Taylor Wimpey Annual Report 2008

FY2008 Annual Report · Taylor Wimpey
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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.

Our 2008 Performance

Financial summary

Revenue – continuing (£m)
Operating profit* – continuing (£m)
Pre-tax (loss)/profit** – continuing (£m)
Exceptional items (£m)
Loss for the year – total Group (£m)
Adjusted (loss)/earnings per share – continuing (p)
Loss per share – total Group (p)
Tangible net assets per share (p)
Year end net debt (£m)

* Profit on ordinary activities before finance costs, exceptional items, brand amortisation and tax.
** (Loss)/profit on ordinary activities before exceptional items and tax.

2008

2007
3,467.7 4,142.8
439.2
346.1
(379.7)
(196.7)
29.5
(24.2)
274
1,529.3 1,415.4

88.7
(74.7)
(1,895.0)
(1,840.0)
(9.4)
(174.8)
158

Contents
Business Review
02 Business Overview
04 Chairman’s Statement
06 Group Chief Executive’s Review

07 Our strategy
08 Our Group key performance indicators
10 Construction
12 Our principal risks and uncertainties

14 UK Housing
20 North America Housing
24 Spain and Gibraltar Housing
25 Our Corporate Responsibility Approach
28 Group Financial Review

Governance
34 Board of Directors
36 Directors’ Report
39 Corporate Governance Report
44 Remuneration Report

Financial Statements
53 Independent Auditors’ Report
54 Consolidated Income Statement
55 Consolidated Statement of

Recognised Income and Expense

56 Consolidated Balance Sheet
57 Consolidated Cash Flow Statement
58 Notes to the Consolidated
Financial Statements

94 Independent Auditors’ Report
95 Company Balance Sheet
96 Notes to the Company

Financial Statements

102 Particulars of Principal Subsidiary

Undertakings
103 Five Year Review

Shareholder Information
104 Notice of Meeting
108 Shareholder Facilities
109 Principal Operating Addresses

More on-line
www.taylorwimpey.com
Our Web site contains a wide variety
of additional information about the
Group, along with links to our sites
for home buyers.

For more information about our
recent debt refinancing please
see pages 30 and 31.

Principal Operating Addresses

UK
Taylor Wimpey plc
80 New Bond Street
London
W1S 1SB

Tel: +44 (0)20 7355 8100
Fax: +44 (0)20 7355 8197

E-mail: 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

Spain and Gibraltar
Taylor Woodrow de España S.A.U.
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.
4/5 The Boardwalk
Tradewinds
Marina Bay Road
Gibraltar

Tel: +00 (350)200 78780
Fax: +00 (350)200 75529

North America
Taylor Morrison, Inc.
4900 North Scottsdale Road
Suite 2000
Scottsdale
Arizona 85251
USA

Tel: +00 (1) 480 840 8100
Fax: +00 (1) 480 840 8156

Details of all our operating locations
are available on our Web site
www.taylorwimpey.com

Taylor Wimpey plc Annual Report and Accounts 2008 109

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Focused on the future
We have taken some tough decisions over the
course of 2008 in the face of an unprecedented
global economic backdrop. We have streamlined
our operations in both the UK and North America,
exited our construction business and put in
place a ﬁrm ﬁnancial base by negotiating a revised
three-year ﬁnancing and covenant package.
During these challenging market conditions we
remain focused on protecting and strengthening
the business for the long term.
We expect 2009 to be another challenging year
for the housebuilding industry, but believe that
Taylor Wimpey is well positioned to take advantage
of improved market conditions in the future.

Norman Askew
Chairman
April 2009

Pete Redfern
Group Chief Executive
April 2009

Taylor Wimpey plc Annual Report and Accounts 2008

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Business Review
Business Overview

A focused
homebuilder

UK Housing
Taylor Wimpey is one of the largest homebuilders in the UK with national
coverage from 23 regional ofﬁces and TW City specialist projects.

Regional ofﬁce

Overview

We build a wide range of homes in the UK,
from one bed apartments to ﬁve bedroom
houses, with prices ranging from below
£100,000 to above £500,000.

We also build affordable housing across
the UK, which represented 21% of our
2008 completions.

We operate two core brands in the UK,
Bryant Homes and George Wimpey.

During the current market weakness we are
focused on pricing competitively in each local
market, cash management and cost control.

For more information see pages 14 to 19.

More on-line
www.taylorwimpey.com
Our Web site contains a wide variety of
additional information about the Group.

Completions

13,394

Average outlets

Average selling price

455

£171k

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North America Housing
Taylor Wimpey is a top 10 homebuilder in the United States and also
operates in Ontario, Canada.

Spain & Gibraltar
Taylor Wimpey operates in
three regions in Spain and also
in Gibraltar.

Areas of operation

Overview

Our homes in North America range from
high-rise apartments in Toronto to full service
country club homes in Florida and from entry
level to luxury homes.

Average selling prices range by geography
from £122,000 in Arizona to £223,000
in California.

In the United States we sell homes under the
Taylor Morrison brand. We also have a land
development business which sells lots to
other homebuilders using the Taylor
Woodrow Communities brand.

Our business in Canada trades under the
Monarch brand.

For more information see pages 20 to 23.

Regional ofﬁce

Overview

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

We announced during 2008 that
we are planning to exit our Gibraltar
business, which operates in the luxury
apartment market.

Our operations in both Spain and
Gibraltar are branded Taylor Woodrow.

For more information see page 24.

Completions

5,421

Average outlets

Average selling price

Completions

234

£175k

214

Average selling
price

£270k

Taylor Wimpey plc Annual Report and Accounts 2008

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Business Review
Chairman’s Statement

Norman Askew
Chairman

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A year of unprecedented challenges

2008 has been an exceptionally difﬁcult year for all housebuilders, including Taylor Wimpey.
After a subdued start to the year in the UK housing market, the industry experienced a sharp
decline in customer reservations from April, a month which normally delivers a strong sales
performance. Restricted mortgage availability made it difﬁcult for customers to ﬁnance their
homes, particularly ﬁrst time buyers and investors. As the year progressed, the turmoil in the
global ﬁnancial markets had a detrimental impact on customer conﬁdence, meaning that
many potential customers who could obtain ﬁnance chose to delay their house purchase.

In North America, where we saw some signs of stabilisation in the ﬁrst half of 2008 after the
market weakness of 2006 and 2007, the uncertainty in the wider economy had a detrimental
effect in the second half. The housing market in Spain remains weak and the strengthening
of the Euro against the pound over the course of the year has further reduced demand from
UK purchasers for second homes in Spain.

2008 performance
The difﬁcult operating environment is clearly reﬂected in the results for the year. Taylor Wimpey’s
continuing operations have generated a loss before exceptional items and tax of £74.7 million
(2007 proﬁt: £346.1 million). Exceptional items for the year total £1,895.0 million (2007:
£379.7 million) and primarily relate to reviews of the carrying value of our land and work in
progress, as well as writing off the value of our goodwill and intangible assets. As a result,
Taylor Wimpey reported a loss before tax from continuing operations of £1,969.7 million
(2007 loss: £33.6 million).

Review of capital requirements
During the early stages of the sharp downturn in the UK housing market, we identiﬁed a risk
that the Company would breach its interest cover covenants when they came to be tested
for the full year 2008. We took appropriate action at an operational level and, following a period
of prolonged and complex negotiations with our debt providers, we announced the
agreement of a revised set of covenants on 7 April 2009.

We recognise that there was considerable uncertainty regarding the Company’s prospects during
2008 and the early months of 2009. However, with a solid ﬁnancial platform now secured, we are
focused on delivering value for shareholders over the medium term.

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Electronic communications
2008 is the first year that Taylor Wimpey
has issued an electronic Annual Report
to those shareholders who have not
requested a paper version. This has
three key benefits:

• A significant reduction in printing and
postage costs, without reducing the
level of information available;

• Faster access to information; and

• Reducing the amount of resources
consumed, such as paper, and
lessening the impact of printing and
mailing activities on the environment.

The Company also encourages
shareholders to elect to receive
notification of the availability of
Company documentation by means
of an e-mail. Shareholders can sign
up for this facility by logging onto our
Web site at www.taylorwimpey.com.

View the report on-line
www.taylorwimpey.com/reportaccounts

Sale of Taylor Wimpey’s construction business
We have exited our construction activities in line with the strategy of focusing on our core
homebuilding operations. We completed the sale of the UK business of Taylor Woodrow
Construction on 9 September 2008 and the sale of our construction businesses in Ghana
on 21 April 2009.

Dividends
The Board did not feel it appropriate to propose an interim dividend as a result of the
deterioration in market conditions. Given that conditions in both our major markets remain
weak, we are not proposing a ﬁnal dividend for 2008 (2007 total dividend: 15.75 pence).
We will review our dividend policy in the light of prevailing market conditions in the future,
once dividend payments become permissible under our revised ﬁnancing arrangements.

Corporate governance
As external events have shown, strong corporate governance is, if anything, even more
essential in challenging market conditions. A full report on our corporate governance
activities can be found on pages 34 to 52.

Board changes
Ian Sutcliffe resigned from the Board on 14 April 2008 and Peter Johnson stood down from
the Board with effect from 16 October 2008. On behalf of the Board I would like to record
my thanks to Ian and Peter for their contributions to Taylor Wimpey and particularly to the
success of the merger and subsequent integration.

Pete Redfern has assumed full management responsibility for the UK Housing division and
we will review this arrangement once we see a stabilisation of market conditions. We were
delighted to appoint Chris Rickard as Group Finance Director on 16 October 2008. Chris
has signiﬁcant experience as a Finance Director of public companies and I would like to take
this opportunity to formally welcome him to the Board.

Our people
The deterioration in market conditions during 2008 has led to a signiﬁcant restructuring
of our UK business, along with further cost reduction initiatives in our North American
and Spanish businesses. The Board is grateful for the dedication and professionalism
that our employees have displayed through this difﬁcult year.

Corporate responsibility management
Details of our approach to corporate responsibility can be found on pages 25 and 26,
as well as in our Corporate Responsibility Report, which is available on our Web site at:
www.taylorwimpey.com/CRreports.

Shareholder information
Full details of the facilities available to shareholders can be found on page 108 of this
Annual Report and Accounts and at www.taylorwimpey.com.

Norman Askew
Chairman

Taylor Wimpey plc Annual Report and Accounts 2008

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Business Review
Group Chief Executive’s Review

Taking tough decisions to deliver
future beneﬁts

Following the merger in July 2007, Taylor Wimpey entered 2008 having made excellent
progress on integrating the two legacy businesses in both the UK and North America.
The strength of our business has been severely tested by the downturn in the UK housing
market and the exceptional events in the global economy over the last 12 months.

Adjusting to adverse market conditions
We have taken difﬁcult decisions during the year to ensure that our businesses are well
placed to face the challenges of current market conditions. Relentless cash management
and cost control have been key priorities across the whole Group. In North America, where
the market had been weak throughout 2006 and 2007, build costs and overhead costs
remain under constant review. In the UK, we suspended new land purchase commitments in
late 2007. When UK housing sales volumes fell dramatically in April 2008, we reacted
quickly, restructuring our UK operations, adjusting our pricing and incentives to deliver
competitive offers in each local market, limiting new site openings and levels of work in
progress, and targeting additional build cost reductions.

Although the different markets that we operate in experienced the impact of the worldwide
economic downturn at different times, we now have a consistent operating strategy across
all of our businesses. Our employees recognise the need to take tough and appropriate
measures in order to protect our business and have been kept fully informed through
consultation processes and our internal communications.

Moving forward
With the amendment to our debt facilities now complete, the Group can focus fully on
delivering value over the medium term, and the opportunities that the current downturn
and future recovery will provide.

Pete Redfern
Group Chief Executive

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In the UK, there was a structural undersupply of new housing even before the reduction in
volumes in 2007 and 2008. Latest forecasts indicate average household formations of
252,000 per annum for England alone. This compares against 200,697 new homes built in
the UK in 2007 and 106,894 in 2008 (source: National House-Building Council). As
homebuilders across the UK continue to delay new site starts and scale back their
operations, we expect this ﬁgure to fall further in 2009. The underlying demand for new
housing remains strong, but many of those looking to buy homes remain unable to obtain an
appropriate mortgage or choose to delay their purchase due to the uncertain economic
environment. When mortgage availability increases and consumer conﬁdence returns, we
will see an even greater imbalance between demand and supply, creating the potential for a
signiﬁcant recovery in house prices in the future.

In North America, the housing market downturn has been ongoing in some markets since
the fourth quarter of 2005. The slowdown, which originated as a result of oversupply has
been exacerbated by the ‘credit crunch’ and is now being prolonged by the increased
number of repossessions and the wider economic uncertainty. In many areas the market has
overcorrected, falling well below both long term price and volume levels. The ﬁrst signs of
industry consolidation have appeared in recent weeks, suggesting that the market may be
close to stabilising.

The overriding priority for the business is to build on our strong base to take advantage of
the opportunities that stabilisation and future upturns in our markets will provide.

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.

Our strategies in our two
largest markets are:

UK
• Goal is to be the leading homebuilder

in the UK

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

Short term priorities

Short term priorities

• Maintain sales momentum

• Drive sensible sales rates for each site

• Reduce build costs

• Tight control of work in progress

• Deliver value from our existing

landbank

• Reduce overheads, whilst maintaining

national coverage

• Deliver additional build cost and

overhead savings

• Continue to reduce investment in
land and work in progress spend
where appropriate

• Grow market share in our key markets

Long term objectives

Long term objectives

• Volume growth from increased outlets

• Take advantage of land acquisition

as the market recovers

opportunities as they arise

Taylor Wimpey plc Annual Report and Accounts 2008

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Business Review
Group Chief Executive’s Review continued

conﬁdence.“

Taylor Wimpey can face the
challenges that 2009 will
inevitably bring with signiﬁcant

8

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We have strong landbanks in both the UK and North America, which have enabled us to
conserve cash in the current market conditions. We are starting to see some attractive
opportunities to purchase good quality land emerging in the US, but we remain cautious
at this stage. There will, however, come a point at which it is right to invest in land in
order to support future growth and we will position the business to take advantage
of such opportunities.

In the slower conditions, we have had the opportunity to squeeze additional value from our
landbank. We are able to improve both the saleability and returns from our products through
a combination of replans, renegotiation of existing planning commitments and redesign of
product types. In the UK we have launched a new product range across the business that
builds on the strongest housetypes of both legacy groups and adds increased ﬂexibility at
reduced costs.

Review of capital requirements
As you will recall, the merger completed on 3 July 2007 and was effected as a nil premium,
all share transaction. As such, no additional debt was taken on to complete the transaction
and our facilities were renegotiated at that point, meaning that no signiﬁcant repayment was
scheduled to fall due until 2012. At 31 December 2007, we had committed funding of
£2.7 billion compared to a total net debt of £1,415 million, of which £591 million related
to bank borrowings, £443 million to private placement notes and £381 million to publicly
traded Eurobonds.

Our Group key performance indicators (KPIs)

Given the signiﬁcant changes in our operating environment during the course
of 2008, our focus has been on the short term performance of the business.
As such, our performance against our KPIs for the year is weak.

(Loss)/proﬁt before tax

(Loss)/earnings per share

Objective

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

We seek to provide continuous growth
in earnings per share.

Deﬁnition

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

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

(74.7)

08

07

346.1

08

07

(9.4)

29.5

£(74.7)m

for 2008
(£346.1m proﬁt for 2007)

(9.4)p

for 2008
(29.5p earnings for 2007)

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As the UK housing market deteriorated sharply in the second quarter of 2008, it became
clear that in the absence of a market recovery there was a risk of breaching the interest
cover covenants which were contained in both our bank debt and the private placement
notes. Having reviewed the options available to us with our advisers, we decided to
approach the banks to seek a revision to the covenant package to reﬂect the challenging
market conditions. We indicated to the banks that we intended to raise additional equity on
the stock market and the banks indicated their intention to amend the covenant package,
subject to a successful equity raise.

Due to the difﬁculties being experienced by companies attempting to raise equity through
traditional rights issues in the early summer of 2008, we proposed to use a structure known
as private placing with clawback. This involved initial discussions with a number of large
existing shareholders and potential new investors on a conﬁdential basis to establish
their level of support for the equity raise. The intention was to obtain sufﬁcient support to
underwrite the full level of the proposed equity raise from these investors prior to making
the transaction public. Existing shareholders would then have been entitled to subscribe
for new shares in proportion to their existing holdings, reducing the number of shares
available to the underwriting investors. Unfortunately, we were not able to obtain sufﬁcient
support due to the uncertain nature of both the UK housing market and the stock markets.

We therefore commenced negotiations with our banks and private placement holders with
a view to agreeing a revised covenant package on the basis of no new equity being raised.
These talks have been lengthy and complicated, requiring signiﬁcant resource from the
Company’s perspective to provide ﬁnancial due diligence to our debt providers.

We believe that these KPIs remain the most appropriate indicators of business performance
in the long term, but are less relevant in the current environment. As such, we will amend
our suite of KPIs in next year’s Annual Report.

Return on average capital employed

Dividend per share

Average number of employees

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

We aim to deliver an attractive
progressive dividend.

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

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).

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

The average number of people employed
across the Group during the year.

2.6%

08

07

14.8%

08

07

XX.X

15.75

08

07

8,069

9,727

2.6%

for 2008
(14.8% for 2007)

nil

for 2008
(15.75p for 2007)

8,069

for 2008
(9,727 for 2007)

Taylor Wimpey plc Annual Report and Accounts 2008

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Business Review
Group Chief Executive’s Review continued

Construction

Performance
The UK Construction business was
sold on 9 September 2008 to VINCI
PLC, generating a profit on disposal
of £55.6 million. The discontinued
operations generated a loss for the
year, before exceptional items, of
£2.5 million (2007 profit: £10.3 million).

Ghanaian operations
Given the small scale of the Ghanaian
construction operations in relation to
the Group as a whole they are reported
as part of the Corporate segment
for this accounting period.

As the talks progressed, it became clear that the conditions in the UK housing market
were continuing to weaken. As a result, there was an increasing risk of additional land
write downs, which might have led to a breach of covenants within the Eurobonds. We
therefore took the decision to bring the holders of these bonds into the discussions. Whilst
extending the discussions to include the Eurobond holders prolonged the negotiations, it
was necessary to do so in order to meet our objective of securing a comprehensive
ﬁnancing structure that is robust against various scenarios.

As announced on 7 April 2009, these discussions have now concluded and we have
reached agreement on a revised set of covenants to allow the Company to trade through
the current downturn. As you would expect, this agreement comes at the cost of an
increased interest charge and an arrangement fee for our debt providers. Whilst the revised
ﬁnancing deal does not require the Group to raise new equity capital, it does allow for the
terms to be adjusted to the Group’s advantage in such circumstances. Chris Rickard
provides more detail on these costs, along with the revised covenant terms, in his Group
Financial Review on pages 30 and 31.

I am delighted that these discussions are now behind us and that we have established a
ﬁrm ﬁnancial base for the Company to weather the downturn and plan for the opportunities
that will come with a return to more normal market conditions.

Construction activities
We have completed our exit from Construction and are now a focused homebuilder. We
announced on 9 September 2008 that we had sold the UK business of our Construction
operation to VINCI PLC for £74 million in cash. This transaction generated a proﬁt on
disposal of £55.6 million.

As previously announced, we completed our exit from construction activities with the sale of
our construction businesses in Ghana on 21 April 2009.

People
During 2008, conditions have impacted heavily on our employees, both through the
redundancy programmes that we have undertaken, and through the additional challenges of
working in such difﬁcult market conditions.

The Board acknowledges the way in which employees have reacted to these challenges and
would like to take this opportunity to thank all staff for their commitment and hard work. We
move forward with high calibre teams in all of our businesses, who are focused on the
Group’s objectives.

Corporate responsibility
Corporate responsibility is an integral part of corporate governance. We remain committed
to being a responsible company and to playing our part in building increasingly sustainable
homes and communities. We also believe that a positive approach to corporate responsibility
makes sound commercial sense.

Further information on our progress during 2008 is contained on pages 25 to 27 and
within our Corporate Responsibility Report, which is available on-line at
www.taylorwimpey.com/CRreports.

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will provide.“

We are positioning the business
to be ready to take advantage of
the opportunities that an upturn

Outlook
Taylor Wimpey can face the challenges that 2009 will inevitably bring with signiﬁcant
conﬁdence. As we trade through these difﬁcult conditions, we are positioning the
business to be ready to take advantage of the opportunities that an upturn will provide.

Trading in the UK has been encouraging during the ﬁrst few months of 2009, with the
underlying pick up in demand coming from all major customer groups and geographies.
The industry has controlled stock well, reducing the risk of a repeat of the extreme price
competition that was experienced in the last major UK housing downturn (and in the
US recently).

However, we remain cautious about the prospects for a signiﬁcant short term recovery in the
UK housing market. Whilst we welcome the recent reductions in interest rates, the availability
of mortgage ﬁnance remains restricted and, together with increasing economic uncertainty,
continues to have a detrimental impact on consumer conﬁdence. We believe that the
prospects for the UK housing market in the medium and long term are very good, with the
current market exacerbating an existing shortage of supply. Given the level of reduction in
capacity and investment in the industry over the last 12 months, we anticipate that this
situation will continue for some time.

In North America, housing market conditions have been more stable in recent weeks,
however the state of the US economy as a whole remains a signiﬁcant concern. With the
impact of Government stimulus now being felt, there are tentative signs of improving
conditions. The scale of the market correction has been dramatic, and has resulted in many
markets falling well below long term norms. As general economic conditions stabilise, there
is the potential that some of these losses will reverse quickly.

The steps that we have taken to restructure our debt ﬁnance and position our business for
the challenges of current market conditions have enhanced the opportunity to deliver value
for shareholders in the medium term.

Pete Redfern
Group Chief Executive

Taylor Wimpey plc Annual Report and Accounts 2008

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Business Review
Group Chief Executive’s Review continued

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.
The largest single risk faced by the Company during 2008 was a potential breach of its ﬁnancial covenants as
a result of the downturn in our operating environment. A revised set of ﬁnancial and operational covenants has
now been agreed with our lenders (see pages 30 and 31) and whilst we still have to comply with these covenants,
the risk of breach is signiﬁcantly reduced. As a result, the table below focuses on the ongoing operational issues
facing the Company.

Economic and market environment

Land purchasing

Availability of sub-contractors

Description
of risk

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 of the Group’s control.

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

The vast majority of 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.

Impact

2008 saw unprecedented global
economic conditions, with a signiﬁcant
reduction in both credit availability and
consumer conﬁdence. As such the
level of demand for new housing was
signiﬁcantly reduced, impacting both
proﬁtability and cash generation.

Whilst we remain cautious regarding
land purchases in both the UK and
North America in the current market
conditions, attractive opportunities are
starting to emerge. Correctly timing new
investment in land will enhance the
Group’s ability to deliver strong proﬁt
growth as housing markets recover.

The difﬁcult operating environment
during 2008 has resulted in the failure
of some sub-contractors’ businesses.
In addition, reduced levels of
homebuilding have led to some skilled
tradesmen leaving the industry to take
jobs in other sectors.

Mitigation

We use the detailed knowledge of our
local teams to select the locations and
home designs that best meet existing
customer demand. We continue to
evaluate our site opening programme on
the basis of local market conditions. We
minimise the level of speculative build
that we undertake by opening a sales
outlet at an early stage of development,
and then matching build to actual sales.

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.

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.

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Site safety

Construction and cost management

Government regulations

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

Construction work can be subject to
delays and additional cost for a variety of
reasons. These include adverse ground
conditions, changes to the original design
once build has commenced and adverse
weather conditions.

Obtaining permission to build homes is dependent
on our ability to meet a wide variety of requirements
in areas such as design, sustainability and
product mix.

We want all of our people – whether
employee or sub-contractor – to go
home at the end of the day safe
and healthy.

Reductions in house prices in both the
UK and North America as a result of
market weakness during 2008 mean
that cost management is an even
greater focus for our business.

Inability to obtain suitable consents could impact
on the number of homes that we are able to build
or the proﬁtability of a site. During 2008, we
undertook a detailed analysis of the implications
for our UK business of the Code for Sustainable
Homes and upcoming changes to building
regulations. Further information is available within
our Corporate Responsibility Report and on our
Web site.

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.
A detailed description of the measures
introduced in 2008 is available on
pages 27 to 31 of our Corporate
Responsibility Report.

We monitor both cost and risk closely
throughout the life of a project from initial
viability assessment to post completion
review. This is achieved through the use
of detailed risk registers and regular site
valuations, which are reviewed and
approved at the appropriate level.

We consult with the UK Government on upcoming
legislation, both directly and as a member of
industry groups, to highlight potential issues. At
a local level our land specialists work closely with
the relevant planning authorities and structure
land purchase agreements to mitigate such risk.

Taylor Wimpey plc Annual Report and Accounts 2008

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Business Review
UK Housing

UK key performance indicators
Operating margin*
Order book as a percentage of 2008 revenue
Average outlet numbers
Private sales rate (per outlet per week)
Customer satisfaction
Health and safety injury frequency rate
(per 100,000 hours worked)

2008
2.2%
23.5%
455
0.40
79.4%
0.296

UK strategy
• Goal is to be the leading homebuilder

Adapting to market conditions
• Maintain sales momentum

in the UK

• Current priority is cash management

and cost reduction, followed by volume
growth from increasing outlet numbers
as the market recovers

• Reduce build costs

• Tight control of work in progress

• Deliver value from our existing landbank

• Reduce overheads, whilst maintaining

national coverage

UK housing market
After a subdued ﬁrst quarter, the UK market saw a sharp decline in April and continued to be
weak throughout the remainder of the year. This slowdown has been driven by an intensification
of three key factors which were becoming apparent in the later stages of 2007:

• Availability of credit and lender restrictions;

• Adverse media coverage of the housing market;

• Loss of consumer conﬁdence; and

• Increasingly cautious mortgage valuations on properties.

According to the Bank of England, the total value of loans approved for house purchases
during 2008 was £69,655 million. This represents a fall of 61.7% against the 2007 ﬁgure
of £181,822 million. Whilst interest rates fell sharply over the course of 2008, from 5.50%
at the start of the year to 2.00% in December, the number of applicants able to qualify for
new loans was restricted by requirements for higher levels of deposits and also increasingly
cautious mortgage valuations on properties.

National house price indices have reﬂected these deteriorating market conditions with sharp
declines over the course of 2008. The Nationwide House Price Index shows a fall of 15.9%
over the year to an average house price of £153,048, with the Halifax House Price Index
recording a fall of 18.9% to an average house price of £159,896.

The UK Government recognises the importance of the housebuilding industry to the
wider UK economy and has launched a number of initiatives during 2008 to try to support
housebuilding volumes in the face of the current downturn. For example, £400 million of
Government funding has been allocated to the HomeBuy Direct scheme, which aims to
help up to 18,000 ﬁrst time buyers purchase their own homes. In addition, following the
recapitalisation of some of the largest banks in the UK during 2008, the UK Government
is now a signiﬁcant shareholder in some of the country’s largest mortgage lenders.

Pete Redfern
Group Chief Executive

We have acted
swiftly and
decisively at an
operational level

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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
• Reduced number of unsold
completed homes by 44%
from June to December 2008

• Restructured our UK operations,

closing 13 of our 39 regional offices
during 2008

• Net land and work in progress write

downs of £904.4 million

The housebuilding industry, including housing associations, has responded to these conditions
by reducing the number of homes started during 2008 to 106,894 (2007: 200,697) according to
the National House-Building Council (NHBC). This compares to forecast average household
formations of 252,000 per annum for England alone and the UK Government’s ambition to
build three million new homes by 2020. Industry forecasts suggest that the number of home
starts in the UK during 2009 could fall below 80,000 (source: Royal Institution of Chartered
Surveyors). As such, the UK housing market remains an attractive environment in which to
do business, with a structural undersupply of new housing likely to continue.

Strategy
We have reduced our level of ongoing overheads signiﬁcantly to reposition the business
for lower volumes and sales prices. During the ﬁrst half of 2008 we initiated a review of
our business structure and closed 13 of our 39 regional ofﬁces by the end of the year.
We have continued to review our regional structure in the light of the ongoing adverse
market conditions and have closed a further three regional businesses in early 2009. We
have sought to redeploy staff wherever possible, however, unfortunately there were a
signiﬁcant number of redundancies in the UK during 2008.

We have actively set sales prices to reﬂect the challenging market conditions, with our wide
range of customer incentives enabling us to deliver competitive offers on a local basis. This
approach proved successful during 2008. We have undertaken a number of national marketing
initiatives over the course of 2008, which have supported the regional activity undertaken to
market each development in its local area. In such a competitive environment, sales and
marketing skills are a key differentiator and we will be further enhancing our capabilities in this
area during 2009.

We remain cautious in evaluating new site openings, especially where there are signiﬁcant
initial costs to be incurred prior to the completion of the ﬁrst homes. We are continuing to
operate with build rates below our current sales rates and our monthly cash spend on work
in progress by the end of 2008 was approximately 50% of the equivalent ﬁgure for 2007.

For both new and existing sites, we are building in cost reduction targets to ensure that new
plots released to construction will contribute an enhanced level of cash generation once the
sale is completed. We are also working closely with our suppliers and sub-contractors to
identify ways to further increase efﬁciency and reduce cost, having already delivered build
cost savings following the merger in 2007.

Whilst the current focus is on reducing costs and generating cash ﬂows, this needs to be
balanced with the requirement for long term value creation. We are continuing to promote
our strategic land assets through the planning process, in order to provide a portfolio of high
quality sites that we can beneﬁt from as the market recovers. In addition, on both active and
mothballed sites, we are taking the opportunity to review the associated planning consents
to identify potential resubmissions that would enhance value.

Financial review
UK housing revenue was £2,390.1 million (2007: £3,053.8 million), as the signiﬁcant downturn
in the UK housing market outweighed the effect of the ﬁrst full year since the merger.
Operating proﬁt* was £53.0 million (2007: £418.2 million).

Exceptional items of £1,750.4 million were charged during the year (2007: £47.9 million).
These related to a review of the carrying value of our land and work in progress in the light
of the ongoing market weakness, a review of the carrying value of goodwill and other
intangible assets and restructuring costs. Exceptional items are discussed in more detail on
pages 30 and 31. Net operating assets in the UK were £2,585.7 million at 31 December
2008 (2007: £3,773.2 million).

* Profit on ordinary activities before finance costs, exceptional items, brand amortisation and tax, after share of results of joint ventures.

Taylor Wimpey plc Annual Report and Accounts 2008

15

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Business Review
UK Housing continued

UK Housing private development
price mix

35

28

21

14

7

0

l

s
n
o
i
t
e
p
m
o
c
%

0
0
1
-
1
5

0
5
1
-
1
0
1

0
0
2
-
1
5
1

0
5
2
-
1
0
2

0
0
3
-
1
5
2

0
0
5
-
1
0
3

+
0
0
5

price points (£000s)

Sales, completions and pricing
Sales rates in the ﬁrst quarter of 2008 were more subdued than in the equivalent period
of 2007. The second quarter then saw a further sharp decline, with sales rates for the
remainder of 2008 well below the equivalent period of 2007. The net private sales rate
per outlet per week for 2008 as a whole was 0.40, against a 2007 comparative of
0.55. Cancellation rates were also elevated in 2008 at 37.5% against a long run
average of around 20%.

We completed 13,394 homes in 2008 (2007: 14,862) at an average selling price of
£170,600 (2007: £191,000). The average selling price of a private home was £187,000
(2007: £208,000), whilst the average selling price of an affordable home was £107,700
(2007: £105,000). Price declines in private housing sales were primarily due to the adverse
market conditions, with the average private house size of 973 square feet in 2008 broadly
similar to that of 2007.

We have not seen widespread geographical variation in market conditions during 2008,
reﬂecting the fact that the downturn has been driven by issues of credit availability, rather
than local market factors. Apartment prices have been under greater pressure than houses,
due to pockets of oversupply, most notably city centres outside London. Having controlled
the number of apartment plots added to our landbank tightly in recent years, our level of
apartment stock is reducing.

With cash generation an ongoing focus, we have achieved a signiﬁcant reduction in the level
of unsold completed homes. At 30 June 2008, we had 2,025 unsold completed homes on
our balance sheet and successfully reduced this number to 1,138 by 31 December 2008.

Our 2008 year-end order book stood at £562 million (2007: £1,064 million).

Our UK Housing key performance indicators

Given the signiﬁcant changes in our operating environment during the course of 2008, we
will be amending our suite of key performance indicators for 2009 to more accurately reﬂect
the way in which we run the business.

Objective

Deﬁnition

Operating margin

Order book as a percentage of revenue

Average outlet numbers

We aim to deliver industry-leading
profit margins in each of our
businesses.

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

In normal market conditions, we aim to
increase outlet numbers over time in
order to grow our business.

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

Year-end order book value divided by
revenue for that year.

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

2.2

08

07

13.7

08

07

23.5

34.8

08

07

455

337

2.2%

for 2008
(13.7% for 2007)

23.5%

for 2008
(34.8% for 2007)

455

for 2008
(337 for 2007)

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Product range and branding
We are currently operating with two core brands in the UK, Bryant Homes and George Wimpey.

We continue to offer a wide range of products from apartments to ﬁve bedroom houses,
with prices ranging from under £100,000 to over £500,000. During 2008, the majority of our
homes were priced within a range from £100,000 to £200,000.

Social housing continues to increase as a proportion of our overall completions, growing
to 21% during 2008 (2007: 16%). The UK Government has provided additional funding
to enable Registered Social Landlords to buy housing originally designated for private sale
and to potentially bring forward social completions. Whilst we have been able to achieve
additional social completions during 2008, the reduced level of site openings in 2009 combined
with the difﬁculty of bringing forward the social element of some sites under their current
planning consents is likely to result in a similar level of social completions during 2009.

During 2008, we continued to develop our new house type range for the UK. This process
involves a wide internal team specialising in ﬁelds from design to affordability and from health
and safety to environmental sustainability. We are also working closely with our suppliers
throughout the design process. All the new UK house types comply with Secured by Design
principles and integrate the principles of Lifetime Homes to improve accessibility and cater
for the changing needs of our customers. Every home design will also be capable of achieving
level three or higher of the Code for Sustainable Homes.

Private sales rate

Customer satisfaction

Health and safety

We aim to achieve an appropriate sales rate
per week to prioritise cash generation over
operating margin and completion volumes.

Annual net reservations divided by the
average number of outlets, divided by 52.

We strive to maintain and improve our
customer satisfaction scores.

National New Homes survey undertaken
by NHBC on behalf of HBF eight weeks
after legal completion.

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

Reportable injury frequency rate per 100,000
hours worked.

08

07

0.40

0.55

0.40

for 2008
(0.55 for 2007)

79.4%customers satisﬁed or very

satisﬁed with the quality
of their home for 2008

08

07

0.296

0.315

0.296

for 2008
(0.315 for 2007)

Taylor Wimpey plc Annual Report and Accounts 2008

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Business Review
UK Housing continued

UK Housing landbank

Plots

Detailed planning

Outline planning

Resolution to grant

Subtotal

Allocated strategic

Non-allocated strategic

Total

Owned

40,753

23,438

3,361

67,552

6,816

19,106

93,474

2008

Controlled

Pipeline

1,300

3,547

2,518

7,365

6,485

57,668

71,518

Total

42,053

27,096

6,260

75,409

13,301

76,774

2007

Total

45,161

32,152

13,746

91,059

12,495

90,397

–

111

381

492

–

–

492

165,484

193,951

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

We have reviewed our approach to measuring customer satisfaction and are now using two
surveys. The ﬁrst is the National New Homes survey undertaken by NHBC (the National House-
Building Council) on behalf of HBF (the Home Builders Federation). Each of our customers is sent
a survey eight weeks after their legal completion date. The second survey is the NHBC’s own
survey measuring the same elements but sent to customers nine months after completion. During
2008, 79.4% of our customers were satisﬁed or very satisﬁed with the quality of their home.

These surveys have become a key part of our Customer Service Management (CSM)
system. The highest performing regions will be entered for our annual Hallmark Awards
for customer service.

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 51 Quality Awards, 10 Seals of Excellence
and two Regional Awards.

Landbank
We suspended new land purchase commitments in late 2007 and did not re-enter the UK
land market in 2008.

Where we have identiﬁed land assets which are surplus to our current requirements, we have
marketed these and have undertaken a number of land sales where we feel that the price
achieved delivers value to shareholders. For the year as a whole, land sales have generated
£58.0 million of revenue (2007: £130.9 million) at an operating loss of £2.2 million after allocation
of overheads (2007 proﬁt: £40.1 million). The signiﬁcant reduction in both revenue and proﬁt
reﬂects the depressed nature of the land market during 2008, with many potential buyers either
out of the market, or only looking to buy land at distressed sale prices.

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Our UK short term landbank, representing owned or controlled land with planning, or a
resolution to grant planning, stood at 74,917 plots at 31 December 2008 (2007: 86,155 plots).
Within this movement, controlled plots have been reduced from 13,439 at 31 December 2007
to 7,365 at 31 December 2008 reﬂecting the ongoing suspension of new land purchase
commitments. The average cost per plot in the landbank was £37,000 at 31 December 2008
(2007: £45,000). We ended 2008 with 56% of our short term landbank fully consented
(2007: 50%) and with a greater weighting towards the South of England and towards houses.

Our cash payments (all in respect of previous land commitments) totalled £538 million during
2008, a signiﬁcant reduction against the land spend in 2007. We expect a further reduction
in land spend during 2009 to around £300 million.

Current trading
In the ﬁrst few months of 2009, the UK housing market has performed at the upper end of
our expectations, with higher than expected visitor levels and sales rates. Pricing has been
relatively stable. Affordability has improved as a result of recent price falls and the sharp
reduction in interest rates. However, the ongoing requirement for a signiﬁcant deposit to
secure a mortgage and the mortgage valuation process continue to make it difﬁcult for
many potential customers to ﬁnance their new homes. The ongoing economic uncertainty
is expected to further impact on consumer conﬁdence and we therefore remain cautious
about the prospects for a meaningful recovery during 2009.

We will maintain our focus on cash generation and cost reduction in order to position the
business to weather the current downturn. This is being achieved through build cost
reduction, the targeted use of sales incentives to deliver competitive pricing in local markets
and tight control of work in progress spend. Our current order book is £881 million (week 16
2008: £1,410 million).

Our experience of operating in the US has provided us with an advantage in identifying the
impacts of the market downturn in the UK and has enabled us to act swiftly to reposition the
business accordingly.

Taylor Wimpey plc Annual Report and Accounts 2008

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Business Review
North America Housing

North America key performance indicators
Operating margin*
Order book as a percentage of 2008 revenue
Average outlet numbers
Sales rate (per outlet per week)
Customer satisfaction
Health and safety injury frequency rate
(per 100,000 hours worked, excluding sub-contractors)

2008
6.1%
50.0%
234
0.4
85.4%
0.041

North America strategy

• Goal is to be the homebuilder of choice

in each of our markets

• Current priority is cash management

and cost reductions, whilst preserving
the inherent value in our long term land
positions

North America approach to
challenging markets
• Drive sensible sales rates for each site
• Deliver additional build cost and

overhead savings

• Continue to reduce investment in
land and work in progress spend
where appropriate

North America housing market
Markets in the US have continued to be extremely challenging throughout 2008. Although
we saw some pockets of stabilisation during the ﬁrst half, the market weakened during the
second half of 2008 and particularly in the wake of the turmoil in the global ﬁnancial markets.
Whilst inventory levels within the industry have been brought under tighter control, the
number of foreclosures has risen, putting further pressure on pricing.

Our markets in North America beneﬁt from signiﬁcant inward migration and job growth.
According to data from the US Census Bureau, three of our markets (California, Texas and
Florida) rank among the four largest States by population and Arizona and Texas were
among the three fastest growing States by population in 2008.

The downturn started in some States in the third quarter of 2005, but we continue to see
weakening market conditions. For example, building permits in Arizona fell by nearly 50%
during 2008, with those in California down by nearly 45% (source: US Census Bureau).
The Case Shiller Home Prices Indices report an average fall of 19% for the 20 areas that it
covers. The largest recorded fall of 34% was in Phoenix, Arizona, with markets in California
and Florida also showing signiﬁcant falls. By contrast, the smallest recorded falls for 2008
of approximately 4% were in Texas and Colorado.

Our Canadian business continued to beneﬁt from a robust operating environment
throughout most of 2008, although it experienced some softening in the fourth quarter.

Strategy
In the current market conditions, we remain focused in the short term on cost reductions
and cash management, whilst preserving the inherent value in our long term land positions.

Sheryl Palmer
President and CEO, North America Housing

We remain
focused in the
short to medium
term on cost
reductions
and cash
management

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North America housing market
at a glance
Key drivers
• Migration to sunbelt States

• Affordability levels

• Customer confidence

• Employment levels

Potential risk factors
• Continuing restriction of

credit availability

• Increased level of foreclosures

• Ongoing house price deflation

Taylor Morrison performance
• Reduced number of unsold
completed homes by 50%

• Landbank plots reduced by 28%

• Net land and work in progress
write downs of £71.1 million
taken during 2008

We have a good quality and well respected business in North America, with strong brands
and a growing market share, as evidenced by our recent recognition as a top 10 homebuilder
in the US. Taylor Morrison was one of very few US homebuilders that traded proﬁtably in 2008.

We entered 2008 with very lean overheads in North America, and whilst we have made
additional savings, the key area of improvement has been build costs, both in terms of the
price that we pay for materials and labour and the efﬁciency of our operations on site. We
have re-bid contracts across our North American operations and have also reviewed all of
our national and regional strategic sourcing.

Work in progress and land spend traditionally represent the largest cash outﬂows in our
business. We have remained cautious regarding land spend throughout 2008 and have
reduced the number of unsold completed homes from 908 at 31 December 2007 to 455
at 31 December 2008.

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.

Financial review
North America housing revenue was broadly stable at £981.6 million (2007: £986.8 million),
as the enlarged scale of the business following the merger and the beneﬁt of a stronger US
Dollar compared to Sterling were offset by the effect of continuing weakness in our US markets.

Operating proﬁt* was £59.9 million (2007: £67.5 million). Exceptional items were £76.6 million
(2007: £321.3 million). The operating margin* for 2008 was 6.1% (2007: 6.8%).

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 £71.1 million during
2008 (2007: £283.4 million).

Net operating assets in North America stood at £677.8 million at 31 December 2008
(2007: £680.3 million).

Sales, completions and pricing
The business operated with an average of 234 outlets during 2008 (2007: 183), reﬂecting
the impact of the ﬁrst full year of the merger.

Total home completions were 5,421 (2007: 5,197).

The average selling price of our North American homes in 2008 was £175,000 (2007:
£182,000), with the ongoing market weakness partially offset by the effect of a stronger
US Dollar on currency translation.

Our year-end order book stood at £491 million (2007: £529 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 condominiums, single family homes,
townhomes and full service country club communities. At present our only active and
upcoming high-rise projects are in the Canadian market.

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

* Profit on ordinary activities before finance costs, exceptional items, brand amortisation and tax, after share of results of joint ventures.

Taylor Wimpey plc Annual Report and Accounts 2008

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Business Review
North America Housing continued

North America Housing Completions
by region

1400

1120

840

560

280

0

a
n
o
z
i
r
A

i

a
n
r
o

f
i
l

a
C

l

a
r
t
n
e
C

a
d
i
r
o
F

l

a
d
a
n
a
C

Quality and customers
Taylor Morrison won a series of sales and marketing awards in 2008. Our Houston Division
won seven awards in the annual PRISM (Professional Results in Sales and Marketing)
Awards organised by the Greater Houston Builders Association. Our Southern California
Division won one MAME (Major Achievements in Marketing Excellence) Award and several
categories of the regional Laurel Awards.

Monarch Corporation achieved third place in the J.D.Power ranking for customer satisfaction
of condominium buyers in the Greater Toronto Area in 2008. We were also a ﬁnalist in the
high-rise category of the Tarion Awards of Excellence for customer service in the Province
of Ontario. Readers of Sacramento’s Modesto Bee newspaper voted Taylor Morrison their
favourite area builder for the second year in a row.

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.

Our customer surveys are now undertaken by Avid Advisors, a customer loyalty
management ﬁrm that works with over 400 housebuilders throughout the United States and
Canada. We are proud of the fact that 89.9% of our customers would recommend us to
their family and friends and our total homebuyer satisfaction score was 85.4%. These scores
compare favourably to the average scores of 400 builders in North America of 86.6% and
83.0% respectively.

Our North America Housing key performance indicators

Given the signiﬁcant changes in our operating environment during the course of
2008, we will be amending our suite of key performance indicators for 2009 to
more accurately reﬂect the way in which we run the business.

Operating margin

Order book as a percentage of revenue

Average outlet numbers

Objective

We aim to deliver industry-leading profit
margins in each of our businesses.

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

In normal market conditions, we aim to
increase outlet numbers over time in order
to grow our business.

Deﬁnition

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

Year-end order book value divided by
revenue for that year.

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

08

07

6.1

6.8

08

07

50.0

53.6

08

07

234

183

6.1%

for 2008
(6.8% for 2007)

50.0%

for 2008
(53.6% for 2007)

234

for 2008
(183 for 2007)

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Landbank
We remain extremely cautious with regard to land purchases in the US, although we are
starting to see some attractive opportunities in certain markets. We continued to invest in
land for our Canadian operations selectively during the ﬁrst part of 2008 and also made
some opportunistic land purchases in Arizona in the fourth quarter.

At the year end, we had a landbank of 29,178 plots (2007: 40,603 plots).

Current trading
Market conditions have remained challenging. Sales rates for the year to date are slightly
below our expectations, although we have seen some improvement in recent weeks and pricing
movements are relatively small. Our current order book stands at £585 million. We expect that
the signiﬁcant improvements in affordability, reducing levels of available stock and the actions of
the US Government will start to impact positively on the market during 2009.

We have maintained a meaningful presence in the markets in which we choose to operate
and are successfully growing our market share in our key markets against a backdrop of
reducing market sizes. We are well placed to take advantage of future opportunities to
capitalise on the strong Taylor Morrison reputation.

Sales rate per outlet per week

Customer satisfaction

Health and safety

We aim to achieve an appropriate sales rate
per week to prioritise cash generation over
operating margin and completion volumes.

Annual net reservations divided by the
average number of outlets, divided by 52.

We strive to maintain and improve our
customer satisfaction scores.

Our customer surveys are now undertaken
by Avid Advisors, a customer loyalty
management firm that works with over
400 housebuilders throughout the United
States and Canada.

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

Reportable injury frequency rate per 100,000
hours worked, excluding sub-contractors.

08

07

0.4

0.78

0.4

for 2008
(0.78 for 2007)

0.041

08

07

0.212

85.4%

Total homebuyer satisfaction
for 2008

0.041

for 2008
(0.212 for 2007)

Taylor Wimpey plc Annual Report and Accounts 2008

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Business Review
Spain and Gibraltar Housing

Spain and Gibraltar key performance indicators
Operating margin*
Order book as a percentage of 2008 revenue
Average outlet numbers
Sales rate (per outlet per week)
Customer satisfaction Spain
Health and safety Spain
(reportable injury frequency rate per 100,000 hours worked)
Health and safety Gibraltar**
(reportable injury frequency rate per 100,000 hours worked)

2008
(4.0)%
97%
20
0.12
85%
0.371

0.828

Spain strategy
• Deliver high quality homes in popular
locations that appeal to both foreign
and Spanish buyers

• Focus on cash generation and

cost reduction

• Remain cautious on land purchasing

at the current point in the market cycle

Gibraltar strategy
• Announced plans to exit the Gibraltar

market in August 2008

Spain and Gibraltar housing market
The housing market in Spain remains weak, with a continuing oversupply of new properties
on the mainland. Demand from British purchasers has been reduced by the increasing
economic uncertainty and the weakening of Sterling against the Euro over the course
of 2008.

Performance
In Spain and Gibraltar we completed a total of 214 homes in 2008 (2007: 212) at an
average selling price of £270,000 (2007: £279,000).

Operating loss* was £2.4 million (2007 proﬁt: £2.2 million) as a result of the weaker
market conditions.

The landbank has reduced from last year as we have become increasingly cautious in our
approach to land purchases. Our year-end order book stood at £58 million (2007: £83 million).

We have undertaken further reviews of the carrying value of our landbank in Spain, which
have resulted in land and work in progress write downs of £37.4 million (2007: £6.3 million).
Of the 2008 write downs, £33.3 million was recorded during the ﬁrst half of the year.

Current trading
Market conditions are expected to remain weak in mainland Spain during 2009.

* Loss on ordinary activities before finance costs, exceptional items, brand amortisation and tax.

** Please note that the injury frequency rate for Gibraltar equates to just four accidents in 2008.

Javier Ballester
Managing Director, Spain

Demand
from British
purchasers
has reduced

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Business Review
Our Corporate Responsibility Approach

We remain committed to being
a responsible housebuilder

Currently, our most pressing corporate responsibility is our duty to those who may be affected by
the impact of the economic downturn on our business. These groups include our investors,
employees, customers and business partners including suppliers and sub-contractors.

Our 2008 Corporate Responsibility Report demonstrates that we continue to take our
environmental and social responsibilities extremely seriously. Operationally, health and safety
continues to be a non-negotiable top priority for us in all regions in which we operate. We
also continue to build our homes and communities reliably and conscientiously.

Corporate responsibility management
We have a duty to take social, environmental, ethical and economic factors into account
when conducting our business and to play our part in tackling global imperatives such as
sustainable development and climate change.

Our Board-level Corporate Responsibility Committee continues to meet at least three times
a year and is responsible for recommending the Company’s corporate responsibility strategy,
policies, reporting and performance monitoring to the plc Board. The Committee is made
up of Independent Non Executive and Executive Directors. The Committee’s remit includes
highlighting signiﬁcant environmental, social and ethical risks and opportunities for the
attention of the plc Board.

Our UK business also has a Sustainability Working Group chaired by our Land and
Planning Director and including Directors from a range of disciplines. In 2009, the Group
will develop recommendations based on a risk and opportunity-focused approach to
corporate responsibility.

Reporting approach
Our Corporate Responsibility Report is divided into two main sections. The ﬁrst section
is about ‘Our homes and communities’ and includes ﬁve sub-sections looking at different
aspects of how we go about creating sustainable communities.

Katherine Innes Ker
Corporate Responsibility Committee Chairman

Taylor Wimpey plc Annual Report and Accounts 2008

25

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Business Review
Our Corporate Responsibility Approach continued

Supporting local communities. We aim to support the local communities in which we
build by being a good neighbour, engaging with local residents and stakeholders as well
as building in a considerate fashion. Examples include community consultation as well as
our support for local communities through schools programmes and charitable initiatives.

Better by design. How we plan and design our communities has a major impact on everything
from aesthetics to sustainability. We look at a signiﬁcant range of issues when designing
our homes and developments. In 2008, we continued to develop our new house type
range and won a series of high proﬁle awards.

Environmental sustainability. We work in areas such as energy efﬁciency, renewable energy
use and water conservation as well as engaging with stakeholders and customers on
sustainability issues. We have also undertaken a comprehensive analysis in 2008 on
the implications of the UK Government’s Code for Sustainable Homes for our business.

Enhancing economic growth. Building new communities and enhancing existing ones
can have a major impact on local economies. We build much needed affordable housing,
employ people from our local communities, provide training and education opportunities
and regenerate urban areas. We also contribute to infrastructure, education, health,
transport and other areas through planning obligations.

Customer care. Our approach to customer care includes measuring ourselves and we
have introduced a number of new initiatives in 2008, such as developing a new Customer
Journey. We also communicate with customers about sustainability issues.

Our Corporate Responsibility Report also includes four large case studies of our developments.
Two UK case studies are EcoHomes Excellent rated Campbell Park in Milton Keynes and
our regeneration of the Raploch estate in Stirling. From North America, we include award-
winning, energy-efﬁcient Mar Bella in Texas and Evergreen, a large scale environmentally-
friendly low-rise residential community in Toronto, Canada.
The second section of the report addresses ‘The way we work’. This focuses on our
management systems and our approach to the key areas of employees, HSE and supply
chain management.

Employees. 2008 has been an exceptionally difﬁcult year for housebuilders and we regret
to report that we have made 3,045 staff redundant across all regions in which we operate.
We engage actively with our employees and examples in 2008 include an employee survey,
as well as training programmes, an initiative to encourage women into housebuilding and
a series of challenges to motivate and develop our employees.

HSE management. We take health, safety and environmental issues very seriously. We have
comprehensive management systems and undertake regular audits. Initiatives in this area
during 2008 include employee and sub-contractor training programmes as well as progress
on our approach to climate change, waste, land remediation and biodiversity.

Supply chain management. Our approach is to work in partnership with suppliers and
sub-contractors, employing key supplier vetting and engagement techniques. We take
into account green procurement issues and have our own logistics company WCL and
timber framing company Prestoplan.

Katherine Innes Ker
Corporate Responsibility Committee Chairman

seriously.“

Our 2008 Corporate Responsibility
Report demonstrates that
we continue to take our
environmental and social
responsibilities extremely

Our Corporate Responsibility Report and
supporting documentation is available
on-line at www.taylorwimpey.com/CRreports.
We value feedback and welcome comments
on the report or any aspect of our approach
to corporate responsibility. Please e-mail
us at CRreport@taylorwimpey.com or
write to The Group Company Secretary,
Taylor Wimpey plc, 80 New Bond Street,
London, W1S 1SB.

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2008 Highlights

Best architect-designed
houses in the UK

Building Disney’s
home of the future

Our Oxley Woods development won yet more prestigious
accolades. We received a Housing Design Award, a RIBA
award and the Manser Medal for the best architect-designed
houses in the UK.

Taylor Morrison’s Innoventions Dream Home opened to the
public at Disneyland Southern California in 2008. We expect
around 17,000 individuals to visit our technological home of
the future each day.

Energy-efﬁcient homes
reduce carbon emissions

EcoHomes award winner

A recent Taylor Wimpey study showed that our standard homes
can use 55% less energy, save 65% in heating, lighting and hot
water bills, and generate 72% less carbon dioxide emissions
than an older home.

Glasdir in Ruthin, Denbighshire won the BREEAM EcoHomes
2008 award for Wales and is the ﬁrst development in Wales
to be built to the EcoHomes Excellent standard.

Awards for our best
site managers

High levels of
employee commitment

We won 51 Quality Awards, 10 Seals of Excellence and
two coveted Regional Awards in the NHBC Pride in the
Job Awards 2008.

Taylor Morrison scored in the top 10% or top 1% of North
American companies for each of our four key areas of
employee satisfaction.

Safety remains a top priority

50 years of building
homes in Spain

We implemented a major new behavioural safety campaign
in the UK and a comprehensive new health and safety
programme for all North American Divisions.

Taylor Woodrow de España celebrated the company’s 50th year
of building homes in Spain. The Company has built around 4,000
homes in the Balearics and in mainland Spain since 1958.

Taylor Wimpey plc Annual Report and Accounts 2008

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Business Review
Group Financial Review

Chris Rickard
Group Finance Director

28

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2008 was the most challenging
year that the housing market has
encountered in recent history

Group summary
The economic downturn and banking crisis which took place in 2008 in all the major
markets in which the Group operates provided the backdrop to the most challenging year
that the housing market has encountered in recent history. The main focus of the Group
changed to one of cash generation and cost reduction to facilitate a restructuring of the
Group’s ﬁnancial indebtedness. Following a long series of negotiations involving the
members of our revolving credit facility, private placement noteholders, Eurobond holders
and surety providers, as well as the Trustee Boards of the two UK deﬁned beneﬁt pension
schemes, the Group was able to announce on 7 April 2009 that it had been able to
successfully restructure its entire debt obligations in a manner acceptable to all parties.
The agreement was subsequently conﬁrmed on 30 April 2009. This secures a medium term
ﬁnancing structure for all the stakeholders of the Group on a going concern basis. Further
details of this reﬁnancing structure are set out below.

Group results
Group revenue from continuing operations in 2008 fell by 16.3% to £3.5 billion (2007:
£4.1 billion). Group completions were 19,029 (2007: 20,271) as a 10% decline in legal
completions in the UK more than offset a 4% increase in legal completions in North America.

The trading impact of these lower volumes was exacerbated by lower average selling prices
in all of the Group’s major markets. The Group’s net ﬁnance charges rose to £168.6 million
(2007: £112.8 million) driven largely by the full year impact of the merger and the higher cost
of debt.

As a result, the Group incurred a loss before tax and exceptional items from continuing
operations of £74.7 million for the year to 31 December 2008 (2007 proﬁt: £346.1 million).

The signiﬁcant downturn in the Group’s UK, US and Spanish markets has resulted in land
and work in progress write downs of £1,012.8 million (2007: £289.7 million). In addition,
the Group incurred other exceptional items of £882.2 million (2007: £90.0 million) comprising
mainly an impairment of goodwill and other intangible assets totalling £816.1 million
(2007: £30.0 million), restructuring costs of £35.1 million (2007: £60.0 million) and

29324_p028-033.qxp:Layout 1  29/4/09  20:49  Page 29

Group results

Completions

Revenue

Operating profit/(loss)* (£m)

Operating margin*

UK Housing

13,394

2,390.1

53.0

2.2

North America
Housing

5,421

981.6

59.9

6.1

Spain and
Gibraltar
Housing

214

59.8

(2.4)

(4.0)

Pre-tax loss – continuing, before exceptionals (£m)

Exceptional items (£m)

Loss before tax – continuing (£m)

Tax including exceptional credit (£m)

Profit for the year from discontinued operations (£m)

Loss for the year – total Group (£m)

Adjusted loss per share – continuing (p)

Dividends per share

Corporate

–

36.2

(14.2)

–

Group

(74.7)

(1,895.0)

(1,969.7)

76.6

53.1

(1,840.0)

(9.4)

nil

reﬁnancing costs of £20.5 million (2007: nil). The Group also wrote off £10.5 million
(2007: nil) of unamortised lenders fees. After taking into account all of the above, the Group
has reported a consolidated loss before tax of £1,969.7 million (2007 loss: £33.6 million). The
tax credit was £76.6 million, after an exceptional credit of £100.0 million, comprising a net
credit of £91.6 million in respect of UK inventory write downs and deferred tax movements
and a net credit of £8.4 million relating to US inventory write downs made in the year
(2007 charge: £173.4 million after an exceptional charge of £70.2 million relating to a write
off of deferred tax). The disposed Construction business contributed a £2.5 million loss after
tax (2007: £10.3 million proﬁt after tax) and a proﬁt on disposal of £55.6 million (2007: nil) to
the Group’s result. This brings the consolidated loss after tax for the year to £1,840.0 million
(2007 loss: £196.7 million).

Dividends
As previously communicated at the interim stage, there will be no dividend for the 2008 year
(2007 full year dividend: 15.75 pence). We will review our dividend policy in light of prevailing
market conditions in the future, once dividend payments become permissible under our
revised ﬁnancing arrangements.

UK Housing
Revenue decreased by 21.7% to £2,390.1 million (2007: £3,053.8 million). Completions were
13,394 (2007: 14,862) as the sharp decline in market conditions outweighed the beneﬁt of the
ﬁrst full year of trading following the merger. Average selling prices were lower at £171,000 (2007:
£191,000) reﬂecting a sharp decline in mortgage availability, despite signiﬁcant cuts in interest
rates, and a signiﬁcant fall in consumer conﬁdence levels together with an increase in the
proportion of social completions for those legal completions which did take place. Operating
proﬁt* was £53.0 million (2007: £418.2 million), with an operating margin* of 2.2% (2007: 13.7%).

North America Housing
In Sterling terms, revenue was broadly ﬂat at £981.6 million (2007: £986.8 million), as the
enlarged scale of the business following the merger and the beneﬁt of a stronger US Dollar
compared to Sterling were offset by the effect of continuing weakness in our US markets.
Completions increased to 5,421 (2006: 5,197), whilst average selling prices decreased
to £175,000 (2007: £182,000) reﬂecting the difﬁcult environment. Operating proﬁt* fell by
11.3% to £59.9 million (2007: £67.5 million). The operating margin* was 6.1% (2007: 6.8%),
reﬂecting the difﬁcult conditions experienced during the year.

* Profit on ordinary activities before finance costs, exceptional items, brand amortisation and tax, after share of results of joint verntures.

Taylor Wimpey plc Annual Report and Accounts 2008

29

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Business Review
Group Financial Review continued

Spain and Gibraltar Housing
Revenue from our operations in Spain and Gibraltar was £59.8 million (2007: £64.4 million),
with completions of 214 homes (2007: 212). Markets in mainland Spain remained extremely
challenging. However, average selling prices were relatively stable at £270,000 (2007:
£279,000), reﬂecting a continuing impact of completions from our Gibraltar business.

Operating loss* was £2.4 million (2007 proﬁt: £2.2 million).

Construction
In September 2008, the Group sold its UK Construction business for £74 million in cash.
This realised a proﬁt on disposal of £55.6 million. Prior to its disposal, the Construction
business realised a loss after tax of £2.5 million (2007 proﬁt after tax: £10.3 million).
As a result, the reported proﬁt after tax from discontinued operations during the year
was £53.1 million (2007: £10.3 million).

We completed our exit from construction activities with the sale of our construction
businesses in Ghana on 21 April 2009. Given the small scale of the Ghanaian construction
operations in relation to the Group as a whole they are reported as part of the Corporate
segment for this accounting period.

Exceptional items
The carrying value of goodwill on the Group’s balance sheet on 1 January 2008 was
£699.8 million, of which £694.3 million was allocated to the UK Housing business segment
and £5.5 million was allocated to the North America Housing business segment. The Group

* Loss on ordinary activities before finance costs, exceptional items, brand amortisation and tax.

On 7 April 2009, the Company
announced that management had
successfully reached agreement with
both its banks and private placement
holders regarding a revised covenant and
financing package appropriate both for
current market conditions and robust
against downside scenarios. The
financial terms of this agreement were
also approved on 30 April 2009 by the
holders of both the Company’s 2012
Eurobonds and 2019 Eurobonds. The
refinancing has also been supported by
the Boards of Trustees of the two UK
defined benefit pension schemes.

Further details of the refinancing are set
out in Note 37 on page 93 of this Annual
Report. In summary, the refinancing provides
for an alignment of all debt maturity dates
to 3 July 2012; an immediate reduction
of the revolving credit facility, resulting
in the cancellation of £235 million of
undrawn and unneeded headroom under

the £1.65 billion facility; amendments
to the margins and coupon rates on
borrowings equivalent to an increase
of 455 basis points; targeted agreed
step downs in the level of facilities of
£150 million by 30 June 2009 and a
further £350 million by 30 June 2010
with additional compensation for lenders
if these are not achieved and improved
terms for the Group if these step downs
are met; warrants giving all lenders the
right to subscribe in cash (exercisable at
par) for a combined total of 5% of the
Company; a reduction in the level of the
Company’s UK overdraft from
£95 million to £45 million; guarantees
and securities to be provided for the
currently undrawn committed facilities
to be provided to the Group for the
duration of the override agreement,
which total a maximum of £416 million.

The previous covenant package has
been replaced with a revised financial

Debt reﬁnancing

In early recognition that the housing market
downturn in the UK, combined with
ongoing market weakness in the US would
cause the Company to breach the interest
cover covenant (minimum adjusted
operating profit cover requirement of not
less than three times interest) in both its
bank syndicate facility agreement and its
private placement notes, the Company
took steps to initiate debt restructuring talks
with its various debt providers in July 2008.
These discussions resulted in the Company
securing a covenant deferral on
24 December 2008, replacing the
interest cover covenant test for the year
ended 31 December 2008 with one for
the 12 months ended 28 February 2009
and a reporting date of 31 March 2009,
which was subsequently extended to
14 April 2009. The existence of the
potential for a covenant breach did not
result in the Company defaulting on any of
its financial obligations nor did its lenders
require a formal standstill.

30

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also held £120.5 million of other intangible assets on its balance sheet, the majority of which
related to UK brand names. Given the weakness that the Group has experienced in most of
the housing markets in which it operates, the Group wrote down all remaining goodwill and
other intangible assets to nil following the impairment test carried out at the 2008 half year.
This resulted in an exceptional charge of £816.1 million. Further detail on the impairment
testing is presented in Note 13 to the consolidated ﬁnancial statements.

In addition, this deterioration in market conditions resulted in the Group undertaking further
reviews of the carrying value of its land and work in progress assets during the year. A total
of £904.4 million was written off against the carrying value of land assets in the UK during
2008 (2007: nil), reﬂecting the sharp deterioration in the UK housing market since April 2008.
A write down of £71.1 million was recorded against land and work in progress assets in the
US during 2008 (2007: £283.4 million). A write down of £37.4 million was recorded in Spain
(2007: £6.3 million).

Other exceptional items charged to proﬁt before ﬁnance costs and tax in 2008 amounted
to £55.6 million (2007: £60.0 million) and consisted of restructuring costs of £35.1 million
(2007: £60.0 million) and reﬁnancing costs of £20.5 million (2007: nil). Further details of
these exceptional charges are set out in Note 5 to the consolidated ﬁnancial statements.

Net ﬁnance costs
Finance costs, net of interest receivable of £8.5 million (2007: £9.0 million), for 2008 were
£179.1 million (2007: £112.8 million).

ﬁnancing solution.“

We have now achieved a
robust, stable medium term

covenant package which is consistent
across all of the Company’s borrowings
and better suited to the current market
environment. There are three financial
covenants which, if breached, would
cause an event of default.

These comprise:

1. Net operating cash flow which is to be
tested for the six months to 30 June
2009, the nine months to 30 September
2009 and then on a rolling 12-month
basis ending at the end of each quarter.
The test is on absolute levels of cash
generated in each period.

2. Consolidated tangible net worth which
is to be tested on a quarterly basis
beginning on 30 June 2009 with
varying covenanted minimum amounts
over the life of the facilities.

3. An asset leverage cover covenant.
This represents the ratio of total

consolidated net borrowings to the
book value of inventories net of land
creditors and is to be tested quarterly
from 30 June 2009.

The covenant amounts have been set
after making allowance for appropriate
sensitivities, including, inter alia, a further
weakening of Sterling against the US
Dollar; a potential increase in interest
rates; and a potential further decline in
UK house selling prices. All of these
covenants are to be calculated on an
adjusted frozen IFRS basis, based on the
accounting principles used in the 2008
audited consolidated financial statements
of the Company.

The Group has also agreed to provide
operational covenants to its banks and
private placement noteholders. These
generally ensure that the existing position
between creditors is protected but also
include, for example, an annual cap on

new land commitments linked to the
Group’s level of net debt.

The refinancing package is sufficiently
robust as to adequacy of both facility
and covenant headroom.

The revised financing deal does not
require the Group to raise new equity
capital. In the event, however, that the
Group meets the planned £150 million
reduction in facilities by the end of 2009
and raises a minimum of £350 million of
equity by the end of 2010, there would
be significant advantages:

• The cash margin and coupon payable
reduce by up to 3.00% based on a
ratchet mechanism related to gearing;

• The Initial PIK of 1.5% and any

additional PIKs cease to accrue; and

• The level of operating covenants

are reduced.

Taylor Wimpey plc Annual Report and Accounts 2008

31

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Business Review
Group Financial Review continued

material uncertainty in this area.“

With a revised covenant package
now agreed with all relevant
parties, there is no longer a

32

www.taylorwimpey.com

Within ﬁnance costs, interest on borrowings from ﬁnancial institutions totalled £127.9 million
(2007: £93.3 million). This increase was due to the higher average net debt levels the
Group carried in 2008 of £1,821.9 million (2007: £1,197.1 million) reﬂecting the ﬁrst full
year of the enlarged business. Other items included in ﬁnance costs are a net pension
charge of £11.7 million (2007: £3.8 million), a mark to market loss on interest rate derivatives
of £10.8 million (2007: £5.4 million), a total of £26.7 million (2007: £19.3 million) charged
for imputed interest on land creditors and exceptional accelerated amortisation of lenders
fees of £10.5 million (2007: nil).

Tax
The pre-exceptional Group tax rate for 2008 was 31.3% (2007: 29.8%). In addition, there
has been a signiﬁcant exceptional tax credit of £100.0 million, comprising a net credit of
£91.6 million in respect of UK inventory write downs and deferred tax movements and a
net credit of £8.4 million relating to US inventory write downs made in the year. During
2007, an exceptional tax charge of £70.2 million was incurred, primarily due to the write
off of deferred tax assets as a result of the weakening of the US markets in the second
half of that year.

In total, the Group has unrecognised potential deferred tax assets as at 31 December 2008
in the UK of £248.3 million (2007: nil) and in the US of £303.6 million (2007: £189.4 million)
providing a signiﬁcant buffer against future tax charges.

Earnings per share
The pre-exceptional basic loss per share from continuing operations was 9.4 pence
(2007 earnings per share: 29.5 pence). The basic loss per share after exceptional items is
174.8 pence (2007: loss of 24.2 pence).

Balance sheet and cash ﬂow
Net assets at 31 December 2008 were £1.7 billion (2007: £3.7 billion) equivalent to a
tangible net asset value of 158 pence per share (2007: 274 pence per share). Gearing
at 31 December 2008 stood at 91.4% (2007: 38.2%).

The Group’s cash inﬂow from operating activities was £153.6 million (2007: outﬂow
£163.3 million). Year end net debt levels rose from £1,415.4 million in 2007 to
£1,529.3 million in 2008, an increase of £113.9 million. An increase of £167.4 million
is attributable to adverse movements in the exchange rates.

Treasury management and funding
The Group operates within policies and procedures approved by the Board. These are
set out in detail in Note 23 to the consolidated ﬁnancial statements.

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

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 dollars and
used to ﬁnance the investment in the US business. It was also designated as a net
investment hedge of the US dollar 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.

Liquidity is the most important ﬁnancial risk to manage for a housebuilder, particularly in the
economic circumstances currently prevailing in those markets in which the Group operates.
Taking into account term borrowings and committed facilities, the Group has access to
funding in excess of £2.5 billion (2007: £2.7 billion), which is committed until 2012. At the
year-end, £411 million (2007: £1,193 million) was committed but undrawn. The total capital
available provides adequate ﬁnancial resources to fund the business in this difﬁcult ﬁnancial
environment. The Group is operating well within its revised ﬁnancial covenants and limits of
available funding and is not obliged to obtain additional funding in the near future.

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Going concern
The consolidated ﬁnancial statements have been prepared on a going concern basis. The
Group’s business activities, together with the factors likely to affect its future development,
performance and position are set out in the Group Chief Executive’s Review on pages 6
to 13. The ﬁnancial position of the Group, its cash ﬂows, liquidity position and borrowing
facilities are described in this Group Financial Review. In addition, Note 23 to the ﬁnancial
statements includes details of the Group’s ﬁnancial instruments, hedging activities and its
exposure to and management of credit risk and liquidity risk.

During 2008, the ongoing covenant negotiations represented a material uncertainty
which could have cast signiﬁcant doubt on the ability of the Group to continue as a going
concern such that the Group might have been unable to realise its assets and discharge
its liabilities in the normal course of business. With a revised covenant package now agreed
with all relevant parties, the Directors are of the view that, whilst the economic and market
conditions continue to be challenging and not without risk, the reﬁnancing package is
sufﬁciently robust as to the adequacy of both facility and covenant headroom to enable
the Group to operate within its terms for at least the next 12 months. Accordingly, the
ﬁnancial statements are prepared on a going concern basis.

Further information is contained within the Corporate Governance Report and Note 1
to the consolidated ﬁnancial statements.

Pensions
Actuarial valuations of both of the Company’s main pension schemes, the Taylor Woodrow
Group Pension & Life Assurance Fund (TWGP&LAF) and the George Wimpey Staff Pension
Scheme (GWSPS), were completed during the ﬁrst half of 2008. The results of these
valuations are a deﬁcit of £162.5 million relating to the TWGP&LAF (previous deﬁcit
£64.6 million) and a deﬁcit of £215.0 million relating to the GWSPS (previous deﬁcit
£148.0 million). The IAS 19 valuation, which appears on the Company’s balance sheet,
is £277.2 million at 31 December 2008 (2007: £216.4 million). The increase in the deﬁcit
was largely due to the strengthening of the mortality assumption used in the IAS 19 deﬁcit
calculation partially offset by a higher iBoxx corporate bond rate as a result of the current
economic environment. The balance sheet also includes £2.6 million of post-retirement
healthcare beneﬁt obligations (2007: £2.7 million).

The Company’s deﬁcit reduction payments in respect of the TWGP&LAF remain unchanged
at £20 million per annum. The deﬁcit reduction payments to the GWSPS, which were made
at the rate of £15 million per annum during the ﬁrst half of 2008, increased to a rate of
£25 million per annum in July 2008 as a result of a scheme-speciﬁc actuarial review. In
addition, a one-off deﬁcit reduction payment of £5 million in respect of the GWSPS was
made in July 2008. The terms of the recently negotiated debt reﬁnancing secures the deﬁcit
repair payments during the term of the reﬁnancing.

Further details relating to the pension schemes of the Group are presented in the ﬁnancial
statements in Note 24.

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.

Chris Rickard
Group Finance Director

Taylor Wimpey plc Annual Report and Accounts 2008

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Governance
Board of Directors

1

4

7

2

5

8

3

6

9

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 and
Pete Redfern.

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.

10

34

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1. 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 Chairmanship of IMI plc and of the
Board of Governors of the University of Manchester.

2. Pete Redfern
Group Chief Executive
Appointed a Director and Chief Executive in July 2007. He also currently has full responsibility for the UK Housing
division. He is a member of the Nomination and Corporate Responsibility Committees. Previously Chief Executive of
George Wimpey Plc, he was appointed 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.

3. Chris Rickard
Group Finance Director
Appointed a Director in October 2008. Most recently he held the position of Group Finance Director at Whatman
Group plc, leaving the business when it was sold to GE Healthcare in April 2008. Chris qualiﬁed as an accountant
and was an Audit Manager with PwC, leaving in 1986 to work in industry. He has extensive experience of working
in the capital intensive manufacturing and services industries, having previously held the position of Group Finance
Director at VT Group plc, Weir Group plc and Meggitt plc.

4. Mike Davies
Independent Non Executive Director
Appointed a Director in October 2003. He is a member of the Audit, Remuneration and Nomination Committees.
He is Chairman of The Royal Mint, Manchester Airports Group and Marshalls plc and a non executive director of
Pendragon plc. He was formerly a director of Williams Holdings plc.

5. 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 and is active in a number of public areas, including the
House of Lords Appointments Commission. Brenda 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.

6. 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. Andrew 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.

7. 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 recently stood down as Chairman of Shed Media plc and was previously a non executive director of the
Ordnance Survey.

8. 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. He is a non executive director of Laird Plc, Spectris Plc and e2v Technologies plc.

9. David Williams
Independent Non Executive 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.
He is a non executive director of DP World Limited (a Dubai quoted company), Mondi PLC, Mondi Limited
(a Republic of South Africa quoted company), Meggitt PLC and Tullow Oil plc.

10. 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.
Previously he held the same position with George Wimpey Plc following his appointment in February 2002.

Taylor Wimpey plc Annual Report and Accounts 2008

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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:

• 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 33.

• 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.

• Changes in asset values are set out in the consolidated
balance sheet on page 56 and in Notes 11 to 30 on
pages 70 to 88.

• The Group’s loss before taxation and the loss after

taxation and minority interests appear in the consolidated
income statement on page 54 and in Notes 3 to 10 on
pages 62 to 70.

• Detailed statements of the Company’s corporate

governance principles, the Group’s systems of internal
control and the going concern conﬁrmation are set out in
the Corporate Governance Report on pages 39 to 43.

• A detailed statement of the Group’s treasury management

and funding is set out in Note 23 on pages 77 to 81.

Directors
The following eight Directors held ofﬁce throughout the year:

Norman Askew, Chairman
Pete Redfern, Group Chief Executive
Mike Davies, Independent Non Executive Director
Brenda Dean, Independent Non Executive Director
Andrew Dougal, Independent Non Executive Director
Katherine Innes Ker, Independent Non Executive Director
Anthony Reading, Independent Non Executive Director
David Williams, Independent Non Executive Director

Peter Johnson and Ian Sutcliffe, as Executive Directors,
resigned on 16 October 2008 and 14 April 2008
respectively.

Chris Rickard was appointed as Finance Director on
16 October 2008.

The Directors together with their biographical
information are shown on pages 34 and 35. With regard
to those Directors who are the subject of election or re-
election at the Annual General Meeting (as set out in the
next section of this Directors’ Report) biographical
information is also set out on page 105.

In determining the retirement 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 Acts and related

legislation. The Articles may be amended by special
resolution of the shareholders. The powers of the Directors
are described in the Corporate Governance Report.

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

Retirement and re-election of Directors
In accordance with the Articles, at the Annual General
Meeting, Chris Rickard who was appointed a Director
during the year by the Board, will retire and, being
eligible, seek election by shareholders.

Norman Askew and Mike Davies retire by rotation and
each will, being eligible, offer himself for re-election at the
Annual General Meeting in accordance with the Articles.

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.

Andrew Dougal, Katherine Innes Ker and David Williams
have each served as an Independent Non Executive
Director of Taylor Wimpey plc (including, in the case of
David Williams, the pre-merger George Wimpey Plc) for
a period in excess of six years. In line with the Combined
Code, each has accordingly been subject to a rigorous
evaluation, following which both the Nomination Committee
and the Board were entirely satisﬁed with their respective
performance and contribution as a Non Executive Director
in addition to their ongoing independence of character and
judgement. An evaluation of this nature will take place on
an annual basis for all applicable Directors and time spent
on the Board of George Wimpey pre-merger will count
towards the six year period.

As part of this review the Board took into account the
requirement of the Combined Code to refresh the Board
from time to time.

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.

On 1 December 2008 Deloitte & Touche LLP, the
Company’s external auditor, changed its name to
Deloitte LLP.

As reported in 2008, following a competitive tender
conducted after completion of the merger, Deloitte LLP
was conﬁrmed as the external auditors of the Company.
Deloitte 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.

Annual General Meeting
The Annual General Meeting will be held at 11.00 am on
19 June 2009 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 104 and on the Company’s Web site
www.taylorwimpey.com.

Web communication
At the Company’s 2007 Annual General Meeting,
shareholders voted overwhelmingly in favour of
authorising the Company to introduce web
communication at a future date.

On 3 March 2009 we wrote to shareholders explaining
that the Company had decided to implement this
authority and would in future make its shareholder
communications (including the 2008 Annual Report
and Accounts) available electronically through the
Company’s Web site www.taylorwimpey.com.

The beneﬁts of web communication are that it will:

• enable the Company to reduce its printing and

postage costs signiﬁcantly;

• enable shareholders to access information faster, on
the day documents are published on the Company’s
Web site; and

• reduce the amount of resources consumed, such as
paper, and lessen the impact of printing and mailing
activities on the environment.

Shareholders were invited to conﬁrm whether they still
required hard copy documentation and the Company is, of
course, happy to provide hard copies to such shareholders.

Registrar
The Company’s registrar is Capita Registrars. Their
details including the new correspondence address,
together with information on facilities available to
shareholders, are set out in the Shareholder Information
section on page 108.

Treasury shares
The Company was authorised at the Annual General
Meeting on 17 April 2008 to purchase a maximum of
115.8 million of its own shares, and this authority
remained valid at 31 December 2008. The authority was
not exercised during 2008.

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 26 on page 86. 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.

As part of the debt reﬁnancing announced on 7 April
2009 the Company has issued Warrants giving the
holders the right, up to 29 April 2014, to subscribe for

36

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

Name

Beneficial interests

Barclays PLC

Polaris Capital Management, LLC

JPMorgan Chase & Co.

Legal & General Group Plc

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

Prudential plc and The Prudential Assurance Company Limited

Number of
shares held
(millions)

Percentage of
issued voting
share capital

63.98

58.80

53.62

42.22

38.67

38.68

6.00

5.52

5.03

3.96

3.63

3.63

up to an aggregate of approximately 58 million ordinary
shares (representing approximately 5% of the Company’s
present issued share capital) for cash at a subscription
price per share of 25 pence. The Warrants are
transferable and carry entitlement to subscription
for three months after the passing of a resolution
for the winding up 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 the
Remuneration Report on pages 44 to 52. The Employee
Share Ownership Trusts abstain from voting in respect of
shares held by them.

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

Substantial interests
The persons set out in the table above 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 29 April 2009, 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
As explained in the Chairman’s Statement on page 5
the Directors do not recommend the payment of a
ﬁnal dividend on the Company’s ordinary shares.

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 4,952,887 shares and in full on the
Company’s holding of 92,732,927 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 remains a high priority throughout the
Taylor Wimpey Group. Our corporate responsibility
practices, policies and case studies are drawn together in
the Taylor Wimpey Corporate Responsibility Report which
was ﬁrst published and circulated to shareholders and other
designated stakeholders in 2008. Our second Corporate
Responsibility Report will be published in 2009 on the
Group’s Web site www.taylorwimpey.com. It will also be
available to any shareholder in hard copy on request.

The Group’s commitment to advancing corporate
responsibility within Taylor Wimpey is demonstrated by
the activities 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 the Group Chief Executive
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, our main effort has been to build on the
previous work undertaken on meeting the new challenges
for more energy efﬁcient and sustainable design. This
work has taken the form of a new range of houses
guided by our previous research. These houses are
designed to be capable of meeting the anticipated
changes to energy efﬁciency in the building regulations
of 2010 (25% improvement) and 2013 (44% improvement).
A key aspect of this development work has been to
anticipate what our strategy for meeting these targets
will be and designing into the houses the ﬂexibility to
accommodate the technological changes required. This
has included thicker walls to allow more insulation, and
space for the integration of solar thermal and variable
roof designs to allow installation of solar panels on
differently orientated sites.

In the course of any research and development we are
conscious of the fact that the houses we build are for
our customers. We therefore constantly consider how
people will want to live in our houses and whether the
behavioural changes required from the results of any
research and development will be acceptable. Whilst
certain design features such as improved daylighting will
be welcomed, we still have to see how our customers
will respond to tightly sealed houses with mechanical
ventilation and water saving ﬁttings. The next stage of
our development will be to prototype the houses, to test
in use and test with our customers.

Continued research and development into how we can
best utilise emerging low and zero carbon technologies
in our homes will be a priority for many years, however
we are keen to take a leading role, working with key
members of our supply chain to help guide them in
developing products ﬁt for our customers.

Understanding the costs of meeting the new regulations
is vital to our business planning for the future. Our
understanding has been further enhanced by running
multiple scenarios of the costed solutions. This
information has then been developed into a viability
model to show the effect of forthcoming regulation
on development viability.

In the USA, Taylor Morrison unveiled its relationship with
the Walt Disney Company, introducing the Innoventions
Dream Home at Disneyland in Southern California. The
partnership affords us a unique and excellent test bed
for new technologies. The Innoventions home is hosting
approximately 17,000 guests each day and we are able
to capture their views, needs and preferences not just
in home building technologies but more speciﬁcally all
technologies that consumers want in their homes.

Other partners are software group Microsoft and electronics
group Hewlett Packard, offering leading edge and available
technologies as well as new technologies that are being
tested and will shortly be ready for the market.

These partnerships allow us to collect and analyse the
consumer preferences collected at Innoventions as well
as understand potential buyer choices as they complete
our on-line ‘build your perfect home’ modules installed
in the home of the future.

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 is also an internal magazine which is widely
circulated across the Group.

The Company promotes all employee share plans,
including the Save As You Earn share option scheme
and the Share Purchase Plan, as widely as possible
across the Group.

Taylor Wimpey plc Annual Report and Accounts 2008

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Governance
Directors’ Report continued

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 ensure 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 £230,000
(2007: £371,000) to various charities, £132,000
(2007:£193,000) in the UK and Europe, £83,000
(2007:£178,000) in North America and £15,000
(2007: nil) in Ghana. Further information on the
Group’s donations, activities and initiatives can be
found in the 2008 Corporate Responsibility Report.

Political donations
The Company did not make any donations to political
parties during 2008 (2007: nil) and has a strict policy
not to do so.

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 2009.

Trade creditor days for the Group for the year ended
31 December 2008 were 26 days (2007: 43 days). This
is based on the ratio of year end Group trade creditors
(excluding sub-contract retentions and unagreed claims
of £28.8 million (2007: £23.8 million) and land creditors,
see Note 22 to the consolidated ﬁnancial statements)
to amounts invoiced during the year by trade creditors.
The Company had no signiﬁcant trade creditors at
31 December 2008.

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, alter, 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,
including the Override Agreement dated 7 April 2009
between the Company and various of its principal
creditors which was entered into as part of the debt
reﬁnancing referred to in ‘Important events since the year
end’ below, 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
As set out on pages 30 and 31 – ‘Debt reﬁnancing’ and
in Note 37 on page 93 on 7 April 2009, the Company
announced that it had successfully reached agreement
with its banks and private placement noteholders
regarding a revised covenant and ﬁnancing package.
The ﬁnancial terms of this agreement were also
approved on 30 April 2009 by the holders of both the
Company’s 2012 Eurobonds and 2019 Eurobonds.

As announced on 21 April 2009 the Company disposed
of its construction operations in Ghana.

Other than as set out above, there have been no
important events affecting the Company or any of its
subsidiary undertakings since 31 December 2008.

Directors’ responsibilities
The Directors are responsible for preparing the Annual
Report, Directors’ Remuneration Report and the
ﬁnancial statements in accordance with applicable
law and regulations.

Company law requires the Directors to prepare ﬁnancial
statements for each ﬁnancial year. The Directors are
required by the IAS Regulation to prepare the Group
ﬁnancial statements under IFRSs, as adopted by the
European Union. The Group ﬁnancial statements are also
required by law to be properly prepared in accordance
with the Companies Act 1985 and Article 4 of the
IAS Regulation.

They have elected to prepare Company ﬁnancial
statements in accordance with United Kingdom
Generally Accepted Accounting Practice (UK GAAP).

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.

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.

In preparing these ﬁnancial statements, the Directors are
required to:

• select suitable accounting policies and then apply

them consistently;

• make judgements and estimates that are reasonable

and prudent; and

• state whether applicable UK accounting standards

have been followed, subject to any material departures
disclosed and explained in the ﬁnancial statements.

The Directors are required to 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.

The Directors are responsible for the maintenance
and integrity of corporate and ﬁnancial information
included on the Company Web site. Legislation
in the United Kingdom governing the preparation
and dissemination of ﬁnancial statements differ from
legislation in other jurisdictions.

Responsibility statement
We conﬁrm that to the best of our knowledge:

• the ﬁnancial statements, prepared in accordance
with International Financial Reporting Standards,
give a true and fair view of the assets, liabilities,
ﬁnancial position and proﬁt or loss of the Company
and the undertakings included in the consolidation
taken as a whole; and

• the management report, which is incorporated into
the directors' report, includes a fair review of the
development and performance of the business and
the position of the Company and the undertakings
included in the consolidation taken as a whole,
together with a description of the principal risks
and uncertainties that they face.

This Report of the Directors was approved by the Board
of Directors on 30 April 2009.

James Jordan
Group Company Secretary and General Counsel
Taylor Wimpey plc

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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’) and also the
June 2008 edition of the Combined Code which applies
to accounting periods beginning on or after 29 June
2008. 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 44 to 52 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.

During the year, the Board recognised that the
challenging market conditions, organisational changes
and initiatives to strictly control costs together with the
work required in connection with the amendment of the
Company’s debt facilities would require an enhanced
governance and control environment in order to maintain
the integrity of the business during such challenging
conditions. This statement sets out some of the initiatives
taken to ensure this was addressed during the year
and into 2009.

Statement of compliance
For the year ended 31 December 2008, the Company
complied with all the provisions of the Combined Code
including the Principles set out in Section 1.

The Board and its committees
As at the date of this Report the Board consists of nine
Directors: the Chairman, two Executive Directors and
six independent Non Executive Directors. Their names,
responsibilities and other details appear on pages 34
and 35. Changes in the Board composition since
31 December 2007 are set out on page 36.

During 2008, as would be expected, the Board met
more frequently than in previous years as a result of both
the equity capital project and the negotiations that took
place with regard to the amendment of its debt facilities.
Accordingly, the Board met on 25 occasions during the
year including 10 meetings since July 2008. Details of
the attendance of each Director are set out in the table
on page 41.

It is Board policy that where a Director misses a Board
or Committee meeting, the Chairman and/or the Group
Company Secretary will, as soon as possible, brief the
Director fully on the business transacted and on any
decisions that have been taken.

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.

The following documents have been adopted by the Board:

• Schedule of matters speciﬁcally reserved for the

decision of the Board;

• Board policies covering operational matters,

compliance and stakeholder policies;

• Terms of Reference of the Board Committees:

Nomination, Remuneration, Audit and Corporate
Responsibility, which outline their objectives and
responsibilities and which deﬁne a programme
of activities to support the discharge of those
responsibilities. These Terms of Reference are
available on our Web site www.taylorwimpey.com;

• Policy for employing the auditors for non-audit work
and advice (details of which are set out on page 41).

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.

The Board took detailed advice during the year both
with regard to the project to raise additional equity in
the ﬁrst half of 2008 and secondly, with regard to the
amendment of its debt facilities in the second half of
the year. Advice was provided in connection with the
amendment of its debt facilities, by specialist restructuring
advisers N M Rothschild & Sons (‘Rothschild’) and the
Company’s legal advisers Slaughter and May (‘Slaughter’)
with regard to UK matters and by Davis Polk with regard
to US matters. Representatives of Rothschild and
Slaughter have attended the relevant part of almost
every meeting of the Board since July 2008 to advise
the Board on key legal issues relating to the status of
the project. The advice also included specialist advice
to the Board as whole and to Directors individually as
to their responsibilities. Since October 2008 the Board
formally considered at each meeting whether the Group
could continue to trade on a going concern basis in light
of the then current status of negotiations relating to the
amendment of its debt facilities.

Board and committee balance, independence
and effectiveness
It is the Company’s policy that appointments to the Board
are made on merit and the Nomination Committee has a
formal, rigorous and transparent process against which
objective criteria recommended by the Nomination
Committee are used. Typically the process of appointment,
prior to the decision of the Board, will include the
engagement of recruitment consultants, interviews
with members of the Board and the taking up of
detailed references.

The Nomination Committee also guides the Board in
arranging the orderly succession for appointments to
the Board and to senior management. The work of all
of the Board Committees is described in this Report.

The Board has an adopted framework of delegated
commercial and operational authorities, which deﬁne
the scope and powers of the Group Chief Executive
and of operational 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. Details of additional
controls introduced during the year are set out on pages
42 and 43.

The Board will continue to review the governance
framework including delegated commercial and
operational authorities to ensure that they are tightened,
as appropriate, to respond to the current period of
change and that they generally meet the requirements
of the Group going forward.

The Board also undertakes a regular 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 2009
Annual General Meeting, every Director will have sought
re-election at least once and any Director appointed
during 2008 by the Board, will be subject to election by
shareholders at that 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. Having sought clarity from the ABI, time spent
by applicable Directors on the Board of George Wimpey
prior to its merger with the Company is deemed to
count towards this six year period. Accordingly,
David Williams (who was appointed to the Board on
3 July 2007 and to the Board of George Wimpey Plc
in May 2001), Katherine Innes Ker who was appointed
to the Board on 1 July 2001 and Andrew Dougal who
was appointed to the Board on 18 November 2002,
have been subject to a rigorous review as part of the
wider annual performance evaluation of the Board,
details of which are as set out on page 40.

Following the review, the Board was entirely satisﬁed
with the performance and contribution of each Director
and also with their ongoing independence of character
and judgement.

Whenever any Director considers that he or she is, or
may be interested in, any contract or arrangement to

Taylor Wimpey plc Annual Report and Accounts 2008

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Governance
Corporate Governance Report continued

which the Company is or may be a party, the Director
gives due notice to the Board in accordance with the
Articles of Association. In such cases, unless allowed
by the Articles, a Director with such an interest is not
permitted to participate in any discussions or decisions
relating to the contract or arrangement.

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. A considerable number of additional
meetings were held during the second half of the year,
as the Board took active measures to both address the
challenges of the difﬁcult market conditions in the UK
and the US, and to oversee progress on the amendment
of its debt facilities.

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. More details are
set out below.

The Group Company Secretary and General Counsel
acts as Secretary to the Board and its Committees
and he attends all meetings. It is policy that wherever
possible a formal agenda and written reports are issued
to Directors in respect of all Board and Committee
meetings one week prior to the meeting in order to
allow sufﬁcient time for detailed review and consideration
beforehand. Where a Director is unable to attend a
meeting of the Board or a Committee, he or she will
still receive the appropriate papers in advance and is
invited to communicate to the Chairman or Committee
Chairman, or the Secretary any views on the matters
to be discussed. In addition, the Director will receive
a full brieﬁng afterwards on the matters discussed and
decisions taken. Formal minutes are prepared in respect of
all Board and Committee meetings and are then circulated
and submitted for approval at the next meeting.

Information and professional development
The Company has procedures whereby Directors (including
Non Executive Directors) receive a 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 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 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 a conﬁdential evaluation by the
Chairman of each Director) and the performance of the
Chairman. This year, the evaluation also speciﬁcally
focused on a rigorous assessment of each of the three

Directors who have served on the Board for more
than six years (taking into account where applicable,
past service on the George Wimpey Plc Board). 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 formally presented the ﬁndings
to the Board on a non-attributable basis for discussion.
Following this, a set of actions was agreed which were
designed to increase further the overall effectiveness
of the Board.

A number of points came out of the performance
evaluation designed to increase the effectiveness of
the Board which will be implemented during 2009. A
speciﬁc action item coming out of the evaluation is that
Directors should receive health and safety training in
order that they are more aligned to the key operational
priority of the Group. This action item has already been
largely addressed.

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.

As part of the appraisal process the Chairman has also
met on a one to one basis with each Director. Last year,
it was reported that a speciﬁc action item would be to
arrange for Non Executive Directors to make additional
visits to operations across the Group.

This action item has been comprehensively addressed:
the Non Executive Directors made several visits to the
businesses around the UK and in North America, to
discuss with local management teams the challenges
currently facing their businesses, the situation in local
markets and the initiatives being taken to counter or
mitigate their effects.

In line with the Combined Code, the Chairman also
holds meetings with the Non Executive Directors
without the Executive Directors present. The Senior
Non Executive Director also holds and leads meetings
with only the Non Executive Directors present.

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

External auditors: As reported last year a comprehensive
formal competitive tender process with regard to the
carrying out of the 2008 external audit was conducted
following the merger between Taylor Woodrow and
George Wimpey which resulted in Deloitte LLP being
selected as external auditors to the Company. Deloitte
LLP will be proposed for re-appointment as the
Company’s auditors at the Annual General Meeting.

Board committees and their work
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. Its
members are set out on page 41. As set out earlier in
this Report, 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 six occasions during the year and
details of the attendance of each Director are set out
in the table on page 41.

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 44
to 52. The Committee is constituted in accordance with the
Combined Code and its members are set out on page 41.

The Committee is chaired by Anthony Reading and all
members are Independent Non Executive Directors as
required by the Combined Code. During the year the
Remuneration Committee met on seven occasions.
Details of the attendance of each Director are set out
in the table opposite. Andrew Dougal routinely attends
meetings of the Remuneration Committee in his capacity
as the Chairman of the Audit Committee.

Audit Committee and auditors
The Committee is chaired by Andrew Dougal and all
members are Independent Non Executive Directors
as required by the Combined Code. 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 Group Chief
Executive, Group Finance Director, Head of Internal
Audit, Group Financial Controller and other senior
executives attend meetings of the Committee by
invitation. Deloitte LLP is invited to attend meetings of the
Audit Committee. The Committee also meets privately
with representatives from Deloitte at two Committee
meetings per annum and as and when required.

During the year the Audit Committee met on four
occasions at each of which there was full attendance.
The meetings were typically also attended by the other
Non Executive Directors.

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, GIA and external
audit. In monitoring the ﬁnancial reporting practices the
Audit Committee reviewed accounting policies, areas of

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Board structure at a glance

Taylor Wimpey plc Board

Chairman – Norman Askew

Number of Meetings in 2008 – 25

Members
Norman Askew
Pete Redfern
Chris Rickard*
Peter Johnson#

* Appointed 16/10/2008
# Resigned 16/10/2008

Title
Chairman
Group Chief Executive
Group Finance Director
Former Group Finance Director

Attendance
25
25
8
16

Members
David Williams
Mike Davies
Brenda Dean
Andrew Dougal
Katherine Innes Ker
Anthony Reading

Title
Senior Independent Director
Independent Non Executive Director
Independent Non Executive Director
Independent Non Executive Director
Independent Non Executive Director
Independent Non Executive Director

Attendance
24
24
25
25
25
25

Nomination Committee

Remuneration Committee

Audit Committee

CR Committee

Reports directly to the Taylor
Wimpey plc Board

Reports directly to the Taylor
Wimpey plc Board

Reports directly to the Taylor
Wimpey plc Board

Reports directly to the Taylor
Wimpey plc Board

Objective
To ensure that there shall be a formal,
rigorous and transparent procedure
for the appointment of new directors
to the Board, its committees and
other senior ofﬁces in the Company.

Objective
To establish and maintain formal
and transparent procedures for
developing policy on executive
remuneration and for ﬁxing the
remuneration packages of individual
directors and senior executives and
to monitor and report on them.

Objective
To assist the Board in fulﬁling its
corporate governance responsibilities
relating to the Group’s internal
control framework, ﬁnancial
reporting practices and external
audit process.

Objective
To recommend to the Board the
Company’s Corporate Responsibility
Strategy, policies, reporting and
performance monitoring.

Chairman – Norman Askew

Chairman – Anthony Reading

Chairman – Andrew Dougal

Chairman – Katherine Innes Ker

Number of meetings in 2008 – 6

Number of meetings in 2008 – 7

Number of meetings in 2008 – 4

Number of meetings in 2008 – 2

Members
Norman Askew
Mike Davies
Brenda Dean
Andrew Dougal
Katherine Innes Ker
Anthony Reading
Pete Redfern
David Williams

Attendance
6
6
6
5
6
6
6
6

Members
Anthony Reading
Mike Davies
Brenda Dean
Katherine Innes Ker
David Williams

Attendance
7
7
7
7
5

Members
Andrew Dougal
Mike Davies
Anthony Reading
David Williams

Attendance
4
4
4
4

Members
Katherine Innes Ker
Norman Askew
Brenda Dean
Andrew Dougal
Pete Redfern

Attendance
2
2
2
2
1

judgement, the going concern assumption and compliance
with accounting standards and the requirements of the
Combined Code. During the year the Committee 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:

• bookkeeping or other services related to the
accounting records or ﬁnancial statements;

• internal audit outsourcing services;

• the provision of advice on large Information

Technology systems;

• services connected with valuation, litigation support,

legal, recruitment or remuneration.

The Board is satisﬁed that this policy is conducive to the
maintenance of auditor independence and objectivity.
During the year a signiﬁcant amount of non-audit related
work was performed by the external auditors as a
consequence of the challenges faced by the Group. A
major component of this work related to the attempted
equity raising which is work ordinarily performed by the
auditors for companies involved in such projects. Having
performed this work, they were requested to provide
further advice and support in connection with the
amendment of the Company’s debt facilities which
commenced in July 2008. In addition, following an
initial competitive tender, they provided advisory
services in connection with the successful sale of the
Taylor Woodrow Construction business.

The Audit Committee is satisﬁed that the carrying out
of this work would not impair the independence of the
external auditors.

Corporate Responsibility Committee
The Corporate Responsibility Committee is chaired by
Katherine Innes Ker and the other members are Norman
Askew, Pete Redfern, Brenda Dean and Andrew Dougal.

The Corporate Responsibility Committee met on two
occasions. Details of the attendance of each Director
are set out in the table above.

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.

Taylor Wimpey plc Annual Report and Accounts 2008

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Governance
Corporate Governance Report continued

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.

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. These risk reviews take account of the
signiﬁcance of environmental, social and governance
matters to the business of the Company. Such risks
are identiﬁed and assessed for potential effect on
the Company’s short and long term value, as well
as opportunities that may arise to enhance value.

Full details of the Company’s achievements and initiatives
in these areas during 2008 and going forward are set
out in Taylor Wimpey’s Corporate Responsibility Report
which is available in electronic form on the Group’s Web
site 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 or 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.

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.

Throughout 2008 the Audit Committee continued to
assess the Group’s risk management and the internal
control framework, and reviewed business change
issues and GIA activities across the Group.

As a result of that process, the top six risks facing
the Group were identiﬁed and agreed by the Board,
including a possible breach by the Company of
certain ﬁnancial covenants at the year end as a result
of the prevailing housing industry market conditions.
To assist it in addressing this risk the Company
appointed Rothschild in July 2008 as its specialist
debt restructuring adviser.

In order to minimise the risk of breach, during the ﬁrst
half of the year, the Company sought to amend its
ﬁnancial covenants and raise equity capital. However,
on 2 July 2008 the Company announced that due to
market conditions it had not been able to reach a
satisfactory outcome with regard to the raising of equity.
Therefore, during the second half of the year the key
risk facing the Group related to the outcome of the
amendment of its debt facilities which were necessary
in order to avoid a breach of certain ﬁnancial covenants
at the end of 2008 as described in ‘Debt reﬁnancing
and going concern’ on page 43. As set out on page 39
of this Corporate Governance Report, during 2008
the Board formally met 25 times with the additional
meetings convened in order to consider and evaluate
the major projects relating to equity capital and the
amendment of its debt facilities. A more detailed review
of the material risks and uncertainties facing the Group
during the year and in the future, is set out in the
Group Financial Review on pages 28 to 33.

The Board oversees the risk and control framework of
the Group and the Group Chief Executive is responsible
for implementing any necessary improvements with the
support of the Executive Committee. The Executive
Committee consisted of the Group Chief Executive,
Group Finance Director, Group Secretary and General
Counsel, UK Chief Executive and the North American
President and CEO. In 2009 the Executive Committee
was expanded to include senior operational management
including the two UK Housing Divisional Chairmen and
the UK and North American Financial Directors. The
Group Chief Executive reports on the key elements
arising from each Executive Committee meeting at
the next Board Meeting and any minutes from such
meetings are included in the next Board pack of
documents. The Board ensures that the Company has
in place effective systems to manage and mitigate
signiﬁcant risks.

On 28 April 2009 the Board completed the annual
assessment for the year to 31 December 2008. This
took the form of detailed brieﬁngs from the Audit
Committee, supported by reports, and by taking
account of events since the year end.

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.
Enhanced cash and debt reporting was introduced
during the year to assist in managing the Group
through the current market difﬁculties and in its
reﬁnancing negotiations.

Disputes that may give rise to signiﬁcant litigation or
contractual claims are monitored quarterly by the Board
with updates provided at intervening meetings.

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 and changing
market circumstances.

Deﬁned authority limits were reviewed in response to
the market downturn. Investment in land was severely
curtailed and subject to Group scrutiny. Work in progress
has been carefully controlled and directly linked to sales
prospects, with little speculative build. Any investment,
acquisition or disposal requires detailed appraisal and
prior approval by Group and is subject to post-investment
review procedures. Investment decisions, projects, and
tenders are subject to approval by the Board or the
Group Chief Executive, 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. Internal Audit
reports are provided to the Executive Directors, indicating
improvements proposed or made where appropriate,
and summaries of these reports are provided to the Board
and the Audit Committee. The Group Chief Executive,
Executive Committee members and senior management
consider the reviews on a regular basis and are
responsible for ensuring that improvements are made,
where required. 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 processes ensure that such
improvements are implemented in a timely manner.

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Debt reﬁnancing and going concern
On 7 April 2009, the Group announced that it had
successfully reached agreement with its banks and
private placement holders regarding a revised covenant
and ﬁnancing package (the “Override Agreement”) which
aligns all of the Group’s debt maturity dates to 3 July
2012. The ﬁnancial terms of this agreement were also
approved on 30 April 2009 by the holders of both the
Group’s 2012 Eurobonds and 2019 Eurobonds.

The ﬁnancial covenants have been set based on the
Group’s ﬁnancial forecasts which have been reviewed
and approved by the Directors. The Directors consider
that these forecasts, based on current market conditions,
demonstrate an adequate level of headroom for at
least the next 12 months and also make appropriate
allowances for a number of potential adverse sensitivities,
including, inter alia, a further weakening of Sterling relative
to the US dollar; a potential increase in interest rates; and
a potential further decline in UK house selling prices.

The Directors are of the view that, whilst the economic
and market conditions continue to be challenging and
not without risk, the reﬁnancing package is sufﬁciently
robust as to adequacy of both facility and covenant
headroom to enable the Group to operate within its terms
for at least the next 12 months. Accordingly the ﬁnancial
statements are prepared on a going concern basis.

Further details of the reﬁnancing are set out in the Group
Financial Review on pages 28 to 33 and in Note 37 on
page 93 of this Annual Report.

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.

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 half year results. There are
associated brieﬁngs for stockbroking analysts and
investors, the presentation material for which is published
on the Company’s Web site 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 half year results and other
major announcements, is published on the
Company’s Web site www.taylorwimpey.com.

Taylor Wimpey plc Annual Report and Accounts 2008

43

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Governance
Remuneration Report

Introduction
The Remuneration Committee (also referred to in this
Report as the ‘Committee’) has adopted the principles
of good governance relating to Directors’ remuneration
as set out in the 2008 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.

A resolution to approve this Report, will be proposed
at the Annual General Meeting of the Company on
19 June 2009.

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

As set out in this Report, the Committee has taken a
number of measures in order to reﬂect the challenging
market conditions. These measures are summarised
brieﬂy below:

• for the second year running (2008 and 2009) no salary
increases have been awarded to any Executive Director;

• no bonuses were paid to any Executive Director

in respect of 2008 performance. This included the
personal element of their bonus opportunity (20%
of maximum bonus potential) and in this respect
the Committee took into account the wishes of
the applicable Directors who had indicated that
they would not be willing to accept any bonus
payments awarded;

• the temporary short term incentive for synergy
achievement arising out of the merger between
Taylor Woodrow and George Wimpey in 2007 and
described in the 2007 Remuneration Report was not
implemented for 2008 and it will not be implemented
in respect of 2009;

• during the year the Chairman determined that he would
reduce his fees from £270,000 per annum down to
£200,000 per annum with effect from 1 January 2009.
This was subsequently agreed with the Remuneration
Committee and endorsed by the Board; and

• no increase in fees to Non Executive Directors were

made during the year.

Long term incentives have not yet been awarded for
2009 as the Committee did not feel it appropriate to
implement these incentives until the successful
completion of the Company’s protracted debt
reﬁnancing negotiations. The Remuneration Committee
is currently reviewing the long term arrangements in
place for Executive Directors and designated senior
management and it will consult as necessary prior to
ﬁnalisation and the making of any awards. Similarly the

44

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Proportion of ﬁxed to performance based remuneration (%)

CEO

08

09

UK Based Directors

08

09

0

20

40

60

80

100

Salary (Annual)
Bonus and Long Term Incentives

Committee will also be reviewing Executive Director and
senior management bonus arrangements for 2009
which have yet to be ﬁnalised. Details of 2009 long term
incentive and bonus arrangements will be included in
next year’s Remuneration Report.

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
The Committee has adopted the following remuneration
philosophy:

• remuneration arrangements must help attract, motivate

and retain the management talent required to meet the
Company’s strategic objectives;

• Taylor Wimpey will be committed to fostering a

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

• a signiﬁcant proportion of each executive’s total

compensation should be delivered through
performance related pay; and

• incentive arrangements should be capable of providing
upper quartile total payment if outstanding performance
is achieved.

Within the principles of good governance, the Committee
regularly reviews its remuneration strategy. The prime
objective is to ensure that the Company is able to attract
and retain highly skilled and motivated people who will be
key to ensuring the long term success of Taylor Wimpey.

A key component of the remuneration packages of the
Executive Directors and senior management is a signiﬁcant
element of performance related incentive remuneration, set
against challenging business performance objectives. The
chart (above) shows the proportion of ﬁxed to performance
based remuneration for 2008 and 2009. 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 are met and the annualised
expected value of long term incentive provision.

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 Web site 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:

• determine the remuneration, including pension

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

• monitor and make recommendations in respect of

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

• approve annual and long term incentive arrangements

together with their targets and levels of awards;

• determine the level of fees for the Company Chairman.

The Committee comprises ﬁve independent Non Executive
Directors. Anthony Reading is the Committee Chairman
and the other members of the Committee are Katherine
Innes Ker, Mike Davies, Brenda Dean and David Williams.
Details of attendance at Remuneration Committee
meetings held during 2008, are set out in the table on
page 41.

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 Mercer
Limited (‘Mercer’). It also received legal advice from
Slaughter and May. Separately, Mercer also provides
actuarial advice direct to the Trustees of the George
Wimpey Pension Scheme.

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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 2008,
Peter Johnson (who stood down from the Board on
16 October 2008) was a non executive director of
(i) Shanks Group plc and received fees of £33,000
(2007: £40,000) and (ii) Oriel Securities Limited where
he received fees of £21,000 (2007: £25,000). The 2008
fees for Peter Johnson have been pro rated to the date
he stood down from the Board. No other Executive
Director holds any non executive positions.

Base salary
The Committee reviews base salaries annually in order to
ensure Executive Directors remain competitively aligned
with external market practices and are fairly compensated
against FTSE peers. As part of this process the Committee
takes detailed advice from Mercer who provide specialist
advice, as well as benchmarking data, to the Committee
based on relevant peer groups.

In determining base salary positioning, the Remuneration
Committee considers market data from two peer groups
reﬂecting sector and size based comparators which are
used to inform decisions on compensation policy and
appropriate compensation quantum respectively.

In light of the prevailing market conditions the Committee
has determined not to implement any increases for
Executive Directors for 2009. No salary increases were
awarded during 2008 for Executive Directors with the
last increases being implemented following the review
which took place following the merger of Taylor Woodrow
and George Wimpey in July 2007. Going forward, it has
been determined that future annual salary reviews for
Executive Directors will take place in April rather than
January in each year with the ﬁrst review to be undertaken
on this basis effective from April 2010. This will be
consistent with all other employees and will follow the
annual performance appraisal process applicable to all staff.

Save for a very small number of exceptions based on
promotion or outstanding performance, no salary
increases have been or will be awarded for any
employee during 2009.

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 2009 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.

For 2008, Executive Director bonuses were based on
a target bonus of 60% of base salary and a maximum
bonus opportunity of 150% of base salary, with a
compulsory three year deferral into shares requirement of
50% of any bonus payment. There is no share matching
element. For Pete Redfern (and Peter Johnson to 16
October 2008) their bonuses for this period were based
on stretching targets in respect of Group PBT, UK
Operating Margins, average capital employed and
personal objectives (20%). For the 2008 performance
year, ﬁnancial performance was below threshold level
against the set targets and therefore no annual bonus is
payable to the Executive Directors for these elements of
the incentive plan. The Committee has also determined, for
2008, that no payments shall be made for achievements
against personal objectives to Executive Directors in light
of the broader business context during the performance
period. In addition, no bonus will be paid to Chris Rickard
for the period 16 October to 31 December 2008.

As mentioned on page 44, bonus arrangements for Pete
Redfern and Chris Rickard for 2009 have yet to be ﬁnalised
by the Committee. Consistent with previous years, targets
will be stretching to achieve.

In addition to the core annual bonus arrangement, for
2008 and 2009 an additional temporary short term
incentive plan for synergy achievement was proposed
for 24 key executives to support the achievement of
exceptional ﬁnancial savings as set out in the merger
documentation sent to shareholders in 2007 (details of
the plan are set out in the 2007 Annual Report). Whilst
achievement of these synergies remained a key business
objective and they were achieved in 2008, in view of the
difﬁcult trading conditions that emerged during 2008, the
decision was taken not to implement the synergy incentive
plan for any executive. In addition the Remuneration
Committee has also determined that the plan will not
be implemented in 2009 for any executive.

In line with the Association of British Insurers’ Guidelines
on Responsible Investment Disclosure the Remuneration
Committee ensures 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, the Committee under its terms of
reference may, where it considers it appropriate, take
ESG matters into account when considering the overall
remuneration structure.

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

Deferred Bonus Plan
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. Last year this alignment was
supported by 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
with no matching element. In view of the changes
made to other parts of the bonus structure, such as
the bonus levels and LTIP awards, the Remuneration
Committee has decided that this requirement should
not operate during 2009.

Executives’ share-based incentive plans
Current Plans
At the Company’s Annual General Meeting in 2008
shareholders approved the introduction of two new
long term incentive plans namely, the Taylor Wimpey
Performance Share Plan and the Taylor Wimpey Share
Option Plan. The Committee believes that use of two
complementary plans will enable incentives to be linked
to both relative and absolute performance and 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.

Full details of the plans are set out below. Except in
circumstances which the Committee, after consulting
the Board, considers exceptional, the combined value
of awards under the two long term incentive plans will
not exceed the expected value of a Taylor Wimpey
Performance Share Plan award of 200% of salary
(face value) for the Executive Directors or 300% of
salary award (face value) for other participants. Where
the Committee elects to award under both plans, two
options will be provided under the Taylor Wimpey
Share Option Plan for each one share reduction in
the Taylor Wimpey Performance Share Plan award.
The satisfaction of any performance conditions will
be the subject of independent veriﬁcation.

Taylor Wimpey Performance Share Plan
Under this plan Executive Directors and senior executives
may be granted annually a conditional award of shares
with a value, at date of grant, of up to 2x base salary
(Executive Directors) or 3x base salary (other participants).
Such awards vest after three years provided, and to the
extent that, the associated performance conditions have
then been achieved. The performance targets are ﬁrstly,
that Group Earnings Per Share (‘EPS’) shall have grown
by at least 3% p.a. (for 25% of the EPS-related award to
vest) or 8% p.a. (for 100% of the EPS-related award to
vest) beyond the rate of UK RPI growth for the same
period and secondly, that the company’s Total Shareholder
Return (‘TSR’) performance over the period compared
to its peer group shall be at least 50th percentile (for 25%
of the TSR-related award to vest) or 75th percentile (for

Taylor Wimpey plc Annual Report and Accounts 2008

45

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Governance
Remuneration Report continued

100% of the TSR-related award to vest). The two TSR
peer groups are ﬁrstly, FTSE 100 (50% of TSR-related
performance) and secondly, Barratt, Bellway, Berkeley
Group, Bovis Homes Group, Galliford Try, Kier, Marshalls,
Persimmon, Redrow, SIG, Travis Perkins and Wolseley
(50% of TSR-related performance). There would be
straight-line vesting between the EPS and TSR thresholds.
The Remuneration Committee has discretion to vary the
targets (other than for Executive Directors) to relate them
to business unit and individual performance targets.

During 2008, awards were made to 329 executives (2007:
nil) over an aggregate of 5,643,537 shares (2007: nil),
based on the share price of 161.67 pence, exercisable
on 17 April 2011. Following the appointment of Chris
Rickard as Group Finance Director on 16 October 2008
an award was made to him over 2,338,462 shares
(2007: nil), based on the share price calculated at date
of award of 16.25 pence, exercisable on 16 October
2011. Details of awards made to Executive Directors
appear on page 51.

Taylor Wimpey Share Option Plan
Under this plan Executive Directors and senior executives
may be granted annually an option over shares with a
value, at date of grant, of up to 2x base salary (Executive
Directors) or 3x base salary (other participants). Such
awards, which may be income tax-approved up to
HMRC’s aggregate limit of £30,000, vest after three
years provided, and to the extent that, the associated
performance condition has then been achieved. The
performance target is that Return on Capital Employed
(‘ROCE’) exceeds the company’s Cost of Capital (‘CoC’)
(for 25% of the award to vest) and to exceed it by 3% (for
100% of the award to vest). There would be straight-line
vesting between the two thresholds. As mentioned on
page 44, as yet no long term incentive awards have
been made during 2009.

During 2008, options were granted to 329 executives
(2007: nil) over an aggregate of 13,247,283 shares
(2007: nil), based on the share price of 137.75 pence,
4,908,753 exercisable on 28 April 2011 and 8,338,530
exercisable on 28 August 2011. Following his appointment
on 16 October 2008, share options were granted
to Chris Rickard over 4,676,923 shares (2007: nil),
based on the share price at date of award of 16.25
pence, exercisable on 16 October 2011. Details of
awards made to Executive Directors appear on page 51.

Legacy plans
Taylor Woodrow Performance Share Plan
The Taylor Woodrow Performance Share Plan operated
from 2004 to 2007, when it was superseded by the
Taylor Wimpey Performance Share Plan described
above. Conditional awards of shares made at nil cost
to executives vest if deﬁned performance criteria are
met over the three year performance period attaching
to each award. For basic awards, the condition is
the achievement of EPS growth of at least 3% p.a.
compound (for 50% of the award to vest) and 6% p.a.
compound (for 100% of the award to vest). Enhanced
awards were made to Executive Directors and members
of the Executive Committee (pre-merger), which vest if

46

www.taylorwimpey.com

Total shareholder return (£)

300

200

100

0

03

04

05

06

07

08

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 the FTSE 100 and 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. The historical data is based on the constituent
companies at each given date. The peer group consists of the companies set out in the Taylor Wimpey
Performance Share Plan section.

the basic 3% compound EPS measure is achieved and
also if the Company’s TSR compared to the peer group,
exceeds median performance (40% of the enhanced
awards vest) or achieves Upper Quartile performance
(100% of the enhanced awards vest). The Peer Group
comprises Barratt, Bellway, Berkeley, Bovis, Crest
Nicholson, McCarthy & Stone, Persimmon and Redrow.
There would be straight-line vesting between the two
EPS and TSR thresholds.

George Wimpey Executive Share Option Scheme
Designated senior UK employees of George Wimpey Plc
participated in the George Wimpey Executive Share
Option Scheme and their interests were rolled-over into
equivalent options over the Company’s shares at the
time of the merger in 2007. Such holdings remain
subject to the rules of the Scheme, which is closed to
new awards. No Executive Director has any participation
in the Scheme.

The last award under the Plan was made in 2007 and it is
now closed to new awards. Details of awards held during
the year by Executive Directors appear on page 51.

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

George Wimpey Long Term Incentive Plan
The George Wimpey Long Term Incentive Plan was
closed to new awards from the date of the merger in
2007. Conditional awards of shares are held by a small
number of key executives and only vest if predetermined
performance conditions are satisﬁed over the three
year performance period. The key condition is the
measurement of TSR against a peer group comprising
Barratt, Bellway, Berkeley, Bovis, Galliford Try, Gleeson
(MJ), Heywood Williams, Kier, Marshalls, Persimmon,
Redrow, SIG, Travis Perkins and Wolseley. Awards vest
if the Company’s TSR compared to the peer group
exceeds the 50th percentile (25% of the awards vest) or
75th percentile (100% of the awards vest). There would
be straight-line vesting between the two thresholds.
There is also a requirement that the Company’s EPS
performance has been satisfactory.

The last award under the Plan was made in 2007 and it is
now closed to new awards. Details of awards held during
the year by Executive Directors appear on page 51.

All-employee share plans
United Kingdom
The Company encourages share ownership by employees
and accordingly, it operates a number of all-employee
type share schemes.

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% of market value. During 2008, 1,248 employees
(18% of those eligible) (2007: 1,912) applied to join the Plan.
Options were granted over 22,685,606 shares (2007:
2,640,216) at an option price of 37.6 pence per share.

The Company also operates 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 2008, 1,504
participants contributed to the Plan (2007: 1,394) and
purchased 3,574,374 partnership shares (2007: 365,577).
During 2008, the Plan was extended so as to allow all
relevant employees who joined the Group from 3 July
2007 (the date of the merger) to participate. Details of
awards held during the year by Executive Directors
appear on page 51.

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Overseas plans
The Company has all-employee stock purchase plans
in the US and in Canada which are broadly equivalent
to those operated in the UK. No Executive Director
is, or was at any time during 2008, a member of
either of these plans. During 2009, the US plan will
be extended so as to allow all relevant employees who
joined the Group at the time of the merger to participate.

Performance graph
The graph opposite shows the Company’s performance,
measured by TSR for the ﬁve-year period to 31 December
2008, compared with the performance of the FTSE 100
and the FTSE 350 Share Index also measured by TSR.
The FTSE 350 Share Index has been selected for this
comparison due to the fact that this index provides the
most relevant comparator index for Company performance
for the duration of the measurement period shown. The
FTSE 100 is included as it is used as a comparator group
for TSR performance in the Taylor Wimpey Performance
Share Plan.

Other matters affecting share plans
The rules of the Company’s share plans provide for the
early vesting or exercise of share entitlements in certain
circumstances. In line with the ABI Guidelines, in the
event of death or cessation of employment due to a
change of control or sale of business, awards would be
pro-rated and early vesting would be subject to the
judgement and discretion of the Remuneration
Committee which would ordinarily take into account
the performance of the Company as at the date of
the event.

Share retention and target Director
shareholdings
The Remuneration Committee has approved guidelines
relating to target shareholdings in the Company and
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:

• Executive Directors will be expected to build up a
shareholding in Taylor Wimpey broadly equal to 1x
base salary;

• 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
Performance Share Plan (‘PSP’) and/or the Share
Option Plan (‘SOP’) are expected to retain shares
for one year as set out below:

• 50% of the net amount of any shares that vest under
the PSP in the case of Executive Directors and 25%
in the case of other participants;

• 50% of the net gain of shares following the exercise
of any executive share options under the SOP and
25% in the case of other participants.

In the event of a participant leaving due to incapacity,
redundancy or normal retirement pro-rating of awards
would occur but the three year performance period
would remain.

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.

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 26 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
wherever it is possible to do so be substantially met by
utilising treasury shares, transferred by gift for all-employee
share plans and sold at market price for its discretionary
share plans, to its Employee Share Ownership Trusts.
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.

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 Executive Directors are
expected to hold shares in the Company in order to
align their interests with those of shareholders.

The Committee will keep these guidelines under
regular review to ensure that they remain both
reasonable and appropriate.

Taylor Wimpey plc Annual Report and Accounts 2008

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Governance
Remuneration Report continued

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 4x 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% 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 2008 a total of £133,767
(2007: £80,000) was paid. Pension allowances do not
count towards the calculation of any bonus awards
which are based only on base salary.

The Directors’ accrued pensions in 2008 are shown on
page 52.

George Wimpey Stakeholder Scheme
Ian Sutcliffe, former Director, was not a member of the
Scheme and instead, the Company paid an amount
equal to 29% of his salary into the George Wimpey
designated stakeholder scheme during 2008 until his
resignation on 14 April 2008. Payments of £143,294
(2007: £57,000) were paid into the stakeholder scheme
on his behalf for the period.

Pension arrangements
Details of the Group’s principal UK pension schemes
are given in Note 24 on page 82 to the consolidated
ﬁnancial statements.

Taylor Woodrow Pension Schemes
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 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% of his basic salary for the year and he contributed
at the rate of 5%. Denis Mac Daid retired from the Board
on 30 June 2005. The Company is paying to him by
monthly installments 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 £20,731 (2007: £20,000).
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% and
10% 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 annum (2.5% for all service earned after 6 April 2006).

48

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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. Chris Rickard is entitled to 18 months’
notice for the ﬁrst year of employment. His entitlement will thereafter immediately reduce to 12 months.

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 2009
Annual General Meeting.

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

Name

Pete Redfern

Chris Rickard*

Former Directors
Peter Johnson

Ian Sutcliffe

Date of
contract

Unexpired term
(months)

Notice periods
by Company
(months)

Notice periods
by Director
(months)

Normal
retirement
age

13 October 2004

20 October 2008

1 November 2002

23 January 2006

12

12

12

12

12

18

12

12

12

12

12

12

60

60

60

60

Current
age

38

52

49

49

* Proposed for election at the Annual General Meeting.

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.

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

Date of initial letter
of appointment

Term of
appointment

Notice period by
Company
(months)

Notice period by
Director
(months)

29 July 2003

25 July 2003

3 years, reviewed annually

13 October 2003

29 September 2003

3 years, reviewed annually

3 July 2007

21 November 2007

3 years, reviewed annually

18 November 2002

31 October 2002

3 years, reviewed annually

1 July 2001

21 May 2001

3 years, reviewed annually

3 July 2007

21 November 2007

3 years, reviewed annually

3 July 2007

21 November 2007

3 years, reviewed annually

6

6

6

6

6

6

6

6

6

6

6

6

6

6

* Proposed for re-election at the Annual General Meeting.

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 standardised at £50,000 per annum following the merger in 2007. 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 fees of the
Non Executive Directors were not increased during 2008.

Chairman’s fees: The Chairman has determined that in light of the prevailing difﬁcult market conditions affecting the Company during 2008, he would reduce his fees from
£270,000 per annum down to £200,000 per annum with effect from 1 January 2009. This was subsequently agreed with the Remuneration Committee and endorsed by
the Board.

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.

Taylor Wimpey plc Annual Report and Accounts 2008

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Governance
Remuneration Report continued

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 2008
£000

Other
benefits
£000

Executive

Pete Redfern

Chris Rickard (Appointed 16 October 2008)

Peter Johnson (Resigned 16 October 2008)¹

Ian Sutcliffe (Resigned 14 April 2008)²

Ian Smith (Resigned 3 July 2007)

John Landrum (Resigned 31 July 2007)

Graeme McCallum (Resigned 16 January 2007)

Iain Napier (Former Director)

Non Executive

Norman Askew

Mike Davies

Brenda Dean

Andrew Dougal

Katherine Innes Ker

Anthony Reading

David Williams

Vernon Sankey (Resigned 3 July 2007)

700

80

367

116

–

–

–

–

270

50

50

60

60

60

60

–

146

–

–

9

–

–

–

–

–

–

–

–

–

–

–

–

28

3

10

–

–

–

–

–

–

–

–

–

–

–

–

–

Aggregate emoluments

1,873

155

41

2007

Aggregate emoluments of the Executive Committee (excluding Executive Directors)

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

2008
total
£000

874

83

791

333

–

–

–

–

2007
total
£000

Basic salary/fee
p.a. with effect
from 01.01.2009
£000

1,011

–

807

663

1,873

838

27

1,083

700

380

–

–

–

–

–

–

270

219

200

50

50

60

60

60

60

–

50

50

60

60

60

60

–

50

25

57

55

30

30

34

6,802

–

–

414

208

–

–

–

–

–

–

–

–

–

–

–

–

622

2,691

Basic
salary
£000

668

Salary
supplement in
lieu of pension
£000

58

Benefits-
in-kind
£000

30

Bonus in
respect of 2008
£000

1,142

Company
contribution
to pension
£000

48

Other
benefits
£000

–

2008
total
£000

1,946

2007
total
£000

Basic salary
p.a. with effect
from 01.01.2009
£000

6,194**

668

2 members

Notes

*

Includes non-cash payments.

The above salary details for 2007 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 for 2007 and 2008 are in each case for the full year.

1 Peter Johnson received a base salary at the rate of £440,000 p.a. for the period 1 January 2008 to his date of resignation from the Company on 31 October 2008 as shown above. On leaving, he received contractual

payments of eight months’ basic pay, car allowance and employer’s pension contributions which together amounted to £414,000 (2007: nil).

2

Ian Sutcliffe received a base salary at the rate of £400,000 p.a. for the period 1 January 2008 to his date of resignation from the Company on 14 April 2008 as shown above. On leaving, he received contractual payments of
four months’ basic pay, company pension contribution and accrued holiday entitlement which together amounted to £199,000 (2007: nil).

In addition, a charge of £65,000 (2007: £30,000) was booked in respect of share-based payments.

** There were 10 members of the Executive Committee during 2007 other than the Executive Directors, relating principally to the pre-merger period.

No expense allowances are paid.

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Directors’ share-based reward and options
Aggregate emoluments disclosed opposite 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. No Director exercised an option or conditional award over ordinary shares during the year.

Name of Director

Peter Johnson

Number of
option shares

Plan

exercised

Performance Share Plan

Bonus Plan

Total

–

–

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

Lapsed
(number)

Exercised
(number)

31 December
2008g

Exercise
price

(pence)

–

–

Exercise
price
(pence)

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

207,255

432,981

1,016,333

137.75

–

179,007

231,940

2,067,516

2,338,461

4,676,923

7,015,384

8,037

43,610

9,858

59,253

272,159

–

92,406

82,941

638,838

1,207,102

3,410

–

222,480

156,626

382,516

–

–

–

–

16.25

197.2

–

–

–

–

–

–

–

137.75

276.98

–

–

–

Market price at
exercise date

Gains on
exercise 2008

Gains on
exercise 2007

(pence)

–

–

Date of
grant

13.3.08

17.4.08

28.4.08

25.5.05

23.5.06

2.4.07

£

–

–

–

£

317,727

264,232

581,959

Date
from which
exercisable

31.12.10

17.4.11

28.4.11

25.5.08

23.5.09

2.4.10

Expiry date

31.12.10

17.4.11

28.4.18

25.5.08

23.5.09

2.4.10

16.10.08

16.10.08

16.10.11

16.10.11

16.10.11

16.10.18

7.10.03

13.3.08

7.4.06

10.4.07

17.4.08

7.9.05

12.4.06

2.4.07

28.4.08

21.9.06

13.3.08

23.5.06

2.4.07

17.10.08

31.10.08

4.3.09

4.3.09

4.3.09

7.9.08

4.3.09

4.3.09

4.3.09

16.4.09

–

16.10.09

16.10.09

16.10.09

6.9.10

16.10.09

16.10.09

16.10.09

15.4.08

14.10.08

–

23.5.09

2.4.10

–

23.5.09

2.4.10

Name of Director

Plan

Pete Redfern

Bonus Plan

Performance Share Plan

Share Option Plan

1 January
2008f

–

–

–

Granted
(number)

207,255d

432,981a

1,016,333b

–

–

–

Long Term Incentive Plan

200,068

Long Term Incentive Plan

179,007

Long Term Incentive Plan

231,940

–

–

–

200,068

–

–

Total

611,015

1,656,569

200,068

Chris Rickard

Performance Share Plan

Share Option Plan

Total

Peter Johnson Sharesave

Bonus Plan:

Matching award

Matching award

–

–

–

2,338,461c

4,676,923c

7,015,384

8,037

9,858

59,253

–

43,610d

–

–

Performance Share Plan

–

272,159c

Performance Share Plan

132,410

Performance Share Plan

Performance Share Plan

92,406

82,941

–

–

–

Share Option Plan

–

638,838b

–

–

–

–

–

–

–

–

132,410

–

–

–

Total

384,905

954,607

132,410

Ian Sutcliffe

Sharesave

3,410

–

–

Bonus Plan:

–

137,698d

137,698

Long Term Incentive Plan

222,480

Long Term Incentive Plan

156,626

–

–

–

–

Total

382,516

137,698

137,698

a. Market value per share on date of grant 17 April 2008 was 158.75 pence

b. Market value per share on date of grant 28 April 2008 was 132.25 pence

c. Market value per share on date of grant 16 October 2008 was 12 pence

d. Market value per share on date of original award (representing 82.4% of this figure) of 13 March 2008 was 163.4 pence and on date of dividend re-investment thereon (representing the balance of 17.6%) of 7 July 2008

was 47.5 pence

e. Market value per share on date of original award of 13 March 2008 was 163.4 pence

f. Or date of appointment

g. Or date of resignation

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 Performance Share Plans, Share Option Plans and Deferred Bonus Plan appear earlier in this Directors’ Remuneration Report.

No performance targets were achieved for normal vesting under the Performance Share Plans or Deferred Bonus Plan during 2008 and all applicable options and conditional share awards under those plans have lapsed.

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 46. The number of awards made to each participant is calculated with reference to a formula based on a maximum of 2x 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 2005, 2006 and 2007, the relevant share prices were 437.1 pence, 544.1 pence and 575.9 pence. The TSR Performance in respect
of those shares conditionally awarded under the 2006 George Wimpey LTIP was not met. No vesting has taken place and the award has now lapsed. These shares are however indexed in the 31 December 2008 column above
for Pete Redfern.

Taylor Wimpey plc Annual Report and Accounts 2008

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Governance
Remuneration Report continued

The market price of the ordinary shares at 31 December 2008 was 13.5 pence and the range during the year was 4.4 pence to 204.75 pence.

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

Norman Askew

Pete Redfern

Chris Rickard

Mike Davies

Brenda Dean

Andrew Dougal

Katherine Innes Ker

Anthony Reading

David Williams

* or date of appointment

Executive Directors’
share interests at
31.12.08 valued
at 31.12.08
share price and
expressed as
a percentage
of basic salary
at 1.1.09

1.8%

0%

at 1.1.08
25p ordinary
shares*

at 31.12.08
25p ordinary
shares

15,674

92,705

–

15,674

92,705

–

15,000

15,000

8,348

5,000

1,000

20,000

8,269

8,348

5,000

1,000

20,000

8,269

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 ‘The Occupational Pension Schemes (Transfer Values) Regulations 2008’.

Accrued pension
as at
31 December
2007
£

Increase in accrued
pension from
31 December 2007
to 31 December
2008
£

Accrued pension
as at
31 December
2008(1)
£

Transfer value
gross of Directors’
contributions at
31 December
2008(2)
£

Transfer value
gross of Directors’
contributions at
31 December
2007(2)
£

Increase in
transfer value from
31 December 2007 to
31 December 2008
less Directors’
contributions (3)
£

Increase in accrued Transfer value of
pension from accrued pension
increase less
Director’s
contribution(4)
£

31 December 2007
to 31 December 2008
less inflation
£

17,547

3,460

20,907

298,200

162,100

124,100

2,483

22,167

Pete Redfern

Notes

1. Pension accrual shown is the amount which would be paid annually on retirement based on service to 31 December 2008.

2. Transfer values have been calculated in accordance with the occupational Pension Schemes (Transfer Value) Regulations 2008.

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.

Non-Group pension arrangements
Chris Rickard has non-Group pension arrangements, to which contributions were paid by the Company as set out below:

Chris Rickard

2008
£

17,417

2007
£

–

Approval
This Remuneration Report was approved by the Board of Directors on 30 April 2009 and signed on its behalf by the Remuneration Committee Chairman:

Anthony Reading
30 April 2009

52

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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 2008 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 37. 
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 2008. 

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, 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. 

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. 

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. 

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. 

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 2008 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 (the ‘IASB’). 

In our opinion the Group financial statements give a true and fair view, in  
accordance with IFRSs as issued by the IASB, of the state of the Group’s  
affairs as at 31 December 2008 and of its loss for the year then ended. 

Deloitte LLP 
Chartered Accountants and Registered Auditors  
London, UK 
30 April 2009

Taylor Wimpey plc Annual Report and Accounts 2008  53

 
 
 
Financial Statements 
Consolidated Income Statement 
for the year to 31 December 2008 

 Continuing operations  
 Revenue  
 Cost of sales  
 Gross profit/(loss) 
 Net operating expenses  
 Profit/(loss) on ordinary activities before finance costs 
 and amortisation of brands  
 Amortisation of brands  
 Profit/(loss) on ordinary activities before finance costs  
 Interest receivable  
 Finance costs  
 Share of results of joint ventures  
 (Loss)/profit on ordinary activities before taxation  
 Taxation (charge)/credit 
 (Loss)/profit for the year from continuing operations  

 Discontinued operations  
 (Loss)/profit for the year from discontinued operations  
 (Loss)/profit for the year  

 Attributable to: 
 Equity holders of the parent  
 Minority interests  

Interim dividend per ordinary share  
Final dividend per ordinary share  
Basic and diluted loss per share – total Group 
Basic and diluted loss per share – continuing operations  
Adjusted  basic (loss)/earnings per share – continuing operations  
Adjusted diluted (loss)/earnings per share – continuing operations 

Note 

3

5

7
15

8

31

28

Note 

9
9
10
10
10
10

Before 
exceptional
items
2008
£m 

Exceptional 
items 
(note 5)
2008 
£m 

3,467.7
(3,138.2)
329.5
(243.2)

88.7
(2.4)
86.3
8.5
(177.1)
7.6
(74.7)
(23.4)
(98.1)

–
(1,012.8)
(1,012.8)
(871.7)

(1,780.6)
(103.9)
(1,884.5)
– 
(10.5)
–
(1,895.0)
100.0
(1,795.0)

Before 
exceptional 
items 
(restated)
2007 
£m 

4,142.8
(3,443.8)
699.0
(263.5)

439.2
(3.7)
435.5
9.0
(121.8)
23.4
346.1
(103.2)
242.9

Total 
2008 
£m 

3,467.7 
(4,151.0) 
(683.3) 
(1,114.9) 

(1,691.9) 
(106.3) 
(1,798.2) 
8.5 
(187.6) 
7.6 
(1,969.7) 
76.6 
(1,893.1) 

Exceptional 
items 
(note 5) 
2007 
£m  

Total 
(restated 
 see note 1)
2007 
£m 

–
(289.7)
(289.7)
(90.0)

(349.7)
(30.0)
(379.7)
–
–
–
(379.7)
(70.2)
(449.9)

4,142.8
(3,733.5)
409.3
(353.5)

89.5
(33.7)
55.8
9.0
(121.8)
23.4
(33.6)
(173.4)
(207.0)

(2.5)
(100.6)

55.6
(1,739.4)

53.1 
(1,840.0) 

10.3
253.2

–
(449.9)

10.3
(196.7)

(1,841.3) 
1.3 
(1,840.0) 

2008 

– 
– 
(174.8p) 
(179.8p) 
(9.4p) 
(9.4p) 

(197.9)
1.2
(196.7)

2007 

5.5p
10.25p
(24.2p)
(25.5p)
29.5p
29.4p

54 

www.taylorwimpey.com 

 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
Financial Statements 
Consolidated Statement of Recognised Income and Expense 
for the year to 31 December 2008 

Exchange differences on translation of foreign operations  
Actuarial (loss)/gain on defined benefit pension schemes  
Tax on items taken directly to equity 
Net (expense)/income recognised directly in equity  
Loss for the year  
Total recognised expense for the year  

Attributable to: 
Equity holders of the parent  
Minority interests  

Note 

28
24
16

30

2008
£m 
19.1
(90.2)
(23.7)
(94.8)
(1,840.0)
(1,934.8)

2007
£m 
21.7
91.3
(28.5)
84.5
(196.7)
(112.2)

(1,936.1)
1.3
(1,934.8)

(113.4)
1.2
(112.2)

30

Taylor Wimpey plc Annual Report and Accounts 2008  55

 
 
 
 
 
Financial Statements 
Consolidated Balance Sheet 
at 31 December 2008 

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 obligations 
Deferred tax liabilities  
Provisions  

Total liabilities  

Net assets  
Equity 
Share capital  
Share premium account  
Own shares  
Merger relief reserve  
Other reserves  
Retained earnings  
Equity attributable to equity holders of the parent  
Minority interests  
Total equity  

Note 

2008
£m 

2007
£m 

11
12
14
15
19
16

17
19

19

22

21
20
25

22
21
20
24
16
25

26
27
29
28
28
28

–
–
15.5
67.7
47.9
6.6
137.7

4,890.6
181.3
90.4
752.3
5,914.6
6,052.3

(1,170.7)
(196.5)
(101.1)
(23.4)
(56.1)
(1,547.8)
4,366.8

(342.1)
(868.0)
(1,289.1)
(279.8)
(1.3)
(51.0)
(2,831.3)
(4,379.1)

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)
(1,756.5)
4,799.4

(388.4)
(823.3)
(708.5)
(219.1)
(29.8)
(38.4)
(2,207.5)
(3,964.0)

1,673.2

3,705.2

289.6
753.6
(275.7)
–
64.7
838.3
1,670.5
2.7
1,673.2

289.6
758.1
(282.0)
1,934.2
46.1
957.1
3,703.1
2.1
3,705.2

The financial statements were approved by the Board of Directors and authorised for issue on 30 April 2009. They were signed on its behalf by: 

P Redfern  
Director   

C Rickard 
Director 

56 

www.taylorwimpey.com 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Statements 
Consolidated Cash Flow Statement 
for the year to 31 December 2008 

Net cash from/(used in) 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 subsidiaries  
Disposal of subsidiaries  
Net cash from investing activities  

Financing activities 
Dividends paid  
Dividends paid by subsidiaries to minority shareholders  
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 in bank loans and overdrafts  
Net cash from/(used in) financing activities  

Net increase/(decrease) 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 

32

2008
£m 
153.6

2007
£m 
(163.3)

11.0
7.7
(2.5)
17.6
(10.9)
(5.2)
–
–
(11.9)
5.8

(107.9)
(0.7)
2.7
–
–
–
(1.4)
–
525.7
418.4

577.8
130.0
44.5
752.3

2.3
24.4
(0.4)
17.3
(13.6)
(3.1)
10.6
31.0
–
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

12

14

31

9

32

Taylor Wimpey plc Annual Report and Accounts 2008  57

 
 
 
 
 
Financial Statements 
Notes to the Consolidated Financial Statements continued 
for the year to 31 December 2008 

1. Significant accounting policies 

Basis of preparation 
The consolidated financial statements have been prepared on a going concern basis 
and on a historical cost basis except as otherwise stated below. The ability of the 
Group to continue as a going concern is reliant upon the continued availability of 
external debt financing. The deterioration of the housing market in 2008 in the 
geographies in which the Group operates called into question the Group’s ability  
to continue to trade within the covenants set out in certain of its debt agreements. 
This led to the Group renegotiating the terms and conditions of, and covenants within, 
its external debt facilities. The amended agreements were signed in April 2009. The 
continued availability of this external financing is dependent upon the Group’s ability  
to generate sufficient cash to service its debt and to continue to operate within  
and adhere to the covenants and other terms and conditions set out in the debt 
agreements. The Group has continued to meet all interest and other payment 
obligations on time from debt resources available to it, and after reviewing cash  
flow forecasts (see ‘Going concern’ below) for a period of not less than 12 months 
from the date of signing these financial statements and as noted on page 43, the 
Directors are satisfied that, whilst the economic and market conditions continue to  
be challenging and not without risk, the refinancing package is sufficiently robust as  
to adequacy of both facility and covenant headroom to enable the Group to operate 
within its terms for at least the next 12 months.  

The principal accounting policies adopted, which have been applied consistently, 
except as otherwise stated, are set out below. 

Basis of accounting 
The consolidated financial statements have been prepared in accordance with 
applicable International Accounting Standards (IAS), International Financial Reporting 
Standards (IFRS) and IFRIC interpretations as adopted for use in the European Union 
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 2008. 

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 a subsidiary is disposed of which 
constituted a major line of business, it is disclosed as a discontinued operation. 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. 

Segmental reporting 
The Group is divided into four operating divisions for management reporting and control: 
• Housing United Kingdom; 
• Housing North America; 
• Housing Spain and Gibraltar; and 
• Corporate.  

The Construction division was disposed of in September 2008, and is presented as  
a discontinued operation. The results and net assets of a minor residual construction 
business, primarily based in Ghana and previously included in the Construction 
business segment are presented within Corporate in 2008. 2007 has been restated 
for consistency. 

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.  

Interest receivable 

(d)
Interest income on bank deposits is recognised on an accruals basis. 

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 or of such significance that they 
require separate disclosure on the face of the income statement in accordance with 
IAS 1 ‘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 equity 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. 

58 

www.taylorwimpey.com 

 
1.  Significant accounting policies continued 
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 arose. 

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. 

Plant, fixtures and equipment 20–25%; and computer equipment 33%. 

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

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. 

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, joint venture, 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. 

If the recoverable amount of an asset is estimated to be less than its carrying  
amount, the carrying amount of the asset is reduced to its recoverable amount. If  
the recoverable amount of a cash-generating unit is estimated to be less than its 
carrying amount, impairment losses are allocated first to the intangible assets in  
the cash-generating unit. If the full impairment of intangible assets is not sufficient  
to reduce the carrying value of the cash-generating unit to its recoverable amount, 
tangible fixed assets must then be reviewed for impairment. If the recoverable amount 
of tangible fixed assets exceeds their carrying value, no further impairment is required. 
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. 

Where an impairment loss subsequently reverses, the carrying amount of the asset or 
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 
or 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. 

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

Goodwill arising on acquisitions before the date of transition to IFRSs was retained at  
the previous UK GAAP amounts, and was subjected to impairment testing 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. 

Other intangible assets 
Brands 
Internally generated brands are not capitalised. Acquired brands are capitalised. Their 
values are calculated based on the Group’s valuation methodology, which is based  
on valuations of discounted cash flows. Brands are stated at cost, less accumulated 
amortisation and any accumulated impairment losses. 

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, and are stated at cost less accumulated 
amortisation and any accumulated impairment losses.  

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 cost less 
accumulated depreciation and any accumulated impairment losses. Freehold  
land is not depreciated. Buildings are depreciated over 50 years. 

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: 

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. 

Taylor Wimpey plc Annual Report and Accounts 2008  59

 
Financial Statements 
Notes to the Consolidated Financial Statements continued 
for the year to 31 December 2008 

1.  Significant accounting policies continued 
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 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. 

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. 

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 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 also 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 foreseeable 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 payment. 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 
Estimation of costs to complete 
In order to determine the profit that the Group is able to recognise on the proportion 
of completions for the period, internal site valuations are carried out for each development 
at regular intervals throughout the year. The valuations will include an estimation of  
the costs to complete and remaining revenues which may differ from the actual costs 
incurred and revenues received on completion.  

Carrying value of land and work in progress 
In order to assess the appropriateness of the carrying value of land and work in progress, 
the Group is required to make estimations of sales prices, costs and margins expected  
on sites in order to determine whether any write downs are required to ensure inventory  
is stated at the lower of cost and net realisable value. Given the deterioration in market 
conditions experienced during the year, the Group has undertaken a detailed review on  
a site-by-site basis of the net realisable value of its land and work in progress. As a result, 
the Group has written down the value of its land and work in progress in the UK, US, and 
Spain by £1,012.8m, as shown in note 5. If there is further significant weakening in any of 
the Group’s major markets, further write downs would be required.  

60 

www.taylorwimpey.com 

1.  Significant accounting policies continued 
Impairment of goodwill and other intangible assets 
The determination of whether goodwill and other intangible assets are impaired 
requires an estimation of the value in use of the cash-generating units to which the 
asset has been allocated. The value in use calculation involves significant judgement 
including 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 
estimates of future cash flows used in the 2008 impairment test performed as at  
30 June 2008 reflected the current weak trading conditions in the Group’s major 
markets, and as a result, the Group has fully written down the value of its goodwill  
and other intangible assets as described in note 13. Impairment of goodwill may  
not be reversed. If the current weak trading conditions reverse, the impairment 
provision relating to other intangible assets may reverse in part or in whole.  

Pensions 
The value of plan assets and liabilities is determined based on various long term 
actuarial assumptions, including future rates of inflation, salary growth, yields,  
returns on investments and mortality rates. Changes in these assumptions over  
time and differences to the actual outcome will be reflected in the Group’s statement 
of recognised income and expense. Note 24 details the main assumptions in 
accounting for the Group’s defined benefit pension schemes. 

Tax and deferred tax  
Aspects of tax accounting require management judgment and interpretation of tax 
legislation across many jurisdictions in some cases relating to items which may not  
be resolved with the relevant tax authority for many years. 

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. 

Going concern 
The Group has prepared forecasts, which have been reviewed by the Directors, 
based on estimates and judgments about the economic environment in each of  
the Group’s major markets, including housing demand, interest rates and foreign 
exchange rates and the Group’s operational performance, including average selling 
prices and build costs. The Directors consider that these forecasts demonstrate an 
adequate level of headroom for the next 12 months over the available funding and 
minimum covenant levels in the revised debt agreements which were entered into  
on 7 April 2009 and further details of which are set out in Note 37 on page 93, to 
allow the Group to operate within the terms of those new financing arrangements. 
Accordingly, they have adopted the going concern basis of preparation for  
these financial statements. This is also discussed further within the Corporate 
Governance Report on page 39. 

Adoption of new and revised standards and interpretations  
Standards, amendments and interpretations effective in 2008  
IAS 39 (Amendment) – Financial Instruments. Provided various criteria are met, the 
amendment allows certain non-derivative financial assets to be reclassified out of fair 
value through profit and loss into one of three other categories; or out of available for 
sale and into loans and receivables. All reclassifications must be made at the fair value 
of the financial asset at the date of reclassification. This interpretation does not have 
an impact on the Group’s financial statements.  

IFRIC 11, IFRS 2 – Group and treasury share transactions. 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. IFRIC 14 provides guidance on the amount of surplus that an 
entity may recognise on its balance sheet in respect of defined benefit pension 
schemes, and on the impact of minimum or committed funding obligations on the 
measurement of a net surplus or deficit. This interpretation does not have an impact 
on the Group’s financial statements.  

Standards and interpretations in issue but not yet effective 
Standards, amendments and interpretations to existing standards that are not yet 
effective and have not been adopted early by the Group 
IAS 1 (revised) Presentation of Financial Statements (effective from 1 January 2009). 
The main changes from the current standard will require the Group to: 

• Present all non-owner changes in equity in one statement of comprehensive income 
(effectively combining the current income statement and statement of changes in 
recognised income and expenses) or in two statements (a separate income statement 
and a statement of comprehensive income). Components of comprehensive income 
must be presented separately from the statement of changes in equity; 

• Present a statement of financial position (balance sheet) as at the beginning of  
the earliest comparative period when the entity applies an accounting policy 
retrospectively or makes a retrospective restatement; 

• Disclose income tax relating to each component of other comprehensive income; and 
• Disclose reclassification adjustments relating to components of other comprehensive 

income. 

This amendment is expected to lead to additional disclosures in the Group’s 2009 
financial statements. 

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. This amendment is not expected to have  
any impact on the Group’s financial statements as, due to the nature of the Group’s 
activities, it is expected to be exempt from the application of this standard.  

IAS 32 (Amendment) Financial Instruments: Presentation and IAS 1 Presentation of 
Financial Statements (effective from 1 January 2010). Relevant for companies that 
have puttable financial instruments or instruments, or components of instruments,  
that impose an obligation on the entity to deliver to another party a pro-rata share  
of net assets on liquidation only. This amendment is not expected to have any impact 
on the Group’s financial statements. 

IAS 39 (Amendment) Eligible hedged items (effective from 1 July 2009). The amendment 
to the standard is still subject to endorsement by the European Union. The amendment 
requires that inflation may only be hedged if changes in inflation are a contractually 
specified portion of cash flows of a recognised financial instrument. The amendment 
also permits an entity to designate purchased options as a hedging instrument in a 
hedge of a financial or non-financial item. This amendment is not expected to have 
any impact on the Group’s financial statements. 

IFRS 1 (revised) First-time Adoption of International Financial Reporting Standards (effective 
from 1 July 2009). The amendment to the standard is still subject to endorsement by  
the European Union. The objective of the revised version of IFRS 1 is to improve the 
structure of the Standard – no new or revised technical material has been introduced.  
This amendment is not expected to have any impact on the Group’s financial statements. 

IFRS 2 (Amendment) Vesting conditions and cancellations (effective from 1 January 
2009). The amendments change the definitions of vesting conditions and introduce 
the concept of a “non-vesting condition”. Vesting conditions will now be restricted  
to service and performance conditions only. A performance condition only meets  
the definition of a vesting condition where it has an implicit service requirement. This 
amendment is not expected to have any impact on the Group’s financial statements. 

IFRS 3 (revised) Business Combinations and IAS 27 (revised) Consolidated and Separate 
Financial Statements (effective from 1 July 2009). The amendment to the standard is still 
subject to endorsement by the European Union. The revisions include a greater emphasis 
on the use of fair value, focusing on changes in control as a significant economic event 
and focusing on what is given to the vendor as consideration. This amendment is not 
expected to have any immediate impact on the Group’s financial statements. 

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. 

IFRIC 15 Arrangements for the Construction of Real Estate. IFRIC 15 sets out guidance 
for whether the accounting for the construction of real estate should fall within IAS 18 – 
Revenue, where a developer sells completed units or, IAS 11 – Construction Contracts, 
where a developer has been commissioned for a construction by a buyer. This is not 
expected to have any effect on the Group’s financial statements as the Group already 
complies with this IFRIC. 

Taylor Wimpey plc Annual Report and Accounts 2008  61

 
Financial Statements 
Notes to the Consolidated Financial Statements continued 
for the year to 31 December 2008 

1.  Significant accounting policies continued 
IFRIC 16 Hedges of a Net Investment in a Foreign Operation. IFRIC 16 clarifies the accounting treatment of hedges taken out to hedge foreign exchange differences arising 
from differences between a Group and its subsidiary’s presentational currencies and hedges of differences between functional currencies. This is not expected to have any 
effect on the Group’s financial statements as the Group already complies with this IFRIC. 

IFRIC 17 Distributions of Non-Cash Assets to Owners. The amendment to the interpretation is still subject to endorsement by the European Union. IFRIC 17 requires that 
distributions of non-cash assets to owners should be recognised and measured at the fair value of the non-cash assets when the dividend is appropriately authorised, and that the 
difference between the carrying amount of the assets distributed and the dividend payable should be recognised in profit or loss on settlement of the dividend payable. This 
amendment is not expected to have any impact on the Group’s financial statements.  

Interpretations to existing standards that are not yet effective and not relevant for the Group’s operations: 
IFRIC 12 Service Concession Arrangements. IFRIC 12 clarifies the accounting for contracts under which an entity contracts to use or operate a public sector asset.  
The effective date for IFRIC 12 is for periods beginning on or after 1 January 2008, however, this interpretation has not yet been endorsed by the European Union.  

IFRIC(cid:3229)13 Customer Loyalty Programmes. IFRIC 13 addresses the accounting by entities that grant loyalty award credits to customers who buy other goods or services.  

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 109.  
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 6 to 13. 

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 pages 58 and 59. 

3. Revenue 
An analysis of the Group’s revenue is as follows: 

Continuing operations: 
Housing 
Corporate (including Construction) 
Land sales 
Consolidated revenue 
Interest receivable 

Discontinued operations: 
Revenue  
Interest receivable 

Total Group 

2008
£m 

2007 
(restated)
£m 

3,342.1
36.2
89.4
3,467.7
8.5
3,476.2

453.4
0.1
453.5
3,929.7

3,947.5
37.8
157.5
4,142.8
9.0
4,151.8

571.5
0.7
572.2
4,724.0

Housing revenue includes £193.0m (2007: £80.9m) 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 four operating divisions – Housing United Kingdom, Housing North America, Housing Spain and Gibraltar, 
and Corporate. These divisions are the basis on which the Group reports its primary segment information. Taylor Woodrow Construction, previously reported as  
the business segment ‘Construction’, was disposed of on 9 September 2008, and is disclosed as a discontinued operation. The results and net assets of a minor residual 
construction operation, primarily based in Ghana and previously included within the Construction segment, are presented within Corporate in 2008. 2007 has been restated  
for consistency, resulting in an increase in Corporate external sales of £37.8m, and an increase in operating loss before joint ventures, brand amortisation and exceptional 
items of £10.0m, an increase in profit from joint ventures of £0.1m, an increase in segment assets of £24.9m, an increase in joint ventures of £0.1m and an increase in 
segment liabilities of £6.8m. 

62 

www.taylorwimpey.com 

 
 
 
 
 
 
4. Business and geographical segments continued 
Segment information about these businesses is presented below:  

2008 

Revenue from continuing operations: 
External sales 

Result from continuing operations: 
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, after share of results of joint ventures 
Brand amortisation 
Exceptional items 
Loss on ordinary activities before finance costs, after share of results of joint ventures 
Finance costs, net (including exceptional finance costs) 
Loss on ordinary activities before taxation 
Taxation  

Result from discontinued operations: 
Profit for the year from discontinued operations  
Loss for the year – total Group 

2008 

Assets and liabilities: 
Segment operating assets 
Joint ventures 
Segment operating liabilities 
Net operating assets/(liabilities) 
Current taxation (net) 
Deferred taxation (net) 
Net debt 
Net assets 

Housing 
United 
Kingdom
£m 

Housing  
North  
America 
£m 

Housing 
Spain and 
Gibraltar
£m 

Corporate
£m 

Consolidated
£m 

2,390.1

981.6 

59.8

36.2

3,467.7

53.2
(0.2)

53.0
(2.4)
(1,750.4)
(1,699.8)

52.1 
7.8 

59.9 
– 
(76.6) 
(16.7) 

(2.4)
–

(2.4)
–
(37.4)
(39.8)

(14.2)
–

(14.2)
–
(20.1)
(34.3)

88.7
7.6

96.3
(2.4)
(1,884.5)
(1,790.6)
(179.1)
(1,969.7)
76.6

53.1
(1,840.0)

Housing 
United 
Kingdom*
£m  

Housing 
North America 
£m 

Housing
Spain and
Gibraltar
£m 

Corporate 
£m 

Consolidated
£m 

3,919.9 
45.4 
(1,379.6) 
2,585.7 

1,014.8 
22.1 
(359.1) 
677.8 

175.4
0.2
(47.6)
128.0

25.2
–
(113.4)
(88.2)

5,135.3
67.7
(1,899.7)
3,303.3
(106.1)
5.3
(1,529.3)
1,673.2

*  The Group is unable to allocate the defined benefit pension scheme assets and liabilities of the Taylor Woodrow Group Pension and Life Assurance Fund, a multi-employer pension scheme, on  

an actuarial basis by entity. However, for the purposes of the 2008 segmental analysis above, the Group has allocated the deficit to Housing United Kingdom as the participating entities materially sit 
within this business segment. The assets and liabilities of the George Wimpey Staff Pension Scheme have been allocated in their entirety to Housing United Kingdom. 

2008 
Other information: 
Property, plant and equipment additions 
Amortisation of intangibles 
Depreciation – plant and equipment 

Other non-cash expenses: 
Provisions recognised 
Inventory write downs 
Reversal of inventory write downs 
Impairment of goodwill 
Impairment of other intangible assets 

Housing
United
Kingdom
£m 

Housing 
North America 
£m 

Housing
Spain and 
Gibraltar
£m 

Corporate
£m 

Consolidated
£m 

2.3
6.7
3.5

56.8
930.1
(25.8)
694.3
116.3

1.3 
– 
1.5 

13.5 
104.3 
(33.2) 
5.5 
– 

0.1
–
0.2

0.5
37.4
–
–
–

5.5
–
2.3

4.4
–
–
–
–

9.2
6.7
7.5

75.2
1,071.8
(59.0)
699.8
116.3

Taylor Wimpey plc Annual Report and Accounts 2008  63

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Statements 
Notes to the Consolidated Financial Statements continued 
for the year to 31 December 2008 

4. Business and geographical segments continued 

2007 (restated) 

Revenue from continuing operations: 
External sales 

Result from continuing operations: 
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, after share of results of joint ventures 
Brand amortisation 
Exceptional items 
Profit/(loss) on ordinary activities before finance costs, after share of results of joint 
ventures 
Finance costs, net 
Loss on ordinary activities before taxation 
Taxation  

Result from discontinued operations: 
Profit for the year from discontinued operations  
Loss for the year – total Group 

2007 (restated) 

Assets and liabilities – continuing operations: 
Segment operating assets 
Joint ventures 
Segment operating liabilities  
Continuing Group net operating assets/(liabilities) 
Discontinued operations: 
– operating assets  
– operating liabilities  

Goodwill  
Current taxation (net) 
Deferred taxation (net) 
Net debt  
Net assets 

Housing
United
Kingdom
£m 

Housing 
North America 
£m 

Housing
Spain and
Gibraltar
£m 

Corporate
£m 

Consolidated
£m 

3,053.8

986.8 

64.4

37.8

4,142.8

409.1
9.1
418.2

(3.7)
(47.9)
366.6

53.3 
14.2 
67.5 

– 
(321.3) 
(253.8) 

2.2
–
2.2

–
(6.3)
(4.1)

(25.4)
0.1
(25.3)

–
(4.2)
(29.5)

439.2
23.4
462.6

(3.7)
(379.7)
79.2

(112.8)
(33.6)
(173.4)

10.3
(196.7)

Housing 
United 
Kingdom*
£m  

Housing 
North America 
£m 

Housing
Spain and
Gibraltar
£m 

Corporate
£m 

Total
£m 

5,350.1 
39.6 
(1,616.5) 
3,773.2 

976.7 
20.0 
(316.4) 
680.3 

182.1
0.2
(66.7)
115.6

64.4
0.1
(77.4)
(12.9)

6,573.3
59.9
(2,077.0)
4,556.2

68.0
(153.7)
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, a multi-employer pension scheme, on  

an actuarial basis by entity. For the purposes of the segmental analysis presented in the published 2007 financial statements, the Group allocated the deficit to business segments on the basis of 
headcount. The 2007 segmental information presented above has been restated to present within Housing United Kingdom, the deficit for this scheme previously included in the Construction 
business segment following the disposal of the construction business on 9 September 2008, resulting in an increase in segment liabilities for Housing United Kingdom of £67.8m. The allocation is 
performed solely for the purposes of providing a 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 Housing United Kingdom. 

64 

www.taylorwimpey.com 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4. Business and geographical segments continued 

2007 (restated) 

Other information – continuing Group: 
Property, plant and equipment additions 
Amortisation of intangibles 
Depreciation – plant and equipment 

Other non-cash expenses: 
Provisions recognised  
Inventory write downs 
Impairment of brands 

Housing
United
Kingdom 
£m 

Housing 
North America 
£m 

Housing
Spain and
Gibraltar
£m 

Corporate
£m 

6.2
5.7
3.3

48.7
–
10.0

5.8 
– 
3.6 

28.7 
283.4 
20.0 

0.3
–
0.1

0.6
6.3
–

–
–
–

–
–
–

Total
£m 

12.3
5.7
7.0

78.0
289.7
30.0

In addition to the above, there was £1.3m of property, plant and equipment additions and £1.3m of depreciation on plant and equipment in relation to discontinued operations 
in 2007. 

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, which was disposed of on 9 September 2008, was 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 
Total continuing operations  
Discontinued operation – United Kingdom 
Total Group 

Sales revenue by  
geographical market 

2008
£m 
2,390.1
981.6
96.0
3,467.7
453.4
3,921.1

2007 
(restated)
£m 
3,053.8
986.8
102.2
4,142.8
571.5
4,714.3

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 
Total  

Carrying amount of  
segment assets 

Additions to property 
and plant 

2008 
£m 
4,592.5 
1,251.8 
208.1 
6,052.4 

2007
£m 
6,205.9
1,231.8
231.5
7,669.2

2008
£m 
2.3
1.3
5.6
9.2

2007
£m 
6.9
5.8
0.9
13.6

Taylor Wimpey plc Annual Report and Accounts 2008  65

 
 
 
 
 
 
 
 
 
 
 
 
Financial Statements 
Notes to the Consolidated Financial Statements continued 
for the year to 31 December 2008 

5. Net operating expenses and profit on ordinary activities before finance costs 

Net operating expenses, continuing operations: 
Administration expenses 
Net other income 
Exceptional items 

Net other income includes profits on the sale of property, plant and(cid:3229)equipment and broker fees from mortgage origination services. 

Exceptional items, continuing operations: 

Land and work in progress write downs 
Goodwill impairment 
Other intangible impairments 
Restructuring costs 
Refinancing costs 
Exceptional items 

2008
£m 
269.0
(25.8)
871.7
1,114.9

2008
£m 
1,012.8
699.8
116.3
35.1
20.5
1,884.5

2007 
(restated)
£m 
270.7
(7.2) 
90.0 
353.5 

2007
£m 
289.7
–
30.0
60.0
–
379.7

Net land and work in progress write downs of £1,012.8m (2007: £289.7m) were required to reduce the carrying value of some of the Group’s inventory to the lower of cost 
and net realisable value, reflecting the deterioration in market conditions first experienced in the US housing market in 2007 and in the UK and European housing markets in 
2008, resulting in lower pricing required to maintain satisfactory sales rates in the UK, US and European markets.  

Goodwill of £699.8m (2007: nil) and other intangible assets of £116.3m (2007: £30m) were fully impaired in 2008 following a detailed impairment review – further detail on the 
impairment is set out in note 13.  

Restructuring costs of £35.1m (2007: £60m) arose on further restructuring of the UK housing business in response to the deteriorating market conditions during 2008 following 
on from the post-merger reorganisation of the business in 2007. The costs incurred in both years include redundancy costs and costs incurred in relocating certain functions 
and operations. A provision for restructuring of £22.1m (2007: £33.6m) remains in the balance sheet at 31 December 2008 – see note 25.  

Refinancing costs of £20.5m (2007: nil) were costs incurred in relation to the proposed equity raising in the first half of 2008 and in relation to the refinancing of the Group’s 
debt. Further refinancing costs will be incurred in 2009 on the signing of the new debt agreements. 

Profit on ordinary activities before financing costs for continuing operations has been arrived at after charging/(crediting): 

Cost of inventories recognised as expense in cost of sales, before write downs of inventories 
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 

2008
£m 

2,946.9
1,071.8
(59.0)
7.5
123.0
8.8

2007 
(restated)
£m 
3,285.8
289.7
–
7.0
35.7
5.1

*  The amortisation of intangibles in 2008 includes the impairments of the George Wimpey brand of £103.9m and of software development costs of £12.4m (2007: impairment losses of £30.0m on the 

Laing and Morrison Homes brands). 

66 

www.taylorwimpey.com 

 
5. Net operating expenses and profit on ordinary activities before finance costs continued 

The remuneration paid to Deloitte LLP, the Group’s external 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 

2008
£m 

2007
£m 

0.2
0.6
0.8
0.1
0.3
2.2
0.6
3.2
4.0

0.3
0.7
1.0
0.1
0.3
0.7
0.1
1.2
2.2

Non-audit services in 2008 predominantly relate to work required as a result of Deloitte LLP’s role as auditors, or work resultant from knowledge and experience gained  
as part of the role. Corporate finance services include necessary work related to the Group’s proposed equity raising and subsequent advice and support with bank 
renegotiations. It also includes work performed in connection with the disposal of the construction business. Their work was either the subject of a competitive tender or  
was best performed by the Group’s auditors because of their knowledge of the Group. Tax services include tax compliance work for certain subsidiaries, as well as advice in 
connection with a restructuring of the Group. Other services include advice in respect of the Group’s forecasting and cash management procedures. See page 41 for details  
of the Group’s policies in respect of non-audit services and approval by the Audit Committee. 

6. Staff costs 

Total Group 

Average number employed 
Housing United Kingdom including corporate office 
Housing North America 
Housing Spain and Gibraltar 
Construction – continuing and discontinued* 

United Kingdom 
Overseas 

*  Of the 2,743 average staff number in 2008, 1,102 related to the disposed construction business (2007: 1,441). 

Remuneration 
Wages and salaries 
Redundancy costs 
Social security costs 
Other pension costs 

2008
Number 

2007
Number 

4,063
1,158
105
2,743
8,069

5,090
2,979
8,069

4,744
1,173
171
3,639
9,727

6,175
3,552
9,727

2008
£m 

2007
£m 

255.3
17.9
27.3
12.7
313.2

314.2
15.4
34.0
16.3
379.9

The information required by the Companies Act 1985 and the Listing Rules of the Financial Services Authority is contained on pages 44 to 52 in the Directors’ Remuneration Report. 

Taylor Wimpey plc Annual Report and Accounts 2008  67

 
 
 
 
 
 
Financial Statements 
Notes to the Consolidated Financial Statements continued 
for the year to 31 December 2008 

7. Finance costs 

Finance costs from continuing operations are analysed as follows: 

Interest on bank overdrafts and loans 
Interest on debenture loans 
Movement on interest rate derivatives 

Unwinding of discount on land creditors and other payables 
Notional net interest on pension liability (note 24) 

Exceptional finance costs: 
Loan and debenture fees 

2008
£m 

72.5
55.4
10.8
138.7
26.7
11.7
177.1

10.5
187.6

2007 
(restated)
£m 
45.9
47.4
5.4
98.7
19.3
3.8
121.8

–
121.8

The exceptional finance costs relate to the write off of the remaining unamortised bank loan and debenture fees relating to the Group’s financing arrangements which were in place 
throughout 2008. The amortisation of these fees was accelerated due to the refinancing of the Group’s debt arrangements (see note 37). 

8. Tax 
Tax (credited to)/charged in the income statement for continuing operations is analysed as follows: 

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 
Current year 
Prior years 

2008
£m 

(124.3)
6.0
–
(22.8)
–
(141.1)

32.7
–
31.8
–
64.5
(76.6)

2007 
(restated)
£m 

85.6
(9.4)
(5.0)
18.0
16.9
106.1

(8.6)
4.9
80.9
(9.9)
67.3
173.4

Corporation tax is calculated at 28.5% (2007: 30%) of the estimated assessable loss (2007: 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, and the write off of the deferred tax asset relating to post-retirement liabilities. This includes the effect of the change in the UK rate of corporation tax from 30%  
to 28% from 1 April 2008.  

68 

www.taylorwimpey.com 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8. Tax continued 

The (credit)/charge for the year can be reconciled to the loss per the income statement as follows: 
Loss before tax 
Tax at the UK corporation tax rate of 28.5% (2007: 30%) 
Under 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 deferred tax assets previously recognised 
Other 
Tax (credit)/charge for the year 

2008
£m 
(1,969.7)
(561.4)
6.0
–
205.6
(8.4)
(1.4)
217.2
65.8
–
(76.6)

2007 
(restated)
£m 
(33.6)
(10.1)
3.5
(2.6)
14.0
(18.5)
(14.5)
12.1
189.4
0.1
173.4

The tax credit for the year includes an amount in respect of exceptional items of £100.0m (2007: £70.2m charge). This is made up of a credit of £91.6m (2007: £14.9m) in 
respect of UK(cid:3229)tax and a credit of £8.4m (2007: £85.1m charge) in respect of US(cid:3229)tax. 

The charge in the UK and the US(cid:3229)reflects a write off of deferred tax assets held by the Group, the utilisation of which is not seen as probable in the foreseeable future primarily 
due to the continued and significant weakening of the UK and US markets in the second half of 2008. 

9. Dividends 

Amounts recognised as distributions to equity holders in the year: 
Final dividend for the year ended 31 December 2007 of 10.25p (2006: 9.75p) per share 
Interim dividend for the year ended 31 December 2008 of nil (2007: 5.5p) per share 

The Group does not propose to pay a final dividend in respect of the 2008 financial year (2007: £107.9m). 

10. Earnings per share 

Basic loss per share – total Group 
Diluted loss per share – total Group 

Basic loss per share from continuing operations 
Diluted loss per share from continuing operations 

Basic earnings per share from discontinued operations 
Diluted earnings per share from discontinued operations 

Adjusted basic (loss)/earnings per share from continuing operations 
Adjusted diluted (loss)/earnings per share from continuing operations 

Weighted average number of shares for basic (loss)/earnings per share – million 
Weighted average number of shares for diluted (loss)/earnings per share – million 
Weighted average number of shares for adjusted diluted (loss)/earnings per share – million 

2008
£m 

2007
£m 

107.9
–
107.9

56.6
60.7
117.3

2008 

(174.8p)
(174.8p)

(179.8p)
(179.8p)

5.0p
5.0p

(9.4p)
(9.4p)

1,053.1
1,053.1
1,053.1

2007 
(restated)
(24.2p)
(24.2p)

(25.5p)
(25.5p)

1.3p
1.3p

29.5p
29.4p

818.5
818.5
821.0

For 2008, 57.4m potential ordinary shares have been excluded from the calculation of the weighted average number of shares as they are anti-dilutive. For 2007, 25.5m 
potential ordinary shares were excluded from the calculation of the weighted average number of shares as they were anti-dilutive, except in the case of adjusted diluted 
earnings per share which included 2.5m of dilutive potential ordinary shares. 

Under the Override Agreement (see note 37), on 30 April 2009 the Company agreed to issue 57.9m warrants giving the holders the right to subscribe to an equivalent number 
of ordinary shares in Taylor Wimpey plc at par value. Had the warrants been issued in the 2008 financial year, they would have been anti-dilutive and not included in the 
calculation of weighted average number of shares for the year. 

Taylor Wimpey plc Annual Report and Accounts 2008  69

 
 
 
 
 
 
 
 
Financial Statements 
Notes to the Consolidated Financial Statements continued 
for the year to 31 December 2008 

10. Earnings per share continued 
Adjusted basic and adjusted diluted (loss)/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 continuing Group. A reconciliation from loss from continuing operations attributable to equity shareholders used for basic and diluted loss 
per share to that used for adjusted (loss)/earnings per share is shown below:  

Loss from continuing operations for basic loss per share and diluted loss per share 
Add exceptional items (see notes 5 and 7) 
(Deduct)/add tax effect of exceptional items 
(Loss)/profit from continuing operations for adjusted basic and adjusted diluted (loss)/earnings per share 

11. Goodwill 

Cost and carrying amount 
At 1 January 2007 
Acquisition of George Wimpey 
Changes in exchange rates 
At 31 December 2007 
Impairment loss recognised in the year 
At 31 December 2008 

2008
£m 
(1,894.4)
1,895.0
(100.0)
(99.4)

2007 
(restated)
£m 
(208.2)
379.7
70.2
241.7

£m 

363.1
336.8
(0.1)
699.8
(699.8)
–

As a result of the 2008 impairment test, the Group has fully impaired all goodwill associated with both the Housing United Kingdom business segment (2007 carrying value: 
£694.3m), and the Housing North America business segment (2007 carrying value: £5.5m) see note 13 below for further details.  

12. Other intangible assets 

Cost 
At 1 January 2007  
Acquisition of George Wimpey Plc 
Additions  
Changes in exchange rates 
At 31 December 2007 
Additions 
At 31 December 2008 

Amortisation/impairment  
At 1 January 2007  
Charge for the year  
Impairment loss for the year (note 13) 
Changes in exchange rates 
At 31 December 2007 
Charge for the year  
Impairment loss for the year (note 13) 
At 31 December 2008 

Carrying amount 
31 December 2008 
31 December 2007 

Software
development
costs
£m 

–
15.8
0.4
–
16.2
2.5
18.7

–
(2.0)
–
–
(2.0)
(4.3)
(12.4)
(18.7)

–
14.2

Brands
£m 

–
140.0
–
0.2
140.2
–
140.2

–
(3.7)
(30.0)
(0.2)
(33.9)
(2.4)
(103.9)
(140.2)

–
106.3

Total
£m 

–
155.8
0.4
0.2
156.4
2.5
158.9

–
(5.7)
(30.0)
(0.2)
(35.9)
(6.7)
(116.3)
(158.9)

–
120.5

As a result of the 2008 impairment test, the Group has fully impaired all other intangible assets (2007: £30m) – see note 13 below for further details.  

70 

www.taylorwimpey.com 

 
 
 
13. Impairment 
The Group is required to test goodwill for impairment on an annual basis or sooner when there are indicators that it might be impaired, and to test other intangible assets for 
impairment if there are indications that the assets might be impaired. The significant downturn in the UK housing market in early 2008 as well as the ongoing deterioration in 
the US market led to the Group performing a full impairment test on intangible assets at the half year reporting date. As a result, the Group fully impaired all remaining goodwill, 
brands and software development costs. The impairment losses recognised within operating expenses in the Group’s income statement were as follows: 

Business Segment: 

Housing United Kingdom 
Housing North America 

Goodwill
£m 
694.3
5.5
699.8

Software 
development 
costs
£m 
12.4
–
12.4

Brands
£m 
103.9
–
103.9

2008 
Total 
£m 

810.6 
5.5 
816.1 

Goodwill 
£m 
– 
– 
– 

Brands
£m 
10.0
20.0
30.0

Software 
development 
costs
£m 
–
–
–

2007
Total
£m 
10.0
20.0
30.0

Housing United Kingdom 
In the first half of 2008 it became apparent that the weakness seen in the US housing market in 2007 had extended to the UK housing market as mortgage availability reduced 
sharply and consumer confidence was eroded by both falling house prices and wider economic uncertainty. The effect of this on the UK business segment was seen in year-
on-year declines in average selling prices and the number of completions (on a pro forma basis) and at the half year the UK business took a significant write down in the value 
of its inventory to reflect its revised estimate of the net realisable value of its land and work in progress. As a result, the Group performed a full impairment test on its other 
intangible assets and goodwill at the half year. The impairment test showed that the discounted cash flows forecast to be generated by the UK business segment were lower 
than the carrying value of the segment assets by an amount greater than the aggregate value of the goodwill, brands and capitalised software development costs associated 
with the segment and therefore, in accordance with IAS 36 Impairment of Assets, the Group fully impaired all remaining goodwill of £694.3m, brands of £103.9m and other 
intangible assets of £12.4m. 

Housing North America 
The US housing market experienced decline in 2007 and despite some initial stabilisation in early 2008 market conditions continued to decline across the year. In particular 
certain US markets which had remained resilient to the downturn in 2007 were affected in 2008, including the market to which the 2007 goodwill balance of £5.5m related.  
As a result the Group has now fully impaired the remaining goodwill of £5.5m associated with its North American Housing segment. 

Key Assumptions 
For the purpose of impairment testing of goodwill and other intangible assets, the Group’s cash-generating units were determined at the level of business segment. The 
impairment tests were performed by comparing the carrying value of each cash-generating unit with its recoverable value, determined on the basis of the cash-generating 
unit’s value in use. The value in use was calculated as the present value of the future cash flows expected to be derived over the next 20 years from the cash-generating unit 
related to the goodwill or intangible asset, using the latest management-approved business plan as the source of the cash flows for the first three years, and a pre-tax discount 
rate of 12% (2007:12%) which was considered to be the Group’s view of an appropriate risk adjusted pre-tax discount rate for the UK housing market. The other key 
assumptions used in the value in use calculations for both business segments were as follows: 

Initial three-year forecast period 

Decline in completions from 2007 pro forma*, based on industry forecasts for the UK and US housing markets 
Average selling prices lower than 2008 average prices in the six months to 30 June 2008 based on industry forecasts for the UK and US 
housing markets 
Gross margin consistent with experience to 30 June 2008, based on the Group’s past experience of build and infrastructure costs relative 
to selling prices  
No account taken of expected but not yet committed operating cost savings 

Years four and five 

Growth in annual completions, based on internal expectations of recovery in the UK and US housing markets by reference to industry 
forecasts by year five to levels consistent with the pro forma Group in 2007  
Gross margin growth rate of 0% 

Forecast period beyond year five 

Long-term growth rate of 0% 

*  Pro forma results reflect the aggregated total of completions or other relevant data points for the combined legacy businesses of Taylor Woodrow plc and George Wimpey Plc as if the merger were 

effected on 1 January 2007. 

As noted above, the 2008 tests were performed as at 30 June 2008 for the purposes of the Group’s half year reporting. The UK housing market experienced significant and 
rapid decline in the second half of the year such that certain of the assumptions used would have been more conservative if the tests had been performed at the year-end 
date; in particular, the decline in average selling prices in the initial three-year forecast period would have been more acute than the decline assumed in the half year 
impairment test. However, as the half year test resulted in all goodwill and other intangible assets being fully impaired, this would not have had any impact on the level of 
impairment loss recorded by the Group.  

Under IAS 36, an impairment of goodwill may not be reversed. Should the decline experienced in the UK market reverse, the brand and software development cost 
impairments may reverse in part or in whole, provided that by the time of the reversal these assets would not already have been fully amortised through the continued charging of 
systematic amortisation over their useful lives. 

Taylor Wimpey plc Annual Report and Accounts 2008  71

 
 
 
Financial Statements 
Notes to the Consolidated Financial Statements continued 
for the year to 31 December 2008 

14. Property, plant and equipment 

Cost or valuation 
At 1 January 2007 
Additions 
Disposals 
Acquisition of George Wimpey Plc  
Changes in exchange rates 
At 31 December 2007 
Additions 
Disposals 
Changes in exchange rates 
At 31 December 2008 

Accumulated depreciation 
At 1 January 2007 
Disposals 
Charge for the year 
Changes in exchange rates 
At 31 December 2007 
Disposals 
Charge for the year 
Changes in exchange rates 
At 31 December 2008 

Freehold land 
and buildings
£m 

Plant and
equipment
£m 

9.6
–
(1.5)
1.2
–
9.3
–
(8.1)
0.3
1.5

–
–
–
–
–
–
–
–
–

63.6
13.6
(13.3)
15.2
0.3
79.4
10.9
(34.4)
4.9
60.8

47.7
(6.5)
8.3
0.2
49.7
(14.7)
7.9
3.9
46.8

All Freehold land and buildings and all plant and equipment were held at cost at 31 December 2008 (2007: £88.2m held at cost, £0.5m held at 2006 valuation). 

Freehold land 
and buildings
£m 
1.5
9.3

Plant and
equipment
£m 
14.0
29.7

2008
£m 

–
89.4
89.4

(20.2)
(32.5)
(52.7)

36.7
31.0
67.7

Carrying amount 
At 31 December 2008 
At 31 December 2007 

15. 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 

72 

www.taylorwimpey.com 

Total
£m 

73.2
13.6
(14.8)
16.4
0.3
88.7
10.9
(42.5)
5.2
62.3

47.7
(6.5)
8.3
0.2
49.7
(14.7)
7.9
3.9
46.8

Total
£m 
15.5
39.0

2007
£m 

–
101.6
101.6

(40.9)
(27.6)
(68.5)

33.1
26.8
59.9

 
 
 
 
 
 
 
15. Interests in joint ventures continued 

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 four (2007: five) principal joint ventures. 

Particulars of principal joint ventures are as follows: 

Country of incorporation  
Great Britain 

USA 

* 

Interest held by subsidiary undertakings. 

Name of joint venture equity accounted  
in the consolidated accounts  
Greenwich Millennium Village Limited* 
Strada Developments Limited* 
Academy Central Limited Liability Partnership* 
Taylor Woodrow Communities/Steiner Ranch Limited* 

2008
£m 

24.2
(14.5)
9.7
(1.7)
8.0
(0.2)
7.8
(0.2)
7.6

2007
£m 

81.3
(51.4)
29.9
(1.6)
28.3
(0.6)
27.7
(4.3)
23.4

Taylor Wimpey plc 
interest in the issued 
ordinary share capital 
50%
50%
62%
50%

16. 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 2007 
Credit/(charge) to income 
Charge to equity 
Acquisition of subsidiaries 
Changes in exchange rates 
At 31 December 2007 
(Charge)/credit to income 
Charge to equity 
Disposal of subsidiaries 
Changes in exchange rates 
At 31 December 2008 

Capital
allowances
£m 
3.1
0.4
–
0.7
–
4.2
(5.5)
–
–
–
(1.3)

Short term
timing
differences
£m 
14.0
(15.0)
(2.6)
12.8
0.8
10.0
(3.0)
–
(0.4)
–
6.6

Brands 
£m 
– 
11.4 
– 
(41.2) 
– 
(29.8) 
29.8 
– 
– 
– 
– 

Inventory
adjustments
£m 
8.9
(54.9)
–
85.6
0.5
40.1
(46.1)
–
–
6.0
–

Retirement
benefit
obligations
£m 
68.6
(10.1)
(29.6)
34.5
–
63.4
(39.7)
(23.7)
–
–
–

Total
£m 
94.6
(68.2)
(32.2)
92.4
1.3
87.9
(64.5)
(23.7)
(0.4)
6.0
5.3

The £23.7m charge to equity comprises a credit of £23.5m in respect of deferred tax on actuarial losses on defined benefit pension schemes taken to the statement of 
recognised income and expense during the year, and a charge of £47.2m in respect of the write off of the deferred tax asset on retirement benefit obligations. 

The recognition of deferred tax assets on capital allowances, short term timing differences and inventory write downs reflects the amount the Group believes is probable to be 
utilised in the UK and US in future years, which has been assessed in light of the weakening market and general worsening economic conditions in the second half of 2008.  

In addition, the deferred tax liability on brands has reduced to nil (2007: £29.8m) as a result of the impairment of those brands. The deferred tax asset recognised on the  
UK retirement benefit obligations has reduced to nil (2007: £63.4m at 28%), due to a lack of visibility over the ability to recover the scheduled deficit repair payments. 

The net deferred tax balance is analysed into assets and liabilities as follows: 

Deferred tax assets 
Deferred tax liabilities 

2008
£m 
6.6
(1.3)
5.3

2007
£m 
117.7
(29.8)
87.9

Taylor Wimpey plc Annual Report and Accounts 2008  73

 
 
 
 
 
 
 
 
 
 
Financial Statements 
Notes to the Consolidated Financial Statements continued 
for the year to 31 December 2008 

16. Deferred tax continued 
At the balance sheet date, the Group has unused UK capital losses of £409.2m (2007: £418.0m), of which £271.7m (2007: £296.8m) are agreed as available for offset against 
future capital profits. No deferred tax asset has been recognised in respect of these losses because the Group does not believe that it is probable 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 Taylor Wimpey Group of 
any gains and previous losses. 

The Group has not recognised potential deferred tax assets relating to inventory charges, pension liabilities and tax losses carried forward amounting to £248.3m (2007: nil)  
in the UK and £303.6m (2007: £189.4m) in the US and £17.3m (2007: £9.7m) in other jurisdictions. Local tax legislation permits losses to be carried forward 20 years in the 
US, 15 years in Spain and indefinitely in the UK.  

Temporary differences arising in connection with interests in associates and joint ventures are insignificant, therefore no deferred tax balance has been recognised. 

17. 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 22. 

2008
£m 
1.5
34.4

3,410.3
1,438.8
5.6
4,890.6

2007
£m 
2.3
106.4

3,879.4
2,019.6
10.1
6,017.8

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 £81.3m (2007: £59.6m) are recorded within ‘Residential developments: Land’. 

During the year, the Group wrote down the carrying value of certain inventories to net realisable value following a significant deterioration in market conditions. The write down 
reflects the extent to which current market conditions have lowered management’s estimates of selling prices and associated costs to sell for its land and work in progress 
below the value at which the inventory had previously been held in the balance sheet. The write down of £1,071.8m (2007: £289.7m) is included as an exceptional charge in 
the consolidated income statement. As a result of this review of the carrying value of inventory, the Group also reversed £59.0m (2007: nil) of write downs which had been 
previously charged to the income statement where management’s estimates of recoverable value for certain land and work in progress had improved. This reversal is treated 
as exceptional income and netted off the exceptional charge. 

18. 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 

2008
£m 

2007
£m 

6.0
(0.8)
5.2
382.4
(377.2)
5.2

57.3
(39.1)
18.2
3,684.8
(3,666.6)
18.2

At 31 December 2008, retentions held by customers for contract work amounted to £2.3m (2007: £11.1m). The Group’s UK construction business was sold on 9 September 2008 
(see note 31). The remaining balances relate to a small construction operation in Ghana which is included in the Corporate business segment, and which was disposed of 
subsequent to year-end on 21 April 2009. 

19. Other financial assets 

Trade and other receivables 

Trade receivables 
Joint ventures 
Currency and interest rate derivatives 
Other receivables 

Current 

Non-current 

2008 
£m 
127.3 
– 
– 
54.0 
181.3 

2007
£m 
257.1
9.0
–
125.2
391.3

2008
£m 
40.0
0.2
3.0
4.7
47.9

2007
£m 
41.9
–
19.9
14.6
76.4

The average credit period taken on sales is 13 days (2007: 15 days). An allowance has been made for estimated irrecoverable amounts from trade receivables of £3.7m (2007: £2.2m). 
This allowance has been determined by reference to past default experience. 

74 

www.taylorwimpey.com 

 
 
 
 
 
 
 
 
 
19. Other financial assets continued 

Cash and cash equivalents 

Cash and cash equivalents (see note 23) 

2008
£m 
752.3

2007
£m 
130.0

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 in both years. 

20. Bank loans and overdrafts 

Bank overdrafts repayable on demand  
Bank loans 

Amount due for settlement within one year 
Amount due for settlement after one year 
Total bank borrowings 

Analysis of borrowings by currency: 
31 December 2008 
Sterling 
Canadian dollars 
Euros 
Ghanaian cedis 
US dollars 

31 December 2007  
Sterling 
Canadian dollars 
Euros 
Ghanaian cedis 
US dollars 

2008
£m 
22.6
1,289.9
1,312.5

23.4
1,289.1
1,312.5

2007
£m 
12.2
708.5
720.7

12.2
708.5
720.7

Bank overdraft
£m 

Bank loans
£m 

0.1
18.4
–
4.1
–
22.6

0.7
8.0
–
3.5
–
12.2

1,030.0
–
106.3
–
153.6
1,289.9

295.0
–
–
–
413.5
708.5

The Directors are unable to estimate reliably the impact of the Group’s credit risk on the fair value of the bank loans at 31 December 2008, which was before the successful 
conclusion of the refinancing (2007: fair value approximates book value). As set out in note 21, at 31 December 2008 the market value of the quoted Eurobonds was 32% of 
their book value.  

Bank borrowings and overdrafts are arranged at floating rates of interest, from 3.82% to 19.75% (2007: 5.25% to 18.0%). 

Secured bank loans and overdrafts totalled £23.4m (2007: £4.5m). Secured bank loans and overdrafts are secured on certain fixed asset properties and land. 

On 24 December 2008 the Group announced that the providers of its bank facilities and its private placement noteholders had agreed to defer the testing date into 2009 of 
certain financial covenants which had been due for testing on 31 December 2008. Had this deferral not been obtained, the Group would have been in breach of an interest 
cover covenant at the year-end which could have resulted in all bank loans being presented as repayable on demand in these financial statements. However, as a result of this 
deferral, the Group remained in full compliance with all its existing covenants and loan terms in the current and preceding period. The Override Agreement signed on 7 April 
2009 includes new financial covenants with which the Group is fully compliant and which supersede those set out in the old financing agreements, including the covenant for 
which the test was deferred into 2009 – see note 37.  

Taylor Wimpey plc Annual Report and Accounts 2008  75

 
 
 
 
 
 
 
 
 
Financial Statements 
Notes to the Consolidated Financial Statements continued 
for the year to 31 December 2008 

21. Debenture loans 

Unsecured 
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 (1) (2) 
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 (2) 
Carrying value 

Fair value (2) 

2008
£m 

2007
£m 

–
24.7
76.4
52.1
254.5
48.8
30.0
18.6
76.5
121.5
25.2
21.1
19.7
200.0
969.1

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

308.8

837.9

(1) The guarantee in respect of the 6.625% £250m guaranteed bond due 2012 was released on 16 January 2004. 

(2) The fair value for all debenture loans has been based on the prices indicated for the two listed Eurobonds as at 31 December 2008 on the basis that the discount applied by the market to the listed 
bonds could be equally applicable to all of the Group’s debt. This discount reflected the uncertainty in the market surrounding the Group’s debt negotiations at the balance sheet date, which has 
subsequently been resolved on the signing of the Override Agreement in April 2009. 

Repayable 
Within one year or on demand 
Total falling due in more than one year 

Interest rates and currencies of debenture loans: 

31 December 2008 
Sterling (3) 
US dollars 

31 December 2007 
Sterling (3) 
US dollars 

2008
£m 

2007
£m 

101.1
868.0

1.4
823.3

Fixed rate debt 

Floating 
rate 
£m 

Fixed rate
£m 

Weighted
average 
interest
rate
% 

Weighted
average
time until
maturity
years 

– 
– 
– 

1.4 
– 
1.4 

484.5
484.6
969.1

473.3
350.0
823.3

6.53
6.04
6.29

6.53
6.05
6.33

6.2
4.4
5.5

7.2
5.4
6.4

(3) Interest on £100.0m (2007: £100.0m) of the 6.625% £250m guaranteed bond 2012 has been swapped from 6.625% to floating rate based on US dollar LIBOR applicable to periods of three 

months. The above table does not reflect the impact of these swaps. 

On 24 December 2008 the Group announced that the providers of its bank facilities and its private placement note holders had agreed to defer the testing date into 2009 of 
certain financial covenants which had been due for testing on 31 December 2008. Had this deferral not been obtained, the Group would have been in breach of an interest 
cover covenant at the year end which could have resulted in certain debenture loans being presented as repayable on demand in these financial statements. However, as a 
result of this deferral, the Group remained in full compliance with all its existing covenants and loan terms in the current and preceding period. The Override Agreement signed 
on 7 April 2009 includes new financial covenants with which the Group is fully compliant which supersede those set out in the old financing agreements, including the 
covenant for which the test was deferred into 2009 – see note 37.  

76 

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2007
£m 
376.6
–
–
11.8
388.4

2007
£m 
453.7
375.3
829.0

2007
£m 
711.0
42.4
38.4
37.2
829.0

22. Trade and other payables 

Trade payables 
Joint ventures 
Currency and interest rate derivatives 
Other payables 

Current 

Non-current 

2008 
£m 
562.9 
– 
14.4 
593.4 
1,170.7 

2007
£m 
920.6
3.4
1.5
614.8
1,540.3

2008
£m 
293.8
–
–
48.3
342.1

Trade payable days were 26 days (2007: 43 days), based on the ratio of year-end trade payables (excluding sub-contract retentions and unagreed claims of £28.8m  
(2007: £23.8m) and land creditors) to amounts invoiced during the year by trade creditors. 

Other payables include customer deposits for reserving plots of £80.1m (2007: £90.1m). 

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 

2008
£m 
355.2
290.1
645.3

2008
£m 
552.5
33.1
35.9
23.8
645.3

Land creditors of £492.0m (2007: £570.9m) are secured against land acquired for development, or supported by bond or guarantee.  

23. Financial instruments 
Capital management  
The Group operates within policies and procedures approved by the Board. The Group’s capitalisation policy, which was established in 2007, set overall parameters for the 
consolidated capital structure designed to maintain a strong credit rating for the business and an appropriate funding structure for the assets based on a minimum interest 
cover and a maximum gearing. Equity, retained profits and long term fixed interest debt have historically been used to finance intangible assets, fixed assets and land. Short 
term borrowings are primarily used to finance net current assets, other than landbank assets of more than one year, and work in progress. In addition to term borrowings and 
overdraft facilities, the Group has access to committed revolving credit facilities and has accessed the capital markets from time to time. The rapid deterioration in the UK 
housing market experienced in 2008, which would have resulted in a breach of one of the Group’s financial covenants at 31 December 2008 had the Group not secured a 
deferral in the testing of that covenant, means that the Group’s policy has been temporarily suspended. This suspension is expected to continue throughout the term of the 
new financing agreements as set out in the Override Agreement (see note 37). The Group’s focus is to remain in compliance with all of its financial obligations and to generate 
cash to reduce its level of borrowings.  

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 
Cash and cash equivalents 
Loans and receivables: 
Land receivables 
Trade and other receivables 

  Mortgage receivables 

Note 

(a)
(a)
(b)

(b)
(b)
 (b)

2008
Carrying
value
£m 

2007
Carrying
value
£m 

0.4
2.7
752.3

55.6
95.4
31.7
938.1

17.7
2.2
130.0

108.6
192.3
16.7
467.5

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 19 include £43.4m (2007: £146.9m) of non-financial assets. 

Taylor Wimpey plc Annual Report and Accounts 2008  77

 
 
 
 
 
 
 
 
 
 
Financial Statements 
Notes to the Consolidated Financial Statements continued 
for the year to 31 December 2008 

23. Financial instruments continued 

Financial liabilities 
Derivative financial instruments: 
  Designated as effective hedging instruments 
  Held for trading 
Amortised cost: 
  Bank loans and overdrafts 

Land creditors 
Trade and other payables 

  Debentures 

2008
Carrying
value
£m 

2007
Carrying
value
£m 

1.8
12.6

1,312.5
645.3
701.1
969.1
3,642.4

–
1.5

720.7
829.0
892.0
824.7
3,267.9

Note 

(a)
(a)

(b)
(b)
(c)

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 22, include £152.6m (2006: £206.2m) 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. 

(c) Details of fair values of debenture loans are provided in note 21. 

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 

Designated as hedging instruments: 
  US$160.5m floating US$ to fixed £ interest 

2008 
Notional 
amount 

2008
Weighted 
average
fixed 

2007
Notional
amount 

£185.0m 
US$145.0m 
– 

5.28% £235.0m
5.16% US$145.0m
– US$50.0m

2007
Weighted
average
fixed 

5.10%
5.16%
5.63%

£100.0m 

6.63% £100.0m

6.63%

In addition, forward contracts have been entered into to hedge transaction risks on intra-Group loans to buy against Sterling: US$nil, €2.5m and C$nil (2007: US$55m and  
C$90.0m; sell against Sterling: €70.9m). The fair values of the forward contracts are not material as they were entered into on or near 31 December 2008 and mature not more 
than one month later. 

Loss before tax has been arrived at after charging/(crediting) the following gains and losses: 

Change 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 

2008
£m 
6.9
(6.9)
(10.8)
(10.8)

2007
£m 
1.7
(1.7)
(5.4)
(5.4)

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. 

78 

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Interest rate risk management  

23. Financial instruments continued 
(a)
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 payments. 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 are 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.  

On 7 April 2009 the Group agreed new terms for its debt – see note 37. 

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 receives interest 
at a fixed rate of 6.625% based on a nominal value of £100m matching the underlying borrowing and pay US dollar floating rates on a nominal value of US$160.5m. During the 
period, the hedge was 100% effective (2007: 100%) in hedging the fair value exposure to interest rate movements and as a result the carrying amount of the loan was reduced 
by £6.9m (2007: increased by £1.7m) which was included in the income statement offsetting the fair value movement of the bifurcated interest rate swap.  

A number of derivatives are held 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% (2007: 1%) rise in interest 
rates is £(5.6m) (2007: £(5.8m)), before tax, a 1% (2007: 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% (2007: 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) 

Sensitivity 
income 
2008 
£m 
4.4 
(9.5) 
(5.1) 

Sensitivity 
income 
2008 
£m 
(4.6) 
9.5 
4.9 

Sensitivity
equity
2008
£m 
4.7
(9.5)
(4.8)

Sensitivity
equity
2008
£m 
(4.8)
9.5
4.7

Sensitivity
income
2007
£m 
5.3
(4.6)
0.7

Sensitivity
income
2007
£m 
(5.6)
4.6
(1.0)

Sensitivity
equity
2007
£m 
1.8
(4.6)
(2.8)

Sensitivity
equity
2007
£m 
(1.9)
4.6
2.7

The interest rate sensitivity shown above will be superseded by the terms of the Override Agreement – see note 37. 

(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. 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 Sterling. 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 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 historical 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.  

Taylor Wimpey plc Annual Report and Accounts 2008  79

 
 
 
 
Financial Statements 
Notes to the Consolidated Financial Statements continued 
for the year to 31 December 2008 

23. Financial instruments continued 
Hedge accounting 
The Group designates the bifurcated cross currency swaps such that the nominal amount of US$160.5m (2007: US$160.5m) is used to hedge part of the Group’s net 
investment in US dollar denominated assets and liabilities.  

The Group has also designated the carrying value of US$527.5m and €75.0m (2007: US$982.5m and €nil) borrowings as a net investment hedge of part of the Group’s 
investment in US dollar and Euro denominated assets respectively. 

The hedge was highly effective throughout the period (2007: 100% effective) and is expected to be highly effective prospectively. The change in the carrying amount of the 
derivatives which were effective hedging instruments and the change in the carrying value of the borrowings offset the exchange movement on the Group’s US dollar and  
€ net investments and are 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 20% increase (2007: 10%) in the respective currencies against Sterling and in accordance with IFRS 7, all other variables remaining constant. A 20% 
(2007: 10%) decrease in the value of Sterling would have an equal but opposite effect.  

The 20% (2007: 10%) change represents a reasonably possible change in the specified foreign exchange rates in relation to Sterling. 

US dollar  
Canadian dollar  
Euro  

Income 
sensitivity 
2008 
£m 
(4.4) 
(0.4) 
0.4 
(4.4) 

Equity
sensitivity
2008
£m 
10.6
(35.2)
(14.1)
(38.7)

Income
sensitivity
2007
£m 
(15.1)
0.2
0.2
(14.7)

Equity
sensitivity
2007
£m 
(20.2)
(15.6)
0.2
(35.6)

Credit risk 
Credit risk is the risk of financial loss where counterparties are not able to meet their obligations.  

The Group’s historical policy was to place surplus cash with banks with a minimum credit rating. This was modified in 2008 due to the uncertainties in the financial sector  
and where possible surplus cash, when not used to repay borrowings is placed on deposit with the Group’s revolving credit facility syndicate banks. In Canada, surplus  
cash is placed on deposit across a number of banks based on credit rating. 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 sufficient in 
relation to the carrying amount of the receivable to which it relates. 

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. 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 arm’s-length terms which  
will include security where appropriate and are usually repayable from sales proceeds.  

The Group’s exposure to credit risk has increased compared to the prior year due to the current policy of maintaining a higher level of liquidity and the general deterioration  
in credit quality due to the current economic climate. 

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 ideally 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 weekly and monthly basis and funding headroom is maintained above forecast peak requirements to meet unforeseen events. The monitoring of this risk during the year 
identified early that the Group was at risk of breaching one of its debt and private placement covenants, which enabled the Group to commence negotiations with its lenders 
well in advance of the date that the covenant was due to be tested. 

The Group has maintained a higher level of cash balances while the negotiations with its lenders have been continuing. Now that the negotiations have been successfully 
concluded, these cash balances will be used to repay revolving credit facilities. 

In addition to term borrowings and on demand overdraft facilities the Group has access to committed revolving credit facilities and cash balances. At the balance sheet date, 
the total unused committed amount was £410.9m (2007: £1,192.9m ) and cash and cash equivalents of £752.3m (2007: £103.0m). As a result of successfully concluding 
negotiations with its lenders in April 2009, the Group now has committed funding until mid-2012 including term loans, committed revolving credit facilities, committed 
overdrafts, bank guarantee and letter of credit facilities totalling £2,467m. Management believe this level of committed funding is adequate to meet forecast requirements. 

80 

www.taylorwimpey.com 

 
 
23. Financial instruments continued 
The maturity profile of the anticipated future cash flows including interest 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 2008 

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 

Bank loans 
and overdraft
£m 
22.8
60.3
59.6
1,379.4
–
1,522.1

Land  
creditors 
£m 
– 
410.1 
83.3 
118.0 
38.4 
649.8 

Other trade 
payables
£m 
–
634.1
40.1
13.5
13.4
701.1

Bank loans 
and overdraft
£m 

Land  
creditors 
£m 

Other trade 
payables
£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

Debenture 
loans
£m 
–
160.3
54.1
463.0
554.9
1,232.3

Debenture 
loans
£m 

–
54.1
124.7
430.6
514.8
1,124.2

Total
£m 
22.8
1,264.8
237.1
1,973.9
606.7
4,105.3

Total
£m 
12.3
1,387.8
425.5
1,387.5
545.4
3,758.5

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 except in  
the case of a default by either party where the amounts may be settled net. 

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 2008 

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 

Net-settled 
derivatives 
net amount 
£m 
(1.6) 
(4.8) 
(3.4) 
(0.8) 
(10.6) 

Gross-settled
derivatives
receivable
£m 
9.0
6.6
113.3
–
128.9

Gross-settled
derivatives
payable
£m 
(7.3)
(5.4)
(112.3)
–
(125.0)

Net-settled 
derivatives 
£m 
2.0 
0.1 
(1.4) 
– 
0.7 

Gross-settled
derivatives
receivable
£m 
132.1
6.6
119.9
–
258.6

Gross-settled
derivatives
payable
£m 
(130.8)
(4.5)
(96.4)
–
(231.7)

Total
£m 
0.1
(3.6)
(2.4)
(0.8)
(6.7)

Total
£m 
3.3
2.2
22.1
–
27.6

Taylor Wimpey plc Annual Report and Accounts 2008  81

 
 
 
Financial Statements 
Notes to the Consolidated Financial Statements continued 
for the year to 31 December 2008 

24. Retirement benefit schemes 
Retirement benefit obligation comprises gross pension liability of £277.2m (2007: £216.4m) and gross post-retirement health care liability of £2.6m (2007: £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) and 
the George Wimpey Staff Pension Scheme (GWSPS) are funded Defined Benefit schemes. The Taylor Woodrow NHS Pension Scheme (TWNHSPS), which was also a Defined 
Benefit scheme, was disposed of as part of the disposal of the construction business on 9 September 2008. 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. The Group’s 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 £8.9m (2007: £11.2m) were charged to income in respect of defined contribution schemes. The Group also operates a number of 
small overseas pension schemes including defined benefit schemes in the US and Canada. Of the defined benefit pension scheme net deficit of £277.2m (2007: £216.4m) at 
31 December 2008, £268.3m (2007: £217.2m) related to the TWGP&LAF and GWSPS schemes in the UK and £8.9m (2007: £0.8m surplus) related to defined benefit 
schemes in the US and Canada.  

The pension scheme assets of the Group’s principal defined benefit pension schemes, TWGP&LAF and GWSPS 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. 

The most recent formal actuarial valuation of the TWGP&LAF was carried out at 1 June 2007. The most recent formal actuarial valuation of the GWSPS was carried out  
at 31 March 2007. 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 and GWSPS are taking place at 1 June 2010 and 31 March 2010 respectively. 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. 

In 2008 the Group agreed revised funding schedules with the Trustees of both schemes under which the Group will make annual funding contributions of £20m over eight 
years in respect of the TWGP&LAF and £25m over 10 years in respect of GWSPS. Following the last valuation of the GWSPS, the ordinary contribution rate was set at 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 pay inflation 
Real pension increases 

Valuation results 
Market value of assets 
Past service liabilities 
Scheme funding levels 

TWGP&LAF 

GWSPS 

3.15%
3.15%
5.60% 6.75/4.75%
5.15%
0.00%

–
0.00%

TWGP&LAF 
£764m
£926m
82.00%

GWSPS 
£668m
£883m
76.00%

The valuations of the Group’s pension schemes have been updated to 31 December 2008 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: 

United Kingdom 

North America 

2008 

2007 

2008 

2007 

As at 31 December 
Discount rate for scheme liabilities 
Expected return on scheme assets 
General pay inflation 
Deferred pension increases 
Pension increases 

6.30% 

5.80% 5.80-7.00% 5.30-5.80%
5.80-6.45%  6.20-6.25% 5.50-8.00% 5.50-6.60%
2.60%
0.00%
2.15-3.35%  2.25-3.35% 0.00-3.00% 0.00-3.00%

4.30% 
2.80% 

3.00%
0.00%

4.60%
3.10%

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. 

82 

www.taylorwimpey.com 

 
 
 
 
24. 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 

The fair value of assets and present value of obligations of the Group’s defined benefit pension schemes are set out below: 

2008 

           2007 

Male 
86 
87 

Female 
89
90

Male 
84
85

Female 
87
88

31 December 2008 
Assets: 
Equities 
Bonds 
Gilts 
Other assets 

Present value of defined benefit obligations 
Deficit in schemes recognised as non-current liability 
31 December 2007 
Assets: 
Equities 
Bonds/Gilts 
Other assets 

Present value of defined benefit obligations 
(Deficit)/surplus 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 

6.90%
6.50%
3.40%
2.00%

8.10%
5.80/4.60%
5.50%

422.2 
324.2 
474.8 
44.2 
1,265.4 
(1,533.7) 
(268.3) 

488.0 
836.0 
97.5 
1,421.5 
(1,638.7) 
(217.2) 

9.3
5.8
–
–
15.1
(24.0)
(8.9)

8.3
4.4
–
12.7
(11.9)
0.8

431.5
330.0
474.8
44.2
1,280.5
(1,557.7)
(277.2)

496.3
840.4
97.5
1,434.2
(1,650.6)
(216.4)

34%
26%
37%
3%
100%

35%
58%
7%
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 were 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: 

UK Equities 
Non-UK Equities  
Index-Linked Gilts 
Fixed-Interest Gilts 
Other UK bonds 
GTAA 
Property 

TWGP&LAF 

GWSPS 

15%
30%
15%
10%
25%
–
5%

18%
12%
25%
16%
24%
5%
–

Taylor Wimpey plc Annual Report and Accounts 2008  83

 
 
 
 
 
 
 
 
 
 
 
Financial Statements 
Notes to the Consolidated Financial Statements continued 
for the year to 31 December 2008 

24. Retirement benefit schemes continued  

Amount (charged against)/credited to income: 
Current service cost 
Curtailment loss 
Settlement loss 
Operating cost 
Expected return on scheme assets 
Interest cost on scheme liabilities 
Finance charges 
Total charge 

The actual return on scheme assets was a loss of £128.4m (2007: gain of £53.4m). 

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 (loss)/gains recognised in the statement of recognised income and expense 

The cumulative amount of actual gains and losses recognised in the statement of recognised income and expense is £73.8m loss (2007: £16.4m gain). 

2008
£m 

(5.5)
(0.9)
–
(6.4)
82.0
(93.7)
(11.7)
(18.1)

2008
£m 

(210.4)
(22.1)
142.3
(90.2)

2007
£m 

(5.1)
–
–
(5.1)
66.1
(69.9)
(3.8)
(8.9)

2007
£m 

(12.7)
26.7
77.3
91.3

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 – employee  
Interest cost 
Acquisitions 
Actuarial gains 
31 December 

Movement in fair value of scheme assets 
1 January 
Changes in exchange rates 
Expected return on scheme assets and expenses 
Contributions – employer and employee  
Benefits paid 
Plan settlements 
Acquisitions 
Actuarial losses 
31 December 

84 

www.taylorwimpey.com 

2008
£m 

2007 
£m 

1,650.6
5.6
5.5
0.9
–
(80.4)
2.0
93.7
–
(120.2)
1,557.7

955.6
0.4
5.1
–
–
(58.6)
1.2
69.9
781.0
(104.0)
1,650.6

2008
£m 

2007
£m 

1,434.2
3.0
82.0
52.5
(80.8)
–
–
(210.4)
1,280.5

749.7
0.8
63.6
31.2
(56.1)
–
657.7
(12.7)
1,434.2

 
 
 
 
 
24. 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 

2008
£m 

2007 
£m 

2006
£m 

2005
£m 

2004
£m 

1,280.5
(1,557.7)
(277.2)

1,434.2 
(1,650.6) 
(216.4) 

749.7
(955.6)
(205.9)

(210.4)
16.4%

(22.1)
1.4%

(12.7) 
1.0% 

26.7 
2.0% 

24.2
3.0%

0.2
0.0%

706.1
(925.9)
(219.8)

61.4
9.0%

(32.6)
4.0%

627.0
(769.5)
(142.5)

22.0
4.0%

(6.5)
0.8%

The estimated amounts of contributions expected to be paid to the TWGP&LAF during 2009 are £20m, to the GWSPS are £31m.  

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 £23.0m 
Increase by £21.0m 
Increase by £1.6m 
Increase by £38.0m 

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 £15.0m. 

The gross post-retirement liability also includes £2.6m at 31 December 2008 (2007: £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 2008.  

The cost is calculated assuming a discount rate of 5% per annum and an increase in medical expenses of 10% per annum. The premium cost to the Group in respect of the 
retired long-service employees for 2008 was £0.2m (2007: £0.2m). 

25. Provisions 

At 1 January 2007 
Additional provision in the year 
Acquisition of George Wimpey Plc  
Utilisation of provision 
Changes in exchange rates 
At 31 December 2007 
Additional provision in the year 
Utilisation of provision 
Released  
Changes in exchange rates 
At 31 December 2008 

Amount due for settlement within one year  
Amount due for settlement after one year 
31 December 2008 

Housing 
maintenance 
£m 
27.9 
23.5 
5.8 
(18.7) 
– 
38.5 
5.9 
(15.0) 
(0.7) 
10.3 
39.0 

Restructuring
£m 

–
52.8
–
(19.2)
–
33.6
35.1
(42.2)
(5.2)
0.8
22.1

Other
£m 

–
1.7
13.9
(1.2)
0.1
14.5
36.0
(3.4)
(3.2)
2.1
46.0

Total
£m 

27.9
78.0
19.7
(39.1)
0.1
86.6
77.0
(60.6)
(9.1)
13.2
107.1

£m 
56.1
51.0
107.1

Taylor Wimpey plc Annual Report and Accounts 2008  85

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Statements 
Notes to the Consolidated Financial Statements continued 
for the year to 31 December 2008 

25. Provisions continued  
The housing maintenance provision arises principally from warranties and other liabilities on housing sold. Whilst such warranties extend to a period of 10 years, payment of 
these costs is likely to occur within a period of two years. The Group has a restructuring provision relating to the second stage of the reorganisation of the UK Housing 
business following the merger with George Wimpey Plc in 2007. It is anticipated that the majority of this provision, which comprises redundancy costs and empty property 
costs will be utilised within eight years. Other provisions consist of a remedial work provision, provisions for legal claims and other contract-related costs. 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. Provisions for legal claims and contract-related costs comprise various matters arising across the Group, the majority of which are anticipated to be settled within 
a three-year period. 

26. Share capital 

Authorised: 
2,000,000,000 ordinary shares of 25p each  

Issued and fully paid: 
1 January 2007 
Acquisition of George Wimpey Plc 
Options exercised 
US Employee Stock Purchase Plan 
31 December 2007 
US Employee Stock Purchase Plan 
31 December 2008 

2008
£m 

2007
£m 

500.0

500.0

  Number of shares 

£m 

594,150,096
563,919,759
194,175
30,678
1,158,294,708
4,493
1,158,299,201

148.5
141.0
0.1
–
289.6
–
289.6

During the year, options were exercised on 249,796 (2007: 4,347,240) ordinary shares of which 4,493 (2007: 194,175) were new issues with the balance coming from 
Treasury/ESOT at varying prices from 148.8p to 226.8p and shares were issued for a total consideration of nil (2007: £4.2m). Additionally, 844 (2007: nil) ordinary shares were 
awarded to employees for 25 or 40 years’ long service. Under the Group’s senior executives’ share option scheme and executive share option plan, employees held options at 
31 December 2008 to purchase 15,467,631 shares (2007: 855,810) at prices between 16.3p and 252.8p per share exercisable up to 16 October 2018. Under the Group’s 
savings-related share option schemes, employees held options at 31 December 2008 to purchase 24,921,300 shares (2007: 7,043,437) at prices between 37.6p and 278.8p 
per share exercisable up to 31 May 2014. Under the Group’s cash bonus deferral plan and executive bonus plan, employees held options at 31 December 2008 in respect  
of 228,126 shares (2007: 716,604) at nil pence per share exercisable up to 9 April 2010. Under the Group’s performance share plan, employees held conditional awards at  
31 December 2008 in respect of 7,832,194 shares (2007: 4,512,837) at nil pence per share exercisable up to 16 October 2018. Under the Group’s share purchase plan, 
employees held conditional awards at 31 December 2008 in respect of 3,252,206 shares (2007: 871,812) at nil pence per share. The former George Wimpey plans were 
acquired as part of the merger in 2007. Under the George Wimpey Sharesave Scheme, employees held options at 31 December 2008 to purchase 1,257,529 shares  
(2007: 3,378,282) at prices between 164.2p and 276.9p per share exercisable up to 31 May 2012. Under the George Wimpey Executive Option Scheme, employees held 
awards at 31 December 2008 in respect of 2,908,267 shares (2007: 4,182,473) 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 2008 in respect of 1,507,710 shares (2007: 3,990,182) at nil pence per share exercisable 
up to 2 April 2010. 

Under the Override Agreement (see note 37), the Company agreed to issue 57.9m warrants giving the holders the right to subscribe to an equivalent number of ordinary 
shares in Taylor Wimpey plc at par value. The warrants may be exercised at par by the holder within five years of the date of issue. 

27. Share premium account 

Balance at 1 January 2007 
Amortisation of debt transferred from retained earnings 
Balance at 31 December 2007 
Amortisation of debt transferred from retained earnings 
Balance at 31 December 2008 

£m 

758.8
(0.7)
758.1
(4.5)
753.6

86 

www.taylorwimpey.com 

 
 
 
28. Reserves 

Balance at 1 January 2007 
Dividends paid 
Transfers to share premium account 
Share-based payment credit 
Cash cost of satisfying share options 
Replacement options granted on acquisition of  
George Wimpey Plc 
Premium on ordinary shares issued to acquire  
George Wimpey plc 
Actuarial gains net of deferred tax 
Transfer to retained earnings 
Net loss for the year 
Exchange differences on translation of overseas operations, 
net of tax 
Increase in fair value of hedging derivatives 
Decrease for the year  
Balance at 31 December 2007 
Dividend paid 
Transfer to share premium account  
Share-based payment credit  
Cash cost of satisfying share options  
Actuarial losses net of deferred tax  
Deferred tax asset write off  
Transfer to retained earnings  
Exchange differences on translation of overseas operations, 
net of tax  
Decrease in fair value of hedging derivatives  
Net loss for the year  
Balance at 31 December 2008 

Retained 
earnings
£m 
1,214.3
(117.3)
0.7
0.6
(8.9)

Merger relief 
reserve
£m 
–
–
–
–
–

Capital 
redemption 
reserve 
31.5
–
–
–
–

Translation 
reserve  
£m 
(19.1) 
– 
– 
– 
– 

2.9

–

–
61.7
1.0
(197.9)

–
–
–
957.1
(107.9)
4.5
6.0
(0.9)
(66.7)
(47.2)
1,934.7

–
–
(1,841.3)
838.3

1,934.2
–
–
–

–
–
–
1,934.2
–
–
–
–
–
–
(1,934.2)

–
–
–
–

–

–
–
–
–

–
–
–
31.5
–
–
–
–
–
–
–

–
–
–
31.5

– 

– 
– 
– 
– 

22.0 
0.8 
– 
3.7 
– 
– 
– 
– 
– 
– 
– 

50.3 
(31.2) 
– 
22.8 

Share-based 
payment tax 
reserve
£m 

8.2
–
–
–
–

–

–
–
–
–

–
–
(2.6)
5.6
–
–
–
–
–
–
–

–
–
–
5.6

Total 
other reserves
£m 
26.9
–
–
–
–

Other 
£m 
6.3
–
–
–
–

–

–
–
(1.0)
–

–
–
–
5.3
–
–
–
–
–
–
(0.5)

–
–
–
4.8

–

–
–
(1.0)
–

22.0
0.8
(2.6)
46.1
–
–
–
–
–
–
(0.5)

50.3
(31.2)
–
64.7

Merger relief reserve 
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: 
• Make a bonus issue of fully paid shares; 
• 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. 

During the year, £1,934.2m (2007: nil) was transferred to retained earnings to offset the write down charged to the profit and loss account of the investment to which the 
reserve related. 

Other reserves 
Capital redemption reserve 
The capital redemption reserve arose on the historical redemption of parent Company shares, and is not distributable. 

Translation reserve 
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. 

Share-based payment tax reserve 
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.  

Taylor Wimpey plc Annual Report and Accounts 2008  87

 
 
Financial Statements 
Notes to the Consolidated Financial Statements continued 
for the year to 31 December 2008 

29. Own shares 

Balance at 1 January 2007 
Acquired in the year 
Disposed of on exercise of options 
Balance at 31 December 2007 
Disposed of on exercise of options 
Balance at 31 December 2008 

£m 
45.0
251.6
(14.6)
282.0
(6.3)
275.7

The own shares reserve represents the cost of shares in Taylor Wimpey plc purchased in the market and those 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 none of its own shares (2007: 94.8m). 

These comprise ordinary shares of the Company: 
Treasury shares 
Shares held in trust for bonus, option and performance award plans 

2008
Number 

2007
Number 

92.7m
6.8m
99.5m

102.7m
4.5m
107.2m

Employee Share Ownership Trusts (‘ESOTs’) are used to hold the Company’s shares (‘shares’) which are either acquired on the market or (during 2008) 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 the year, 10.0m (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 2008, aggregating 6.7m shares (2007: 4.5m), was covered by outstanding options and conditional awards over shares  
at that date. 

30. Reconciliation of movements in consolidated equity 

Total recognised loss for the year 
Dividends on equity shares 
New share capital subscribed 
Replacement options granted on acquisition of George Wimpey Plc 
Transfer of own shares 
Purchase of own shares 
Decrease in share-based payment tax reserve 
Share-based payment charge 
Cash cost of satisfying share options 
Dividends to minority shareholders 
Net (decrease)/increase in equity 
Opening equity 
Closing equity 

2008
£m 
(1,934.8)
(107.9)
–
–
6.3
–
–
6.0
(0.9)
(0.7)
(2,032.0)
3,705.2
1,673.2

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

88 

www.taylorwimpey.com 

 
 
 
 
31. Discontinued operations and disposals  

Discontinued operations 
On 9 September 2008, Taylor Wimpey plc disposed of Taylor Woodrow Construction (TWC) the results of which have been presented as discontinued. The business was sold 
for £74.0m in cash resulting in a profit on disposal of £55.6m. On disposal, the continuing Group repaid £89.5m of intercompany balances owing to TWC. The cash costs of 
disposal were £3.4m, and £4.2m of cash was disposed of with the business. 

During the period, TWC contributed a £4.3m outflow (2007: £28.4m inflow) to the Group’s net operating cash flows, a £0.6m inflow (2007: £10.6m outflow) in respect of 
investing activities and nil (2007: nil) in respect of financing activities. 

The analysis of the result from TWC is as follows: 

Revenue 
Expenses 
Profit on ordinary activities before finance costs and taxation  
Net interest receivable  
Profit on ordinary activities before taxation  
Taxation 
(Loss)/profit after tax of discontinued operation 
Gain on disposal of discontinued operation 
Tax on gain on sale 
Profit from discontinued operation  

2008
£m 
453.4
(451.3)
2.1
0.1
2.2
(4.7)
(2.5)
55.6
–
53.1

2007
£m 
571.5
(558.1)
13.4
0.7
14.1
(3.8)
10.3
–
–
10.3

An analysis of the assets and liabilities of TWC at the date of sale of 9 September 2008, excluding the intercompany receivable balance of £89.5m settled on disposal, and the 
comparative figures at 31 December 2007 is set out below: 

Property, plant and equipment  
Investment in joint ventures 
Trade and other receivables 
Cash 
Trade and other payables 
Deferred taxation asset/(liability) 
Net liabilities of discontinued operation  

September 
2008
£m 
9.4
0.1
62.7
4.2
(157.2)
0.4
(80.4)

31 December 
2007
£m 
9.1
0.1
59.3
7.0
(153.7)
(0.1)
(78.3)

Prior to its disposal, TWC, which had been a participating employer in the TWGP&LAF defined benefit pension scheme, transferred all of its past and future obligations under 
the scheme to another Group company, Taylor Woodrow Developments Limited (‘TWD Ltd’), part of the continuing operations of the Group. TWD Ltd is included in the 
Housing United Kingdom business segment. As a result of this transfer, the net assets of TWC at 31 December 2007 shown in the table above exclude a pension liability of 
£67.8m which was included in the operating liabilities of the Construction business segment in the 2007 published financial statements and which is now shown within the 
operating liabilities of the Housing United Kingdom business segment in these financial statements (see note 4). The table above also excludes the 2007 deferred tax asset of 
£19.2m on the pension liability. 

Other disposals  
During 2008, the Group also disposed of a mining operation in Ghana for £11m in cash. 

Subsequent to the year end, on 21 April 2009, the Group disposed of its remaining construction operations in Ghana to existing local management for £1 in cash. 

Taylor Wimpey plc Annual Report and Accounts 2008  89

 
 
 
Financial Statements 
Notes to the Consolidated Financial Statements continued 
for the year to 31 December 2008 

32. Notes to the cash flow statement  

(Loss)/profit on ordinary activities before finance costs – continuing  

– discontinued 

Non-cash exceptional items: 
Impairment of goodwill  
Impairment of brands and software development  
Land and WIP write downs  

Adjustments for: 

Amortisation of brands  
Amortisation of software development costs  

  Depreciation of plant and equipment  

Share-based payment charge 

  Gain/(loss) on disposal of property and plant 

Increase in provisions 

Operating cash flows before movements in working capital 
  Decrease/(increase) in inventories 
  Decrease in receivables 
  Decrease in payables 

Pension contributions in excess of charge 

Cash generated by operations 

Income taxes received/(paid) 
Interest paid 
Net cash from/(used in) operating activities 

2008
£m 
(1,798.2)
2.1

699.8
116.3
1,012.8

2.4
4.3
7.9
6.0
1.0
6.8
61.2
393.7
135.9
(390.8)
(44.1)
155.9

112.6
(114.9)
153.6

2007 
(restated)
£m  
55.8
13.4

–
30.0
289.7

3.7
2.0
8.3
0.6
(5.7)
38.6
436.4
(316.0)
38.9
(81.6)
(30.0)
47.7

(127.3)
(83.7)
(163.3)

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  

2008
£m 

2007
£m 

752.3
(1,312.5)
(969.1)
(1,529.3)

130.0
(720.7)
(824.7)
(1,415.4)

33. 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.  

The Group has entered into counter-indemnities in the normal course of business in respect of performance bonds. 

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 2008 (2007: nil). 

90 

www.taylorwimpey.com 

 
 
 
 
 
 
 
 
 
 
 
 
 
34. 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 

2008
£m 
8.4
26.6
12.3
47.3

2007
£m 
16.1
44.1
17.4
77.6

Operating lease payments principally represent rentals payable by the Group for certain office properties and vehicles.  

35. 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 44 to 52. 

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 

2008 

2007 

Weighted 
average 
exercise price 
(in £) 
2.72
0.69
2.07
1.92
–
1.01
2.58

Options 

15,460,002 
42,697,752 
(11,273,011) 
(242,076) 
– 
46,642,667 
2,649,887 

Options 

6,956,315
2,640,216
(421,974)
(2,142,532)
8,427,977
15,460,002
3,222,426

Weighted 
average 
exercise price 
(in £) 
2.28
2.65
(2.94)
(2.00)
2.93
2.72
2.04

The weighted average share price at the date of exercise for share options exercised during the period was £1.73 (2007: £3.30). The options outstanding at 31 December 2008 
had a range of exercise prices from £0.16 to £4.57 (2007: £1.27 to £4.57) and a weighted average remaining contractual life of 6.3 years (2007: 4.8 years).  

Schemes not requiring consideration from participants include the George Wimpey Long Term Incentive Plan and the Performance Share Plan. 

Schemes not 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 

2008 

2007 

Weighted 
average 
exercise price
(in £) 
–
–
–
–
–
–
–

Options 

10,091,435 
9,695,831 
(9,047,250) 
(7,720) 
– 
10,732,296 
175,153 

Options 

8,428,486
2,062,377
(2,230,286)
(2,204,708)
4,035,566
10,091,435
88,538

Weighted 
average 
exercise price
(in £) 
–
–
–
–
–
–
–

The options outstanding at 31 December 2008 had a weighted average remaining contractual life of 8.2 years (2007: 4.2 years). 

Taylor Wimpey plc Annual Report and Accounts 2008  91

 
 
 
 
 
Financial Statements 
Notes to the Consolidated Financial Statements continued 
for the year to 31 December 2008 

35. Share-based payments continued  
For share options with non-market conditions granted during the current and preceding year, the fair value of the options at grant date was determined using the Binomial 
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 

2008 

2007 

£0.38
£0.69
37%
3/5 years
4.4%
0.5%

£2.81
£2.65
30%
3/5 years
5.1%
3.6%

The weighted average fair value of share options granted during the year is £0.10 (2007: £0.69). 

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 the options was 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 

2008 

2007 

£0.69
£nil
40%
3 years
4.3%
0.9%

£4.92
£nil
26%
3 years
5.4%
3.6%

The weighted average fair value of share options granted during the year is £0.33 (2007: £4.35). 

Expected volatility was determined by calculating the historical volatility of the Group’s share price over the expected term, however due to the exceptional volatility in this 
financial year we have excluded the period between 1 May 2008 and 31 October 2008 as allowed by IFRS 2 Share based payment. The expected life used in the model is 
based on historical exercise patterns. 

The Group recognised total expenses of £6.0m and £0.6m related to equity-settled share-based payment transactions in 2008 and 2007 respectively. Of this amount, £1.6m 
related to the accelerated vesting of share options held by employees of Taylor Wimpey Construction, which was disposed of on 9 September 2008, and which is included in 
profit from discontinued operations in the income statement. 

36. 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 £8.1m (2007: £21.4m). Purchases were based on open market values. 

Remuneration of key management personnel 
Details of the remuneration of the Directors and the Group Company Secretary and General Counsel and the President and Chief Executive Officer of Taylor Morrison, Inc., 
who are the key management personnel of the Group, are contained in the audited part of the Remuneration Report on pages 44 to 52 and form part of these financial statements. 

92 

www.taylorwimpey.com 

 
 
 
37. Post-balance sheet events 
On 7 April 2009 the Group successfully reached agreement with its banks and private placement holders regarding a revised covenant and financing package (the Override 
Agreement). The principal terms of the refinancing consisted of an alignment of all debt maturity dates to 3 July 2012, with extension fees payable on a sliding scale dependent on 
the length of the extension to those lenders who have agreed to defer repayment of their loans; a day one reduction of the revolving credit facility, resulting in the cancellation 
of £235m of the £1.65 billion facility; amendments to the margins and coupon rates on borrowings equivalent to an increase of 455 basis points, with the potential for a reduction  
in the event of an equity raising and subsequent reduction in the Group’s gearing level; an additional interest charge in the form of payment in kind (PIK), being cash or equity, 
which accrues at 1.50% per annum and becomes payable at the earlier of repayment and maturity; possible further additional interest charges, also in the form of PIK, which 
would accrue in the event that the Company does not meet agreed step downs in the level of facilities of £150m by 30 June 2009 and a further £350m by 30 June 2010; 
warrants giving all lenders the right to subscribe in cash (exercisable at par) for a combined total of approximately 5% of the Company’s ordinary share capital; a reduction in 
the level of the Group’s UK overdrafts from £95m to £45m; guarantees and securities to be available for the currently undrawn committed facilities to be provided to the Group 
for the duration of the Override Agreement, which total a maximum of £416m. 

The existing covenant package has been replaced with a revised financial covenant package which is consistent across all of the Group’s borrowings. There are three financial 
covenants which, if breached, would cause an event of default. These comprise: 
• Net operating cash flow covenant which will be tested for the six months to 30 June 2009, the nine months to 30 September 2009 and then on a rolling 12-month  

basis ending at the end of each quarter. The test is on absolute levels of cash generated or absorbed in each period; 

• Consolidated tangible net worth which will be tested on a quarterly basis beginning on 30 June 2009 with varying covenanted minimum amounts over the life of  

the facilities; and 

• An asset leverage cover covenant. This represents the ratio of total consolidated net borrowings to the book value of inventories net of land creditors and is to be tested 

quarterly from 30 June 2009. 

The covenant levels for these three covenants have been set after making allowance for what the Directors consider to be appropriate adverse sensitivities including, inter alia, 
a further weakening of Sterling relative to the US dollar; a potential increase in interest rates and a possible further decline in UK selling prices. All of these covenants are to be 
calculated on an adjusted frozen IFRS basis, based on the accounting principles used in these consolidated financial statements. 

The financial terms of this agreement were also approved on 30 April 2009 by the requisite numbers of both the Company’s 2012 Eurobonds and 2019 Eurobonds and also 
have the support of the Boards of Trustees of the two UK defined benefit pension schemes with each of whom a Deed of Covenant has been entered into. 

In addition, the Group has also agreed to provide operational covenants and information undertakings to its banks and private placement holders. 

Taylor Wimpey plc Annual Report and Accounts 2008  93

 
 
Opinion 
In our opinion: 
• 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 2008; 

• the parent company financial statements have been properly prepared in 

accordance with the Companies Act 1985; and 

• the information given in the Directors’ Report is consistent with the parent company 

financial statements. 

Deloitte LLP 
Chartered Accountants and Registered Auditors  
London, UK 
30 April 2009 

Financial Statements 
Independent Auditors’ Report 
to the members of Taylor Wimpey plc 

We have audited the parent company financial statements of(cid:3229)Taylor Wimpey plc for 
the year ended 31 December 2008 which comprise the Balance Sheet and the related 
notes 1 to 20. 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 2008 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. 

94 

www.taylorwimpey.com 

 
 
 
 
Financial Statements 
Company Balance Sheet 
at 31 December 2008 

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  
Provisions 
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 

2008
£m 

2007
£m 

4

5

6

7

9
10
11
12
13
14
15
18

962.8
962.8

2,629.1
2,629.1

2,587.5
510.8
3,098.3
(788.1)
2,310.2
3,273.0
(1,917.1)
(4.0)
1,351.9

289.6
753.6
–
31.5
89.6
463.2
(275.6)
1,351.9

2,344.4
30.4
2,374.8
(678.7)
1,696.1
4,325.2
(1,275.7)
–
3,049.5

289.6
758.1
934.2
31.5
(50.5)
1,368.5
(281.9)
3,049.5

The Company has elected to take the exemption under section 230 of the Companies Act 1985 to not present the parent company profit and loss account.  

The financial statements were approved by the Board of Directors and authorised for issue on 30 April 2009. They were signed on its behalf by: 

P Redfern  
Director   

C Rickard 
Director 

Taylor Wimpey plc Annual Report and Accounts 2008  95

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Statements 
Notes to the Company Financial Statements  
for the year to 31 December 2008 

1. Significant accounting policies 
The following accounting policies have been used consistently, unless otherwise 
stated, in dealing with items which are considered material. 

Basis of preparation 
The Company financial statements have been prepared on a going concern basis. 
The ability of the Taylor Wimpey plc Group (‘the Group’) to continue as a going 
concern is reliant upon the continued availability of external debt financing. The 
deterioration of the housing market in the geographies in which the Group operates in 
2008 called into question the Group’s ability to continue to trade within the covenants 
set out in certain of its debt agreements. This led to the Group renegotiating the terms 
and conditions of, and covenants within, its external debt facilities. The amended 
agreements were signed in April 2009. The continued availability of this external 
financing is dependent upon the Group’s ability to generate sufficient cash to service 
its debt and to continue to operate within and adhere to the covenants and other 
terms and conditions set out in the debt agreements. The Group has continued to 
meet all interest and other payment obligations on time from debt resources available 
to it, and after reviewing cash flow forecasts for a period of not less than 12 months 
from the date of signing these financial statements, the Directors are satisfied that, 
whilst the economic and market conditions continue to be challenging and not without 
risk, the refinancing package is sufficiently robust as to adequacy of both facility and 
covenant headroom to enable the Group to operate within its terms for at least the 
next 12 months.  

The financial statements have been prepared in accordance with applicable United 
Kingdom accounting standards and pronouncements of the Urgent Issues Task  
Force 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 (FRS) 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.  

The Company has taken advantage of the exemption contained in FRS 8 ‘Related 
Party Disclosures’ and has not reported transactions with fellow Group undertakings. 
The Company has also taken advantage of the exemption contained within FRS 29 
‘Financial Instrument Disclosures’ and has not presented any disclosures required by 
that standard, as disclosures that comply with FRS 29 are included within the Taylor 
Wimpey plc consolidated financial statements in note 23 on pages 77 to 81. 

The principal accounting policies adopted are set out below. 

Investments in Group undertakings 
Investments are included in the balance sheet at cost less any provision for impairment. 
The Company assesses investments for impairment whenever events or changes in 
circumstances indicate that the carrying value of an investment may not be recoverable. 
If any such indication of impairment exists, the Company makes an estimate of the 
recoverable amount of the investment. If the recoverable amount is less than the value 
of the investment, the investment is considered to be impaired and is written down to 
its recoverable amount. An impairment loss is recognised immediately in the profit and 
loss account; if the impairment is not considered to be a permanent diminution in value, 
it may reverse in a future period to the extent it is no longer considered necessary.  

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 loss 
account. Unrealised exchange differences on intercompany 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. 

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 remeasuring the carrying 
amount being recognised directly in reserves.  

Share-based payments 
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. The 
cost of equity-settled share-based payments granted to employees of subsidiary 
companies are borne by the employing company. 

Provisions 
Provisions are recognised at the Directors’ best estimate when the Company has a 
present obligation as a result of a past event and it is probable that the Company will 
have to settle the obligation. 

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. 

Dividends paid 
Dividends are charged to the Company’s profit and loss reserve in the period of 
payment in respect of an interim dividend, and in the period in which shareholders’ 
approval is obtained in respect of the Company’s final dividend. 

96 

www.taylorwimpey.com 

2. Particulars of employees 

Directors 

2008
No. 
2

2007
No. 
3

The Executive Directors received all of their remuneration, as disclosed in the Remuneration Report on pages 44 to 52, from Taylor Wimpey Developments Limited and Taylor 
Wimpey UK(cid:3229)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 50 of the Remuneration Report. The Company was recharged costs of £6.3m (2007: nil) in respect of staff costs for Directors and 
employees of subsidiary companies who provided services to Taylor Wimpey plc during the year, which includes amounts in respect of employer contributions to both defined 
contribution and defined benefit pension schemes. Information in respect of the Group’s defined benefit pension schemes is provided in note 24, on pages 82 to 85, to the 
Taylor Wimpey plc consolidated financial statements. Contributions in respect of the Defined Contribution Scheme for Directors can be found in the Remuneration Report on 
page 52. There were no outstanding contributions at the year-end. 

3. Auditors’ remuneration 

External audit services 
Other assurance 
Other services: 
Tax services 

  Corporate finance services 

A description of other services is included in note 5 on page 66 to the Group financial statements. 

4.

Investments in Group undertakings 

Cost  
31 December 2007 
Changes in exchange rates 
Additions 
Disposals 
31 December 2008 

Provision for impairment 
31 December 2007 
Charge for the year 
Disposals 
31 December 2008 

Carrying amount  
31 December 2008 
31 December 2007 

2008
No. 
0.3
0.5

0.1
2.2

2007
No. 
0.3
0.1

0.3
0.7

Shares
£m 

Loans
£m 

Total
£m 

3,949.2
–
7.5
(64.0)
3,892.7

1,614.7
1,749.9
–
3,364.6

366.7
140.1
–
–
506.8

72.1
–
–
72.1

4,315.9
140.1
7.5
(64.0)
4,399.5

1,686.8
1,749.9
–
3,436.7

528.1
2,334.5

434.7
294.6

962.8
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 recognised an impairment charge of £1,749.9m (2007: £1,614.7m) against the carrying value of its investments in subsidiary companies.  
The impairment reflects the decrease in value of assets in the underlying subsidiaries following the downturn in the housing market in the UK and US.  

Taylor Wimpey plc Annual Report and Accounts 2008  97

 
 
 
 
 
 
 
Financial Statements 
Notes to the Company Financial Statements continued 
for the year to 31 December 2008 

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 2007 
Charged to profit and loss account 
31 December 2008 

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 and interest rate derivatives  
Corporation tax creditor 
Total 

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 
In more than one year but less than five years 
Within one year or on demand 

98 

www.taylorwimpey.com 

2008
£m 

2007
£m 

2,584.2
3.3
–
–

–
–
2,587.5

2,305.0
8.2
12.2
0.8

0.5
17.7
2,344.4

£m 
0.5
(0.5)
–

2007
£m 
1.4
636.2
0.5
38.2
2.4
–
678.7

2007
£m 
568.6
707.1
1,275.7

707.1
707.1

2007
£m 
1.4
245.8
37.6
87.7
197.5
570.0

568.6
–
1.4
570.0

2008
£m 
–
710.9
2.2
39.2
19.9
15.9
788.1

2008
£m 
628.0
1,289.1
1,917.1

1,289.1
1,289.1

2008
£m 
–
254.4
52.1
121.5
200.0
628.0

321.5
306.5
–
628.0

 
 
 
 
 
 
 
 
 
 
 
 
 
9. Share capital 

Authorised: 
2,000,000,000 ordinary shares of 25p each  

Issued and fully paid: 
31 December 2007 
US Employee Stock Purchase Plan 
31 December 2008 

2008
£m 

2007
£m 

500.0

500.0

Number 
of shares 

1,158,294,708
4,493
1,158,299,201

£m 

289.6
–
289.6

During the year, options were exercised on 249,796 (2007: 4,347,240) ordinary shares of which 4,493 (2007: 194,175) were new issues with the balance coming from 
Treasury/ESOT at varying prices from 148.8p to 226.8p and shares were issued for a total consideration of nil (2007: £4.2m). Additionally 844 (2007: nil) ordinary shares were awarded to 
employees for 25 or 40 years’ long service. Under the Group’s senior executives’ share option scheme and executive share option plan, employees held options at 31 December 2008 
to purchase 15,467,631 shares (2007: 855,810) at prices between 16.3p and 252.8p per share exercisable up to 16 October 2018. Under the Group’s savings-related share option 
schemes, employees held options at 31 December 2008 to purchase 24,921,300 shares (2007: 7,043,437) at prices between 37.6p and 278.8p per share exercisable up to 31 May 
2014. Under the Group’s cash bonus deferral plan and executive bonus plan, employees held options at 31 December 2008 in respect of 228,126 shares (2007: 716,604) at nil pence 
per share exercisable up to 9 April 2010. Under the Group’s performance share plan employees held conditional awards at 31 December 2008 in respect of 7,832,194 shares (2007: 
4,512,837) at nil pence per share exercisable up to 16 October 2018. Under the Group’s share purchase plan employees held conditional awards at 31 December 2008 in respect of 
3,252,206 shares (2007: 871,812) at nil pence per share. The former George Wimpey plans were acquired as part of the merger in 2007. Under the George Wimpey Sharesave 
Scheme, employees held options at 31 December 2008 to purchase 1,257,529 shares (2007: 3,378,282) at prices between 164.2p and 276.9p per share exercisable up to 31 May 
2012. Under the George Wimpey Executive Option Scheme, employees held awards at 31 December 2008 in respect of 2,908,267 shares (2007: 4,182,473) 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 2008 in respect of 1,507,710 
shares (2007: 3,990,182) at nil pence per share exercisable up to 2 April 2010. 

Under the Override Agreement (see note 20), the Company agreed to issue 57.9m warrants giving the holders the right to subscribe to an equivalent number of ordinary 
shares in Taylor Wimpey plc at par value. The warrants may be exercised at par by the holder within five years of the date of issue. 

10. Share premium 

1 January 
Amortisation of debt transferred from retained earnings 
31 December  

11. Merger relief reserve 

1 January 
Premium on ordinary shares issued on acquiring 100% equity in George Wimpey Plc 
Transfer to profit and loss reserve 
31 December 

2008
£m 
758.1
(4.5)
753.6

2008
£m 
934.2
–
(934.2)
–

2007
£m 
758.8
(0.7)
758.1

2007
£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: 
• Make a bonus issue of fully paid shares; 
• 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, £934.2m (2007: £1,000.0m) was transferred to the profit and loss account reserve following an impairment charge being recognised in respect of the George 
Wimpey Plc investment. 

Taylor Wimpey plc Annual Report and Accounts 2008  99

 
 
 
 
 
 
Financial Statements 
Notes to the Company Financial Statements continued 
for the year to 31 December 2008 

12. Capital redemption reserve 

31 December 2008 and 31 December 2007 

13. Translation reserve 

1 January 
Transfer from profit and loss reserve 
31 December 

14. Profit and loss account 

1 January  
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 

£m 

31.5

2007
£m 
(44.9)
(5.6)
(50.5)

2007
£m 
1,167.1
0.7
(687.1)
(117.3)
5.6
1,000.0
2.9
(3.4)
1,368.5

2008
£m 
(50.5)
140.1
89.6

2008
£m 
1,368.5
4.5
(1,595.9)
(107.9)
(140.1)
934.2
–
(0.1)
463.2

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 £1,595.9m (2007: £687.1m). 

Included in the Company profit and loss account reserve is £290.2m (2007: £290.2m) which is not distributable.  

15. Own shares 

Own shares 

These comprise ordinary shares of the Company: 
Treasury shares 
Shares held in trust for bonus, options and performance award plans 

2008
£m 
275.6

2007
£m 
281.9

Number 

Number 

92.7
6.7

102.7
4.5

The market value of the shares at 31 December 2008 was £13.4m (2007: £218.1m) and their nominal value was £24.9m (2007: £26.8m).  

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 2008, 10.0m shares (2007: 4.3m) were transferred out of the Company’s Treasury holding to the ESOTs for this purpose. 

The ESOTs’ entire holding of shares at 31 December 2008, aggregating 6.7m shares (2007: 4.5m), was covered by outstanding options and conditional awards over shares  
at that date. 

16. Share-based payments 
Details of share options granted by the Company to employees of subsidiaries, and that remain outstanding at the year end over the Company’s shares are set out in note 35, 
on page 91, 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.  

17. 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.  

During the year, the Company issued a guarantee in respect of the Taylor Woodrow Group Pension and Life Assurance Fund (TWGP&LAF), a defined benefit pension scheme in 
which a number of its subsidiary companies participate, and which had a deficit under IAS 19 of £112.6m at 31 December 2008. The guarantee commits the Company to ensure 
that the participating subsidiaries make deficit repair contributions in accordance with a schedule agreed with the Trustees during the year of £25m per annum for 10 years.  

100 

www.taylorwimpey.com 

 
 
 
 
 
 
18. Reconciliation of movement in shareholders’ funds 

Opening shareholders’ funds  
Dividends paid 
Loss for the financial year 
New share capital subscribed 
Transfer of own shares 
Purchase of own shares 
Replacement share options on acquisition of subsidiary 
Loss on disposal of own shares 
Closing shareholders’ funds 

2008
£m 
3,049.5
(107.9)
(1,595.9)
–
6.3
–
–
(0.1)
1,351.9

2007
£m 
2,016.2
(117.3)
(687.1)
2,075.3
14.5
(251.6)
2.9
(3.4)
3,049.5

19. Dividend 
The Company does not propose to pay a final dividend in respect of the 2008 financial year (2007: 10.25p per share). 

20. Post balance sheet event 
On 7 April 2009, the Group successfully reached agreement with its banks and private placement holders regarding a revised covenant and financing package (the Override 
Agreement). The principal terms of the refinancing consisted of an alignment of all debt maturity dates to 3 July 2012, with extension fees payable on a sliding scale dependent 
on the length of the extension to those lenders who have agreed to defer repayment of their loans; a day one reduction of the revolving credit facility, resulting in the cancellation of 
£235m of the £1.65 billion facility; amendments to the margins and coupon rates on borrowings equivalent to an increase of 455 basis points, with the potential for a reduction 
in the event of an equity raising and subsequent reduction in the Group’s gearing level; an additional interest charge in the form of payment in kind (PIK), being cash or equity, 
which accrues at 1.50% per annum and becomes payable at the earlier of repayment and maturity; possible further additional interest charges, also in the form of PIK, which 
would accrue in the event that the Company does not meet agreed step downs in the level of facilities of £150m by 30 June 2009 and a further £350m by 30 June 2010; 
warrants giving all lenders the right to subscribe in cash (exercisable at par) for a combined total of approximately 5% of the Company’s ordinary share capital; a reduction in 
the level of the Group’s UK overdrafts from £95m to £45m; guarantees and securities to be available for the currently undrawn committed facilities to be provided to the Group 
for the duration of the Override Agreement, which total a maximum of £416m. 

The existing covenant package has been replaced with a revised financial covenant package which is consistent across all of the Group’s borrowings. There are three financial 
covenants which, if breached, would cause an event of default. These comprise: 
• Net operating cash flow covenant which will be tested for the six months to 30 June 2009, the nine months to 30 September 2009 and then on a rolling 12-month basis 

ending at the end of each quarter. The test is on absolute levels of cash generated or absorbed in each period; 

• Consolidated tangible net worth which will be tested on a quarterly basis beginning on 30 June 2009 with varying covenanted minimum amounts over the life of the  

facilities; and 

• An asset leverage cover covenant. This represents the ratio of total consolidated net borrowings to the book value of inventories net of land creditors and is to be tested 

quarterly from 30 June 2009. 

The covenant levels for these three covenants have been set after making allowance for what the Directors consider to be appropriate adverse sensitivities including, inter alia, 
a further weakening of Sterling relative to the US dollar; a potential increase in interest rates and a possible further decline in UK selling prices. All of these covenants are to be 
calculated on an adjusted frozen IFRS basis, based on the accounting principles used in these consolidated financial statements. 

The financial terms of this agreement were also approved on 30 April 2009 by the requisite numbers of both the Company’s 2012 Eurobonds and 2019 Eurobonds and also 
have the support of the Boards of Trustees of the two UK defined benefit pension schemes with each of whom a Deed of Covenant has been entered into. 

In addition the Group has also agreed to provide operational covenants and information undertakings to its banks and private placement holders. 

Taylor Wimpey plc Annual Report and Accounts 2008  101

 
 
Financial Statements 
Particulars of Principal Subsidiary Undertakings 

Country of incorporation and principal operations 

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 
Taylor Wimpey Holdings Limited  
(formerly Taylor Woodrow Holdings Limited) 
George Wimpey Limited 
Taylor Wimpey UK Limited*  
Taylor Wimpey 2007 Limited 
Taylor Wimpey (No.4) 2005 Limited* (formerly Taylor Woodrow (No.4) 2005 Limited) 
Wimpey Overseas Holdings Limited* 
Taylor Woodrow Holdings of Canada, Corporation  
Monarch Corporation* ** 
Monarch Development Corporation*   
Taylor Woodrow de España S.A.U.* † 
Taylor Woodrow Holdings (USA), Inc.* 
Taylor Morrison Holdings of Arizona, Inc.* (formerly Taylor Woodrow Holdings/Arizona, Inc.) 
Taylor Morrison of Florida, Inc.* (formerly Taylor Woodrow Homes Florida Inc.) 
Taylor Morrison of Texas, Inc.* (Morrison Homes of Texas, Inc.) 
Taylor Morrison, Inc.* (formerly Taylor Woodrow, Inc.) 
Taylor Morrison Services, Inc.*  

* 

Interests held by subsidiary undertakings. 

**  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. 

102 

www.taylorwimpey.com 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Statements 
Five Year Review 

Income statement 
Revenue – continuing 
Profit on ordinary activities before exceptional items, finance costs and tax 
Exceptional items 
Net finance costs, including exceptional finance costs 
Share of results of joint ventures 
(Loss)/profit for the financial year 
Taxation  
Profit for the year from discontinued operations 
(Loss)/profit for the financial year 

Balance sheet 
Goodwill 
Other intangible assets 
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 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 (loss)/earnings per share – total Group 
Dividends per ordinary share 
Equity shareholders’ funds per share 
Dividend cover (times) 
Net gearing 

2008
£m 

2007 
£m 

2006*
£m 

2005*
£m 

2004*
£m 

3,467.7
86.3
(1,884.5)
(179.1)
7.6
(1,969.7)
76.6
53.1
(1,840.0)

–
–
15.5
67.7
47.9
6.6
3,739.0
(674.2)
3,202.5

289.6
753.6
–
–
31.5
4.8
5.6
22.8
838.3
(275.7)
1,670.5
2.7
1,529.3
3,202.5

1,158.3
(174.8p)
–
157.8p
n/a
91.5%

4,142.8 
435.5 
(379.7) 
(112.8) 
23.4 
(33.6) 
(173.4) 
10.3 
(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 
352.3p 
n/a 
38.2% 

3,572.1
447.7
–
(64.2)
22.1
405.6
(115.0)
–
290.6

363.1
–
25.5
56.2
56.0
95.4
2,261.0
(360.4)
2,496.8

3,476.9
460.0
–
(64.0)
15.0
411.0
(124.5)
–
286.5

363.9
–
24.4
92.1
37.2
101.2
2,097.8
(330.4)
2,386.2

3,311.5
478.9
24.8
(108.6)
8.8
403.9
(123.0)
–
280.9

363.2
–
24.2
87.0
26.5
71.1
1,936.7
(266.1)
2,242.6

148.5
758.8

148.0
756.2

146.7
748.1

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
364.7p
3.4
18.6%

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%

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%

*  The results of the construction business which was disposed of on 9 September 2008 are included within profit for the year from discontinued operations for 2008 and 2007, and within continuing 

operations for 2006, 2005 and 2004. 

The figures for 2004 were restated in 2005 in respect of the transition from UK GAAP to IFRS. 

Dividends per ordinary share comprise the interim and final dividends declared for the year. 

Taylor Wimpey plc Annual Report and Accounts 2008  103

 
 
 
 
 
 
 
 
 
 
29324_p104-108.qxp:Layout 1  29/4/09  20:31  Page 104

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 fourth Annual
General Meeting of Taylor Wimpey plc (the ‘Company’)
will be held on 19 June 2009 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 2008.

2

3

4

5

6

To elect as a Director, Chris Rickard who was
appointed as a Director of the Company by the
Board since the last Annual General Meeting.

To re-elect as a Director, Norman Askew who
retires by rotation as a Director of the Company
in accordance with the Articles of Association.

To re-elect, as a Director, Mike Davies who retires by
rotation as a Director of the Company in accordance
with the Articles of Association.

To re-appoint Deloitte LLP (previously named
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.

That the Board be and it is hereby generally and
unconditionally authorised in substitution for any
previous authority or authorities to exercise all
powers of the Company:

(i)

(ii)

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 £88,797,189 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 2010 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, and further

to allot equity securities (within the meaning of
Section 94 of the said Act) in connection with a
rights issue in favour of ordinary shareholders
where the equity securities respectively attributable
to the interests of all ordinary shareholders are
proportionate (as nearly as may be) to the respective
numbers of ordinary shares held by them up to
an aggregate nominal amount of £88,797,189
provided that this authority shall expire on the date
of the next Annual General Meeting of the Company

after the passing of this resolution save that the
company may before such expiry make an offer or
agreement which would or might require relevant
securities to be allotted after such expiry and the
board may allot relevant securities in pursuance
of such an offer or agreement as if the authority
conferred hereby had not expired.

Special resolutions:
7

That subject to the passing of Resolution 6, the 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 2010, 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.

8

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)

the maximum number of ordinary shares hereby
authorised to be purchased shall be 115,829,920;

(ii) 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;

104 www.taylorwimpey.com

(iv) the authority hereby conferred shall expire at
the earlier of the conclusion of the Annual
General Meeting of the Company in 2010
and 18 December 2010 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 of any
such contracts as if the authority conferred by
this Resolution had not expired.

SPECIAL BUSINESS
Ordinary resolutions:
9

To approve the Directors’ Remuneration Report
for the year ended 31 December 2008.

10 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 18 December 2010
or, if sooner, at the conclusion of the Annual General
Meeting of the Company in 2010.

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.

Special resolution:
11 That a general meeting other than an Annual

General Meeting may be called on not less than
14 clear days’ notice.

29324_p104-108.qxp:Layout 1  29/4/09  20:35  Page 105

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 2008 and the reports of the Directors
and Auditors before a general meeting of the Company.

As a result of the difﬁcult trading year outlined in the
Annual Report and Accounts, the Directors do not
recommend the payment of any ﬁnal dividend in
respect of the year ended 31 December 2008.

Resolutions 2 to 4: Election of Directors
The current Articles of Association provide that:

• any Director appointed since the previous Annual
General Meeting shall retire from ofﬁce and may
seek election;

• 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) Chris Rickard appointed by the Board since the last

Annual General Meeting;

2) Norman Askew retires by rotation in accordance with
the Articles of Association and seeks re-election;

3) Mike Davies retires by rotation in accordance with
the Articles of Association and seeks re-election.

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 44 to 52 of the Report and Accounts.
Biographical information concerning each Director is on
pages 34 and 35 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:

Chris Rickard – Group Finance Director
Chris was appointed Group Finance Director on
16 October 2008. Chris qualiﬁed as an accountant
and was an Audit Manager with PwC, leaving in
1986 to work in industry. Most recently he held the
position of Group Finance Director at Whatman
Group plc, leaving the business when it was sold to
GE Healthcare in April 2008. He has extensive experience
of working in the capital intensive manufacturing and
services industries, having previously held the position of
Group Finance Director at VT Group plc, Weir Group plc
and Meggitt plc.

Norman Askew – Chairman
Norman was appointed a Director and Chairman on
29 July 2003. He also chairs the Nomination Committee

and is a member of the Corporate Responsibility
Committee. His current appointments include the
Chairmanship of IMI plc and of the Board of Governors
of the University of Manchester.

Mike Davies – Independent Non Executive Director
Mike was appointed a Director on 13 October 2003.
He is also a member of the Audit, Remuneration and
Nomination Committees. He is Chairman of The Royal
Mint, Manchester Airports Group and Marshalls plc and
a non executive director of Pendragon plc. He was
formerly a director of Williams Holdings plc.

The Board conﬁrms that each of the Directors proposed
for election or re-election has 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 5: Re-appointment of Deloitte LLP
(‘Deloitte’) as auditors of the Company and
authorisation of the Audit Committee to agree
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 2009 Annual
General Meeting until the conclusion of the next general
meeting at which accounts are laid before shareholders.
During the year, Deloitte LLP changed its name from
Deloitte & Touche LLP.

During 2007, following the Merger, a competitive tender for
future external audit work was carried out and 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 2008 are given
on page 41 of the Report and Accounts.

Resolution 6: 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. It also proposes that it
be granted a new, additional authority to allot securities
in connection with a rights issue, to allow it, in such
circumstances, to meet the proposed accelerated
timeline for such issues proposed in the recommendations
of the Rights Issue Review Group. Each authority would
apply for the period commencing on the passing of this
Resolution and ending at the Annual General Meeting of
the Company in 2010. It is proposed, in respect of Section
80 allotments, to authorise the Board to allot ordinary
shares up to a maximum of £88,797,189 in nominal
value (equivalent to 355,188,756 ordinary shares),
representing approximately 33.3 per cent of the existing
issued ordinary share capital of the Company excluding
92,732,927 treasury shares as at the close
of business on 21 April 2009.

It is also proposed, in respect of rights issue allotments,
to authorise the Board to allot ordinary shares up to a
maximum of £88,797,189 in nominal value (equivalent to
355,188,756 ordinary shares), representing approximately
33.3 per cent of the existing issued ordinary share
capital of the Company excluding 92,732,927 treasury
shares as at the close of business on 21 April 2009.
The Company held 92,732,927 shares in treasury
(representing approximately 8.7 per cent of the issued
ordinary share capital of the Company excluding
treasury shares) as at the close of business on
21 April 2009.

Special Resolutions
Resolution 7: 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 cent of the Company’s issued ordinary share
capital as at the close of business on 21 April 2009. 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 2010.

Resolution 8: Authority to make market purchases
of shares
In last year’s Annual Report, we reported that given the
uncertainty of the UK housing market, the Board had
decided to suspend the buyback programme until
conditions improve. 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 21 April
2009. 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,

Taylor Wimpey plc Annual Report and Accounts 2008 105

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Shareholder Information
Notice of meeting continued

and renewed at the Annual General Meeting on
17 April 2008 the Company currently holds a total
of 92,732,927 shares in treasury (representing
8.7 per cent of its issued share capital).

This authority will last until the earlier of 18 December 2010
and the conclusion of the Company’s Annual General
Meeting in 2010, unless renewal was sought by further
resolution at that meeting.

The total number of options to subscribe for ordinary
shares outstanding as at the close of business on
21 April 2009 was 46,996,702, representing approximately
4.4 per cent of the issued ordinary share capital of the
Company (excluding treasury shares) as at that date
and approximately 4.5 per cent of the Company’s
issued ordinary share capital following any exercise
in full of this authority to make market purchases.

This authority will last until the earlier of 18 December
2010 and the conclusion of the Company’s Annual
General Meeting in 2010, unless renewal was sought
by further resolution at that meeting.

Special Business
Ordinary Resolutions
Resolution 9: Approval of the Directors’ Remuneration
Report for the year ended 31 December 2008
The Directors’ Remuneration Report for the year ended
31 December 2008 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
44 to 52 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 10: 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 10 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 10 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 10 extends
approval to all of the Company’s subsidiaries.

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 38 of
the Report and Accounts.

Special Resolution
Resolution 11: Notice of general meetings
This resolution is required to reﬂect the proposed
implementation in August 2009 of the Shareholder
Rights Directive. The regulation implementing this
Directive will increase the notice period for general
meetings of the Company to 21 days. The Company
is currently able to call general meetings (other than
an Annual General Meeting) on 14 clear days’ notice
and would like to preserve this ability. In order to be
able to do so after August 2009, shareholders must
have approved the calling of meetings on 14 days’
notice. Resolution 11 seeks such approval. The approval
will be effective until the Company’s next Annual General
Meeting, when it is intended that a similar resolution will
be proposed. The Company will also need to meet the
requirements for electronic voting under the Directive
before it can call a general meeting on 14 days’ notice.

By Order of the Board

James Jordan

Group Company Secretary and General Counsel
Taylor Wimpey plc
80 New Bond Street
London W1S 1SB
30 April 2009

Registered in England and Wales
Registration No. 296805

Action to be taken
Whether or not you intend to attend the Annual General
Meeting, you are requested to complete the form of
proxy and return it to the Company’s Registrars, Capita
Registrars, Proxy Department, P. O. Box 25, 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 17 June 2009. 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:

• register your vote on-line at www.capitashareportal.com;

• complete and return the form of proxy sent to

shareholders with the Chairman’s letter, advising them
that the Company’s Annual Report had been posted
on the Company’s Web site;

• complete and return the form of proxy enclosed with
this Annual Report for shareholders who elected to
continue to receive such documents in hard copy;

• use the service provided by Euroclear UK and Ireland

Limited for members 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
Withheld’ option. The outcome of voting on all
resolutions will be announced at the Annual General
Meeting and to the market and published on our Web
site 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.

106 www.taylorwimpey.com

29324_p104-108.qxp:Layout 1  28/4/09  23:47  Page 107

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 17 June
2009 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;

(c) Non Executive Directors’ letters of appointment;

v. A copy of the full Annual Report and Financial

Statements for the year ended 31 December 2008,
including the Remuneration Report referred to in
Resolution 9, is also available on our Web site
www.taylorwimpey.com.

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 21 April 2009 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
21 April 2009 were 1,065,566,274.

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 10.00 am and also
after the conclusion of the Meeting.

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.

An induction loop system operates in the meeting room.

Directions to the venue can be found on the back of
your attendance card.

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
17 June 2009. 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.

Taylor Wimpey plc Annual Report and Accounts 2008 107

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Low-cost share dealing services
We have arranged both telephone and on-line share
dealing services for UK resident Taylor Wimpey
shareholders 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 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).

J.P. Morgan Cazenove Limited also offer a postal share
dealing service on behalf of the Company. For further details
please contact them direct on +44 (0)207 155 5155.

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 Web site
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)9058 171690 and ask for
‘Taylor Wimpey’ on the voice activated response
(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 7930 3737.

The beneﬁts of web communication are that it will:

• enable the Company to reduce its printing and

postage costs signiﬁcantly

• enable shareholders to access information faster, on
the day documents are published on the Company’s
Web site; and

• reduce the amount of resources consumed, such as
paper, and lessen the impact of printing and mailing
activities on the environment.

Shareholders were invited to conﬁrm whether they still
required hard copy documentation and the Company is,
of course, happy to provide hard copies to such
shareholders upon request.

Electronic communications
The Company also encourages shareholders to elect
to receive notiﬁcation of the availability of Company
documentation by means of an e-mail. Shareholders
can sign up for this facility by logging onto our Web
site 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.

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.

Shareholder Information
Shareholder facilities

Financial Calendar
Annual General Meeting
11.00 am on 19 June 2009 at:

The Royal College of Physicians, 11 St Andrews Place,
Regent’s Park, London, NW1 4LE.

Latest date for receipt of proxy instructions for 2009
Annual General Meeting:
11.00 am on 17 June 2009

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 8197
E-mail: james.jordan@taylorwimpey.com

Registrar
For any enquiries concerning your shareholding or
details of shareholder services, please contact:

Capita Registrars
Northern House
Woodsome Park
Fenay Bridge
Huddersﬁeld
West Yorkshire HD8 0GA
E-mail: ssd@capitaregistrars.com
Tel: +44 (0)871 664 0303
(Calls cost 10p per minute plus network extras)

Auditors
Deloitte LLP

Bankers
HSBC Bank plc

Solicitors
Slaughter and May

Stockbrokers
J.P. Morgan Cazenove Limited

Shareholders’ Services
Web communications
At the Company’s 2007 Annual General Meeting,
shareholders voted overwhelmingly in favour of
authorising the Company to introduce web
communication at a future date.

On 3 March 2009 we wrote to shareholders explaining
that the Company had decided to implement this
authority and would in future make its shareholder
communications (including the 2008 Annual Report and
Accounts) available electronically through the
Company’s Web site www.taylorwimpey.com.

108 www.taylorwimpey.com

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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.

Our 2008 Performance

Financial summary

Revenue – continuing (£m)
Operating profit* – continuing (£m)
Pre-tax (loss)/profit** – continuing (£m)
Exceptional items (£m)
Loss for the year – total Group (£m)
Adjusted (loss)/earnings per share – continuing (p)
Loss per share – total Group (p)
Tangible net assets per share (p)
Year end net debt (£m)

* Profit on ordinary activities before finance costs, exceptional items, brand amortisation and tax.
** (Loss)/profit on ordinary activities before exceptional items and tax.

2008

2007
3,467.7 4,142.8
439.2
346.1
(379.7)
(196.7)
29.5
(24.2)
274
1,529.3 1,415.4

88.7
(74.7)
(1,895.0)
(1,840.0)
(9.4)
(174.8)
158

Contents
Business Review
02 Business Overview
04 Chairman’s Statement
06 Group Chief Executive’s Review

07 Our strategy
08 Our Group key performance indicators
10 Construction
12 Our principal risks and uncertainties

14 UK Housing
20 North America Housing
24 Spain and Gibraltar Housing
25 Our Corporate Responsibility Approach
28 Group Financial Review

Governance
34 Board of Directors
36 Directors’ Report
39 Corporate Governance Report
44 Remuneration Report

Financial Statements
53 Independent Auditors’ Report
54 Consolidated Income Statement
55 Consolidated Statement of

Recognised Income and Expense

56 Consolidated Balance Sheet
57 Consolidated Cash Flow Statement
58 Notes to the Consolidated
Financial Statements

94 Independent Auditors’ Report
95 Company Balance Sheet
96 Notes to the Company

Financial Statements

102 Particulars of Principal Subsidiary

Undertakings
103 Five Year Review

Shareholder Information
104 Notice of Meeting
108 Shareholder Facilities
109 Principal Operating Addresses

More on-line
www.taylorwimpey.com
Our Web site contains a wide variety
of additional information about the
Group, along with links to our sites
for home buyers.

For more information about our
recent debt refinancing please
see pages 30 and 31.

Principal Operating Addresses

UK
Taylor Wimpey plc
80 New Bond Street
London
W1S 1SB

Tel: +44 (0)20 7355 8100
Fax: +44 (0)20 7355 8197

E-mail: 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

Spain and Gibraltar
Taylor Woodrow de España S.A.U.
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.
4/5 The Boardwalk
Tradewinds
Marina Bay Road
Gibraltar

Tel: +00 (350)200 78780
Fax: +00 (350)200 75529

North America
Taylor Morrison, Inc.
4900 North Scottsdale Road
Suite 2000
Scottsdale
Arizona 85251
USA

Tel: +00 (1) 480 840 8100
Fax: +00 (1) 480 840 8156

Details of all our operating locations
are available on our Web site
www.taylorwimpey.com

Taylor Wimpey plc Annual Report and Accounts 2008 109

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Taylor Wimpey plc

29324_Cover.qxp:Layout 1  30/4/09  15:40  Page 1

Taylor Wimpey plc
80 New Bond Street
London
W1S 1SB

Tauro Offset is a PEFC certiﬁed stock that is
produced from virgin wood ﬁbre sourced mainly
from Germany, Canada and Sweden. It is
bleached using a Totally Chlorine Free process
and can be disposed of by recycling, incineration
for energy and composting. It is produced in a mill
that is certiﬁed to the ISO14001 environmental
management standard. The printing of this report
is CarbonNeutral®.