Emerging
Stronger
Annual Report and Accounts 2020
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Contents
Strategic report
2
4
Our market environment
Chairman’s statement
Chief Executive’s statement
6
10 Our response in 2020
12 Our equity raise
14 Our management
16 Our robust investment case
18 Our purpose
20 Our business model
22 Our strategy and key performance indicators
26 Materiality assessment
28 Our stakeholders
42
44
Environmental strategy
Task Force on Climate-related
Financial Disclosures
46 Our approach to identifying and managing risk
49 Principal Risks and uncertainties
54 Group financial review
Directors’ report: governance
60 Chairman’s Statement
62 Governance at a glance
80 Nomination and Governance Committee report
90 Audit Committee report
98 Remuneration Committee report
121 Statutory, regulatory and other information
Financial statements
124 Independent auditor’s report
130 Consolidated income statement
131 Consolidated statement of
comprehensive income
132 Consolidated balance sheet
133 Consolidated statement of changes in equity
134 Consolidated cash flow statement
135 Notes to the consolidated financial statements
165 Company balance sheet
166 Company statement of changes in equity
167 Notes to the Company financial statements
171 Particulars of subsidiaries, associates
and joint ventures
173 Five year review
Shareholder information
174 Notice of Annual General Meeting
177 Notes to the Notice of Annual General Meeting
183 Shareholder facilities
Navigating this report
Read more
Key performance indicators
Link to remuneration
Link to our stakeholders
Link to our business model
Link to our strategic goals
Link to our Principal Risks
Link to our Sustainability Report
Connect with us
www.taylorwimpey.co.uk/corporate
www.twitter.com/taylorwimpeyplc
www.linkedin.com/company/taylor-wimpey
Taylor Wimpey plc is a customer-focused residential
developer building and delivering homes and
communities across the UK and in Spain.
Our equity raise
See pages 12 and 13
Our response
in 2020
See pages 10 and 11
Our purpose
See pages 18 and 19
Emerging
stronger for our
stakeholders
See pages 28 to 41
Strengthening engagement
with our employees
See pages 76 and 77
Our
business
model
See pages 20 and 21
We participate in various benchmarks and have been awarded a number of industry accreditations
We are a constituent of the Dow Jones Sustainability Europe Index and the FTSE4Good Index series, the leading
responsible investment indices. We are also included in the S&P Global Sustainability Yearbook. We participated
in CDP Climate, scoring B; CDP Water, scoring B; CDP Forests, in relation to timber sourcing, scoring B; and
Supplier Engagement where we scored A-.
Alternative Performance Measures
The Group uses Alternative Performance Measures (APMs) as key financial performance indicators to assess
underlying performance of the Group. Definitions and reconciliations of our APMs to the equivalent statutory
measures are included in Note 32 of the financial statements.
Our purpose
is to build great
homes and
create thriving
communities.
This is what our teams come to work to do each
and every day and is where the core drivers of
value for all our stakeholders ultimately lie.
2020 has not been a normal year. We have taken
a careful approach to the pandemic, putting the
health and safety of our employees, customers,
subcontractors and partners first, while setting the
business up in a responsible and sustainable way
to emerge stronger from this crisis. Key to this is
renewing our focus on driving further operational
and financial improvement by aligning our actions
and priorities even more closely to our purpose,
which will benefit all our stakeholders.
www.taylorwimpey.co.uk
Taylor Wimpey plc Annual Report and Accounts 2020
1
Strategic report
Chairman’s statement
Committed to
our purpose
Irene Dorner
Chairman
98%
Employees felt positive about how the
Company supported them whilst on furlough
£2.7bn
Order book as at 31 December 2020
to ensure the effective adoption of COVID-secure
ways of working. Group operating profit* reduced
to £300.3 million (2019: £850.5 million), reflecting
the reduction in completions. However, demand
for our homes remained encouraging and we
entered 2021 with a strong UK order book
amounting to 10,685 homes (31 December 2019:
9,725 homes) excluding joint ventures, valued at
£2,684 million (31 December 2019: £2,176
million) and were more than 50% forward sold for
private completions for 2021.
Notwithstanding the challenges associated with
COVID-19, underlying cost discipline continued
to be a priority in the year. In the Group financial
review, our Group Finance Director Chris Carney,
outlines the measures we have successfully put
in place to optimise our efficiency and maximise
stakeholder value, together with further
information on our financial performance.
We also place importance on a wider number
of operational measures (our KPIs) that reflect
the priorities of our strategy, as outlined on pages
22 to 25.
Ordinary dividend
We are pleased to announce the resumption of
dividends starting with the 2020 final dividend
of 4.14 pence per share which will be paid in
May. Details of our resolutions for the 2021
Annual General Meeting (AGM) can be found on
pages 175 and 177.
Stakeholder engagement
I was pleased to get out and about in the
regional businesses before the first lockdown
occurred. It would have been difficult to get a feel
for the business without the benefit of these visits.
Subsequently, I was able to keep in touch with the
business remotely, as well as attend our National
Employee Forum. I am looking forward to getting
out again when circumstances permit in 2021.
Our Annual General Meeting (AGM) was held
remotely as was our half year results presentation,
but I hope that by making these as interactive
as we could that our shareholders felt able
to participate.
In the autumn, I conducted a virtual Chairman’s
roadshow and met a number of our key investors
to discuss strategy and markets. Investors were
keen to understand how the Board had
conducted itself in the pandemic with regard
to risk management and key strategic decisions
such as the equity raise.
I was able to reaffirm the Board’s strong
commercial rationale in approving the raise and it
is clear that land acquisition since the equity raise
bears out that commercial rationale. I was also
able to confirm that throughout the year we had
continued rigorous evaluation and challenge over
our decision making, as necessary, in order
to maintain strong governance and risk
management. The meetings with investors also
served to highlight the growing interest around
the subject of environmental, social and
governance (ESG). It may be that one good
consequence of the pandemic is the expansion
and acceleration of thinking in this area.
We continue to align our climate reporting to
the recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD)
and, this year, have gone further in undertaking
a climate scenario analysis, the findings of which
are summarised in our 2020 Sustainability Report.
Responding to direct investor feedback, we have
engaged with the Sustainability Accounting
Standards Board (SASB) and are now reporting
against the majority of its disclosure criteria for our
sector in our 2020 Sustainability Report and will
work to further improve our alignment over time.
Our purpose
ESG is about sustainability in its broadest sense.
It is the Board’s responsibility to ensure that
Taylor Wimpey is a sustainable business
respecting and taking account of the needs
and views of all our stakeholders in our decision
making. Our role in society must be defined
by our purpose which is to build great homes and
create thriving communities. This may be a simple
statement but it is one which is easy
to understand and we can all get behind.
Our purpose will lead us to define the areas where
we believe we can make a measurable difference
and will help us define our strategy in the context
of our ESG commitments. As a responsible
business, we want to play our part in creating
a sustainable future for everyone. We will be
refining and simplifying our thinking; creating KPIs
to which we can all sign up and setting
measurable objectives which support our
purpose. In recognition of the importance and
breadth of this subject, ESG is currently the
responsibility of the Nomination and Governance
Committee which is charged with the
responsibility of helping management define our
ambitions. I am looking forward to developing
our ideas in conjunction with our stakeholders.
Board changes
It has been a year of transition for the Board.
I would like to thank Kevin Beeston who stepped
down as Chairman at the end of February.
Under his stewardship, the business made great
progress in terms of culture, quality and customer
service, as well as undergoing significant growth
to become the strong sustainable business we
see today. Kate Barker also left us having
commendably served on the Board since 2010.
In December, we announced that two new
Non Executive Directors will join our Board from
1 March 2021. Scilla Grimble and Jitesh Gadhia
are experienced executives who will add valuable
skills, perspectives and diversity to the Board.
Scilla has over 15 years executive experience in
corporate finance and retail sectors and brings
knowledge on risk and technology in a customer-
facing environment. Jitesh has over 20 years
executive experience principally in banking and
private equity and brings an understanding of a
broad range of sectors as well as public affairs.
Annual General Meeting
The safety and security of our shareholders and
colleagues remains our priority. As a result of the
measures announced by the UK Government on
22 February 2021, unfortunately shareholders
Developing our purpose
Our purpose is to build
great homes and create
thriving communities.
Over the course of 2020, the Board and
I have developed this purpose, with
consideration for all of our stakeholders.
See page 74
will not be permitted to attend the AGM in person.
Each year the Board looks forward to engaging
with shareholders at the AGM, therefore we are
pleased to offer shareholders the opportunity to
follow the AGM remotely and submit questions.
Further details can be found on page 182 and
on our website.
Looking forward
Taylor Wimpey believes in doing the right thing
for our customers and, in this context, the Board
determined that it was right to support
leaseholders and building owners with fire safety
investment to ensure their Taylor Wimpey
apartment buildings constructed over the last 20
years are safe and meet current EWS1 (External
Wall Fire Review) requirements. More information
on this can be found in Pete Redfern’s letter on
page 5 and on page 30.
We expect to emerge from this crisis stronger,
not just in terms of financial metrics, but with
strong focus on performance, forward momentum
and growth potential into the medium term.
The pandemic has opened up new ways of working
and thinking and we start 2021 with renewed
focus on our purpose. Your business has
continued to deliver in a responsible manner
and together we have set the business up to
maximise value for our shareholders and other
stakeholders in the years ahead. I would like to
thank everyone for their support; our employees,
our customers, our suppliers, subcontractors and
shareholders. It is greatly appreciated.
Irene Dorner
Chairman
During 2020, many extreme words were used
to define the global pandemic but in the end
the pandemic defined 2020. In my first year as
your Chairman I have been impressed with
the dedication, commitment and resilience
shown by employees throughout our business
in what have been highly challenging and
uncertain times.
At Taylor Wimpey, health and safety is our non-
negotiable number one priority, and COVID-19 has
added a new challenge to finding ways for keeping
our employees, customers and partners safe.
Strong leadership has been demonstrated by our
management team and our employees at all levels
throughout the business.
Acting decisively for our stakeholders
I am proud to say that we were the first major
housebuilder to close sites, and the first to reopen
when we had implemented the Taylor Wimpey
COVID-19 Code of Conduct and adapted our
working practices to be COVID-secure. We were
able to offer support, not just to our own employees
but to our customers, communities, subcontractors
and suppliers.
Coming into the pandemic, it was key that
Taylor Wimpey had a strong balance sheet and cash
position. Without a map or compass to know how
things would develop, it was important for the Board
to ensure that every step was taken to conserve
cash and to protect the Company. Challenging
decisions were made which affected all of our
stakeholders including the cancellation of all
dividends. We are very aware of the impact this
has had on our loyal shareholders who rely upon
dividend income.
As you would expect, the Board met virtually
and more frequently this year, dealing with
the implications of the crisis as they unfolded,
protecting and enhancing the long term sustainability
of the business. I am particularly pleased that
Taylor Wimpey raised equity in June in order to
pursue opportunities in the land market. This
demonstrates that Taylor Wimpey is a Company
looking confidently to the future, backed by an
investor base that believes in the strength of the
business, the robustness of the market we operate
in and future opportunities. We received strong
support from existing and new shareholders and,
together with the whole of our Board, I am grateful
for your support.
2020 financial performance
During the year, we completed 9,799 new homes
across the Group (2019: 16,042) including joint
ventures, a reduction of 39% due to the impact
of our shutdown in the second quarter of 2020,
followed by the steady build up of our operations
2
Taylor Wimpey plc Annual Report and Accounts 2020
www.taylorwimpey.co.uk
www.taylorwimpey.co.uk
Taylor Wimpey plc Annual Report and Accounts 2020
3
Strategic report
Chief Executive’s statement
Emerging stronger
2020 has been an eventful year, to say the least… At the time
of writing last year’s Annual Report letter, we could not have
known how the year would turn out or how quickly the, then
relatively unknown COVID-19 would escalate, with increasing
impact on lives and businesses.
We entered the COVID-19 pandemic with a well capitalised
balance sheet, strong landbank and net cash position
which gave us increased levels of resilience and confidence.
This, together with the benefit of a strong culture and a shared
core value of doing the right thing, meant we had two very
clear priorities. The first was to do all we reasonably could
to support and protect our employees, customers,
subcontractors, suppliers and communities. This included
a focus on those financially vulnerable and on health and
wellbeing. Our second priority was on ensuring that we
positioned the business to emerge stronger from this crisis.
On pages 10 and 11, you can read more information on the
steps we took during the year.
We were the first major homebuilder to stop construction on
sites and close sales centres in the wake of the pandemic and
the lockdown restrictions in March 2020, as we implemented
new working practices to adhere to strict social distancing
requirements and developed the Taylor Wimpey COVID-19
Code of Conduct. This meant a seven week shutdown of
construction sites and nine week shutdown of our sales
centres as we put in place our enhanced safety measures
and processes and adjusted to COVID-secure ways of working.
You can see more information on the impact on our financial
performance in Chris Carney’s section on pages 54 to 59.
Given it was clear that we were entering a period of uncertainty,
with no finite end, we took steps to conserve cash and increase
our flexibility, by controlling working capital very tightly. Whilst
our Ordinary Dividend Policy has been stress tested and is
payable through a ‘normal’ downturn, the global COVID-19
pandemic goes beyond normal and even severe cyclical swings
and represents an exceptional case. Accordingly, the Board
took the decision to cancel the 2019 final dividend of 3.80
pence per share (c.£125 million) that was due to be paid on
15 May 2020 and the planned special dividend payment of
10.99 pence per share (c.£360 million) that was due to be paid
on 10 July 2020.
Pete Redfern
Chief Executive
2020 has posed a number of challenges, and opportunities, for our business and the wider industry.
Within this section, I will highlight how we are emerging stronger through...
Our market
environment
Our response
in 2020
Our
equity raise
Our
management
Our robust
investment case
See pages 6 and 7
See pages 10 and 11
See pages 12 and 13
See pages 14 and 15
See pages 16 and 17
like biodiversity and customer environmental
engagement. In the social sphere, building on
the lessons learnt through the pandemic, we are
also aiming to strengthen our engagement and
relationship with the local communities in which
we operate.
Doing the right thing for customers and
communities
Doing the right thing for our customers is a key
priority for the Group.
Fire safety provision
At the time of our 2020 full year results, we
announced our intention to support building
owners and leaseholders with fire safety
investment to ensure their apartment buildings
are safe and meet current EWS1 (External Wall
Fire Review) requirements. This applies to
Taylor Wimpey apartment buildings constructed
over the last 20 years, including apartment
buildings below 18 metres. We announced an
additional £125 million provision, to be booked in
2021, to cover this cost.
This is a complex and exceptional situation,
but Taylor Wimpey is focused on doing the right
thing for its customers. The Board has
determined that we will fund and oversee the
improvement works of apartment buildings in
our ownership, regardless of eligibility for the UK
Government Building Safety Fund, to make them
safe and mortgageable by achieving EWS1
certification. If Taylor Wimpey no longer owns
the building and it is not eligible for the Building
Safety Fund, or similar support that may be
announced in the future, where a freeholder
produces a fair and proportionate plan for fire
safety improvement works following EWS1
assessment, we will contribute funding to bring
those buildings up to the standards required by
current RICS EWS1 guidance. Whilst the legal
responsibility continues to rest with the building
owner, we will also provide advice and other
assistance where appropriate.
CMA investigation
The CMA’s investigation into leasehold remains
open and we understand that the CMA will
continue to proceed with its investigation. We will
continue to cooperate with the CMA and will
formally respond to the CMA at the appropriate
point in its process. More information can be
found on pages 30 and 31.
Whilst 2020 was a very challenging year, we
were able to drive positives including benefiting
from prior investments in IT, training and
development which allowed us to continue to
support customers through this time and protect
and grow our order book, at a time of great
uncertainty. During each week of 2020,
including through the various levels of
restrictions, we continued to sell homes and
progress purchases. We also continued to
progress sites through the planning process and
open new sales outlets, which provides a strong
platform for 2021. We have been able to adapt
our ways of working including digitising our
whole sales process from reservation through
to completion, with only the signing of contracts
required to be done by hand, and expanding and
extending our approach to flexible working to
benefit our employees and customers.
Our Pay It Forward Scheme, as well as weekly
updates to suppliers and subcontractors,
helped the process of returning to work on
Taylor Wimpey sites and further strengthened
those relationships. Our approach to health
and safety and our COVID-secure site protocols
enabled us to accommodate subsequent
restrictions, both local and national, with the
support of our employee, subcontractor and
supplier base. We are particularly pleased that
customer feedback and scores during and after
the lockdown period continued to be very
positive and we have been recognised by our
employees via Glassdoor for our leadership
during the pandemic, including being named
in the Glassdoor top 50 places to work in the UK
for 2021, as voted for by employees, for the
fourth consecutive year and rated in its top ten
UK firms for work-life balance during COVID-19.
We have been very grateful for the support from
our shareholders during this period. It continues
to be our aim to provide a reliable income stream
to our shareholders, throughout the cycle,
including during a ‘normal downturn’.
Ordinary Dividend Policy
Our Ordinary Dividend Policy is to pay out
to shareholders approximately 7.5% of net
assets, which will be at least £250 million per
annum, paid in two equal instalments in May
and November.
We propose to resume ordinary dividend
payments in May 2021, starting with the 2020
final dividend payment of 4.14 pence per share
equating to c.£151 million, subject to
shareholder approval at the AGM.
This means that, in the 2021 calendar year,
we intend to return c.£301 million in cash
(c.8.28 pence per share) via the payment
of the 2020 final dividend in May subject to
shareholder approval and the 2021 interim
dividend in November.
Approach to return of excess capital
As we look forward, our intention remains
to return cash generated by the business in
excess of that needed by the Group to fund
land investment, all working capital, taxation
and other cash requirements of the business,
and once the ordinary dividend has been met.
We are not proposing to return excess capital
in 2021. We will review the level of excess capital
and potential return in respect of 2021 at the
time of the 2021 full year results in February
2022, for payment in 2022.
This represents a shorter period between
proposing and distributing excess capital returns
and we expect to continue with this timing
going forward.
The method of returning excess capital, either by
way of special dividend or share buyback, will be
considered at the appropriate time.
Taking the opportunities to emerge
stronger
The key objective of our actions throughout the
pandemic has been to protect the business in
the short term while ensuring we position
ourselves to take advantage of opportunities
that will strengthen the business for the future
and increase shareholder returns.
With a strong balance sheet and cashflow,
coupled with resilient underlying demand and
confidence in the long term outlook, we were
able to be proactive and opportunistic.
The pandemic materially reduced the level of
competition for land and created a disconnect
in the land market, resulting in significant short
term opportunities to acquire land from a broad
range of sources at attractive returns. On 17
June 2020, we announced an equity raise where
we raised net proceeds of £510 million to take
advantage of these near term opportunities.
Between re-entering the land market and 31
December 2020, we had agreed terms on and
authorised c.£1.3 billion of gross land
purchases, comprising 93 sites and c.22,600
plots, significantly ahead of our normal rate of
acquisition. These sites have been secured at
attractive returns in line with our medium term
operating profit margin target of c.21-22% and
with an average return on capital employed‡‡*
of c.34%. We expect the land spend already
committed will lead to outlet growth from late
2022 and completions from 2023. Having
approved significant incremental new land in the
past nine months we expect new land approvals
to revert to a more normal replacement level.
You can read more about this on pages 12
and 13.
Sustainability in the widest sense
We run our business for the long term and so
sustainability in the widest sense has always
been a key element of our culture and way of
doing business. In 2021, we will implement our
new environmental strategy, which strengthens
our environmental, social and governance
framework which is well integrated into the
business. The environmental strategy focuses
on both our macro impact on issues like climate
change and carbon footprint, and also aims
to enhance our local engagement on issues
4
Taylor Wimpey plc Annual Report and Accounts 2020
www.taylorwimpey.co.uk
www.taylorwimpey.co.uk
Taylor Wimpey plc Annual Report and Accounts 2020
5
Strategic report
Chief Executive’s statement
continued
Our market
environment
This section looks at our industry context, how
supply and demand underpin our market and
how other external factors have influenced our
year as well as their potential impact on the
short and longer term.
A very resilient UK housing market
After an unusual and volatile year, our 2020 results
were in line with market expectations. Our teams
and partners responded with dedication and
professionalism to the pandemic and their resolve
to continue to deliver high-quality homes and
exceptional service for our customers was
outstanding. The UK housing market has
remained resilient, despite the shutdown period
in the second quarter. The market recovered
strongly in the second half, ahead of expectations,
and demonstrated the underlying strength of
demand in the UK and the importance of low
interest rates and stable mortgage lending.
We are pleased to note the Government’s
ongoing support for the housing market, home
ownership and, specifically, first time buyers,
and the recognition that housebuilding is a key
part of the economy.
In 2020, total home completions (including
joint ventures) decreased by 39% to 9,609
(2019: 15,719), due primarily to the impact on
production capacity during the second quarter
shutdown and we delivered 1,904 affordable
homes including joint ventures (2019: 3,548),
equating to 20% of total completions (2019:
23%). Our net private reservation rate for 2020
was 0.76 homes per outlet per week (2019:
0.96). Cancellation rates for the full year were
above normal levels at 20% (2019: 15%), but
normalised in the final quarter, at 16% (2019:
16%). Average selling prices on private
completions increased by 6% to £323k (2019:
£305k), with the overall average selling price
increasing to £288k (2019: £269k), driven mostly
by change in mix.
375k
items of personal protective equipment (PPE)
delivered to care homes, GP surgeries and local
care organisations during the pandemic
Industry context
– Demand and supply imbalance with
undersupply of new housing in the UK
– Just over 200k new homes built in a
normal year
– Estimated requirement to build c.300k
homes per year
– 2020 volume materially impacted by
COVID-19 delays
Part of a larger market
There are generally in excess of one million
housing transactions per year in the UK, with
new homes accounting for between 15-20%
of total completions in a normal year.
This means we are part of a larger market
and prices of new homes are closely aligned
to second hand homes of a similar size and
location. One important point of difference
is in the Government’s Help to Buy scheme
that is only available for new builds, making
our homes more desirable for many first
time buyers.
Industry key drivers
The key drivers for the housing market
are affordability and consumer confidence.
Affordability is determined by interest rates
and mortgage availability and consumer
confidence is closely aligned to the
employment outlook.
A number of external factors determine our
ability to operate successfully. For example,
the availability of land with planning and
ease of the planning process, the regulatory
backdrop and the availability of skilled labour
and materials.
The COVID-19 pandemic led to industry-
wide site closures and our sites closed for
a seven week period with our sales centres
closed for nine weeks. Unsurprisingly, overall
second quarter market completions reduced
significantly but they recovered strongly in
the third quarter of 2020. According to the
Ministry of Housing Communities and Local
Government (MHCLG) completions in England
from October 2019 to September 2020 were
145k, around 18% lower than the comparable
period a year earlier.
Whilst output fell, customer demand remained
strong and transactions rebounded strongly
after the second quarter lockdown, underpinned
by pent up demand, continued low interest
rates, a wide choice of mortgage products
and the Government’s Help to Buy scheme,
as well as the Stamp Duty Land Tax Holiday.
Supply demand imbalance
In October 2020, the UK Government reiterated
its intention to target the building of c.300k
new homes per year. With the new build
industry delivering just over 200k new dwellings
in a normal year, there remains a significant
gap between current output and the
Government target.
The UK Government plans to introduce further
reforms to the planning system that it hopes will
help encourage more building. As a homebuilder
we have an important part to play in providing
much needed high-quality new homes and
expect continued strong demand for our homes
in the years ahead and are supportive of any
improvements in the planning system.
Labour and materials
Build cost inflation in 2020 was lower than
in recent years where we have tended to
experience inflation of c.3-4%. We believe the
fall in output across the industry has resulted in
spare capacity for our subcontractors reducing
inflationary pressure on labour and materials.
As demand for build materials and labour
returns, we anticipate a more normal inflationary
environment. The extent of build cost inflation is
dependent on industry-wide production levels as
well as the strength of the housing market.
Key market data
The home ownership rate in England
At just under 65%, home ownership rates in England are much lower
than the mid 2000s peak of c.71%.
UK first time buyers mortgage payments as a percentage
of take home pay / interest rates
Low interest rates mean that for many the monthly servicing of mortgage
payments is cheaper than renting a comparable property.
%
75
70
65
60
55
50
y
a
p
e
m
o
h
e
k
a
t
f
o
%
60
50
40
30
20
10
0
%
e
t
a
r
t
s
e
r
e
t
n
I
16
14
12
10
8
6
4
2
0
1980
1990
2000
Year
Owner occupiers
Source: MHCLG.
2010
2020
1983
1990
2000
2010
2020
Interest rate %
Year
% of take home pay
Sources: Nationwide, Bank of England.
UK house price development
House price inflation has been more modest in recent years than in
previous cycles.
England net additional dwellings and new build completions
While the data below covers England only, it demonstrates overall supply
was much lower than the Government’s national target of 300k
new homes per year, prior to COVID-19 related reductions in output.
£k
250
0
0
0
’
£
200
150
100
50
0
%
40
30
20
10
0
-10
-20
1980
1990
2000
Year
Price £k
Annual Change %
Source: Nationwide.
2010
2020
000s
250
200
150
0
0
0
’
£
100
50
0
1
0
-
0
0
0
2
2
0
-
1
0
0
2
3
0
-
2
0
0
2
4
0
-
3
0
0
2
5
0
-
4
0
0
2
6
0
-
5
0
0
2
7
0
-
6
0
0
2
8
0
-
7
0
0
2
9
0
-
8
0
0
2
0
1
-
9
0
0
2
1
1
-
0
1
0
2
2
1
-
1
1
0
2
3
1
-
2
1
0
2
4
1
-
3
1
0
2
5
1
-
4
1
0
2
6
1
-
5
1
0
2
7
1
-
6
1
0
2
8
1
-
7
1
0
2
9
1
-
8
1
0
2
0
2
-
9
1
0
2
Net additional dwellings (000s)
New build completions (000s)
Source: MHCLG.
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Strategic report
Chief Executive’s statement
continued
Our market environment continued
Key drivers
2020 backdrop
Short term implications
Long term implications
– The bank rate was reduced
to an historic low of 0.1%
on the 19 March
– Initially as the pandemic hit,
some mortgage products
were withdrawn, particularly
high loan to value (LTV)
– Whilst widespread lending
has returned, there is still a
reduction in the higher LTV
products
– Expect interest rates to remain
low and mortgage payments
to continue to be affordable
and generally lower than rental
payments
– May take time for high LTV
mortgage products to return,
which could foster increased
demand for new homes where
Help to Buy is available for first
time buyers
– UK unemployment rose to
5.0% in November 2020
(1.2% higher than the prior
year (source: ONS)), with
the Coronavirus Job
Retention Scheme (CJRS)
preventing a larger rise
– The CJRS is due to end in
April 2021, which may lead
to a further rise in
unemployment
– The Office of Budgetary
Responsibility estimates that
UK unemployment will
increase to 7.75% in mid 2021
– High unemployment can
impact housing market
sentiment
– Unlike other periods of high
unemployment, this is
most concentrated amongst
specific sectors such as leisure
– In 2020, a technical build
extension of two months
for the first scheme of Help
to Buy was granted to
compensate for delays
caused by COVID-19
– Scheme changes from April
2021 which will restrict Help to
Buy to first time buyers and
there will be maximum regional
price caps
– Changes have been well
flagged giving us the
opportunity to prepare for the
change
– In 2020, there were delays to
the implementation of new
regulation including the
Future Homes Standard
– This has given us additional
time to prepare and to
purchase land that factors in
these new costs
– Adjustment in implementing
the Future Homes Standard
– Opportunity to produce more
energy-efficient homes
– We plan to increase natural
habitats on new sites from
2023
– Introduction of red diesel and
plastic taxes
Interest rates and mortgage availability
Interest rates and mortgage availability determine housing affordability and accessibility
for our customers. Interest rates are at an historic low and for customers able to access
the housing market currently, servicing mortgage payments is, on average, cheaper
than renting (source: Bank of England, Nationwide). At 7.7 times median income for
England and Wales in 2019 (source: ONS), the house prices to earnings multiple remains
high. Stricter rules on mortgage lending were introduced in 2014, aimed at ensuring
customers will be able to meet their mortgage payments if interest rates increase.
The average age of a first time buyer is 34 (source: Money.co.uk), suggesting there
remains considerable unmet demand.
Employment
The UK employment rate has implications on the number of customers able and willing
to buy new houses.
A healthy employment outlook is important for general consumer confidence in the
housing market and the wider economy.
In previous cycles, higher unemployment has been a contributory factor to a weaker
housing market.
Help to Buy
Help to Buy has been popular with our customers, supporting them to get onto the
housing ladder and in moving up the housing ladder. Under the current scheme the
Government will lend up to 20% of the value of a new build home (40% within Greater
London) via an equity loan (interest free for five years) to homebuyers able to meet certain
criteria, including raising a 5% deposit. From April 2021, the scheme moves into its next
phase, limited to first time buyers and has introduced regional maximum price caps with
the scheme due to end 31 March 2023. We believe that the changes announced are
appropriate and are in the best long term interests of the housing market and homebuyers.
Climate change / regulation
The Future Homes Standard outlines new regulations aimed at making new homes more
energy-efficient. Part L relates to the conservation of fuel and power, and Part F covers
ventilation. These measures were originally planned for 2020 but were delayed due to the
COVID-19 pandemic and will now come into force in June 2022 and will allow for a one
year transitional period. The new rules have cost implications for our sector. Where possible
we are factoring the potential costs into our land purchases.
We are also awaiting the outcome of the Government’s EV (electric vehicle) charging
regulations consultation expected in April 2021, which could have important implications
in relation to charging points on developments, which may raise potential issues regarding
the overall capacity of the grid to serve future developments.
Land and planning
COVID-19 has also led to some delays in the planning system this year, impacting the
timing of our outlet openings and the level of conversions from the long term landbank.
We also await the final outcomes of consultations on the Government’s land and
planning proposals. The Government is assessing the planning system, with the aim
of streamlining processes and ensuring each area has a local plan.
– Interest rates expected to remain low and
mortgage payments to remain affordable
– We expect to see higher LTV mortgage
products return to market
Links to Principal
Risks
Impact of the market
environment on mortgage
availability and housing
demand
Key stakeholder
concerns
– A long term healthy employment outlook is
important for housing as well as the rest of the
economy
– If unemployment rebounds quickly and
Impact of the market
environment on mortgage
availability and housing
demand
remains concentrated in certain industries,
it seems likely that the housing market will
remain robust, but if this results in longer term
unemployment of a more structural nature this
could pose a threat to our sector and the
wider economy
Key stakeholder
concerns
– The Government has made housing a
continued priority, and expressed the desire
for some form of private sector mechanism to
support first time buyers after Help to Buy
ends in 2023
Government policy and
planning regulations
Key stakeholder
concerns
– The pending Environment Act will accelerate
the environmental agenda nationally
Government policy and
planning regulations
Key stakeholder
concerns
– The Government has committed to net zero
UK emissions by 2050. This will ultimately
necessitate an overhaul of the UK’s energy
infrastructure to move away from our reliance
on gas
– Housing remains high on the political agenda,
with the shortage of housing recognised as a
priority by the Government and we expect
there to remain strong political support
The quick recovery
of the housing market
in the second half of
this year, ahead of
expectations, is
evidence of the
underlying strength
of demand.”
We estimate that market-led house price growth
for our regional mix was c.1.9% in the 12
months to 31 December 2020 (2019: c.1%).
During 2020, approximately 46% of total sales
used the Help to Buy scheme and we worked
with 4,800 households to take the first step to
home ownership or to move up the housing
ladder (2019: 34% and 5,693). Approximately
80% of sales through Help to Buy in 2020 were
to first time buyers (2019: 76%) at an average
price of £286k (2019: £277k). From 16
December, we began taking reservations under
the new phase of the Help to Buy scheme and,
up to 31 December, took 650 reservations
under the new scheme for completions from
the second quarter of 2021.
With demand for our homes remaining strong,
we ended the year with a total order book
valued at £2,684 million (31 December 2019:
£2,176 million), excluding joint ventures, which
represents 10,685 homes (31 December 2019:
9,725 homes). We traded from an average of
240 outlets in 2020 (2019: 250) and entered
2021 with 239 outlets (31 December 2019:
240). As previously guided, we expect to end
2021 with outlet numbers broadly similar to
the end of 2020.
Underlying build cost inflation in 2020 was
c.3.0% (2019: c.4.5%). Since the final quarter
of 2020, we have seen a softening in the cost
pressures experienced earlier in 2020.
A renewed focus on margin and cost
discipline
We came into 2020 with a renewed focus on
reducing costs and increasing efficiency, after
a period of margin pressure and increased
investment in the long term future of the
business which is now substantially complete.
Operating through the challenges of the
pandemic has further sharpened that focus
and highlighted opportunities for ongoing
efficiency and operational and financial
performance improvement to benefit
shareholders. Our clear primary performance
focus is on returning the business to c.21-22%
operating profit margin in the medium term.
– White Paper on wide
– Building our land position
ranging planning reform
– Revisions to the Standard
Housing Methodology
increases our range of options
moving into a planning
environment undergoing
change
– Improved speed in planning could lead to
further efficiencies in our process and speed of
build once land is acquired
– More readily available land could, in some
instances, lead to greater competition
Government policy and
planning regulations
Key stakeholder
concerns
Read more about key issues for our stakeholders on pages 26 to 41
Read more about our Principal Risks and material issues on pages 26 to 27
and 49 to 53
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Strategic report
Chief Executive’s statement
continued
Our response
in 2020
May
Closure of show homes,
sales centres and construction sites
Following the start of the first
nationwide lockdown, we took the
decision to close all of our show
homes and sales centres on 23 March,
and construction sites on 24 March,
while we put in place the safety
measures necessary to operate in
a COVID-secure manner.
Employee wellbeing
A small challenge was set each day
for employees, with the aim of providing
a focus for all and encouraging
colleagues to stay connected and
engaged. A total of 44 challenges
were set between March and May
and almost 1,000 entries were shared
using the Group’s internal social
network, Yammer.
Reopening of construction sites
and sales centres
The phased reopening of
Taylor Wimpey construction sites in
England and Wales began on 4 May
and in Scotland from 28 May.
Following Government guidance which
removed restrictions on non-essential
home moves and supported the return
of activities related to the sale and
purchase of homes, Taylor Wimpey’s
sales centres reopened by appointment
only in England from 22 May.
NHS and care worker discount
Discount scheme for NHS and care
worker employees launched, offering
5% discount of the purchase price
of a new home, as a thank you for
their heroic efforts during the
COVID-19 pandemic.
2020
New national restrictions
The Government confirmed that the
housing market should remain open
for business during the period of new
restrictions in England announced
in November, and construction was
encouraged to continue.
Construction sites also remained open
in Scotland and Wales.
Cost and organisational review
A detailed review of organisational and
cost structures resulted in management
changes, a rationalisation of the London
operating structure and a series of
reductions in central and business
unit overhead levels.
February
March
April
May
June
July
October
November
December
Irene Dorner adopts position
of Chairman
After joining the plc Board as
Chair-designate in December 2019,
Irene Dorner adopted the position
of Chairman on 26 February,
bringing a wealth of financial
and commercial experience.
Feb
Pay It Forward Scheme
Equity raise
Successfully completed an equity raise,
raising net proceeds of £510 million in
order to take advantage of attractive
opportunities in the land market.
Scotland and Wales sales centres
reopen
Sales centres in Wales reopened by
appointment only for customers from
22 June, and in Scotland from 29 June.
Educational masterclasses
Between April and June, a series of
masterclass sessions were held for
employees, covering a range of topics
with over 2,500 attendees.
Taylor Wimpey Pay It Forward Scheme
launched offering interest-free loans to
support self-employed subcontractors.
PPE donations
Following the closure of our
construction sites, surplus PPE was
donated to local care organisations
which highlighted a widespread need.
TW Logistics was able to procure face
masks, gloves and aprons which were
distributed by employees to care homes
across the country.
Isolation Challenge
As the annual TW Challenge was unable
to take place, employees instead took
part in an Isolation Charity Challenge
to complete as many miles as possible
during their daily exercise, raising over
£70k for charity.
Board changes
Kate Barker stepped down from
the Board after just over nine years
with Taylor Wimpey. Robert Noel took
up the position of Senior Independent
Director on 21 April.
Apr
Work-life balance during
COVID-19
Taylor Wimpey was named in
Glassdoor’s top 10 companies
for work-life balance, based on
employee reviews left between
March and September 2020.
Housebuilder Award for care home
initiative
Taylor Wimpey received
the Housebuilder Star Award at
the Housebuilder Awards 2020,
for the Company’s care home
initiative, which supplied over 50
care organisations with much needed
PPE and other supplies.
New Non Executive Directors
The Board announced that Scilla
Grimble and Jitesh Gadhia
will be appointed as Independent
Non Executive Directors with effect
from 1 March 2021.
Diversity and Inclusion
Taylor Wimpey’s second
diversity and inclusion
conference was held virtually
on 6 July, with over 110
attendees including our D&I
Champions, Managing Directors
and Divisional Chairs.
Furlough subsidies returned
All employees returned to work
from furlough and all furlough
subsidies returned
to Government.
Dec
As previously announced, in 2020 we undertook
a detailed organisational review and made
changes to our cost structure to ensure that
we continue to operate efficiently in a changing
market. This resulted in annualised cost
reductions that will deliver savings in the region
of £16 million in 2021, with the costs to achieve
these of £12.1 million incurred in 2020.
These changes included the removal of one tier
of operational management, the rationalisation
of our London operating structure to focus on
affordable price points that meet the affordability
needs of Londoners, and a series of reductions
in central and business unit overhead levels. As
part of these changes, we have reorganised our
divisional structure into Scotland; North West,
North East and Yorkshire; Midlands and Wales;
Central, South West and Spain; and London
and South East. Each region is headed by
a Divisional Chair, who is also a member of
the Group Management Team. As a result,
each business unit will now report directly to a
member of the Group Management Team.
Our focus will remain on reducing cost, process
simplification and enhancing the core drivers of
value for our business to achieve this. We will
continue to ensure our overheads are
appropriate to the operating environment and
we are focused on extracting the benefits of
workstreams already in place.
A long term, sustainable business
Our purpose must guide us in all that we do:
we build great homes and create thriving
communities. Whilst short term performance is
very important, we run the business for the long
term to enhance and generate more value and
mitigate risk. We will deliver on our priorities in
a responsible and sustainable way, which makes
a positive contribution to all stakeholders.
This approach is integrated into our business
decision making, including our commitment to
health and safety and prior investments in build
quality and in developing our people.
Environmental, social and governance (ESG)
has always been an important part of working
for Taylor Wimpey. Our teams see the social
and governance aspects as ‘business as usual’,
including our contributions to, and involvement
in, local communities and our strong culture.
In 2020, we identified that in the area of the
environment we could and should be doing
more, and in February 2021 we launched a new
environmental strategy, as we play our part in
tackling climate change and respond positively
to changes in our regulatory environment.
We delayed the timing of the launch of our
environmental strategy to ensure our targets
reflected the requirements of the new Future
Homes Standard.
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Strategic report
Chief Executive’s statement
continued
As a result of the
equity raise in June,
we were able to
confidently and
assertively re-enter
the land market.”
Our strategy includes ambitious science-based
targets approved by the Science Based Target
Initiative to reduce our operational carbon
emissions intensity by 36% by 2025 from a 2019
baseline, and to reduce the carbon emissions
intensity from our supply chain and customer
homes by 24% by 2030 from a 2019 baseline.
We will also make it easier for close to 40,000
customers to work from home and enable more
sustainable transport choices through 36,000
electric vehicle (EV) charging points and 3,000
additional bike stands by the mid 2020s.
Biodiversity is another key focus area and,
in 2020, we adopted a biodiversity net gain
approach in a number of our planning
applications and from 2021 we will also integrate
our priority nature enhancements on all suitable
new sites. A full outline of our targets can be
found in our Sustainability Report and on our
website. We are also disclosing our performance
against the criteria identified for our sector by
the Sustainability Accounting Standards Board
in our Sustainability Report for the first time
this year.
Our
equity raise
In June 2020, we raised net proceeds of £510 million
through issuing new shares in order to take advantage of
attractive opportunities in the land market. This was a front
footed raise aimed at building the long term sustainability
of our business and the response from our investors and
employees was positive.
Where are we buying?
New land acquisitions span all our regions. Between re-entering the
land market and 31 December 2020, we had agreed terms on and
authorised gross land purchases of c.£1.3 billion comprising 93 sites.
Though this includes sites we would have progressed without the
capital raise, it is significantly more than what we would have normally
transacted to replace land built on during the year. Overall, the
timing of land spend is ‘opportunity-led’ as we seek to maximise
value. Having invested in recent years to improve site teams, quality
and customer service, we are well placed to deliver these additional
outlets without adding meaningfully to our existing structure of 23
regional businesses, generating long term value and helping us
emerge in a strong competitive position. We have continued to
progress land buying this year, as land market conditions have begun
to normalise and competition has returned in most areas.
What are we buying?
At the beginning of 2020, we flagged our intention to increase
the proportion of smaller sites in our portfolio to help us raise outlet
numbers and increase our optionality. Over recent years, we have
faced greater competition for smaller sites which generally attract a
larger number of bidders, such as smaller housebuilders. This has
made it more challenging to acquire smaller sites at our high margin
and return hurdle rates. Since the equity raise, we have been able
to increase our number of smaller sites with less competition and
at expected returns, in line with our hurdle rates. We remain good at
developing large sites where we often have a competitive advantage
and these remain an important part of our mix.
Adding to our strong landbank
As at 31 December 2020, our short term landbank stood at c.77k
plots (2019: c.76k plots). 50% of this short term landbank has been
strategically sourced (2019: 54%) since 2009. During 2020 we
acquired 7,644 plots (2019: 7,268 plots). The average cost of land
as a proportion of average selling price within the short term owned
landbank remains low at 15.2% (2019: 14.9%). The average selling
price in the short term owned landbank in 2020 increased by 1.1% to
£288k (2019: £285k). A key strength of Taylor Wimpey is our strategic
land pipeline. This is an important input to the short term landbank
and provides an enhanced supply of land with greater control over the
planning permissions we receive. We have one of the largest strategic
pipelines in the sector which stood at c.139k potential plots as at 31
December 2020 (31 December 2019: c.140k potential plots). During
2020, we converted a further c.4k plots from the strategic pipeline to
the short term landbank (2019: c.8k plots). We continue to seek new
opportunities and added a net 2.4k new potential plots to the
strategic pipeline in 2020 (2019: 21.2k). In the year, 55% of our
completions were sourced from the strategic pipeline (2019: 56%).
Behind our equity raise
Last year, we set out our ability to
grow at the right time in the cycle,
without compromising on quality
or adding meaningful market risk.
We have added to our excellent
land position whilst maintaining a
strong balance sheet and tightly
controlling cash.
The equity raise was completed in three ways:
1. An equity placing to existing and new institutional
shareholders
2. A subscription, to allow Taylor Wimpey Directors
to participate
3. A retail offer for employees and retail shareholders
March
At the beginning of the crisis, when the extent of the UK
lockdown was unknown, we placed discretionary land
spending on hold to conserve our cash resources.
April to May
As we prepared to remobilise sites and began assessing land
deals in late April 2020, we saw a marked increase in the
number and the attractiveness of opportunities with much
reduced competition.
June
We recognised this period as a time limited opportunity in the
land market.
At all times maintaining a strong balance sheet was a priority.
The Board signed off the equity raise and we raised net
funds of £510 million. The equity raised allowed us to
increase our investment in land over and above the land we
would normally purchase whilst maintaining a very strong
balance sheet, a key differentiator.
June to December
Our teams progressed deals in the pipeline which were
assessed by management and those that met our target
returns were approved. We agreed terms and authorised
gross land purchases of c.£1.3 billion by 31 December,
significantly more than our usual rate.
We expect our short term landbank to grow by over 10k
plots over the next 12-18 months. We expect the land spend
already committed will lead to outlet growth from late 2022
and completions from 2023.
c.£1.3bn
of agreed terms and authorised gross land purchases
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Strategic report
Chief Executive’s statement
continued
Operating through
the challenges of
the pandemic has
also highlighted
opportunities for
ongoing efficiency
and performance
improvement.”
We continue to develop our interactions with
our communities. Our Community
Communications Plan launched in 2019 is
ensuring a consistent approach to relationships
with new and existing communities and we have
signed the Social Mobility Pledge to boost
opportunity and social mobility.
UK current trading and outlook
The 2021 selling season has started well,
following on from the stronger than expected
recovery of the housing market in the second
half of 2020 and reflecting the underlying
strength of demand, underpinned by low interest
rates and stable mortgage lending. The net
private sales rate for the year to date
(w/e 21 February 2021) was 0.89 (2020: 0.94).
We started the year over 50% sold for 2021
private completions and have continued to grow
our order book. As at 21 February 2021, our
total order book excluding joint ventures was
£2,793 million (2020 equivalent period: £2,584
million), comprising 11,013 homes (2020
equivalent period: 10,880). Our order book
includes a healthy profile of sales extending into
the second quarter and beyond when the Stamp
Duty Land Tax holiday is due to end and into the
next phase of Help to Buy. With the benefit of
a strong order book, we have tested sales
pricing across our developments, and have
achieved selling price growth in the first two
months of the year.
We are mindful of the changing regulatory
environment for the sector in the short to
medium term and have put the steps in place
to enable us to respond appropriately.
While Brexit related friction and the ongoing
implications of COVID-19 may cause some
disruption in housing market sentiment in the
near term, with the process now agreed, we
expect the clearer political outlook to provide a
longer period of stability for our customers.
Our
management
Our Group Management Team
1. Pete Redfern
Chief Executive
2. Chris Carney
Group Finance Director
3. Jennie Daly
Group Operations Director
4. Alice Marsden
Group General Counsel
and Company Secretary
5. Anne Billson-Ross
Group Human Resources Director
6. Lee Bishop
Managing Director,
Group Strategic Land
7. Ingrid Osborne
Divisional Chair, London
and South East
8. Nigel Holland
Divisional Chair, Central,
South West and Spain
9. Ian Drummond
Divisional Chair, Scotland
10. Shaun White
Divisional Chair, Midlands
and Wales
Daniel McGowan left his role as Divisional
Chair, North East, North West and Yorkshire
at the end of January 2021. Whilst a
comprehensive recruitment process is
conducted to appoint a new Divisional Chair,
this role is held by Jennie Daly, on an interim
basis, with some of her other responsibilities
temporarily shared with Chris Carney.
1.
2.
3.
The Group Management Team
(GMT) is our most senior
management group, below the
Board, comprising the three
Executive Directors and eight
other senior management roles
across regional and central
leadership.
How was the GMT involved in
decision making in 2020?
The GMT is key to enacting the
decisions of the Board, and GMT
feedback and input is key to
aiding the Board’s decision making
processes. The GMT meets formally
on a monthly basis and met very
frequently via video conference during
the early stages of the pandemic to
assist the Board in its decision making
processes, take key operational
decisions and to enact necessary
changes quickly and effectively.
For example, the GMT were charged
with creating, implementing and
overseeing the detailed procedural
changes necessary to satisfy the
Board that it would be safe to return
to site in a COVID-secure way; this
programme of work was led by Group
Operations Director, Jennie Daly.
What are the recent changes
to the GMT?
We have removed one layer of
operational management that was
in place between the GMT and the
regional business units. This
streamlines our operational structure,
giving more ownership and
accountability to the Managing
Directors of our 23 business units.
We have expanded the GMT to
include two new Divisional Chairs: Ian
Drummond, Divisional Chair Scotland
and Shaun White, Divisional Chair
Midlands and Wales. This means our
regional business units report directly
into a member of the GMT.
4.
5.
6.
7.
8.
10.
9.
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Strategic report
Chief Executive’s statement
continued
Our robust
investment case
Our culture and values
have shone through
in 2020
We maintained our
focus on sustainability
– First major homebuilder to announce the
closure of sites to ensure safety
– Our employees played an important role
supporting the NHS and care homes
– Supported vulnerable subcontractors through
our Pay It Forward Scheme
Our culture and values have been put to the test
in this challenging year and our dedicated
employees have risen to the challenge. We have
acted decisively and responsibly in the interests
of our stakeholders and the wider society,
including going above and beyond to support
the NHS and care homes. We closed our sites
early to put in place COVID-secure ways of
working and supported our colleagues and
partners financially and through added support,
communication and online training. We were
rated by Glassdoor in the top 10 UK firms for
work-life balance during COVID-19.
Not only is this the right thing to do, which is our
core value, but protecting and supporting our
customers, employees and subcontractors is
in the long term interest of our business and
the industry, reputationally and operationally.
Acting responsibly has been key to keeping
construction open.
– Continued to open new outlets and progress
build, not just run the business for short term
– Progressed our ESG goals, particularly in
relation to environmental targets and diversity
– New environmental strategy in February 2021
with ambitious carbon reduction targets
Whilst it is important to adjust to near term
market considerations, we make our decisions
in the interests of the long term sustainability
of the business. Ensuring our business is
sustainable is in the interests of all our
stakeholders and is at the heart of the Board’s
decision making process.
This was demonstrated this year as we
progressed our ESG goals including
environmental targets and diversity, our rigorous
approach to health and safety as well as our
decision to invest in the future by increasing
our investment in land.
We have captured opportunities to maintain our
well-invested, quality landbank and strong
balance sheet. We also made some difficult
decisions to streamline our operational structure
and refocus our London business on more
affordable and sustainable pricing points.
Added to our high-
quality landbank and
maintained strong
balance sheet
– Between re-entering the land market and 31
December 2020, agreed terms on
and authorised c.£1.3 billion of gross land
– Ended year with strong balance sheet with net
cash‡ of £719.4 million as at 31 December
2020
We began the year with one of the strongest
land positions in the sector, with high-quality
land in our core areas. The equity raise allowed
us to grow our land position whilst maintaining
a strong balance sheet. We agreed terms on
and authorised gross land spend of c.£1.3 billion
by 31 December comprising 93 sites and
c.22,600 plots.
We believe that our decision to take
opportunities to progress land investment will
provide us with strong momentum going into
the medium term.
We have a strong short term landbank of c.77k,
as at 31 December 2020. Our strategic land
pipeline is an important input to the short term
landbank and provides an enhanced supply of
land with greater control over the planning
permissions we receive. We have one of the
largest strategic pipelines in the sector which
stood at c.139k potential plots as at 31
December 2020.
c.£1.3bn
Agreed terms on and authorised gross land purchases
We are focused on the performance objectives
of reducing underlying costs, process simplification
and driving value across the business, with
operating profit margin the primary financial
measure for the Group. We continued to
prioritise opening new outlets throughout 2020
and remain focused on developing our new land
acquisitions through the planning system and
opening new outlets efficiently. In 2021,
assuming the market remains broadly stable,
we expect to deliver 85-90% of 2019 volumes
and make further progress towards our medium
term operating profit margin target of c.21-22%.
We expect to record a smaller proportion of
affordable homes than usual in 2021, (c.17%),
influenced by site mix and a revision to the way
we contract land sold to Housing Associations,
with revenue and profit realised slightly later.
The private / affordable mix will return to more
normal historic levels from 2022. At this stage,
we anticipate overall build cost inflation in 2021
to be marginally lower than in 2020, (c.2-3%),
though this is dependent on industry-wide
production levels as well as the strength of
the housing market.
As our completion volumes recover, we expect
2021 operating profit margin to increase to
between 18.5% and 19%. At this stage we
anticipate 2021 year end net cash of broadly
£500 million, subject to timing of land
acquisitions and payments.
Having approved significant incremental new
land in the past nine months, we expect new
land approvals to revert to a more normal
replacement level. Between re-entering the land
market in 2020 and up to 26 February 2021,
we agreed terms on and authorised gross land
purchases comprising 30,956 plots and expect
our short term landbank to grow by over 10k
plots over the next 12-18 months.
The Group has a robust balance sheet and a
growing high-quality landbank, which will enable
us to grow the business whilst generating
compelling returns. The actions we have taken
in 2020, and the strong embedded margin in the
landbank, underpin our confidence in achieving
our medium term target to deliver operating
profit margins of c.21-22%. Our focus on
retaining momentum in outlet openings and our
incremental land acquisitions leave us well
positioned to deliver strong volume growth in the
medium term. With a continued focus on costs
and efficiency, the Board believes the Group is
well positioned for strong progress and to deliver
enhanced shareholder value in the years ahead.
Pete Redfern
Chief Executive
Driving growth at the
right time in the cycle
– Expect growth in our outlets in late 2022 and
2023 as a result of additional land buying
– Expect to add over 10,000 plots to our
landbank as a result of the equity raise
– Assertive land buying providing strongest
momentum in the sector
We see potential for some medium term volume
growth, assuming a supportive market. We
continue to view timing as key to our investment
decisions. In June 2020, we were able to take
advantage of a disconnect in the land market
with much reduced competition. We raised
additional equity which enabled us to confidently
and assertively re-enter the land market, adding
plots that meet our strict criteria in terms of
location, value and margin hurdle rates.
This additional investment has helped us to
re-balance our landbank by adding a slightly
higher proportion of smaller sites into the mix.
In normal years, stepping up land buying at such
a rate would not be possible without impacting
the market and causing land prices to rise. The
quality of the pipeline we have coming through
means we feel we will emerge stronger from
this crisis, with the best momentum in the sector
heading into the medium term. The additional
investments made in land in 2020 and in 2021
are expected to result in outlet openings from
late 2022 and increased volume from 2023,
generating additional value and investor returns.
On track to generate
significant and
reliable shareholder
returns
– We have paid £2.3 billion in total dividends
over the last seven years
– Cancelled 2019 final and planned 2020
special dividend due to COVID-19
– We have resumed the payment of ordinary
dividends with the 2020 final dividend
In order to conserve cash and increase our
flexibility, we took proactive measures to
protect the balance sheet in the short term,
including cancelling the 2019 final dividend
and the planned special dividend payment.
It continues to be our aim to provide a reliable
income stream to our shareholders,
throughout the cycle, including during a
‘normal downturn’. With a strong balance
sheet and performance, we propose to
resume ordinary dividend payments in May
2021, starting with the 2020 final dividend
payment of 4.14 pence per share equating
to c.£151 million, subject to shareholder
approval at the AGM.
As we look forward, our intention remains to
return cash generated by the business in
excess of that needed by the Group to fund
land investment, all working capital, taxation
and other cash requirements of the business,
and once the ordinary dividend has been met.
We are not proposing to return excess capital
in 2021. We will review the level of excess
capital and potential return in respect of 2021
at the time of the 2021 full year results in
February 2022, for payment in 2022.
£2.3bn
Total dividends paid over the last seven years
Read more on pages 30 to 41
Read more in our Sustainability Report
Read more on pages 12 to 13
Read more on pages 6 to 7
Read more on page 5
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Strategic report
Strategic report
Our purpose
Our purpose
A purpose-led
homebuilder
Achieving our purpose takes
an integrated approach…
... where an ESG mindset is embedded in
the business and decision-making...
Our purpose
is to build great
homes and create
thriving communities
Our values are key to how we do business:
Do the
right thing
Environmental
– New environment strategy to reduce our environmental
impact and improve efficiency
– Ambitious science-based target for carbon reduction
approved by the Science Based Targets initiative
– Enhancing nature on our sites, reducing waste, and using
fewer and more sustainable resources
Social
– Our Community Communications Plan ensures a
consistent approach to working with communities and
we aim to improve this engagement
– Creating connected, sustainable communities through
placemaking, benefiting customers and existing residents
– Significant contributors to local communities through our
planning obligations
Governance
– Strong culture of doing the right thing with health and
safety as our number one priority
– Refined our purpose following consultations with our
stakeholders
– Strive to improve diversity and, in 2021, we will be
launching our new Equality, Diversity and Inclusion Policy
Achieved through our
optimised business model
See pages 20 to 21
Key performance indicators
See pages 22 to 25
Environmental targets
See page 42
Read more about our
strategy and targets in
our Sustainability Report
www.taylorwimpey.co.uk/
corporate/sustainability
... which enables us to deliver on our long
term strategy and achieve our medium term
goals (2018-2023) and short term priorities...
... whilst delivering long term
value for our stakeholders.
Our customers
Customers and
communities
Best in class
efficient engine
room
Build quality
Our employees
Be the
employer
of choice in
our industry
Optimising our
strong landbank
Priorities in 2021:
– Margin delivery – optimisation
of selling price and an enhanced
cost mindset
– Bringing through new land
acquisitions for volume growth
in 2023/24
Medium term goals (2018-2023):
Return on net
operating assets**
35%
9.9% in 2020
(2019: 31.4%)
Cash conversion‡‡
70-100%
(54.9)% in 2020
(2019 : 82.6%)
– Delivering customer service and
consistently great build quality
– Building on our strengths in Social
and Governance areas and new
Environmental strategy
Operating profit*
margin
c.21-22%
10.8% in 2020
(2019: 19.6%)
Short term landbank
4-4.5 years
c.8.1 years in 2020
(2019: c.4.8 years)
Due to the impact of COVID-19 on the 2020 financial results, none of our medium term
strategic objectives were met in the year.
Remuneration report
See pages 112 to 115
Our partners
Our investors
Our communities
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19
Strategic report
Our business model
How our business model
delivers on our purpose...
What we do
1. Investment
Selecting land
2. Development
Managing the community and planning
process
i
R
e
n
v
e
s
t
i
n
g
3. Realising value
Optimising the housebuilding process
Principal Risks key:
A:
B:
Government policy and planning regulations
Impact of the market environment on mortgage availability and
housing demand
Material costs and availability of subcontractors
C:
D:
E:
F:
G:
Ability to attract and retain high-calibre employees
Land purchasing
Quality and reputation
Site and product safety
Why we do it
How we do it
The value we created in 2020
Shareholder capital management
Ensuring long term sustainability of the business
model through securing a quality land pipeline,
located in places people want to live, with
good planning prospects.
We continue to look for opportunities in the right
locations that optimise our value and meet our
returns criteria. We continue to focus on being
responsive to land market conditions. In 2020,
we completed an opportunity-led equity raise.
c.77k
Plots in our UK short
term landbank
(2019: 76k)
c.£2.9bn
Land on the balance sheet
(2019: c.£2.7bn)
Our strong land position comprises both short
term land (land with some form of planning
permission) and strategic land pipeline (land
with no residential planning at the time we take
a commercial interest).
Protecting capital and adding value
Progressing land through the planning system
is the key way we add value to the land we
acquire. Securing good quality planning
permissions benefits both our land portfolio and
the communities in which we build, providing
much needed new homes, affordable housing,
infrastructure and community facilities through
planning obligations. We engage extensively with
communities, before and during the lifetime of
each development.
Optimising stakeholder returns
Key to this is building quality homes which are
attractive to customers. Health and safety is
our first priority and is not an area we will
compromise. We seek to do the right thing,
and deliver our strategy in a way that benefits all
our stakeholders. As a national housebuilder we
benefit from our scale and look to maximise and
optimise the efficiency of our operations.
At this stage in the business model we seek to
manage the following Principal Risks:
A, E
We do this through factoring in stakeholders’
needs, addressing environmental and other
local issues and building community facilities
to create developments that meet their
wider needs.
At this stage of the business model we seek
to manage the following Principal Risks:
A, B, F, G
We work with our subcontractors to make
improvements to our processes and operations.
We have implemented additional checks and
driven higher standards of build quality across
our business. We have taken further tangible
measures to remove unnecessary costs and
ensure we are operating efficiently to maximise
stakeholder returns.
At this stage of the business model we seek
to manage the following Principal Risks:
C, D, F, G
68
Planning applications
granted
97
Community events
and meetings
(2019: 81)
(2019: 187)
c.9.8k
New homes completed
for our customers
6.0k
Directly employed on
average during 2020
(2019:16.0k)
(2019: 5.9k)
Worked with
12.3k
subcontractors on
average during 2020
(2019: 14.6k)
Read more about our risk
management on pages 46 to 53
Read more on how we create
value for all stakeholder groups
on pages 28 to 41
20
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21
Strategic report
Our strategy and key performance indicators
Measuring our progress
Strategic priority
Performance in 2020
Priorities going forward
C:
KPI
Principal Risks key:
A:
B:
Government policy and planning regulations
Impact of the market environment on mortgage availability and
housing demand
Material costs and availability of subcontractors
D:
E:
F:
G:
Ability to attract and retain high-calibre employees
Land purchasing
Quality and reputation
Site and product safety
Customers and
communities
Principal Risks
A, B, C, D, E, F, G
Read more on pages 49 to 53
Read more on pages 112 to 115
Read more on pages 30 to 33
and 40 to 41
Build quality
Principal Risks
A, C, D, F, G
Read more on pages 49 to 53
Optimising our strong
landbank
Principal Risks
A, D, E
Read more on pages 49 to 53
– We are pleased that our 8-week ‘would you
recommend’ score is back up to a five-star
level after narrowly missing this last year.
– We maintained a high level of customer
satisfaction, despite the challenges of
managing customer expectations in the face
of build delays caused by COVID-19.
– We retained a sales presence even while sales
centres and show homes were closed during
the national lockdown and leveraged our IT
systems to support our customers digitally
and on the phone.
– Our focus on longer term customer
satisfaction is beginning to be reflected in an
improved 9-month ‘would you recommend’
score.
– We launched our new, user friendly customer-
facing website which is smart phone friendly.
– Over the last few years, we have focused on
enhancing build quality and are pleased with
our National House-Building Council (NHBC)
Construction Quality Review (CQR) score of
4.45 out of 6.
– Average reportable items per inspection have
fallen in the year as we continue to improve
processes and systems.
– Published a customer version of our
Consistent Quality Approach guidelines so it is
clearer for customers what they expect from
us.
– During 2020, we learnt many valuable lessons
on how our customers interact with us via
technology and the benefits of holding
appointments outside of traditional opening
hours. Taking on board these learnings will
enable us to continue to improve the ease of
doing business with us.
– Our focus in 2021 will be to continue to deliver
good quality homes. Quality is key to a
customer’s first impressions, minimises the
need for future remediation and improves long
term customer satisfaction.
– We continue to prioritise strong customer
service and aim to maintain a five-star rating.
– Providing reliable move in dates continues to
be a priority for us.
– We continue to consider build quality as key
and aim to maintain the level and consistency
of quality throughout the business.
– We aim to continue to ensure our quality
assurance processes are embedded at every
stage of build.
– Improving quality reduces the need for
remediation, reduces costs and waste, and
drives additional value for our stakeholders.
– We continue to exceed our target of sourcing
more than 40% of completions from the
strategic pipeline.
– We saw opportunities in 2020 to invest in
the land market for the medium term. This,
together with the reduction in completions in
the year, as a result of COVID-19, has resulted
in our landbank years exceeding the medium
term target.
– In the year, land cost as a percentage of
average selling price on approvals has
increased against a low comparator, but still
remains strong. The increase is partly due to
the mix of sites with an increased proportion in
the South East as well as a higher proportion
of smaller sites.
– Continue to convert land from the strategic
pipeline into the short term landbank to
provide visibility, optionality and aid long term
planning.
– We continue to invest in land to support future
growth and returns with a pipeline of future
quality outlets.
– We remain focused on progressing our new
land acquisitions through the planning system
and opening new outlets efficiently.
– We will continue to drive value from acquiring
land at high contribution margins in places
where customers want to live both now and in
the future.
Customer satisfaction 8-week score ‘would you recommend?’
Customer satisfaction 9-month score ‘would you recommend?’
92
90% 89%
92%
Objective: We strive to achieve 90% or above in this
question, which equates to a five-star rating.
Definition: Percentage of customers who would recommend
Taylor Wimpey to a friend as measured by the National New
Homes Survey undertaken by the NHBC on behalf of the
Home Builders Federation (HBF) eight weeks after
legal completion.
Why it is key to our strategy: Identifying and serving the
needs of our customers by delivering a high-quality product
is key to our ambition to become a customer-focused
homebuilder.
Read more on pages 112 to 115
78
76% 77%
78%
Objective: We strive to improve this score and understand
the reasons behind and underlying drivers of this customer
feedback.
18
0
19
20
Definition: Percentage of customers who would recommend
Taylor Wimpey to a friend as measured by the National New
Homes Survey undertaken by the NHBC nine months after
legal completion.
Why it is key to our strategy: We think about
how customers live in the homes and places we build for
longer than the first few months after they move in. Ensuring
our customer satisfaction remains high in the months
following completion is important.
Read more on pages 112 to 115
18
0
19
20
Note: The 8-week ‘would you recommend’ score for 2020 relates to customers who legally completed between October 2019 and September 2020, with the comparators
relating to the same period in the prior years. The 9-month ‘would you recommend’ score for 2020 relates to customers who legally completed between October 2018 and
September 2019, with the comparator relating to the same period in the prior years.
Construction Quality Review
Average reportable items per inspection
4.45
3.93
4.13
4.45
Objective: To achieve an average score of four out of six
across Taylor Wimpey by 2020.
0.28
0.28
0.28 0.24
Definition: The average score, out of six, achieved during
an in-depth annual review of construction quality on a
site-specific basis.
Why it is key to our strategy: Right first time continues
to be a key priority within our customer-focused approach.
CQRs focus on construction quality and understanding
‘why or how’ given levels of quality have resulted.
Read more on pages 112 to 115
18
0.00
19
20
18
0.00
19
20
Objective: Reduce defects found during build stages.
Definition: The average number of defects found per
plot during NHBC inspections at key stages of the build.
Why it is key to our strategy: Reducing the number of
defects per plot is crucial to ensuring we deliver consistently
high-quality homes for our customers, whilst also minimising
the cost of rectifications.
Strategically sourced completions
Landbank years
58
58% 56%
55%
Objective: We aim to source more than 40% of our
completions from the strategic pipeline per annum in
the medium term.
8.1
c.8.1
Objective: Increase landbank efficiency – reduce length
of short term owned and controlled landbank years by
c.1 year to 4-4.5 years.
18
0
19
20
Definition: Number of completions on land which originally
did not have a residential planning permission when we
acquired a commercial interest in it, expressed as a
percentage of total completions.
Why it is key to our strategy: The strategic pipeline
enhances our ability to increase the contribution per legal
completion because of the inherent margin uplift from
strategic plots. It also allows us to take a long term view
of sites.
c.5.1
c.4.8
18
0.0
19
20
Definition: The years of land supply in our short term
landbank based at current completion levels.
Why it is key to our strategy: We seek to use our
high-quality landbank more efficiently to deliver growth,
both in the number and quality of homes built for a wider
range of customers.
Read more on page 19
Land cost as % of average selling price on approvals
18.3%
Objective: To maintain at current levels or reduce our
average land cost.
19.2%
16.2%
18
19
20
Definition: Cost of land as a percentage of average selling
price on approvals.
Why it is key to our strategy: Maintaining a sustainable
land cost percentage increases value for our shareholders.
20
15
10
5
0
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23
Strategic report
Our strategy and key performance indicators continued
Strategic priority
Performance in 2020
Priorities going forward
KPI
Be the employer of
choice in our industry
Principal Risks
D, F, G
Read more on pages 49 to 53
Read more on pages 34 to 35
Best in class efficient
engine room
Principal Risks
A, B, C, D, E, F, G
Read more on pages 49 to 53
Read more on pages 36 to 37
– We are pleased that our Annual Injury
– We continue to use research and
development to test and implement measures
on site in order to make our sites as safe as
possible.
– We continue to value a stable workforce using
surveys and feedback to understand our
employees’ views and continue to develop
our employee offering.
– In 2021, we plan to run a ‘Talkback’ survey,
as we did in 2019. We undertake an
engagement survey periodically and it forms
an important part of how we involve, gain
feedback from and communicate with our
employees.
– We continue to improve our recruitment
strategy and diversity road map with
supportive training and working practices.
We aim to reach a wider talent pool through
different attraction channels to increase BAME
representation in our workforce and establish
a more gender balanced workforce which
is more representative of the communities
we serve.
– Through 2021, we aim to optimise our
operations under COVID-secure conditions.
– We aim to work efficiently through our strong
order book and continue to meet sales
demand.
– We worked with architects to update our
standard house types which we will start using
in 2021. We have reduced our number of
different house types which provides a
number of operational and procurement
benefits that will help ensure quality and
consistency. However, we have not reduced
the specification of our homes.
– We continue to focus on cost and efficiency,
process simplification, and extracting the
benefits of workstreams already in place.
Incidence Rate (AIIR) reduced again to 151
in 2020 (2019: 156). Our AIIR for reportable
injuries per 100,000 employees and
contractors remains well below both the HBF
and Health and Safety Executive Construction
Industry averages.
– Our dedicated teams have demonstrated the
ability to quickly adapt to new working
practices through the pandemic.
– To gain feedback we ran three ‘pulse’ surveys
in 2020 which were designed to provide a
‘temperature check’ on employee
engagement. These showed our employees
to be highly engaged as well as aligned to the
Group’s actions during the COVID-19 crisis.
– We continue to have one of the lowest rates
of voluntary employee turnover in the industry.
– With a well known shortage of skills, we have
taken a proactive approach to our early talent
programmes and direct labour model. In
2020, we reviewed the structure of the
business and engaged with employees
throughout the process.
– In the year, sales rates have been constrained
by the impact of COVID-19, and in particular
our second quarter shutdown when COVID-
secure practices and socially distanced
operations were implemented. By the end of
2020 we had returned to near normal capacity
whilst operating in a COVID-secure way.
– Sales recovered strongly in the second half
and our net private sales rate remains strong
in the context of historic rates. We have been
able to adapt our ways of working including
digitising our whole sales process from
reservation through to completion, with only
the signing of contracts required to be done
by hand, and expanding and extending our
approach to flexible working to benefit our
employees and customers.
– Our order book both by value and volume is at
an historic high, this is partly due to build
delays extending the order book but also
reflects strong underlying demand.
– In 2020, we undertook a detailed
organisational review and made changes to
our cost structure to ensure that we continue
to operate efficiently in a changing market
including the removal of one tier of operational
management, the rationalisation of our
London operating structure and a series of
reductions in central and business unit
overhead levels. We are now operating from
23 regional businesses.
Voluntary employee turnover
Number recruited into early talent programmes
14.5
11.6
8.7
5.8
2.9
0.0
14.5%
12.9% 9.4%
18
19
20
Objective: We aim to attract and retain the best people
in the industry and give them opportunities to develop to their
full potential. We aim to keep this within a range of 5-15%.
Definition: Voluntary resignations divided by number of total
employees.
Why it is key to our strategy: Our employees are one of
our greatest competitive advantages and they are crucial
to executing our strategy. Low employee turnover supports
greater depth of experience, continuity and development of
skills within our teams.
175
175.00
131.25
87.50
43.75
116
47
18
0.00
19
20
Objective: To reduce the impact of the industry skills
shortage and future-proof our business.
Definition: The amount of people recruited onto one of our
early talent programmes including graduates, management
trainees and site management trainees.
Why it is key to our strategy: Creating a more consistent
framework and development path for early and ongoing talent
management will underpin our future growth and customer-
focused approach. We establish bespoke development
programmes to ensure we develop the skills we need when
we need them, ensuring we have the experience required to
support our strategy.
Directly employed key tradespeople, including trade apprentices
Health and Safety Annual Injury Incidence Rate (per 100,000 employees and
contractors)
1169
1,169 1,038
Objective: To improve quality, reduce bottlenecks in key
trade supply, reduce the impact of the industry skills shortage
and future-proof the business.
Definition: The number of key tradespeople directly
employed by Taylor Wimpey including bricklayers, joiners,
carpenters, painters, scaffolders and trade apprentices.
Why it is key to our strategy: Against industry-wide skills
shortages and uncertainty we aim to future-proof our
workforce. We do this by developing skills to build quality
homes and behaviours which align our business to our
customer-focused approach.
228.0
182.4
136.8
91.2
45.6
0.0
228
151
156
18
19
20
Objective: We are committed to providing a safe place in
which our employees and subcontractors can work and our
customers can live.
Definition: Reportable (all reportable) injury frequency rate
per 100,000 employees and contractors (Annual Injury
Incidence Rate).
Why it is key to our strategy: Health and safety is our
non-negotiable top priority. As well as having a moral duty
to maintain safety on site, accidents and injuries can have a
detrimental impact on the business through additional costs,
delays and / or reputational damage.
748
18
0
19
20
Net private sales rate
0.96
0.80
0.96 0.76
18
0.00
19
20
Objective: We want to break our historic sales rate barrier by
thinking differently about how we deliver a home and to better
capture demand.
10685
Definition: The average number of private sales made per
outlet per week.
Why it is key to our strategy: We want to become a
more efficient and agile business that can respond quickly
to opportunities in the market, creating increased value
for our shareholders.
Order book volume
10,685
9,725
8,304
18
0
19
20
Private legal completions per outlet
Order book value
48.2
48.2
Objective: To improve efficiency on our sites and increase
the number of legal completions per outlet.
2684
£2,684m
41.8
31.5
Definition: The number of private legal completions
per outlet.
Why it is key to our strategy: We are working to increase
new home supply for a wider range of customers by
improving efficiency across our sites.
18
0.0
19
20
18
0
19
20
£2,176m
£1,782m
Definition: The total value of homes in our year end order
book.
Objective: We focus on building a strong order book for
the future while balancing our customers’ needs. This is
particularly important in an uncertain market.
Definition: The total number of homes in our year end order
book.
Why it is key to our strategy: A strong order book provides
our customers with good visibility and provides greater
stability for business planning and enhances our ability
to deliver the best experience for customers whilst driving
the most value for our shareholders.
Objective: We focus on building a strong order book for
the future while balancing our customers’ needs. This is
particularly important in an uncertain market.
Why it is key to our strategy: A strong order book provides
our customers with good visibility and provides greater
stability for business planning and enhances our ability
to deliver the best experience for customers whilst driving
the most value for shareholders.
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Identifying our material issues
Our materiality matrix
h
g
H
i
Strategic report
Materiality assessment
Key issues for
our stakeholders
Our materiality assessment helps us to
identify and focus on the sustainability
(environmental, social and economic)
issues and impacts that matter most to
our business and our stakeholders, including
customers, communities, investors, our
employees and partners.
The assessment takes into account a range
of factors including our business priorities,
stakeholder views, the UN Sustainable
Development Goals, long term and market
trends and government policy.
We updated our materiality assessment in 2019
and early 2020 to ensure we remain focused on
the key issues for our business and stakeholders.
We use the results of our materiality assessment
to inform our approach to managing ESG risks
and opportunities including the development of
our environmental strategy.
Read more in our Sustainability Report
Read more in emerging stronger for our
stakeholders on pages 28 to 41
United Nations Sustainable
Development Goals
We support the United Nations Sustainable
Development Goals (SDGs), which aim to
unite governments, businesses and the
third sector to end poverty, fight inequality
and address climate change. Our Legacy,
Engagement and Action for the Future
(LEAF) committee has reviewed the Goals
and their relevance to our business.
This process identified 12 goals and 32
targets where we can make a contribution
towards a more sustainable future.
We use the Goals to inform our materiality
process and in the development of
our sustainability strategy and targets.
An index is included on our website,
showing how we can support the goals.
Read more about how we support the
SDGs at www.taylorwimpey.co.uk/
corporate/sustainability
1. Issue identification
A long list of issues was identified based on our current priorities,
our previous materiality assessment, business strategy, our main
impacts and risks, long term and market trends, the UN Sustainable
Development Goals and other external frameworks.
2. Stakeholder research
We sought the views of investors, local government,
non-governmental organisations (NGOs), academics, registered social
landlords and sustainable business organisations. We also drew on consumer
research, a government policy review and a media scan.
3. Internal interviews and research
We carried out internal interviews and research with senior
leaders, functional leads, and graduates.
4. Review
Our materiality matrix was reviewed by our Chief Executive
and members of our Group Management Team.
Climate change
mitigation & adaptation
(inc flood risk)
Sustainable homes & lifestyles
Affordability & supply
of housing
Fire safety
Placemaking, design
& community infrastructure
Build
quality
Health, safety
& wellbeing
(employees)
Customer health & wellbeing
Ethics, culture, governance
& transparency
Biodiversity
Sustainable transport
Air quality
Site environmental
& remediation
Ethical sourcing & human rights
Access to skills
Customer
service /
satisfaction
Land, planning, community engagement
Choice of land
(greenfield, brownfield)
Innovation
Sustainable materials
Inclusion & diversity
Resource use & waste
Accessible & adaptive homes
Labour relations
Water use efficiency
Charitable giving
Privacy / data security
Taxation & remuneration policies
Employee engagement
l
s
r
e
d
o
h
e
k
a
t
s
o
t
e
c
n
a
t
r
o
p
m
i
–
w
e
v
i
l
a
n
r
e
t
x
E
i
m
u
d
e
M
Medium
Internal view – importance to the business
High
Our material issues
Sustainable homes
and communities
Land, planning and
community engagement
Health, safety
and wellbeing
Environment
People
and skills
Charitable
giving
The issues identified in our materiality
matrix have been grouped to create a list
of nine material issues. Corresponding
colours have been used to show how
the issues have been grouped.
Customer service
and quality
Responsible
sourcing
Governance and
management
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27
Strategic report
Our stakeholders
Emerging stronger
for our stakeholders
Stakeholders
Key issues from our materiality matrix
Our customers
Our customers
Our employees
Our employees
• Affordability and supply of housing
• Affordability and supply of housing
• Air quality
• Air quality
• Biodiversity
• Biodiversity
• Build quality
• Build quality
• Climate change mitigation and adaptation (inc flood risk)
• Climate change mitigation and adaptation (inc flood risk)
• Customer service / satisfaction
• Customer service / satisfaction
• Access to skills
• Access to skills
• Employee engagement
• Employee engagement
• Ethics, culture, governance and transparency
• Ethics, culture, governance and transparency
• Health, safety and wellbeing
• Health, safety and wellbeing
• Inclusion and diversity
• Inclusion and diversity
• Placemaking, design and community infrastructure
• Placemaking, design and community infrastructure
• Sustainable homes and lifestyles
• Sustainable homes and lifestyles
• Sustainable transport
• Sustainable transport
• Fire safety
• Fire safety
• Labour relations
• Labour relations
Our partners
Our partners
• Charitable giving
• Charitable giving
• Climate change mitigation and adaptation
• Climate change mitigation and adaptation
• Ethical sourcing and human rights
• Ethical sourcing and human rights
• Health, safety and wellbeing
• Health, safety and wellbeing
• Land, planning, community engagement
• Land, planning, community engagement
• Innovation
• Innovation
• Sustainable materials
• Sustainable materials
Our investors
Our investors
Our communities
Our communities
• Climate change mitigation and adaptation
• Climate change mitigation and adaptation
• Customer service / satisfaction
• Customer service / satisfaction
• Employee engagement
• Employee engagement
• Ethics, culture, governance and transparency
• Ethics, culture, governance and transparency
• Health, safety and wellbeing
• Health, safety and wellbeing
• Inclusion and diversity
• Inclusion and diversity
• Affordability and supply of housing
• Affordability and supply of housing
• Air quality
• Air quality
• Biodiversity
• Biodiversity
• Charitable giving
• Charitable giving
• Choice of land (greenfield, brownfield)
• Choice of land (greenfield, brownfield)
• Climate change mitigation and adaptation (inc flood risk)
• Climate change mitigation and adaptation (inc flood risk)
• Innovation
• Innovation
• Taxation and remuneration policies
• Taxation and remuneration policies
• Health, safety and wellbeing
• Health, safety and wellbeing
• Land, planning, community engagement
• Land, planning, community engagement
• Placemaking, design and community infrastructure
• Placemaking, design and community infrastructure
• Site environmental and remediation
• Site environmental and remediation
• Sustainable homes and lifestyles
• Sustainable homes and lifestyles
• Sustainable transport
• Sustainable transport
Section 172(1) Directors’ Duty
The Directors continue to have regard to the interests of the Company’s wider stakeholders, in accordance with s172 of the Companies Act.
Details of how the Directors have fulfilled their duties can be found throughout the Strategic and Governance reports. The content below on
stakeholder engagement and on pages 30 to 41 highlight key actions in this area. Further details on how the Directors’ duties are discharged and
the oversight of these duties are included in the Governance section on pages 72-77.
How we engage
Actions and outcomes
Value created
We engage directly with customers at our developments, via our
We engage directly with customers at our developments, via our
customer portal (Touchpoint) and through social media.
customer portal (Touchpoint) and through social media.
We monitor customer views through focus groups, satisfaction surveys,
We monitor customer views through focus groups, satisfaction surveys,
Trustpilot reviews and post-occupancy research.
Trustpilot reviews and post-occupancy research.
In 2020, we surveyed customers on their attitudes to the environment.
In 2020, we surveyed customers on their attitudes to the environment.
Our CEO wrote to all customers upon closing and reopening of sites as
Our CEO wrote to all customers upon closing and reopening of sites as
well as to update them on subsequent changes throughout the pandemic.
well as to update them on subsequent changes throughout the pandemic.
We engage with our employees and gather feedback through meetings,
We engage with our employees and gather feedback through meetings,
appraisals, focus groups, employee surveys, our internal magazine and
appraisals, focus groups, employee surveys, our internal magazine and
newsletter, Company wide emails, and our national and regional
newsletter, Company wide emails, and our national and regional
employee forums. We encourage employees to share feedback and this
employee forums. We encourage employees to share feedback and this
can be sent directly to the Chief Executive via email.
can be sent directly to the Chief Executive via email.
Our updated induction now includes both pre- and post-start content to
Our updated induction now includes both pre- and post-start content to
help new employees quickly become familiar with how we work.
help new employees quickly become familiar with how we work.
In 2020, we completed a detailed review of the business which resulted
In 2020, we completed a detailed review of the business which resulted
in some areas of restructure. Throughout, we engaged with employees,
in some areas of restructure. Throughout, we engaged with employees,
encouraged them to feedback to senior management, including our
encouraged them to feedback to senior management, including our
CEO and, where appropriate, entered formal consultation and ensured
CEO and, where appropriate, entered formal consultation and ensured
that Employee Representatives were briefed.
that Employee Representatives were briefed.
We engage with our subcontractors and suppliers on a wide range of
We engage with our subcontractors and suppliers on a wide range of
matters and initiatives through meetings, workshops, working groups,
matters and initiatives through meetings, workshops, working groups,
engagement sessions and our membership of the Supply Chain
engagement sessions and our membership of the Supply Chain
Sustainability School.
Sustainability School.
Our engagement with our local and national charity partners is overseen
Our engagement with our local and national charity partners is overseen
by our Charity Committee.
by our Charity Committee.
We engage with local authorities and parish councils and councillors
We engage with local authorities and parish councils and councillors
and participate in the development of strategic frameworks, Local Plans
and participate in the development of strategic frameworks, Local Plans
and Neighbourhood Plans. We also interact with central Government
and Neighbourhood Plans. We also interact with central Government
including the MHCLG, Homes England, and the Department for the
including the MHCLG, Homes England, and the Department for the
Environment, Food & Rural Affairs, the Scottish and Welsh
Environment, Food & Rural Affairs, the Scottish and Welsh
Governments, to understand their priorities and share our views. We
Governments, to understand their priorities and share our views. We
engage directly and through trade associations such as the HBF.
engage directly and through trade associations such as the HBF.
We engage with investors throughout the year through results
We engage with investors throughout the year through results
presentations, meetings, roadshows, conferences, telephone and
presentations, meetings, roadshows, conferences, telephone and
video calls. We engage via our regulatory reporting including the Annual
video calls. We engage via our regulatory reporting including the Annual
Report and Accounts, our full year results, half year results, trading
Report and Accounts, our full year results, half year results, trading
updates and our Annual General Meeting.
updates and our Annual General Meeting.
When possible, we conduct visits to our sites and we participate in
When possible, we conduct visits to our sites and we participate in
benchmarks and disclosure initiatives.
benchmarks and disclosure initiatives.
92%
92%
(2019: 89%)
(2019: 89%)
8-week ‘would you
8-week ‘would you
recommend’ score
recommend’ score
9.4%
9.4%
(2019: 12.9%)
(2019: 12.9%)
voluntary employee
voluntary employee
turnover
turnover
12.3k
12.3k
(2019: 14.6k)
(2019: 14.6k)
operatives that we
operatives that we
provided work for
provided work for
– Moved efficiently to online appointments
– Moved efficiently to online appointments
through the pandemic to support our
through the pandemic to support our
customers
customers
– 8-week ‘would you recommend’ score back up
– 8-week ‘would you recommend’ score back up
to a five-star level
to a five-star level
– In response to customer insights, updated
– In response to customer insights, updated
standard house types to be rolled out in 2021
standard house types to be rolled out in 2021
– Provided an NHS and care worker discount
– Provided an NHS and care worker discount
scheme
scheme
– Based on feedback, named in Glassdoor’s top
– Based on feedback, named in Glassdoor’s top
10 companies for work life balance during
10 companies for work life balance during
COVID-19 and, for the fourth year running, in
COVID-19 and, for the fourth year running, in
Glassdoor’s top 50 UK employers for 2021
Glassdoor’s top 50 UK employers for 2021
– Ran three pulse surveys to keep up to date with
– Ran three pulse surveys to keep up to date with
our employee views and input with 98% of
our employee views and input with 98% of
furloughed employees feeling positive about the
furloughed employees feeling positive about the
support they received during the pandemic
support they received during the pandemic
– Provided health and wellbeing support,
– Provided health and wellbeing support,
information and educational resources with over
information and educational resources with over
2,000 employees attending health and wellbeing
2,000 employees attending health and wellbeing
masterclasses and ‘wellbeing in lockdown’
masterclasses and ‘wellbeing in lockdown’
sessions
sessions
– Through the first national lockdown, we
– Through the first national lockdown, we
supported our subcontractors through our Pay
supported our subcontractors through our Pay
It Forward scheme, as well as weekly updates
It Forward scheme, as well as weekly updates
to suppliers and subcontractors
to suppliers and subcontractors
– We continued to progress planning through the
– We continued to progress planning through the
shutdown period and were pleased to achieve
shutdown period and were pleased to achieve
the UK’s first significant planning permission
the UK’s first significant planning permission
remotely
remotely
– Employees supported local communities by
– Employees supported local communities by
donating, packing and delivering PPE to local
donating, packing and delivering PPE to local
NHS and care organisations
NHS and care organisations
– Investors welcomed our structured
– Investors welcomed our structured
communications programme to keep investors
communications programme to keep investors
updated on steps to manage and protect the
updated on steps to manage and protect the
business, and consideration for the health and
business, and consideration for the health and
safety of customers, employees and partners
safety of customers, employees and partners
through the pandemic
through the pandemic
– Our Chairman conducted a virtual investor
– Our Chairman conducted a virtual investor
roadshow which received positive feedback
roadshow which received positive feedback
c.£151m
c.£151m
(2019: nil)
(2019: nil)
final dividend
final dividend
We engage with local communities at every site, from planning and
We engage with local communities at every site, from planning and
throughout construction, including through meetings, exhibitions,
throughout construction, including through meetings, exhibitions,
workshops, newsletters, information boards, social media and our
workshops, newsletters, information boards, social media and our
website.
website.
We collaborate with non-governmental organisations (NGOs), academia
We collaborate with non-governmental organisations (NGOs), academia
and expert organisations to learn from their insights.
and expert organisations to learn from their insights.
– Continued to run community meetings virtually
– Continued to run community meetings virtually
during the pandemic
during the pandemic
– Ran third internal placemaking competition
– Ran third internal placemaking competition
– We have signed up to the Construction
– We have signed up to the Construction
Logistics and Community Safety initiative and
Logistics and Community Safety initiative and
committed to developing our traffic
committed to developing our traffic
management systems
management systems
£287m
£287m
(2019: £447m)
(2019: £447m)
contributions to local
contributions to local
communities, via
communities, via
planning obligations
planning obligations
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Strategic report
Emerging stronger for our stakeholders
Our customers
We want every customer to receive a
great service and for every new home
to meet our quality standards.
Material issues
Progress for 2020
– Achieved an average quality score
of 4.45 compared with an industry
benchmark group average score
of 4.32
– Achieved a recommend score of 92%
in the HBF 8-week survey which
equates to a five-star rating
– Enhanced our digital offering to
customers to complete their
homebuying journey remotely, from
registering their interest through to
completion of purchase
– Published a customer version of
our Customer Quality Assurance
document, so it is clearer for
customers what they can expect
from us
– Customer research carried out into
environmental issues, with over
1,000 people taking part
Priorities for 2021
– Improve our 9-month customer
satisfaction survey score
– Roll out the new house type range
across our regional businesses
– Maintain our five-star customer
satisfaction rating
– £125 million in funding to support fire
safety improvement works for
leaseholders in Taylor Wimpey
apartment buildings, including those
below 18 metres, built over the last 20
years, to ensure they meet current
RICS EWS1 guidance
Read more on pages 20 and 21
Read more on pages 22 and 23
Our customer proposition is closely tied to our
purpose and centres on delivering great homes
and thriving communities consistently. Our
customers can trust us to do the right thing.
Fire safety provision
Background
The safety of our customers is of paramount
importance and we have always been guided by
this principle. Following the tragic fire at Grenfell
Tower, Taylor Wimpey moved quickly to identify
where action was needed to remove ACM
cladding on legacy high rise apartment buildings,
even though the buildings concerned met the
requirements of building regulations at the time
construction was approved. We announced
a £40 million provision to cover the cost of
removing and replacing ACM cladding on those
buildings, and to date we have completed work
on 12 out of 19 of the apartment buildings
identified in this review.
Over the past three years there have been
multiple updates to regulation and advice on
implementation, and the number of buildings
and scope of issues under review has widened
materially, to include apartment buildings below
18 metres and those with other forms of
cladding. Many leaseholders have been left
with unreasonably large bills to ensure their
properties are safe and in line with post-Grenfell
fire safety standards.
Latest RICS EWS1 Guidance
In January 2021, the Royal Institution of
Chartered Surveyors (RICS) issued proposed
guidance for public consultation to improve
consistency in EWS1 (External Wall Fire Review)
requests. This consultation clarified the
circumstances in which an EWS1 form
is required.
The UK Government announcement on 10
February 2021 endorsed this updated guidance,
which has made fire safety improvement
requirements clearer and enabled us to focus on
resolving issues for leaseholders using EWS1
forms as an independent framework. Whilst we
await a further update from RICS, we believe
that it is right to provide as much clarity as
possible for customers at this point.
Provision scope
As a result of this clarified guidance, we have
announced an additional £125 million provision,
to be booked in 2021, to fund fire safety
improvement works for leaseholders in
Taylor Wimpey apartment buildings constructed
over the last 20 years. We will provide funding
to make apartment buildings safe and
mortgageable in line with the latest RICS
EWS1 guidance.
For buildings we own, Taylor Wimpey will both
fund and oversee the improvement of apartment
buildings, regardless of eligibility for the UK
Government Building Safety Fund, including
apartment buildings below 18 metres. If
Taylor Wimpey no longer owns the building and
it is not eligible for the Building Safety Fund, or
similar support that may be announced in the
future, where a freeholder produces a fair and
proportionate plan for fire safety improvement
works following EWS1 assessment, we will
contribute funding to assist freeholders in
bringing those buildings up to the standards
required by EWS1 assessment.
We have identified 232 apartment buildings
that may require fire safety works under
EWS1 requirements.
We expect building owners to contact
Taylor Wimpey following completion of the
required EWS1 assessment on the relevant
buildings they own. If the apartment building is
eligible for the UK Government’s Building Safety
Fund, we would expect building owners to apply
for this funding, which is expected to be partly
funded by an Industry levy.
This provision will be reflected as a non-adjusting
post balance sheet event, disclosed as such
in the 2020 accounts, and the provision will
be booked in the 2021 accounts as an
exceptional charge.
Ground Rent Review Assistance Scheme
During 2007-2011, ten-year doubling ground rent
clauses were generally included in customer leases
on some of our developments. We ceased using
such clauses on new developments from January
2012 onwards. In April 2017, following a detailed
review, we launched a voluntary Ground Rent
Review Assistance Scheme (GRRAS) to help
affected customers. Under GRRAS, Taylor Wimpey
covers the cost of converting our customers’ lease
terms into an industry standard RPI-based lease,
comparable to that used in the majority of
residential leases in the UK.
GRRAS is available to all of our customers and also
to subsequent purchasers on those developments
where we still own the freehold.
We have reached agreement with freeholders
representing 99% of the leases concerned, with the
other 1% in negotiations. All of our customers that
currently have the option of converting their ten-year
doubling lease to an RPI-based structure have been
contacted in connection with this matter.
The CMA’s investigation into leasehold remains
open and we understand that the CMA will continue
to proceed with its investigation. We will continue to
cooperate with the CMA and will formally respond
to the CMA at the appropriate point in its process.
May
Supporting
NHS and care
workers
In May we announced a discount
scheme for NHS and care workers, as a
thank you for their heroic efforts during
the COVID-19 pandemic. The scheme,
which ran between May and December,
offered care workers a special 5%
discount off the purchase price of a new
home. We are pleased that over 3,000
NHS and care workers used the scheme,
saving a combined c.£46 million on
reservations made in the year.
We were fortunate
enough to qualify for
Taylor Wimpey’s Care
Worker Discount,
which has taken some
of the pressure off
saving money to pay
for the optional extras
that we wanted in our
new home.”
Taylor Wimpey customer
March
April
July
August
Communicating with our
customers
Increased communications with our
customers throughout the pandemic
ensured they were kept updated,
starting with the closure of sales
centres and construction sites.
Moving our sales online
Safe customer service
Dynamics
An enhanced digital offering,
including remote appointments and
video tours allowed customers to
complete their entire homebuying
journey remotely while our sales
centres were closed.
Created a video for customers to
clearly show the safety protocols
we have in place for when our
teams visit customers’ homes.
Launched trials of our new
customer relationship
management system, Dynamics,
in two regional businesses.
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Strategic report
Emerging stronger for our stakeholders continued
Customer satisfaction
We are pleased to have achieved a 5-star rating
in the year and a score of 92% for the year
ending September 2020, as measured by the
Home Builders Federation survey reflecting
customer satisfaction becoming embedded into
the way we work. We are particularly pleased to
have improved customer service during the
lockdown. We acknowledge that we do not
always get it right for our customers and
sometimes fall short of our targeted standards.
Where this is the case, we remain committed to
working closely with our customers to put this
right and learn from our mistakes. We encourage
customers to leave reviews on Trustpilot. At the
end of 2020, with over 4,500 reviews, we had
a 4 out of 5 star rating (end of 2019: 4 out of 5)
with a trust score of 4 out of 5 (2019: 3.9 out
of 5).
We are supportive of Government plans to
introduce an independent ombudsman service
for the new build sector. We expect this to be
introduced in 2021 and we will sign up to its
code of conduct. We have been working with
the HBF and others in our industry to align to the
expected new requirements in areas such as
complaints handling and customer rights to
pre-inspection of new properties.
Greener living
We conducted research with over 1,000
consumers around the UK in 2020 to explore
attitudes to the environment and sustainable
living. Our research shows that environmental
issues are becoming increasingly important.
NHS and care workers discount scheme
In May we announced a discount scheme for
NHS and care workers, as a thank you for their
heroic efforts during the COVID-19 pandemic.
The scheme, which ran between May and
December offered NHS and care workers a
special 5% discount off the purchase price of a
new home. We are pleased that over 3,000 NHS
and care workers used the scheme, saving a
combined c.£46 million on reservations made in
the year.
New house type range
We worked with architects to update our
standard house types which we will start using
in 2021. These have been designed to reflect
four years of customer insights. The standard
designs with fewer house types also provide a
number of operational and procurement benefits
that will help ensure quality and consistency.
However, we have not reduced the specification
of our homes.
The new range incorporates more open plan
living, more natural light and improved storage,
reflecting customer feedback and the results of
our research and development. Our new house
types include more flexible living with adaptable
work study spaces, with at least one study area
per home that will make it easier for customers
to work and study from home and help reduce
their travel footprint.
Build quality
Since the introduction of the measure, we have
led the volume housebuilders in build quality
as measured by the NHBC CQR score, which
measures build quality at key build stages.
In 2020, we scored an average of 4.45 (2019:
4.13) from a possible score of six, once again
the highest score for a volume housebuilder.
This compares with an industry benchmark
group average score of 4.32. We are fifth
nationally when ranked against all housebuilders
that have more than 100 build stages (which
excludes self build and very small
housebuilders).
We aim to improve this further by ensuring our
quality assurance processes are embedded
at every stage of build.
Our Consistent Quality Approach (CQA)
guidelines ensure our Site Managers,
subcontractors, production and customer
service teams all have a consistent
understanding of the finishing standards
we expect on all Taylor Wimpey homes. We are
developing specific guidance within the CQA
for the different trades working on our sites that
will form part of our framework agreements with
contractors in the future. In 2020, we published
a customer version, so it is clearer for customers
what they can expect from us.
Build quality on site is overseen by our UK Head
of Production who works closely with our
Customer Director. Progress is reviewed monthly
by our Group Management Team. We agree a
quality improvement plan for any sites not meeting
our standards and work with commercial and
production teams to implement improvements.
Getting things right first time also reduces costs
and is important from an environmental
perspective as fewer mistakes mean less waste,
fewer deliveries to site and homes perform to
the energy-efficiency standards we expect.
Customer insight and communication
In 2020 we designed and piloted a new
customer relationship management system
using Microsoft Dynamics software. This will be
rolled out across our business in 2021 and will
build on the progress we have made in digital
communications with our customers over the
past few years. As well as the customer service
and efficiency benefits of better, more targeted
communication, we expect the system to
provide better insight led decision making,
enhancing revenue and margin. The system will
bring customer service benefits such as real time
online issue resolution, delivering greater visibility
and faster responses. Operationally, there are a
number of benefits, for example, the system will
enable end to end workflows for legal processes,
with online notifications and approvals ensuring
customers, solicitors and our legal teams are
aligned, helping to reduce time to completion.
We want customers to receive clear information
and prompt service throughout the homebuying
process. During the year, and mindful of the
uncertainty and impact on our customers and
their house moves, we increased the level of
communication, with our CEO writing to all
customers upon closing and reopening of sites
and throughout the subsequent changes. We
also ensured that throughout the lockdown, we
retained a core sales presence to communicate
with customers and who were on hand, digitally,
to answer any questions.
New house
type range
Our new standard house types have
been designed to reflect four years of
customer insights. The range includes a
reduced number of house types which
will provide operational and procurement
benefits and help improve quality and
consistency for our customers.
The new range incorporates more open
plan living, more natural light and
improved storage, reflecting customer
feedback and the results of our R&D. The
house types also offer more flexible living
with adaptable work study spaces and at
least one study area per home, which will
make it easier for our customers to work
and study from home and reduce their
travel footprint.
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Strategic report
Emerging stronger for our stakeholders continued
Our employees
We want to be known as the employer
of choice in our sector and beyond,
recruiting a diverse workforce and
offering industry-leading development
opportunities.
Material issues
Progress for 2020
– Named in the Glassdoor top 50 places
to work for the fourth year running
– Many of our employees have stepped
forward to volunteer for the NHS and
support local communities and charities
– Launched our new Code of Conduct
– Once again recognised in the NHBC
Pride in the Job Awards, achieving a
total of 53 Quality Awards (2019: 66),
19 Seal of Excellence Awards (2019:
16) and two Regional Awards in 2020
(2019: two)
– Launched our updated two part
induction process ‘Laying the
Foundations’ including content on our
commitment to customers, and
diversity and inclusion
– Introduced new measures to support
our colleagues’ health and wellbeing
throughout the pandemic
– Retained commitment to equality of
opportunity in all employment practices
– 92% of employees agreed that their
Line Manager values different
perspectives, beliefs, values and
abilities
Priorities for 2021
– Launch our updated Equality, Diversity
and Inclusion policy, Maternity,
Paternity and Adoption Leave policy,
and first Menopause policy
– Remain committed to equality of
opportunity in all of our employment
practices, policies and procedures
across the business
– Introduce reverse mentoring with
LGBTQ+ colleagues
Read more on pages 20 and 21
Read more on pages 24 and 25
Link to SDGs
During 2020 we have continued to implement
our people strategy while adapting how we work
in response to the pandemic.
Health and safety
Health and safety is a shared responsibility and
always comes first at Taylor Wimpey. Whilst cost
and process simplification is a key priority for our
business in 2021, health and safety is not an area
that we are prepared to compromise on. Building
sites are, by their very nature, dangerous and so
we do everything we possibly can to minimise
those risks. We embed a safety culture through
training, awareness and visible health and safety
leadership. We are pleased that our Annual Injury
Incidence Rate (AIIR) has reduced further to 151 in
2020 (2019: 156) and our AIIR for reportable
injuries per 100,000 employees and contractors
remains well below both the HBF Home Builder
Average and Health and Safety Executive
Construction Industry Average, but we will continue
to seek to improve this. Our AIIR for major injuries
per 100,000 employees and contractors was 58 in
2020 (2019: 44). There were no health and safety
prosecutions or improvement notices in 2020.
Our Health, Safety and Environmental (HSE)
Management System covers all business activities,
and we have specific HSE plans for every site.
Our culture and people
We aim to create a strong, positive work culture at
Taylor Wimpey, guided by our purpose and
values. Our updated Code of Conduct was
launched in 2020, setting out the high standards
of integrity and conduct we expect. Our culture
makes us stand out and we aspire to be the
employer of choice in our sector, offering a unique
and valued employee experience, and something
different to the rest of the industry. We were
pleased to have been named in the top 50 places
to work in the UK for 2021, by Glassdoor, as
voted for by employees, for the fourth consecutive
year and in the top 10 companies for work-life
balance during the pandemic.
We are very proud of the efforts of our teams
through this testing time. Many of our employees
have stepped forward to volunteer for the NHS
and support local communities and charities.
During 2020, we directly employed, on average,
5,948 people across the UK (2019: 5,796)
and provided opportunities for, on average, a
further 12.3k operatives on our sites (2019:
14.6k). Our voluntary employee turnover rate
remained low at 9.4% (2019: 12.9%).
In 2020, we undertook a detailed review of our
organisational and cost structure to ensure that
we continue to operate efficiently in a changing
market. More information can be found on pages
9 to 11. Throughout this time we continued
to engage with employees and remained
committed to ensuring everyone was treated fairly
and with respect.
Skills and development
With a well known shortage of skills, we have taken
a proactive approach to our early talent
programmes and direct labour model. We have
reviewed this in line with our cost and efficiency
approach. We have a strong talent pipeline
balanced with an efficient engine room. We
currently directly employ 1,038 key trades including
apprentices (2019: 1,169). Entry level positions
make up around 14% of our total workforce (2019:
16%).
We provide a wide range of training focusing
on three areas: management and leadership;
personal development skills and technical knowledge;
and capabilities. The pandemic provided an
opportunity to change how we deliver training, using
technology and new formats to reach more people
and introducing more bite size content. Over 2,500
employees attended online masterclasses and over
4,000 viewed our how-to videos during 2020.
Our technical academies cover production, sales
and customer service providing structured career
and skills development, and enable employees to
gain a formal qualification. Over 1,500 employees
have enrolled on or completed academy courses.
Building a diverse workforce
Diversity and inclusion (D&I) is a key area we want
to actively improve. This will enable us to better
understand our customer base, widen our potential
talent pool and makes for productive and
effective teams.
Our D&I Steering Committee is chaired by a
member of our GMT. Each regional business has a
Diversity Champion who works with the Managing
Director to develop and deliver a local D&I action
plan. All new employees are required to complete
our online Diversity & Inclusion e-learning and it is
mandatory for senior leaders to complete Open
Minds unconscious bias training.
The Company is committed to ensuring that people
with disabilities are treated fairly, supported and
encouraged to apply for employment and to
progress and receive training once employed.
Working with key partners, we hope to increase
permanent and secondment opportunities for people
with disabilities.
We released our 2021 Gender Pay Gap Report
which showed a negative gender pay gap of -6%,
meaning that females received more pay than males
at our snapshot date of 5 April 2020, though the
data was impacted by employees on furlough.
Overall we have a gender mix of 70% male and 30% female
across the Company. As at 31 December 2020, the Board
is 50% female and GMT is 40%. We are making some
progress increasing diversity in recruitment. For example,
for our management trainee programme we reached 36%
women and 14% black, Asian and minority ethnic (BAME)
among new recruits. Among graduate recruits 55% were
women and 9% were BAME.
We ran our second D&I conference virtually in
2020 with over 110 attendees including our D&I
Champions, Managing Directors and Divisional Chairs.
This reviewed our progress to date, our plans for the year
ahead and included a panel discussion on Black Lives
Matter and how Taylor Wimpey can be a consciously
anti-racist organisation. We began a Reverse Mentoring
pilot for eight senior leaders who were partnered with
BAME employees.
We retained our commitment in 2020 to equality of
opportunity in all of our employment practices, policies
and procedures across the business. In 2021, we will be
launching our new Equality, Diversity and Inclusion policy
and remain committed to equality.
Supporting employees during the pandemic
During the pandemic, we introduced new measures to
support colleagues to look after themselves whether they
remained at work, were on furlough or working from home.
This included a free digital GP service for all employees. We
also provided wellbeing training for line managers to help
them support staff working remotely and launched
wellbeing coaching sessions covering topics such as
work-life balance, healthy lifestyles and goal setting.
We supported our colleagues on furlough with their
full base pay and implemented revised remuneration
arrangements for colleagues who usually receive high
levels of variable pay, such as sales staff. Colleagues who
were not furloughed through the lockdown were given
extra time off in-lieu to make up for their work during the
crisis. We also extended emergency leave and introduced
special leave for those unable to work their full hours, for
example due to family commitments. We were able to
emerge from the shutdown in a strong financial position
and paid back all of the funds we received through the
Government’s Job Retention Scheme.
The Board took a voluntary 30% cut in salary and pension
during the early stages of the COVID-19 pandemic in April
until the end of July, when our sites, which reopened in
May, returned to more normal levels of production.
We are proud of how committed our employees are to
the long term success of the Company and we strive to
listen and engage with all employees. During 2020 we ran
three ‘pulse’ surveys which were designed to provide
a temperature check on employees’ engagement on
key topics.
2020
National
Employee
Forum
Our National Employee Forum (NEF)
continues to meet regularly, with three
meetings held in 2020 chaired by a senior
leader. In 2020, the Chair of
the Remuneration Committee was
appointed the Board’s NEF Champion
and now attends NEF meetings and feeds
back to the Board. Our Chairman Irene
Dorner also attended the NEF in 2020.
Following the success of the NEF, Local
Employee Forums will be formed in 2021
to facilitate two-way communication and
collective consultation at a local level.
Read more in corporate governance on
page 76
91% of employees
feel they can share
their thoughts and
give honest feedback
to management.
Pulse employee survey, June
2020
March
April
May
July
Regular and open communication
Learning and development
New careers site
Diversity and inclusion
Employees received regular
communications from the outset of
the pandemic, including updates from
our CEO on key business decisions,
Q&A sessions and a dedicated email
address for employees to share their
views and ideas with management.
A series of masterclasses which
took place between April and
June covered a range of topics
and proved popular with
employees across the business,
with over 2,500 attendees.
As part of the redevelopment of
the Company’s website, we
re-launched the careers section,
making it easier for candidates to
learn about the culture and
explore career opportunities at
Taylor Wimpey.
Our second D&I conference was
held virtually with over 110
attendees and covered a range of
topics including remote and flexible
working and the Company’s
Reverse Mentoring scheme.
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Strategic report
Emerging stronger for our stakeholders continued
Our partners
Our partnerships are very important
to us and we take that responsibility
seriously. We strongly believe that
the best partnerships are fair and
mutually beneficial.
Material issues
Progress for 2020
– Launched the Taylor Wimpey Pay It
Forward Scheme for subcontractors
– Provided clear and regular
communications for our suppliers and
subcontractors during the pandemic
– Our colleagues raised over £70k
for charity by taking part in the
Taylor Wimpey Isolation Charity
Challenge
– Introduced a COVID-19 Code of
Conduct to keep our partners safe
on site
Priorities for 2021
– Continue to develop on site training,
competency and site-based audit
programme in collaboration with our
supply chain to have full nationwide
coverage by spring 2021
– Integrate sustainability compliance into
the tender process for central suppliers
– Hold our Taylor Wimpey Challenge
and participate in the Housebuilders
Challenge event, COVID-19
restrictions permitting
Read more on page 21
Link to SDGs
Supporting subcontractors in the pandemic
During the first stages of the COVID-19
pandemic we introduced our ‘Taylor Wimpey
Pay It Forward Scheme’, providing advance
payments for future work done by
subcontractors where we have a long-term
relationship. This was aimed at self-employed
individuals who either did not benefit from the
Government’s Self-employment Income Support
Scheme or may have experienced significant
hardship before that scheme started to make
payments. This helped us to maintain strong
links with our subcontractors and quickly begin
working with them again once the crisis eased.
We also made our employee helpline available so
subcontractors could get support and guidance
on a range of topics including finances,
budgeting, stress and anxiety, or use our mental
health and wellbeing app.
Supply chain
We want to work in collaboration with our supply
chain to deliver greater quality and efficiency,
with national agreements a key tool to optimise
our purchasing power. Collaboration brings
benefits and the potential for cost savings for
both Taylor Wimpey but also our suppliers. This
includes increasing efficiency by reducing stock
items and improving visibility on programming for
material demands.
We continue to work to improve our relationships
with our supply chain, both in procurement and
via Taylor Wimpey Logistics, to deliver solutions to
build quality and efficiency issues on an ongoing
basis. Taylor Wimpey Logistics plays an important
part in our supply chain management, providing
us with an alternative route to delivery and aiding
efficiency with the preparation of ‘just in time’ build
packs for each stage of the build process.
We have been reviewing how we train people by
leveraging technology, firstly with online supplier
masterclasses hosted by our Supply Chain
partners throughout 2020, and by launching a
Nationwide Supplier Training programme with
site and installation teams to provide expert
supplier knowledge and information to the
workforce. We have engaged with our
incumbent suppliers to develop a focused
on-site training, competency and site-based
audit programme for site teams, direct trades
and subcontractors, that will be delivered by the
suppliers’ technical representatives supporting
‘right first time’ and improving quality which
enables us to provide a better-quality customer
experience. We will continue to develop this
platform in collaboration with our supply chain to
have full nationwide coverage by spring 2021.
Charity partnerships
During 2020, we continued our partnership with
our national charities as well as local charity
partners across the UK albeit meetings were
held virtually this year. The Charity Committee
oversees and prioritises our national charity
donations and includes a variety of employees
across the business. Our six national charities
are the Youth Adventure Trust, End Youth
Homelessness, Crisis, CRASH, St Mungo’s and
Foundations Independent Living Trust. When the
COVID-19 crisis hit we contacted our charity
partners to understand how it was affecting
them and ask how we could best support them.
In total, during 2020, we donated and fundraised
over £668,000 for registered charities (2019:
over £1.1 million). We held a number of virtual
fundraising challenges and made donations to
support our charity partners through this difficult
year. This included a company-wide Isolation
Challenge that raised over £70,000. The money
was shared between NHS charities, Crisis and
Childline. More information about our charity
partnerships and local sponsorships can be
found within our Sustainability Report.
When the pandemic struck the UK in early 2020,
our colleagues across the business got involved
to support those affected in their local
communities. We donated our surplus supplies
of PPE to local NHS and care organisations,
which were packed and delivered by employees.
Taylor Wimpey Logistics also used its supplier
contacts to purchase additional PPE for
hospitals and care homes. In total we were able
to buy and deliver 150,000 aprons, 75,000 pairs
of gloves and 150,000 masks to over 50 care
homes and hospitals.
Local Planning Authorities
We aim to work constructively with planning
authorities to agree the details of our planning
obligations for each development, including
affordable housing, local infrastructure
and facilities.
We use the results of our community
engagement to help us develop planning
proposals that are financially viable and meet
local needs. Each planning application integrates
a clear development plan, enabling planning
authorities to monitor progress. As at 31
December 2020, we were building on 96% of
sites with implementable planning.
Working with local and central Government
We engage with local authorities, parish
councils, Homes England, the Greater London
Authority (GLA), the MHCLG and other public
sector organisations to understand their priorities
and share our views.
As well as site-specific engagement, we
participate in the development of strategic
frameworks, Local Plans and Neighbourhood
Plans, which consider broader development
needs and enable local people to shape new
developments in their area.
We engage with central Government on issues
relating to planning and sustainability. In 2020, this
included: the Planning for the Future White Paper,
COVID-19 impact on the planning system, Building a
Safer Future, and the Future Homes Standard. More
information is included in our Sustainability report.
We engage with Government through our
membership of industry organisations such as
the HBF and the British Property Federation.
We are members of five Homes England regional
Delivery Partner Panels.
Working with suppliers on HSE
We work closely with suppliers and subcontractors
on safety. Our approach includes risk assessment
and vetting procedures to confirm that all
subcontractors have the right knowledge, skills,
resources and experience to manage health and
safety to our standards. Our ‘Operative’s Journey’
process includes our HSE site induction, regular
poster campaigns and site safe briefings and we
have HSE site support teams that participate in
monitoring and improving site safety.
Our Supply Chain Policy and Supplier Code of
Conduct summarise our supplier standards for
safety, quality, ethics, human rights and the
environment. In 2020, we established a Sustainable
Procurement Working Group to further develop
our approach to engaging suppliers on
sustainability issues.
Human rights and modern slavery
We respect the human rights of our employees,
workers in our supply chain, customers, people in
the communities in which we operate and others
affected by our business activities. We are guided
in our approach by international standards such
as the United Nations’ Universal Declaration of
Human Rights and the European Convention on
Human Rights.
We respect the rights of our employees and those
working on our behalf, including the rights to
freedom of assembly and association and non-
discrimination. Our work on issues such as health,
safety, diversity and the environment supports our
commitment to uphold human rights.
We do not tolerate any form of slavery, forced
labour, child labour or human trafficking in our
business or supply chain. We have established our
Modern Slavery Act multidisciplinary working party,
to oversee our approach to due diligence and our
work with suppliers to reduce modern slavery risks.
More information is available in our Modern Slavery
Act Statement.
April
Pay it Forward
The Taylor Wimpey Pay it Forward
Scheme offered support to self-employed
subcontractors who lost income during
the lockdown.
As well as providing support for trusted
subcontractors, the scheme also helped
the Company to maintain strong
relationships with trusted partners and
ensured we were able to swiftly re-
mobilise our construction sites with
sufficient resource and support.
It’s not a ‘them’
and ‘us’ culture
with subcontractor
relationships, but
very much a team
approach to achieve
the best possible
outcomes, at all times.”
Contractor
April
May
June
July
Open and honest communications
Communications from a Group and
regional level, including weekly calls
with suppliers and subcontractors
ensured our partners were kept up
to date with key messages, including
our re-mobilisation strategy and new
ways of working.
Taylor Wimpey Isolation
Challenge
A Company-wide isolation activity
challenge raised over £70,000 for
charity. The money was shared
between NHS Charities Together,
Crisis and Childline.
Engaging our suppliers
Working with Government
A Sustainable Procurement
Working Group was established
to further develop our approach to
engaging suppliers on
sustainability issues.
We engaged with local and central
Government on issues relating to
planning and sustainability, including
the Planning for the Future White
Paper, the Future Homes Standard
and Building a safer future.
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Strategic report
Emerging stronger for our stakeholders continued
Our investors
Our focus has been to protect the
business in the short term while
ensuring we position ourselves to
take advantage of opportunities
which will strengthen the business
for the future and increase
shareholder returns.
Material issues
Progress for 2020
– Successfully completed an equity raise
of £510 million by issuing new shares
in order to take advantage of attractive
opportunities in the land market
– Made progress in aligning with the
SASB disclosure framework and will
disclose our performance against
most of the criteria identified for our
sector in our Sustainability Report for
the first time this year
– Completed a detailed review of our
organisational and cost structure
which will result in annualised savings
from 2021
– Included in Standard & Poor’s
Sustainability Yearbook 2021
Priorities for 2021
– Implement our new environmental
strategy
– Deliver annualised savings of c.£16
million from 2021 as a result of
organisational and cost restructure
(with the costs to achieve these of £12
million incurred in 2020)
– Make progress towards our medium
term operating profit margin of
c.21-22%
– Move towards integrated reporting
supported by an ESG Addendum,
reflecting the Company’s increased
focus on ESG
Read more on page 21
Read more on pages 24 and 25
Read more about our investment case
on pages 16 and 17
We run our business for the long term and so
sustainability in the widest sense has been always
been a key underpin to our culture and way of
doing business. The Group has a robust balance
sheet and a growing high-quality landbank, which
will enable us to grow the business whilst
generating compelling returns.
Our primary performance focus is on returning
the business to c.21-22% operating profit margin
and we continue to target a number of areas to
achieve this; focused on cost, process
simplification and enhancing the core drivers of
value for our business. In November 2020, we
announced that we had undertaken a detailed
review of our organisational and cost structure in
addition to cost reduction and management
programmes already in place. We have delivered
the planned savings outlined in November 2020,
which will be realised from the beginning of 2021.
These changes will not affect the ability of the
business to generate future growth or to deliver a
high-quality product and service to our
customers.
Ordinary Dividend Policy
Our Ordinary Dividend Policy is to pay out to
shareholders approximately 7.5% of net assets,
which will be at least £250 million per annum, paid
in two equal instalments in May and November.
We propose to resume ordinary dividend
payments in May 2021, starting with the 2020
final dividend payment of 4.14 pence per share
equating to c.£151 million, subject to shareholder
approval at the AGM.
This means that, in the 2021 calendar year, we
intend to return c.£301 million in cash (c.8.28
pence per share) via the payment of the 2020 final
dividend in May subject to shareholder approval
and the 2021 interim dividend in November.
Approach to return of excess capital
As we look forward, our intention remains to return
cash generated by the business in excess of that
needed by the Group to fund land investment, all
working capital, taxation and other cash
requirements of the business, and once the
ordinary dividend has been met.
We continued to prioritise opening new outlets
throughout 2020 and remain focused on
developing our new land acquisitions through
the planning system and opening new
outlets efficiently.
More information on guidance for 2021 can be
found on page 17.
Equity raise
Our focus has been to protect the business in the
short term while ensuring we position ourselves
to take advantage of opportunities which will
strengthen the business for the future and
increase shareholder returns. This includes
significant investment in land, given the short term
opportunity, and investing in and opening new
sales outlets, which we expect to continue to
grow in the medium term.
On 17 June 2020 we announced an opportunity-
led equity raise where we raised net proceeds of
£510 million to take advantage of near term
opportunities. These investments, which are
continuing to meet our returns criteria, will
support sustainable future growth and deliver
long term value to shareholders. More information
can be found on pages 12 to 13.
Shareholder returns
It continues to be our aim to provide a reliable
income stream to our shareholders, throughout
the cycle, including during a ‘normal downturn’.
We are not proposing to return excess capital in
2021. We will review the level of excess capital
and potential return in respect of 2021 at the time
of the 2021 full year results in February 2022, for
payment in 2022.
This represents a shorter period between
proposing and distributing excess capital returns
and we expect to continue with this timing
going forward.
The method of returning excess capital, either by
way of special dividend or share buyback, will be
considered at the appropriate time.
Approach to ESG
We maintain a dialogue with investors on our
approach to managing environmental, social and
governance risks, including implementing the
recommendations of the Task Force on Climate-
related Financial Disclosures. More information can
be found on page 44. We are also disclosing our
performance against the criteria identified for our
sector by the Sustainability Accounting Standards
Board, in our Sustainability Report for the first time
this year. More detail on our approach to ESG risks
is included in the risk section and our Sustainability
Report.
Reflecting the importance of ESG issues, we are
moving towards integrated reporting. We have
increased disclosure of ESG topics in our Annual
Report and Accounts this year. In 2022, our goal
is to publish an integrated report supported by our
sustainability web pages and an ESG Addendum for
social and environmental performance data.
We are a constituent of the Dow Jones Sustainability
Europe Index and the FTSE4Good Index series, the
leading responsible investment indices.
We participate in the CDP Climate report and
received a score of B in 2020 (2019: B) and in CDP
Water, scoring B (2019: B). We also participate in
CDP Forests, disclosing our approach to timber
sourcing and received a B rating in 2020 (2019: C).
We received a Supplier Engagement rating of A- from
CDP for our approach to engaging suppliers on
climate change.
We are a member of Next Generation, a rigorous and
detailed sustainability performance benchmark of the
UK’s largest homebuilders, and were awarded silver
in 2020.
Research and development
Our R&D initiatives span our Supply Chain, HSE,
Design and Production and the Sustainability
functions and are responsible for introducing
technology advancements and process efficiencies
that improve quality and operational delivery and
seek to add value through continuous improvement.
In 2020, the focus was on quality improvements
and regulatory changes such as the impacts of the
Future Homes Standard. We committed to funding a
PhD with the University of Birmingham to investigate
cost-effective scalable construction solutions and
strategies to overcome overheating and improve the
indoor environmental quality of future new homes as
the regulatory changes drive increased thermal
efficiency and air tightness.
Throughout the year we worked with universities and
experts to explore the impacts of future regulatory
requirements to design, specification, and health and
wellbeing in new homes. The R&D teams are
currently trialling a range of energy efficient and low
carbon technologies including energy efficient lintels,
Wastewater Heat Recovery, and Flue Gas Heat
Recovery systems. This will help us to meet our
climate change targets and comply with expected
changes to building regulations.
We continually assess modern methods of
construction (MMC) trialling those that meet
regulations, deliver quality, are safe and comfortable
for our customers and can deliver at scale with a
robust and reliable supply chain. In the short to
medium term, combining traditional construction
with panellised MMC components and panellised
construction such as Timber Frame will continue to
fuel practical innovation.
2021
Engaging with
our investors on
sustainability
A major investor engaged with us over
our approach to sustainability reporting.
The investor wanted to see reporting in
line with the Task Force on Climate-
related Financial Disclosures (TCFD) and
the Sustainability Accounting Standards
Board (SASB) metrics.
We continue to align our climate reporting
to the recommendations of the Task
Force on Climate-related Financial
Disclosures (TCFD) but had not
previously formally reported against
SASB standards.
Management requested a review, led by
our Director of Sustainability, to establish
our ability to report against SASB
requirements and establish the processes
necessary for data collection.
We also engaged directly with SASB to
ensure we correctly understood its
requirements and are now reporting
against the majority of its disclosure
criteria for our sector in our 2020
Sustainability Report and will work to
further improve our alignment over time.
Read more in our 2020
Sustainability Report
March
June
October
November
Cash preservation
Equity raise
Chairman’s roadshow
Organisational review
Implemented measures early in
the pandemic to manage our
working capital, including pausing
discretionary land spend,
cancelling the ordinary and
special dividends and drawing
down our Revolving Credit facility.
Raised net proceeds of £510
million by issuing new shares to
take advantage of near term
opportunities in the land market.
The Chairman met a number of
key investors during a virtual
roadshow. Topics discussed
included ESG and the Board’s
involvement in strategic decisions.
Completed detailed review of our
organisational and cost structure.
Removed a tier of operational
management and rationalised our
London structure delivering annual
cost savings of c.£16 million.
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Taylor Wimpey plc Annual Report and Accounts 2020
39
Strategic report
Emerging stronger for our stakeholders continued
Our communities
We want communities to welcome
Taylor Wimpey to their area and
recognise the positive contribution
we can make to their existing
community, as well as trusting us
with the responsibility of creating a
new one.
Material issues
Progress for 2020
– Supplied and delivered PPE to over 50
care organisations in our local
communities
– Signed the Social Mobility Pledge,
signalling our commitment to boost
opportunity and social mobility
– Adopted virtual consultation methods
so community engagement could
continue safely during the pandemic
– Developed our new environmental
strategy and set a science-based
carbon reduction target
Priorities for 2021
– Update our placemaking training and
review our placemaking guidance on
cycling
– Continue to strengthen our
engagement and relationship with the
local communities in which we
operate
Read more on page 21
Link to SDGs
We know housebuilding, particularly in its early
stages, can be disruptive. In order to mitigate
this, we seek to engage, consult and work in
partnership with communities and all interested
stakeholders on each and every site, both before
we submit a planning application and throughout
the life of the development. It has been
increasingly important to be more innovative in
seeking ways to engage and connect with
communities. We continued to progress
planning through the shutdown period and run
community meetings virtually. We were pleased
to have achieved the UK’s first significant
planning permission remotely.
We seek to engage, consult and work in
partnership with communities and all interested
stakeholders on each and every site, both before
we submit a planning application and throughout
the life of our developments. Our Community
Communications Plan launched in 2019 covers
the whole development process from planning to
after construction finishes. It ensures we take a
consistent approach across our sites and helps
our teams organise activities and events that
foster relationships between the new and
existing community.
Community engagement
We build in communities for years, making a
significant impact on the area and its people. We
aim to build good relationships with local people
throughout this time by communicating
proactively and consistently.
Every one of our sites has a tailored planning
and community engagement strategy and a
clear point of contact. We use a range of
methods to inform local people about our plans,
including our website, meetings, exhibitions,
workshops and information boards. We aim to
reach a wide range of stakeholders including
neighbouring residents and property owners,
potential customers, local authorities,
businesses, schools and other groups.
During 2020, we issued guidance to our
planning teams on how to use virtual
consultation methods to allow engagement to
continue safely during the pandemic.
Infrastructure and facilities
We invest in infrastructure and facilities that help
make our developments great places to live. This
includes affordable housing, green spaces,
community and leisure facilities, transport
infrastructure, educational funding, jobs for local
people and public art. In 2020, we contributed
£287 million to the local communities in which
we build across the UK via planning obligations
(2019: £447 million), the reduction reflecting
the lower building activity due to COVID-19.
Our teams across the business get involved in
local life, organising competitions with primary
schools, and sponsoring local sports clubs, as
part of their daily working life. In addition, we
contributed over £94k to other organisations,
such as scout groups, local football teams and
various local community causes (2019: £129k).
Affordable homes
A lack of affordable housing is one of the biggest
challenges facing people across the UK with
rising house prices and rents and younger
generations waiting longer to get on the
housing ladder. We work with local authorities
and registered provider partners (housing
associations) to integrate high-quality social
housing on our developments.
We can a play a part in addressing these
problems, by creating quality homes for a
wide range of people and exploring new
initiatives to improve affordability and
encourage homeownership.
The majority of our developments include
affordable social housing (homes made available
at below market rates including social rent,
affordable rent, low-cost home ownership and
discount market sale tenures) which are
negotiated as part of planning obligations. In
2020, around 20% of our completions were
designated affordable (2019: 23%).
Social mobility
We have signed the Social Mobility Pledge, an
initiative by former MP Justine Greening,
signalling our commitment to boost opportunity
and social mobility. We have developed an
Opportunity Action Plan setting out how we do
this focusing on four areas: helping to tackle
homelessness; building employability for
disadvantaged people; developing construction
skills; and diversity and inclusion.
Placemaking
Good placemaking is important, both for long
term customer attraction and long term
satisfaction. Our customer research shows a
clear relationship between good placemaking
and long term customer satisfaction.
Increasingly, we aim to install infrastructure at an
early stage. This can help in the successful
development of a new community, increase sales
by making new developments more desirable to
prospective buyers and provide new facilities to
benefit existing residents. We are equipping our
teams to plan, design and deliver schemes that
promote social, environmental and economic
sustainability and the wellbeing of future residents.
Our placemaking standards are based on best
practice such as the Building for a Healthy Life
framework, and incorporate criteria to help us
create attractive, successful and healthy
communities for the long term. We have an Urban
Designer and a Director of Design who work with
our teams on placemaking. We have appointed a
Design Lead in each of our regional businesses.
Our e-learning Design Academy covers the core
principles of urban design and how to create
sustainable communities. Our third internal
competition recognised colleagues for best
practice placemaking.
Two of our schemes were shortlisted at the National
Housing Design Awards, which promote excellence,
innovation and sustainability in housing scheme
design. Our Whitehill & Bordon development won
a National Planning Award and a second scheme
was shortlisted.
Sustainable homes and lifestyles
We conducted research with over 1,000 consumers
around the UK in 2020 to explore attitudes to the
environment and sustainable living. 43% said that
environmental performance was an important factor
in choosing who to buy a new home from. Our
homes already integrate features to help customers
reduce their environmental footprint and live a more
sustainable lifestyle and with our new environment
strategy we’ll be helping customers to reduce
waste, save water and encourage nature in their
garden. More information can be found in our
Sustainability Report.
Enabling sustainable travel
We aim to design walkable neighbourhoods that
prioritise pedestrians and cyclists and where
customers can enjoy an active lifestyle and make
sustainable transport choices. Our placemaking
standards encourage layouts that integrate paths
and cycle routes that connect with existing networks
and street design that encourages slower vehicle
speeds and safer cycling conditions. We invest in
public and community transport, walkways and cycle
paths through our planning obligations and aim to
install this infrastructure at an early stage.
April
Virtual
planning
success
A planning application submitted by
Taylor Wimpey became one of the first
major schemes to be approved using the
virtual planning committees and rules
brought in during the pandemic.
The plans for Coronation Square in
Waltham Forest include 750 new homes,
of which 50% will be affordable, a range
of new community facilities as well as
shops, cafes and flexible commercial
facilities.
Taylor Wimpey is working with Waltham
Forest Council to revitalise the area as
part of a major joint regeneration project
in Leyton, London.
April
May
June
July
Social Mobility Pledge
Virtual consultations
Assessing sustainability
Greener living
Signed the Social Mobility Pledge,
signalling our commitment to
boost opportunity and social
mobility.
Adopted virtual consultation
methods so community
engagement could continue safely
during the pandemic.
Rolled out our new digital platform
LEADR (Land and Environment
Assessment of Development Risk)
for assessing and managing
sustainability risks at site level.
Conducted research with
consumers around the UK to help
us engage customers on
environmental issues and explore
how we can make it easier for
customers to adopt sustainable
habits.
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Strategic report
Environmental strategy
Building a better world
Our environment strategy
Our business has a significant environmental
footprint through the resources we use and
the emissions associated with our operations,
supply chain and the homes we build. We will
also be affected by the physical impacts of
climate change and new legislation. We know
from our research that customers are
increasingly engaged on environmental subjects
and many have a desire to live more sustainably.
Most importantly, climate change, declining
nature and other environmental problems are
increasingly becoming a threat to the wellbeing
of people today and future generations. We want
to play our part in addressing these challenges
and we have a great opportunity to do so.
Through our operations we can positively impact
the local environment in hundreds of locations
around the UK and, through the homes and
places we build, we can enable our customers
to live more sustainably.
In 2020, we have reviewed our approach to
the environment and developed a new set
of challenging targets. The launch of our
environment strategy, which was delayed until
2021 as we waited for the details of the new
Future Homes Standard regulation to ensure
our compliance, will allow us to play our part
in creating a greener, healthier future for our
customers, colleagues and communities.
Development of our strategy has been informed
by our materiality assessment, risk management
processes and stakeholder feedback, including
investor feedback and the research with our
customers. It has been reviewed and approved
by our Board of Directors.
A full list of our supporting targets can be found
in our 2020 Sustainability Report.
Vision and commitment
Building a better world
Our world – our home – is in trouble and we aren’t standing on the side lines watching.
We want to be part of the solution – working together to minimise the impact we have on
climate change and protecting our planet for future generations. We’re committing to challenging,
measurable targets based on science, to making changes in the way we work and to reducing
our footprint. By thinking globally and acting locally, we will play our part to create a greener,
healthier home for us all. Let’s build a better world together.
Climate change
Protect our planet
and our future by playing
our part in the global fight
to stop climate change.
Our priorities
Nature
Improve access to and
enable enjoyment of
nature for customers
and communities by
regenerating the natural
environment on our
developments.
Resources and waste
Protect the environment
and improve efficiency
for our business and
our customers by
using fewer and more
sustainable resources.
Strategic objectives
Increase natural habitats
by 10% on new sites from
2023 and include our priority
wildlife enhancements
from 2021.
Cut our waste intensity
by 15% by 2025 and use
more recycled materials.
By 2022, publish a
‘towards zero waste’
strategy for our sites.
Achieve our science-based
carbon reduction target:
– Reduce operational
carbon emissions intensity
by 36% by 2025 from a
2019 baseline
– Reduce carbon emissions
intensity from our supply
chain and customer
homes by 24% by 2030
from a 2019 baseline
Read more about our strategy and targets
in our Sustainability Report at
www.taylorwimpey.co.uk/corporate/
sustainability
Climate and energy
Climate change is the most significant global
environmental threat and we are determined
to play our part in tackling it.
In early 2021, we published our ambitious
science-based carbon reduction target which
has been approved by the Science Based Targets
initiative (SBTi) and replaces our previous carbon
reduction target. The SBTi has confirmed that
our operational target is consistent with reductions
required to keep warming to 1.5°C, the most
ambitious goal of the Paris Agreement. Our scope
3 goal meets the SBTi’s criteria for ambitious value
chain goals, in line with current best practice.
We have achieved an absolute reduction in
emissions of 39% since 2013, and reduced our
carbon emissions intensity by 30% since 2013.
The pandemic and lockdown affected our year
on year performance with absolute emissions
falling but emissions intensity increasing. While
we completed less floor space than the previous
year, we continued to use energy on our sites
even when construction was halted, for example
to run IT systems, street lighting and pumping
stations. On return to sites, homes took on
average longer to complete and sell due to the
need for social distancing measures and other
factors meaning that energy use per plot
increased. We expect to see a downward trend
in 2021 as we return to more normal operating
conditions and implement our environmental
strategy. More information on our greenhouse
gas emissions data can be found below.
Giving nature a home on our sites
We want to improve access to nature for our
customers and communities by regenerating
the natural environment on our developments.
Developments can contribute to biodiversity
loss but with the right approach, we can use
our sites to protect, enhance and even increase
biodiversity. Our new target is to increase natural
habitats by 10% on new sites and include our
priority wildlife enhancements from 2021.
In 2021, we will be partnering with Hedgehog
Street, a campaign by the British Hedgehog
Preservation Society and People’s Trust for
Endangered Species, to introduce hedgehog
highways on all suitable new sites. We are also
working with Buglife, to support their B-Lines
campaign and ensure our sites include pollinator
and wildlife friendly planting. We will be piloting
our first B-Line site in 2021.
Resources and waste
We aim to protect the environment and improve
efficiency for our business and our customers
by using fewer and more sustainable resources.
Our new target is to reduce waste intensity by
15% by 2025. We engage our teams on waste
reduction through: our Waste Dos and Don’ts
guide and induction process for site teams;
a waste league table for our regional businesses;
and 15% of the potential production bonus for
Site Managers is linked to performance on
waste reduction.
The materials we purchase have a significant
environmental impact from extraction and
processing, to manufacturing and transport.
We want to work with suppliers to reduce these
impacts and promote the use of recycled and
renewable materials. Integrating sustainability into
our sourcing strategy can also improve resilience
to future resource shortages and price rises.
Sustainability and landbuying
We take account of sustainability issues from
the start of the landbuying process including
flood risk, sustainable transport and promoting
local economic development.
We review each potential piece of land against
the Government’s National Planning Policy
Framework (NPPF), which aims to ensure that
developments are economically, socially and
environmentally sustainable. We also have
our own internal processes and guidance
documents that help our teams identify and
address relevant sustainability issues for each site.
We transform derelict or contaminated land into
new communities, which helps support urban
regeneration. Around 25% of our homes in 2020
were built on brownfield land (2019: 29%).
We take the risk of flooding on our developments
extremely seriously and identify potential flood
risk as part of our site selection process. We use
the Environment Agency’s flood mapping tools,
and take account of their input during our
planning consultations. We do not buy land
unless we can mitigate flood risk.
Greenhouse gas emissions intensity
(scope 1 and 2 emissions per 100 sqm
of completed homes)
2.5
1.96
1.73
1.73
1.62
2.0
2.13
1.5
1.0
0.5
0.0
2016
2020
2019
2018
2017
2025
target
Tonnes CO2e per 100sqm completed homes
Target emissions intensity by 2025
(science-based target)
Greenhouse gas emissions (scope 1, 2 and 3) and energy use for the period 1 January 2020 – 31 December 2020
Scope 1 GHG emissions – combustion of fuel
Scope 2 GHG emissions – market based
Scope 2 GHG emissions - location based
Total scopes 1 and 2 – market based
Emissions per 100 sqm completed homes
(scope 1 and 2)
Total scope 3 emissions
Operational energy use (fuel and electricity consumption from UK sites
and offices)
Operational energy intensity (UK site and office fuel and electricity intensity
– MWh / 100 sqm completed homes)
tonnes CO2e
tonnes CO2e
tonnes CO2e
tonnes CO2e
tonnes
CO2e/100 sqm
2020
16,522
1,981
5,272
18,503
2019
21,018
3,563
6,172
24,581
2018
20,328
4,509
6,892
24,837
2017
18,889
4,794
8,236
23,683
2016
17,983
10,827
10,417
28,809
1.96
1.62
1.73
1.73
2.13
tonnes CO2e
1,961,431 3,869,583 2,171,973 1,826,183 1,963,775
MWh
85,442
101,352
95,170
89,550
92,236
MWh / 100 sqm
9.3
6.8
6.8
6.5
6.8
Data is provided as tonnes of carbon dioxide equivalent (CO2e) for all operations. Scope 1 and 2 emissions are from our sites, offices, show homes and sales areas, plots before sale
and car fleet. Data on scope 3 emissions categories is included in our Sustainability Report.
We have used the GHG Protocol Corporate Accounting and Reporting Standard (revised edition) for data gathered to fulfil our requirements under the Mandatory Carbon Reporting
(MCR) requirements, and emission factors from the Government’s GHG Conversion Factors for our corporate reporting. We use the market-based method of the revised version
of the GHG Protocol Scope 2 Guidance for calculating our scope 2 emissions. We have also included our scope 2 emissions calculated using the location-based method.
We have reported on the emissions sources required under the Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations 2013 apart from the exclusions noted.
The reported sources fall within our Consolidated Financial Statements and are for emissions over which we have financial control. We do not have responsibility for any emissions
sources that are not included in our consolidated statement.
The following sources of emissions were excluded or part-excluded from this report:
1. Fugitive emissions (refrigerant gases): excluded on the basis of expected immateriality and difficulty in acquiring data
2. Gas and electricity of part-exchange properties: excluded on the basis of immateriality due to very few completions of this type
3. Certain emissions from District Heating Schemes where we are receiving a rebate from customers prior to handover to the long term operator
4. Certain joint venture properties: where Taylor Wimpey was not part of the handover process. In these cases other homebuilders have captured MCR-related data
See our Carbon Reporting Methodology Statement at www.taylorwimpey.co.uk/corporate/sustainability for more detail on our calculations.
The energy consumption figure in the table relates to UK sites and offices only. If energy use from our fleet and our Spanish sites and offices is included the figure is 96,195 MWh
(2019: 116,207 MWh).
98.9% of this total energy consumption is from the UK and offshore areas and 1.1% from Spain. 98.3% of total scope 1 and scope 2 emissions are from the UK and offshore areas and
1.66% from Spain. During the last year, we have worked to reduce energy and emissions through our purchase of green tariff electricity for our sites during construction, and through
the efforts of our Sustainability Champions including working with Site Managers to increase the use of natural ventilation methods for drying out homes and checking thermostats in
show homes to ensure heating is only used when necessary. This reporting meets the SECR (Streamlined Energy and Carbon Reporting) requirements.
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Strategic report
Task Force on Climate-related Financial Disclosures
Non-financial information statement
Our Annual Report contains a range of non-financial information. The following table summarises where this can be found in our reporting.
Responding to
our climate risks
Climate change will affect where and how
we build our homes with increased risks from
flooding and over heating. Increased
regulation on climate change will affect our
business and, with almost three-quarters
of the UK’s local authorities declaring a
climate emergency, we expect additional
requirements through the planning process.
Responding to the Task Force on Climate-
related Financial Disclosures (TCFD)
We have governance and risk management
systems in place to help us achieve our carbon
reduction target and reduce climate-related risks
to the business. We support the aims of the
TCFD and aim to increase our disclosure in line
with its recommendations, see table below.
We will provide an enhanced summary of our
approach in our 2021 Annual Report and
Accounts, and we will also publish a separate
detailed TCFD supplement.
We have achieved the Carbon Trust Standard
for our overall approach to carbon management,
including our policy, strategy and verification
of our data and processes. We are the first
homebuilder to achieve this.
Further information on our approach to climate
risk is included in our submission to the CDP
Climate report, which we publish on our website.
We received a score of B for 2020.
We received a Supplier Engagement rating
of A- from CDP in 2020 for our approach
to engaging suppliers on climate change.
Our approach to managing climate change-related risk and opportunity
Governance
Our Legacy, Engagement and Action for the Future (LEAF) committee, chaired by a member of our Group Management Team (GMT), is responsible for reviewing climate
strategy, risks and opportunities and meets four times a year. The LEAF Chair and Director of Sustainability attend Board meetings at appropriate times during the year, either
to discuss strategic direction, request specific approvals, or to update on progress being made. Ultimate responsibility for our approach to climate change resides with our Chief
Executive. Below Board level, the Director of Sustainability is responsible for monitoring climate-related issues as part of the overall risk management process. He reports to our
CEO and updates the GMT monthly on risk and progress against targets.
Our Audit Committee reviews financial and non-financial risks included in the Group Risk Register, which includes climate change. They receive an update on sustainability risks
every six months. In addition, ESG is currently the responsibility of the Nomination and Governance Committee.
Strategy
Climate change risks have the potential to impact our business strategy through increased costs, reduced productivity and reputational damage. We assess climate risks to
the business using short (0-5 years), medium (6-10 years) and long term (11-100 years) horizons. We conducted a climate scenario analysis during 2020, and have included a
summary of the results in our 2020 Sustainability Report.
The most material short-term risks relate to regulation. Updates to Part L and F Building Regulations (the first step towards the ambitious 2025 goals of the Future Homes
Standard), will change the way homes are powered and heated. Requirements for electric vehicle (EV) charging will require design for charging points and upgrades to site
electrical infrastructure. In the medium-term regulatory risks may extend to require zero carbon homes, and potentially zero or very low carbon supply chain and operations.
The longer-term risks include changes in weather patterns and an increase in severe weather events which could affect the availability and cost of resources and raw materials
or activities on sites; and adaptation risks such as flooding and overheating in homes.
There are significant short and medium-term opportunities from meeting and exceeding the expectations of our stakeholders on climate. This includes the financial benefits
associated with our use of low carbon goods and services as well as shifts in consumer preference to favour low carbon homes and products. We will better meet the
expectations of local planning authorities who have declared climate emergencies and ESG requirements of investors. Being a responsible business is important for the
recruitment and retention of staff. There are short, medium- and longer-term opportunities around technology. For example off site construction methodologies; building more
homes from timber which sequesters carbon from the atmosphere; and use of renewable energy and digital technologies. In the longer term, the most material opportunity
relates to improved business resilience due to implementation of climate change transition and adaptation measures.
Risk management
Climate change is included as a risk in our consolidated Group Risk Register. Sustainability risks are also integrated into our corporate risk management framework, through
functional risk registers and our Climate Change and Sustainability Risk and Opportunity Register.
Our Climate Change Register guides the climate change adaptation of our business practices and the homes we build. For each climate-related risk and opportunity the register
identifies: risk driver, description of risk, potential impact, timeframe, whether the risk or opportunity is direct or indirect, likelihood and magnitude of impact. This is a standing
item on every LEAF committee agenda. The committee makes recommendations to the GMT on how to mitigate, transfer, accept, or control climate-related risks. We prioritise
our climate change risks and opportunities based on their materiality to our business, measured in % of profit before tax (PBT). A % of PBT greater than 20% is considered a
major impact. A large risk in terms of likelihood is a greater than 50% chance.
Metrics and targets
We have published a science-based carbon reduction target which has been approved the Science Based Targets initiative. This commits us to reduce scope 1 and 2 GHG
emissions by 36% per 100 sqm of completed floor area by 2025 from a 2019 base year and reduce scope 3 GHG emissions 24% per 100 sqm of completed floor area by
2030 from a 2019 base year. We report progress on a range of metrics, see page 42 and our Sustainability Report.
Overview
Our policies
Sustainability Policy – Outlines our approach to balance the long term
growth of our Company with our responsibilities to the environment, society
and the communities in which we operate
Climate Policy – Outlines our approach to reduce greenhouse gas emissions
from our operations, supply chain and homes
Health Safety and Environmental (HSE) Policy – Outlines our ongoing
commitment to continual improvement of our HSE performance
Supply Chain Policy – Sets out our commitment to work with trusted
partners and ensure our homes are built using carefully sourced materials
Waste and Resource Use Policy – Outlines our approach to using materials
efficiently and minimising waste
Diversity Policy – Confirms our commitment to creating a workforce that reflects
the diversity of the communities in which we operate
Our impact and related
Principal Risks
Read more
More information can be
found within:
Building a better world
Responding to our climate risks
42 to 43
44
More information on our
employees can be found within:
Our strategy and key
performance indicators
Emerging stronger for our
stakeholders – our employees
Principal Risks and uncertainties
24 to 25
34 to 35
51
Anti-Slavery, Human Trafficking and Human Rights Policy –
The measures we uphold to safeguard against modern slavery
Supplier Code of Conduct – The principles that our suppliers, contractors
and business partners are required to adhere to in ensuring individuals’ human
rights are respected and modern slavery is not taking place
Supply Chain Policy
More information on our
approach to human rights
can be found within:
Emerging stronger for our
stakeholders – our partners
36 to 37
Community Policy – Outlines our commitment to be a responsible
housebuilder, building homes and communities that enhance the local area
to meet the needs of new and existing residents
Donations Policy – Our approach to making charitable donations and our
policy not to make political donations
Charity and Community Support Policy – Our commitment to supporting
charities and local community groups in the areas we operate
Sustainability Policy
More information on how we
engage with our communities
and social matters can be
found within:
Emerging stronger for our
stakeholders – our communities
40 to 41
Anti-Corruption Policy – Our approach to combat risks of bribery, including
the key principles employees should follow
Fraud Mitigation and Response Policy – This policy formalises the
Company’s attitude to fraud and its response to instances, or allegations,
of fraud against its employees or third parties
Whistleblowing Protected Disclosure Policy – Includes the procedures
to be followed in making a disclosure of wrongdoing within the Company or
related to its business
More information on anti-bribery
and anti-corruption can be
found within:
Corporate governance – Board
activities
68 to 69
Community Policy
Sustainability Policy
Customer service policy – Our approach and commitments to provide
excellent customer service
More information on our
business model and the value
created for our stakeholders
can be found within:
Our business model
20 to 21
Customer Service Policy
Health Safety and Environmental Policy
Communications and Investor Relations Policy – Sets out our
commitment to conduct clear, open and accurate communication with all
of the Company’s stakeholder groups
Our non-financial KPIs can be
found within:
Our strategy and key
performance indicators
22 to 25
Environmental matters
Our performance
In 2020, we have reviewed our approach
to the environment and developed a
new set of challenging targets
30% reduction in direct carbon
emissions intensity since 2013
97% of construction waste recycled
Employees
Our performance
98% of employees feel positive about
how the company supported them
whilst on furlough
Included in Glassdoor’s top 50 places
to work in the UK for 2021, as voted for
by employees
Human rights
Our performance
Continue to train employees to identify
signs of modern slavery and human
trafficking for which we operate a zero
tolerance policy
Social matters
Our performance
Contributed £287 million to communities
via our planning obligations
In 2020, around 20% of our completions
were designated affordable
Anti-bribery and anti-corruption
Our performance
Continue to train our employees and
raise awareness of the procedures
in place
Strict rules in relation to recording, giving
or receiving of gifts
Business model
Our performance
c.9.8k new homes completed for
customers in 2020
Strong short term landbank of c.77k
plots, as at 31 December 2020
Non-financial KPIs
Our performance
Achieved a recommend score of
92% in the HBF 8-week survey which
equates to a five-star rating
Our Annual Injury Incidence Rate
(AIIR) for reportable injuries per
100,000 employees and contractors
was 151 in 2020
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Strategic report
Our approach to identifying and managing risk
Risk management
As with any business, Taylor Wimpey faces
risks and uncertainties in the course of its
operations. It is only by timely identification,
effective management and monitoring of
these risks that we are able to deliver our
strategy and strategic goals.
Governance
The Board has overall responsibility for risk
oversight, for maintaining a robust risk management
and internal control system and for determining
the Group’s appetite for exposure to the
Principal Risks to the achievement of its strategy.
The Audit Committee supports the Board
in the management of risk and is responsible
for reviewing the effectiveness of the risk
management and internal control processes
during the year.
The Board recognises the importance of
identifying and actively monitoring our strategic,
reputational, financial and operational risks, and
other longer term threats, trends and challenges
facing the business.
The Board takes a proactive approach to the
management of these and regularly reviews both
internal and external factors to identify and
assess the impact on the business and in turn
identify the Principal Risks that would impact
delivery of Group strategy.
The Chief Executive is primarily responsible for
the management of the risks, with the support of
the Group Management Team (GMT) and other
senior managers located in the business. In line
with the 2018 UK Corporate Governance Code,
the Board holds formal risk reviews at least half
yearly and routinely considers risk at each Board
meeting as appropriate.
The formal assessment includes consideration
of the Principal Risks to ensure they remain
appropriate as well as a review of the key
and emerging risks identified by the business,
their risk profile and mitigating factors.
At the Board meeting in February 2021, the
Board completed its annual assessment of risks.
This followed the Audit Committee’s formal
assessment of risk in December 2020, which
was supported by a detailed risk assessment
by the GMT and their review of the effectiveness
of internal controls in mitigating the risks.
The diagram below illustrates the internal
governance process within the Group around
risk management.
Identification of risks
Our risk management and internal control
frameworks define the procedures to manage
and mitigate risks facing the business, rather
than eliminate risk altogether and can only
provide reasonable and not absolute assurance
against material misstatement or loss.
Identifying risks is a continual process and
risk registers are maintained throughout the
Group at an individual site level, at the business
unit level and at Group-wide functional levels.
The business unit and functional registers are
reviewed twice a year as part of our formal risk
assessment process. In determining the risk,
consideration is given to both internal and
external factors. The registers document both
the inherent risks before consideration of any
mitigations and residual risks after consideration
of effective mitigations.
Risk Management Framework
Board
approval
Audit Committee
review
GMT review of key,
principal and emerging risks
M
o
n
i
t
o
r
i
n
g
munication & reporting
Com
Consolidation of key risks
Top-down (functions)
+
Bottom-up (business units)
Risk identification and assessment
Inputs (e.g. business change, external factors, workshops)
guidance carefully, including the impact of
localised lockdowns and further national
lockdowns, and where needed will adapt its
operational protocols and processes to continue
to safeguard our employees, customers,
suppliers and subcontractors.
The Board’s latest risk assessment has
considered both the specific consequences
of COVID-19 and its effect on the underlying
Principal Risks managed by the business.
A new Principal Risk for the COVID-19 pandemic
has not been established; instead, due to its
pervasive nature, we recognise the impact it
has had and will continue to have on our entire
risk landscape. We will continue to closely
monitor the situation over the coming period,
especially as new variants are being identified
and will take any required action to maintain
control over the impact.
A consolidated view of the risk environment,
including potential emerging risks, is discussed,
challenged and approved by the GMT and Audit
Committee before being presented to the Board,
ensuring all key risks to the Group are known,
are being actively monitored and appropriate
mitigations / actions are in place to ensure each
risk falls within the tolerance set by the Board.
Evaluation of risks
A risk scoring matrix is used to ensure risks are
evaluated on a consistent basis. Our matrix
considers likelihood based on probability of
occurrence and impact based on financial,
reputational, customer, health and safety,
employees, environmental, operational, legal and
regulatory and IT perspectives, to help determine
those risks that are considered to be key in
delivering our strategy. Key risks are defined as
those with a residual score equal to or greater
than 12 and these are reviewed and monitored
by the Board as part of our bi-annual risk
assessment process.
Each risk is evaluated at the inherent and
residual levels, with consideration given to
the target residual risk levels based on our risk
appetite and tolerance. All identified risks are
aligned to our Principal Risks to help validate
the continuance of such or the identification of
potential new Principal Risks.
Management of risks
Ownership and management of the Principal
and key risks is assigned to members of the
GMT or senior management as appropriate.
They are responsible for reviewing the operating
effectiveness of the internal control systems,
for considering and implementing risk mitigation
plans and for the ongoing review and monitoring
of the identified risk. This includes the monitoring
of progress against agreed KPIs as an integral
part of the business process and core activities.
Risk appetite and tolerance
The risk appetite and tolerance levels for the
Group are set by the Board. In setting these,
the Board has considered the expectations of
its shareholders and other stakeholders and
recognises the distinction between those risks
we can actively manage, for example around
our landbank and those against which the
Group would need to be responsive as and
when they became known, for example
transitional arrangements for changes to
building regulations.
Approved risk appetite and tolerance levels for
each of our Principal Risks are detailed in the
Principal Risk tables on pages 50 to 53. The
residual risk ratings of all our Principal Risks
continue to be within their respective established
risk tolerance levels.
COVID-19
A global health pandemic was identified in 2019
as one of our emerging risks but the speed
with which it materialised and the direct and
indirect impact it has had on our business
has demonstrated the fundamental importance
of having a robust risk management process
in place.
The Group implemented a number of measures
to ensure the continued health and safety of our
employees, customers, suppliers and
contractors; this included closure of our
construction sites and sales centres during the
initial lockdown phase, and the creation of a
COVID-19 working group to provide guidance,
support and direction from the onset of the
pandemic. We engaged with the Government
and sector specific bodies to develop COVID-19
working protocols that met the Government
guidance. To assist the wider sector, we made
these available to other housebuilders.
The Group continues to monitor Government
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Strategic report
Our approach to identifying and managing risk continued
Principal Risks and uncertainties
Emerging risks
Emerging risks are defined as those where
the extent and implications are not yet fully
understood, with consideration given to the
potential timeframe of occurrence and velocity
of impact that these could have on the Group.
These are monitored and reviewed as part of
the ongoing risk assessment process and the
annual emerging risk workshop was held in
November 2020 with the GMT. Demonstrating
the continuing maturity of this process, the aims
of the workshop were to review and challenge
previously identified emerging risks and make
formal assessments on their anticipated
timelines and velocity, along with any identifiable
mitigations currently in place or planned. As part
of our risk management process, these were
discussed and agreed by the Board.
Our emerging risks are grouped into the
categories listed in the table below, which also
contains some narrative description against
each category indicating example focus areas
into which the identified emerging risks fall.
Specific risk areas other than
the Principal Risks
The Group considers other specific risk areas
recognising the increasing complexity of the
industry in which it operates and which are in
addition to its identified Principal Risks. These
include widespread emerging health risks and
risks from a wider technology, cyber and climate
perspective. We continue to improve and invest
in our information technology to mitigate
ever-increasing cyber threats and data loss, theft
or corruption, especially given the heightened
risk in this area as we have increased the level
of ‘remote working’ in response to COVID-19.
As an organisation, we continue to recognise the
risks associated with leaving the EU. The Board
views these potential risks as an integral part of
our Principal Risks rather than as separate
standalone risks. We have identified a potential
impact on our supply chain, labour force and
overall economic market impacting mortgage
availability and demand. We will continue to
monitor the impact of leaving the EU and the
deal which has been agreed and implement any
further required mitigations.
Our Sustainability and Climate Change Risk and
Opportunity Register highlights the material risks
and opportunities facing the Group in relation
to sustainability and climate change as well as
those monitored in the Group Risk Register.
In addition, our climate change related risks and
opportunities are available as part of our 2020
CDP submission. More information is available
at www.taylorwimpey.co.uk/corporate. We
support the aims of the Task Force on Climate-
related Financial Disclosures and you can read
more on page 44.
Together these support both the Audit
Committee and the Board in their evaluation
of the identified risks facing the Group.
Housing and fire safety remains high on the
agendas of the Government and the main
political parties. The sector continues to face
increasing scrutiny and pressure from social
media and pressure groups, together with
greater oversight from Government through a
single New Homes Ombudsman. We endeavour
to deliver both the letter and the spirit of
regulations and maintain this same ethos in our
relationships with our customers.
Emerging risks
Category
Example focus area
Environmental / climate
Unpredictable weather patterns
Operational / build
Political / economic
Technological
Social
Governmental
Supply chain issues related to regulation changes
Continuing impact of Brexit and COVID-19 on the economic
landscape and the potential for devolution
Artificial intelligence
Customer demographics and preferences
Changing Government policies
Our Principal Risks
and uncertainties
Our values
Strategic objectives
Risk change in year
Robust risk management underpins our
strategic approach, with each risk area
identified and carefully monitored by
the Board and GMT.
Principal Risks overview
The table opposite summarises the Group’s
Principal Risks and uncertainties, showing how
each links to our corporate values and strategic
objectives. Control of each of these is critical to
the ongoing success of the business. As such,
their management is primarily the responsibility
of the Chief Executive and the GMT, together
with the roles noted in the Principal Risks tables
on pages 50 to 53. The Board has finalised its
assessment of these risks and how the residual
risk profile has changed in the year.
A. Government policy and
planning regulations
B.
Impact of the market
environment on
mortgage availability
and housing demand
C. Material costs and
availability of
subcontractors
D. Ability to attract and
retain high-calibre
employees
E. Land purchasing
Key to our values
F. Quality and reputation
G. Site and product safety
Principal Risks heat map
The heat map opposite illustrates the relative
inherent and residual positioning of our
Principal Risks from an impact and likelihood
perspective. The increasing regulatory climate
and current economic uncertainty we are
experiencing driven largely by COVID-19 and
leaving the EU has resulted in an increase
in the residual rating of two of our Principal
Risks (Government policy and planning
regulations and Impact of the market
environment on mortgage availability and
housing demand). Further information is
detailed in the Principal Risk table above and
on pages 50 to 53.
h
g
H
i
C
Key
Inherent
Residual
d
o
o
h
i
l
e
k
L
i
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w
o
L
Low
Impact
High
Strategic report
Principal Risks and uncertainties continued
A. Government policy and planning regulations
Risk description
The industry in which we operate is becoming increasingly regulated. Any adverse changes to Government policy, for example around changes to building regulations, could
impact our ability to effectively meet our strategic objectives.
Planning delays could result in missed opportunities to optimise our landbank, affecting profitability and production delivery.
Risk Appetite
COVID-19 Impact
Accountability
Key Mitigations
Residual Risk
Change in Year
We operate in an increasingly
regulatory and compliance-
based environment impacting
all aspects of our business
operations. We are committed
to ensure we ‘do the right
thing’ in this respect and as
such we have a low risk
appetite in this area, using this
to set us apart from
competitors.
The UK Government
encouraged the construction
industry to continue on the
basis that it operates in a
COVID-secure way.
Customers have benefited from
the short term extension to
the current phase of the
Government’s Help to Buy
scheme and the Stamp Duty
Land Tax holiday.
– Group
Operations
Director
– Regional
Managing
Directors
– Ongoing and regular
review of building
regulations
– Consultation with
Government agencies
– New house type range
– COVID-19 risk
assessments for all
operations
– Ground Rent Review
Assistance Scheme
The impact of regulatory changes, such
as Future Homes Standard 2025 and
Government’s continued focus on
housing, together with the ongoing
developments in regulation and
guidance around fire safety and
planning, has resulted in an increase in
both the inherent and residual risk levels.
Residual
Rating
Moderate
Risk Tolerance
Risk Appetite
Link to Strategy
Link to Values
Example Key
Risk Indicators
Opportunities
Low-moderate
Low
– Removal of Help to Buy
– New Government regulations (e.g.
around planning and climate)
To build enhanced collaborative networks
with stakeholders and peers, to monitor
the implications of regulatory change.
– Delays in planning
Lead the business in addressing pressing
environmental issues, including reducing
our carbon footprint and targeting
biodiversity.
B. Impact of the market environment on mortgage availability and housing demand
Risk description
Sustained growth in interest rates, together with low wage inflation or reduced confidence in continued employment, could challenge mortgage affordability resulting in a
direct impact on our volume targets.
Risk Appetite
COVID-19 Impact
Accountability
Key Mitigations
Residual Risk
Change in Year
Heightened economic
uncertainty and the short-
medium term implications
remain unknown. We continue
to keep a watching brief over
the situation and we have a low
risk appetite in this area, due to
the impact changes could have
on the business.
The macro-economic
impact of COVID-19
could reduce mortgage
affordability, impacting
on demand for housing,
as uncertainty and
unemployment may affect
customer confidence and
mortgage availability.
– UK Sales and
Marketing
Director
– Regional Sales
and Marketing
Directors
– Evaluation of new
outlet openings based
on local market
conditions
– Pricing and incentives
review (e.g. NHS
and care workers
discount scheme)
– Review of external
data (e.g. HBF,
mortgage lenders)
Throughout 2020 we were encouraged by
the continued resilience of the UK housing
market, underpinned by low interest rates
and strong customer demand, with
interest levels remaining strong.
Although the outlook for the UK housing
market appears robust, the continued
economic uncertainty driven by the
ongoing impact of COVID-19 and leaving
the EU, results in an increase in both the
inherent and residual risk levels.
Residual
Rating
Moderate
C. Material costs and availability of subcontractors
Risk description
Increase in housing demand and production may further strain the availability of skilled subcontractors and materials and put pressure on utility firms to keep up with the pace
of installation resulting in increased costs and construction delays.
Risk Appetite
COVID-19 Impact
Accountability
Key Mitigations
Residual Risk
Change in Year
Economic and political factors
impact this risk but we believe
the actions we have put in
place provide us with strong
foundations going forward,
therefore we have a low to
moderate risk appetite in
this area.
COVID-19 has increased the
pressure on the availability of
certain materials in the short
term and the continuation of the
pandemic could result in further
disruptions to the supply chain.
– Group Operations
Director
– Head of
Procurement
– Regional
Commercial
Directors
– Central procurement
and key supplier
agreements
– Supplier and
subcontractor
relationships (Pay It
Forward scheme)
– Contingency plans for
critical path products
– Confirmation by
suppliers of plans to
address withdrawal
from EU
– Direct trade and
apprenticeship
programmes
There continues to be pressure on
the availability of certain build materials
and skilled labour in the housebuilding
industry. This has resulted in an
increase in the inherent risk level but
as a result of additional mitigations
implemented we see no significant
increase in the residual risk level.
Residual
Rating
Moderate
Risk Tolerance
Risk Appetite
Link to Strategy
Link to Values
Example Key
Risk Indicators
Opportunities
Moderate
Low-moderate
– Material and trade shortages
– Material and trade price increases
– Level of build quality and waste
To develop and implement different
build methods as alternatives to
conventional brick and block.
produced from sites
– Longer build times
– Number of skilled trades
D. Ability to attract and retain high-calibre employees
Risk description
An inability to attract, develop, motivate and retain high-calibre employees, together with a failure to consider the retention and succession of key management could result in
a failure to deliver our strategic objectives, a loss of corporate knowledge and a loss of competitive advantage.
Risk Appetite
COVID-19 Impact
Accountability
Key Mitigations
Residual Risk
Change in Year
People are the foundation of
our organisation. To deliver
our objectives we need the
right calibre of employees
and we have implemented a
number of initiatives in this
area. These and other existing
mechanisms to retain and
develop our employees leads
us to having a moderate risk
appetite in this area.
We have retained a stable
workforce during the pandemic
with staff attrition rates lower
than normal. Therefore, the
need to attract new employees
has reduced. This is viewed as
a short term effect with the
expectation of a more ‘normal’
pattern resuming in the future.
– Group HR
Director
– Every employee
managing people
– Production Academy
– Management training
– Graduate programme
– Apprenticeship
programme
– Enhanced remote
working procedures
– Educational
masterclasses
– Isolation challenge
We have seen a slight reduction in
the inherent rating of this risk due to
competitiveness for employees falling
in the current economic uncertainty;
however the availability of site-based
labour continues to present a challenge
and consequently there is no change
in the residual risk level.
Residual
Rating
Low
Risk Tolerance
Risk Appetite
Link to Strategy
Link to Values
Example Key
Risk Indicators
Opportunities
Risk Tolerance
Risk Appetite
Link to Strategy
Link to Values
Example Key
Risk Indicators
Opportunities
Low-moderate
Low
– Interest rate increases
– Levels of unemployment
– Volume of enquiries / people
visiting our developments
– UK household spending
– Loan to value metrics
To continue to develop strong working
relationships with established mainstream
lenders and those wishing to increase
volume in the new build market.
Moderate
Moderate
– Employee engagement score
– Number of, and time to fill,
To further develop in-house capability,
expertise and knowledge.
vacancies
– Employee turnover levels
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G. Site and product safety
Risk description
The health and safety of all our employees, subcontractors, visitors and customers is of paramount importance. Failure to implement and monitor our stringent health,
safety and environment (HSE) procedures and policies across all parts of the business could lead to accidents or site-related incidents resulting in serious injury or loss of life.
Risk Appetite
COVID-19 Impact
Accountability
Key Mitigations
Residual Risk
Change in Year
Safety of our staff, indirect and
direct, and in the products we
supply and fit is of paramount
importance not only to our
business but also to our values,
therefore we have a very low
risk appetite in this area.
There is an increased inherent
risk from any personal
interaction given the nature of
COVID-19, in particular as
lockdown measures are eased.
– Embedded HSE
system
– HSE training
and inductions
– COVID-19 protocols
– Head of Health,
Safety and
Environment
– Group
Operations
Director
– Director of
Design
– Every employee
and
subcontractor
The COVID-19 pandemic has and
continues to present significant
challenge in this area and we are
committed to ensuring we continue
to conduct business in the safest
way possible. Our response to the
pandemic in terms of implementing
additional measures to mitigate the
risk was swift and effective, resulting
in there being no change to the
residual risk level.
Residual
Rating
Low
Risk Tolerance
Risk Appetite
Link to Strategy
Link to Values
Low
Low
Example Key
Risk Indicators
– Increase in near misses
and fatalities
– Health and safety audit outcomes
– Number of reportable health and
safety incidents
Opportunities
To lead the industry in health and safety
and to reduce the amount and level
of incidents.
Strategic report
Principal Risks and uncertainties continued
E. Land purchasing
Risk description
The purchase of land of poor quality, at too high a price, or the incorrect timing of land purchases in relation to the economic cycle could impact future profitability.
Risk Appetite
COVID-19 Impact
Accountability
Key Mitigations
Residual Risk
Change in Year
We continue to have a strong
landbank, including our
strategic pipeline. We continue
to look for opportunities in
the right location that optimise
our value and we have a
moderate risk appetite
in this area.
Disruption in the land market
as a result of the pandemic
created short term
opportunities to acquire land
at attractive returns and prices.
– Divisional Chairs
– Regional
Managing
Directors
– Critically assess
opportunities
– Land quality
framework
– Regional Land
and Planning
Directors
– Managing
Director Group
Strategic Land
Following our June 2020 equity raise
we have agreed terms on and
authorised land purchases significantly
ahead of our normal rate of acquisition.
These sites have been secured at
attractive returns and this investment
provides us with a route to high-quality
growth in the medium term from our
strong landbank. Balancing this with the
current economic environment we see
no change in the residual risk level.
Residual
Rating
Low
Risk Tolerance
Risk Appetite
Link to Strategy
Link to Values
Example Key
Risk Indicators
Opportunities
Moderate
Moderate
– Movement in landbank years
– Number of land approvals
– Timing of conversions from
strategically sourced land
A strong balance sheet allows us to invest
when land market conditions are attractive
F. Quality and reputation
Risk description
The quality of our products is key to our strategic objective of being a customer-focused business and in ensuring that we do things right first time.
If the Group fails to deliver against these standards and its wider development obligations, it could be exposed to reputational damage, as well as reduced sales and
increased costs.
Risk Appetite
COVID-19 Impact
Accountability
Key Mitigations
Residual Risk
Change in Year
Fundamental to our business
model is the quality of our build
and maintaining our strong
reputation. Conscious that
there are an ever-increasing
number of sources that could
have a detrimental impact on
our reputation, starting with
build quality, we have a low risk
appetite in this area.
COVID-19 increases the risk of
reputational damage if we are
not recognised to be doing the
right thing for our employees,
customers and suppliers; for
example adapting to the ways
in which our customers wish to
communicate.
– Customer
Director
– UK Head of
Production
– Director of
Design
– Customer-ready
Home Quality
Inspection (HQI)
– Consistent Quality
Approach (CQA)
– Quality Managers in
the business
– NHS and care worker
discount scheme
The climate in which we currently
operate means it is even more
important to deliver on our fundamental
of quality. As we continue to adapt
the risk of reputational damage is
heightened but the additional measures
we have implemented, for example
around quality reviews, results in
there being no change to the residual
risk level.
Residual
Rating
Moderate
Risk Tolerance
Risk Appetite
Link to Strategy
Link to Values
Low-moderate
Low
Example Key
Risk Indicators
– Customer satisfaction metrics
(8-week and 9-month)
– Number of NHBC claims
– Construction Quality Review
(CQR) scores
– Average reportable items per
inspection found during NHBC
inspections at key stages of
the build
Opportunities
To better understand the needs of
our customers enabling increased
transparency of our build profile.
To lead the industry in quality standards
(our CQR score) and reduce the number
of reportable items identified through
monitoring defects at every stage of build.
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Strategic report
Group financial review
Focused on protecting
value and margin
Q&A with Chris Carney,
Group Finance Director
What are the key financial priorities for the
group?
Our primary performance focus is on returning the
business to 21-22% operating profit margin in the
medium term and we continue to target a number
of areas to achieve this; focus on cost, process
simplification and the incremental growth as a result
of the equity raise.
What will help drive margin performance?
We have strong embedded margins in the landbank
which, together with the recovery in our completion
levels, gives us confidence in achieving our medium
term margin targets, assuming stable market
conditions.
What costs savings have you made this year?
In 2020, we undertook a detailed review of our
organisational and cost structure to ensure that we
continue to operate efficiently in a changing market.
This resulted in a series of actions, including the
removal of one layer of management, a rationalisation
of our London operating structure to focus on
affordable price points that meet the affordability
needs of Londoners, and a series of other reductions
in central and business unit overhead levels. These
changes will generate savings in the region of £16
million annually from 2021, with the £12 million costs
to achieve these savings already incurred in 2020.
What is new for 2021?
In 2020 we designed and piloted a new customer
relationship management system using Microsoft
Dynamics software. This will be rolled out across
our business in 2021 and will build on the progress
we have made in digital communications with our
customers over the past few years. As well as the
customer service and efficiency benefits of better,
more targeted communication, we expect the system
to provide better insight led decision making,
enhancing revenue and margin. The system will bring
customer service benefits such as real time online
issue resolution, delivering greater visibility and faster
responses. Operationally, there are a number of
benefits, for example, the system will enable end to
end workflows for legal processes, with online
notifications and approvals ensuring customers,
solicitors and our legal teams are aligned, helping to
reduce time to completion.
Group financial review of operations
Income statement
Group revenue decreased by 35.7% to £2,790.2
million in 2020 (2019: £4,341.3 million) due to a
reduction in completions as a result of the
controlled closure of our sites and sales centres
during the second quarter of 2020, as we
responded to the COVID-19 pandemic and
developed safe working practices for our
employees, subcontractors and customers.
Completions in the UK (excluding joint ventures)
decreased by 39.4% to 9,412 (2019: 15,520).
Despite the uncertainties associated with the
pandemic, prices have remained resilient and UK
average selling prices increased 7.3% to
£288.3k (2019: £268.6k) with private
completions up by 5.8% to £323.2k (2019:
£305.4k), the majority of the increase driven by
geographical and product mix.
During the year we have identified and expensed
£62.7 million of costs relating to the COVID-19
pandemic, with £60.3 million charged to gross
profit and £2.4 million to administrative costs.
These costs include unproductive site overhead
costs incurred during the controlled closure
and lockdown period which would ordinarily be
capitalised to WIP and expensed as plots legally
complete of £29.9 million; additional costs
incurred by the business due to extended site
durations resulting from the reduced productivity
levels as we implemented our operational
processes under the COVID-secure guidelines
totalling £17.4 million; and incremental costs
incurred by the business in responding to
COVID-19, including to meet our health and
safety requirements and complying with
Government guidelines, of £15.4 million.
Group gross profit reduced to £496.7 million
(2019: £1,044.1 million) representing a gross
margin of 17.8% (2019: 24.1%). The decline was
mainly driven by expensing costs relating to the
COVID-19 pandemic (as discussed above) as
well as fixed build and direct selling costs which
are absorbed across fewer completions.
Administrative costs reduced to £206.8 million
(2019: £211.7 million) reflecting the reduction in
payments under the Group’s bonus plans and
impact of the current financial performance on
the long term incentive schemes, in part offset by
the £12.1 million of restructuring costs incurred
following the detailed review of our organisational
and cost structure to ensure that we continue to
operate efficiently in a changing market.
We have implemented a series of proposed
changes that will generate annualised savings of
£16 million from 2021. These changes include
the removal of one tier of operational
management, a rationalisation of our London
operating structure to focus on affordable price
points that meet the affordability needs of
Londoners, and a series of reductions in central
and business unit overhead levels. These
changes will not affect the ability of the business
to generate future growth or to deliver a high
quality product and service to our customers.
Operating through the challenges of the last six
months has also highlighted opportunities for
ongoing efficiency and performance
improvement, as our recent investments in
systems and processes have performed well.
During the year, completions from joint ventures
were 197 (2019: 199). The total order book value
of joint ventures as at 31 December 2020
decreased to £51 million (31 December 2019:
£62 million), representing 118 homes for
completions in 2021 and 2022. Our share of
results of joint ventures in the period was a profit
of £7.9 million (2019: £8.0 million).
Operating profit was £300.3 million (2019:
£850.5 million), delivering an operating profit
margin of 10.8% (2019: 19.6%).
During the year we continued our works to
replace Aluminium Composite Material (ACM)
cladding on a small number of legacy
developments. Following a review of these works
and expected costs to complete during the first
half a further £10.0 million was provided and in
line with our policy charged to exceptional items.
The prior year exceptional credit of £14.3 million
arose on the implementation of a Pension Increase
Exchange for members of the Taylor Wimpey
Pension Scheme which enabled some pension
scheme members to elect to exchange future
pension increases on part of their pensions for
a one-off increase in pension.
The net finance expense of £25.9 million (2019:
£28.9 million) principally includes imputed interest
on land acquired on deferred terms, bank interest
and interest on the pension scheme. The net
interest charge on the defined benefit pension
scheme reduced as the liability at 1 January 2020
was lower at £84.5 million compared with £133.0
million at 1 January 2019. In addition, changes in
foreign exchange rates in the year resulted in a
small foreign exchange gain compared with a loss
in the prior year. This was partially offset by an
increase in net bank interest payable reflecting the
prudent step of fully drawing down the previously
unutilised £550 million revolving credit facility
following the temporary closure of sites. Once
construction had restarted under new operating
protocols the facility was fully repaid before the
end of June 2020.
Profit on ordinary activities before tax decreased
to £264.4 million (2019: £835.9 million) after the
exceptional charge of £10.0 million (2019:
exceptional credit of £14.3 million). The pre-
exceptional tax charge was £49.1 million (2019:
£159.3 million) with an underlying tax rate of
17.9% (2019: 19.4%) which includes a £1.4 million
credit (2019: nil) arising from the remeasurement
of the Group’s UK deferred tax assets at 19.0%
following the changes to the corporation tax rates
enacted by the UK Government. A tax credit of
£1.7 million was recognised in respect of the
exceptional charge (2019: exceptional tax charge
of £2.7 million). This resulted in a total tax charge
of £47.4 million (2019: £162.0 million), a rate of
17.9% (2019: 19.4%). Profit for the year was
£217.0 million (2019: £673.9 million).
Completions including joint ventures
Revenue (£m)
Operating profit (£m)
Operating profit margin (%)
Profit before tax and exceptional items (£m)
Profit for the year (£m)
Basic earnings per share (p)
Adjusted basic earnings per share† (p)
UK
9,609
2,726.9
284.5
10.4
Spain
190
63.3
15.8
25.0
Group
9,799
2,790.2
300.3
10.8
274.4
217.0
6.3
6.5
Chris Carney
Group Finance Director
Our primary performance focus
is on returning the business to
21-22% operating profit margin
in the medium term and we
continue to target a number of
areas to achieve this; focus on
cost, process simplification and
the incremental growth as a
result of the equity raise.”
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Strategic report
Group financial review continued
We have a strong financial position with a
robust and flexible balance sheet with net
cash of £719.4 million, positioning us well
for growth in 2021 and beyond.”
Basic earnings per share was 6.3 pence
(2019: 20.6 pence). The adjusted basic earnings
per share was 6.5 pence (2019: 20.3 pence).
Net cash, combined with land creditors, resulted
in an adjusted gearing‡‡‡ of (1.1)% (31 December
2019: 5.5%).
Spain
The Spanish second-homes market has been
impacted by travel restrictions as a result of
COVID-19. We completed 190 homes in 2020
(2019: 323) at an average selling price of €375k
(2019: €429k). The total order book as at
31 December 2020 stood at 126 homes
(31 December 2019: 217 homes).
The Spanish business delivered an operating
profit of £15.8 million for 2020 (2019: £32.1
million) and an operating profit margin of 25.0%
(2019: 26.7%). We expect the business to begin
to normalise when foreign travel returns to more
normal levels.
Balance sheet and financial position
We have a strong financial position with a robust
and flexible balance sheet positioning us well for
growth in 2021 and beyond.
Net cash and financing position
Net cash increased to £719.4 million at 31
December 2020 from £545.7 million at 31
December 2019. The increase was due in part
to net proceeds from the issuance of shares in
June 2020 of £510.1 million being partially offset
by a net cash outflow from operating activities of
£301.2 million and an increase in investment in
joint ventures of £19.8 million. Average net cash
for 2020 was £399.3 million (2019:
£157.0 million).
The main driver of the net cash outflow from
operating activities in 2020 was an increase
in land and work in progress working capital
of £362.2 million as we settled land creditor
obligations, continued investment in land and
the number of completions decreased.
In the 12 months to 31 December 2020, the
outflow of cash from operations as a result of
increased working capital led to cash conversion
of (54.9)% of operating profit (2019: 82.6%).
At 31 December 2020 our committed borrowing
facilities were £653.6 million of which £550
million was undrawn. The average maturity of
the committed borrowing facilities at 31
December 2020 was 3.8 years.
Balance sheet
Net assets at 31 December 2020 increased
by 21.4% to £4,016.8 million (2019: £3,307.8
million), with net operating assets increasing by
£464.6 million to £3,264.8 million (31 December
2019: £2,800.2 million). The increased
investment in operating assets together with the
decrease in operating profit results in return on
net operating assets reducing to 9.9% (2019:
31.4%) and Group net operating asset turn†*
was 0.92 times (2019: 1.60 times).
The balance sheet principally comprises work
in progress and land investment, with total
investment in the year increasing by
£338.7 million.
Work in progress (‘WIP’)
Average WIP per UK outlet at 31 December
2020 increased by 13.8% to £6.6 million (2019:
£5.8 million), reflecting the increase in overall
WIP held whilst outlet numbers remained broadly
flat. The increase in WIP reflected the delay of
some 2020 forecast completions into 2021 due
to site closures in the second quarter and the
continued investment in build since our sites
reopened in May.
Land
Land at 31 December 2020 increased by
£139.8 million as the Group invested in land
opportunities following the equity raise
completed in June 2020. Land creditors
decreased to £675.9 million (31 December
2019: £729.2 million) following repayments
made in the year being in excess of the level of
new creditors. Included within the gross land
creditor balance is £64.9 million of UK land
overage commitments (31 December 2019:
£56.4 million). £347.9 million of the land creditors
is expected to be paid within 12 months and
£328.0 million thereafter.
As at the balance sheet date, the Group held
certain land and work in progress that had been
written down by £64.4 million (31 December
2019: £68.6 million) to a net realisable value of
£53.8 million (31 December 2019: £59.3 million).
The balance of previously written down land and
work in progress in the UK was £34.5 million
(31 December 2019: £39.0 million), following
the associated write-downs of £25.5 million
(31 December 2019: £30.5 million).
At 31 December 2020 the UK short term
landbank comprised 77,435 plots (31 December
2019: 75,612), with a net book value of £2.5
billion (31 December 2019: £2.4 billion). Short
term owned land comprised £2.4 billion (31
December 2019: £2.3 billion), representing
53,731 plots (31 December 2019: 54,641).
The controlled short term landbank represented
23,704 plots (31 December 2019: 20,971).
The value of long term owned land increased
to £217 million (31 December 2019: £97 million),
representing 36,968 plots (31 December 2019:
33,329), with a further total controlled strategic
pipeline of 101,676 plots (31 December 2019:
106,895). Total potential revenue in the owned
and controlled landbank increased to £54 billion
in the period (31 December 2019: £53 billion),
reflecting the overall mix of opportunities in the
short term landbank and strategic pipeline.
As at 31 December 2020, in the UK, 90% of
the short term owned and controlled landbank
was purchased after 2009, 56% of which
was sourced through our strategic pipeline.
This results in a land cost to average selling price
in the short term owned landbank of 15.2%
(31 December 2019: 14.9%).
Provisions increased to £130.5 million
(31 December 2019: £128.4 million). The £10.0
million increase in the ACM cladding
replacement provision and the provision for
restructuring in the final quarter of the year being
substantially offset by utilisation as claims were
made and processed through the Ground Rent
Review Assistance Scheme and costs were
incurred on work performed to replace ACM
cladding. Further details on the post balance
sheet increase to provisions is included in
Note 33.
Our net deferred tax asset of £33.7 million
(31 December 2019: £29.8 million) relates to
our pension deficit, employee share schemes
and the temporary differences of our Spanish
business, including brought forward trading
losses. The net deferred asset held was affected
by the changes to the corporation tax rates
enacted by the UK Government in 2020.
The increase in the pension deficit in the year
also further increased the deferred tax
asset recognised.
Pensions
Following the 31 December 2016 triennial
valuation, the Group agreed a recovery plan with
the Trustee to pay deficit reduction contributions
of £40.0 million per annum for the period from
April 2018 to December 2020.
During 2020 and in response to the site
shutdowns, a temporary suspension of the
agreed deficit reduction contributions was
agreed with the Trustee for the three months
between April and June 2020 and as a result,
the recovery plan period was extended to 31
March 2021. The agreed recovery plan included
a contribution mechanism, tested quarterly, such
that should the Taylor Wimpey Pension Scheme
(TWPS) become fully funded on the Technical
Provisions funding basis, further contributions
would be suspended and only recommence if
the funding level fell below 96%.
In April 2018, the Group paid a one-off
contribution of £23.0 million into the TWPS to
increase the funding level to 100% and thereby
suspend any future contributions from 31 March
2018. However, the quarterly funding test for
31 December 2018 showed that the TWPS
funding level had subsequently fallen to 94%.
The Group therefore recommenced regular
contributions from January 2019.
The most recent funding test at 31 December
2020 showed a funding level of 95% on the
Technical Provisions funding basis. As a result,
regular contributions will continue for the
remaining three months of the recovery plan.
The Group continues to provide a contribution
for Scheme expenses and also makes
contributions via the Pension Funding
Partnership. Total Scheme contributions and
expenses were £37.1 million in 2020 (2019:
£47.1 million). Confirmed payments in 2021
are expected to be £17.4 million although this
is dependent on the outcome of negotiations for
the triennial valuation at 31 December 2019.
During 2020, the Group has engaged with the
TWPS Trustee on the triennial valuation of the
pension scheme with a reference date of 31
December 2019. At the current time discussions
are ongoing with the Trustee to agree the
valuation as well as any future contributions.
Legislation requires that agreement is to be
reached by 31 March 2021.
At 31 December 2020, the IAS 19 valuation of
the Scheme revealed an underlying deficit of
£89.1 million (2019: surplus of £100.5 million).
Due to the rules of the TWPS, any surplus
cannot be recovered by the Group and therefore
in 2019 a deficit was recognised on the balance
sheet under IFRIC14. This deficit was equal to
the present value of the remaining committed
payments under the 2016 triennial valuation
at that time. No such adjustment has been
recognised at 31 December 2020 since the
Scheme was in a deficit on an IAS 19
accounting basis.
Total retirement benefit obligations of £89.5
million at 31 December 2020 (31 December
2019: £85.0 million) comprise a defined benefit
pension liability of £89.1 million (31 December
2019: £84.5 million) and a post-retirement
healthcare liability of £0.4 million (31 December
2019: £0.5 million).
The Group continues to work closely with the
Trustee in managing pension risks, including
management of interest rate, inflation and
longevity risks.
Dividends
Subject to shareholder approval at the AGM
scheduled for 22 April 2021, the 2020 final
ordinary dividend of 4.14 pence per share will
be paid on 14 May 2021 to shareholders on the
register at the close of business on 6 April 2021.
This dividend will be paid as a cash dividend,
and shareholders are once again being offered
the opportunity to reinvest all of their ordinary
dividend under the Dividend Re-Investment Plan
(DRIP), details of which are available from our
Registrar and on our website. Elections to join
the Plan must reach the Registrar by 22 April
2021 in order to be effective for this dividend.
Further details can be found on our website
www.taylorwimpey.co.uk/corporate
Alternative Performance Measures
The Group uses Alternative Performance
Measures (APMs) as key financial performance
indicators to assess underlying performance
of the Group. The APMs used are widely used
industry measures and form the measurement
basis of the key strategic KPIs (return on net
operating assets, operating profit margin and
cash conversion).
A portion of executive remuneration is also
directly linked to some of the APMs. Definitions
and reconciliations to the equivalent statutory
measures are included in Note 32 of the
financial statements.
Value distributed during 2020 (£m)
Contribution to local
communities via
planning obligations
Employment
Net investment
in land & WIP
Interest paid
Pension
contributions
Taxes
£286.6m
£264.9m
£362.2m
£10.8m
£52.3m
£136.4m
2019: £447.3m
2019: £275.9m
2019: £21.7m
2019: £6.4m
2019: £61.6m
2019: £178.8m
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Strategic report
Group financial review continued
Going concern
The Directors remain of the view that the
Group’s financing arrangements and balance
sheet strength provide both the necessary
facilities and covenant headroom to enable the
Group to conduct its business for at least the
next 12 months. Accordingly, the consolidated
financial statements are prepared on a going
concern basis.
Chris Carney
Group Finance Director
Definitions
*
Operating profit is defined as profit on ordinary activities before net finance costs, exceptional items
and tax, after share of results of joint ventures.
**
***
‡‡*
†
†*
‡
‡‡
‡‡‡
Return on net operating assets (RONOA) is defined as rolling 12-month operating profit divided by
the average of the opening and closing net operating assets, which is defined as net assets less net
cash, excluding net taxation balances and accrued dividends.
Operating cash flow is defined as cash generated by operations (which is before taxes paid, interest
paid and payments related to exceptional charges).
Return on capital employed (ROCE) is defined as 12-month rolling operating profit divided by average
capital employed calculated on a monthly basis over the period.
Adjusted basic earnings per share represents earnings attributed to the shareholders of the parent,
excluding exceptional items and tax on exceptional items, divided by the weighted average number
of shares in issue during the period.
Net operating asset turn is defined as 12-month rolling total revenue divided by the average of
opening and closing net operating assets.
Net cash / (debt) is defined as total cash less total borrowings.
Cash conversion is defined as operating cash flow divided by operating profit on a rolling 12-month
basis.
Adjusted gearing is defined as adjusted net debt divided by net assets. Adjusted net debt is defined
as net cash less land creditors.
Viability Statement
In accordance with the 2018 UK Corporate
Governance Code, the Directors and the senior
management team have assessed the prospects
and financial viability of the Company for a period
longer than the 12 months required by the
‘going concern’ provision.
Time period
The Directors have assessed the viability of the
Group over a five-year period, taking account
of the Group’s current financial position, current
market circumstances and the potential impact
of the Principal and emerging risks facing the
Group. The Directors have determined this as
an appropriate period over which to assess the
viability based on the following:
– It is aligned with the Group’s bottom up five
year budgeting and forecasting cycle
– Five years represents a reasonable estimate
of the typical time between purchasing land
(obtaining planning permission, putting in
place infrastructure and commencing build)
and selling homes to customers from a
development
The time period is challenged annually to ensure
that it remains appropriate and as part of the
review the Directors also considered:
– The cyclical nature of the market in which
the Group operates, which tends to follow
the economic cycle
– The nature of the economic cycle and our
expectations of how this will impact us
– Consideration of the impact of Government
policy, planning regulations and the mortgage
market
– Long term supply of land, which is supported
by our strategic landbank
– Changes in technology and customer
expectations
Assessment of prospects
We consider the long term prospects of
the Group in light of our business model.
Our strategy to deliver sustainable value is
achieved through delivering high quality homes
in the locations where people want to live, with
excellent customer service, whilst carefully
managing our cost base and the Group’s
balance sheet. Future prospects are primarily
monitored through the risk management process
detailed on pages 46 to 48.
In assessing the Group’s prospects and long
term viability due consideration is given to:
– The Group’s current performance, which
includes the current year performance
(pages 6 to 9), the output from the annual
business planning process and financing
arrangements, the wider economic
environment and mortgage market, as well
as changes to Government policies and
regulations that could impact the Company’s
business model including the recent
announcement on the Future Homes
Standard and developer taxes
– Strategy and business model flexibility,
including build quality, customer dynamics
and approach to land investment. Further
detail is provided on pages 22 to 25
– Principal Risks associated with the Group’s
strategy and business model including those
which have the most impact on our ability to
remain in operation and meet our liabilities as
they fall due
Principal Risks
The Principal Risks, to which the Group are
subject, have undergone a comprehensive
review by the Executive Committee and Board.
Consideration is given to the risk likelihood
based on the probability of occurrence and
potential impact on our business, together
with the effectiveness of mitigations. The review
included assessing the impact of COVID-19
on each of the risks and is detailed on pages
49 to 53, particularly with the economic outlook
remaining unclear in light of the pandemic.
The Directors identified the Principal Risks
that have the most impact on the longer term
prospects and viability of the Group as: ‘Impact
of the market environment on mortgage
availability and housing demand’, ‘Government
policy and planning regulations’ and ‘Quality and
reputation’. A range of sensitivity analyses for
these risks together with likely mitigating actions
that would be adopted in response to these
circumstances were modelled, including a
severe but plausible scenario in which the
impacts were aggregated together.
Assessment of viability
The Group adopts a disciplined annual business
planning process involving the management
teams of the 23 UK business units and Spain,
and the Group’s senior management, and is
built on a bottom up basis. This planning
process comprises a budget for the next
financial year, together with a forecast for
the following four financial years.
The financial planning process considers the
Group’s profitability and Income Statement,
Balance Sheet including landbank, gearing
and debt covenants, cash flows and other key
financial metrics over the plan period. The Group
has adapted its business plan in response to
COVID-19, which includes the impact of the
increased investment in land opportunities
following the capital raise and impact of
operating under COVID-19 secure protocols on
build times. The plan also incorporates the likely
market impact of the planned changes to Help
to Buy and the impact of the Government
announcements on transitional arrangements
for the Future Homes Standard.
These financial forecasts are based on a number
of key assumptions, the most important of
which include:
– Timing and volume of legal completions of
new homes sold, this includes annual
production volumes and sales rates over the
life of the individual developments
– Average selling prices achieved
– Build costs and cost of land acquisitions,
including the impact of the Future Homes
Standard
– Working capital requirements
– Capital repayment plan, where we have
assumed the re-instatement of the ordinary
dividend in line with the previous policy, which
is a minimum of £250 million or 7.5% of the
Group’s net assets, throughout the period
Stress testing our risk resilience
The assessment considers sensitivity analysis on
a series of realistically possible, but severe and
prolonged, changes to principal assumptions.
In determining these we have included macro-
economic and industry-wide projections as well
as matters specific to the Group.
The plausible downside scenario reflects the
aggregated impact of the sensitivities, taking
account of a sharp decline in customer
confidence, disposable incomes, and mortgage
availability. To arrive at our stress test we have
drawn on experience gained managing the
business through previous economic downturns
and the COVID-19 pandemic.
We have applied the sensitivities encountered at
those times, as well as the mitigations adopted,
to our 2021 expectations in order to test the
resilience of our business. As a result, we have
stress tested our business against the following
plausible downside scenarios:
Volume – a decline in total volumes of 30%
from pre-COVID-19 levels, followed by a
gradual recovery
Price – a reduction to current selling prices
of 10%
Build cost – potential inflationary risks from
shortfalls in material and labour as a result of
Brexit, largely offset by deflationary pressure
caused by the lower volumes. An increased build
cost for 2023 onwards has been included to
reflect the transitional arrangements of the
Future Homes Standard
Costs – a one-off exceptional charge and cash
cost of £150 million for an unanticipated event,
change in Government regulations or financial
penalty
The mitigating actions considered in the model
include a reduction in land investment, a
reduction in the level of production and work in
progress held and optimising our overhead base
to ensure it aligns with the scale of the
operations through the cycle.
The Group’s liquidity (defined as cash and
undrawn committed facilities) was £1,373 million
at 31 December 2020. This is sufficient to
absorb the financial impact of each of the risks
modelled in the stress and sensitivity analysis.
If these scenarios were to occur, we have a
range of additional options to maintain our
financial strength, including: a reduction in capital
expenditure, the sale of assets, raising debt and
reducing the dividend.
Confirmation of viability
Based on the results of this analysis, the
Directors have a reasonable expectation that
the Company will be able to continue in
operation and meet its liabilities as they fall due
over the five-year period of their assessment.
Approval of the
Strategic Report
This Strategic Report was approved by
the Board of Directors and signed on its
behalf by
Pete Redfern
Chief Executive
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Governance
Corporate governance
Corporate governance
I am pleased to have
joined a business with
strong embedded
governance processes,
and the culture to support
continued improvement,
which I am determined to
lead and oversee.
Irene Dorner
Chairman
Dear Shareholder
My first personal statement on the Company’s
approach to corporate governance has
coincided with a period when our governance
processes and procedures were thoroughly
tested by the impact of the COVID-19
pandemic, and I am pleased to be able to
report that they, and the team, responded
extremely well.
We have also continued the Company’s
approach to governance, of working to comply
with corporate governance developments prior
to their formal application to reporting years.
Maintaining effective governance during
the COVID-19 pandemic
As I have already mentioned in my Chairman’s
Statement, as a result of the pandemic, the
Board had to make a number of challenging
decisions which affected all of our stakeholders
in different ways. We have set out later in this
report on pages 72 to 77 how we considered
our stakeholders in the decision making process.
The impact of the pandemic and our response
to it involved the temporary shutdown of our
construction sites, sales offices and the
furloughing of many employees. This, together
with necessary provision for the possible illness
or self-isolation of employees, introduced a
new challenge to the Company’s governance
processes. We addressed this through a
detailed review of our existing governance
processes; business continuity planning;
delegated authorities; and their respective
resilience to the possible non-availability of
key personnel.
Monitoring of these processes and procedures
by Internal Audit disclosed no material evidence
of weakened controls and I should like to
congratulate the team on their effective response
to these major challenges.
Nomination and Governance Committee
During the year, the Board considered the
ever-growing focus on good governance and
decided that this could be more effectively
addressed by the Board through delegating the
initial review and recommendation stages of
future governance developments to a Board
Committee. We believe the most appropriate
body for this would be the Nomination
Committee and accordingly, during the year, the
Committee’s remit was widened and its name
changed to the Nomination and Governance
Committee to reflect the broader scope.
Environmental, social and governance
As I noted in my Chairman’s Statement, after
the pandemic, perhaps the most important
governance development during 2020 was
stakeholders’ increasing focus on how and
to what extent companies are building
environmental, social and governance (ESG)
factors into their strategy, planning and
business operations.
This report sets out how the Company has
acted during 2020 and will continue to drive
further action during 2021, in addressing this
key area. I am pleased that the Nomination
and Governance Committee is currently tasked
with the responsibility of ensuring that we
progress appropriately.
Conclusion
I believe that your Board remains effective and
continues to work very well, as borne out by
the conclusion of the independent, externally
facilitated Board appraisal for 2020. As a result
of the work done through 2020, I am confident
that the Board has the right balance of skills,
expertise and professionalism to continue
to deliver strong governance and to maintain
the strong culture that we have worked hard
to establish.
Irene Dorner
Chairman
1 March 2021
Culture
Underpinning the Company’s approach to
corporate governance is the work that has
been done, led by the Board and particularly
the Group Management Team (GMT), to embed
throughout the Company and its wider Group a
culture of seeking to do ‘the right thing’. I have
observed this at first hand, during my visits to
Group operations and through regular reporting
to the Board, and it manifests itself in the ways
set out on pages 66, 68 and 70.
Diversity and inclusion
Diversity and inclusion have rightly continued
to be key areas of focus on the Board’s agenda
and the Company has met the target set by the
Hampton-Alexander Review to have at least
33% female representation on the Board. We do
however recognise that further progress needs
to be made when considering female
representation on the GMT and their direct
reports (23% as at 31 December 2020).
The Board is also mindful of the Parker Review’s
target of including one person of colour by 2021.
The Company’s Diversity Policy, together with
details of progress made towards it during 2020
and plans for further progress during 2021,
appears on pages 88 and 89.
Stakeholders
As I’ve noted above, the Board has led the
Company’s stakeholder engagement throughout
the year and has taken the feedback from these
very important interactions fully into account,
particularly in its response to the COVID-19
pandemic, but also in the wider development
of its strategic planning and decision making
processes.
The Board recognises the importance of
effective two-way communication with
employees. Our National Employee Forum (NEF)
has been in place since 2017 and has been a
great success. During the year we looked to
further strengthen the engagement between the
Board and employees by appointing Gwyn Burr
as the Board’s NEF Champion.
I also conducted a virtual Chairman’s roadshow
in September, when I met with a number of key
investors and shareholder representative bodies
and was pleased to discuss governance-related
topics with them, such as ESG, succession
planning, and diversity and inclusion. I very much
look forward to further engagement in the future.
When circumstances allow it, I and the Board
are very keen to meet more stakeholders face
to face.
Appointment and succession
During 2020 the Nomination and Governance
Committee conducted a thorough review of
the Board’s composition; structure; and balance
of skills and experience; and this both informed
the Board changes during the year and the plans
announced recently for further change from
1 March 2021.
I was, as had previously been announced in last
year’s Annual Report, appointed as Chairman of
the Board on 26 February 2020.
Kevin Beeston stood down as Chairman on 26
February 2020.
Kate Barker stood down as Non Executive
Director on 31 July 2020.
Rob Noel succeeded Kate as the Company’s
Senior Independent Director on 21 April 2020.
These changes, together with the planned
appointments on 1 March 2021, recently
announced, of Scilla Grimble and Jitesh Gadhia
as Independent Non Executive Directors, will
improve the Board’s skill sets and bring
additional perspective to the Board dynamic.
Board evaluation
It is extremely important that the Board and its
Committees rigorously review their performance
each year and critically examine how
improvements could be made, where necessary.
This process is given greater emphasis through
the Code requirement that it be externally
facilitated at least every third year, as it was for
the Company during 2020, full details of which
appear on pages 84 and 85.
Annual General Meeting
The safety and security of our shareholders and
colleagues remains our priority. Even if the
national lockdown has ended and the
vaccination programme continues to progress
well, we will not be able to hold the Annual
General Meeting (AGM) in person in April.
Therefore, as shareholders will not be permitted
to attend the AGM in person, we are pleased to
provide an electronic facility for shareholders to
be able to follow the meeting remotely and
submit questions. Please see pages 174 and
182 for further information.
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Governance
Corporate governance continued
Governance at a glance
Highlights of 2020
Board attendance during 2020
– Compliant with the requirements of the 2018 UK Corporate Governance
Code (the Code), except for Provision 38 which we will comply with
by 1 April 2024.
– Acted in accordance with the Financial Reporting Council’s Guidance on
Risk, Internal Control and Related Financial and Business Reporting.
Read more on pages 93 and 94.
– Expanded the remit and accordingly changed the name of the
Nomination and Governance Committee. Read more on page 84.
– Conducted a thorough review of the Company’s governance processes
and delegated authority controls to ensure they continued to operate
effectively during the COVID-19 pandemic. Read more on page 84.
– Reported on the likely impact of the Company’s activities on the climate.
Read more on pages 42 to 44.
– Developed and enhanced the Company’s succession and contingency
plans. Read more on page 83.
– Made progress towards our diversity and inclusion strategy throughout
the business. Read more on page 86.
– Released the Company’s fourth Gender Pay Gap Report. Read more on
page 86.
– Conducted a comprehensive externally facilitated Board evaluation.
Read more on pages 84 and 85.
– Enabled shareholders to listen and ask questions via a teleconference
facility at the Company’s AGM, held during the COVID-19 pandemic.
Read more on page 75.
– Published the Company’s half year statutory report of payment terms,
showing steady improvement through a further 24% reduction in the
number of payments being made outside of agreed terms.
Number
of meetings
attended
in 2020
12/12
12/12
12/12
12/12
12/12
12/12
12/12
12/12
1/1
9/9
Irene Dorner,(a) Chairman
Pete Redfern, Chief Executive
Chris Carney, Group Finance Director
Jennie Daly, Group Operations Director
Robert Noel,(b) Senior Independent Director
Gwyn Burr, Independent Non Executive Director
Angela Knight, Independent Non Executive Director
Humphrey Singer, Independent Non Executive Director
Kevin Beeston(c)
Kate Barker(d)
(a) Appointed Chairman on 26 February 2020.
(b) Appointed Senior Independent Director on 21 April 2020.
(c) Stood down as Chairman and as a Director on 26 February 2020.
(d) Stood down as a Non Executive Director on 31 July 2020.
Board meetings
Microsoft Teams:
10
In person:
2
Directors’ skills matrix
Operational
Financial
Property
Customer
service
Economics
Public sector
Marketing
Risk
IT
Sustainability
Governance and
compliance
Irene Dorner
Pete Redfern
Chris Carney
Jennie Daly
Robert Noel
Gwyn Burr
Angela Knight
Humphrey Singer
Scilla Grimble(a)
Jitesh Gadhia(a)
(a) Appointed from 1 March 2021
As at 31 December 2020:
Executive and Non Executive Directors
Chairman:
Executive:
Non Executive:
1
3
4
Non Executive Directors’ tenure
0-2 years:
3-4 years:
5-6 years:
2
1
2
Board gender diversity
Male (Executive):
Male (Non Executive):
Female (Executive):
Female (Non Executive):
2
2
1
3
Board independence
Independent:
Not independent:
5
3
The 2018 UK Corporate Governance Code
statement of compliance
For the year ended 31 December 2020, the Company complied
with:
– All of the provisions of the 2018 UK Corporate Governance Code
(the Code), except for Provision 38 (executive director pension
contributions) which we will comply with by 1 April 2024. Further
details can be found on pages 98 and 106
– The Financial Conduct Authority’s Disclosure and Transparency
Rules sub-chapters 7.1 – 7.2 and Listing Rules 9.8.6R, 9.8.7R
and 9.8.7AR, which can be found at: www.handbook.fca.org.uk
– The BEIS Directors’ Remuneration Reporting Regulations and
Narrative Reporting Regulations, which can be found at: www.
gov.uk
In accordance with Section 4, Principle N, Provision 27 of the Code,
the Board considers that, taken as a whole, this Annual Report and
Accounts is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Company’s
position, performance, business model and strategy.
The Board was able to reach this conclusion after receiving advice
from the Audit Committee. Read more on page 97.
How we comply with the Code
The Corporate Governance section of this Annual Report and
Accounts explains how the Code principles have been applied,
as set out below.
1. Board leadership and Company purpose
Board of Directors
Board activities during the year
Considering stakeholders in decision making
2. Division of responsibilities
How we are governed
3. Composition, succession and evaluation
Nomination and Governance Committee report
Appointments to the Board
Board evaluation
Progress of our Diversity Policy
4. Audit, risk and internal control
Audit Committee report
5. Remuneration
Remuneration Committee report
Remuneration at a glance
64
70
72
78
80
82
84
88
90
98
102
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63
Governance
Corporate governance: Board leadership
and Company purpose
Board of Directors
Chairman
Executive Directors
Independent Non
Executive Directors
New
appointments
Irene Dorner
Chairman
Pete Redfern
Chief Executive
Chris Carney
Group Finance Director
Jennie Daly
Group Operations Director
Robert Noel
Independent
Non Executive Director
Gwyn Burr
Independent
Non Executive Director
Angela Knight CBE
Independent
Non Executive Director
Humphrey Singer
Independent
Non Executive Director
Scilla Grimble
Independent
Non Executive Director
Lord Jitesh Gadhia
Independent
Non Executive Director
N A
N A
Joined December 2019 and
appointed Chairman 26
February 2020
Skills and experience
Irene has strong leadership
skills and commercial
experience gained during her
career spanning more than
30 years in banking and also
through her various non
executive roles. Her long and
distinguished career at HSBC
included a number of senior
positions, including CEO of
HSBC Malaysia and CEO and
President of HSBC in the
United States. She retired from
HSBC at the end of 2014 and
was a Group Managing
Director of HSBC Holdings and
a member of the Group
Management Board.
Previously, Irene was Chairman
of Virgin Money (UK) plc prior to
its acquisition in 2018.
External appointments
Irene currently holds
independent non executive
roles at AXA SA and Rolls-
Royce Holdings plc, and she
also Chairs Control Risks
Limited, a risk consultancy
business. She is a Trustee of
the South East Asia Rainforest
Research Partnership and an
Honorary Fellow of St. Anne’s
College, Oxford.
Key
A
N
R
Audit Committee
Nomination and
Governance Committee
Remuneration
Committee
Chairship
of the Committee
Joined July 2007
Joined April 2018
Joined April 2018
Joined October 2019
Joined February 2018
Joined November 2016
Joined December 2015
Joins 1 March 2021
Joins 1 March 2021
Skills and experience
Pete was previously Group
Chief Executive of George
Wimpey Plc, having
successively held the posts of
Finance Director and Chief
Executive of George Wimpey’s
UK housing operations. He has
full day to day operational
responsibility for delivering the
Company’s strategy in a
profitable, safe and
environmentally responsible
manner and has significant
financial, operational and
management experience,
gained from his various roles
in industry and from his time
at KPMG.
External appointments
Pete is a non executive director
of Travis Perkins plc, where he
is also the Senior Independent
Director. Pete is also a member
of their Audit, Remuneration
and Stay Safe Committees and
sits on the Colleague Voice
Panel. Pete is Chair of the
Youth Adventure Trust charity.
Skills and experience
Chris is a Chartered
Accountant and has worked in
both private practice with
Deloitte and for Associated
British Foods plc. After joining
Taylor Wimpey in 2006, he has
successively held the roles of
Group Financial Controller;
Finance Director of
Taylor Wimpey UK (the Group’s
main operating company);
Managing Director of the
Company’s South Thames
business unit; and Divisional
Chair for the London and South
East Division, where he
oversaw significant progress in
the operational and financial
performance of the Division.
Appointed as Group Finance
Director on 20 April 2018, he
has operational responsibility
for managing the Company’s
finances and also oversees the
information technology and
pension functions.
Skills and experience
Jennie has a wealth of
experience in the housebuilding
industry gained from roles
which included strategic land
oversight at Westbury plc and
Managing Director of Harrow
Estates Plc. She joined the
Company in 2014 from Redrow
plc, as UK Planning Director,
before becoming UK Land
Director in 2015. Jennie
oversees our land, planning,
design, technical, sustainability,
production and supply chain
functions; and manages
the Taylor Wimpey
Logistics business.
External appointments
Jennie is a non executive
director of the Peabody Trust
and is also a non executive
director of New Homes Quality
Board Limited.
Skills and experience
Rob has over 30 years’
experience in the property
sector and is Chairman of
Hammerson plc. He was Chief
Executive of Land Securities
Group PLC from 2012 to 2020
and was previously Property
Director at Great Portland
Estates plc and a Director of
Nelson Bakewell, the property
services group. He is a former
President of the British
Property Federation.
Rob was appointed as the
Company’s Senior Independent
Director on 21 April 2020.
External appointments
Rob is Chairman of
Hammerson plc and a Trustee
of the Natural History Museum.
Skills and experience
Angela brings to the Board a
wealth of experience gained at
a senior level in both the public
and private sectors. Previously,
Angela was a Member of
Parliament from 1992 to 1997,
including two years as the
Economic Secretary at HM
Treasury, and Chair of the
Office of Tax Simplification in
HM Treasury until the end of
February 2019.
External appointments
Angela is Senior Independent
Director of TP ICAP Plc; and a
non executive director of
Arbuthnot Latham & Co;
Provident Financial plc; and
Encore Capital Group, Inc.
Skills and experience
Humphrey has a wealth of
financial experience and
expertise in the areas of both
digital solutions and customer
services. Previously he was
Chief Finance Officer of Marks
and Spencer Group plc; Group
Finance Director of Dixons
Carphone plc; Group Finance
Director of Dixons Retail plc;
and earlier held senior
finance-related roles within
Dixons and Coca Cola
Enterprises.
External appointments
Humphrey is Chief Financial
Officer of Belron Group.
Skills and experience
Gwyn has over 25 years’
executive experience,
principally in marketing and
customer service in the retail
sector, which included the roles
of Customer Director and
Customer Service and
Colleague Director at
J Sainsbury plc. She previously
held non executive positions
with the Principality Building
Society Limited, Sainsbury’s
Bank plc, DFS Furniture plc,
Wembley National Stadium
Limited and the Financial
Ombudsman Service.
External appointments
Gwyn is the Senior
Independent Director of
Hammerson plc, non executive
director of Just Eat Takeaway.
com N.V. plc and non
executive director of Metro AG
(a German listed company).
Skills and experience
Scilla has over 15 years’
executive experience in the
corporate finance and retail
sectors, having held senior
roles at UBS, Tesco plc, Marks
and Spencer Group plc and is
currently the Chief Financial
Officer of Moneysupermarket.
com Group plc.
Along with her significant
financial and risk-related
experience, Scilla also has
experience of technology in a
customer-facing environment
and has broad property
experience from her time at
both Tesco plc and Marks and
Spencer Group plc.
External appointments
Scilla is Chief Financial Officer
of Moneysupermarket.com
Group plc.
Skills and experience
Jitesh has over 20 years’
executive experience,
principally in the banking and
private equity sector, having
previously held senior roles at
Blackstone Group International
LLP, Barclays Capital (UK)
and ABN AMRO Corporate
Finance Limited.
He previously supported the
Letwin Review of the build out
rate of residential homes in the
UK and was an Independent
Non Executive Director at UK
Financial Investments Limited.
External appointments
Jitesh has been a Member of
the House of Lords since 2016.
In addition, he is the Senior
Independent Director of Calisen
plc; a Non Executive Director of
BGL (Holdings) Limited; a
Director of Accord Healthcare
Limited; and a member of the
Board of UK Government
Investments Limited.
Skills and experience
Alice, a solicitor, was previously the Group General Counsel and
Company Secretary of Thomas Cook Group plc and has also
worked in the legal profession. Alice oversees compliance with
legal and regulatory obligations and also manages the
Company’s Legal and Secretariat Departments. She has
significant legal, commercial, transactional and regulatory /
corporate governance related experience.
Company Secretary
Alice Marsden
Group General Counsel
and Company Secretary
Joined November 2019
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Governance
Corporate governance: Board leadership
and Company purpose continued
The Board and its Committees
At the date of this Report, the Board consists of
eight Directors, namely: the Chairman,
three Executive Directors and four Independent
Non Executive Directors. Their names,
responsibilities and other details appear on
pages 64 and 65.
The role of the Independent Non Executive
Directors is to offer advice, guidance and
constructive challenge to the Executive
Directors, using their wide experience gained in
business and from their diverse backgrounds,
details of which are set out in their biographies
on pages 64 and 65 and in the Board diversity
analysis on page 63. They also play an important
part in monitoring the overall direction and
strategy of the Company; scrutinising the
performance of the Executive Directors;
satisfying themselves as to the integrity of the
financial information made available both to the
Board and to the Company’s shareholders; and
in general succession planning for the Board and
other executive and senior management
positions below Board level.
Appointments and succession
During 2020 the Committee reviewed the
composition, structure, and balance of skills and
experience on the Board. Details of the resultant
changes to the composition of the Board during
2020 and planned for 2021 are set out on pages
82 and 83.
Board attendance
The Board met on 12 occasions during 2020
including four meetings arranged between
March and June specifically to discuss either the
impact of COVID-19 or preparations for the June
2020 equity raising. There was full attendance at
all meetings by all Directors. The Board regularly
considers the number of Board meetings that
take place each year and has concluded that
nine meetings is appropriate, with a business
update meeting added during January 2021 in
order to update on the previous year end
outlook and the initial trading in the current year.
The Board will keep the number of meetings
under review. Additional Board meetings are
convened as and when necessary and there are
also processes in place for approving
transactions and other matters that exceptionally
may require approval in between Board
meetings.
Where, exceptionally, a Director is unable to
attend a meeting, it is Board policy that the
Chairman and / or the Secretary will, as soon as
possible, brief the Director fully on the business
transacted at the meeting and on any decisions
that have been taken. In addition, the views of
the Director are sought ahead of the meeting
and conveyed to those attending by the
Chairman and / or the Secretary as appropriate.
Details of the attendance of each Director at
Board and Committee meetings are set out in
the tables on pages 62, 80, 91 and 98.
In addition, and in line with the Code, the
Chairman and the Senior Independent Director,
independently of each other, hold meetings at
least annually with the Independent Non
Executive Directors without the Executive
Directors present, and each did so on one
occasion during 2020. There is a standing
agenda item at the end of each Board meeting
for the Independent Non Executive Directors to
meet without the Executive Directors.
Board responsibilities
The Board discharges its responsibilities by
providing strategic and entrepreneurial
leadership of the Company, within a framework
of strong governance, effective controls and a
strong culture emphasising openness and
transparency, which enables opportunities and
risks to be assessed and managed
appropriately. In addition, the Board sets the
Company’s strategic direction; ensures that the
necessary financial and human resources are in
place for the Company to meet its objectives;
and reviews management performance.
Information and professional development
In normal business conditions, 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. The
role of the National Employee Forum (NEF) has
been even more important during the pandemic,
to ensure that a representative of the Board is
able to continue hearing employee sentiment
first hand.
Company culture
A healthy culture is extremely important and the
Board fully agrees with the Financial Reporting
Council (FRC) that it both ‘protects and
generates value’ and that culture should be the
subject of a continuous focus rather than only in
times of crisis. The Board is responsible for the
Company’s culture and for defining and
demonstrating the Company’s values and
standards from the top. Culture is established by
leadership and by example, but this also needs
to be underpinned by clear policies and codes
of conduct which ensure that the Company’s
obligations to its shareholders and other
stakeholders are clearly understood and met.
The Company’s approach is described in more
detail on page 34. The Board is led in these
respects by the Chairman, who ensures the
Board operates correctly, setting its own culture
and, by extension, that of the Company in its
operations and its dealings with all stakeholders.
The observance of that culture throughout
business operations is led by the Chief Executive
with the assistance of the other Executive
Directors and the Group Management Team.
In the early part of 2020, the Board concluded a
review of what it considers are important
indicators of the Company culture, including
health, safety and environmental matters (as set
out on page 70), customer service, land, risk
strategy, and diversity and inclusion.
The Board took a number of actions designed to
address the findings of these cultural indicators:
– An Independent Non Executive Director was
appointed as the Board’s NEF Champion to
ensure two-way information flows, as
described on page 76
– Initiatives in response to the pulse surveys, as
described on page 70
– Actions taken in response to employee
consultation are set out on page 77
– The NEF was consulted on the Company’s
response to COVID-19, health and safety and
remuneration as set out on page 77
The Board will keep all of these areas under
regular review.
The Group General Counsel and Company
Secretary acts as Secretary to the Board and its
Committees and attends all meetings. A formal
agenda and reports are issued electronically to
Directors in respect of all Board and Committee
meetings, generally at least one week prior to the
meeting, in order to allow sufficient time for
detailed review and consideration beforehand.
Formal minutes are prepared in respect of all
Board and Committee meetings.
The Secretary provides regular briefings to the
Board on regulatory and governance matters,
supplemented, as appropriate, by briefings from
independent advisers.
The Chairman, Chief Executive, relevant
Committee Chairs and Secretary meet sufficiently
in advance of each Board or Committee meeting,
in order to ensure action points from previous
meetings have been implemented and to prepare
the agenda and matters to be covered at the
next, and at future Board and Committee
meetings, as appropriate.
Advice available to the Board
All Directors have access to the advice and
services of the Secretary and Company
Secretariat team. The Board has an established
procedure whereby Directors may take
independent professional advice at the
Company’s expense, where they judge it
necessary to do so, in order to discharge their
responsibilities as Directors.
The Board took advice during the year:
– From Finsbury Glover Hering; Citigroup Global
Markets Limited (Citi); and Credit Suisse
International (Credit Suisse) on its
announcements, political and public interest
topics, the sector and the relative performance
of the Company’s share price.
– From its principal legal adviser Slaughter and
May in relation to compliance arrangements in
the COVID-19 environment and the Market
Abuse Regulation and disclosure obligations.
– From Deloitte via the Audit Committee on the
significant governance developments during
the year.
– From Korn Ferry via the Remuneration
Committee on remuneration matters as
reported in more detail in the Remuneration
Report on pages 99 and 111.
– From various safety consultants in reviewing
the external cladding system and fire safety
arrangements on relevant developments,
provided through the Cladding Committee’s
regular updates to the Board.
Environmental, social and governance
The Board receives regular briefings and updates
on particular topics that fall within the broad
umbrella of environmental, social and
governance (ESG).
These ESG briefings allow the Board to assess
the significant ESG risks to the Company’s short
and long term value and to identify any
opportunities that may arise to enhance value.
They also inform the Board as to the progress
being achieved towards early compliance,
as far as reasonably possible, with the new
requirements, effective for the 2021
reporting period.
ESG currently falls under the remit of the
Nomination and Governance Committee to
increase focus, rigour and track progress of
ESG priorities.
The Company has retained its membership of
the FTSE4Good Index.
In the latest update of the Institutional
Shareholder Services (ISS) Governance Quality
Score for the Company’s ESG performance, the
Company is assessed to be at level 1 indicating
the lowest level of comparative risk for
governance, including for the key areas of
compensation and shareholder rights.
The Board is aware of the increasing level of
investor interest in climate change risk and that
consideration is being given when reassessing
risk and asset values to reflect this in revised
capital allocations.
The Board has noted the Policy statement
published by the Financial Conduct Authority
setting out details of how greater reporting in this
area is to become mandatory under the Listing
Rules for 2021 reporting. The Company has
sought to move towards early compliance with
these requirements.
The Company continued work during 2020 to
align its operations with the aims of the Task
Force on Climate-related Financial Disclosures.
More detailed information on this reporting is set
out on pages 44 and 45.
We are also disclosing our performance against
the criteria identified for our sector by the
Sustainability Accounting Standards Board, in
our Sustainability Report.
Company purpose
The Company’s purpose is to build great
homes and create thriving communities.
This purpose is described in more detail,
together with the way it links to the
Group’s strategy; is strongly supported
by our values; and guides operational
planning and performance, on pages 18
and 19.
Examples of the Board’s leadership
towards achieving this purpose during
2020 are described on pages 1, 3, 18 and
19 and pages 72 to 77 set out the
Board’s consideration of key stakeholders
and the ways in which consideration of
their interests informed the Board’s
decision making.
Details of ESG risks and value enhancement
pursuits appear in the 2020 Sustainability
Report, which is available on our website at
www.taylorwimpey.co.uk/corporate/
sustainability
Health, safety and environment
The Board’s commitment to conducting its
operations to high standards of health, safety
and environmental management is
demonstrated by receipt of detailed reports on
health, safety and environmental matters in
respect of the Company’s operations in the UK
and Spain as the first substantive item at each
Board meeting. More details, on these and other
initiatives in these areas, can be found in the
stakeholders section on pages 30 to 37, in our
Sustainability Report for 2020 and the
Company’s detailed carbon reporting, as
required by the Department for Business, Energy
& Industrial Strategy, as set out on pages 42 and 43.
Diversity
As part of our ESG agenda, the Company is
committed to supporting diversity and its policy
is to appoint or promote, as appropriate, the
best person for the role in question, without
taking account of factors such as educational or
professional backgrounds (save as appropriate
for the position); age; gender; ethnicity; or
disability. The policy has been reinforced through
training sessions on unconscious bias for
management teams throughout the Company’s
business and its head office functions. Progress
to date in this area is set out on pages 86 to 89
and continuing to improve our diversity across
the Company will remain a priority for the Board.
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Governance
Corporate governance: Board leadership
and Company purpose continued
Culture, values and ethics
The Board strongly believes that good
governance should be focused not only on how
the Board itself operates effectively but also, and
very importantly, on the culture within which all of
our businesses and employees operate and
conduct themselves on a day to day basis in
order to achieve our purpose. The culture,
values and ethics set out on pages 34 and 68
are set and monitored by the Board as set out
on page 70 and led in our operations by the
Chief Executive and the GMT. The principles of
good governance are embedded throughout
Taylor Wimpey and manifest themselves in a
number of different ways, including the following:
– An absolute and non-negotiable requirement
throughout our business to ensure the health
and safety of our employees, customers,
subcontractors, suppliers and visitors to our
offices and developments. Please see pages
30 to 37 and 67.
– The requirement to observe good business
practice, including abiding by all applicable
laws and regulations that relate to our
business. Please see pages 68 and 69.
– The provision of mandatory training to all of
our businesses on key legislation and
regulations relating to our areas of operation.
– Our Group-wide Operating Framework control
document setting out certain rules of
operation, common procedures, other areas
of best practice and delegated authority limits.
– A system of controls and checks underpinned
by a rigorous Internal Audit Department and in
turn overseen by the Audit Committee.
– Regular and embedded risk assessment and
monitoring processes. Please see pages 46 to
53 and 93.
– Encouraging and investigating any disclosures
made either directly or through an
independent third-party whistleblowing hotline
available to employees, subcontractors,
suppliers, customers and the general public.
Please see page 69.
Governance developments during the year
The Company has consistently sought to comply
with planned improvements and revisions to the
Code, and with wider governance initiatives,
often in advance of their formal application to our
reporting years.
There are regular briefings and updates on
corporate governance at Board and Committee
meetings and this report aims to explain in clear
terms the governance related processes and
procedures that are in place to ensure the
Company complies with all applicable laws and
regulations as well as, of course, meeting the
requirements of our relevant stakeholders,
including shareholders and their representative
bodies with whom we are always very pleased
to engage.
Expanding on our ‘Highlights of 2020’
The Board received governance briefings during
the year, encompassing all of the key legal and
regulatory governance changes introduced
during 2020, in addition to specific briefings
on its responsibilities under the Code and regular
training on topics such as the Market
Abuse Regulation.
The key areas of enhanced reporting introduced
in the Code, and by other governance
developments during 2020, may be found in
the following areas of this Annual Report
and Accounts:
– Addressing COVID-19 guidance from the FRC
and on the holding of Annual General
Meetings during lockdown. Please see page
75.
– The enhanced role of our employees’ voice in
Board deliberations, through our National
Employee Forum (NEF), and the appointment
of an Independent Non Executive Director as
the Board’s NEF Champion with specific
responsibility for liaising with the NEF and
acting as a focus for two-way interaction
between the NEF and the Board. Please see
pages 76 and 77.
– An increasing focus on the culture of the
Company. Please see pages 34 and 66.
– Requirements around Board composition and
succession planning at Board level. Please
see page 83.
– Wider recommendations to promote good
corporate governance, particularly around
executive pay. Please see page 98.
Management
Progress in achieving the Group strategy is
reviewed at appropriate Board meetings through
the year and is reported on pages 22 to 25. The
Chief Executive has responsibility for preparing
and reviewing strategic plans for the Group and
the annual budgetary process. These are subject
to formal review and approval by the Board. The
Chief Executive and the Board conduct regular
reviews of actual results and future projections
with comparison against budget and prior year,
together with various treasury reports. Disputes
that may give rise to significant litigation or
contractual claims are monitored at each Board
meeting, with specific updates on any material
developments or new matters presented by the
Group General Counsel.
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 continue to be closely
monitored in response to prevailing
market conditions.
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 are set out in the Operating Framework,
which is available for review online by any
employee through the Company’s intranet.
These activities are reinforced through process
compliance and other audits conducted by
Internal Audit. The annual employee
performance appraisal process is competency
based, with individual objectives cascaded down
from the appropriate business objectives. The
process also identifies training needs to support
achievement of objectives.
Operational oversight
Operational management of the Company’s
business is undertaken by the Chief Executive
who receives advice from the GMT. The GMT is
the most senior executive committee and its
membership is as set out on pages 14 and 15.
The Board also receives regular reports and
minutes from the Treasury Committee, which
meets under the Chairship of the Group Finance
Director, and also comprises the Group General
Counsel and Company Secretary; a senior
operations executive (Group Operations Director
or one of the Divisional Chairmen) who rotate
periodically; and the Group Treasurer. The key
responsibilities of the Committee are, broadly, to
monitor and keep under review the Group’s
financial risks, financial policies, financial facilities,
covenant compliance and insurance programme
in the light of current and proposed strategic and
operational requirements, and to make
recommendations to the Board or GMT, as
appropriate, regarding policy or operational
changes in these areas.
The Treasury Committee also continuously
monitors the operation of the Group’s supplier
payment policy and practices and advises the
Board, through its reports and minutes
considered at Board meetings, of any significant
variances, together with remedial actions
proposed or taken.
The following documents relating to the Group’s
management processes and division of
responsibility are available for review on the
Company’s website at: www.taylorwimpey.co.
uk/corporate/investor-relations/corporate-
governance:
– Schedule of matters specifically reserved for
the decision of the Board.
– Terms of Reference of the Board Committees:
Audit, Nomination and Governance, and
Remuneration, which outline their objectives
and define a programme of activities to
support the discharge of their responsibilities.
– Policies covering operational, compliance,
corporate responsibility and stakeholder
matters, including those related to the Bribery
Act 2010 and Anti-Corruption.
– The Company’s Articles of Association
(Articles).
These have been updated to reflect the Code
and relevant reporting against these is provided
to the Board or to the Audit Committee by the
Head of Internal Audit and the Secretary as
appropriate.
Productivity
The Company continues to support the
Government’s desire for increased productivity,
including through greater recognition of the
importance of ‘human capital’ and a clearer
focus on training and development. Details of
our initiatives in this regard appear on pages 24,
25 and 34.
Risk
During 2020, the Group’s control environment
was further improved through enhanced
reporting, tracking and monitoring, which
identified the key risks to be reviewed and
assessed by Internal Audit as part of its
programme of work during the year. This work
was led by the Board, assisted by the Audit
Committee, and informed by a detailed review
from the GMT, and included a number of
assessments of risk and its identification and
mitigation, as set out on pages 46 to 53.
Anti-bribery and anti-corruption
In line with the Bribery Act 2010, the Company
has written policies on its zero-tolerance
approach to bribery or corruption. The policies
are available for review externally on the
Company’s website and by all employees on the
Company’s intranet. The risk to the Company of
non-compliance would be significant reputational
damage, potential financial penalties and the
possible exclusion from certain approved partner
arrangements. These risks are mitigated by
training for senior managers and by issuing an
annual reminder, which includes the then-current
versions of the policies, to all businesses and key
departments, which requires written confirmation
of continuing compliance and maintaining the
gifts and hospitality register.
Ensuring there is no conflict of interest
In order to assist Directors in complying with
their duty to avoid conflicts (or possible conflicts)
of interest, it is standard procedure that the
Board must first give its clearance to such
potential conflicts of interest (which would
include directorships or other interests in outside
companies and organisations) following which,
an entry is then made in the statutory register
which the Company maintains for this purpose.
Whenever any Director considers that he or she
is, or may be, interested in any contract or
arrangement to which the Company is or may
be a party, the Director gives due notice to the
Board in accordance with the Companies Act
2006 and the Company’s Articles. In such
cases, unless allowed by the Articles, any
Director with such an interest is not permitted to
participate in any discussions or decisions
relating to the contract or arrangement.
The Board undertakes a regular review of each
Director’s interests, if any, outside the Company.
In addition, all proposed new appointments and
interests of Directors are cleared in advance with
the Board, which considers the impact on the
time commitments of the Director concerned.
Following these reviews, the Board remains
satisfied that, in line with the Code, all Directors
are able to allocate sufficient time to the
Company to enable them to discharge their
responsibilities as Directors effectively, and that
any current external appointments do not detract
from the extent or quality of time which the
Director is able to devote to the Company.
Whistleblowing
The Group’s Whistleblowing Policy is
supported by a clear process that includes
an independent third-party whistleblowing
hotline through which any person,
including employees of the Company,
may, in confidence, raise concerns about
possible improprieties in financial
reporting, other operational matters or
inappropriate behaviours in the workplace.
All whistleblowing cases are investigated
by the Head of Internal Audit, Head of
HSE (where appropriate), Group Human
Resources Director and / or the Group
General Counsel and Company Secretary
depending on the nature of the issue. The
Chief Executive is apprised, on an
anonymous basis, of all allegations and
conclusions of the review.
Whistleblowing incidents and their
outcome are reported to the Board, on an
anonymous basis, in line with the Code.
Whistleblowing featured regularly on the
Board’s agenda during 2020, with formal
half yearly reviews and interim updating on
significant matters, which allowed the
Board to regularly review the adequacy of
the policy in line with its requirement to do
so under the Code. The policy includes
the ability for workers to make protected
disclosures with regard to matters arising
under the Modern Slavery Act with regard
to our business and its supply chain.
Following a review of the process and
administration, and the continuing
high-profile awareness campaign around
the Company’s businesses and offices,
the Board is satisfied that the Policy and
its administration remain effective.
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Governance
Corporate governance: Board leadership
and Company purpose continued
Board
activities
How our Board
monitors culture
The Board is responsible for setting the
Company’s culture from the top, as explained
on page 61. The Company’s culture is
underpinned by clear policies and codes of
conduct which ensure that the Company’s
obligations to shareholders and stakeholders
are clearly understood and met. The
observance of the culture throughout the
business operations is led by the Chief
Executive with the support of the GMT.
A healthy culture is extremely important
to protect and generate value and the
Board keeps the culture under continuous
review. Throughout 2020, the Board used
a number of internal and external indicators
to inform its regular assessment of the
Company’s culture.
The Board regularly reviews and discusses the following topics:
– Health, safety and environment.
– Business strategy.
– Company culture.
– Governance.
– HR and employee matters.
– Diversity and inclusion.
– Key risks and risk management.
– The market.
– The Company’s financial position and performance.
– The Company’s share register and investor relations programme.
– Compliance and legal matters.
– Operational matters, such as customer service and community engagement.
Compliance
The Board oversee the implementation
of the Company’s policies covering
anti-bribery and corruption, anti-money
laundering, anti-slavery and human
trafficking, data protection and cyber security.
This includes implementing the appropriate
processes, online training and annual senior
management sign off, and monitoring the
Company’s whistleblowing process, as set
out on page 69.
Board and employee engagement
The Board selected Gwyn Burr, Independent
Non Executive Director,
to be the Board’s NEF Champion
to strengthen the availability and frequency of
communication between the Board and
employees. More information can be found
on pages 76 and 77.
Employee perception
The Company has maintained its
top fifty ranking in the ‘Glassdoor list of best
places to work’ for the fourth successive
year. More information can be found on
pages 34 and 35.
Health and safety
Our Annual Injury Incidence Rate per
100,000 employees and contractors was
151 (2019: 156). The Board receives
detailed reports on health, safety and
environmental matters as the first
substantive item at each Board meeting.
More information can be found on
pages 24, 25, 34 and 35.
Employee retention
Our voluntary employee turnover of
9.4% (2019: 12.9%) is consistent with a
strong level of engagement with the
Company’s strategy, however, we
acknowledge that employees were less
likely to change employment during the
pandemic. More information can be
found on pages 24, 25, 34 and 35.
Employee surveys
The Board reviewed the results
of the employee surveys evaluating the
Company’s response to the COVID-19
pandemic:
– 97% felt very satisfied with the level
of support received during 2020
– 97% felt working in a more flexible way
will positively impact their mental health
and wellbeing
– 96% felt the Company is
committed to becoming
a more inclusive organisation
More information can be found on pages
34 and 35.
Strategy and execution
Business updates
– Held a two day off site meeting with the
GMT in September 2020 (adhering to
COVID-19 guidelines) to discuss strategy
– Received regional operating divisions’
performance updates
– Received a detailed update on the
Company’s strategy
– Received a detailed presentation on the
Company’s health, safety and environmental
performance
Organisational capacity
COVID-19
– Held regular meetings to discuss and
monitor the impact of the COVID-19
pandemic on the Company and its
stakeholders and agreed appropriate
actions to be taken
– Considered and approved the proposal to
raise £510 million through an equity raise
Environmental strategy
– Oversaw the development of, and approved
the Company’s environmental strategy, to
be implemented from 2021
Compliance
– Reviewed and approved the 2019 Annual
Report and Accounts
Operational performance
– Reviewed and discussed detailed reports
National Employee Forum (NEF)
– Approved the appointment of Gwyn Burr
from the GMT
to be the Board’s NEF Champion
– Received detailed half yearly reports on HR
matters, in addition to the regular updates
at every meeting
– Received reports on NEF meetings and
considered employee participants’ views
on key areas
– Reviewed the arrangements for ongoing
compliance with GDPR and actions
proposed for improving the resilience of the
Company’s IT systems
COVID-19
– Reviewed the implementation of the
Company’s emergency cover plans in
response to the COVID-19 pandemic and
was proud to note that no material evidence
of weakened controls was found
Succession and contingency planning
– The Nomination and Governance Committee
formally reviewed the strategy for succession
planning and related training assessment
and provisions, for both the Board and
positions below Board level, and progress
towards achieving it
Brexit
– Reviewed and assessed the impact of Brexit
on the Company’s operations
Financial oversight
Financial resources
– Received a detailed review of the
Company’s financial position, including
borrowing facilities and financial alternatives,
at each meeting
– Agreed the budget for the 2021
to 2022 period
Governance and values
Compliance
– Expanded the remit of the Nomination
Committee to take the lead on the Board’s
corporate governance responsibilities
– Received regular updates on governance
and regulatory developments during the
year, from both internal and external sources
– Checked the status of the Company’s
compliance with the requirements of the
Code throughout 2020
– Reviewed and further improved processes
designed to guard against instances of
modern slavery
– Reviewed financial performance reports,
including the availability of financial, people
and supply chain resources, at each meeting
Reporting
– Reviewed and approved, with prior advice
from the Audit Committee, the full year
and half year results statements
– Reviewed and approved each trading
statement made during the year
Dividend
– Considered the Company’s Dividend Policy
Pensions
– Received regular updates on the financial
position of the Company’s pension fund and
its funding objectives
– Approved the Company’s fourth
Modern Slavery Act 2015 statement in
2020 after reviewing its operations and
supply chain
AGM
– Held the 2020 AGM during the first
COVID-19 lockdown ‘behind closed doors’
but with the opportunity for shareholders to
pre-submit questions or ask them live
Board evaluation
– Concluded the externally facilitated Board
evaluation for 2019, identifying areas for
further improvement and recommended
actions to be taken
Shareholders
– Received an update from the Chairman
following the Chairman’s virtual shareholder
roadshow
– At the 2020 AGM, submitted the
– Sought shareholder and institutional
Remuneration Report, which was approved
by in excess of 96% of votes
feedback, both at the AGM and half year
and full year results presentations, along with
advice from the Company’s stockbrokers on
the market and sector
Key
Customers
Employees
Partners
Investors
Communities
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Governance
Corporate governance: Board leadership
and Company purpose continued
How the Board
considered stakeholders
during the year
engagement enabled them to fully understand
the key issues relevant to each stakeholder.
Further details on how the Board considered
stakeholders during the decision making
process, and how the stakeholder engagement
fed into this process, are set out on the next
three pages.
Read more about stakeholder engagement on
pages 28 to 41.
Details of how the Directors have fulfilled their
duties can be found throughout the Strategic
and Governance reports on the following pages:
– The likely consequences of any decision in
the long term – Pages 11, 12 and 13, 18 and
19 and 72 to 75.
– The interests of the company’s employees –
pages 24 to 29, 34 and 35, and 72 to 75.
– The need to foster the company’s business
relationships with suppliers, customers and
others – pages 28 to 41 and 72 to 75.
– The impact of the company’s operations on
the community and the environment – pages
28 and 29, 42 to 44 and 73 to 75.
– The desirability of the company maintaining
a reputation for high standards of business
conduct – pages 18, 20 and 21, 26 to 29 and
67 to 75.
– The need to act fairly as between members
of the company – pages 28 and 29, 38 and
39, and 72 and 75.
The Directors are required by law to act in a way
that promotes the success of the Company for
the benefit of shareholders as a whole. In so
doing the Company must, in accordance with
Section 172 of the Companies Act 2006, also
have regard to wider expectations of responsible
business behaviour, such as having due regard
to the interests of, and actively engaging with, its
employees; the need to engage and foster
business relationships with suppliers, customers
and others; the need to act fairly as between
members of the Company; the likely
consequences of any decision in the long term;
the desirability of maintaining a reputation for
high standards of business conduct; and the
impact of the Company’s operations on the
community and the wider environment. The
Company’s section 172 (1) statement of
compliance can be found on page 29 and
further details on how the Directors have fulfilled
their duties can be found on the next six pages.
The Company’s stakeholders are set out on
page 28. The Board understands the importance
of stakeholder engagement and continues to
engage with each stakeholder on a regular
basis. Further information on how the Board
directly engaged with shareholders and
employees can be found on pages 75 and 76
and details on how the Company engaged
with our customers, partners, investors and
communities (and outcomes as a result of that
engagement) during the year is noted on pages
28 and 29. The Board receive an update from
the Executive Directors on this engagement on
a regular basis.
During the year, the Board was closely involved
in all key decisions of the Company. Alongside
providing rigorous evaluation, risk management
and challenge to maintain strong governance,
the Board also used the stakeholder
engagement to inform each decision. The Board
is aware that in some situations, stakeholders’
interests will be conflicted, however the
Key
Customers
Employees
Partners
Investors
Communities
Closure of construction sites
and sales offices
March 2020
The Board took the proactive decision
to be the first major housebuilder to close
construction sites and sales offices.
In making this decision, the Board considered
the following stakeholders:
Whilst construction was deemed to be a
permitted activity by the UK Government,
the Board believed it was essential to ensure
that our working practices could strictly
adhere to social distancing and this would
require time and careful planning.
The health and safety of our customers,
employees and partners has always been a
non-negotiable priority at Taylor Wimpey.
The Chief Executive wrote to all customers
when we closed sites. As a result of this
engagement, we continued to support new
and existing customers and conducted all
business by telephone or digitally. To give
added reassurance we extended our
two-year warranty for all customers in
warranty, at any point in the first national
lockdown, by two months.
The Board understood that closing our sites
and sales offices would have an impact on
sales and completions, and this in turn would
impact our investors. The Board felt strongly
that it was important to ensure the enhanced
safety measures were put in place to protect
the health and safety of all our stakeholders
that visit our sites.
For further information see page 4.
Dividends and executive pay
March 2020
To protect the long term financial stability of
the Company the Board made the decision to
cancel the 2019 final dividend and the 2020
special dividend. The Remuneration Committee
also considered the application of the
Remuneration Policy during 2020.
In making this decision, the Board considered
the following stakeholders:
The Board were very aware of the impact this
decision would have on our loyal shareholders
who rely on dividend income. The Board took
this proactive measure to protect the balance
sheet and increase flexibility in the short term
until the extent and duration of the pandemic
was better understood. The Board continues
to be committed to providing a reliable
minimum annual return to shareholders,
therefore in July 2020, the Board announced
its intention to resume the payment of an
ordinary dividend in 2021.
At the request of the Executive Directors,
the Remuneration Committee amended the
application of the Remuneration Policy in 2020.
The Executive Directors’ 2020 annual bonus
was cancelled and they took a voluntary
reduction in base salary and pension from
1 April to 31 July 2020. The Non Executive
Directors also took a voluntary reduction in their
fees for the same period of time. Further details
of these changes can be found on page 102.
The Board is aware that over 64% of our
employees are also shareholders in the
business and this decision directly impacted
them in the same way.
For further information see pages 3 and 98.
Taylor Wimpey Pay
it Forward Scheme
April 2020
The Board oversaw the implementation of the
Taylor Wimpey Pay it Forward Scheme (the
Scheme) by the GMT and Internal Audit.
In making this decision, the Board considered
the following stakeholders:
Most people working on our sites are
subcontractors and their support and loyalty
was vital to ensure we were able to re-start
work on sites as soon as possible, with new
working practices to be COVID-secure. The
Board considered that the interest-free loan
would make a real difference to our self-
employed subcontractors when they
otherwise would not be able to earn during
the first national lockdown.
In addition, we remained in constant dialogue
with our partners and remained committed to
paying them promptly.
The Board considered that the Scheme
would protect the business in the short term
whilst also strengthening the business for the
future and increasing shareholder returns.
Many of our subcontractors live in the
communities in which we build, so the
Scheme indirectly benefits the communities
by ensuring job security.
For further information see pages 36 and 37.
Remobilisation
May 2020
Following the UK Government’s
announcement to restart the housing market,
the Board oversaw the development of the
processes and plans to ensure that work
could start back on site in a safe and
sustainable manner, whilst at all times
complying with the relevant UK Government
guidelines.
In making this decision, the Board considered
the following stakeholders:
To ensure that customers who had already
reserved homes were able to move as soon
as possible with minimum delays.
The Board ensured that the COVID-19 Code
of Conduct and adapted COVID-secure
working practices protected our employees
and partners.
In addition, the Board made the decision to
share our updated working practices with
other housebuilders to support them to
remobilise as soon as possible.
The Board ensured that the revised
processes were developed so that we could
re-open our sites as quickly as possible,
whilst being COVID-secure, to limit the impact
on our investors.
For further information see pages 10 and 11.
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73
Governance
Corporate governance: Board leadership
and Company purpose continued
Equity raise
Company purpose
Environmental strategy
June 2020
The Board approved the decision to raise
£510 million through issuing new shares in
order to take advantage of attractive
opportunities in the land market.
In making this decision, the Board considered
the following stakeholders:
The Board recognised that the reduced level
of competition for land created a disconnect
in the market, resulting in short term
opportunities to acquire land from a range of
sources at attractive returns.
These investments will support sustainable
future growth and deliver enhanced long term
value to shareholders.
Retail shareholders were also able to
participate in the equity raise through the
retail offer.
All Directors participated in the equity raise.
The Board ensured that employees had the
opportunity to participate in the equity raise.
The Board were pleased to note that 329
employees participated in the equity raise.
The Board considered that the equity raise
would increase our opportunity to provide
homes in the locations our customers want
to live.
For further information see pages 12
and 13.
September 2020
During the year, the Board considered the
Company’s purpose and how best to define it
in a way that is meaningful for the Company
and is understandable for, and resonates
with, our stakeholders. Taylor Wimpey’s
purpose is to build great homes and create
thriving communities.
In making this decision, the Board considered
the following stakeholders:
September 2020
As part of the broader ESG agenda, the
Board reviewed and approved our new
environmental strategy during 2020.
As a business, we want to play our part
in creating a sustainable future for everyone.
Therefore when considering the new
strategy, the Board considered the
following stakeholders:
The Board believes that our purpose should
drive our strategy, guide our culture and
provide a framework for consistent decision
making which benefits all stakeholders.
To fully understand each stakeholder’s
interests, the Board considered each of them
in turn.
During 2021, the Board will continue to align
our actions and priorities even more closely to
our purpose, which will benefit all of our
stakeholders.
For further information see pages 18 and 19.
The Board is confident that our new
environmental strategy, and the challenging
targets contained within it, will positively
impact the local environment in the locations
that we build across the UK.
Environmental factors have become
increasingly more material issues for investors
when making investment decisions. As a
result of the increasing focus placed on all
ESG matters by our investors and
shareholders, the Board ensured that the new
environmental strategy had been informed by
shareholder feedback.
Like many of our stakeholders, our employees
want to work for a business which takes its
environmental responsibilities seriously.
The Board believes that by implementing the
new strategy, our customers will be able to
lead greener and more sustainable lives.
For further information see pages 42 and 43.
Diversity and inclusion
October 2020
As another ESG topic, the Board reviewed
the Company’s approach to, and progress
in respect of, diversity and inclusion during
2020.
In conducting this review, the Board
considered the following stakeholders:
By embracing the diversity in our business
and the communities in which we operate,
this will enable us to succeed through a
workforce that is inclusive, creative and
innovative.
The Board considered that having a broader
range of perspectives, ideas and experiences
will align with our purpose, improve decision
making across the business and benefit all of
our stakeholders.
In early 2021, we will be launching our new
Equality, Diversity and Inclusion Policy and
remain committed to equality of opportunity in
all of our employment practices, policies and
procedures across the business.
For further information see page 86.
How the Board engaged with investors during the year
The Board actively seeks and encourages
engagement with investors, including its major
institutional shareholders and shareholder
representative bodies.
The Company has engaged with investors in a
proactive manner during the pandemic and as
part of the equity raise in June. The charts below
set out the number of meetings held with
investors by the Chairman, Executive Directors
and our Investor Relations team. These meetings
include one to one meetings, group and
conference meetings.
2020 Annual General Meeting
As a result of the pandemic shareholders were
unable to attend the 2020 AGM in person.
The Board put in place arrangements for
shareholders to listen to the business of the
meeting by dialling in to a teleconference facility.
Shareholders were also given the opportunity to
ask questions in real time on the call.
Alternatively, they were able to submit questions
in advance of the meeting to the Company
Secretary by email and these were answered on
the call.
Investor relations programme
The Company operates a structured investor
relations programme, based around formal
announcements and publications of the full
year and half year results. The Board is kept
regularly apprised on the investor relations
programme and receives a detailed report
at each meeting.
In the year, there has been increased investor
engagement through telephone and video calls
in order to give investors the opportunity to
discuss the Company's response to the
COVID-19 pandemic. Early in the pandemic an
investor outreach programme took place to offer
investors the opportunity to meet with Executive
Directors and discuss key decisions.
In June, alongside and following the equity
raise, Executive Directors engaged with a range
of investors.
Number of meetings held during the year
Chairman(a):
11
Executive Directors(a):
Investor Relations:
(a)
Investor Relations also
attended these meetings
108
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Number of Executive Director meetings
2020
2019
2018
52
52
108
Chairman’s virtual roadshow
Irene Dorner met individually with 11 of our key
investors and shareholder representative bodies
in September and October. During these
meetings, investors were keen to understand the
Board’s involvement in strategic decisions during
the year.
During these meetings, the key topics discussed
were strategy, ESG matters, the equity raise and
succession planning.
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Governance
Corporate governance: Board leadership
and Company purpose continued
Strengthening engagement
with our employees
Q&A with Gwyn Burr,
the Board’s NEF
Champion
How have you found your first few months
as the Board’s NEF Champion and what
benefit has it brought to Board
discussions?
I have thoroughly enjoyed being a part of the
NEF since being appointed as the Board’s NEF
Champion. So far, I have attended two virtual
meetings which gave me a great opportunity to
meet with members and get a real
understanding of what matters are key to our
employees. This has enabled me to reflect and
support their interests accurately during Board
discussions and also feedback employees’
views on key topics to the Board. The Board
values employee feedback as it is an essential
component of our culture.
What makes the NEF so effective?
I think the format of the NEF is key to its
effectiveness. As members are elected from
across the divisions and functions it ensures
that I’m able to capture a true representation of
employees’ views from across the business.
How often will you be attending the NEF?
The NEF meets every quarter and I plan to
attend each meeting. I am very much looking
forward to meeting with the NEF in person when
circumstances permit.
How will you report back to the Board?
After every NEF meeting, there is a standing
item on the Board agenda for me to provide an
update to the Board. In addition, the Chairman
and I are given the opportunity to propose items
for each NEF agenda if we wish to do so.
Engagement with employees has been more important than ever as a
result of the pandemic. During the year the Board looked to strengthen
how they engage with employees in the following ways:
Board’s NEF Champion
Gwyn Burr was selected to be the Board’s NEF Champion in July 2020.
Further details can be found on the next page.
Regional business unit visits by the Chairman and Senior
Independent Director
Prior to the onset of the COVID-19 pandemic, as part of their induction,
Irene Dorner and Robert Noel visited three regional businesses in the
Northern Division, where they met employees, visited sites and
developed a feel for the business.
CEO Microsoft Teams calls
Pete Redfern spoke with c.2,000 employees via group calls on Microsoft
Teams during the year. Pete used this as an opportunity to gain
feedback from employees about the Company’s response to the
pandemic, the introduction of the COVID-secure safety measures and to
gain a sense of their overall health and wellbeing. The Board were
particularly pleased that Pete was recognised by Glassdoor for his
leadership during the pandemic.
Pulse surveys
The Company ran three ‘pulse’ surveys to gain feedback on key topics
such as diversity and inclusion and access to development opportunities.
The results were fed back to the Board.
Regular communications from the GMT
Throughout the first national lockdown, the GMT regularly engaged with
all employees through a set of daily challenges. Employees were also
encouraged to contact a dedicated email address if they had any
concerns at all.
Employee engagement framework with the Board
The diagram below shows the current framework used by the Board to gather the views of the workforce. The framework ensures that there is
continuous two-way communication and collective consultation between the Board and employees.
During 2021, the NEF and ECC format will be further reviewed to ensure both forums are reflective of the individual business units and the wider
business as a whole. Further details of this review will be set out in the Annual Report and Accounts 2021.
Employee Consultative
Committees (ECC)
Purpose:
Each regional business unit
(BU) has an ECC to consider
local and national issues.
Members:
– ECC chaired by the BU
Managing Director
– Three members from
different functions
– Elected every three years by
employees within the BU
Meeting frequency:
At least twice a year
National Employee
Forum (NEF)
Purpose:
Provide a platform to enhance employees’
ability to raise matters with the Company
that affect the business across all of
its Divisions.
Members:
– NEF chaired by a senior leader
– 12 members from across the divisions
and from a range of functions
– The Board’s NEF Champion
– Elected every three years by respective
division
Meeting frequency:
Quarterly
Key topics discussed during 2020:
– The Company’s response to COVID-19
– Health and safety
– Build quality and customer service
– Remuneration
Taylor Wimpey plc Board
In addition to the NEF, the
Board engages with employees
in the following ways:
– Site and BU visits
– Employee survey results
– Regular people reports
– Annual Strategy Away Day
at a regional BU
– Open lines of
communications with the
CEO via Group Microsoft
Teams calls
– Regular updates from the
Divisional Chairmen
– Whistleblowing reports
How the ECC communicates with:
How the NEF communicates with:
How the Board communicates with:
The NEF
– The ECC members are encouraged to
The ECC and employees
– A NEF newsletter is distributed
feedback directly to the NEF members to
ensure two-way communication and
collective consultation at a local level
to all employees within four weeks
of the NEF meeting taking place
which provides an overview
of topics discussed and
encourages feedback
The Board
– There is a standing item on the Board
agenda after each NEF meeting for the
Board’s NEF Champion to feedback to
the Board
The NEF
– NEF agendas are established by
the Chairman of the NEF, the Group HR
Director and other key stakeholders
– Agendas are subsequently reviewed by
the Group General Counsel and Company
Secretary for input on behalf of
the Board
– The Chairman of the Board and the
Board’s NEF Champion are given the
opportunity to propose items for each
NEF agenda
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77
Governance
Corporate governance: Division of responsibilities
A clear and
effective structure
There is a clear and effective division of
responsibilities between the Board, its
Committees and operational management,
which is a key foundation of the Company’s
strong governance.
In line with the Code, the clearly defined roles
and responsibilities of the Chairman and Chief
Executive were reviewed during 2020, set out in
writing and signed by Irene Dorner and Pete
Redfern in their respective capacities as
Chairman and Chief Executive.
We believe that a successful company is led by
an effective and entrepreneurial board, whose role
it is to promote the long term sustainable success
of the company, generating value for all of the
company’s stakeholders. To support this
principle, the Board has established a framework
of delegated financial, commercial and
operational authorities which define the scope
and powers of the Chief Executive and the GMT.
How we are governed
The Board
– Provides strategic and entrepreneurial leadership within a framework of strong governance and effective controls
– Responsible for defining and setting the Company’s purpose and values which in turn set its culture
– Establishes the Company’s risk appetite and oversees processes designed to ensure compliance
– Defines which matters are reserved for the decision of the Board, which for Taylor Wimpey include profit expectations and Dividend Policy
– Reviews the Whistleblowing Policy and associated investigations and outcomes
– Ensures effective engagement with shareholders
Audit Committee
Chaired by Humphrey Singer
– Monitors, reviews and advises the Board on the
Company’s financial reporting and related
announcements
– Undertakes a detailed half-yearly review of the
Company’s risk assessment and mitigation
processes and outcomes, and advises the
Board
– Oversees the relationship with the Company’s
auditor
– Oversees the reporting of internal audit
investigations and reviews the implementation of
any changes required
– Monitors the continuous improvements in
information technology, data protection and
resilience to cyber attacks
Nomination and Governance
Committee
Chaired by Irene Dorner
– Reviews the balance, diversity, independence
and effectiveness of the Board
– Oversees the selection, interview and
appointment of new Directors to the Board
– Reviews the succession and contingency
planning for the Board and across the
Company’s senior positions
– Reviews the training and development plans
for the Board and across the Company’s
senior positions
– Reviews, sets targets for and drives the
Company’s diversity and inclusion strategy
– Reviews the Company’s corporate governance
practices and procedures
– Reviews AGM resolutions and makes related
recommendations to the Board for approval
Remuneration Committee
Chaired by Gwyn Burr
– Advises the Board on remuneration policy at
Board and senior management level
– Ensures that remuneration is geared to the
enhancement of shareholder value
– Ensures that targets are appropriate and support
the delivery of the strategy, whilst appropriately
limiting risk taking and reflecting ESG
considerations
– Ensures that rewards for achieving or exceeding
agreed targets are not excessive
– Promotes the alignment of executive and wider
employee interests with those of the Company’s
shareholders and with the Company culture,
including by setting executive shareholding
guidelines and stipulating post-employment
holding requirements for certain employees
Chief Executive and the GMT
- Responsible for the day to day management of the Company’s operations
- Responsible for making key strategic and operational decisions, and for sustainability, customer service, health and safety, HR, finance, legal and compliance matters
- Oversee the regional divisions’ performance with input from each of the Divisional Chairmen
Read more in the Committees’ Terms of Reference available at: www.taylorwimpey.co.uk/corporate/our-company/governance.
Role of the Board
Whilst all Directors share collective responsibility for the activities of the Board, we have defined the roles in more detail as governance
considerations have developed over time. These roles and responsibilities are:
Chairman
– Lead the Board effectively to direct the
– Facilitate and promote constructive Board
– Ensure an appropriate induction and
Company
relations and communication
– Chair Board meetings and set Board
– Ensure Directors receive accurate, timely
meeting agendas
and clear information
development programme is in place for
individual Directors
– Agree the Chief Executive’s personal
– Ensure high standards of corporate
– Set the Company’s cultural tone from
objectives
governance
the top
– Demonstrate objective judgement
– Build a well balanced and highly effective
– Enable an annual review of the
Board’s effectiveness
– Ensure there is effective communication
and debate with shareholders
– Maintain an appropriate balance between
Board
– Engage individually with the Directors,
the interests of stakeholders
– Promote a Board culture of openness and
debate to encourage constructive challenge
as required
Chief Executive
– Develop and implement the Company’s
– Regularly review the organisational
– Maintain relationships with investors and
strategy
– Recommend the strategic plan and related
annual budget
– Ensure the effective day to day running of
the Company
– Ensure coherent leadership of the
Company
structure, including developing the Group
Management Team and planning for
succession
– Manage the Group’s risk profile and
establish effective internal controls
– Ensure the Chairman and the Board are
kept advised and updated regarding any
key matters
advise the Board accordingly
– Set the Company’s culture from the top,
particularly with regard to compliance and
sustainability
– Agree the Company’s annual budget
proposal, prior to formal agreement with
the Board
Group Finance Director
– Manage the Company’s operational
– Oversee the Company’s risk profile,
financial affairs, including any treasury and
tax matters
in conjunction with the Group
Management Team
– Oversee the commercial, information
technology and pension departments
Group Operations Director
– Agree the Company’s annual budget
proposal from a financial perspective,
prior to formal agreement with the Chief
Executive and then the Board
– Manage the Company’s operational
– Oversee the operational supply chain and
– Agree the Company’s annual budget
development process, from land acquisition,
through planning applications, design and
production, to sale of the completed
product and customer service matters
logistics support
– Oversee the Company’s risk profile,
in conjunction with the Group
Management Team
proposal from an operational perspective,
prior to formal agreement with the Group
Finance Director, Chief Executive and then
the Board
Senior Independent Director
– Act as a sounding board for the Chairman
– Chair Board meetings in the absence of
the Chairman
Independent Non Executive Directors
– Act as an intermediary for the other
– Lead the search for a new Chairman,
Directors, when necessary
– Lead the evaluation of the
Chairman’s performance
when necessary
– Be available to shareholders who wish
to discuss matters which cannot be
resolved otherwise
– Provide effective and constructive
– Assist in developing and approving
challenge to the Board
the Company’s strategy
– Serve on the Board Committees
– Provide advice and experience to the
Board and Group Management Team
– Keep abreast of shareholders’ views
Group General Counsel and Company Secretary
– Advise the Board on matters of corporate
governance, compliance and legal issues
– Responsible for all legal and compliance
– Provide support to the Chairman and
Independent Non Executive Directors
– Ensure effective support to the
– Keep abreast of shareholders’ views
– Oversee the Company’s Secretariat and
Legal Departments
matters relating to the Company
Board during meetings and whilst
setting agendas
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Governance
Corporate governance: Composition,
succession and evaluation
Nomination and Governance
Committee report
In April 2020, the Board made the decision to
broaden the objectives and responsibilities of
the Committee to include greater oversight of,
and input into the Company’s corporate
governance practices. Previously, this had been
a matter for the whole Board; however, I believe
this change will allow the Committee to give the
subject appropriate attention, reporting to the
Board as necessary, whilst allowing the Board
more time to focus on our key strategic topics
and areas of business focus. We will continue to
ensure that the Company and Board operate in
a manner consistent with corporate governance
best practice. The Committee’s name and Terms
of Reference were updated to reflect this wider
remit. Additionally, in December 2020, the Board
decided that the Committee would have
responsibility for the oversight and achievement
of the Company's ESG agenda. This will be kept
under review in 2021, as we develop our thinking
and business practices in this area.
2020 was a year of transition for the Board, with
a number of Board and Committee changes.
In addition to my comprehensive induction
process, as outlined on page 83, this period of
transition was greatly supported by Kate Barker
remaining on the Board to help ensure a smooth
transition as I took over from Kevin Beeston. The
additional continuity added stability to the Board
and Committee during a period of change. I am
grateful to both Kevin and Kate for their
assistance and advice.
In light of Robert Noel’s deep understanding
of the property sector and executive leadership
experience, the Board appointed Rob as the
Company’s Senior Independent Director on
21 April 2020. Since that date, Rob has supported
me in my role and I very much look forward to
continuing working together in the future.
Ahead of Kate stepping down from the Board,
the Committee considered the range and
balance of skills and experience of the
Independent Non Executive Directors, their time
commitments and the succession plans for the
Board Committees and their respective
Chairmen. This led to the decision to recruit and
appoint Scilla Grimble and Jitesh Gadhia as
Independent Non Executive Directors, from
Main objectives
– To ensure that there shall be a formal,
compliance with the provisions of the
Market Abuse Regulation
rigorous and transparent procedure for the
appointment of new Directors to the Board,
its Committees and other senior positions in
the Company
– To keep the Board’s corporate governance
arrangements under review and to ensure
that both the Company and the Board
operate in a manner consistent with
corporate governance best practice
2020 performance
– Oversaw the retirement of Kevin Beeston
and Kate Barker, and the appointment of
Irene Dorner as Chairman and Rob Noel as
the Company’s Senior Independent Director
– Reviewed the composition of the Board
and its Committees and recommended
the appointment of two new Independent
Non Executive Directors to ensure the
maintenance of the appropriate balance of
experience and skills
– Oversaw the recruitment process of two
new Independent Non Executive Directors
– Thoroughly reviewed the succession and
contingency plans at Board, Committee
and senior management level
– Established a Disclosure Committee
to enhance the structure of ongoing
– Reviewed the operation of governance and
compliance processes across the Company
during the COVID-19 pandemic
– Oversaw the progress on diversity and
inclusion and set objectives to ensure future
progress
– Embraced the Committee’s oversight and
input into the Company’s corporate
governance practices
2021 objectives
– Embrace the Committee’s current
responsibility for the oversight and
achievement of the Company’s ESG agenda
– Drive the Company’s diversity and inclusion
agenda across the Company and ensure it is
embedded within the Company’s culture
– Continue to review succession and
contingency planning across the business
– Ensure the Company continues to have the
necessary level of Board and senior
management skills and leadership to
effectively deliver the strategy
– Further develop and embed good
governance processes and compliance and
ensure the Company operates in line with,
and exceeds where possible, corporate
governance best practice
Irene Dorner
Chairman of the Nomination
and Governance Committee
Dear Shareholder
As my first report to you since my appointment
as Chairman of the Nomination and Governance
Committee (the Committee), I am pleased to
report on the progress that has been made
during 2020 and our plans for 2021.
Nomination and Governance
Committee summary
The Committee is chaired by Irene Dorner,
Chairman of the Board. On 31 December
2020, the Committee consisted of four
Independent Non Executive Directors, as
required by the Code, and the Chairman of the
Board. On appointment to the Board on 1
March 2021, Scilla Grimble and Jitesh Gadhia
will become members of the Committee.
Committee members
Irene Dorner (Chairman)(a)
Robert Noel
Gwyn Burr
Angela Knight
Humphrey Singer
Kevin Beeston(b)
Kate Barker(c)
Meetings
attended
4/4
4/4
4/4
4/4
4/4
1/1
2/2
(a) Appointed Chairman of the Committee on 26
February 2020
(b) Stood down from the Committee on 26 February
2020
(c) Stood down from the Committee on 31 July 2020
1 March 2021. These appointments enhance
the range of skill sets and diversity on the Board
in terms of age, gender and experience.
In June 2020, the Committee considered
the topic of Board succession, including CEO
succession, with a view to identifying any key
internal talent and ensuring tailored training
and development plans are in place to allow
the relevant individuals to demonstrate and
deliver their potential. This review not only
ensures the Board is prepared to continue to
deliver the Company’s longer term strategy,
but also gives the Committee a valuable insight
into the Company’s strength in depth.
During 2020, in order to strengthen the Board’s
engagement with employees, the Committee
appointed Gwyn Burr, Independent Non
Executive Director, to be the Board’s NEF
Champion. Gwyn’s role will ensure there is an
open and consistent dialogue between the
Board and employees with information flowing
in both directions. More information about
Gwyn’s participation in the National Employee
Forum (NEF) can be found on pages 76 and 77.
With diversity and inclusion firmly on the
Committee’s agenda, I am proud of our
continued progress towards the targets
established by the Hampton-Alexander Review,
with 50% of our Board positions and 36% of
our Executive Committee (the Group
Management Team) positions held by women.
We do recognise that further progress needs
to be made when considering the level of female
representation on the Leadership Team (the
Group Management Team plus their direct
reports) which was 23% as at 31 December
2020. I am also proud of our compliance,
from 1 March 2021, with the Parker Review
‘Beyond One by 21’ recommendation.
As part of the Committee’s considerations of
the Company’s corporate governance
obligations, the Committee reviewed the
Company’s procedures, systems and controls
for compliance with disclosure obligations and
arranged refresher Market Abuse Regulation
training alongside the establishment of the
Company’s Disclosure Committee.
The COVID-19 pandemic highlighted the need
to ensure the availability of key individuals or
otherwise to have contingency plans in place to
ensure the Company’s governance procedures
continued to operate appropriately. The
Committee conducted a thorough review of the
Company’s governance policies and processes
and I am pleased to report that the Company’s
existing measures were effective throughout
the year. I am very proud of our teams for their
continued effective response during a
difficult period.
This year, the Board conducted its triennial
external evaluation, which was successfully
undertaken by Manchester Square Partners
(MSP). I am pleased to report that MSP
considered the Board to be functioning well, with
the Executive and Independent Non Executive
Directors working together with the best interests
of the Company and all of its stakeholders at the
forefront of their decision making.
I am proud of the progress that the Committee
has overseen in 2020, especially in light of the
COVID-19 pandemic. We have started 2021 with
a renewed focus on our objectives and priorities
and I look forward to reporting on the progress
made in the 2021 Annual Report.
Irene Dorner
Chairman of the Nomination
and Governance Committee
1 March 2021
Committee activities during 2020
The Committee meets formally at least twice per year and otherwise as the Chairman or any member of the Committee shall require.
February 2020
June 2020
October 2020
December 2020
– Reviewed and approved the
– Received an update on progress of the
proposal for Kate Barker to continue
as a Non Executive Director for a
short period beyond nine years
– Recommended the appointment of
Rob Noel as the Company’s Senior
Independent Director
– Reviewed the Directors’ Conflicts
of Interests register
– Reviewed progress against the
Committee’s Terms of Reference
and objectives for 2019
– Reviewed and approved the
Committee’s Report in the 2019
Annual Report and Accounts
Company’s contingency planning and related
development plans
– Received an update on revised employee
stakeholder feedback processes and the
development of the National Employee Forum
– Reviewed the division of responsibilities
between the Chairman, Chief Executive and
Senior Independent Director, prior to being
signed by the respective parties following the
appointment of the new Chairman and Senior
Independent Director
– Agreed relevant external facing policies held
on the Company’s website
– Arranged appropriate refresher training for the
Board on its responsibilities under the Market
Abuse Regulation and the associated
compliance processes
– Reviewed individual Directors’ current actual
and potential conflicts of interest and the current
Conflicts Register
– Received an update on progress
of the Group’s diversity and
inclusion initiatives, progress
towards achieving the 2020
objectives in this area, and plans
for further improvement in 2021
– Approved the commencement of
recruitment processes for one or
two new Independent Non
Executive Directors, and
established the related skills and
experience preferred
– Reviewed and approved the
planned activities of the Committee
for 2021 to ensure they would meet
its objectives under the Committee’s
Terms of Reference
– Recommended the
reappointment of
Gwyn Burr as an
Independent
Non Executive Director
at the conclusion of
her initial three year
appointment term
– Recommended the
appointment of two
new Independent Non
Executive Directors
from 1 March 2021,
following the previously
approved recruitment
process
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Governance
Corporate governance: Composition,
succession and evaluation continued
Committee purposes and responsibilities
The Committee is responsible for maintaining
formal, rigorous and transparent procedures
for Board appointments, which ensure that all
appointments are made on merit and assessed
against objective criteria. As part of this,
the Committee oversees and advises the Board
on the identification, assessment and selection
of candidates for appointment to the Board.
The Committee also regularly reviews the
succession and contingency planning and
procedures across the Company as a whole
to ensure that individuals’ careers are supported
by their professional development.
The Committee is also responsible for guiding
the Board on diversity considerations and for
driving the Company’s diversity and inclusion
agenda at all levels. The Committee fully
supports the Hampton-Alexander Review which
seeks to improve the diversity of boards and
senior leadership and sets the target of 33%
of female representation on the Board and the
Leadership Team (the Group Management
Team plus their direct reports). As at 31
December 2020, 50% of our Board positions
and 23% of our Leadership Team positions
were held by women. It is recognised that further
progress needs to be made when considering
the female representation on the Leadership
Team, however female representation on the
Group Management Team is 36%.
The Committee also welcomes the Parker
Review ‘Beyond One by 21’ recommendation
and is able to report that with the appointment of
our newest Board members, Jitesh Gadhia and
Scilla Grimble, on 1 March 2021 the Company
will be in compliance with this recommendation.
The Committee guides the Board in regularly
assessing whether there is an appropriate
balance of expertise and skills on the Board and,
in doing so, regularly reviews the Board’s
composition, balance, diversity, experience and
skill sets; as well as the individual Directors’ time
commitments. These are reviewed to ensure the
Company continues to have the necessary level
of Board and senior management skills,
leadership and time available to effectively deliver
the strategy and also in order to arrange orderly
succession planning for the Board and senior
management positions. This not only includes
the immediate succession planning for Directors,
but also a deeper review into the Company’s
management structure to identify those with
the longer term potential to develop into
future successors.
The Committee also leads the annual evaluation
of the Board which considers, amongst other
things, its composition, diversity and how
effectively members work together to achieve
the objectives of the Board. The Committee also
considers the length of service of the Board as
a whole and membership is refreshed as
considered appropriate. Further information
about the Board evaluation is on pages 84 and
85. Individual evaluations are also undertaken to
ensure that each Director continues to contribute
effectively to the Board as a whole.
As mentioned on page 80, the Committee’s
responsibilities were expanded in 2020 to advise
the Board on the maintenance, further
development and embedding of corporate
governance best practice throughout the
Company. The Board considered that the
importance of this area and the determination
to achieve further improvements would be best
handled by the Committee as it is able to
dedicate sufficient time and attention. The
Committee will feedback appropriately to the
Board, giving the Board more time to consider
the Company’s strategy and other key areas of
focus as required by the scale and complexity
of the Company’s operations.
The Committee was accordingly renamed
and the Committee’s Terms of Reference
were reviewed and amended to reflect the
Committee’s additional responsibilities.
The Terms of Reference can be found at:
www.taylorwimpey.co.uk/corporate/our-
company/governance.
As part of this wider remit, the Committee will
regularly brief the Board on corporate
governance and compliance considerations and
developments, through consideration of minutes
of its meetings and detailed briefings from the
Chairman, and will identify any actions to be
taken. The Committee will also report to the
Board any stakeholder feedback following
actions taken. We believe this arrangement will
give greater focus to this extremely important
and continually developing area.
Relevant skills and expertise
During the year, the Committee reviewed the
Board’s balance of skills, experience,
independence and knowledge of the Company
in order to assess the ability of the Board to
effectively discharge its duties and
responsibilities. This review, including a list of
desired skills, was utilised when creating the
recruitment framework used for the appointment
of our new Independent Non Executive
Directors, as further described below. As part
of the review, the Committee considered
whether each Director brings relevant and
complementary skills, experience and
background knowledge to the Board. Details of
the Directors’ relevant skills and expertise are set
out in their biographies on pages 64 and 65 and
in the notes to the notice of Annual General
Meeting on pages 177 and 178.
Board appointments
Appointments to the Board are subject to the
Committee’s formal, rigorous and transparent
procedures, as set out below. The Committee
also maintains an effective succession plan for
all Board positions and senior management
positions. Both appointments and succession
plans are based on merit and objective criteria
and promote diversity of gender, social and
ethnic background, and cognitive and personal
strengths.
During 2020, Irene Dorner succeeded Kevin
Beeston as the Chairman of the Board
and the Committee on 26 February 2020;
Kate Barker stood down from the Board on
31 July 2020; and Rob Noel succeeded Kate
as the Company’s Senior Independent Director
on 21 April 2020.
In addition, following the Committee’s review
of the Board and Committee composition,
including the balance of skills and experience
and succession plans for key Board and
Committee positions, the Committee
recommended to the Board that one or two
additional Independent Non Executive Directors
be appointed, subject to the availability of
suitable candidates.
The Committee, led by Irene Dorner in her
capacity as Chairman of the Committee, initiated
the recruitment process and the executive
search consultants Spencer Stuart undertook
the search. It was confirmed that Spencer Stuart
has no other connection with the Company or
individual Directors.
Following the search conducted by Spencer
Stuart, a ‘long list’ of candidates was considered
by the Committee which resulted in a ‘short list’
of potential candidates who met the
Committee’s criteria in terms of the skills and
expertise they could bring to the Board.
Interviews and meetings were then held with
the Chairman, Chief Executive and Senior
Independent Director, before those on
the final short list met with the remaining
Directors, following which the final candidates
were selected.
As a result, Scilla Grimble and Jitesh Gadhia will
be appointed as Independent Non Executive
Directors on 1 March 2021. The appointment of
Scilla and Jitesh brings a refreshed set of skills
to the Board, including additional experience of
corporate finance, technology, property and
public affairs.
Board and Committee balance and
independence
The Code requires at least half of the Board,
excluding the Chairman, to consist of
Independent Non Executive Directors. As at 31
December 2020, four out of eight (50%) Board
members were Independent Non Executive
Directors, other members being the Chairman
and three Executive Directors. The Committee
considered this balance to be acceptable, but
will be further improved by the appointment of
our new Independent Non Executive Directors,
Scilla Grimble and Jitesh Gadhia, who will be
appointed from 1 March 2021. This balance will
provide the right blend of experience, expertise
and constructive challenge, as well as guidance
and support, in order to continue to deliver the
Company’s strategy, whilst ensuring and
maintaining corporate governance best practice.
This is kept under review by the Committee,
in line with the guidance as set out in the Code.
Induction
The importance of induction and training is
recognised by the Committee and the Company
has established procedures whereby all newly
appointed Directors, including Independent
Non Executive Directors, receive a formal
induction. This includes training and continuing
familiarisation with the Company’s business,
strategy, operations (including health and safety),
systems, the principles underlying their duties as
a Director, and wider issues relating to the
housing sector.
For newly appointed Independent Non Executive
Directors, this induction also includes meetings
with key members of senior management and
heads of functions from across the business,
external advisers and site and business unit
visits. The Committee keeps the Board induction
process under review and it is considered to
remain appropriate.
By way of example, Irene Dorner’s induction
process focused on the Company’s culture,
operational structure and key challenges
and included:
valuable exposure to the Board for up and
coming management, but is also extremely
valuable to the Committee members when
assessing the Company’s strength in depth.
The Company also operates a Group Talent
Management Board which is chaired by the
Chief Executive and comprises our Divisional
Chairmen, Group Managing Director of Strategic
Land and HR representatives. The Group Talent
Management Board is supported by our
Divisional Talent Management Boards which
regularly review succession planning and related
development and training requirements across
the Company. Actions taken to support
succession planning across the Company
include the development of career paths linked
to experience, exposure and education, an
assessment and development centre, and the
promotion of the Company’s mentoring scheme.
Contingency planning relates to the Company’s
and Board’s preparedness for and
responsiveness to the sudden and unexpected
loss or non-availability of any Board member or
key member of senior management. During the
COVID-19 pandemic, the Committee reviewed
those individuals identified as most suitable
within the Company who could quickly assume
a key role and provide effective support until
the individual returned to work or, where
appropriate, a successor could be appointed.
The Committee considered this contingency
planning to be effective and appropriate
throughout the COVID-19 pandemic, and
Internal Audit confirmed that there was no
evidence of weakened controls or any material
process failure during this time.
– A comprehensive document pack of
Company and Board information, including
analyst and broker reports.
– An introductory meeting with Kevin Beeston to
discuss Board process and Company culture.
– A meeting with the Company Secretary.
– A series of meetings with the Divisional
Chairmen and heads of the Company’s
key functions.
– Meetings with the Company’s key advisers
and stockbrokers.
– Visits to a selection of development sites and
offices in two of the regional divisions.
In 2021, the Committee will oversee the
induction process for Scilla Grimble and Jitesh
Gadhia, who will be appointed as Independent
Non Executive Directors from 1 March 2021.
Board succession and contingency
planning
Succession planning has continued to be a key
area of focus for the Committee throughout
2020, to ensure the long term successful
delivery of the Company’s strategy. The
Committee ensures that all members of the
Board and key members of senior management
have appropriate succession and development
plans in place.
With a view to identifying key prospects and
tailoring training and development programmes
to allow individuals to demonstrate their
potential, the Committee has visibility of a wide
range of employees with leadership potential.
As part of this, the Committee reviews the talent
pipelines across the business and the
Company’s talent development and training
programmes, including the individual
development plans for those showing senior
leadership potential.
One aspect of individuals’ development plans
is for management below Board level to be
provided with access to the Board, including the
opportunity to attend Board meetings and other
Board-related functions from time to time to give
presentations on specialist topics, project work
and the performance of specific regional
business and divisions. This not only provides
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Governance
Corporate governance: Composition,
succession and evaluation continued
Board evaluation
A key requirement of good governance is
ensuring that the Board itself is operating
effectively. The Board takes the annual evaluation
seriously and recognises the focus that
stakeholders place on it.
In line with the Code, the 2020 Board evaluation
exercise was externally facilitated by Manchester
Square Partners (MSP), who have no other
connection to the Company and were chosen
for their constructive and direct evaluation style.
The evaluation considered the effectiveness of
the Board as a whole, as well as that of each
Board Committee and each Director individually,
and focused on the Board’s alignment,
behaviours, dynamics and culture. The
evaluation was conducted in consideration of
the Company’s strategy; challenges and risks;
values and culture; role; dynamics; engagement;
structure; composition; succession; governance;
execution; and leadership. The process followed
is outlined opposite.
The Board has developed an action plan
designed to address the findings of the
evaluation, which will be actioned during 2021,
and the key recommendations can be found in
the table opposite. The overall outcome of the
evaluation was that MSP considered the Board
to be functioning well and with excellent Board
dynamics. The Board is considered to be unified
and aligned, with Independent Non Executive
Directors and Executive Directors working
together but feeling able to constructively
challenge as appropriate, each fulfilling their roles
appropriately. MSP concluded that the Board is
providing good leadership and support to the
Company and is maintaining strong performance
for all of the Company’s stakeholders.
– An update for the Board on compliance
requirements in relation to the Market Abuse
Regulation.
– Reviewing the Directors’ Conflicts of Interests
Register.
– A review of the relevance and completeness
of the Company’s externally facing policies
as they appear on the website.
Details of progress made by the Committee
will be included in the 2021 Annual Report
and Accounts.
Annual re-election to the Board
In line with the Code, each Director is required
to seek election or re-election, as appropriate,
at each year’s AGM. The Committee reviewed
and confirmed that it considers each of the
Independent Non Executive Directors to be
independent in character and judgement and
that there are no relationships which could affect
their judgement.
Kate Barker was recommended for re-election
at the 2020 AGM, beyond her nine year term,
in order to support Irene Dorner in her new role.
Kate stepped down as the Company’s Senior
Independent Director on 20 April 2020 and as
a Non Executive Director on 31 July 2020.
The Chairman, at the time of her appointment on
26 February 2020, met the independence criteria
as set out in the Code.
It is also considered that each of the Directors is
able to allocate sufficient time to discharge their
responsibilities to the Company effectively. This
not only included Board and Committee meeting
attendance (which was 100% during 2020), but
also preparation time for meetings, visits to our
operating businesses and other additional time
commitments that were required.
Accordingly, at the 2021 AGM, every Director,
irrespective of the date of their appointment,
will be submitted for election or re-election,
as appropriate.
Details of the resolutions to be proposed in
this respect, alongside supporting biographical
details, appear in the Notice of Meeting on pages
174 to 182.
Governance
During 2020, the Committee was asked by the
Board to take the lead in respect of the Board’s
corporate governance responsibilities. This wider
remit requires the Committee to act as the first
filter on all governance developments, to oversee
the further embedding of good governance at all
levels of the Company and its operations, and
to make appropriate recommendations to the
Board in furthering the Company’s progress in
this area.
This change enabled greater focus on
governance matters with more dedicated time
available on the agenda, whilst the full Board
used their time for greater focus on key strategic
topics and areas of operational business focus.
This decision proved extremely beneficial, and
timely, when the COVID-19 pandemic required
a thorough appraisal of the Company’s
governance and control processes at all levels,
to ensure the continuation of effective
governance despite the challenges of furlough,
home working and self-isolation due to illness.
These challenges were swiftly addressed through
the formation of a working party, comprising
representatives from the Company Secretariat and
Internal Audit Departments. This working party:
– Reviewed current governance and control
processes throughout the Company.
– Updated approval requirements in line with
developing changes across the teams.
– Introduced revised approval, signature and
checking requirements processes that could
be quickly and smoothly implemented in the
event of relevant individuals not being available
at short notice.
– Monitored and reported on the continued
appropriateness and effectiveness of these
measures throughout 2020.
– Considered wider application of suitable
changes to reflect the new ways of working
that emerged during the COVID-19 pandemic.
The governance areas on which the Committee
focused during 2020 included:
– The Board evaluation process.
– A review of the governance framework,
including constitutional documents and
the Board Committees’ Terms of Reference.
– Regular updates on the progress and
outcomes of the COVID-19 governance
working party.
The evaluation was conducted from April to August 2020 and consisted of:
MSP reviewed the
Board and
Committee
papers from the
prior 12 months
A comprehensive
set of questions
was developed
between MSP
and the Chairman
A briefing
between MSP,
the Chairman and
the Group
General Counsel
and Company
Secretary to
determine the
scope of the
evaluation
Individual
interviews were
conducted with
each of the Board
members, the
Divisional
Chairmen, Group
HR Director and
Group General
Counsel and
Company
Secretary
MSP observed a
Board and an
Audit Committee
meeting where all
participants joined
via Microsoft
Teams during the
COVID-19
pandemic
MSP prepared a
summary paper of
key findings and
themes for
discussion with
the Chairman
MSP produced
a report to the
Board on the
findings and
recommendations
of the evaluation,
on a non-
attributable basis,
and had a session
with the Board to
review and
discuss the
findings and
recommendations
2019 recommendations
Actions taken during 2020
Review and confirm the division of
responsibilities between the Chairman,
Chief Executive, Senior Independent
Director, and the Matters Reserved for
the Board
– The division of responsibilities document was reviewed and updated to reflect current governance
requirements and best practice
– The Matters Reserved for the Board document was also reviewed and no amendments were
required
– These documents are available on the Company’s website at: www.taylorwimpey.co.uk/corporate/
our-company/governance
Assess progress made on engagement
with employees and focus on further
progress
– The Board reviewed the effectiveness of the National Employee Forum (NEF) and further
strengthened engagement with employees through the appointment of an Independent
Non Executive Director, Gwyn Burr, as the Board’s NEF Champion
Review agendas, timings and paper
structure
Introduce an Independent Non Executive
Directors only meeting
– Further information can be found on pages 76 and 77
– A full review of Board and Committee agendas and papers was conducted and a number of
changes introduced, with the aim of giving greater focus to key operational issues, highlighting key
matters and decision areas, and to ensure the consideration of stakeholders’ interests was clearly
set out
– Independent Non Executive Directors only meetings are now held at the end of every Board meeting
2020 recommendations
Actions to be taken during 2021
Review Board paper structure and issue
guidance on drafting Board papers
– Board paper structure and presentation to be standardised to ensure they focus on key matters
requiring the Board’s attention
Recruit additional Independent Non
Executive Director(s)
– Guidance notes will be issued to all employees involved in drafting Board papers to ensure that
all relevant considerations are set out for the Board and requests of the Board are clear
– After the conclusion of the 2020 Board evaluation and a comprehensive selection process,
the Board announced on 18 December 2020 that Jitesh Gadhia and Scilla Grimble were to be
appointed to the Board on 1 March 2021
– Further information can be found on pages 82 and 83
Focus on ESG matters
– Add ESG to the current remit of the Nomination and Governance Committee to ensure focus,
Regular Board training / information
sessions
learning and direction on ESG matters in line with the Company’s definition of ESG
– Further information can be found on pages 67 and 80
– Arrange appropriate training and teach-ins led by both external and internal specialists on a range
of topics
– The first session arranged for 2021 is a session for the Board and GMT, facilitated by the
Company’s brokers, Citi, on ESG
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Governance
Corporate governance: Composition,
succession and evaluation continued
The D and I Committee, which is made up of a
variety of members from across the Company,
has been overseeing progress towards achieving
the Company’s Diversity and Inclusion Strategy
and implementing and progressing initiatives
in order to improve our performance. The
Company’s Diversity Policy, as set out on pages
88 and 89, focuses on the challenges faced in
developing an inclusive and diverse workforce,
with each regional business unit making an
appropriate commitment to this. The diversity
and inclusion strategy is based on the following
key objectives:
– 21st century leadership – We ensure that
our leaders understand their role in developing
a more diverse and inclusive culture and
have the relevant training and support to
achieve this.
– Remaining an employer of choice – We
ensure that our working environment, policies,
procedures and development and progression
opportunities support greater diversity and
inclusion.
– Expanding our reach – We develop broader
recruitment channels, understand and
embrace the diversity of our customers
and workplace and improve engagement
with them.
The Company has put in place systems to
measure and monitor diversity around the
Company more effectively. The data becoming
available from these improved systems has
assisted in designing and implementing a
number of improvements to the Company’s
employment terms and conditions which we
believe should facilitate access to and success
at work for all. Some examples of these
improvements are:
– A review of our gender pay gap – The
Company’s fourth Gender Pay Gap Report is
available at: www.taylorwimpey.com/
corporate.
– Implementing a flexible working policy – During
the COVID-19 pandemic, the requirement for
our office based employees to work from home
enabled the benefits of flexible and agile
working to be demonstrated across the
business. This has led to a review of our flexible
and agile working policies which will be
implemented in 2021.
– Developing our Young Persons Forums –
These Forums provide an opportunity for
young employees across the business to
access training and information.
– Delivering unconscious bias training – The
introduction of mandatory unconscious bias
training for all employees has helped to raise
awareness of the need to be more diverse
and inclusive.
– Implementing our applicant tracking system –
This new system has enabled us to reach a
wider and more diverse talent pool.
Read more on pages 34 and 35.
Board and employee diversity
and inclusion
Diversity and inclusion, in its widest sense, has
continued to be a key item on the overall UK
governance agenda during 2020. Within the
Company, diversity and inclusion remained an
area of focus throughout 2020 and will continue
to be in 2021 and beyond.
Although the Committee and the Board will
continue to recommend appointments and
appoint based on skills, experience and merit,
it is recognised that boards generally perform
better when they include the best people from
a range of backgrounds and experiences.
Therefore, diversity and inclusion will continue
to be a key consideration when assessing the
composition of the Board and all of our teams
to ensure the development of a diverse pipeline
for succession. By embracing diversity and
inclusion, the Board believes that the Company
will better understand how people’s differences
and similarities can be harnessed for the benefit
of all of our stakeholders, and improve the
Company’s ability to deliver the strategy.
Consideration of diversity was at the forefront of
the Committee’s considerations when reviewing
the Board composition and balance during 2020
and whilst framing the widest possible brief for
the recruitment of additional Independent
Non Executive Directors. These appointments,
scheduled to take effect on 1 March 2021, will
fulfil the recommendation of the Parker Review
to have at least one person of colour Director by
2021 and will also bring a refreshed set of skills
to the Board, including experience of corporate
finance, technology, property and public affairs.
To support the Board’s diversity and inclusion
policies and strategies, the Diversity and
Inclusion Committee (D and I Committee) has
continued its work to ensure that the Company
is continuing to progress towards operating in
a truly diverse and inclusive manner.
Gender diversity
As at 31 December 2020:
plc Board
Female
Male
Group Management Team
(Executive Committee)
50%
(2019: 50%)
50%
(2019: 50%)
Female
Male
36%
(2019: 44%)
64%
(2019: 56%)
Group Management Team plus their direct reports
(the Leadership Team)
Female
Male
23%
77%
Percentage of the workforce that
are women
30%
2019: 29%
Percentage of new starters with the
Group during 2020 that are women
33%
2019: 22%
While we continue to make reasonable
overall progress and are committed to
doing so, we of course recognise that this
is a journey and there is more work to be
done to fulfil our diversity ambitions. It is a
priority for 2021 to achieve further progress
in this area, as stated on page 80.
Read more on pages 34 and 35.
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Governance
Corporate governance: Composition,
succession and evaluation continued
Progress of our Diversity Policy
The Committee and the Board monitor and review the implementation of the Company’s Diversity Policy, which is set out below, against the Diversity
Strategy and the progress made during 2020.
Diversity Policy
Strategy
Progress
Diversity Policy
Strategy
Progress
Taylor Wimpey operates in
diverse communities. We
believe that embracing this
diversity will enable us to
succeed through a workforce
that is inclusive, creative and
innovative. Diversity covers
many aspects. We have defined
diversity to mean that we
actively embrace the business
and local communities in which
we operate and will strive
to reflect their richness and
character to include such
aspects as gender, race,
disability and religion but also
diversity of thought, background
and experience.
Managing diversity is about
valuing everyone as an individual
– valuing people as our
employees, customers and
clients. People have different
needs, values and beliefs.
Our people management
practice demands that
employment propositions are
both consistently fair but also
flexible and inclusive in ways
that assist our people while
supporting our business needs
and objectives.
We will examine our culture and
practices to determine what
further actions can be taken to
improve diversity and inclusion
within Taylor Wimpey.
Our Diversity and Inclusion Strategy is based on three key objectives as set out
on page 86.
To deliver the Diversity and Inclusion Strategy, our D and I Committee is chaired
by a member of our Group Management Team and consists of employees who
represent a cross-section of our business. In addition, each regional business
unit has a ‘Diversity Champion’ who works with the Regional Managing Director
to develop and deliver a local Diversity and Inclusion Action Plan.
The second annual Diversity and Inclusion conference was successfully held
virtually, with over 110 attendees including our Divisional Chairmen, Regional
Managing Directors and Diversity and Inclusion Champions. During the
conference, progress was reviewed, plans were discussed and there was
a panel discussion on Black Lives Matter and how the Company can be a
consciously anti-racist organisation.
We will identify people
management practices that
assist a diverse workforce to
achieve its full potential.
As reported on page 82 we continue to exceed the target set by the Hampton-
Alexander Review, with 50% female representation on our Board. We recognise
that progress needs to be made when considering the female representation on
our Leadership Team (23%) however female representation on the GMT is 36%.
We will use our Community
Engagement Programme to
heighten awareness of positive
strategies for personal
interaction and valuing
individuals.
We will increase the
opportunities for young people
to join the Company and will
promote continuous personal
development.
Although we were unable to run the Leonard Cheshire Disability Change 100
Programme due to the COVID-19 pandemic, we intend to engage during 2021
to give talented disabled students the opportunity to participate in a 100 day
summer internship and professional development programme.
During the COVID-19 pandemic, our office based employees were required to
work from home, which has proven successful due to our previous investment
in technology and training. A wealth of information, guidance and training
support was delivered to employees which has enabled successful remote
working for many of our employees.
We have developed respectful workplace training to be delivered to our site
management teams which sets out our expectations of how individuals should
be treated. This will be included in the site induction process and ‘toolbox talks’
to our employees and workers on site.
We believe that everyone should
have the right to equal access
to employment and, when in
our employ, to equal pay and
access to training and career
development.
We will ensure that all managers
involved in recruitment and
selection receive training that
incorporates the areas of
diversity and promoting equality.
We will extend our recruitment
sources in order to attract a
more diverse range of
applicants.
We are committed to ensuring
that our people are free from
any direct or indirect
discrimination, harassment
or bullying. We will not tolerate
any behaviour that detracts
from this.
We will encourage our people to
speak out and report any direct
or indirect discrimination,
harassment or bullying. We will
act promptly in addressing any
inappropriate behaviour or
practice.
Diversity will be promoted from
the highest level and we will
ensure that our people
understand the benefits of
having a diverse and inclusive
workforce.
We acknowledge that we must
continue to promote diversity in
order to create an organisation
that attracts, supports and
promotes the broadest range of
talent. Establishing an
organisational culture with
diversity as a core value will
enable individuals to reach their
full potential and provide the
best service to our customers.
Our continued engagement with organisations such as Black Professionals
in Construction and SEO London have enhanced our internal progression in
this area.
We had 36% female representation and 14% BAME representation within our
Management Trainee new recruits in 2020, and among new Graduates 55%
were female and 9% BAME. We have also improved the percentage of female
new employees joining the Company during 2020 to 33% (2019: 22%).
In March 2020, we launched a new external careers site which has been
carefully formulated to ensure accessibility to all and has led to an improvement
in the diversity of applications for vacancies.
In 2020, we also launched a reverse mentoring pilot involving eight senior
leaders being partnered with BAME employees. This has helped raise
awareness of the barriers faced by BAME colleagues and encouraged
challenging of practices that may be hindering diversity in our talent pipeline.
This mentoring programme will be continued in 2021, with the addition of
LGBTQ+ colleagues.
Our Grievance and Harassment policies ensure that any reports of harassment
or bullying are investigated and addressed appropriately.
These policies are regularly publicised to all employees.
The Company’s Whistleblowing Policy enables employees to raise genuine
concerns without being at risk of suffering any form of retribution as a result.
Employees are also provided with an external whistleblowing hotline.
Diversity and inclusion is a core message of our strategy and is a standing item
on our Board and GMT meeting agendas.
Our cultural principles framework supports our employees to maximise their
performance and inherently embraces diversity and inclusion.
All new employees are required to complete our online Diversity and Inclusion
e-learning and our senior leaders are required to complete mandatory
unconscious bias training.
We offer a wide range of training focusing on three key areas: management
and leadership; personal development skills; and technical knowledge and
capabilities. The COVID-19 pandemic provided an opportunity to change how
we deliver training, by using technology to reach more employees. This resulted
in over 2,500 employees attending online ‘masterclasses’.
The Company published its fourth Gender Pay Gap Report in March 2021,
which can be viewed on our website at: www.taylorwimpey.co.uk/corporate.
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Governance
Corporate governance: Audit, risk and
internal control
Audit Committee report
Annual Report and Accounts; and the external
audit process.
The main responsibilities of the Audit Committee
are summarised in the main objective opposite
and further details of the Committee’s
responsibilities can be found in the Terms of
Reference of the Audit Committee which are
available in full on the Company’s website.
Following a review during 2020, it was
determined that the Terms of Reference remain
appropriate, in line with best practice and reflect
the Committee’s responsibilities under the Code
and related regulations.
The Committee conducts an annual evaluation
of its performance against its key objectives.
An interim review of progress against these
objectives was considered at the Committee’s
July and December 2020 meetings, and the
evaluation for 2020 was formally assessed
recently by the Committee at its February
2021 meeting.
The key activities of the Committee during 2020
are set out below and described in more detail
in this report.
The Committee’s key areas of focus for 2021
are also set out opposite. Whilst these remain
sufficiently flexible to permit the Committee to
quickly respond to any major change in
circumstances, our key priorities for the year
ahead will include the continued delivery of
robust risk management and monitoring the
effectiveness of the control framework.
A key area of focus for the Committee was the
impact of COVID-19 and ensuring the
maintenance of effective controls; processes;
assessment and mitigation; during lockdowns
and the closure and re-opening of sites.
Committee members participated, of course,
in the four additional Board meetings addressing
these matters, including financial resourcing; the
robustness of the balance sheet; and the
decision to undertake the successful equity raise
in June 2020; all as described on page 66. In
addition, the Committee received specific
briefings, at its July and December 2020
meetings, on the impact of COVID-19 and the
Company’s response to it, in relation to
re-assessing potential risks; and making
appropriate changes; in order to maintain
effective controls and processes. More details
are set out below.
The Committee continues to hold meetings
with the external Auditor and the Head of Internal
Audit, independent of the Executive Directors,
and these assist in ensuring that reporting,
forecasting and risk management processes are
subject to rigorous review throughout the year.
The audit of the 2020 results will be Deloitte’s
final one prior to handing over responsibility to
PricewaterhouseCoopers LLP (PwC) and I would
like to thank Deloitte for their support and
assistance over the years, for the Company;
the Audit Committee; and for representing
shareholders’ interests in ensuring that our
published accounts give a true and fair view
of the state of the Group’s affairs. Following a
Humphrey Singer
Chair of the Audit Committee
Dear Shareholder
On behalf of the Board, I am pleased to present
the report of the Audit Committee, summarising
below, and in the report which follows, the
ongoing responsibilities and objectives of the
Committee; the work that has been carried
out during 2020; and the priorities established
for 2021.
The Committee supports the Board in fulfilling its
corporate governance responsibilities, including
the Group’s risk management and internal
control framework; internal audit process;
financial reporting practices; the preparation and
compliance of this document, the Company’s
Committee activities during 2020
rigorous tender process described in this report,
PwC has been chosen, subject to shareholder
approval at the AGM, to succeed Deloitte LLP
as external Auditor for the 2021 audit. In
preparation, and to ensure an effective handover
of responsibilities if their appointment is
confirmed by shareholders, PwC has been
‘shadowing’ Deloitte during the audit of the
2020 results.
Throughout the year the Committee met the
Financial Reporting Council (FRC) guidance on
Audit Committees which was incorporated into
the Code. The aim of the guidance was to
further improve good governance around the
Committee’s competence; induction for new
members; audit rotation; independent
assessment of areas of judgement; and
sufficiency of resourcing for the Committee;
all with the aim of ensuring that the Committee is
able to perform its primary function of protecting
shareholders’ interests in relation to the
Company’s financial reporting and internal control.
We were able to meet these guidelines,
notwithstanding the practical limitations imposed
by the COVID-19 pandemic and the lockdown
restrictions, due in large part to the support of
Internal Audit in undertaking the corporate
governance review to address its impact as
described in the Chairman’s Letter on Corporate
Governance on pages 60 and 61. I would like to
echo her congratulations to the team on their
effective response to these major challenges.
The Committee will continue to ensure that all
applicable regulations are complied with, and we
remain confident that the business continues to
operate in a controlled and well-managed way.
I look forward to welcoming Scilla Grimble,
who will join the Board on 1 March 2021 as an
Independent Non Executive Director and will,
on appointment, also join the Committee. Scilla’s
significant financial and risk-related experience,
described in more detail on page 65, will add to
the Committee’s skill sets and further enhance
the quality of its work on behalf of shareholders.
Humphrey Singer
Chair of the Audit Committee
1 March 2021
Audit Committee summary
The Audit Committee is chaired by Humphrey
Singer. All members of the Committee are
Independent Non Executive Directors as
required by the Code. The Board has
determined that Humphrey Singer has recent
and relevant financial experience as required
by the Code. In addition, and in line with
the Code, the Board considers that the
Audit Committee when considered as a
whole, has the necessary competence relevant
to the housebuilding sector in which the
Company operates.
Main objective
To assist the Board in fulfilling its corporate
governance responsibilities relating to the
Group’s risk management and internal
control framework; internal audit process;
financial reporting practices including the key
accounting judgements and estimates;
and external audit process.
Members
Committee members
Humphrey Singer (Chair)
Angela Knight
Robert Noel
Kate Barker(a)
Meetings
attended
4/4
4/4
4/4
1/1
– Gained assurance that current technology
and ongoing related process improvements
are implemented within a robust framework
– Engaged with the senior management team
to ensure an effective and appropriate risk
management and control framework
continued to evolve
(a) Stood down from the Committee on 20 April 2020
– Received the Group fraud risk assessment
2020 key areas of focus
– Oversaw the external audit tender process
and recommended to the Board the
decision, subject to shareholder approval,
to appoint PwC as external Auditor from
22 April 2021
– Reviewed and approved the handover plan
of the external audit, subject to shareholder
approval at the AGM, from Deloitte to PwC
– Continued focus on key initiatives to support
cost management and simplification of key
commercial processes
and gave continuing focus thereto
– Gave independent advice and guidance to
the Executive in addressing the financial and
accounting challenges posed by the impact
of the COVID-19 pandemic on the Company
and its market
2021 key areas of focus
– Oversee the externally-facilitated quality
assessment of Internal Audit
– Continuing focus on the resilience and
protection of key business systems against
cyber and other threats
– Gain assurance that new systems and
processes related to the customer journey
are implemented within a robust framework
February 2020
May 2020
July 2020
December 2020
December 2020
February 2021
– Reviewed the draft 2019
Annual Report and
Accounts, including
significant accounting and
audit issues; issues of
materiality; the external
Auditor’s report; and
conducted a formal
compliance check
– Disclosed relevant audit
information to the Auditor
and the required evidence
in support of it
– Reviewed the Group’s 2019
draft full year results
statement; and advised the
Board regarding the
appropriateness of the
proposed dividends
– Concluded the prior year’s
risk review, including
agreeing key risks;
consideration of emerging
risks; and monitoring
progress on mitigation
actions
– Reviewed the draft Viability
Statement to appear in the
2019 Annual Report and
Accounts
– Reviewed the Committee’s
performance against its
objectives for 2019 and set
objectives for 2020
– Received the Group fraud
risk assessment
– Reviewed progress in
the tendering of the
external audit
– Received various reports
from Internal Audit
– Held private meetings with
the external Auditor and the
Head of Internal Audit
– Agreed Internal Audit’s
programme of work
for 2020
– Reviewed the interim
– Reviewed the draft half
outcome of the tendering
of the external audit
– Received detailed
presentations from the two
firms shortlisted for the
external audit
– Discussed the relative
merits of those tendering
and (in early June) agreed
a recommendation to the
Board for the appointment
of PwC as external Auditor
from 22 April 2021
year statement for 2020,
including significant
accounting issues;
materiality; and the
external Auditor’s report on
its review of that statement
– Conducted the 2020 half
year risk review
– Received a further detailed
presentation on the
Group’s data and systems
security, including
progress to date and plans
for further improvement
– Received an update on the
continuing robustness of
the Group’s data
protection systems and
processes
– Advised the Board
regarding the
appropriateness of
proposing any dividend in
light of the impact of
COVID-19 on the business
and shareholders
– Received briefings on the
impact of COVID-19 and
the Company’s response
– Reviewed Deloitte’s plan
for the audit of the
Company’s 2020 accounts,
and the progress of the
audit to date
– Considered Deloitte’s
performance during the
audit of the Company’s
2019 results
– Received an update from
PwC on the progress of the
plan for the handover of
the external audit, subject
to shareholder approval,
from 22 April 2021
– Received various reports
from Internal Audit
– Received a briefing on key
accounting judgements
with regard to the
Company’s 2020 accounts
– Received briefings on
the continuing impact
of COVID-19 and the
Company’s response
– Oversaw the process of
– Considered the risk review
development of the Board’s
Viability Statement included
in its 2020 reporting
– Oversaw the process
of assessing that the
Company continues to be
a going concern in
preparation for disclosure
in 2020 reporting
– Received an update from
PwC on the progress of
the plan for handover,
subject to shareholder
approval at the AGM, of
the external audit
outcome for 2020
– Received a detailed
presentation on progress to
date and plans for further
improving the Group’s IT
systems and wider IT
security more generally
– Conducted an interim
review of progress against
the Committee’s objectives
for 2020
– Reviewed and agreed the
appointment of the
independent external
quality review assessor of
Internal Audit for 2021
– Reviewed the draft 2020
– Disclosed relevant audit
Annual Report and
Accounts, including
significant accounting and
audit issues; issues of
materiality; and the external
Auditor’s report; and
conducted a formal
compliance check
– Reviewed and confirmed
the processes which allow
the Committee to ensure
that the 2020 Annual Report
and Accounts meets the
requirements of Code
Principle N, Provision 27,
to present a fair, balanced
and understandable
assessment of the
Company’s position and
prospects
information to the Auditor
and the required evidence
in support of it
– Reviewed the Group’s draft
2020 full year results
statement; and advised
the Board regarding the
appropriateness of the
proposed dividend
– Concluded the prior year’s
risk review including
agreeing key risks;
consideration of emerging
risks; and monitoring
progress on mitigation
actions
– Reviewed the draft Viability
Statement to appear in the
2020 Annual Report and
Accounts
– Reviewed the process and
outcomes underpinning the
giving of the going concern
statement in 2020 reporting
– Reviewed the Committee’s
performance against its
objectives for 2020 and set
objectives for 2021
– Reviewed the Committee’s
performance against its
Terms of Reference
during 2020
– Agreed Internal Audit’s
programme of work
for 2021
– Received various reports
from Internal Audit
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Governance
Corporate governance: Audit, risk and
internal control continued
Committee meetings
The membership of the Audit Committee is
set out in the table on page 91. Committee
meetings are also attended, by invitation, by
the Chief Executive, Group Finance Director
and Group Operations Director, the Chairman
and other Independent Non Executive Directors
(who traditionally attend the key Committee
meetings dealing with the Company’s half year
and full year accounts), Group Financial
Controller who also has direct oversight of the
risk management framework, Head of Internal
Audit, the Group General Counsel and Company
Secretary, Deputy Company Secretary, Deloitte
LLP (Deloitte), the external Auditor, and for July
and December in connection with the handover
of the external audit, PwC. Other relevant senior
executives are invited for particular agenda
items, as required. The Committee also meets
individually and privately with the Head of Internal
Audit and with representatives from Deloitte
during at least two Committee meetings per
year, which normally take place around the time
of the full and half year financial statements,
in order to discuss any matters which either may
wish to raise in confidence, with only the
Company Secretary being present.
Committee purpose and responsibilities
The Committee’s purpose and responsibilities
are, in line with the requirements of the Code:
– To establish formal and transparent policies
and procedures to ensure the independence
and effectiveness of internal and external audit
functions and satisfy itself as to the integrity of
financial and narrative statements.
– To ensure the Annual Report and Accounts
and half year results each present a fair,
balanced and understandable assessment
of the Company’s position and prospects.
– To establish procedures to manage risk,
oversee the internal control framework,
and determine the nature and extent of
the Principal Risks the Company is willing
to take in order to achieve its long term
strategic objectives.
Committee activities during 2020
The Audit Committee met on four occasions
during the year – the regular pattern of three
meetings being augmented by an additional one,
in May 2020, specifically for the purpose of
concluding the tender process for the external
audit and formally proposing the outcome to the
Board. The reports considered at the February
2021 meeting concluded the Committee’s
activities with regard to the Company’s 2020
reporting and have been included on page 91.
At those meetings, the Committee carried out
its remit which, in addition to reviewing at each
meeting the summary reports of Internal Audit
activity, primarily included reviews of
the following:
– Financial reporting practices.
– The risk management and internal control
framework.
– The internal audit process.
– Checking for any incidences of fraud, actual,
alleged or precautionary, and ensuring proper
controls and a response plan are in place.
– IT systems and data resilience and security.
– Concluding the process of tendering the
external Auditor role.
In carrying out these activities, the Committee
places reliance on regular reports from the
Executive Directors, other senior executives,
Internal Audit and from Deloitte. In monitoring the
financial reporting practices, the Committee
reviewed accounting policies, areas of
judgement highlighted by the Executive
Directors, other senior executives and Deloitte,
the going concern assumptions and compliance
with accounting standards and the requirements
of the Code.
Committee competence
A key requirement of the FRC’s guidance on
Audit Committees is that each Committee
member should have sufficient knowledge,
training and expertise to contribute effectively
to the Committee’s deliberations.
The Committee Chair has extensive experience
of the financial reporting requirements of
FTSE 100 companies; of financial reporting
preparation and compliance for public
companies; and of dealing with internal and
external auditors in his current role as Chief
Financial Officer of Belron Group and from
previous roles with Marks and Spencer Group
plc and Dixons Carphone plc. He also has
previous experience of both attending
Audit Committee meetings and of being a
member of an Audit Committee. This experience
has given him insight into key areas of
shareholder concern and independent experience
of robustly challenging both Management and
the external and internal auditors.
The Committee Chair is assisted on the
Committee by the knowledge and experience of
the other Independent Non Executive Directors:
– Angela Knight has broad experience of
financial services and banking and has
extensive non executive director experience.
– Rob Noel has considerable experience of
the property sector and wide commercial
experience as Chair of Hammerson plc and
previously as CEO of Land Securities
Group PLC.
– Kate Barker, who was a member of the
Committee until she stepped down on 20 April
2020, at the conclusion of her ninth year of
office, had significant experience of key areas
of stakeholder interest in which the Company
operates day to day, having led Government
policy reviews into housing supply and land
use planning. She also had experience of
being a non executive director with Man
Group plc and previously with Yorkshire
Building Society.
The Committee is confident that its members
collectively have the necessary competence
relevant for the housebuilding sector as required
by the Code and that this will be further
enhanced through the planned appointment of
Scilla Grimble with effect from 1 March 2021.
As described in the Nomination and Governance
Committee report on page 83, there is a formal
process of induction for new Directors and this
includes specific reference to supporting
competence in relevant Committee areas
through exposure to appropriate areas of the
Company’s operations and performance.
The Committee is confident that its composition;
balance; and expertise can give shareholders
confidence that the financial; reporting; risk; and
control processes of the Company are subjected
to the appropriate level of independent, robust
and challenging oversight.
The Principal Risks facing the Company, as
assessed by the Board, are set out on pages 49
to 53 together with information on the
mitigations for each risk.
Internal control
Compliance with the Group’s system of internal
control is primarily driven and co-ordinated
through compliance with an established
Operating Framework supported by detailed
manuals covering the main disciplines. The
Operating Framework was reviewed in detail
during 2020 and, after suitable amendments
had been made to reflect changes in processes;
organisational structure; risk; and wider market
developments; re-issued online, where it is
immediately available to employees at all levels
for consultation. The Operating Framework and
supporting manuals include clear levels of
delegated authority, responsibility and
accountability, and are subject to periodic
review, including in response to the impact of
the COVID-19 pandemic, to ensure they remain
appropriate and proportionate to the Group’s
changing strategic and operating requirements.
Adherence to the Operating Framework is
monitored by the senior management team and
assessed independently by Internal Audit. At its
half year and full year meetings, the Board
reviews risk in relation to the Company’s
strategic objectives and its current plans to
deliver them. It also reviews progress and
performance in action taken to mitigate the
impact of those risks.
The Board is supported in this by more regular
and detailed reviews by the Audit Committee,
including the review of reports from Internal
Audit, and by risk reviews across the business,
led by the GMT. These reviews during 2020
resulted in enhancements to internal controls,
designed to better manage risk across the
business, as outlined in the key areas of focus
for 2020 on page 91.
Committee evaluation
The Board evaluation for 2020, which is
described more fully in the Nomination and
Governance Committee report on pages 84 and
85, included an appraisal of the performance of
the Audit Committee and individually of its Chair
and other members.
The outcome of the appraisal was that the
Committee was considered to continue to
operate effectively, with the necessary level
of expertise and independent challenge, and
with no specific actions arising requiring further
improvement.
At its February 2021 meeting, the Committee
reviewed its performance against its objectives
and Terms of Reference during 2020, which was
considered to have been satisfactory.
Risk management and internal control
Risk management
The Group has an established ongoing process
of risk management, which is detailed further on
pages 46 to 53. The Committee monitors the
Group’s risk management and internal control
systems, including their effectiveness, on behalf
of the Board and provides advice to the Board in
connection with the Board’s own risk review.
The Committee’s objectives for 2020 in this
area were:
– To ensure the risk profile remains within the
Company’s agreed risk appetite and tolerance
and is adequately monitored and reviewed as
appropriate to reflect external and internal
changes.
– Consideration of the continuing review of
reporting and audit and the implications for
the Group, including anticipating the
formalisation of internal controls reporting in
the UK.
– To continue to develop the Company’s risk
processes in light of evolving best practice.
– To consider emerging risks that could impact
the Company’s longer term strategy.
To achieve these objectives, the Committee
undertook the following during 2020:
– Risk reviews were conducted twice during the
year, at the Committee’s July (half year) and
December (full year) meetings and covered
both the systems used and the reported risks.
– Consideration was given to the specific impact
of COVID-19 on the Principal Risks of the
Company, together with the mitigations
implemented to address these.
– Regular updates were received on the
continuing review of relevant historic matters
and more current developments following
the tragic fire at Grenfell Tower and actions
taken by the Company to comply with recent
changes to the Government guidance on
fire safety.
– Received updates on key information
technology (IT) risks, specifically as a
consequence of the potential impact of
COVID-19 in this area, including the resilience
of the Group’s systems to cyber attack and
action taken to maintain security of systems
and data.
– Oversaw the assessment of emerging risks,
including potential velocity and impact on the
Company’s longer term strategy, further
details of which can be found on page 48.
– Oversaw implementation of further
enhancements to the processes for
identifying, assessing, monitoring, reporting,
and managing the residual elements of risk,
which included enhanced reporting of
action plans and target risk for the identified
key risks.
The Board makes its assessment of risk half
yearly, after overseeing, with advice from the
Committee, a bottom-up and top-down review
of risk in all areas of the business, including
taking account of environmental, social and
governance considerations over various time
horizons. The assessments use a standard
methodology and include regularly reviewing the
effectiveness of the Group’s system of internal
control in providing a responsible assessment
and mitigation of risks. Action to mitigate the
effect of each risk is led by the Chief Executive
either directly or indirectly in conjunction with the
Group Management Team (GMT).
The Board’s monitoring covers all controls,
including financial, operational, compliance and
assurance controls which include
risk management.
The systems cannot eliminate the risk of failure
but rather seek to manage both the likelihood of
their occurrence and the extent of their impact
and can only provide reasonable and not
absolute assurance against material
misstatement or loss.
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Governance
Corporate governance: Audit, risk and
internal control continued
The Committee also oversees the actions being
taken to monitor IT initiatives which aim to either
directly protect against and reduce the risk of
cyber-related type attacks and fraud; support
and enhance the current IT environment
including data protection; or that are crucial
in their contribution to key business initiatives
aiming to enhance the experience of customers,
suppliers and / or employees.
The Committee was pleased to learn that the IT
Department had been well-prepared to address
the impact of the COVID-19 pandemic, as was
shown by the ability of such a large proportion of
the business to quickly and successfully
transition to working effectively from home.
At its meeting in February 2021, the Board, after
conducting its own review and after reviewing
more detailed assessments from the Audit
Committee, remained satisfied that the system
of internal control continued to be effective in
identifying, assessing, and ranking the various
risks facing the Company; and in monitoring and
reporting progress in mitigating their potential
impact on the Company. The Board also
approved the statement of the Principal Risks
and uncertainties set out on pages 49 to 53 of
this Annual Report.
Responding to the challenge of COVID-19
One of the key defining factors of 2020 was the
impact of the COVID-19 pandemic on the
business; and the Committee ensured that the
Company’s response would maintain essential
processes and effective controls.
This was accomplished initially as part of the four
additional Board meetings held during 2020 to
address the impact of the pandemic and to
conduct the equity raise (all as described on
page 66); and later through specific briefings to
the Committee’s July and December 2020
meetings, at which reviews were undertaken of:
– How immediate challenges were addressed,
particularly the maintenance of effective
processes and controls despite the closure of
sites and remote homeworking.
– Assurance as to the assessment of key risk
areas and mitigation through revised controls;
and cyber security resilience and training.
– The effectiveness of real-time assurance
activities supporting the closure and
subsequent re-mobilisation of sites, in
compliance with Government guidance.
– The re-assessment of key risks and the design
and implementation of appropriate responses
and mitigations.
– Ensuring that the Company’s approach
evolved appropriately to changing
circumstances.
External audit performance and
effectiveness
The Audit Committee assessed the performance
of Deloitte LLP and the effectiveness of the
external audit process for the year ended
31 December 2020. In coming to its conclusion
the Audit Committee reviewed amongst
other things:
– The effectiveness of the working relationship
and communication of issues to the
Committee through its regular meetings in the
year and its presentations to the Committee.
– Feedback from Group, divisional and regional
management, Head of Internal Audit and
Head of IT, on the level of audit work and
engagement throughout the period.
– Deloitte’s fulfilment of the external audit plan.
– Deloitte’s objectivity and independence during
the process, including its own representation
about its internal independence processes.
– The output from the FRC’s Audit Quality
Review (AQR) annual inspection of audit firms
to ensure the matters identified by the AQR
have been addressed in the audit of the
Company’s 2020 financial statements.
In addition, the Committee considered whether
Deloitte had appropriately challenged
management estimates and judgements.
The Auditor’s report (starting on page 124)
details the key matters that were considered as
part of the year end audit. This includes details of
the procedures performed by Deloitte to assess
the estimates and judgements made by
management. In particular the Committee notes
during the course of the audit, the external
Auditor challenged management’s judgements
and assertions on the following matters:
– Margin recognition on developments, with
particular focus on the impact of COVID-19.
– The presentation of COVID-19 related costs
in the income statement.
– The assumptions underlying the presentation
of the financial statements on the basis that
the Group is a going concern.
In relation to each of these judgements the
external Auditor confirmed that the approach
The timeline and stages of the external audit tender process are detailed below:
Tender of the external audit
Introduction
In our Annual Report and Accounts 2019,
we disclosed the decision to commence a
tender process for the appointment of our
external Auditor to be completed during 2020,
with the chosen firm to be appointed for the
2021 financial year at the earliest.
The external audit tender resulted in the
proposal, subject to shareholder approval at the
2021 AGM on 22 April 2021, to appoint PwC as
the external Auditor for the 2021 financial year.
Governance
To ensure a transparent and robust selection
and evaluation process, the following
governance was applied. A steering group
chaired by the Audit Committee Chair and
including the Group Finance Director, Group
Financial Controller and Head of Group Reporting
was formed to oversee, co-ordinate and execute
the audit tender process. The Committee was
involved throughout the process and the Board
was included at key decision points.
adopted by management in accounting for these
in the financial statements was appropriate.
The Committee concluded that the external audit
process as a whole had been conducted
robustly, the external audit team selected to
undertake the audit had done so thoroughly
and professionally, and the external Auditor had
applied sufficient experience and understanding
of the housebuilding industry. Deloitte LLP’s
performance as external Auditor to the Group
during 2020 was therefore considered to
be satisfactory.
As noted earlier, Deloitte LLP is the Company’s
external Auditor for the year ended 31 December
2020. Following the audit tender described on
pages 95 and 96, a resolution to appoint PwC
will be put to the shareholders at the AGM on 22
April 2021.
Appointment of the external Auditor for
non-audit services
The Committee has a formal policy, reviewed
annually, as to whether the Company’s external
Auditor should be employed to provide services
other than audit services. In line with the Code,
the Committee has regard to the relevant ethical
guidance regarding the provision of non-audit
services by Deloitte.
As part of that policy, the Committee has
determined that the following assignments
should not be undertaken by the Auditor:
– Bookkeeping or other services related to the
accounting records or financial statements.
– Internal audit outsourcing services.
– The provision of advice on large IT systems.
– Services connected with valuation, litigation
support, legal, recruitment or remuneration.
Where non-audit services have an initial or
forecast face value in excess of £100,000 there
must be prior review and authorisation by the
Group Finance Director and the Committee.
The Board, acting on guidance from the
Committee following its review of the continuing
effectiveness of this policy, is satisfied that this
policy meets the EU Audit Directive and Audit
Regulation 2016, and will be conducive to the
maintenance of good governance, best practice
and auditor independence and objectivity.
Deloitte undertook non-audit services in the form
of assurance work carried out in connection with
the announcement of the Company’s half year
results for 2020, which is of direct benefit to
shareholders although it is not formally regarded
as ‘audit’ work for reporting purposes. Deloitte
also performed cyber security enhanced
assurance services for which they were selected
as they were considered to be the best supplier
of that service given the initial work they had
undertaken in previous years.
The Committee fully recognises and supports the
importance of the independence of auditors. Its
review of the Auditor’s performance during 2020
included non-audit services. The Committee is
satisfied that the carrying out of the above work
did not, and will not going forward, impair the
independence of the external Auditor. It also
recognises that, from time to time, there is a clear
commercial advantage based on cost and
timetable requirements in using the Company’s
Auditor. As a result, the value of non-audit
services work was £0.2 million in 2020 (2019:
£0.1 million) which represents approximately 28%
of the audit fee as set out in Note 6 to the
Accounts on page 143.
July 2019
September – November 2019
December 2019
January 2020
March – May 2020
May 2020
July 2020 – April 2021
April 2021
– Audit tender process commences
– Board, Audit Committee and
steering group consider suitable
audit firms based on selection
criteria including audit quality,
independence and business
knowledge
– Six firms are considered including
three outside the ‘Big 4’
– A ‘short list’ of three firms
including one outside the ‘Big 4’
is agreed and approved
– Audit Committee Chair and Group
– Request for Proposal (RFP)
Finance Director meet with
relevant heads of audit for the
shortlisted companies to
determine their capabilities
– Meetings held and consideration
given to prospective partners
drafted and agreed by the Audit
Committee, including the
selection and evaluation criteria to
be used through the process
– Sent to short list of firms on 20
December 2019
– Two of the firms confirm they
will participate in the audit
tender
– PwC undertake
transition work
– Resolution to appoint new
Auditor to be put to the
shareholders at the 2021
Annual General Meeting
– Secure online data room
available to the audit firms
to support tender
submissions
– Structured Q&A process in
place where responses to
clarification questions and
additional information
requests were shared with
all participating firms
through the electronic data
room
– To ensure a level playing
field, a series of structured
and targeted engagement
sessions with
Taylor Wimpey’s key
business and function
leaders including Divisional
Chairs, Heads of Tax,
Treasury, Internal Audit and
IT, together with Group and
operational finance teams
– In addition to the
engagement sessions the
participating firms were
given the opportunity to
meet with the Chief
Executive, the Group
Finance Director, Group
Operations Director and the
Audit Committee Chair
– Tender documents
submitted and evaluated
against the RFP criteria
– Formal presentations
made by the prospective
firms to the steering group,
Audit Committee and
Board members
– Results of the selection
criteria matrix presented to
the Audit Committee and
Board
– Audit Committee and
Board recommend and
approve, subject to
shareholder approval
at the 2021 AGM, the
appointment of PwC
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Governance
Corporate governance: Audit, risk and
internal control continued
Tender process
The process, which ran from July 2019 to
May 2020, was in compliance with statutory
legislation and guidance issued by the Financial
Reporting Council (FRC) and was conducted
with the overarching objective of running a
process resulting in a high quality, effective and
efficient audit.
The scope of the tender consisted of the
Taylor Wimpey Group audit and statutory audits
of subsidiaries with effect from the 2021
financial year.
Selection criteria
A range of candidates were considered,
including audit firms outside the ‘Big 4’
accounting firms. The Audit Committee and
steering group agreed the selection criteria
and which firms would be invited to tender.
The selection criteria included:
– Audit Quality – findings from the FRC Audit
Quality Review inspections.
– General aspects of the audit firm –
independence, conflicts of interest, ethics
and compliance standards.
– Understanding of the business and industry
– audit credentials in housebuilding /
construction, and knowledge of
Taylor Wimpey’s business and industry.
Invitation to tender
Three firms were invited to tender, including a
firm from outside the ‘Big 4’. At this stage, one
firm withdrew from the process and therefore
two firms progressed to the next stage. Deloitte
LLP was not invited to tender as they had served
the maximum time permitted under the UK
rules relating to rotation of external auditors by
large companies.
Assessment criteria
The requirements for the tender document and
selection criteria were set out and detailed in the
request for proposal and included:
– Confirmation of independence and details
of how the firm monitors and maintains its
independence, and the governance in place
to ensure conflicts of interest do not arise.
– The firm’s and the team’s credentials.
– Internal quality assurance processes and
output from latest FRC reviews.
– Understanding of Taylor Wimpey and the
industry in which it operates.
– Audit approach – proposed scope, approach
to controls and integration of technology in
the audit, approach to technical judgements,
availability of audit tools and their use to
provide value-add insights.
– Audit planning – timetable, interaction with
regional teams including Spain, approach
to working with management, approach
to resolving issues.
– Technical expertise including firm’s experience
and expertise in relation to sustainability
reporting and assurance.
– Fees and terms.
– Transition approach, detailing how the firm will
interact with the incumbent external Auditor
and the Group to ensure an effective and
efficient process.
Each firm submitted a detailed tender document
and provided an oral presentation of their
proposal for external audit services to the Audit
Committee and Board.
Final selection
The Committee agreed that both firms submitted
excellent, professional and thorough tender
proposals. However, after taking into account
the process as a whole, the views of senior
management who met with each firm, the
presentations and results against the evaluation
criteria, the Committee identified PwC as the
preferred new external Auditor. We are now
working closely with both PwC and Deloitte
to ensure that, if shareholders approve the
proposed appointment of PwC at the 2021
AGM, there will be an efficient transition of
the external audit. PwC shadowed key meetings
through the 2020 audit process and regular
reports on the transition are being provided to
the Committee.
The recommendation of PwC was free from
influence by a third party and no contractual
term of the kind mentioned in Article 16(6) of the
Audit Regulation has been imposed on the
Company whereby there would be a restriction
on the choice to certain categories or lists of
audit firms.
Internal Audit
Internal Audit’s primary role is to support the
Board and Management to protect the assets,
reputation and sustainability of the Group. The
function is led by the Head of Internal Audit who
has direct access to the Chair of the Audit
Committee and the Chairman of the Board,
protecting the function’s independence. The
Head of Internal Audit also has access to the
Chief Executive and the other Executive
Directors, as required.
Internal Audit 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.
The Internal Audit plan, and the individual audits
conducted in line with the audit plan, are driven
primarily by the Group’s strategic plan and key
risks. Following each review, an Internal Audit
report is provided to both the management
responsible for the area reviewed and the GMT.
These reports outline Internal Audit’s opinion of
the management control framework in place
together with actions indicating improvements
proposed or made as appropriate. The Chief
Executive, the GMT and senior management
consider the reports on a regular basis and
are responsible for ensuring that improvements
are made as agreed. A database of audit
recommendations and improvement initiatives is
maintained. Follow-up and escalation processes
ensure that such improvements are implemented
and fully embedded in a timely manner.
The Company belongs to and participates in
industry-wide forums and other initiatives aimed
at combating fraud within the housebuilding and
construction industry.
Summaries of all key Internal Audit reviews and
activity and resulting reports are provided to
the Audit Committee for review and discussion.
The Internal Audit function also reviews
proposed related-party transactions, such
as purchases by employees from Group
companies, to provide assurance that proper
procedures are followed and that such
procedures are undertaken strictly in accordance
with the policy in place and, where applicable,
company law.
During 2020, in response to the COVID-19
pandemic, Internal Audit worked with the Legal
and Company Secretariat Departments on an
assessment of the continuing effectiveness of
key controls and processes, both short-term to
address the possibility of non-availability of key
staff and management; and in longer-term
revisions to reflect changes to the working
environment and practices. The learnings and
improvements from this activity are being woven
into the ongoing control and risk processes and
this activity will continue through 2021.
The most recent independent formal evaluation
of the Internal Audit function was carried out in
2015 on behalf of the Audit Committee by PwC
and its finding was that Internal Audit continues
to operate effectively. A number of initiatives
were progressed subsequently to ensure the
Internal Audit function continues to meet both
current best practice and the evolving needs of
the Group. The next such evaluation is currently
being planned for 2021 (having been deferred
during 2020 due to the impact of the COVID-19
pandemic) and will consider the
recommendations included in the Code of
Practice for effective internal audit in the private
and third sectors, published in January 2020 by
the Chartered Institute of Internal Auditors. The
evaluation will be conducted by The Chartered
Institute of Internal Auditors.
Going concern
The Group has prepared forecasts, including
certain sensitivities, taking into account the
Principal Risks and uncertainties identified on
pages 49 to 53. Having considered these
forecasts, the Directors remain of the view that
the Group’s financing arrangements and capital
structure provide both the necessary facilities and
covenant headroom to enable the Group to
conduct its business for at least the next 12
months. The Committee reviewed the forecasts
and the Directors’ expectations based thereon and
agreed that they were reasonable. Accordingly,
the consolidated financial statements have been
prepared on a going concern basis.
Read more about our Principal Risks on
pages 49 to 53.
Viability Statement
The Viability Statement is designed to be a longer
term view of the sustainability of the Company’s
strategy and business model and related
resourcing, in the light of projected wider
economic and market developments. The
Committee considered whether there should be
any change to the five-year period chosen for the
statement but remained of the opinion that this
continued to be appropriate, taking into account
the balance sheet strength and development
cycle. The Committee also reviewed the Directors’
expectations; the criteria upon which they were
based; and the sensitivities applied, including how
these linked to the Principal Risks faced by the
business; and agreed that they were reasonable.
The statement appears on pages 58 and 59
together with details of the processes,
assumptions and testing which underpin it.
Annual Report and Accounts 2020
Fair, balanced and understandable
A key requirement of our financial statements is
that they are fair, balanced and understandable,
and that they include the information necessary
for shareholders to assess the Group’s position,
performance, business model and strategy.
The Committee monitors the integrity of the Group’s
reporting process and financial management; and
reviews in detail the work of the external Auditor
and any significant financial judgements and
estimates made by Management.
It considers the output from the above and
reviews the full year and half year financial
statements before proposing them to the Board
for consideration.
The review of the Company’s Annual Report and
Accounts took the form of a detailed assessment
of the collaborative process of drafting them,
which involves the Company’s Investor Relations;
Company Secretariat; and Finance functions, with
guidance and input from other relevant functions
and external advisers. It ensured that there is a
clear and unified link between this Annual Report
and Accounts and the Company’s other external
reporting, and between the three main sections of
the Annual Report and Accounts – the strategic
report; the governance reports; and the
financial statements.
In particular, the Committee:
– Reviewed all material matters, as reported
elsewhere in this Annual Report.
– Ensured that it correctly reflected the
Company’s performance in the reporting year,
as described in this Annual Report.
– Ensured that it presented a consistent
message throughout.
– Ensured that it correctly reflected the
Company’s business model, as described
on pages 20 and 21.
– Ensured that it correctly described the
Company’s strategy, as described on pages
22 to 25.
– Ensured that it fairly reflected the impact to
date, and continuing, of the COVID-19
pandemic on the Company’s business;
position; and prospects.
– Considered whether it presented the
information in a clear and concise manner,
illustrated by appropriate KPIs, to facilitate
shareholders’ access to relevant information.
Significant items
The items below are those that the Audit
Committee has considered in discharging its
duties and in considering the financial reporting
of the Group.
Cost allocation of inventory
The cost allocation framework used across the
Group controls the way in which inventory is
costed and allocated across each development.
It also ensures that costs incurred in excess of
the original budget are recognised appropriately
as the site progresses.
Following the unprecedented impact of
COVID-19 the decision was taken by the
Company to close all sites, sales centres
and offices before a controlled remobilisation.
The Committee received a paper produced by
Management which set out the treatment of
costs incurred by the business both during
this lockdown phase and the subsequent
remobilisation. These costs were expensed
to the income statement as cost of sales and
included £29.9 million of non-productive site
overhead costs incurred during the controlled
closure and lockdown period which would
ordinarily be capitalised to work in progress and
expensed as plots legally complete; £17.4 million
of additional costs incurred due to extended site
durations resulting from reduced productivity
levels as the Company developed its operational
processes under the COVID-secure guidelines;
and £15.4 million of incremental costs incurred
in responding to COVID-19, including costs to
meet our health and safety requirements and
complying with Government guidelines.
The Committee gave careful consideration to
the judgements and assumptions involved,
challenging Management where appropriate.
The Committee reviewed the reports and
recommendations from the senior management
team in relation to areas of the business
recognising cost excesses and the paper setting
out the treatment of costs incurred by the
business both during this lockdown phase and
the subsequent remobilisation. The Committee
also reviewed the work performed by Deloitte
which included testing Group-wide controls to
monitor cost allocation and considered the
results of the Group’s internal audit reviews
across the business.
Following these reviews, together with enquiries
made to Management and the external Auditor,
the Committee concluded that there are
appropriate systems and internal controls in
place, which ensured that consistent principles
were applied, the treatment and presentation
on the income statement of the costs incurred
by the business both during this lockdown
phase and the subsequent remobilisation were
appropriate and that the external Auditor agreed
with the conclusions reached.
Defined Benefit Pension valuations
The Committee reviewed the funding position
of the Taylor Wimpey Pension Scheme and
discussed and agreed the market-based
assumptions used to establish the net pension
deficit recognised on the balance sheet at
31 December 2020.
ACM cladding and leasehold provisions
The Committee reviewed senior management’s
updates on the progress of rectification of
buildings identified with ACM cladding materials,
together with utilisation and estimates of the
remaining provision. The Committee also
reviewed the level of applications received in
respect of the Ground Rent Review Assistance
Scheme, the utilisation of the provision and latest
management assumptions.
Recommendation to the Board
The outcome of the above processes,
together with the views presented by
Deloitte, was that the Committee
recommended, and in turn the Board
confirmed, that the 2020 Annual Report
and Accounts, taken as a whole, is fair,
balanced and understandable, and
provides the necessary information for
shareholders to assess the Company’s
position, performance, business model
and strategy.
More detail on how the Board and the
Audit Committee have addressed the
assessment, control and mitigation of risk,
and the oversight of the internal and
external audit functions, appear in this
Audit Committee report.
Statement of compliance
The Company has complied throughout
the reporting year with the provisions of
The Statutory Audit Services for Large
Companies Market Investigation
(Mandatory Use of Competitive Tender
Processes and Audit Committee
Responsibilities) Order 2014.
96
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Governance
Corporate governance: Remuneration
Remuneration Committee report
of our stakeholders. During the year, the
Committee has remained mindful of the need
to ensure that the Executive Directors’
remuneration appropriately reflects the
Company’s actual performance and is aligned to
the experience of our shareholders, employees
and wider society. As ever, we are committed
to ensuring that our remuneration practices are
directly linked to the Company’s purpose and
values and to the successful delivery of our long
term strategy for the benefit of all stakeholders.
2020 Remuneration Policy
Following our detailed Remuneration Policy
(Policy) review and shareholder consultation last
year, the Policy was approved by shareholders
at the 2020 Annual General Meeting (AGM)
with over 98% of shareholders voting in favour.
I would like to thank you all for your continued
support.
The Policy was updated in line with the latest UK
Corporate Governance Code requirements and
the latest investor perspectives on key topics.
We incorporated a post-employment
shareholding requirement and the Executive
Directors’ pension contributions are being
reduced in line with the agreed timeframe set out
in the 2019 Remuneration Report.
During the year we have needed to use the
flexibility afforded by the Policy to ensure that
the Executive Directors’ remuneration remained
appropriate and proportionate when considering
the impact the pandemic has had on our
performance and wider stakeholders.
COVID-19
As is well documented elsewhere in this Annual
Report and Accounts, in March 2020 the
Company closed all sites and sales offices to
ensure the health and safety of employees,
subcontractors and our customers, and took the
decision to cancel the 2019 final dividend and
the 2020 special dividend in order to protect the
balance sheet. In recognition of the impact of
these decisions on our stakeholders, the
Committee considered the proposed application
of the Policy in 2020.
After careful consideration, we used the
discretion available to us to amend the
application of the Policy during the year.
On 1 April 2020, we announced that the
previously disclosed 2% annual salary increase
for the Executive Directors (due to come into
effect in April 2020) along with their annual
bonus for 2020 performance would be
cancelled, and at the request of the Executive
Directors they also took a voluntary 30%
Main objective
To establish and maintain formal and
transparent procedures for developing policy
on executive remuneration to deliver the
Company’s strategy and value for
shareholders; to agree, monitor and report on
the remuneration of individual Directors and
senior executives; and to review wider
workforce remuneration practices and policies.
2020 activities
– Implemented the revised Policy following
shareholder approval at the 2020 AGM
– Applied discretion to the application of the
Policy during 2020 in light of the COVID-19
pandemic
– Reviewed the wider workforce remuneration
in light of the COVID-19 pandemic
2021 objectives
– Ensure that the Policy is applied
appropriately, and if necessary flexibly, to
ensure continued alignment between the
remuneration outcomes for Executive
Directors and the experience of other
stakeholders
– Review the remuneration positioning for the
Group Finance Director
– Continue to review the performance
measures for the EIS and PSP to ensure
there is a rounded assessment of financial
and non-financial performance aligned to the
business strategy and a strong continued
alignment of interest with all stakeholders
Gwyn Burr
Chair of the Remuneration Committee
Dear Shareholder
As Chair of the Remuneration Committee,
I am pleased to present our 2020 Directors’
Remuneration Report (the Report) on behalf
of the Board.
I think it is important to start this letter by
referencing the immense challenge posed by
the COVID-19 pandemic and the extraordinary
impact it has had on our colleagues and all
Remuneration Committee
summary
The Committee is chaired by Gwyn Burr. On
31 December 2020, the Committee consisted
of two Independent Non Executive Directors
and the Chairman of the Board. On his
appointment to the Board on 1 March 2021,
Jitesh Gadhia will become a member of the
Committee. Its members during 2020 are set
out in the table below.
Committee members
Gwyn Burr (Chair)
Irene Dorner
Angela Knight
Kate Barker(a)
Kevin Beeston(b)
Meetings
attended
3/3
3/3
3/3
1/1
1/1
(a) Stood down from the Committee on 20 April 2020
(b) Stood down from the Board and the Committee on
26 February 2020
reduction in base salary and pension from 1 April
to 31 July 2020.
In addition, the Chairman and each Non
Executive Director took a 30% reduction in their
fee for the same period of time.
For the 2020 Performance Share Plan (PSP)
Awards, the performance measures were
determined and the awards were granted in
early March, before the business performance
and share price were impacted by the
pandemic. We have not adjusted the terms
of these awards (other than to neutralise the
impact of the equity raise) and the original
performance targets now represent an extremely
challenging target.
The Company initially accessed the UK
Government’s Coronavirus Job Retention
Scheme for furloughed employees; however,
once all furloughed employees had returned to
work by the end of June the Company made the
decision to repay the funds in full to the
Government in July 2020. In addition, the
Company did not take advantage of the
COVID-19 Corporate Financing Facility or
Coronavirus Business Interruption Loan Scheme.
Wider workforce remuneration
The Committee continues to regularly review
remuneration arrangements for senior
management to ensure the delivery of our long
term strategy and alignment to the wider
workforce. The Policy has been further cascaded
down to the Group Management Team, by
requiring them to defer one-third of any annual
bonus paid into shares for a period of three
years. These shares will be beneficially owned
from the outset, but will be held in the Employee
Benefit Trust for the deferral period.
The Committee has, for a number of years,
reviewed wider workforce remuneration in
line with the Code. This year we have been
particularly mindful of the impact of the
pandemic on our people from both a financial
and personal wellbeing perspective. Whilst our
sales offices and sites were temporarily closed,
the Company made the decision to place a
significant proportion of employees on furlough.
The Committee welcomed and supported the
Company’s decision to ensure that furloughed
employees did not suffer financial hardship, by
continuing to pay full base salaries when on
furlough and sales staff received 80% of the level
of their average commission. Further details of
measures taken by the Company can be found
on page 102.
During the year, I was also appointed as the
Board’s NEF Champion and plan to attend each
of the National Employee Forum (NEF) meetings
going forward. Whilst the primary objective of
this appointment is to strengthen the Board’s
engagement with employees on a variety of
topics, I will also take the opportunity to gain
regular feedback from the NEF on the incentives
and rewards available to the wider workforce.
It is important that we continue to represent and
reward performance in line with the Company
strategy whilst protecting the culture of the
Company at all levels, and also ensure that there
is a strong alignment of interest between
executive pay and the workforce.
The Committee also encourages share
ownership at all levels of the business and is
pleased to see that the number of employees
currently participating in one or both of our
all-employee share schemes, or who are
otherwise shareholders in the business has
increased to over 64% this year (2019: 57%).
The equity raise also saw 329 employees
participate, and it was pleasing to see
employees having direct involvement in this
exciting opportunity for the Company.
Committee activities during 2020
February 2020
March and April 2020
October 2020
December 2020
– Reviewed feedback from major
shareholders on the remuneration
consultation conducted in January
2020 in respect of the Company’s
revised Policy
– Considered and approved the
salary review proposals for 2020
for the Executive Directors and
senior management
– Considered and approved the
outcome of the EIS for 2019 and of
the PSP Award vesting in 2020
– Reviewed its Terms of Reference
and evaluated its own
performance against them
– Reviewed and approved the
Remuneration Report for the
Company’s Annual Report and
Accounts 2019
– Reviewed the remuneration
policies and practices for the
wider workforce
– Considered the EIS
deferred share
award for the 2019
bonus
– Applied discretion
on the application of
the Policy to the
Executive Directors
in 2020 in light of
the COVID-19
pandemic
– Considered
reports from Korn
Ferry on executive
remuneration
developments and
investor guidance
– Considered and
agreed the
Committee’s
planned activities
for 2021
– Considered reports from
Korn Ferry on executive
remuneration
benchmarking
– Considered a general
governance update from
Korn Ferry on
remuneration
considerations
– Preliminary discussions
on salary proposals for
2021; projected
outcomes of the PSP
Award vesting in 2021
– Considered the
performance measures
and targets for the 2021
EIS and 2021 PSP Award
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99
Governance
Corporate governance: Remuneration continued
Shareholder engagement
We are extremely grateful for the constructive
engagement that took place last year in relation
to the renewal of the Policy at the 2020 AGM.
2020 performance and incentive plan
payments
As previously noted, in responding to the impact
of COVID-19 the Committee determined that
no annual bonus would be payable under
the Executive Incentive Scheme (EIS) to the
Executive Directors for 2020 performance.
For disclosure purposes, the performance
targets and the Company’s performance against
them can be found on page 115. As you will see,
the Company made steady progress against
the targets for customer service and build
quality; and if the EIS had not been cancelled for
the Executive Directors, the EIS outturn would
have been 34% of maximum.
Prior to the onset of the COVID-19 pandemic,
the PSP Award granted in 2018, which
measured performance up to the end of 2020,
was forecast to vest at a healthy level. As with
many areas of the business, the pandemic has
had a significant negative impact on the
performance measures; however the Committee
does not consider it appropriate to use their
discretion to adjust the targets of in-flight Awards
to negate the impact of the pandemic. On this
basis, only the cash conversion measure met
the threshold target, and therefore has led to an
overall vesting of 6.6%. Further details can be
found on page 114.
The graph at the end of this letter summarises
the total payments made to the Executive
Directors in 2020. As you can see, the Executive
Directors’ total remuneration was 66% lower in
2020 than 2019.
2021 remuneration approach and alignment
to strategic objectives
The Committee reviews the performance
measures for the Company’s incentive plans
each year to ensure that they remain appropriate
and directly linked to our strategy. Going into
2021, the focus is on strengthening the
business, improving margins and ensuring that
the land secured following the 2020 equity raise
results in outlet growth in 2022 and volume
growth from 2023. Further details of how
the 2021 measures align with our strategic goals
and key performance indicators can be found on
page 112. Whilst considering the performance
measures and respective targets for our variable
pay arrangements, the Committee has ensured
that the proposed measures and targets focus
on the key performance drivers that will deliver
our strategy.
2021 Executive Incentive Scheme
For 2021 our focus needs to remain on those
measures that deliver strong financial and
operational performance, underpinned by our
commitment to the quality of our homes and our
customer experience. The annual bonus scheme
(the EIS) will operate with some minor changes
from 2020 to the weighting of the performance
measures to increase the focus on operating
margin, to ensure a focus on cost discipline and
on mitigating future build cost inflation.
Further details of the measures can be found
on page 112. We do not disclose the targets
themselves for the EIS due to commercial
sensitivities and these will be disclosed in full
in next year’s Report. The targets have been
considered with the short term uncertain market
conditions in mind; and whilst they are slightly
lower than 2020 as set out on page 115, I can
assure you that they are materially above the top
end of investor expectations and are considered
to be appropriately stretching.
2021 Performance Share Plan Award
We intend to make a PSP Award in March 2021
to the Executive Directors at the Policy level of
200% of base salary; however, the Committee
will review the grant level in light of the share
price at and around the Award date.
There are two main changes to the performance
measures in 2021. Firstly, cash conversion will
be replaced by operating profit margin as this will
support our focus on cost and process
discipline. Secondly, we have simplified the basis
on which customer service is measured; and
performance will be measured using the
nine-month independent NHBC customer
service survey ‘would you recommend your
builder to a friend?’ question. The response
to this question is the primary opinion of our
customer in terms of their overall experience.
The target ranges for each measure have been
set recognising the prevailing market uncertainty
but have been chosen to incentivise the
Executive Directors as we look to build towards
our objectives of consistent sustainable growth
and long term profitability. The measures and the
target ranges are disclosed on page 112 of the
Report and the Committee believes that the
targets are challenging.
Salary review
Following a detailed review of performance
and actions taken in 2020 and the outlook
for 2021, the Committee is proposing a 2%
salary increase across the Company for 2021,
which will apply with effect from 1 April 2021.
This increase will also apply to the Executive
Directors.
On his promotion to the Board in April 2018,
the Committee increased Chris Carney’s salary
to £430,000, which was below that of his
predecessor and positioned between the lower
quartile and median of comparable market data.
As we indicated in the 2018 Remuneration
Report, the Committee offered a below market
salary initially with a view to making above
market and workforce increases over a number
of years to reach the desired salary positioning,
subject to individual and Company performance.
In light of the wider remit of Chris’ role and his
outstanding personal performance to date, we
intend to conduct a review of his base salary
during the course of 2021.
Pension
As I have already mentioned, in line with the
shareholder approved Remuneration Policy;
the Executive Directors’ pension contributions
will be reduced again on 1 April 2021 as part
of our agreed timeframe set out in the 2019
Remuneration Report to reduce their overall
contributions to 10% of salary by 1 April 2024,
which is the level of pension contribution
available to the majority of the workforce. Further
details of the pension contributions that each
Executive Director will receive in 2021 can be
found on page 111.
Closing remarks
I look forward to welcoming Jitesh Gadhia to
the Committee when he joins on 1 March 2021.
Jitesh’s Remuneration Committee experience
at other companies will add to the Committee’s
skill sets and further enhance the quality of
its work.
I would like to thank you for your continued
support and I hope that you will feel able to
support the level of remuneration paid in 2020
to our Executive Directors and how we will
implement our Policy in 2021.
Gwyn Burr
Chair of the Remuneration Committee
1 March 2021
Executive Directors’ total remuneration
The chart below compares the 2020 single figure for total remuneration for each of the Executive Directors with the equivalent figure for 2019.
Executive
Director
Pete Redfern
Chief Executive
Chris Carney
Group Finance Director
Jennie Daly
Group Operations
Director
2020
2019
2020
2019
2020
2019
Single total
remuneration figure (£’000)
91% 9%
£1,120
35%
20%
45%
£3,247
93% 7% £513
42%
26%
32% £1,302
94% 6% £472
49%
30%
21%
£1,021
£0
£1,000
£2,000
£3,000
£4,000
Fixed pay
EIS
PSP
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101
Governance
Corporate governance: Remuneration continued
Remuneration at a glance
Application of the Policy in 2020 in light of COVID-19
In recognition of the impact of the COVID-19 pandemic on stakeholders and at the request of
the Executive Directors, the Committee carefully considered the proposed application of the
Policy in 2020 and decided the following:
l
y
a
p
e
b
a
i
r
a
V
y
a
p
d
e
x
F
i
Policy elements
Change in application
Executive Directors
Executive Incentive
Scheme (Annual
bonus) (EIS)
The 2020 EIS was cancelled
Long Term
Incentive Plan (PSP)
No change
Base
salary
Benefits
Pension
2% annual increase due to come into effect on 1 April 2020 was cancelled
Voluntary 30% reduction in base salary from 1 April 2020 to 31 July 2020
No change
Voluntary 30% reduction in pension contributions from 1 April 2020 to
31 July 2020
The Chairman and Independent Non Executive Directors
Fees
Voluntary 30% reduction in fees from 1 April 2020 to 31 July 2020
Wider workforce
remuneration
during 2020
– The general workforce salary
increase of 2% was cancelled
– All furloughed employees received
their full base salary
– Those employees for whom
variable pay elements made up a
high proportion of their regular pay
received further top-up
– All Government furlough subsidies
were repaid in July 2020
Read more about wider workforce
remuneration on page 108.
2020 actual remuneration v 2020 on target potential (£’000)
Pete Redfern, Chief Executive
2020
Actual
2020
On target
Chris Carney, Group Finance Director
91%
9%
£1,120
54%
31%
15%
£2,092
2020
Actual
2020
On target
93% 7%
£513
55%
34% 11%
£962
Jennie Daly, Group Operations Director
2020
Actual
2020
On target
94%
6%
£472
57%
34% 9%
£872
£0
£500
£1,000
£1,500
£2,000
£2,500
Fixed pay
EIS
PSP
The actual remuneration has included the 30% voluntary reduction in base salary and pension and the cancellation of the EIS for performance in 2020.
The on target potential is based on no changes being made to the Executive Directors' remuneration in 2020 (i.e. before the reductions agreed in light
of the impact of the COVID-19 pandemic).
Variable pay outcomes in 2020
2020 EIS outcome*
2018 PSP outcome
Group operating profit
Cash conversion
Operating profit margin
Customer service
Build quality
Total
Weighting Outcome
35%
15%
10%
20%
0%
0%
0%
14%
20%
20%
100% 34%
* The 2020 EIS was cancelled for the Executive
Directors in response to COVID-19.
TSR v peer group
TSR v FTSE 100
RONOA
Operating profit margin
Cash conversion
Total
Weighting Outcome
30%
20%
20%
15%
0%
0%
0%
0%
15%
6.6%
100% 6.6%
Proposed application of the Policy in 2021
Policy elements
Award timeline
Purpose
Measure
Strategic goal KPI
Stakeholders
Year 1
Year 2
Year 3
Year 4
Year 5
Executive
Incentive Scheme
(Annual bonus)
(EIS)
Long Term
Incentive Plan
(PSP)
Base
salary
Benefits
Pension
l
y
a
p
e
b
a
i
r
a
V
y
a
p
d
e
x
F
i
Operating profit
Operating profit margin
Cash conversion
Build quality
Customer service
TSR v Peer Group
RONOA
Operating profit margin
Customer service
To reward the achievement
of stretching objectives that
support the Company’s
annual and strategic goals
To assist with retention and
the incentivisation and
motivation of senior
executives to deliver long
term returns to
shareholders
To recruit and reward
executives of a suitable
calibre for the role and
duties required
To provide a competitive
package of benefits to
assist with recruitment and
retention of staff
To provide competitive
retirement benefits to assist
with recruitment and
retention of staff
Performance period
Deferral / holding periods
Read more about our
strategic goals on page 19
Read more about our
KPIs on pages 22 to 25
Read more about our
stakeholders on pages 28 to 41
Read more about our
financial definitions on page 58
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103
Governance
Corporate governance: Remuneration continued
Introduction
This Report has been prepared by the
Committee on behalf of the Board.
The 2020 Remuneration Report includes
disclosures which reflect in full the Regulations
(as defined below) on remuneration reporting,
divided into two sections:
– Remuneration Policy Report: this sets out the
Policy that was approved by shareholders at
the 2020 AGM, describing the framework
within which the Company remunerates its
Directors.
– Annual Report on Remuneration: this sets out
how the Company’s Remuneration Policy
(Policy) was applied during 2020 and how it is
proposed to be implemented during 2021.
The Policy and these remuneration reports have
been prepared in accordance with the relevant
provision of the Companies Act 2006 and on the
basis prescribed in the Large and Medium-sized
Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013 (“the
Regulations”). Where required, data has been
audited by Deloitte and this is indicated.
Remuneration Policy Report
Unaudited information
The Company’s Policy was subject to a binding
shareholder vote at the 2020 AGM of the
Company and was approved by over 98% of
shareholders who voted. The three-year life of
that Policy will expire at the 2023 AGM and we
will be required to seek binding shareholder
approval for a new policy.
The Policy is designed to ensure that the
remuneration framework will support and drive
forward the Taylor Wimpey strategy by both
challenging and motivating the Executive
Directors and the senior management team to
deliver it, and this will in turn drive value for our
shareholders whilst having due regard to our
other stakeholders. The Policy is set out on
pages 105 to 107 and is also available to view
on the Company’s website at www.
taylorwimpey.co.uk/corporate/our-company/
governance.
When the Committee designed the Policy, they
considered the factors in Provision 40 of the
Code. Full details on how clarity, simplicity, risk,
predictability, proportionality and alignment to
culture are addressed in the Policy and can be
found on page 112 of the 2019 Directors’
Remuneration Report.
Policy overview
A key part of the Committee’s role is to ensure
that the remuneration of Executive Directors and
senior management is aligned to the Company’s
strategic objectives. It is, of course, key that the
Company is able to attract and retain leaders
who are focused and also appropriately
incentivised to deliver the Company’s strategic
objectives within a framework which is aligned
with the long term interests of the Company’s
shareholders. This alignment is achieved through
a combination of: deferral into shares of a
percentage of the EIS; a two-year retention
period for vested PSP awards; share ownership
guidelines which require executives to build up
holdings of Taylor Wimpey shares, either directly
or by retaining vested PSP share awards and
deferred EIS amounts; and also requiring shares
to be retained by the Executive Directors after
they have ceased employment.
The above requirements ensure that a significant
percentage of the overall remuneration package
of Executive Directors and senior management is
subject to performance. With all packages for
Executive Directors substantially geared towards
meeting challenging targets set under the
EIS and PSP, the Committee believes that the
pay and benefits of its Executive Directors and
senior management adequately balance reward
and risk.
In line with best practice, the 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
appropriate, take ESG matters into account
when considering the overall remuneration
structure and as part of its overall discretion.
Our Remuneration Policy
Element
Purpose and link to strategy
Operation
Maximum
Salary
To recruit and reward
Executive Directors of a
suitable calibre for the role
and duties required.
Chairman of
the Board
and Non
Executive
Director
fees
The Chairman and
Non Executive Directors’
fees should be in line with
recognised best practice
and be sufficient to attract
and retain high calibre
non executives.
Other
benefits,
including
benefits-
in-kind
Provides a competitive
package of benefits to assist
with recruitment and
retention of staff.
Salaries are normally reviewed annually to ensure that
they remain positioned appropriately. There is no
automatic entitlement to an increase each year.
Salary level and increases take into account the
following:
– The performance, role and responsibility of each
individual Executive Director
– The economic climate, general market conditions
and the performance of the Company
– The level of pay awards across the rest of the
business
– Salary levels in comparably-sized companies and
other major housebuilders
Fees consist of a single consolidated fee for the
Chairman, an annual fee for the other Non Executive
Directors and additional fees for roles such as the
Chair of the Audit Committee, Chair of the
Remuneration Committee and Senior Independent
Director.
Set by reference to the responsibilities undertaken by
the non executive, taking into account that each Non
Executive Director is expected to be a member of the
Nomination and Governance Committee and / or the
Audit Committee and / or Remuneration Committee.
Reviewed periodically but generally at least every other
year. Takes into account levels in comparably-sized
companies and other major housebuilders.
Non Executive Directors do not participate in any
incentive, share scheme, benefits-in-kind or pension
arrangements.
The main benefits offered are:
– Company-provided car or a cash allowance in lieu
– Provision of a fuel card
– Life assurance
– Private medical insurance
– A 5% discount on the price of a new home
acquired from the Group
Performance targets
Company and
individual
performance are
factors considered
when reviewing
salaries.
The maximum annual salary increase will not
normally exceed the average increase which
applies across the wider workforce. However,
larger increases may be awarded in certain
circumstances including but not limited to:
– Increase in scope or responsibilities of
the role.
– To apply salary progression for a newly /
recently appointed Executive Director.
– Where the Executive Director’s salary has
fallen below the market positioning.
Aggregate annual limit of £1 million imposed
by the Company’s Articles of Association.
N/A
N/A
The value of a Company-provided car or a
cash allowance in lieu is of a level appropriate
to the individual’s role and is subject to review
from time to time. The fuel card covers the
cost of all fuel, for both business and
personal use.
Life assurance of up to four times basic salary.
For home purchases, the price discount is
calculated at the plot release price less the
average discount to third party buyers for that
house type on that development, less a further
5% employee discount. No more than one
home per annum can be acquired at a
discount under the scheme; and no more
than three homes can be acquired in a
five-year period. The maximum discount over
a five-year period is £100,000.
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Governance
Corporate governance: Remuneration continued
Element
Purpose and link to strategy
Operation
Maximum
Performance targets
Element
Purpose and link to strategy
Operation
Maximum
Performance targets
Rewards the achievement of
EIS awards are determined by the Committee after the
stretching financial
performance targets and
other objectives that support
the Company’s annual and
strategic goals.
Compulsory deferral in
shares further aligns the
interests of Executive
Directors with shareholders.
year end, based on annual performance against
targets set at the beginning of each year.
One-third of any EIS is payable in shares which are
held in trust for three years.
A malus and clawback mechanism applies to all
participants in the event of a material misstatement of
the Group’s accounts, error, misconduct, reputational
damage or corporate failure. The discovery period for
the event that would give rise to the clawback is three
years from the date of payment.
Annual grants of share-
Executive Directors and other designated senior
Executive
Incentive
Scheme
(EIS)
Performance
Share
Plan (PSP)
based long term incentives
assist with retention,
incentivisation and
motivation of Executive
Directors to achieve
long term sustainable
returns for shareholders.
A post-vest holding period
helps align the interests
of senior executives with
those of the Company’s
shareholders.
executives can receive annual PSP awards.
PSP awards provide alignment with shareholders as
they deliver (subject to meeting performance
conditions) the full value of the shares, which can
increase and decrease in value over the three-year
performance period.
The value of dividends or other distributions will accrue
during the performance and holding periods and will
be received with any shares that vest in favour of
participants after the applicable performance period.
Dividends will normally be accrued and paid in shares.
Performance measures are normally measured over
three financial years.
A malus and clawback mechanism applies to all
participants in the event of a material misstatement of
the Group’s accounts, error, misconduct, reputational
damage or corporate failure. The discovery period for
the event that would give rise to the clawback is three
years from the date of payment.
Pension benefits are provided through one or more of
the following arrangements:
– Personal Choice Plan
– Taylor Wimpey Pension Scheme
– As a cash allowance
Pension
The Company aims to
provide competitive
retirement benefits that
represent an appropriate
level of cost and risk for the
Group’s shareholders.
Over five years the pension
contributions will reduce to
the level of the workforce
pension.
The maximum EIS opportunity for Executive
Directors is set at 150% of salary. Target is set
at 75% of salary and threshold at 0%.
The EIS measures
are based on a
scorecard of
designated key
annual financial,
operational and
environmental
measures.
The maximum award (currently in
performance shares) is normally over shares
with a face value of 200% of salary.
In exceptional circumstances this can be
increased up to 300% of salary.
The performance
conditions are
aligned to the long
term business
strategy.
The Committee may
vary the measures
that are included in
the plan and
the weightings
between the
measures from year
to year.
Awards vest at 20%
for threshold
performance.
Pete Redfern: cash allowance reducing to
18.43% of salary on 1 April 2021 then
reducing annually by 2.81% of salary until the
pension rate is the same as the majority of the
workforce.
N/A
Chris Carney and Jennie Daly: cash allowance
reducing to 16% of salary on 1 April 2021
then reducing annually by 2% of salary until
the pension rate is the same as the majority of
the workforce.
Company contributions to any pension
scheme in respect of a new Executive Director
will be in line with the pension contribution rate
applying to the majority of the workforce,
currently 10% of salary.
All-employee
share schemes
All employees including
Executive Directors are
encouraged to become
shareholders through the
operation of all-employee
share plans such as the
HMRC tax-advantaged
Sharesave plan and a Share
Incentive Plan (SIP).
Shareholding
guidelines
Encourages greater levels of
shareholding and aligns
employees’ interests with
those of shareholders.
The Sharesave plan and SIP have standard terms
under which all UK employees with at least three
months’ service can participate.
Executive Directors are expected to achieve and
maintain a holding of the Company’s shares at least
equal to 200% of salary and until this level is achieved,
are required to retain no less than 50% of the value of
any vested EIS or PSP awards, after tax.
A post-employment shareholding requirement will
require Executive Directors to hold 200% of salary, or
their shareholding level at the time of cessation if their
200% shareholding requirement has not yet been met,
for at least two years. This requirement may be
reduced by the Committee in exceptional
circumstances, such as serious ill-health.
N/A
Sharesave: Employees can elect for a savings
contract of either three or five years, with a
maximum monthly saving set by legislation or
by HMRC. Options can be exercised during
the six months following the end of the
contract.
SIP: Employees can elect to contribute an
amount per month or per tax year by one or
more lump sums.
The maximum saving or contribution level is
set by legislation or Government from time to
time and the Committee reserves the right to
increase contribution levels to reflect any
approved Government legislative changes.
Executive Directors: 200% of salary.
N/A
The Committee may amend this shareholder approved Policy to take account of changes to legislation, taxation and other supplemental and
administrative matters without the necessity to seek shareholder approval for those changes.
Illustration of the Remuneration Policy for 2021
The charts below illustrate the level and mix of remuneration based on the Policy depending on the achievement of below target, target and maximum for
the Executive Directors under the Policy.
Pete Redfern
Chief Executive
Jennie Daly
Group Operations Director
Chris Carney
Group Finance Director
6,000
5,000
4,000
3,000
2,000
1,000
0
)
s
’
0
0
0
£
(
£1,114
£2,132
£4,200
£5,074
£530
£1,041
£2,078
£2,516
£492
£958
£1,904
£2,304
41%
32%
17%
31%
100%
52%
27%
Below
target
Target Maximum
Maximum
(with share
price growth)
43%
32%
25%
17%
32%
51%
Target Maximum
Maximum
(with share
price growth)
100%
Below
target
42%
32%
26%
17%
32%
51%
Target Maximum Maximum
(with share
price growth)
100%
Below
target
Fixed pay
EIS
PSP
50% share price growth on PSP
1. Salary is £891,644, £447,372 and £408,000 for Pete Redfern, Chris Carney and Jennie Daly, respectively, with effect from 1 April 2021 (see page 111 for further details).
2. Benefits are £57,000, £11,000 and £19,000 for Pete Redfern, Chris Carney and Jennie Daly, respectively, being the 2020 value (see page 111 for further details).
3. Pension is 18.43% for Pete Redfern and 16% for Chris Carney and Jennie Daly with effect from 1 April 2021.
4. For the EIS the target and maximum award is 75% and 150% of base salary, respectively.
5. For the PSP the target (assumed for these purposes to be at threshold performance) and maximum are 40% and 200% of base salary, respectively. An indication of the maximum
remuneration receivable assumes a share price appreciation of 50% during the period in which the award is subject to underpins. The basis of the calculation of the share price
appreciation is that the share price embedded in the calculation for the ‘maximum’ bar chart is assumed to increase by 50% across the performance period.
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107
Governance
Corporate governance: Remuneration continued
Committee discretion
The Committee recognises that the exercise of
discretion must be undertaken only on an
exceptional basis and in a careful and
considered way, as it is an area that will quite
rightly come under scrutiny from shareholders
and other stakeholders. The Committee confirms
that any exercise of discretion in such
circumstances would be within the available
discretions set out in this Report and that the
maximum levels available under any relevant
plans would not be exceeded. There would be
full disclosure in the following Directors’
Remuneration Report and major investors would
be consulted if necessary.
With regard to both the EIS and the PSP, the
Committee, consistent with market practice,
retains discretion over a number of areas relating
to the operation and administration of these
plans but in all cases within the applicable
scheme rules.
As detailed on pages 98 and 99, the Committee
decided that it was appropriate to exercise its
discretion in response to the COVID-19
pandemic. As such, the Committee cancelled
the previously agreed 2% salary increase,
cancelled the 2020 EIS and also approved a
voluntary 30% reduction in the Executive
Directors’ base salary and pension from 1 April
to 31 July 2020. The Committee believes that
these changes to the Policy ensure that the
Executive Directors’ remuneration experience is
more commensurate with shareholders,
employees and wider stakeholders.
How shareholder views are taken
into account
The Committee appreciates and considers very
seriously all shareholder feedback received in
relation to remuneration each year and guidance
from shareholder representative bodies more
generally. Shareholder views are key inputs
when shaping the Policy and the Committee
welcomes any comment or feedback on any
aspects of remuneration and will always take
these into consideration and respond.
The Committee regularly engages with the
Company’s largest shareholders and
shareholder representative bodies regarding the
ongoing Policy and its implementation, and will
take into account any feedback when
determining any changes that might apply.
The last such consultation took place in January
2020 and included the changes made to the
2020 approved Policy and the performance
targets and weightings for variable pay
arrangements in 2020.
The Committee follows the principles of good
governance relating to Directors’ remuneration
as set out in the Principles and Provisions of the
Code. The Committee reviews and takes into
account governance-related developments and
guidance that arise on an ongoing basis.
How our employees’ voice is taken
into account
The Committee supports and welcomes the
strengthening of the ‘employee voice’ initiative.
The Taylor Wimpey National Employee Forum
(NEF) was established in 2017 and continues to
work with members of the Group Management
Team and build upon the existing business
wide regional Employee Consultation
Committee structure.
During 2020, Gwyn Burr attended the NEF in her
capacity as Chair of the Remuneration
Committee. During the meeting Gwyn explained
the corporate governance process more
generally and the role of the Committee in setting
pay and undertaking the Policy review for
Executive Directors. The meeting also discussed
how executive remuneration aligns with the
wider workforce pay practices and policies. The
NEF members were encouraged to hear that it
was proposed that the Executive Directors’
pension entitlements would be reduced to be
aligned with those available to the wider
workforce. The feedback received from the NEF
was positive and they confirmed that the session
was clear and extremely informative.
In addition, Gwyn Burr has been appointed as
the Board’s NEF Champion, which will further
strengthen the reporting line between the Board
and employees. As detailed on page 77, the
employee membership of the NEF is to be
revised to more appropriately reflect and
represent the Company’s structure following
the organisational changes that took place
during 2020.
Remuneration Policy for the wider
workforce
When setting the Policy for Executive Directors,
the Committee is made fully aware of pay
structures across the workforce. In addition,
the Committee will conduct a formal review of
relevant elements of remuneration across the
Group and for all levels of employee at least
every three years as part of its remuneration
policy review. A summary of the remuneration
arrangements across the workforce can be
found below.
Cascade of the Policy through the wider workforce
Base
salary
Bonus
Long Term
Incentive Plan
Pension
All Employee
Share Plans
Car / Car
allowance
Private
healthcare
Paid holiday
Executive Directors
Group Management
Team
Senior managers
Managers
Wider workforce
During 2020, the Committee was particularly
mindful of how the wider workforce had been
impacted by the pandemic. The Committee was
supportive of the actions taken by the Company
to ensure that furloughed employees did not
suffer any substantial financial detriment.
Virtually all of the Company’s employees
participate in incentive arrangements. Many of
our employees can elect to take their bonus-
related payment in Taylor Wimpey shares (and
benefit from a 20% uplift) rather than in cash,
further enhancing the link and alignment
between shareholder value and employee
reward throughout the Company, which both
the Company and the Committee consider
important. Alternatively, employees can elect
to invest their bonus-related payment into
their pension and will therefore benefit from
tax efficiencies.
The Company also offers both Sharesave and
Share Incentive schemes to all eligible UK
employees with more than three months’
service. The Committee is delighted that over
64% of all eligible employees participate in at
least one of the share schemes or are already
shareholders in the business.
How performance measures were chosen
The performance measures that are used for
each of the EIS and PSP have been selected to
reflect the Group’s key strategic goals and are
designed to align the Executive Directors’ and
senior management’s interests with those of the
Company’s shareholders. The Committee
consults with major shareholders where any
significant policy changes are proposed.
Going into 2021, the ongoing focus for
Taylor Wimpey is strengthening the business
and improving margins; and ensuring that the
land secured following the 2020 equity raise
results in outlet growth in 2022 and volume
growth from 2023. Both the EIS and PSP have a
quality and customer service underpin to ensure
that the business continues to make steady
progress against these strategic pillars.
Directionally and at the appropriate time, we still
propose to move to a broader scorecard
approach including a more equal balance of
financial and non-financial measures, including
environmental ones.
The Committee will continue to review the choice
of performance measures and the
appropriateness of the performance targets
each year. Targets are set based on a sliding
scale that takes account of internal planning and
external market expectations for the Company.
Maximum rewards require substantial out-
performance of our challenging plans approved
at the start of each year, with a significantly lower
level of rewards available for delivering threshold
performance levels.
Read more about the 2021 performance
measures for the EIS and PSP on page 112.
External non executive director positions
Subject to Board approval and provided that
such appointments fall within the general
requirements of the Code (and do not give rise
to any conflict issues which cannot be managed
by the Board and the Executive Director),
Executive Directors are permitted to take on one
non executive position with another company.
Executive Directors are permitted to retain their
fees in respect of such positions.
Details of any external positions held by the
Executive Directors can be found in their
biographies on pages 64 and 65.
Remuneration Policy on recruitment
or promotion
Base salary levels will be set in accordance with
the Policy, taking into account the experience
and calibre of the individual. Where appropriate,
the Company may offer a below market salary
initially with a view to making above market and
workforce increases over a number of years to
reach the desired salary positioning, subject to
individual and Company performance. Benefits
will be provided in line with those offered to other
Executive Directors and pension will be provided
in line with the wider workforce, and relocation
expenses will be provided if necessary. Tax
equalisation may also be considered if a new
Executive Director is adversely affected by
taxation due to their employment with the
Company. Legal fees and other costs incurred
by the individual may also be paid by the
Company, if considered appropriate and
reasonable to do so.
The variable pay elements that may be offered
will be subject to the maximum levels described
in the policy table on pages 105 to 107. The
Company may also consider applying different
performance measures if it feels these more
appropriately meet the strategic goals and aims
of the Company whilst incentivising the new
appointee.
In the case of an external hire, the Company
may choose to buy-out any incentive pay or
benefit arrangements which would be forfeited
on leaving the previous employer. This will only
occur where the Company feels that it is a
necessary requirement to aid the recruitment.
The replacement value would be provided for,
taking into account the form (cash or shares),
timing and expected value (i.e. likelihood of
meeting any existing performance criteria) of the
remuneration being forfeited. Replacement share
awards, if used, will be granted using
Taylor Wimpey’s existing share plans wherever
and to the extent possible, although in
exceptional circumstances awards may also be
granted outside of these schemes if necessary
and permitted under the Listing Rules. To ensure
alignment from the outset with shareholders,
malus and clawback provisions may also apply
where appropriate and the Committee may
require new Executive Directors to acquire
Company shares up to a pre-agreed level.
Shareholders will be informed of any buy-out
payments at the time of appointment.
In the case of an internal hire including a
promotion, as previously reported, the Company
will honour any commitments entered into prior
to their appointment to the Board even where it
is not consistent with the Policy prevailing at the
time such commitment is fulfilled.
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Governance
Corporate governance: Remuneration continued
Directors’ contracts and policy on
payments for loss of office
It is the Company’s policy that Executive
Directors should have contracts of employment
providing for a maximum of one year’s notice
either way.
Name
Pete Redfern
Chris Carney
Jennie Daly
Date of appointment
12 July 2007
20 April 2018
20 April 2018
Notice period
12 months
12 months
12 months
Pete Redfern, Chris Carney and Jennie Daly are
proposed for re-election at the 2021 AGM and
each will have at that date an unexpired service
contract term of one year.
Each of the Executive Directors’ service
contracts provides for:
– The payment of a base salary.
– An expensed company car or a cash
allowance in lieu; a fuel allowance; life
assurance; and private medical insurance.
– Employer’s contribution to a pension.
– A notice period by either side of 12 months.
– A provision requiring a Director to mitigate
losses on termination.
Each service contract contains the following
performance-related provisions:
– Participation in the EIS.
– Participation in one or more long term
incentive plan.
The Company has the right to terminate contracts
by making a payment in lieu of notice. Any such
payment will typically reflect the individual’s salary,
benefits in kind and pension entitlements. The
Company will be mindful, on termination of an
Executive Director’s employment, of the need to
mitigate costs and phase payments, which cease
when the individual obtains an alternative role.
There are no change of control provisions that
apply in relation to the service contract of any
Executive Director.
Other than in certain ‘good leaver’ circumstances
(which could include redundancy, ill-health or
retirement), no payment would usually be due
under the EIS unless the individual remains
employed at the payment date. Any payment to a
good leaver under the EIS would be based on an
assessment of their and the Company’s
performance over the applicable period and
pro-rated for the proportion of the EIS year worked.
With regard to long term incentive plan awards,
the rules of the PSP provide that, other than in
certain good leaver circumstances, awards lapse
on cessation of employment. Where an individual
is a good leaver, the Committee’s normal policy
is for the award to vest at the normal time
following the application of performance targets
and a pro-rata reduction to take account of the
proportion of the applicable performance period
outstanding post the cessation. The Committee
also has discretion for both early vesting and
reducing the impact of pro-rating. In doing so, it
will take account of the reason for the departure
and the performance of the individual through to
the time of departure.
In situations where an Executive Director is
dismissed, the Committee reserves the right to
make additional exit payments where such
payments are made in good faith:
– In discharge of an existing legal obligation (or
by way of damages for breach of such an
obligation).
– By way of settlement or compromise of any
claim arising in connection with the termination
of a Director’s office or employment.
– To contribute towards the individual’s legal
fees and fees for outplacement services.
The terms of engagement of the Chairman of the
Board and the Non Executive Directors are
regulated by letters of appointment over a term
of three years, which are reviewed annually. Both
the Company and the aforementioned Directors
(including the Chairman) have a notice period of
six months and the Directors are not entitled to
compensation on termination other than for the
normal notice period if not worked out.
Service contracts for all Executive Directors and
letters of appointment for all Non Executive
Directors are available for inspection at the
Company’s registered office during normal
business hours and at the AGM.
Terms of engagement
The terms of engagement of the Chairman of the Board and the Non Executive Directors are regulated by letters of appointment as follows:
Name
Irene Dorner
Gwyn Burr
Jitesh Gadhia
Scilla Grimble
Angela Knight
Rob Noel
Humphrey Singer
Date of appointment as Director
1 December 2019
1 February 2018
1 March 2021
1 March 2021
1 November 2016
1 October 2019
9 December 2015
Term of appointment
3 years, reviewed annually
3 years, reviewed annually
3 years, reviewed annually
3 years, reviewed annually
3 years, reviewed annually
3 years, reviewed annually
3 years, reviewed annually
Notice period by
Company
(months)
6
6
6
6
6
6
6
Notice period by
Director (months)
6
6
6
6
6
6
6
Legacy arrangements
Any commitment which is consistent with the approved Remuneration Policy in force at the time that the commitment was made will be honoured, even
where it is not consistent with the policy prevailing at the time such commitment is fulfilled.
Pete Redfern (Chief Executive), Anne Billson-
Ross (Group Human Resources Director), Alice
Marsden (Group General Counsel and Company
Secretary) and Anthony Moriarty (Head of
Reward and Pensions) each attended the
Committee meetings during 2020 by invitation
only but were not present for any discussions
that related directly to their own remuneration.
How the Remuneration Policy will be
applied in 2021
Base salary
Following a detailed review of performance and
actions taken in 2020, and the outlook for 2021,
the Committee decided to award increases of
2% to each Executive Director with effect from
1 April 2021, in line with the general
workforce increase.
The salaries of the Executive Directors as at
1 April 2021 will be as follows:
Executive Director
Pete Redfern
Chris Carney
Jennie Daly
Salary at
Salary at
1 April 2020
£874,161
£438,600
£400,000
1 April 2021
£891,644
£447,372
£408,000
Increase
2%
2%
2%
Pension and benefits
The Executive Directors’ pension contributions
will be further reduced in 2021 in line with the
agreed incremental reduction over a five-year
period to 10%, the level of pension contribution
enjoyed by the wider workforce. Therefore, from
1 April 2021 Pete Redfern, Chris Carney and
Jennie Daly will receive a pension contribution of
18.43%, 16% and 16% of salary respectively.
Annual Report
on Remuneration
This Annual Report on Remuneration will be put
to an advisory shareholder vote at the 2021
AGM. Details of the resolution and its status as
an advisory vote are set out in the notes to the
Notice of Meeting on page 179.
Remuneration Committee
The role of the Committee is to recommend to
the Board a strategy and framework for
remuneration for Executive Directors and senior
management which will attract and retain leaders
who are focused and incentivised to deliver the
Company’s strategic business priorities within a
remuneration framework which is aligned with
the interests of our shareholders and thus
designed to promote the long term success of
the Company.
The Committee’s Terms of Reference are
available on the Company’s website at
www.taylorwimpey.co.uk/corporate/our-
company/governance. The Committee’s main
responsibilities are to:
– Establish and maintain formal and transparent
procedures for developing policy on Executive
Director remuneration and for determining the
remuneration packages of individual Executive
Directors and senior management, and to
monitor and report on them.
– Determine the remuneration, including pension
arrangements, of the Executive Directors and
senior management.
– Approve annual and long term incentive
arrangements together with their targets and
levels of awards.
– Determine the level of fees for the Chairman of
the Board.
– Select and appoint the external advisers to
the Committee.
– Review wider workforce remuneration and
other policies.
As at 31 December 2020, the Committee
comprised two Independent Non Executive
Directors and also the Chairman of the Board.
Gwyn Burr is the Committee Chair and the other
members of the Committee were Irene Dorner
and Angela Knight. Kevin Beeston and Kate
Barker stood down as Committee members
on 26 February and 20 April 2020 respectively.
In addition, on his appointment to the Board
on 1 March 2021, Jitesh Gadhia will become
a member of the Committee.
Details of attendance at Committee meetings
held during 2020 appear on page 98.
No Director is involved in any decisions about
their own remuneration and a conflicts of interest
register is maintained by the Company Secretary
in accordance with the Company’s Conflicts of
Interest Policy.
Advice to the Committee
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.
The Committee appoints its own independent
remuneration advisers and during the year it
continued to retain the services of Korn Ferry.
Korn Ferry is a member of the Remuneration
Consultants Group and signatory to its Code of
Conduct. During 2020 Korn Ferry also provided
other ad hoc remuneration services outside the
scope of the Committee to the Company. The
Committee reviews the performance and
independence of its advisers on an annual basis
and is satisfied that the advice provided is
objective and independent.
The Committee also receives legal advice from
Slaughter and May, the Company’s solicitors, as
and when necessary. This generally relates to
technical advice on share schemes and also with
regard to any senior appointments and
termination arrangements. The Committee is
satisfied that the advice provided by Slaughter
and May is objective and independent.
The fees paid to the Committee’s advisers in
2020 were: Korn Ferry £62,920 on a time and
materials basis (2019: £112,722). No significant
amount of advice was sought from Slaughter
and May during the year.
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Governance
Corporate governance: Remuneration continued
Annual Bonus Scheme
The Executive Incentive Scheme (EIS)
performance measures and their weightings for
2021 are shown in the table below. The precise
details of the targets themselves are deemed
to be commercially sensitive as they relate to
the current financial year. However, detailed
retrospective disclosures of the targets and
performance against them will be provided in next
year’s Report in the usual way.
The targets have been set so that entry level
performance is above current market
consensus; and the achievement of the stretch
targets would require strong performance in
favourable market conditions. The Committee
therefore considers the targets to be challenging.
Measure
Weighting
Operating profit
Operating profit margin
Cash conversion
Build quality
Customer service
35%
15%
10%
20%
20%
While the measures themselves have not
changed, there has been a small amendment to
the weighting of two of the measures. Given the
increased focus to build margin, the operating
profit margin weighting has increased to 15%
(2020: 10%) and cash conversion has reduced
to 10% (2020: 15%). Operating profit margin is
an important measure as the Company looks to
maintain focus on increasing cost discipline and
mitigating future cost inflation. Cash conversion
will be measured excluding net land spend, to
recognise the commitment to acquire land as
anticipated by the equity raise.
Given the Company’s increased strategic focus
on placing customers at the heart of decision
making, customer service and build quality
remain the two non-financial measures operating
within the EIS. These measures continue to be
used to underpin our goal to deliver high-quality
homes and to reduce the number of instances
requiring remediation.
The basis on which customer service is measured
has been changed. Previously it has been
measured equally against the independent NHBC
scores at both eight-week and the longer term
nine-month customer satisfaction surveys. Going
forward, it is proposed to base it solely on the
‘Would you recommend your builder to a friend?’
question asked as part of the eight-week survey.
This approach aligns to the HBF star builder
Cash conversion has been replaced with
operating profit margin as this supports the
focus on cost and process discipline. The target
range has been set recognising the prevailing
market uncertainty but is based on delivering
the targeted 21% to 22% in the third year.
Return on net operating assets (RONOA)
has been retained as a performance measure
to maintain focus on driving increased
capital efficiency.
Customer service continues to be a key strategic
priority for the Company and therefore will
remain a performance measure in 2021. The
customer service element of the PSP will be
based on the single question ‘Would you
recommend your builder to a friend?’ from
the independently measured NHBC nine-month
survey, therefore will be on a different
measurement basis to the EIS customer
service measure.
Awards vest on a straight-line basis between the
above threshold and maximum vesting levels.
Malus and clawback provisions are in line with
the Code requirements and the Committee is
satisfied that they remain fully enforceable if
ever needed. Performance will be measured
over a three-year performance period and will
be subject to a two-year post-vesting
holding period.
The PSP will operate in accordance with the
Policy as set out on pages 105 to 107.
status which resonates with our customers and
which we believe is only achievable if all other
areas of customer satisfaction are achieved.
The nine-month survey measure has been moved
to the PSP where we believe it is better placed.
Malus and clawback provisions are in line with
the Code requirements and the Committee is
satisfied that they remain fully enforceable if ever
needed. One third of any bonus paid will be
deferred into shares and held in the Employee
Benefit Trust for three years.
The EIS will operate in accordance with the
Policy as set out on pages 105 to 107.
Long Term Incentive Plan
In accordance with the Policy, long term
incentives take the form of the Taylor Wimpey
Performance Share Plan (PSP) award with a
maximum award of 200% of base salary (face
value of shares at date of award).
The annual awards granted to the Executive
Directors in 2021 will be subject to the
performance measures shown in the table
below. The Committee has reviewed the targets
and believes they remain stretching and
appropriate in the present market outlook for the
medium term.
The Committee has made some changes to the
performance measures and their respective
targets for 2021 to reflect the Company’s long
term strategic priorities.
TSR will remain a performance measure and
performance will again be measured against the
Housebuilder Peer Group. The Peer Group is an
unweighted index comprising Barratt
Developments, Bellway, Berkeley Homes,
Countryside Properties, Crest Nicholson,
Persimmon, Redrow and Vistry Group. By
retaining TSR as a measure it aligns the rewards
received by executives with the returns received
by shareholders.
Measure
(% of total award)
(0% vesting)
(20% vesting)
TSR v Peer Group
40% Below median
Median
(100% vesting)
Upper
quartile
Weighting
Below threshold
Threshold
Maximum
Operating profit margin (2021-2023)
20% Below 18.5%
18.5%
20.5%
RONOA (2021-2023)
Customer service (2021-2023)
20%
20%
Below 22%
Below 78%
22%
78%
25%
81%
Key
Key performance indicators
See pages 22 to 25.
Link to our stakeholders
See pages 28 to 41.
Link to our strategic goals
See page 19.
Payments for loss of office to former Directors (audited)
There were no payments made to former Directors.
Fees
The current fees for the Chairman of the Board and Independent Non Executive Directors are set out below. Fees will be reviewed during the course of
2021.
Chairman of the Board
Basic Independent Non Executive Director
Senior Independent Director
Audit Committee Chair
Remuneration Committee Chair
The Board’s NEF Champion
Implementation of the Remuneration Policy during 2020
Director emoluments (audited)
Annual fees as
at 1 April 2021
£320,000
£60,000
£17,500
£17,500
£17,500
£10,000
£’000
Executive
Pete Redfern
Chris Carney
Jennie Daly
Non Executive
Irene Dorner (appointed 1 December 2019)
Gwyn Burr
Angela Knight
Rob Noel (appointed 1 October 2019)
Humphrey Singer
Kate Barker (stood down 31 July 2020)
Kevin Beeston (stood down 26 February 2020)
Total
Year
Fees and
salary(a)
Benefits(b)
EIS(c)
PSP(d)
Pension(e)
All-employee
schemes(f)
Total fixed
remuneration
Total variable
remuneration
Total
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
787
870
395
436
360
400
248
5
70
72
54
60
65
15
70
78
34
83
51
320
2,134
2,339
55
54
9
20
17
18
–
–
–
–
–
–
–
–
–
–
–
–
–
1
81
93
–
663
–
333
–
304
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,300
103
1,449
34
424
26
217
–
–
–
–
–
–
–
–
–
–
–
–
–
–
163
2,090
173
209
73
87
67
80
–
–
–
–
–
–
–
–
–
–
–
–
–
–
313
376
2
2
2
2
2
2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6
6
1,120
3,247
513
1,302
472
1,021
248
5
70
72
54
60
65
15
70
78
34
83
51
321
2,697
6,204
1,017
1,135
479
545
446
500
248
5
70
72
54
60
65
15
70
78
34
83
51
321
2,534
2,814
103
2,112
34
757
26
521
–
–
–
–
–
–
–
–
–
–
–
–
–
–
163
3,390
(a) The 2020 figure takes into account the voluntary 30% reduction in salaries and fees from 1 April to 31 July 2020. Further details can be found on pages 98 and 108.
(b) Benefits include non-cash payments to Pete Redfern, Chris Carney and Jennie Daly for private medical insurance, life assurance and company car provision (the value of the
Company car provided was £39,129, £4,583 and £12,978 respectively). Kevin Beeston’s benefit relates to the provision of private medical insurance.
(c) The 2020 EIS for the Executive Directors was cancelled in light of the COVID-19 pandemic. For disclosure purposes the performance measures and targets can be found on page
115. One third of the 2019 EIS was deferred into shares for three years and will not be subject to any further performance measures.
(d) This column shows the vesting during 2020 and 2019 of the PSP as set out in the tables on page 114 and includes the value of dividends accrued during the performance period and
payable on vesting. The 2019 totals have been restated to reflect the actual share price at vesting of 212.4 pence. None of the values received in 2019 and 2020 relate to a share
price increase from the date of Award and date of vesting.
(e) For Pete Redfern these figures represent the cash allowance payable. For Chris Carney and Jennie Daly these figures represent pension contributions up to the amount permissible
under HMRC rules and cash allowances beyond this level.
(f) These figures represent the value of the matching shares under the Share Incentive Plan.
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Governance
Corporate governance: Remuneration continued
Performance Share Plan (audited)
PSP awards included in the 2019 total remuneration figure – overall vesting 62.8%
Award
2017 PSP
Performance target
TSR FTSE 100
TSR peer group
RONOA
Cash conversion
Operating profit margin
Weighting
20%
30%
20%
15%
15%
% of maximum
20%
0%
20%
15%
7.8%
Date of end of
performance period
31/12/2019
31/12/2019
31/12/2019
31/12/2019
31/12/2019
Date of vesting
26/02/2020
26/02/2020
26/02/2020
26/02/2020
26/02/2020
Share price
at vesting
212.4p(a)
212.4p(a)
212.4p(a)
212.4p(a)
212.4p(a)
(a) The share price shown is the closing middle market share price on the date of vesting – 26 February 2020.
PSP awards included in the 2020 total remuneration figure – overall vesting 6.6%
Award
2018 PSP(a)
Performance target
TSR FTSE 100
TSR Peer Group
RONOA
Cash conversion
Operating profit margin
Weighting
20%
30%
20%
15%
15%
% of maximum
0%
0%
0%
6.6%
0%
Date of end of
performance period
31/12/2020
31/12/2020
31/12/2020
31/12/2020
31/12/2020
Average share price
in the last three months
of the performance
period
140.8p(b)
140.8p(b)
140.8p(b)
140.8p(b)
140.8p(b)
Date of vesting
02/03/2021
02/03/2021
02/03/2021
02/03/2021
02/03/2021
(a) On exercise, an equivalent proportion of cash accrued in lieu of dividends paid during the performance period, will also be paid net of income tax and national insurance.
(b) The share price shown is the average of the share prices for the dealing days in the last three months (October to December 2020) and will be restated in next year’s Annual Report
and Accounts to reflect the actual share price on vesting on 2 March 2021.
Vesting of PSP awards for performance period ending 31 December 2020 (audited)
2018 PSP Award
The performance period for all elements of the 2018 PSP Award ended on 31 December 2020 and the final measurement was undertaken based on this
date, with the performance outcome being independently calculated by Korn Ferry and as part of the overall audit process.
The outcomes were as follows:
Measure
Weighting
No vesting
Vesting scale
20% vesting
100% vesting
Performance
% of
achieved
maximum
TSR FTSE 100
20%
Below median
Median
Upper quartile or above
Below median
0%
TSR peer group
30%
Below median
Median
Upper quartile or above
Below median
0%
RONOA (2020)(a)
20%
Below 26%
26%
30% or above
10.3%
0%
15%
Below 65%
65%
75% or above
68%
6.6%
Cash conversion
(2018-2020)(a)
Operating profit
margin (2020)
Directors’ PSP awards granted during 2020 (audited)
Performance awards were made in March 2020 as summarised below:
Pete Redfern
Award
PSP
Type
Nil-cost options
Number of
shares(a)
855,762
Face value
(% of salary)(b)
£1,748,322 (200%)
Chris Carney
Jennie Daly
PSP
PSP
Nil-cost options
Nil-cost options
429,368
391,581
£877,200 (200%)
£800,000 (200%)
% vesting at
threshold
performance
20%
Performance conditions(c) Performance period
01/01/2020
to
31/12/2022
40% on TSR v peer group
20% on RONOA
20% on cash conversion
20% on customer service
As above
As above
As above
As above
As above
As above
(a) Calculated using the share price of 204.3 pence being the average of the closing prices for 28 February, 2 and 3 March 2020.
(b) The Executive Directors’ salary as at 4 March 2020 was used to calculate the total face value of the Award.
(c) The Awards were granted in early March 2020, before business performance and the share price were impacted by the pandemic.
EIS in respect of 2020 (audited)
As detailed on pages 98 and 99, the Committee used its discretion to cancel the EIS in respect of 2020 performance for the Executive Directors in light of
the COVID-19 pandemic. For disclosure purposes, the performance measures and their respective targets are set out below.
Measure
Strategic goal / KPI
Weighting
Entry (10% vesting)
Target (50% vesting)
Stretch (100% vesting)
Result
maximum
Summary of targets
% of
To increase aggregate
profit
To increase the
conversion of operating
profit into operating cash
flow
To maintain focus on cost
discipline
To deliver high-quality
homes and to reduce
remediation
To improve and deliver
customer service based
on key National House-
Building Council
performance standards
eight-
week
survey
nine-
month
survey
Operating
profit (£)
Cash
conversion (%)
Operating
profit margin (%)
Build quality
Customer
service
Total
35%
£800m
£828m
£858m
£300m
0%
15%
70%
75%
80%
(55)%
0%
10%
17.8%
18.8%
20.3%
10.8%
0%
20%
4.00
4.10
4.20
4.45
20%
10%
89%
90%
91%
91.8%
10%
10%
70%
72%
74%
71.4%
4%
100%
34%
15%
Below 20%
20%
22% or above
10.8%
0%
As no payment will be made in respect of 2020 performance, there will be no bonus deferred into shares.
Total
100%
6.6%
(a) The RONOA and cash conversion measures were assessed on the basis that the impact of the equity raise in 2020 was neutralised.
In deciding whether, and to what extent, any vesting of awards should take place under any PSP, the Committee also considers the overall financial
performance of the Company during the period. The Committee has determined that the overall financial performance of the Company has been resilient
and therefore determined that the 2018 PSP awards should vest at 6.6% based on the partial achievement of one performance measure, as set out in
the table above.
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115
Governance
Corporate governance: Remuneration continued
Executive Directors’ interests in the Company’s share schemes (audited)
Details of the options and conditional awards over shares held by Directors who served during the year are as follows:
Maximum
potential
outstanding
shares as at
1 January 2020
Additional
maximum
potential
awarded during
the year
Dividend
re-investment
shares added
during the year
Delivered /
exercised during
the year
Lapsed
during
the year
Maximum
potential
receivable
as at
31 December
Maximum shares vesting in:
2020
2021
2022
2023
Pete Redfern
653,096
Deferred shares (EIS)
Performance Share Plan (PSP) 2,734,300
Sharesave Plan
18,863
Total
190,165
855,762
–
3,406,259 1,045,927
Chris Carney
Deferred shares (EIS)
120,898
Performance Share Plan (PSP) 1,029,702
20,891
Sharesave Plan
1,171,491
Total
95,413
429,368
–
524,781
Jennie Daly
Deferred shares (EIS)
Performance Share Plan (PSP)
Sharesave Plan
Total
84,795
800,722
22,921
908,438
87,016
391,581
–
478,597
–
–
–
0
–
–
–
0
–
–
–
0
218,036
557,731
–
775,767
–
330,377
–
330,377
625,225
2,701,954
18,863
3,346,042
181,313
898,423
–
1,079,736
253,747
947,769
18,863
1,220,379
190,165
855,762
–
1,045,927
–
163,293
–
163,293
–
96,728
–
96,728
216,311
1,199,049
20,891
1,436,251
–
294,149
11,460
305,609
120,898
475,532
9,431
605,861
95,413
429,368
–
524,781
–
83,347
–
83,347
–
49,372
–
49,372
171,811
1,059,584
22,921
1,254,316
–
225,648
22,921
248,569
84,795
442,355
–
527,150
87,016
391,581
–
478,597
Vesting of the deferred shares and Sharesave Plan options are not dependent on any performance conditions. The vesting of the PSP is subject to the
achievement of performance conditions and 20% will be receivable if threshold performance is achieved. There have been no variations to the terms and
conditions or performance criteria for outstanding share awards during the financial year.
The market price of the ordinary shares on 31 December 2020 was 165.8 pence and the range during the year was 99.18 pence to 236.2 pence. Details
of any share awards made to the Executive Directors during 2021 will be included in the 2021 Remuneration Report.
The Directors do not hold any vested but unexercised share options.
Total shareholder return performance graph and Chief Executive historic remuneration (unaudited)
The graph below shows the value of £100 invested in Taylor Wimpey plc on 31 December 2010 compared with the value of £100 invested in the FTSE
350 and in the average of the Housebuilders Index introduced for the 2012 Performance Share Plan awards onwards and as varied subsequently for the
2014 and 2016 awards. These benchmarks have been chosen as Taylor Wimpey is a constituent of both.
Total shareholder return
Taylor Wimpey
Housebuilders Index
FTSE 350
Source: Thomson
Reuters Datastream.
Value (£) (rebased)
1,000
900
800
700
600
500
400
300
200
100
0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
The table below shows the total remuneration figure for the Chief Executive over the same 10-year period as is shown in the TSR graph above. The total
remuneration figure includes the EIS and PSP awards which vested based on performance in those years. The EIS and PSP percentages show the
payout for each year as a percentage of the maximum award that could have been paid or received.
Total remuneration (£’000)
EIS (%)
PSP vesting (%)
Year ending 31 December
2011
1,674
82
0
2012
3,009
95
40
2013
6,724
90
85
2014
6,250
90
94
2015
6,888
78
100
2016
4,072
80
81
2017
3,697
66
78
2018
3,272
93
50
2019
3,247
50.6
62.8
2020
1,120
0
6.6
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Governance
Corporate governance: Remuneration continued
CEO pay ratios (unaudited)
Year
Method
CEO single figure
2018(a)
2019(a)
2020(b)
Option B
£3,151,748
Option B
£3,023,654
Option B
£1,120,451
All UK employees
Ratio
Total pay
Salary
Ratio
Total pay
Salary
Ratio
Total pay
Salary
Lower quartile
103:1
£30,375
£26,412
93:1
£32,342
£27,500
39:1
£28,389
£23,233
Median
77:1
£41,135
£26,873
73:1
£41,483
£31,277
26:1
£42,492
£30,600
Upper quartile
41:1
£76,575
£52,458
48:1
£62,418
£45,621
20:1
£56,844
£47,000
(a) The 2018 and 2019 CEO single figures disclosed have not been restated to reflect the share price on the date the 2016 and 2017 PSP Award vested. We have chosen to do this for
transparency purposes so that we are comparing the ratios disclosed in previous Reports.
(b) The three representative employees were determined on 31 December 2020.
Under Option B, using the hourly rate from our 2020 gender pay gap data, three employees have been identified as the best equivalents of our lower
quartile, median and upper quartile. Option B provides a clear methodology involving fewer adjustments to calculate full-time equivalent earnings and is
more likely to produce more robust reporting year on year. The Committee has reviewed the results of the calculations and is satisfied that they continue
to be representative of the respective quartiles. Total pay and benefit figures, during the financial year ending 31 December 2020, have been calculated
for the employee at each quartile, and for employees either side of the identified employees, to ensure that the employees selected are a reasonable
representative based on their full year’s remuneration.
As a result of the COVID-19 pandemic the CEO single figure is significantly lower than in 2019, which has caused all three ratios to reduce to a greater
degree than would otherwise have been expected. The decrease in the CEO single figure is predominantly due to no annual bonus being paid to
Executive Directors in respect of 2020 performance, a low level of vesting in respect of the 2018 Performance Share Plan Award and the 30% reduction
to Executive Directors’ salaries and pension from 1 April to 31 July 2020. Further details on the amendments to the Policy in 2020 can be found on pages
98, 99 and 108. In contrast, base salaries for the wider workforce were generally protected over the same period to ensure that they did not suffer any
financial hardship during the COVID-19 pandemic. Further information on the steps taken by the Company can be found on pages 99, 108 and 109.
During 2019, the Company increased the use of direct labour to mitigate the industry-wide skills shortage. This led to an increase in the number of
apprentices employed by the Company during 2020. As apprentices are paid lower rates of pay, this has impacted on the lower-quartile range, which
has seen the total remuneration figure for our lower quartile representative being lower in comparison to 2019.
Whilst the Company has protected employees’ base salaries during the pandemic, COVID-19 has naturally resulted in reduced bonus payments in the
year. This has impacted the total remuneration for the upper quartile representative when compared to the 2019 representative.
As has been noted on pages 108 and 109, the Committee has reviewed the remuneration policies and practices for the wider workforce in conjunction
with the Directors' Remuneration Policy review during the year. The Committee is satisfied that there is a good level of consistency in relation to pay
policies throughout Taylor Wimpey.
Annual percentage change in remuneration of Directors and employees (unaudited)
The table below shows the percentage change in salary or fee, taxable benefits and annual bonus of each individual Director in respect of the financial
years ending 31 December 2019 and 31 December 2020, as set out on page 113.
Executive Directors(a)
Pete Redfern
Chris Carney
Jennie Daly
Non Executive Directors(b)
Irene Dorner(c)
Gwyn Burr(d)
Angela Knight
Rob Noel(c)
Humphrey Singer
Average pay of Taylor Wimpey employees
Salary / fee(a)
Benefits
Annual bonus
scheme(b)
(10)%
(10)%
(10)%
n/a
(3)%
(10)%
n/a
(10)%
0%
2%
(55)%
(6)%
–
–
–
–
–
0%
(100)%
(100)%
(100)%
–
–
–
–
–
(46)%
(a) The percentage change is a result of the voluntary 30% reduction in base salary and pension from 1 April 2020 to 31 July 2020.
(b) The percentage change is a result of the voluntary 30% reduction in fees from 1 April 2020 to 31 July 2020.
(c) Irene Dorner and Rob Noel were appointed in December 2019 and October 2019 respectively.
(d) Gwyn Burr was appointed Chair of the Remuneration Committee in April 2019 and therefore received the additional Remuneration Chair fee for part of 2019.
Change in Company performance relative to change in remuneration (unaudited)
Operating profit(a)
Dividends paid per ordinary share
Employee pay in aggregate (see Note 7 to the financial statements)
Employee pay average per employee (see Note 7 to the financial statements)
2019
£850.5m
18.34p
£290.4m
£49,363
2020
£300.3m
0.00p
£280.1m
£46,459
Change (%)
(64.7)%
(100)%
(3.5)%
(5.9)%
(a) Operating profit is defined as profit on ordinary activities before net finance costs, exceptional items and tax, after share of results of joint ventures.
Directors’ interests in shares of the Company
Share ownership guidelines
The level of required shareholding for Executive Directors to attain is 200% of their base salary. The Executive Directors are required to retain at least 50%
of their net of taxes gain arising from any shares vesting or acquired pursuant to the Company’s Long Term Incentive Plans, until such time as the
guidelines have been met. Beneficially owned shares count toward the guidelines, together with the portion of the annual bonus (EIS) deferred into shares
(on a net of tax basis) and any vested but unexercised PSP awards.
A post-employment shareholding guideline requires Executive Directors to retain shares worth two times their base salary, or their shareholding at the
time of cessation if their 200% salary shareholding requirement has not yet been met, for at least two years. Any shares that vest from either the PSP or
the EIS deferred shares must be held within the Company’s Employee Benefit Trust until the required shareholding level has been achieved. The shares
will then be released from the Employee Benefit Trust two years from the date of cessation of employment.
The Chairman and the Independent Non Executive Directors are also encouraged to hold shares in the Company in order to align their interests with
those of shareholders.
In June 2020, all Directors subscribed to shares in the Company as part of the equity raise.
Directors’ interests in shares of the Company (audited)
Beneficially owned
Outstanding interests in share plans
Director
Irene Dorner
Pete Redfern
Chris Carney
Jennie Daly(d)
Gwyn Burr
Angela Knight
Rob Noel
Humphrey Singer
Kevin Beeston(d)
Kate Barker
at 01/01/20
(ordinary shares)
15,000
1,188,804
253,182
98,484
–
10,000
–
25,000
777,596
60,000
at 31/12/20
(ordinary shares)(a)
125,440
2,363,494
376,484
179,511
17,241
16,896
46,674
31,896
777,596
67,586
EIS deferred shares
(gross)
–
625,225
216,311
171,811
–
–
–
–
–
–
PSP(b)
–
2,701,954
1,199,049
1,059,584
–
–
–
–
–
–
Share interests expressed
as a % of salary
Value of shares
(including EIS deferred
shares on a net basis) as
at 31/12/20(c)
–
511%
185%
112%
–
–
–
–
–
–
Sharesave
–
18,863
20,891
22,921
–
–
–
–
–
–
(a) Or date stood down from the Board.
(b) Vesting is subject to the achievement of performance conditions.
(c) This has been calculated on the basis of beneficially owned shares and the net amount of EIS shares. The share price on 31 December 2020 (165.8p) has been used to calculate the
Executive Directors’ share interest expressed as a percentage of salary.
(d) A proportion of shares are held by a connected person.
The only changes to the Directors’ interests as set out above during the period between 31 December 2020 and 1 March 2021 were the regular monthly
purchases of shares and 1:1 matching by the Company under the Share Incentive Plan by Pete Redfern, Chris Carney and Jennie Daly who acquired
366, 368 and 368 shares respectively.
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Governance
Corporate governance: Remuneration continued
Directors’ pension entitlements (audited)
Defined benefit schemes
Pete Redfern is a member of the Taylor Wimpey Pension Scheme (TWPS). The following table sets out the transfer value of his accrued benefit under the
TWPS calculated in a manner consistent with The Occupational Pension Schemes (Transfer Values) Regulations 2008.
Director
Pete Redfern
Normal retirement age
62
Accrued pension as
at 31/12/19
15,625
Increase in accrued
pension from 31/12/19
to 31/12/20
710
Accrued pension as
at 31/12/20(a)
16,335
Transfer value gross of
Director’s contributions
at 31/12/20(b)
476,360
Transfer value gross of
Director’s contributions
at 31/12/19(b)
389,163
Increase (decrease)
in transfer value from
31/12/19 to 31/12/20
less Director’s
contributions(c)
87,197
(a) The pension benefits are based on service up to 31 August 2010 when the George Wimpey Staff Pension Scheme (GWSPS) closed to future accrual. Members of the GWSPS were
transferred into the Taylor Wimpey Pension Scheme (TWPS) on 1 October 2013 and there was no change to members’ benefit entitlement. Pension benefits include a two thirds
spouse’s pension. Pensions accrued up to 5 April 2009 will revalue in deferment in line with inflation subject to an overall cap of 5% per annum. Pensions accrued after 5 April 2009
will revalue in deferment in line with inflation subject to an overall cap of 2.5% per annum. Once in payment, pensions accrued up to 5 April 2006 are guaranteed to increase in line
with inflation limited each year to 5%, pensions accrued after 5 April 2006 are guaranteed to increase in line with inflation limited each year to 2.5%. The Company has only taken into
account defined benefits accrued over the period to 31 August 2010 and has not included any Defined Contribution pension benefits accrued after this date.
(b) Transfer values have been calculated in accordance with The Occupational Pension Schemes (Transfer Value) Regulations 1996 (as amended).
(c) The transfer value includes the effect of fluctuations due to factors beyond the control of the Company and Directors, such as financial market movements.
There were no changes to benefits during the year and consequently no difference between the changes to Pete Redfern’s pension benefits in
comparison with those of other employees.
Non-Group pension arrangements
The value of Company pension contributions in 2020 for Chris Carney and Jennie Daly was:
Chris Carney
Jennie Daly
Statement of shareholder voting (unaudited)
At the 2020 AGM, the result of the shareholders’ vote on the Company’s Remuneration Report for 2019 was:
For
Against
Withheld
At the 2020 AGM, the result of the shareholders’ vote on the Company Remuneration Policy was:
For
Against
Withheld
2020
(£)
5,501
5,501
2019
(£)
9,988
10,007
2020
(Votes)
1.95 billion
(96.5%)
72 million
(3.5%)
502,869
2020
(Votes)
2 billion
(98.6%)
27 million
(1.4%)
583,978
Approval
This Remuneration Report was approved by the Board of Directors on 1 March 2021 and signed on its behalf by the Remuneration Committee Chair:
Gwyn Burr
Chair of the Remuneration Committee
1 March 2021
Statutory, regulatory and
other information
Introduction
This section contains the remaining matters on which the Directors are required to report each year, which do not appear elsewhere in this Directors’
Report. Certain other matters which are required to be reported on appear in other sections of this Annual Report and Accounts, as detailed below:
Matter
Strategic Report
Likely future developments in the business of the Company
Carbon footprint reporting
Stakeholder engagement
A description of the Company’s policies on employment of people with disabilities
A description of the Company’s employee engagement practices
Charitable donations
Research and development activities
Viability Statement
2018 UK Corporate Governance Code compliance statement
Directors
Retirement and re-election of Directors
A description of how the Board assesses and monitors culture
Remuneration Committee report
Details of the Company’s long term incentive schemes
Profit before taxation and profit after taxation
Directors’ dividend recommendation
Changes in asset values
Statement on the Group’s treasury management and funding including information on the exposure of the Company in
relation to the use of financial instruments
Subsidiaries and associated undertakings, including branches outside the UK
Page(s) in this Annual Report
1 to 59
1 to 59
42 and 43
28 to 41 and 72 to 77
34
34, 35, 76 and 77
36
39
58 and 59
63
64 and 65
84, 174 to 182
70
98 to 120
98 to 120
130 and 135 to 173
175 and 177
132 and 135 to 173
151 to 153
171 and 172
176 and 179
183
184
Political donations
Web communications with shareholders
Registrar
Qualifying third party indemnity
In accordance with Section 234 of the
Companies Act 2006 and following advice from
the Company’s solicitors, Slaughter and May,
the Company has granted an indemnity in favour
of its Directors and Officers and those of its
Group companies, including the Trustee
Directors of its Pension Trustee Company. The
indemnity is against the financial exposure that
they may incur in the course of their professional
duties as Directors and Officers of the Company
and / or its subsidiaries / affiliates.
Audit and auditor
Each Director has, at the date of approval of this
Report, formally confirmed that:
This confirmation is given and should be
interpreted in accordance with the provisions of
Section 418 of the Companies Act 2006.
More information can be found on page 124.
– To the best of their knowledge there is no
relevant audit information of which the
Company’s Auditor is unaware.
– They have taken all the steps they ought to
have taken as a Director in order to make
themselves aware of any relevant audit
information and to establish that the
Company’s Auditor is aware of that information.
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Governance
Corporate governance: Statutory,
regulatory and other information continued
Annual General Meeting
The Annual General Meeting (AGM) will be held
at 10:00am on 22 April 2021 at Gate House,
Turnpike Road, High Wycombe, Buckinghamshire,
HP12 3NR.
current intention of exercising this authority but
will nevertheless be seeking the usual renewal
of this authority at the AGM, and the Board
will continue to keep the position under
regular review.
Formal notice of the AGM is set out in the Notice
of Annual General Meeting on pages 174 to
182 and on the Company’s website at:
www.taylorwimpey.co.uk/2021AGM.
In June 2020, we undertook an equity raise
to generate £510 million through issuing new
shares. More information about the equity raise
is set out on pages 12 and 13.
Capital structure
Details of the Company’s issued share capital,
together with information on movements in the
Company’s issued share capital during the year,
are shown in Note 23 on pages 158 and 159.
The Company has two classes of shares:
Ordinary Shares of 1p, each of which carries the
right to one vote at general meetings of the
Company and other such rights and obligations
as are set out in the Company’s Articles of
Association; and Deferred Shares, which carry
no voting rights.
The authority to make market purchases
pursuant to the resolution passed at the 2020
AGM was not exercised during 2020 or prior to
the date of this Report. The Company has no
The Company currently holds no shares
in treasury.
There are no specific restrictions on the size of
a holding, the exercise of voting rights, or the
transfer of shares, which are governed by the
Company’s Articles of Association and prevailing
legislation. The Directors are not aware of any
agreement or agreements between holders
of the Company’s shares that may result in
restrictions on the transfer of securities or
voting rights.
The Employee Share Ownership Trust (ESOT),
which holds shares on trust for employees under
the Company’s various share schemes,
generally abstains from voting at shareholder
general meetings 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.
Dividend
During 2020, in consideration of the COVID-19
pandemic and after careful consideration of the
long term best interests of the Company, the
Board decided to cancel the 2019 final dividend
of 3.80 pence per share (c.£125 million) that was
due to be paid on 15 May 2020, and the
planned special dividend payment of 10.99
pence per share (c.£360 million) that was due to
be paid on 10 July 2020.
Information relating to the 2020 final ordinary
dividend is set out on page 57 and in the notes
to resolution 2 on page 177. The Company will
be operating a Dividend Re-Investment Plan
(DRIP), further details are set out on pages 177
and 183.
The right to receive any dividend has been
waived in part by the Trustees of the Company’s
ESOT over that Trust’s combined holding of
7,052,920 shares. More details about the ESOT
can be found in Note 26 on page 159.
Substantial interests
The persons set out in the table below have notified the Company pursuant to Rule 5.1 of the Disclosure and Transparency Rules of their interests in
the ordinary share capital of the Company.
At 1 March 2021, 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 Company’s issued share capital.
Directors’ interests in the Company’s shares are shown in the Remuneration Report on page 119.
Name
The Capital Group Companies, Inc
BlackRock Inc
Legal & General Group plc
Standard Life Investments Limited
As at 31 December
2020
Percentage
of issued voting
share capital
5.08
5.01
2.70
2.64
Number of shares
held (millions)
185.1
182.5
98.5
96.5
Number of shares
held (millions)
185.1
182.5
98.5
96.5
As at 1 March
2021
Percentage
of issued voting
share capital
5.08
5.00
2.70
2.64
In addition to the substantial interests shown above, at 31 December 2020, the Company held in its ESOT 7.1 million of its own shares, representing
0.19% of the shares in issue at that date (2019: 10.7 million, 0.33%). The Company holds no shares in treasury.
Modern Slavery Act
The Company welcomes the aims and
objectives of the Modern Slavery Act 2015
(MSA) and continues to take its responsibilities
under the MSA with the seriousness deserved
and required. A multi-disciplined team is
responsible for ensuring that objectives continue
to be met and is ready to respond appropriately
to the anticipated strengthening of Section 54
of the MSA by the Government, reflecting the
Government’s response to its 2019 consultation
on the subject. The Company will shortly be
publishing its fifth statement under the Modern
Slavery Act 2015, which will be available at:
www.taylorwimpey.co.uk/corporate.
Agreements
The Company’s borrowing and bank facilities
contain the usual change of control provisions
which could potentially lead to prepayment and
cancellation by the other party upon a change of
control of the Company. There are no other
significant contracts or agreements which take
effect, alter or terminate upon a change of
control of the Company.
Employee share ownership
The Company promotes employee share
ownership as widely as possible across the
business. The Company has two all-employee
share plans, the Save As You Earn share option
plan and the Share Incentive Plan, which are
offered to all UK-based employees once they
have worked for the Company for three months.
The Company also offers a scheme whereby
employees who do not participate in the
Executive Incentive Scheme (cash bonus
scheme) are offered the opportunity to exchange
any cash bonus awarded for shares in the
Company, offering a 20% enhancement to the
value if taken entirely in shares and retained for
a designated period. The scheme has operated
since 2012 and in 2020 resulted in 574,817
shares (2019: 423,839) being acquired by 294
employees (2019: 302).
The percentage of our employees who hold shares
in the Company, either through the all-employee
share schemes, the bonus exchange scheme, or
any other method is over 64% (2019: 57%).
Important events since the year end
There has been a non-adjusting balance sheet
event since 31 December 2020. More details on
the fire safety provision can be found on page 30
and Note 33 on page 164.
Directors’ responsibilities statement
The Directors are responsible for preparing the
Annual 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.
Under that law the Directors are required to
prepare the Group financial statements in
accordance with international accounting
standards in conformity with the requirements
of the Companies Act 2006 and International
Financial Reporting Standards (IFRS Standards)
adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union.
The Directors have also chosen to prepare the
parent company financial statements in
accordance with Financial Reporting Standards
101 Reduced Disclosure Framework. Under
company law the Directors must not approve the
financial statements unless they are satisfied that
they give a true and fair view of the state of affairs
of the Company and of the profit or loss of the
Company for that period.
In preparing the parent company financial
statements, the Directors are required to:
position of the Company and enable them to
ensure that the financial statements comply with
the Companies Act 2006. They are also responsible
for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors are responsible for the
maintenance and integrity of the corporate and
financial information included on the Company’s
website. Legislation in the United Kingdom
governing the preparation and dissemination of
financial statements may differ from legislation
in other jurisdictions.
In accordance with Section 4, Principle N,
Provision 27 of the UK Corporate Governance
Code 2018, as set out on page 63, the Directors
are required to ensure that the Annual Report
and Accounts provides the information
necessary for shareholders to assess the
Company’s performance, business model and
strategy. Details of how this was addressed are set
out in the Audit Committee report on page 97.
– Select suitable accounting policies and then
apply them consistently.
The Directors confirm that to the best of their
knowledge:
– Make judgements and accounting estimates
that are reasonable and prudent.
– State whether Financial Reporting Standard
101 Reduced Disclosure Framework has been
followed, subject to any material departures
disclosed and explained in the financial
statements.
– Prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Company will continue in business.
In preparing the Group financial statements,
International Accounting Standard 1 requires that
the Directors:
– Properly select and apply accounting policies.
– Present information, including accounting
policies, in a manner that provides relevant,
reliable, comparable and understandable
information.
– Provide additional disclosures when
compliance with the specific requirements in
the IFRS Standards are insufficient to enable
users to understand the impact of particular
transactions, other events and conditions on
the entity’s financial position and financial
performance.
– Make an assessment of the Company’s ability
to continue as a going concern.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Company’s transactions and disclose
with reasonable accuracy at any time the financial
– The financial statements, prepared in
accordance with the relevant financial
reporting framework, 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.
– The Strategic 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.
– The Annual Report and financial statements,
taken as a whole, are fair, balanced and
understandable and provide the information
necessary for shareholders to assess the
Company’s position and performance,
business model and strategy.
This Report of the Directors and responsibility
statement was approved by the Board of Directors
on 1 March 2021 and is signed on its behalf by:
Alice Marsden
Group General Counsel and Company
Secretary, Taylor Wimpey plc
1 March 2021
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Financial statements
Independent auditor’s report to the
members of Taylor Wimpey plc
Report on the audit of the financial statements
3. Summary of our audit approach
5. Key audit matters
5. Key audit matters
1. Opinion
In our opinion:
– the financial statements of Taylor Wimpey plc (the ‘Parent Company’)
and its subsidiaries (the ‘Group’) give a true and fair view of the state
of the Group’s and of the Parent Company’s affairs as at 31
December 2020 and of the Group’s profit for the year then ended;
– the Group financial statements have been properly prepared in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006 and International
Financial Reporting Standards (IFRSs) as adopted by the
European Union;
– the Parent Company financial statements have been properly
prepared in accordance with United Kingdom Generally Accepted
Accounting Practice, including Financial Reporting Standard 101
“Reduced Disclosure Framework”; and
– the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
– the consolidated income statement;
– the consolidated statement of comprehensive income;
– the consolidated and Parent Company balance sheets;
– the consolidated and Parent Company statements of changes in equity;
– the consolidated cash flow statement; and
– the related notes 1 to 33 of the Group financial statements and notes
1 to 15 of the Parent Company financial statements.
The financial reporting framework that has been applied in the preparation
of the Group financial statements is applicable law and international
accounting standards in conformity with the requirements of the
Companies Act 2006 and IFRSs as adopted by the European Union.
The financial reporting framework that has been applied in the preparation
of the Parent Company financial statements is applicable law and United
Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure
Framework” (United Kingdom Generally Accepted Accounting Practice).
2. Basis for opinion
We conducted our audit in accordance with International Standards on
Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the auditor’s responsibilities
for the audit of the financial statements section of our report.
We are independent of the Group and the Parent Company in accordance
with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the Financial Reporting Council’s (the
‘FRC’s’) Ethical Standard as applied to listed public interest entities, and
we have fulfilled our other ethical responsibilities in accordance with these
requirements. We confirm that the non-audit services prohibited by the
FRC’s Ethical Standard were not provided to the Group or the Parent
Company. The non-audit services provided to the Group and Parent
Company for the year are disclosed in note 6 to the financial statements
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Key audit
matters
Materiality
Scoping
The key audit matters that we identified in the current
year were:
– inventory costing and margin recognition;
– defined benefit pension scheme accounting; and
– accounting for the leasehold provision.
The materiality that we used for the Group financial
statements was £35.0 million which was determined
based on 0.9% of net assets.
Based on our scoping assessment, our group audit
was focused on the UK Housing division (excluding joint
ventures) which represented the principal segment within
the Group and accounted for 97% of the Group’s net
operating assets, 98% of the Group’s revenue and
95% of the Group’s pre-tax profit.
Significant
changes in
our approach
Our approach to materiality was changed in the current
year, due to the impact of the COVID-19 pandemic on
profit before tax (‘PBT’) and an increased user focus on
the resilience of company balance sheets.
There has been no change in the key audit matters
reported in the current year and the scope remains
consistent with the prior year.
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’
use of the going concern basis of accounting in the preparation of
the financial statements is appropriate. Our evaluation of the directors’
assessment of the Group’s and Parent Company’s ability to continue
to adopt the going concern basis of accounting included:
– understanding the relevant controls relating to the assessment of the
appropriateness of the going concern assumptions;
– analysing the current and forecast performance of the Group including
working capital requirements, by assessing Management’s assumptions
against market data and the Group’s Q1 2021 performance;
– assessing the financing options that are available to the Group;
– recalculating current loan covenants in order to assess compliance over
the going concern period;
– assessing the wider macro-economic environment over the going
concern period, with respect to COVID-19, Brexit and Climate Change,
and whether this has been appropriately reflected in the forecast;
– using various external data sources to identify indicators of potential risk
at the entity and industry level; and
– assessing the appropriateness of the going concern disclosure.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or collectively,
may cast significant doubt on the Group's and Parent Company’s ability
to continue as a going concern for a period of at least twelve months from
when the financial statements are authorised for issue.
In relation to the reporting on how the Group has applied the UK Corporate
Governance Code, we have nothing material to add or draw attention
to in relation to the directors’ statement in the financial statements about
whether the directors considered it appropriate to adopt the going concern
basis of accounting.
Our responsibilities and the responsibilities of the directors with respect
to going concern are described in the relevant sections of this report.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included
period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included
those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team.
those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
provide a separate opinion on these matters.
5.1. Inventory costing and margin recognition
5.1. Inventory costing and margin recognition
Refer to page 97 (Audit Committee report), page 140 (source of estimation uncertainty) and page 149 (financial statement disclosures)
Refer to page 97 (Audit Committee report), page 140 (source of estimation uncertainty) and page 149 (financial statement disclosures)
Key audit
Key audit
matter
matter
description
description
The value of inventory as at 31 December 2020 is £4,534.7 million (2019: £4,196.0 million) and as such is the most significant asset on the
The value of inventory as at 31 December 2020 is £4,534.7 million (2019: £4,196.0 million) and as such is the most significant asset on the
balance sheet (page 132). Inventory comprises land and work in progress ('WIP'); WIP includes the construction cost of developing a site,
balance sheet (page 132). Inventory comprises land and work in progress ('WIP'); WIP includes the construction cost of developing a site,
and is transferred to cost of sales as each plot completes.
and is transferred to cost of sales as each plot completes.
The Group's cost allocation framework determines the total profit forecasted for each site. This allows the land and build costs of a development
The Group's cost allocation framework determines the total profit forecasted for each site. This allows the land and build costs of a development
to be allocated at a plot level, ensuring the forecast margin per plot is equalised across the development. The margins at a plot level aggregate
to be allocated at a plot level, ensuring the forecast margin per plot is equalised across the development. The margins at a plot level aggregate
to form the overall site margin which is a key internal metric. This cost allocation framework drives the recognition of costs as each plot is sold.
to form the overall site margin which is a key internal metric. This cost allocation framework drives the recognition of costs as each plot is sold.
Additionally, in the current year there is a risk that WIP could include unproductive costs associated with COVID-19 that have been
Additionally, in the current year there is a risk that WIP could include unproductive costs associated with COVID-19 that have been
inappropriately capitalised.
inappropriately capitalised.
For each development there is significant judgement and a potential risk of fraud in the following areas:
For each development there is significant judgement and a potential risk of fraud in the following areas:
– Estimating the inputs included within a site budget in order to determine the level of profit that each unit of the development is forecast to
– Estimating the inputs included within a site budget in order to determine the level of profit that each unit of the development is forecast to
deliver. These inputs include the total estimated costs to complete and future forecast selling prices;
deliver. These inputs include the total estimated costs to complete and future forecast selling prices;
– Appropriately allocating costs, such as shared infrastructure, relating to a development so that the gross profit margin (in % terms) achieved on
– Appropriately allocating costs, such as shared infrastructure, relating to a development so that the gross profit margin (in % terms) achieved on
each individual plot is equal;
each individual plot is equal;
– Recording the variation when a deviation from the initial budget occurs and ensuring such variations are appropriately recognised; and
– Recording the variation when a deviation from the initial budget occurs and ensuring such variations are appropriately recognised; and
– Allocating costs correctly in each cost centre so that where actuals are over or under budget (excesses and savings respectively) they are
– Allocating costs correctly in each cost centre so that where actuals are over or under budget (excesses and savings respectively) they are
identified within the appropriate category.
identified within the appropriate category.
How the
How the
scope of
scope of
our audit
our audit
responded
responded
to the key
to the key
audit matter
audit matter
These judgements impact the carrying value of inventory in the balance sheet and therefore the costs recognised for each plot sold and the total
These judgements impact the carrying value of inventory in the balance sheet and therefore the costs recognised for each plot sold and the total
margin that is recognised. These are therefore considered to be a key audit matter.
margin that is recognised. These are therefore considered to be a key audit matter.
We have tested the relevant controls governing inventory costing including the initial process to create a site budget and the ongoing monitoring
We have tested the relevant controls governing inventory costing including the initial process to create a site budget and the ongoing monitoring
process of assessing the actual site margin against the budget.
process of assessing the actual site margin against the budget.
For a sample of sites we have analysed completions in the period and compared the achieved margin to the initial margin determined when the
For a sample of sites we have analysed completions in the period and compared the achieved margin to the initial margin determined when the
original site budget was approved. Where differences fell outside of an acceptable threshold, we made inquiries of Management and obtained
original site budget was approved. Where differences fell outside of an acceptable threshold, we made inquiries of Management and obtained
evidence supporting the variance.
evidence supporting the variance.
For a sample of sites tested, we have reviewed the total excesses and savings balance identified for each tested site, and through recalculation
For a sample of sites tested, we have reviewed the total excesses and savings balance identified for each tested site, and through recalculation
of the expected income statement impact (based on the number of completions in the year), we have determined whether the excesses and
of the expected income statement impact (based on the number of completions in the year), we have determined whether the excesses and
savings have been appropriately allocated and recognised.
savings have been appropriately allocated and recognised.
Through the use of IT interrogation techniques:
Through the use of IT interrogation techniques:
– we have analysed journal postings being made to the inventory balances to highlight any items which potentially should have been recorded
– we have analysed journal postings being made to the inventory balances to highlight any items which potentially should have been recorded
as an expense including a specific focus on the period where the sites were shut due to COVID-19. We also tested the valuation of additions
as an expense including a specific focus on the period where the sites were shut due to COVID-19. We also tested the valuation of additions
to WIP by agreeing a sample to supporting invoices. In completing this procedure we also checked whether all costs could be appropriately
to WIP by agreeing a sample to supporting invoices. In completing this procedure we also checked whether all costs could be appropriately
capitalised and were not linked to unproductive COVID-19 costs;
capitalised and were not linked to unproductive COVID-19 costs;
– we have analysed the cumulative cost over time for a sample of live sites to identify any unusual trends in the costs allocated at a site. Where
– we have analysed the cumulative cost over time for a sample of live sites to identify any unusual trends in the costs allocated at a site. Where
such a trend was identified we made inquiries of Management and obtained evidence with regards to the trend; and
such a trend was identified we made inquiries of Management and obtained evidence with regards to the trend; and
– we have performed a historical analysis of excess recognition across the business units to identify any unusual trends, with any outliers
– we have performed a historical analysis of excess recognition across the business units to identify any unusual trends, with any outliers
included within our testing procedures described above.
included within our testing procedures described above.
We have analysed the cost per square foot of plots sold at a regional business unit level for the current year and compared this to cost per
We have analysed the cost per square foot of plots sold at a regional business unit level for the current year and compared this to cost per
square foot in previous years, to analyse for any unusual trends which required corroboration from Management.
square foot in previous years, to analyse for any unusual trends which required corroboration from Management.
We performed a review of sites where the initial site budget was created a number of years ago, which may indicate the use of an outdated
We performed a review of sites where the initial site budget was created a number of years ago, which may indicate the use of an outdated
budget. Given the age of these sites, we challenged Management where savings from the budget had been made or additional costs had not
budget. Given the age of these sites, we challenged Management where savings from the budget had been made or additional costs had not
been recorded by obtaining evidence to support claims made.
been recorded by obtaining evidence to support claims made.
With the involvement of Deloitte real estate specialists, we assessed costs to complete estimates on a sample of sites, and whether the estimates
With the involvement of Deloitte real estate specialists, we assessed costs to complete estimates on a sample of sites, and whether the estimates
used by Management were reasonable.
used by Management were reasonable.
Key
Key
observations
observations
Based on the procedures performed, we concluded that the Group’s cost allocation framework was reasonable for the intended purpose of
Based on the procedures performed, we concluded that the Group’s cost allocation framework was reasonable for the intended purpose of
recognising appropriate margins on plot completion.
recognising appropriate margins on plot completion.
We concluded that the additions to WIP were appropriate and unproductive costs were not capitalised whilst the Group’s construction activity
We concluded that the additions to WIP were appropriate and unproductive costs were not capitalised whilst the Group’s construction activity
was suspended due to COVID-19.
was suspended due to COVID-19.
The accounting for cost allocation, both at the inception of a site and on an ongoing basis is in line with this framework.
The accounting for cost allocation, both at the inception of a site and on an ongoing basis is in line with this framework.
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Independent auditor’s report continued
5.2. Defined benefit pension scheme accounting
Refer to page 97 (Audit Committee report), page 140 (key source of estimation uncertainty) and pages 154-157 (financial statement disclosures)
Key audit
matter
description
The total value of the defined benefit pension scheme at the balance sheet date is a net deficit of £89.1 million (2019: £84.5 million).
The liabilities and assets are valued at £2,493.4 million and £2,404.3 million respectively (2019: £2,366.7 million and £2,282.2 million).
Accounting for defined benefit pension scheme liabilities is dependent on significant assumptions, including an assessment of the discount rate,
price inflation and key demographic figures including life expectancy and mortality rates. A change in any of these assumptions could cause
a material change in the value of the liabilities overall and the net pension deficit on the Group’s balance sheet.
These accounting assumptions are inherently complex and require a high level of Management judgement and specialist actuarial input.
How the
scope of
our audit
responded
to the key
audit matter
We obtained an understanding of the relevant controls associated with Management’s review of the pension assumptions.
We assessed the competence and objectivity of the qualified actuary engaged by the Group to value the scheme’s defined benefits pension
position under IAS 19 “Employee benefits”. We involved our internal actuarial specialists to assess the appropriateness of the methodology
and assumptions used to account for the defined benefit scheme liability. We challenged Management’s estimates by comparing key data with
market benchmarks used to derive the pension assumptions. We considered whether each of the key assumptions was reasonable in isolation
and collectively in determining the value of the pension liabilities at the balance sheet date.
Key
observations
We have determined that the assumptions used by Management to determine the valuation of the defined benefit pension scheme fall within
an acceptable range.
We concur with Management that the sensitivity of the liability to changes in key assumptions is appropriately disclosed as a key source of
estimation uncertainty.
5.3. Accounting for the leasehold provision
Refer to page 97 (Audit Committee report), page 140 (source of estimation uncertainty) and page 158 (financial statement disclosures)
Key audit
matter
description
How the
scope of
our audit
responded
to the key
audit matter
During the year, £12.6 million (2019: £29.9 million) of the leasehold provision was utilised and the amount of the leasehold provision held as at
31 December 2020 was £59.6 million (31 December 2019: £72.2 million). There have been no further additions or releases.
Accounting for these provisions is complex and involves Management making a number of forward-looking estimates. The judgements related to
this key audit matter lie in estimating the number and value of final settlements with the stakeholders impacted by the historical lease structures.
This provision has multiple components that relate to payments to a number of parties including freeholders and individual customers. Within the
provision are additional costs relating to the implementation of the measures that have been identified. There is a risk that the number of
claimants or the value of the costs provided are inaccurately estimated or valued.
We have obtained an understanding of the relevant controls associated with the review of the calculation of the provision.
We have obtained Management’s current estimation of the total costs. For each component of the provision we have performed procedures
to assess, based on current facts and circumstances, whether the estimates made by Management are accurate.
We have had correspondence with legal counsel to ascertain whether Management’s model reflects the progress of negotiations that have been
held with freeholders.
The largest component of this calculation are the estimated payments to be made to freeholders in order to alter the terms of the leases. In order
to verify these amounts we have confirmed the status of negotiations with freeholders and, where these negotiations had been completed,
obtained a sample of agreements and recalculated the specific amounts that have been provided for. Where these negotiations have not been
completed we have assessed the value that was provided for these freeholder payments.
We have assessed the additional costs the Group is required to pay in order to remediate certain historical lease structures.
Key
observations
Based on the procedures performed, considering the judgements as a whole and the potential range of outcomes, we consider that the value
provided by Management is appropriate.
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably
knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in evaluating the results of
our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Materiality
Basis for
determining
materiality
Group financial statements
£35.0 million (2019: £41.0 million)
The Group materiality was determined based on net assets of
£4,016.8 million (2019: £3,307.8 million), and equates to 0.9% of this
amount.
Parent Company financial statements
£33.2 million (2019: £38.6 million)
0.9% (2019: 1%) of net assets of £4,418.9 million (2019: £3,862.4
million), capped at 95% of Group materiality.
In the prior year, materiality was determined by utilising 5% of pre-tax
profit, before exceptional items.
Rationale for the
benchmark
applied
Using net assets to determine materiality is a change from the prior year to reflect the volatility in the results of the Group arising from the
impact of COVID-19 and the additional focus of users of the financial statements on the balance sheet during periods of increased economic
uncertainty.
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce
the probability that, in aggregate, uncorrected and undetected
misstatements exceed the materiality for the financial statements as a
whole. Group performance materiality was set at 70% of Group materiality
for the 2020 audit (2019: 70%). Parent Company performance materiality
was set at 70% of Parent Company materiality for the 2020 audit (2019:
70%).
In determining performance materiality, we considered the following
factors:
– our risk assessment, including our assessment of the Group's overall
control environment and that we consider it appropriate to rely on
controls over a number of business processes; and
– our past experience of the audit, which has indicated a low number of
corrected and uncorrected misstatements identified in prior periods.
6.3 Error reporting threshold
We agreed with the Audit Committee that we would report to the
Committee all audit differences in excess of £1.75 million (2019: £2.0
million), as well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds. We also report to the Audit
Committee on disclosure matters that we identified when assessing the
overall presentation of the financial statements.
7. An overview of the scope of our audit
7.1 Identification and scoping of components
Our audit was scoped by obtaining an understanding of the Group and
its environment, including group-wide controls, and assessing the risks
of material misstatement at the group level. Based on that assessment,
we focused our audit scope primarily on the UK division (excluding joint
ventures) which represents the principal segment within the Group and
accounts for 97% (2019: 97%) of the Group's net operating assets, 98%
(2019: 97%) of the Group's revenue and 95% (2019: 96%) of the Group's
pre-tax profit. Our audit work on the principal segment was executed at a
lower level of materiality of £33.2 million (2019: £39.0 million).
We also involved Deloitte Spain to perform an audit of specified account
balances over the valuation of inventory and specified audit procedures on
management override of controls. We directed their work by issuing
referral instructions and monitored work by holding regular discussions
with Deloitte Spain and reviewing their working papers.
The UK audit was performed centrally and includes all of the regional
business units within the Group's UK division. The Parent Company is
located in the UK and audited directly by the Group audit team to the
materiality level specified above.
At the Group level we also tested the consolidation process and carried
out analytical procedures to reconfirm our conclusion that there were no
significant risks of material misstatement to the Group from the remaining
components not subject to audit or audit of specified account balances,
including those balances not tested by Deloitte Spain.
7.2 Our consideration of the control environment
Across the UK, all business units operate under a common control
environment, with a centrally designed and monitored controls operating
framework and utilise the same IT infrastructure. We assessed that the
common controls environment is appropriately designed and implemented
across all business units. We then tested controls at eight (2019: four)
business units.
We considered the relevant controls related to certain business processes.
These processes were cost allocation, inventory and work in progress
expenditure, budgeting, land creditor valuation and the private sales
revenue process. We also performed testing of the relevant general IT
controls associated with the production of certain system generated data
from the key accounting, reporting and consolidation systems. This was
to assess whether we could adopt a controls reliance approach which
would impact the extent of substantive audit testing that was required.
We selected a sample of relevant controls for testing based on the
frequency of each control. Based on the procedures performed, we were
able to take a controls reliance approach on the IT systems and in the
business processes that we planned.
8. Other information
The other information comprises the information included in the annual
report other than the financial statements and our auditor's report thereon.
The directors are responsible for the other information contained within the
annual report. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in
our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the course of the audit,
or otherwise appears to be materially misstated.
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Independent auditor’s report continued
Independent auditor’s report continued
If we identify such material inconsistencies or apparent material
If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to
misstatements, we are required to determine whether this gives rise to
a material misstatement in the financial statements themselves. If, based
a material misstatement in the financial statements themselves. If, based
on the work we have performed, we conclude that there is a material
on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
We have nothing to report in this regard.
9. Responsibilities of Directors
9. Responsibilities of Directors
As explained more fully in the directors’ responsibilities statement, the
As explained more fully in the directors’ responsibilities statement, the
directors are responsible for the preparation of the financial statements and
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal
for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation
control as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether
of financial statements that are free from material misstatement, whether
due to fraud or error.
due to fraud or error.
In preparing the financial statements, the directors are responsible for
In preparing the financial statements, the directors are responsible for
assessing the Group’s and the Parent Company’s ability to continue as a
assessing the Group’s and the Parent Company’s ability to continue as a
going concern, disclosing as applicable, matters related to going concern
going concern, disclosing as applicable, matters related to going concern
and using the going concern basis of accounting unless the directors
and using the going concern basis of accounting unless the directors
either intend to liquidate the Group or the Parent Company or to cease
either intend to liquidate the Group or the Parent Company or to cease
operations, or have no realistic alternative but to do so.
operations, or have no realistic alternative but to do so.
10. Auditor’s responsibilities for the audit of the
10. Auditor’s responsibilities for the audit of the
financial statements
financial statements
Our objectives are to obtain reasonable assurance about whether the
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor's report that includes
whether due to fraud or error, and to issue an auditor's report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not
our opinion. Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with ISAs (UK) will
a guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements can
always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the
arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic
aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial
A further description of our responsibilities for the audit of the financial
statements is located on the FRC's website at:
statements is located on the FRC's website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our
www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor's report.
auditor's report.
– identifying, evaluating and complying with laws and regulations
– identifying, evaluating and complying with laws and regulations
and whether they were aware of any instances of non-compliance,
and whether they were aware of any instances of non-compliance,
including any related to the CMA investigation as disclosed within
including any related to the CMA investigation as disclosed within
the Strategic report on page 31;
the Strategic report on page 31;
– detecting and responding to the risks of fraud and whether they have
– detecting and responding to the risks of fraud and whether they have
knowledge of any actual, suspected or alleged fraud;
knowledge of any actual, suspected or alleged fraud;
– the internal controls established to mitigate risks of fraud or non-
– the internal controls established to mitigate risks of fraud or non-
compliance with laws and regulations;
compliance with laws and regulations;
– the matters discussed among the audit engagement team and relevant
– the matters discussed among the audit engagement team and relevant
internal specialists, including tax, actuarial, IT and real estate specialists
internal specialists, including tax, actuarial, IT and real estate specialists
regarding how and where fraud might occur in the financial statements
regarding how and where fraud might occur in the financial statements
and any potential indicators of fraud.
and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and
As a result of these procedures, we considered the opportunities and
incentives that may exist within the organisation for fraud and identified the
incentives that may exist within the organisation for fraud and identified the
greatest potential for fraud in inventory costing and margin recognition and
greatest potential for fraud in inventory costing and margin recognition and
revenue recognised on a percentage completion basis. In common with
revenue recognised on a percentage completion basis. In common with
all audits under ISAs (UK), we are also required to perform specific
all audits under ISAs (UK), we are also required to perform specific
procedures to respond to the risk of management override.
procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks
We also obtained an understanding of the legal and regulatory frameworks
that the Group operates in, focusing on provisions of those laws and
that the Group operates in, focusing on provisions of those laws and
regulations that had a direct effect on the determination of material
regulations that had a direct effect on the determination of material
amounts and disclosures in the financial statements. The key laws and
amounts and disclosures in the financial statements. The key laws and
regulations we considered in this context included the UK Companies Act,
regulations we considered in this context included the UK Companies Act,
Listing Rules, pensions legislation, tax legislation and housebuilding and
Listing Rules, pensions legislation, tax legislation and housebuilding and
construction legislation.
construction legislation.
In addition, we considered provisions of other laws and regulations that
In addition, we considered provisions of other laws and regulations that
do not have a direct effect on the financial statements but compliance with
do not have a direct effect on the financial statements but compliance with
which may be fundamental to the Group's and Company's ability to
which may be fundamental to the Group's and Company's ability to
operate or to avoid a material penalty. These included building regulations,
operate or to avoid a material penalty. These included building regulations,
employment law and environmental regulations.
employment law and environmental regulations.
11.2 Audit response to risks identified
11.2 Audit response to risks identified
As a result of performing the above, we identified inventory costing and
As a result of performing the above, we identified inventory costing and
margin recognition as a key audit matter related to the potential risk of
margin recognition as a key audit matter related to the potential risk of
fraud. The key audit matters section of our report explains the matter in
fraud. The key audit matters section of our report explains the matter in
more detail and also describes the specific procedures we performed in
more detail and also describes the specific procedures we performed in
response to that key audit matter.
response to that key audit matter.
11. Extent to which the audit was considered capable of detecting
11. Extent to which the audit was considered capable of detecting
irregularities, including fraud
irregularities, including fraud
In addition to the above, our procedures to respond to risks identified
In addition to the above, our procedures to respond to risks identified
included the following:
included the following:
Irregularities, including fraud, are instances of non-compliance with laws
Irregularities, including fraud, are instances of non-compliance with laws
and regulations. We design procedures in line with our responsibilities,
and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities,
outlined above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of
including fraud. The extent to which our procedures are capable of
detecting irregularities, including fraud is detailed below.
detecting irregularities, including fraud is detailed below.
11.1 Identifying and assessing potential risks related to irregularities
11.1 Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of
In identifying and assessing risks of material misstatement in respect of
irregularities, including fraud and non-compliance with laws and
irregularities, including fraud and non-compliance with laws and
regulations, we considered the following:
regulations, we considered the following:
– the nature of the industry and sector, control environment and business
– the nature of the industry and sector, control environment and business
performance including the design of the Group's remuneration policies,
performance including the design of the Group's remuneration policies,
key drivers for directors' remuneration, bonus levels and performance
key drivers for directors' remuneration, bonus levels and performance
targets;
targets;
– results of our enquiries of Management, Internal Audit and the Audit
– results of our enquiries of Management, Internal Audit and the Audit
Committee about their own identification and assessment of the risks
Committee about their own identification and assessment of the risks
of irregularities;
of irregularities;
– any matters we identified having obtained and reviewed the Group's
– any matters we identified having obtained and reviewed the Group's
documentation of their policies and procedures relating to:
documentation of their policies and procedures relating to:
– reviewing the financial statement disclosures and testing to supporting
– reviewing the financial statement disclosures and testing to supporting
documentation to assess compliance with provisions of relevant laws
documentation to assess compliance with provisions of relevant laws
and regulations described as having a direct effect on the financial
and regulations described as having a direct effect on the financial
statements;
statements;
– enquiring of Management, the Audit Committee and in-house and external
– enquiring of Management, the Audit Committee and in-house and external
legal counsel concerning actual and potential litigation and claims;
legal counsel concerning actual and potential litigation and claims;
– performing analytical procedures to identify any unusual or unexpected
– performing analytical procedures to identify any unusual or unexpected
relationships that may indicate risks of material misstatement due to fraud;
relationships that may indicate risks of material misstatement due to fraud;
– reading minutes of meetings of those charged with governance,
– reading minutes of meetings of those charged with governance,
reviewing correspondence from the CMA and reviewing internal audit
reviewing correspondence from the CMA and reviewing internal audit
reports;
reports;
– in addressing the fraud risk in revenue recognised on a percentage of
– in addressing the fraud risk in revenue recognised on a percentage of
completion basis, which is primarily within the partnership housing
completion basis, which is primarily within the partnership housing
revenue stream, we have tested a sample of revenue recorded in the
revenue stream, we have tested a sample of revenue recorded in the
year through agreement to the contract, valuation certificates and bank
year through agreement to the contract, valuation certificates and bank
statements. Additionally, at an analytical review level, we developed an
statements. Additionally, at an analytical review level, we developed an
expectation of the revenue balance with reference to the unit completion
expectation of the revenue balance with reference to the unit completion
figures; and
figures; and
– in addressing the risk of fraud through management override of controls,
testing the appropriateness of journal entries and other adjustments;
assessing whether the judgements made in making accounting
estimates are indicative of a potential bias; and evaluating the business
rationale of any significant transactions that are unusual or outside the
normal course of business.
We also communicated relevant identified laws and regulations and
potential fraud risks to all engagement team members, including internal
specialists, and remained alert to any indications of fraud or non-
compliance with laws and regulations throughout the audit.
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies
Act 2006
14. Matters on which we are required to report by exception
14.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our
opinion:
– we have not received all the information and explanations we require for
our audit; or
– adequate accounting records have not been kept by the Parent
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
– the Parent Company financial statements are not in agreement with the
accounting records and returns.
We have nothing to report in respect of these matters.
In our opinion the part of the directors’ remuneration report to be
audited has been properly prepared in accordance with the Companies
Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
– the information given in the strategic report and the directors’ report
for the financial year for which the financial statements are prepared is
consistent with the financial statements; and
– the strategic report and the directors’ report have been prepared in
accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the
Parent Company and their environment obtained in the course of the
audit, we have not identified any material misstatements in the strategic
report or the directors’ report.
13. Corporate Governance Statement
The Listing Rules require us to review the directors' statement in relation to
going concern, longer-term viability and that part of the Corporate
Governance Statement relating to the Group’s compliance with the
provisions of the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded
that each of the following elements of the Corporate Governance
Statement is materially consistent with the financial statements and our
knowledge obtained during the audit:
– the directors’ statement with regards to the appropriateness of
adopting the going concern basis of accounting and any material
uncertainties identified set out on page 97;
– the directors’ explanation as to its assessment of the Group’s
prospects, the period this assessment covers and why the period is
appropriate set out on page 97;
– the directors' statement on fair, balanced and understandable set out
on page 97;
– the board’s confirmation that it has carried out a robust assessment
of the emerging and principal risks set out on page 93;
– the section of the annual report that describes the review of
effectiveness of risk management and internal control systems set out
on page 93; and
– the section describing the work of the audit committee set out on
page 92.
14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our
opinion certain disclosures of directors’ remuneration have not been made
or the part of the directors’ remuneration report to be audited is not in
agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
15. Other matters which we are required to address
15.1. Auditor tenure
Following the recommendation of the Audit Committee, we were
reappointed by the shareholders on 23 April 2020 to audit the financial
statements for the year ending 31 December 2020. Following the merger
of Taylor Woodrow and George Wimpey in 2007, we were appointed as
auditor of the merged Group for subsequent financial periods. The period
of total uninterrupted engagement of the merged Group is 14 years from
the year ended 31 December 2007 to 31 December 2020. Prior to that we
were the auditor of Taylor Woodrow.
This year is our final year of association with the Group due to mandatory
rotation rules.
15.2. Consistency of the audit report with the additional report to the
audit committee
Our audit opinion is consistent with the additional report to the audit
committee we are required to provide in accordance with ISAs (UK).
16. Use of our report
This report is made solely to the company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. 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 auditor’s
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.
Dean Cook MA FCA (Senior statutory auditor)
for and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
1 March 2021
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Financial statements
Consolidated income statement
Consolidated income statement
for the year to 31 December 2020
for the year to 31 December 2020
Consolidated statement of comprehensive income
for the year to 31 December 2020
£ million
£ million
Continuing operations
Continuing operations
Revenue
Revenue
Cost of sales
Cost of sales
Gross profit before positive contribution
Gross profit before positive contribution
Positive contribution from written down inventory
Positive contribution from written down inventory
Gross profit
Gross profit
Net operating expenses
Net operating expenses
Profit on ordinary activities before finance costs
Profit on ordinary activities before finance costs
Finance income
Finance income
Finance costs
Finance costs
Share of results of joint ventures
Share of results of joint ventures
Profit before taxation
Profit before taxation
Taxation charge
Taxation charge
Profit for the year
Profit for the year
Basic earnings per share
Basic earnings per share
Diluted earnings per share
Diluted earnings per share
Adjusted basic earnings per share
Adjusted basic earnings per share
Adjusted diluted earnings per share
Adjusted diluted earnings per share
Before
Before
exceptional
exceptional
items
items
2020
2020
2,790.2
2,790.2
(2,293.5)
(2,293.5)
492.1
492.1
4.6
4.6
496.7
496.7
(204.3)
(204.3)
292.4
292.4
3.5
3.5
(29.4)
(29.4)
7.9
7.9
274.4
274.4
(49.1)
(49.1)
225.3
225.3
Note
Note
4
4
6
6
8
8
8
8
13
13
9
9
Note
Note
10
10
10
10
10
10
10
10
Exceptional
Exceptional
items
items
2020
2020
Before
Before
exceptional
exceptional
items
items
2019
2019
Exceptional
Exceptional
items
items
2019
2019
Total
Total
2020
2020
4,341.3
4,341.3
(3,297.2)
(3,297.2)
1,034.0
1,034.0
10.1
10.1
1,044.1
1,044.1
(201.6)
(201.6)
842.5
842.5
2.9
2.9
(31.8)
(31.8)
8.0
8.0
821.6
821.6
(159.3)
(159.3)
662.3
662.3
–
–
–
–
–
–
–
–
–
–
14.3
14.3
14.3
14.3
–
–
–
–
–
–
14.3
14.3
(2.7)
(2.7)
11.6
11.6
–
–
–
–
–
–
–
–
–
–
(10.0)
(10.0)
(10.0)
(10.0)
–
–
–
–
–
–
(10.0)
(10.0)
1.7
1.7
(8.3)
(8.3)
2,790.2
2,790.2
(2,293.5)
(2,293.5)
492.1
492.1
4.6
4.6
496.7
496.7
(214.3)
(214.3)
282.4
282.4
3.5
3.5
(29.4)
(29.4)
7.9
7.9
264.4
264.4
(47.4)
(47.4)
217.0
217.0
2020
2020
6.3p
6.3p
6.2p
6.2p
6.5p
6.5p
6.5p
6.5p
Total
Total
2019
2019
4,341.3
4,341.3
(3,297.2)
(3,297.2)
1,034.0
1,034.0
10.1
10.1
1,044.1
1,044.1
(187.3)
(187.3)
856.8
856.8
2.9
2.9
(31.8)
(31.8)
8.0
8.0
835.9
835.9
(162.0)
(162.0)
673.9
673.9
2019
2019
20.6p
20.6p
20.6p
20.6p
20.3p
20.3p
20.2p
20.2p
All of the profit for the year is attributable to the equity holders of the Parent Company.
All of the profit for the year is attributable to the equity holders of the Parent Company.
£ million
Note
2020
2019
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
Movement in fair value of hedging instruments
Items that will not be reclassified subsequently to profit or loss:
Actuarial loss on defined benefit pension schemes
Tax credit on items taken directly to other comprehensive income
Other comprehensive expense for the year net of tax
Profit for the year
Total comprehensive income for the year
All of the comprehensive income for the year is attributable to the equity holders of the Parent Company.
25
25
21
14
5.2
(4.2)
(36.6)
8.6
(27.0)
217.0
190.0
(5.5)
4.1
(8.9)
1.7
(8.6)
673.9
665.3
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Financial statements
Consolidated balance sheet
Consolidated balance sheet
at 31 December 2020
at 31 December 2020
Consolidated statement of changes in equity
for the year to 31 December 2020
Share
capital
288.5
Share
premium
762.9
Own
shares
(22.7)
Other
reserves
45.0
Retained
earnings
2,153.1
£ million
Total equity at 1 January 2019
Other comprehensive expense for the year net of tax
Profit for the year
Total comprehensive (expense)/income for the year
New share capital subscribed
Utilisation of own shares
Cash cost of satisfying share options
Share-based payment credit
Tax credit on items taken directly to statement of changes in equity
Dividends approved and paid
–
–
–
0.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5.1
–
–
–
–
Total equity at 31 December 2019
288.6
762.9
(17.6)
Other comprehensive income/(expense) for the year net of tax
Profit for the year
Total comprehensive income for the year
New share capital subscribed
Utilisation of own shares
Cash cost of satisfying share options
Share-based payment credit
Tax credit on items taken directly to statement of changes in equity
–
–
–
3.6
–
–
–
–
–
–
–
10.2
–
–
–
–
–
–
–
–
6.1
–
–
–
Total equity at 31 December 2020
292.2
773.1
(11.5)
Total
3,226.8
(8.6)
673.9
665.3
0.1
5.1
0.3
8.0
1.9
(599.7)
(7.2)
673.9
666.7
–
–
0.3
8.0
1.9
(599.7)
2,230.3
3,307.8
(28.0)
217.0
189.0
–
–
(8.0)
7.0
1.0
(27.0)
217.0
190.0
512.9
6.1
(8.0)
7.0
1.0
2,419.3
4,016.8
(1.4)
–
(1.4)
–
–
–
–
–
–
43.6
1.0
–
1.0
499.1
–
–
–
–
543.7
£ million
£ million
Non-current assets
Non-current assets
Intangible assets
Intangible assets
Property, plant and equipment
Property, plant and equipment
Right-of-use assets
Right-of-use assets
Interests in joint ventures
Interests in joint ventures
Trade and other receivables
Trade and other receivables
Deferred tax assets
Deferred tax assets
Current assets
Current assets
Inventories
Inventories
Trade and other receivables
Trade and other receivables
Cash and cash equivalents
Cash and cash equivalents
Total assets
Total assets
Current liabilities
Current liabilities
Trade and other payables
Trade and other payables
Lease liabilities
Lease liabilities
Bank and other loans
Bank and other loans
Tax payables
Tax payables
Provisions
Provisions
Net current assets
Net current assets
Non-current liabilities
Non-current liabilities
Trade and other payables
Trade and other payables
Lease liabilities
Lease liabilities
Bank and other loans
Bank and other loans
Retirement benefit obligations
Retirement benefit obligations
Provisions
Provisions
Total liabilities
Total liabilities
Net assets
Net assets
Equity
Equity
Share capital
Share capital
Share premium
Share premium
Own shares
Own shares
Other reserves
Other reserves
Retained earnings
Retained earnings
Total equity
Total equity
Note
Note
2020
2020
2019
2019
11
11
12
12
19
19
13
13
16
16
14
14
15
15
16
16
16
16
18
18
19
19
17
17
22
22
18
18
19
19
17
17
21
21
22
22
23
23
24
24
26
26
25
25
8.1
8.1
24.0
24.0
27.5
27.5
82.2
82.2
26.3
26.3
33.7
33.7
7.0
7.0
25.6
25.6
27.4
27.4
55.3
55.3
43.7
43.7
29.8
29.8
201.8
201.8
188.8
188.8
4,534.7
4,534.7
189.1
189.1
823.0
823.0
5,546.8
5,546.8
5,748.6
5,748.6
(919.3)
(919.3)
(6.4)
(6.4)
(13.5)
(13.5)
(1.1)
(1.1)
(70.6)
(70.6)
4,196.0
4,196.0
161.0
161.0
630.4
630.4
4,987.4
4,987.4
5,176.2
5,176.2
(974.8)
(974.8)
(7.6)
(7.6)
–
–
(67.9)
(67.9)
(72.7)
(72.7)
(1,010.9)
(1,010.9)
(1,123.0)
(1,123.0)
4,535.9
4,535.9
3,864.4
3,864.4
(459.8)
(459.8)
(21.6)
(21.6)
(90.1)
(90.1)
(89.5)
(89.5)
(59.9)
(59.9)
(720.9)
(720.9)
(499.7)
(499.7)
(20.3)
(20.3)
(84.7)
(84.7)
(85.0)
(85.0)
(55.7)
(55.7)
(745.4)
(745.4)
(1,731.8)
(1,731.8)
(1,868.4)
(1,868.4)
4,016.8
4,016.8
3,307.8
3,307.8
292.2
292.2
773.1
773.1
(11.5)
(11.5)
543.7
543.7
2,419.3
2,419.3
4,016.8
4,016.8
288.6
288.6
762.9
762.9
(17.6)
(17.6)
43.6
43.6
2,230.3
2,230.3
3,307.8
3,307.8
The financial statements of Taylor Wimpey plc (registered number: 296805) were approved by the Board of Directors and authorised for issue on
The financial statements of Taylor Wimpey plc (registered number: 296805) were approved by the Board of Directors and authorised for issue on
1 March 2021. They were signed on its behalf by:
1 March 2021. They were signed on its behalf by:
P Redfern
P Redfern
Director
Director
C Carney
C Carney
Director
Director
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Financial statements
Consolidated cash flow statement
Consolidated cash flow statement
for the year to 31 December 2020
for the year to 31 December 2020
Notes to the consolidated financial statements
£ million
£ million
Profit on ordinary activities before finance costs
Profit on ordinary activities before finance costs
Adjustments for:
Adjustments for:
Depreciation and amortisation
Depreciation and amortisation
Pension contributions in excess of charge to the income statement
Pension contributions in excess of charge to the income statement
Share-based payment charge
Share-based payment charge
Increase/(decrease) in provisions excluding exceptional payments
Increase/(decrease) in provisions excluding exceptional payments
Operating cash flows before movements in working capital
Operating cash flows before movements in working capital
Increase in inventories
Increase in inventories
Increase in receivables
Increase in receivables
Decrease in payables
Decrease in payables
Cash (used in)/generated by operations
Cash (used in)/generated by operations
Payments related to exceptional charges
Payments related to exceptional charges
Income taxes paid
Income taxes paid
Interest paid
Interest paid
Net cash (used in)/from operating activities
Net cash (used in)/from operating activities
Investing activities
Investing activities
Interest received
Interest received
Dividends received from joint ventures
Dividends received from joint ventures
Purchase of property, plant and equipment
Purchase of property, plant and equipment
Purchase of software
Purchase of software
Amounts invested in joint ventures
Amounts invested in joint ventures
Net cash used in investing activities
Net cash used in investing activities
Financing activities
Financing activities
Lease capital repayments
Lease capital repayments
Proceeds from the issue of own shares
Proceeds from the issue of own shares
Cash received on exercise of share options
Cash received on exercise of share options
Proceeds from borrowings
Proceeds from borrowings
Dividends paid
Dividends paid
Net cash generated by/(used in) financing activities
Net cash generated by/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes
Effect of foreign exchange rate changes
Cash and cash equivalents at end of year
Cash and cash equivalents at end of year
Note
Note
8
8
12
12
11
11
27
27
2020
2020
282.4
282.4
16.4
16.4
(33.4)
(33.4)
7.0
7.0
19.6
19.6
292.0
292.0
(362.2)
(362.2)
(19.5)
(19.5)
(75.3)
(75.3)
(165.0)
(165.0)
(17.7)
(17.7)
(107.7)
(107.7)
(10.8)
(10.8)
(301.2)
(301.2)
3.1
3.1
0.8
0.8
(3.1)
(3.1)
(4.9)
(4.9)
(19.8)
(19.8)
(23.9)
(23.9)
(8.0)
(8.0)
510.1
510.1
0.8
0.8
13.5
13.5
–
–
516.4
516.4
191.3
191.3
630.4
630.4
1.3
1.3
823.0
823.0
2019
2019
856.8
856.8
13.5
13.5
(60.6)
(60.6)
8.0
8.0
(6.2)
(6.2)
811.5
811.5
(21.7)
(21.7)
(12.7)
(12.7)
(74.9)
(74.9)
702.2
702.2
(36.8)
(36.8)
(149.0)
(149.0)
(6.4)
(6.4)
510.0
510.0
2.9
2.9
7.4
7.4
(7.2)
(7.2)
(5.4)
(5.4)
(6.3)
(6.3)
(8.6)
(8.6)
(8.4)
(8.4)
0.1
0.1
5.4
5.4
–
–
(599.7)
(599.7)
(602.6)
(602.6)
(101.2)
(101.2)
734.2
734.2
(2.6)
(2.6)
630.4
630.4
1. Significant accounting policies
Basis of preparation
The consolidated financial statements have been prepared on a going
concern basis and under the historical cost convention, except as
otherwise stated below.
The principal accounting policies adopted, which have been applied
consistently, except as otherwise stated, are set out below.
Adoption of new and revised standards
The Group has adopted and applied the following standards and
amendments in the year, which are relevant to its operations, none of
which had a material impact on the financial statements.
– IFRS 3 ‘Business Combinations’ (amendments) – definition of a business
– Amendments to References to the Conceptual Framework in
IFRS Standards
– IAS 1 ‘Presentation of Financial Statements’ and IAS 8 ‘Accounting
Policies, Changes in Accounting Estimates and Errors’
(amendments) – definition of material
– IFRS 9, IAS 39 and IFRS 7 (amendments) – interest rate benchmark
reform
At the date of authorisation of these financial statements, the Group has
not applied the following new or revised standards and interpretations that
have been issued but are not yet effective:
– IFRS 3 ‘Business Combinations’ (amendments) – references to the
Conceptual Framework
– IAS 16 ‘Property, Plant and Equipment’ (amendments) – proceeds
before intended use
– IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’
(amendments) – cost of fulfilling a contract
– Annual improvement in IFRS Standards 2018-2020
– IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 (amendments) – interest
rate benchmark reform – phase 2
– IAS 1 ‘Presentation of Financial Statements’ (amendments) –
classification of liabilities as current or non-current
The Directors do not expect that the adoption of the standards,
amendments and interpretations listed above will have a material impact
on the financial statements of the Group.
Going concern
During the year the Group took a number of mitigating actions, in response
to the COVID-19 pandemic, to tightly manage working capital and liquidity,
including pausing discretionary land spend and cancelling the 2019 final
dividend and 2020 special dividend. The prudent step of fully drawing
down the previously unutilised £550 million revolving credit facility was
also taken, which was subsequently fully repaid in the year.
In June 2020 the Group also completed a placing of shares that raised
£510.1 million, net of fees, that was undertaken to allow the Group to
pursue additional near term land acquisition opportunities.
Group forecasts have been prepared that reflect both the actual
experienced impact of the pandemic and estimates of future impact based
on the current Group operational plan. The forecasts were subject to a
range of sensitisation including severe but plausible scenarios together
with the likely effectiveness of mitigating actions.
The assessment considered sensitivity analysis on a number of realistically
possible, but severe and prolonged, changes to principal assumptions
through to the end of December 2025, in line with the viability assessment
performed. In determining these, the Group included macro-economic and
industry wide projections, taking into account the possible impact of Brexit
as well as matters specific to the Group. To arrive at the sensitisation tests,
the Group has drawn on experience gained managing the business
through previous economic downturns and stress tested the business
against a number of scenarios including:
– Volume – a decline in total volumes of 30% from pre-COVID-19 levels,
followed by a gradual recovery
– Price – reduction to current selling prices by 10%
In addition, the Group considered what additional reductions to volumes
or sales prices would be required, before any further mitigating actions
were taken, to cause a potential breach in the Group’s financial covenants.
Having performed the analysis, the Directors consider the likelihood of
such scenarios to be remote and that mitigating actions would be available
should they be required. The mitigating actions considered included a
reduction in land investment, a reduction in the level of production and
work in progress held and optimising the overhead base to ensure it
aligned with the scale of the operations through the cycle.
The Group’s liquidity (defined as cash and undrawn committed facilities)
was £1,373 million at 31 December 2020. The undrawn facilities and the
majority of the drawn facilities have maturities more than one year after the
current balance sheet date with €100 million due in June 2023, €15 million
due in December 2021 and £550 million maturing in February 2025. This is
sufficient to absorb the financial impact of each of the risks modelled in the
stress and sensitivity analysis.
Based on these forecasts, it is considered that there are sufficient
resources available for the Group to conduct its business for at least the
next 12 months. As such the consolidated financial statements have been
prepared on a going concern basis.
Basis of accounting
The consolidated financial statements have been prepared in accordance
with international accounting standards in conformity with the requirements
of the Companies Act 2006 and International Financial Reporting
Standards (IFRS Standards) adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union.
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 over the investee;
– is exposed, or has rights, to variable return from its involvement with
the investee; and
– has the ability to use its power to affect its returns.
On acquisition, the assets and liabilities and contingent liabilities of a
subsidiary are measured at their fair value at the date of acquisition.
Any excess of the cost of acquisition over the fair value of the identifiable
net assets acquired is recognised as goodwill. Any deficiency of the cost
of acquisition below the fair value 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 non-controlling shareholders is stated
at the non-controlling interest’s proportion of the fair value of the assets
and liabilities recognised. Subsequently, all comprehensive income is
attributed to the owners and the non-controlling interests, which may result
in the non-controlling interest having a debit balance.
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Financial statements
Notes to the consolidated financial statements continued
Notes to the consolidated financial statements continued
1. Significant accounting policies continued
1. Significant accounting policies continued
The results of subsidiaries acquired or disposed of during the year are
The results of subsidiaries acquired or disposed of during the year are
included in the consolidated income statement from the effective date
included in the consolidated income statement from the effective date
of acquisition or up to the effective date of disposal, as appropriate.
of acquisition or up to the effective date of disposal, as appropriate.
Where a subsidiary is disposed of which constituted a major line of
Where a subsidiary is disposed of which constituted a major line of
business, it is disclosed as a discontinued operation. Where necessary,
business, it is disclosed as a discontinued operation. Where necessary,
adjustments are made to the financial statements of subsidiaries to bring
adjustments are made to the financial statements of subsidiaries to bring
the accounting policies used into line with those used by the Group.
the accounting policies used into line with those used by the Group.
All intra-Group transactions, balances, income and expenses are
All intra-Group transactions, balances, income and expenses are
eliminated on consolidation.
eliminated on consolidation.
Joint ventures
Joint ventures
Undertakings are deemed to be a joint venture when the Group has joint
Undertakings are deemed to be a joint venture when the Group has joint
control of the rights and assets of the undertaking via either voting rights
control of the rights and assets of the undertaking via either voting rights
or a formal agreement which includes that unanimous consent is required
or a formal agreement which includes that unanimous consent is required
for strategic, financial and operating decisions. Joint ventures are
for strategic, financial and operating decisions. Joint ventures are
consolidated under the equity accounting method. On transfer of land
consolidated under the equity accounting method. On transfer of land
and/or work in progress to joint ventures, the Group recognises only
and/or work in progress to joint ventures, the Group recognises only
its share of any profits or losses. Joint operations arise where the Group
its share of any profits or losses. Joint operations arise where the Group
has joint control of an operation but has rights to only its own assets and
has joint control of an operation but has rights to only its own assets and
obligations related to the operation. These assets and obligations, and the
obligations related to the operation. These assets and obligations, and the
Group’s share of revenues and costs, are included in the Group’s results.
Group’s share of revenues and costs, are included in the Group’s results.
Joint ventures and joint operations are entered into to develop specific
Joint ventures and joint operations are entered into to develop specific
sites. Each arrangement is site or project specific and once the
sites. Each arrangement is site or project specific and once the
development or project is complete the arrangement is wound down.
development or project is complete the arrangement is wound down.
Segmental reporting
Segmental reporting
The Group operates in the United Kingdom and Spain. The United Kingdom
The Group operates in the United Kingdom and Spain. The United Kingdom
is split into five geographical operating segments, each managed by
is split into five geographical operating segments, each managed by
a Divisional Chair who sits on the Group Management Team. In addition,
a Divisional Chair who sits on the Group Management Team. In addition,
there are central operations covering the corporate functions and
there are central operations covering the corporate functions and
Strategic Land.
Strategic Land.
The Group aggregates the UK operations into a single reporting segment
The Group aggregates the UK operations into a single reporting segment
on the basis that they share similar economic characteristics. In addition
on the basis that they share similar economic characteristics. In addition
each division builds and delivers residential homes, uses consistent
each division builds and delivers residential homes, uses consistent
methods of construction, sells homes to both private customers and local
methods of construction, sells homes to both private customers and local
housing associations, follows a single UK sales process, is subject to the
housing associations, follows a single UK sales process, is subject to the
same macro-economic factors including mortgage availability and has the
same macro-economic factors including mortgage availability and has the
same cost of capital arising from the utilisation of central banking and debt
same cost of capital arising from the utilisation of central banking and debt
facilities The segmental disclosure has been updated in the year, see Note
facilities The segmental disclosure has been updated in the year, see Note
5 for further details.
5 for further details.
As a result, the Group has the following reporting segments:
As a result, the Group has the following reporting segments:
– United Kingdom
– United Kingdom
– Spain
– Spain
Revenue
Revenue
Revenue is recognised when the performance obligation associated with
Revenue is recognised when the performance obligation associated with
the sale is completed. The transaction price comprises the fair value of the
the sale is completed. The transaction price comprises the fair value of the
consideration received or receivable, net of value added tax, rebates and
consideration received or receivable, net of value added tax, rebates and
discounts and after eliminating sales within the Group. Revenue and profit
discounts and after eliminating sales within the Group. Revenue and profit
are recognised as follows:
are recognised as follows:
(a) Housing and land sales
(a) Housing and land sales
Revenue is recognised in the income statement when control is
Revenue is recognised in the income statement when control is
transferred to the customer. This is deemed to be when title of the
transferred to the customer. This is deemed to be when title of the
property passes to the customer on legal completion and the
property passes to the customer on legal completion and the
performance obligation associated with the sale is completed.
performance obligation associated with the sale is completed.
Revenue in respect of the sale of residential properties, whether under
Revenue in respect of the sale of residential properties, whether under
the Government’s Help to Buy scheme or not, is recognised at the fair
the Government’s Help to Buy scheme or not, is recognised at the fair
value of the consideration received or receivable on legal completion.
value of the consideration received or receivable on legal completion.
(b) Long term contracts
(b) Long term contracts
Revenue arising on contracts which give the customer control over
Revenue arising on contracts which give the customer control over
properties as they are constructed, and for which the Group has a right
properties as they are constructed, and for which the Group has a right
to payments for work performed, is recognised over time. Revenue and
to payments for work performed, is recognised over time. Revenue and
costs are recognised over time with reference to the stage of completion
costs are recognised over time with reference to the stage of completion
of the contract activity at the balance sheet date where the outcome of a
of the contract activity at the balance sheet date where the outcome of a
long term contract can be estimated reliably. This is normally measured
long term contract can be estimated reliably. This is normally measured
by surveys of work performed to date. Variations in contract work,
by surveys of work performed to date. Variations in contract work,
claims and incentive payments are included to the extent that it is
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
probable that they will result in revenue and they are capable of being
reliably measured. When land is transferred at the start of a long term
reliably measured. When land is transferred at the start of a long term
contract, revenue is not recognised until control has been transferred
contract, revenue is not recognised until control has been transferred
to the customer which includes legal title being passed to them.
to the customer which includes legal title being passed to them.
Where the outcome of a long term contract cannot be estimated
Where the outcome of a long term contract cannot be estimated
reliably, contract revenue where recoverability is probable is recognised
reliably, contract revenue where recoverability is probable is recognised
to the extent of contract costs incurred. The costs associated with
to the extent of contract costs incurred. The costs associated with
fulfilling a contract are recognised as expenses in the period in which
fulfilling a contract are recognised as expenses in the period in which
they are incurred. When it is probable that total contract costs will
they are incurred. When it is probable that total contract costs will
exceed total contract revenue, the expected loss is recognised as
exceed total contract revenue, the expected loss is recognised as
an expense immediately.
an expense immediately.
(c) Part exchange
(c) Part exchange
In certain instances, property may be accepted in part consideration
In certain instances, property may be accepted in part consideration
for a sale of a residential property. The fair value is established by
for a sale of a residential property. The fair value is established by
independent surveyors, reduced for costs to sell. Net proceeds
independent surveyors, reduced for costs to sell. Net proceeds
generated from the subsequent sale of part exchange properties are
generated from the subsequent sale of part exchange properties are
recorded as a reduction to net operating expenses. The original sale
recorded as a reduction to net operating expenses. The original sale
is recorded in the normal way, with the fair value of the exchanged
is recorded in the normal way, with the fair value of the exchanged
property replacing cash receipts.
property replacing cash receipts.
(d) Cash incentives
(d) Cash incentives
The transaction price may include cash incentives. These are considered
The transaction price may include cash incentives. These are considered
to be a discount from the purchase price offered to the acquirer and
to be a discount from the purchase price offered to the acquirer and
are therefore accounted for as a reduction to revenue.
are therefore accounted for as a reduction to revenue.
Cost of sales
Cost of sales
The Group determines the value of inventory charged to cost of sales
The Group determines the value of inventory charged to cost of sales
based on the total budgeted cost of developing a site. Once the total
based on the total budgeted cost of developing a site. Once the total
expected costs of development are established, they are allocated to
expected costs of development are established, they are allocated to
individual plots to achieve a standard build cost per plot.
individual plots to achieve a standard build cost per plot.
To the extent that additional costs or savings are identified as the site
To the extent that additional costs or savings are identified as the site
progresses, these are recognised over the remaining plots unless they
progresses, these are recognised over the remaining plots unless they
are specific to a particular plot, in which case they are recognised in the
are specific to a particular plot, in which case they are recognised in the
income statement at the point of sale.
income statement at the point of sale.
Positive contribution
Positive contribution
The positive contribution presented on the face of the income statement
The positive contribution presented on the face of the income statement
represents the net amount of previous impairments allocated to inventory
represents the net amount of previous impairments allocated to inventory
on a plot that has subsequently resulted in a gross profit on completion.
on a plot that has subsequently resulted in a gross profit on completion.
This is due to the combination of selling prices and costs, or product mix
This is due to the combination of selling prices and costs, or product mix
improvements exceeding market assumptions in the previous net
improvements exceeding market assumptions in the previous net
realisable value (NRV) exercise. These amounts are stated before the
realisable value (NRV) exercise. These amounts are stated before the
allocation of overheads, which are excluded from the Group’s NRV
allocation of overheads, which are excluded from the Group’s NRV
exercise.
exercise.
Exceptional items
Exceptional items
Exceptional items are defined as items of income or expenditure which,
Exceptional items are defined as items of income or expenditure which,
in the opinion of the Directors, are material or unusual in nature or of such
in the opinion of the Directors, are material or unusual in nature or of such
significance that they require separate disclosure on the face of the income
significance that they require separate disclosure on the face of the income
statement in accordance with IAS 1 ‘Presentation of Financial Statements’.
statement in accordance with IAS 1 ‘Presentation of Financial Statements’.
Should these items be reversed, disclosure of this would also be as
Should these items be reversed, disclosure of this would also be as
exceptional items.
exceptional items.
1. Significant accounting policies continued
Finance income
Interest income on bank deposits is recognised on an accruals basis.
Also included in interest receivable are interest and interest-related
payments the Group receives on other receivables.
Finance costs
Borrowing costs are recognised on an accruals basis and are payable
on the Group’s borrowings and lease liabilities. Also included are the
amortisation of fees associated with the arrangement of the financing.
Finance charges, including premiums payable on settlement or
redemption, and direct issue costs, are accounted for on an accruals basis
in 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.
Capitalised finance costs are held in other receivables and amortised over
the period of the facility.
Foreign currencies
The individual financial 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 at 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 the net profit or loss for the period.
On consolidation, the assets and liabilities of the Group’s overseas
operation are translated at exchange rates prevailing at the balance sheet
date. Income and expense items are translated at an appropriate average
rate for the year. Exchange differences arising are recognised within other
comprehensive income and transferred to the Group’s translation reserve.
Such translation differences are recognised as income or expenses in the
income statement in the period in which the operation is disposed of.
The Group uses foreign currency borrowings to hedge its net investment
exposure to certain overseas subsidiaries.
Leases
The Group as a lessee
The Group assesses at inception whether a contract is, or contains,
a lease. A lease exists if the contract conveys the right to control the use
of an identified asset for a period of time in exchange for consideration.
The Group assessment includes whether:
– the contract involves the use of an identified asset;
– the Group has the right to obtain substantially all of the economic
benefits from the use of the asset throughout the contract period; and
– the Group has the right to direct the use of the asset.
At the commencement of a lease, the Group recognises a right-of-use
asset along with a corresponding lease liability.
The lease liability is initially measured at the present value of the remaining
lease payments, discounted using the Group’s incremental borrowing rate.
The lease term comprises the non-cancellable period of the contract,
together with periods covered by an option to extend the lease where the
Group is reasonably certain to exercise that option based on operational
needs and contractual terms. Subsequently, the lease liability is measured
at amortised cost by increasing the carrying amount to reflect interest on
the lease liability and reducing it by the lease payments made. The lease
liability is remeasured when the Group changes its assessment of whether
it will exercise an extension or termination option.
Right-of-use assets are initially measured at cost, comprising the initial
measurement of the lease liability adjusted for any lease payments made at
or before the commencement date, estimated asset retirement obligations,
lease incentives received and initial direct costs. Subsequently, right-of-use
assets are measured at cost, less any accumulated depreciation and any
accumulated impairment losses, and are adjusted for certain
remeasurements of the lease liability. Depreciation is calculated on a
straight-line basis over the length of the lease.
The Group has elected to apply exemptions for short term leases and
leases for which the underlying asset is of low value. For these leases,
payments are charged to the income statement on a straight-line basis
over the term of the relevant lease.
Right-of-use assets are presented within non-current assets on the face of
the balance sheet, and lease liabilities are shown separately on the balance
sheet in current liabilities and non-current liabilities depending on the length
of the lease term.
Intangible assets
Brands
Internally generated brands are not capitalised. Acquired brands are
capitalised. Brands are stated at cost, less accumulated amortisation and
any accumulated impairment losses. Brands are amortised over their
estimated useful life on a straight-line basis.
Software
Costs that are directly associated with the acquisition or production of
identifiable and unique software controlled by the Group, and that generate
economic benefits beyond one year, are recognised as intangible assets.
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 to expense the cost or valuation of assets
over their estimated useful lives. Other assets are depreciated using the
straight-line method, on the following bases:
– Plant and equipment: 20-33% per annum
– Leasehold improvements: over the term of the lease
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. This difference is
recognised in the income statement.
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Financial statements
Notes to the consolidated financial statements continued
Notes to the consolidated financial statements continued
1. Significant accounting policies continued
1. Significant accounting policies continued
Impairment of tangible and intangible assets
Impairment of tangible and intangible assets
At each balance sheet date, the Group reviews the carrying amounts
At each balance sheet date, the Group reviews the carrying amounts
of its tangible and intangible assets to determine whether there is any
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 that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated to
indication exists, the recoverable amount of the asset is estimated to
determine the extent of the impairment loss (if any). Where the asset does
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
not generate cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit to which
estimates the recoverable amount of the cash-generating unit to which
the asset belongs.
the asset belongs.
The recoverable amount is the higher of fair value less costs to sell and
The 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
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
discounted to their present value, using a pre-tax discount rate that reflects
current market assessments and the risks specific to the asset.
current market assessments and the risks specific to the asset.
If the recoverable amount of an asset or cash-generating unit is estimated
If the recoverable amount of an asset or cash-generating unit is estimated
to be less than its carrying amount, the carrying amount of the asset or
to be less than its carrying amount, the carrying amount of the asset or
cash-generating unit is reduced to its recoverable amount. An impairment
cash-generating unit is reduced to its recoverable amount. An impairment
loss is recognised as an expense immediately in the income statement.
loss is recognised as an expense immediately in the income statement.
Where an impairment loss subsequently reverses, due to a change in
Where an impairment loss subsequently reverses, due to a change in
circumstances or in the estimates used to determine the asset’s
circumstances or in the estimates used to determine the asset’s
recoverable amount, the carrying amount of the asset or cash-generating
recoverable amount, the carrying amount of the asset or cash-generating
unit is increased to the revised estimate of its recoverable amount, so long
unit is increased to the revised estimate of its recoverable amount, so long
as it does not exceed the original carrying value prior to the impairment
as it does not exceed the original carrying value prior to the impairment
being recognised. A reversal of an impairment loss is recognised as
being recognised. A reversal of an impairment loss is recognised as
income immediately in the income statement.
income immediately in the income statement.
Financial instruments
Financial instruments
Financial assets
Financial assets
Financial assets are initially recognised at fair value and subsequently
Financial assets are initially recognised at fair value and subsequently
classified into one of the following measurement categories:
classified into one of the following measurement categories:
– Measured at amortised cost
– Measured at amortised cost
– Measured at fair value through profit or loss (FVTPL)
– Measured at fair value through profit or loss (FVTPL)
– Measured at fair value through other comprehensive income (FVOCI)
– Measured at fair value through other comprehensive income (FVOCI)
The classification of financial assets depends on the Group’s business
The classification of financial assets depends on the Group’s business
model for managing the asset and the contractual terms of the cash flows.
model for managing the asset and the contractual terms of the cash flows.
Assets that are held for the collection of contractual cash flows that
Assets that are held for the collection of contractual cash flows that
represent solely payments of principal and interest are measured at
represent solely payments of principal and interest are measured at
amortised cost, with any interest income recognised in the income
amortised cost, with any interest income recognised in the income
statement using the effective interest rate method.
statement using the effective interest rate method.
Financial assets that do not meet the criteria to be measured at amortised
Financial assets that do not meet the criteria to be measured at amortised
cost are classified by the Group as measured at FVTPL. Fair value gains
cost are classified by the Group as measured at FVTPL. Fair value gains
and losses on financial assets measured at FVTPL are recognised in
and losses on financial assets measured at FVTPL are recognised in
the income statement and presented within net operating expenses.
the income statement and presented within net operating expenses.
The Group currently has no financial assets measured at FVOCI.
The Group currently has no financial assets measured at FVOCI.
Trade and other receivables
Trade and other receivables
Trade and other receivables are measured at amortised cost, less any
Trade and other receivables are measured at amortised cost, less any
loss allowance.
loss allowance.
Shared equity loans
Shared equity loans
Shared equity loans were provided to certain customers to facilitate a
Shared equity loans were provided to certain customers to facilitate a
house purchase. The contractual cash flows on shared equity loans are
house purchase. The contractual cash flows on shared equity loans are
linked to a national house price index. Under IFRS 9, financial assets with
linked to a national house price index. Under IFRS 9, financial assets with
embedded derivatives are considered in their entirety when determining
embedded derivatives are considered in their entirety when determining
whether their cash flows are solely payment of principal and interest.
whether their cash flows are solely payment of principal and interest.
Accordingly, shared equity loans are classified as FVTPL with fair value
Accordingly, shared equity loans are classified as FVTPL with fair value
gains and losses arising on the remeasurement of the loan presented in
gains and losses arising on the remeasurement of the loan presented in
the income statement within net operating expenses.
the income statement within net operating expenses.
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents comprise cash held by the Group and short
Cash and cash equivalents comprise cash held by the Group and short
term bank deposits with an original maturity of three months or less from
term bank deposits with an original maturity of three months or less from
inception and are subject to insignificant risk of changes in value.
inception and are subject to insignificant risk of changes in value.
Financial liabilities
Financial liabilities
Financial liabilities are initially recognised at fair value and subsequently
Financial liabilities are initially recognised at fair value and subsequently
classified into one of the following measurement categories:
classified into one of the following measurement categories:
– Measured at amortised cost
– Measured at amortised cost
– Measured at fair value through profit or loss (FVTPL)
– Measured at fair value through profit or loss (FVTPL)
Non-derivative financial liabilities are measured at FVTPL when they are
Non-derivative financial liabilities are measured at FVTPL when they are
considered held for trading or designated as such on initial recognition.
considered held for trading or designated as such on initial recognition.
The Group has no non-derivative financial liabilities measured at FVTPL.
The Group has no non-derivative financial liabilities measured at FVTPL.
Borrowings
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs
Borrowings are initially recognised at fair value, net of transaction costs
incurred and subsequently measured at amortised cost.
incurred and subsequently measured at amortised cost.
Trade and other payables
Trade and other payables
Trade and other payables are measured at amortised cost. When the
Trade and other payables are measured at amortised cost. When the
acquisition of land has deferred payment terms a land creditor is
acquisition of land has deferred payment terms a land creditor is
recognised. Payables are discounted to present value when repayment is
recognised. Payables are discounted to present value when repayment is
due more than one year after initial recognition or the impact is material.
due more than one year after initial recognition or the impact is material.
Customer deposits
Customer deposits
Customer deposits, measured at amortised cost, are recorded as a liability
Customer deposits, measured at amortised cost, are recorded as a liability
on receipt and released to the income statement as revenue upon legal
on receipt and released to the income statement as revenue upon legal
completion.
completion.
Equity instruments
Equity instruments
An equity instrument is any contract that evidences a residual interest
An equity instrument is any contract that evidences a residual interest
in the assets of the Group after deducting all of its liabilities. Equity
in the assets of the Group after deducting all of its liabilities. Equity
instruments issued by the Parent Company are recorded as the proceeds
instruments issued by the Parent Company are recorded as the proceeds
are received, net of direct issue costs.
are received, net of direct issue costs.
Derivative financial instruments and hedge accounting
Derivative financial instruments and hedge accounting
The Group uses foreign currency borrowings and derivatives to hedge its
The Group uses foreign currency borrowings and derivatives to hedge its
net investment exposure to movements in exchange rates on translation of
net investment exposure to movements in exchange rates on translation of
certain individual financial statements denominated in foreign currencies
certain individual financial statements denominated in foreign currencies
other than Sterling which is the functional currency of the Parent Company.
other than Sterling which is the functional currency of the Parent Company.
Derivative financial instruments are measured at fair value. Changes in the
Derivative financial instruments are measured at fair value. Changes in the
fair value of derivative financial instruments that are designated and
fair value of derivative financial instruments that are designated and
effective as hedges of net investments in foreign operations are recognised
effective as hedges of net investments in foreign operations are recognised
directly in other comprehensive income and the ineffective portion, if any,
directly in other comprehensive income and the ineffective portion, if any,
is recognised immediately in the income statement.
is recognised immediately in the income statement.
For an effective hedge of an exposure to changes in fair value, the hedged
For an effective hedge of an exposure to changes in fair value, the hedged
item is adjusted for changes in fair value attributable to the risk being
item is adjusted for changes in fair value attributable to the risk being
hedged with the corresponding entry in the consolidated income
hedged with the corresponding entry in the consolidated income
statement. Gains or losses from remeasuring the derivative, or for
statement. Gains or losses from remeasuring the derivative, or for
non-derivatives the foreign currency component of its carrying amount,
non-derivatives the foreign currency component of its carrying amount,
are also recognised in the income statement.
are also recognised in the income statement.
Changes in the fair value of derivative financial instruments that do not
Changes in the fair value of derivative financial instruments that do not
qualify for hedge accounting are recognised in the income statement as
qualify for hedge accounting are recognised in the income statement as
they arise.
they arise.
Hedge accounting is discontinued if the hedged item is sold or no longer
Hedge accounting is discontinued if the hedged item is sold or no longer
qualifies for hedge accounting at which point any cumulative gain or loss
qualifies for hedge accounting at which point any cumulative gain or loss
on the hedging instrument accumulated in other comprehensive income is
on the hedging instrument accumulated in other comprehensive income is
transferred to the income statement for the period.
transferred to the income statement for the period.
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 charged or credited to the income
statement, except when it relates to items charged or credited directly to
other comprehensive income or equity, in which case the deferred tax is
also dealt with in other comprehensive income or equity.
Share-based payments
The Group issues equity-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 vest after adjusting for the effect of non-market vesting conditions.
Employee benefits
For defined benefit plans a finance charge is determined on the net defined
benefit pension liability. The operating and financing costs of such plans
are recognised separately in the income statement; service costs are
spread systematically over the service period of employees, past service
costs are recognised as an expense at the earlier of when the plan is
amended or curtailment occurs, at the same time as which the entity will
recognise related restructuring costs or termination benefits. Certain liability
management costs and financing costs are recognised in the periods in
which they arise. Actuarial gains and losses are recognised immediately
in the statement of comprehensive income.
The retirement benefit obligation recognised in the consolidated statement
of financial position represents either the net deficit position of the scheme
or, should the scheme be in an IAS 19 accounting surplus, the IFRIC 14
liability equal to the present value of future committed cash contributions.
Payments to defined contribution schemes are charged as an expense as
they fall due.
2. Critical accounting judgements and key sources of estimation
uncertainty
Preparation of the financial statements requires management to make
significant judgements and estimates. Management have considered
whether there are any such sources of estimation or accounting
judgements in forming the financial statements and highlight the following
areas. In identifying these areas, management have considered the size
of the associated balance and the potential likelihood of changes due to
macro-economic factors.
Critical accounting judgements
Management have not made any individual critical accounting judgements
that are material to the Group.
1. Significant accounting policies continued
Provisions
Provisions are recognised when the Group has a present legal or
constructive 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 and held at the lower of this initial
amount and net realisable value. Costs comprise direct materials and,
where applicable, direct labour 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 probable that the option will not be exercised.
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 profit before tax 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 at 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. 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 taxable 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 tax is measured on a non-discounted basis using the tax rates
and laws that have been enacted or substantively enacted by the balance
sheet date.
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Financial statements
Notes to the consolidated financial statements continued
Notes to the consolidated financial statements continued
3. General information
3. General information
Taylor Wimpey plc is a company incorporated in the United Kingdom
Taylor Wimpey plc is a company incorporated in the United Kingdom
under the Companies Act and is registered in England and Wales.
under the Companies Act and is registered in England and Wales.
The Company’s registered office is Taylor Wimpey plc, Gate House,
The Company’s registered office is Taylor Wimpey plc, Gate House,
Turnpike Road, High Wycombe, HP12 3NR. The nature of the Group’s
Turnpike Road, High Wycombe, HP12 3NR. The nature of the Group’s
operations and its principal activities are set out in the Strategic Report
operations and its principal activities are set out in the Strategic Report
on pages 1 to 59.
on pages 1 to 59.
These financial statements are presented in pounds Sterling as
These financial statements are presented in pounds Sterling as
the currency of the primary economic environment in which the
the currency of the primary economic environment in which the
Group operates.
Group operates.
2. Critical accounting judgements and key sources of estimation
2. Critical accounting judgements and key sources of estimation
uncertainty continued
uncertainty continued
Key sources of estimation uncertainty
Key sources of estimation uncertainty
Key sources of estimation uncertainty are those which present a significant
Key sources of estimation uncertainty are those which present a significant
risk of potential material misstatement to carrying amounts of assets or
risk of potential material misstatement to carrying amounts of assets or
liabilities within the next financial year.
liabilities within the next financial year.
Employee benefits
Employee benefits
The value of the defined benefit plan liabilities is determined by using various
The value of the defined benefit plan liabilities is determined by using various
assumptions, including discount rate, future rates of inflation, growth, yields,
assumptions, including discount rate, future rates of inflation, growth, yields,
returns on investments and mortality rates. As actual changes in these
returns on investments and mortality rates. As actual changes in these
values may differ from those assumed, this is a key source of estimation
values may differ from those assumed, this is a key source of estimation
uncertainty within the financial statements. Changes in these assumptions
uncertainty within the financial statements. Changes in these assumptions
over time and differences to the actual outcome will be reflected in the
over time and differences to the actual outcome will be reflected in the
statement of comprehensive income. Note 21 details the main assumptions
statement of comprehensive income. Note 21 details the main assumptions
in accounting for the Group’s defined benefit pension scheme, along with
in accounting for the Group’s defined benefit pension scheme, along with
sensitivities of the liabilities to changes in these assumptions.
sensitivities of the liabilities to changes in these assumptions.
Other sources of estimation uncertainty
Other sources of estimation uncertainty
Provision for leasehold
Provision for leasehold
The value of this provision has been established using information
The value of this provision has been established using information
available to management at 31 December 2020, together with a range
available to management at 31 December 2020, together with a range
of assumptions including the number of units which have been sold by
of assumptions including the number of units which have been sold by
the original Taylor Wimpey customer and as such are not eligible for the
the original Taylor Wimpey customer and as such are not eligible for the
scheme, and the final deed of variation valuations for those freeholders
scheme, and the final deed of variation valuations for those freeholders
with whom the Group has not yet agreed a settlement. The value of the
with whom the Group has not yet agreed a settlement. The value of the
assumptions applied by management directly impacts the final provision
assumptions applied by management directly impacts the final provision
recognised. These outcomes are not known with certainty as at
recognised. These outcomes are not known with certainty as at
31 December 2020 but represent management’s best estimate. It is not
31 December 2020 but represent management’s best estimate. It is not
anticipated that any reasonable changes would lead to a material
anticipated that any reasonable changes would lead to a material
adjustment in the value of the provision held. See Note 22 for further
adjustment in the value of the provision held. See Note 22 for further
details on the provision.
details on the provision.
Aluminium Composite Materials (ACM) provision
Aluminium Composite Materials (ACM) provision
This provision was established to provide for the cost of replacing ACM
This provision was established to provide for the cost of replacing ACM
cladding on a small number of legacy developments. The Group has
cladding on a small number of legacy developments. The Group has
estimated the cost of replacement based on engagement with contractors
estimated the cost of replacement based on engagement with contractors
and, where applicable, the management companies of the affected
and, where applicable, the management companies of the affected
developments. Determining the total cost of replacing cladding across
developments. Determining the total cost of replacing cladding across
a number of different buildings contains inherent estimation uncertainty,
a number of different buildings contains inherent estimation uncertainty,
it is not anticipated that any reasonable changes would lead to a material
it is not anticipated that any reasonable changes would lead to a material
adjustment in the value of the provision for these developments. See Note
adjustment in the value of the provision for these developments. See Note
22 for further details on the provision. The scope of works may also be
22 for further details on the provision. The scope of works may also be
impacted by future government guidance or regulations (see Note 33
impacted by future government guidance or regulations (see Note 33
for details of a post balance sheet event).
for details of a post balance sheet event).
Cost allocation
Cost allocation
In order to determine the profit that the Group is able to recognise on its
In order to determine the profit that the Group is able to recognise on its
developments in a specific period, the Group has to allocate site-wide
developments in a specific period, the Group has to allocate site-wide
development costs between units built in the current year and in future
development costs between units built in the current year and in future
years. It also has to estimate costs to complete on such developments,
years. It also has to estimate costs to complete on such developments,
and make estimates relating to future sales price margins on those
and make estimates relating to future sales price margins on those
developments and units. In making these assessments, there is a degree
developments and units. In making these assessments, there is a degree
of inherent uncertainty. The Group has developed internal controls to
of inherent uncertainty. The Group has developed internal controls to
assess and review carrying values and the appropriateness of
assess and review carrying values and the appropriateness of
estimates made.
estimates made.
4. Revenue
An analysis of the Group’s continuing revenue is as follows:
£ million
Private sales
Partnership housing
Land & other
2020
2019
2,507.9
269.3
13.0
2,790.2
3,798.3
490.6
52.4
4,341.3
Other revenue includes income from the sale of commercial properties developed as part of larger residential developments. The Group’s revenue
includes revenue from construction contracts that are recognised over time by reference to the stage of completion of the contract with the customer.
All other revenue is recognised at a point in time once control of the property is transferred to the customer.
£ million
Recognised at a point in time
Recognised over time
2020
2019
2,573.7
216.5
2,790.2
4,013.7
327.6
4,341.3
At 31 December 2020, the aggregate amount of the transaction price allocated to unsatisfied performance obligations on construction contracts was
£572.3 million (2019: £692.7 million), of which approximately 46% is expected to be recognised as revenue during 2021.
5. Operating segments
The Group operates in two countries, the United Kingdom and Spain.
The United Kingdom is split into five geographical operating segments, each managed by a Divisional Chair who sits on the Group Management Team;
there are also central operations covering the corporate functions and Strategic Land. As part of a 2020 review of operating efficiencies the Group split
its three UK divisions into five and as a result re-assessed its reporting segments in accordance with IFRS 8. It was determined that all the UK operating
segments share similar economic characteristics. In making this assessment the Group has considered the key metrics that are used to monitor the
performance of the segments; these have been considered over a long term period and have included historic and forecast results. The metrics focus on
profitability, return on capital and other asset related measures. In addition each division builds and delivers residential homes, uses consistent methods
of construction, sells homes to both private customers and local housing associations, follows a single UK sales process, is subject to the same macro-
economic factors including mortgage availability and has the same cost of capital arising from the utilisation of central banking and debt facilities. As a
result, the disclosure for the current year has been updated to reflect the two reportable segments of the UK and Spain (2019: five reportable segments)
and the comparative period has been shown on the same basis.
The accounting policies of the reportable segments are the same as the Group’s accounting policies described in Note 1.
Segment information about these businesses is presented below:
£ million
Revenue
External sales
Result
Profit before joint ventures, finance costs and exceptional items
Share of results of joint ventures
Operating profit (Note 32)
Exceptional items (Note 6)
Profit before finance costs
Net finance costs
Profit before taxation
Taxation charge
Profit for the year
2020
2019
UK
Spain
Total
UK
Spain
Total
2,726.9
63.3 2,790.2 4,220.9
120.4
4,341.3
276.6
7.9
284.5
(10.0)
274.5
15.8
–
15.8
–
15.8
810.4
8.0
818.4
14.3
832.7
32.1
–
32.1
–
32.1
292.4
7.9
300.3
(10.0)
290.3
(25.9)
264.4
(47.4)
217.0
842.5
8.0
850.5
14.3
864.8
(28.9)
835.9
(162.0)
673.9
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Financial statements
Notes to the consolidated financial statements continued
Notes to the consolidated financial statements continued
5. Operating segments continued
5. Operating segments continued
£ million
£ million
Assets and liabilities
Assets and liabilities
Segment operating assets
Segment operating assets
Joint ventures
Joint ventures
Segment operating liabilities
Segment operating liabilities
Net operating assets
Net operating assets
Net current taxation
Net current taxation
Net deferred taxation (Note 14)
Net deferred taxation (Note 14)
Net cash (Note 27)
Net cash (Note 27)
Net assets
Net assets
£ million
£ million
Other information
Other information
Property, plant and equipment additions
Property, plant and equipment additions
Right-of-use asset additions
Right-of-use asset additions
Software additions
Software additions
Property, plant and equipment depreciation
Property, plant and equipment depreciation
Right-of-use asset depreciation
Right-of-use asset depreciation
Amortisation of intangible assets
Amortisation of intangible assets
2020
2020
2019
2019
UK
UK
Spain
Spain
Total
Total
UK
UK
Spain
Spain
Total
Total
4,635.1
4,635.1
82.2
82.2
(1,564.0)
(1,564.0)
174.6 4,809.7 4,299.0
174.6 4,809.7 4,299.0
55.3
55.3
82.2
82.2
(63.1) (1,627.1) (1,632.2)
(63.1) (1,627.1) (1,632.2)
–
–
3,153.3
3,153.3
111.5 3,264.8 2,722.1
111.5 3,264.8 2,722.1
161.7
161.7
–
–
(83.6)
(83.6)
78.1
78.1
(1.1)
(1.1)
33.7
33.7
719.4
719.4
4,016.8
4,016.8
4,460.7
4,460.7
55.3
55.3
(1,715.8)
(1,715.8)
2,800.2
2,800.2
(67.9)
(67.9)
29.8
29.8
545.7
545.7
3,307.8
3,307.8
2020
2020
2019
2019
UK
UK
Spain
Spain
Total
Total
UK
UK
Spain
Spain
Total
Total
2.8
2.8
9.1
9.1
4.9
4.9
(4.6)
(4.6)
(7.6)
(7.6)
(3.8)
(3.8)
0.3
0.3
0.2
0.2
–
–
(0.1)
(0.1)
(0.3)
(0.3)
–
–
3.1
3.1
9.3
9.3
4.9
4.9
(4.7)
(4.7)
(7.9)
(7.9)
(3.8)
(3.8)
7.2
7.2
9.1
9.1
5.4
5.4
(3.1)
(3.1)
(8.4)
(8.4)
(1.6)
(1.6)
–
–
0.4
0.4
–
–
(0.1)
(0.1)
(0.3)
(0.3)
–
–
7.2
7.2
9.5
9.5
5.4
5.4
(3.2)
(3.2)
(8.7)
(8.7)
(1.6)
(1.6)
6. Net operating expenses and profit on ordinary activities before finance costs
6. Net operating expenses and profit on ordinary activities before finance costs
Profit on ordinary activities before finance costs for continuing operations has been arrived at after charging/(crediting):
Profit on ordinary activities before finance costs for continuing operations has been arrived at after charging/(crediting):
£ million
£ million
Administration expenses
Administration expenses
Other expenses
Other expenses
Other income
Other income
Exceptional items
Exceptional items
2020
2020
206.8
206.8
7.2
7.2
(9.7)
(9.7)
10.0
10.0
2019
2019
211.7
211.7
4.3
4.3
(14.4)
(14.4)
(14.3)
(14.3)
Other income and expenses include profits on the sale of property, plant and equipment and the revaluation of certain shared equity mortgage
Other income and expenses include profits on the sale of property, plant and equipment and the revaluation of certain shared equity mortgage
receivables, pre-acquisition and abortive costs, and profit/loss on the sale of part exchange properties. In April 2020 the Group took the decision to utilise
receivables, pre-acquisition and abortive costs, and profit/loss on the sale of part exchange properties. In April 2020 the Group took the decision to utilise
the Government’s Coronavirus Job Retention Scheme. As of June 2020, all employees had returned from furlough and in July 2020 the Group returned
the Government’s Coronavirus Job Retention Scheme. As of June 2020, all employees had returned from furlough and in July 2020 the Group returned
the funds to the Government.
the funds to the Government.
Exceptional items:
Exceptional items:
£ million
£ million
Provision in relation to Aluminium Composite Materials cladding
Provision in relation to Aluminium Composite Materials cladding
Net Pension Increase Exchange credit
Net Pension Increase Exchange credit
Exceptional items
Exceptional items
2020
2020
10.0
10.0
–
–
10.0
10.0
2019
2019
–
–
(14.3)
(14.3)
(14.3)
(14.3)
Aluminium Composite Materials (ACM) cladding
Aluminium Composite Materials (ACM) cladding
Following the tragic fire at Grenfell Tower, the Group conducted a detailed review into all legacy and current buildings’ ACM cladding and worked with
Following the tragic fire at Grenfell Tower, the Group conducted a detailed review into all legacy and current buildings’ ACM cladding and worked with
building owners, management companies, and the Fire Service to implement Government advice on interim mitigation measures, where applicable.
building owners, management companies, and the Fire Service to implement Government advice on interim mitigation measures, where applicable.
Whilst each situation is different, and this is an exceptionally complex issue, the Group has in a number of cases, having regard to all of the relevant facts
Whilst each situation is different, and this is an exceptionally complex issue, the Group has in a number of cases, having regard to all of the relevant facts
and circumstances, agreed to support our customers both financially and practically with removal and replacement of ACM cladding, even though the
and circumstances, agreed to support our customers both financially and practically with removal and replacement of ACM cladding, even though the
buildings concerned met the requirements of building regulations at the time construction was formally approved. This decision was taken for buildings
buildings concerned met the requirements of building regulations at the time construction was formally approved. This decision was taken for buildings
recently constructed by the Group because management believe that it is morally right, not because it is legally required. In 2020 the provision was
recently constructed by the Group because management believe that it is morally right, not because it is legally required. In 2020 the provision was
increased by £10 million to reflect the latest cost estimates of the work to be performed.
increased by £10 million to reflect the latest cost estimates of the work to be performed.
Pension Increase Exchange (PIE)
Pension Increase Exchange (PIE)
During 2019, the Group initiated a Pension Increase Exchange exercise which enables pension scheme members to elect to exchange future pension
During 2019, the Group initiated a Pension Increase Exchange exercise which enables pension scheme members to elect to exchange future pension
increases on part of their pensions for a one-off increase in pension. The PIE exercise consisted of two stages – the option to select the exchange at
increases on part of their pensions for a one-off increase in pension. The PIE exercise consisted of two stages – the option to select the exchange at
retirement for members who have not yet retired and a bulk exercise for members already drawing a pension. The credit arising from the implementation
retirement for members who have not yet retired and a bulk exercise for members already drawing a pension. The credit arising from the implementation
of the PIE was considered a past service credit and recognised through the income statement in accordance with IAS 19.
of the PIE was considered a past service credit and recognised through the income statement in accordance with IAS 19.
6. Net operating expenses and profit on ordinary activities before finance costs continued
Profit on ordinary activities before finance costs has been arrived at after charging:
£ million
Cost of inventories recognised as an expense in cost of sales
Property, plant and equipment depreciation (Note 12)
Right-of-use asset depreciation (Note 19)
Amortisation of intangible assets (Note 11)
2020
2019
2,094.2
4.7
7.9
3.8
3,203.6
3.2
8.7
1.6
During the year the Group identified and expensed £62.7 million of costs relating to the COVID-19 pandemic, with £60.3 million charged to gross profit
and £2.4 million to administrative costs. These costs include unproductive site overhead costs incurred during the controlled closure and lockdown period
which would ordinarily be capitalised to WIP and expensed as plots legally complete of £29.9 million; additional costs incurred by the business due to
extended site durations resulting from the reduced productivity levels as the Group implemented its operational processes under the COVID-secure
guidelines totalling £17.4 million; and incremental costs incurred by the business in responding to COVID-19, including to meet its health and safety
requirements and complying with Government guidelines, of £15.4 million.
The remuneration paid to Deloitte LLP, the Group’s external auditor, is as follows:
£ million
Fees payable for the audit of the Company’s annual accounts and consolidated financial statements
Fees payable to the Company’s auditor and its associates for other services to the Group:
The audit of the Company’s subsidiaries pursuant to legislation
Total audit fees
Other assurance services
Total non-audit fees
Total fees
2020
0.2
0.3
0.5
0.2
0.2
0.7
2019
0.2
0.3
0.5
0.1
0.1
0.6
Non-audit services in 2020 and 2019 predominantly relate to work undertaken as a result of Deloitte LLP’s role as auditor, or work resulting from
knowledge and experience gained as part of the role. In both 2020 and 2019 the fees relating to other assurance services predominantly related to the
review of the interim statements. The work was either the subject of a competitive tender or was best performed by the Group’s auditor because of its
knowledge of the Group. In 2020, non-audit fees also include £50,000 (2019: £1,000) of other services related to enhanced assurance.
7. Staff costs
Number
Average number employed
United Kingdom
Spain
£ million
Remuneration
Wages and salaries
Redundancy costs
Social security costs
Other pension costs
2020
2019
5,948
81
6,029
5,796
87
5,883
2020
2019
264.9
5.5
28.7
15.2
314.3
275.9
0.9
29.8
14.5
321.1
The information relating to Director and Senior Management remuneration required by the Companies Act 2006 and the Listing Rules of the Financial
Conduct Authority is contained in Note 30 and pages 98 to 120 in the Directors’ Remuneration Report.
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Financial statements
Notes to the consolidated financial statements continued
Notes to the consolidated financial statements continued
8. Finance costs and finance income
8. Finance costs and finance income
£ million
£ million
Interest receivable
Interest receivable
Foreign exchange gain
Foreign exchange gain
£ million
£ million
Interest on bank and other loans
Interest on bank and other loans
Foreign exchange loss
Foreign exchange loss
Unwinding of discount on land creditors and other items
Unwinding of discount on land creditors and other items
Interest on lease liabilities (Note 19)
Interest on lease liabilities (Note 19)
Net interest on pension liability (Note 21)
Net interest on pension liability (Note 21)
9. Taxation
9. Taxation
Tax (charged)/credited in the income statement is analysed as follows:
Tax (charged)/credited in the income statement is analysed as follows:
£ million
£ million
Current tax:
Current tax:
UK:
UK:
Overseas:
Overseas:
Deferred tax:
Deferred tax:
UK:
UK:
Overseas:
Overseas:
Current year
Current year
Adjustment in respect of prior years
Adjustment in respect of prior years
Current year
Current year
Adjustment in respect of prior years
Adjustment in respect of prior years
Current year
Current year
Adjustment in respect of prior years
Adjustment in respect of prior years
Current year
Current year
Adjustment in respect of prior years
Adjustment in respect of prior years
2020
2020
3.1
3.1
0.4
0.4
3.5
3.5
2020
2020
8.3
8.3
–
–
8.3
8.3
19.3
19.3
0.4
0.4
1.4
1.4
29.4
29.4
2019
2019
2.9
2.9
–
–
2.9
2.9
2019
2019
5.5
5.5
1.1
1.1
6.6
6.6
21.5
21.5
0.5
0.5
3.2
3.2
31.8
31.8
2020
2020
2019
2019
(38.5)
(38.5)
(0.6)
(0.6)
(2.2)
(2.2)
–
–
(41.3)
(41.3)
(5.5)
(5.5)
(0.2)
(0.2)
(0.4)
(0.4)
–
–
(6.1)
(6.1)
(138.1)
(138.1)
(5.2)
(5.2)
(5.2)
(5.2)
(0.6)
(0.6)
(149.1)
(149.1)
(10.8)
(10.8)
0.5
0.5
(1.8)
(1.8)
(0.8)
(0.8)
(12.9)
(12.9)
(47.4)
(47.4)
(162.0)
(162.0)
Corporation tax is calculated at 19.0% (2019: 19.0%) of the estimated assessable profit for the year in the UK. Taxation outside the UK is calculated at the
Corporation tax is calculated at 19.0% (2019: 19.0%) of the estimated assessable profit for the year in the UK. Taxation outside the UK is calculated at the
rates prevailing in the respective jurisdictions. The effective tax rate, before exceptional items, is 17.9% (2019: 19.4%). The tax charge for the year includes
rates prevailing in the respective jurisdictions. The effective tax rate, before exceptional items, is 17.9% (2019: 19.4%). The tax charge for the year includes
an exceptional credit of £1.7 million relating to the ACM provision. The tax charge for the prior year includes an exceptional charge of £2.7 million relating
an exceptional credit of £1.7 million relating to the ACM provision. The tax charge for the prior year includes an exceptional charge of £2.7 million relating
to the Pension Increase Exchange exercise. The charge for the year can be reconciled to the profit per the income statement as follows:
to the Pension Increase Exchange exercise. The charge for the year can be reconciled to the profit per the income statement as follows:
£ million
£ million
Profit before tax
Profit before tax
Tax at the UK corporation tax rate of 19.0% (2019: 19.0%)
Tax at the UK corporation tax rate of 19.0% (2019: 19.0%)
Net under provision in respect of prior years
Net under provision in respect of prior years
Net impact of items that are not taxable or deductible
Net impact of items that are not taxable or deductible
Recognition of deferred tax asset relating to Spanish business
Recognition of deferred tax asset relating to Spanish business
Other rate impacting adjustments
Other rate impacting adjustments
Tax charge for the year
Tax charge for the year
2020
2020
264.4
264.4
(50.2)
(50.2)
(0.9)
(0.9)
2.8
2.8
1.1
1.1
(0.2)
(0.2)
(47.4)
(47.4)
2019
2019
835.9
835.9
(158.8)
(158.8)
(6.1)
(6.1)
3.4
3.4
1.5
1.5
(2.0)
(2.0)
(162.0)
(162.0)
10. Earnings per share
Basic earnings per share
Diluted earnings per share
Adjusted basic earnings per share
Adjusted diluted earnings per share
Weighted average number of shares for basic earnings per share – million
Weighted average number of shares for diluted earnings per share – million
2020
6.3p
6.2p
6.5p
6.5p
2019
20.6p
20.6p
20.3p
20.2p
3,471.2
3,473.6
3,268.2
3,276.2
Adjusted basic and adjusted diluted earnings per share, which exclude the impact of exceptional items and any associated net tax amounts, are
presented to provide a measure of the underlying performance of the Group. A reconciliation of earnings attributable to equity shareholders used for basic
and diluted earnings per share to that used for adjusted earnings per share is shown below.
£ million
Earnings for basic and diluted earnings per share
Adjust for exceptional items (Note 6)
Adjust for tax on exceptional items
Earnings for adjusted basic and adjusted diluted earnings per share
Million
Weighted average number of shares for basic earnings per share
Long term incentive share options
SAYE options
Weighted average number of shares for diluted earnings per share
11. Intangible assets
£ million
Cost
At 1 January 2019
Additions
At 31 December 2019
Additions
At 31 December 2020
Accumulated amortisation
At 1 January 2019
Charge for the year
At 31 December 2019
Charge for the year
At 31 December 2020
Carrying amount
At 31 December 2020
At 31 December 2019
The amortisation of software is recognised within administration expenses in the income statement.
2020
217.0
10.0
(1.7)
225.3
2019
673.9
(14.3)
2.7
662.3
2020
2019
3,471.2
1.3
1.1
3,473.6
3,268.2
6.3
1.7
3,276.2
Brands
Software
Total
140.2
–
140.2
–
140.2
(140.2)
–
(140.2)
–
(140.2)
11.8
5.4
17.2
4.9
22.1
(8.6)
(1.6)
(10.2)
(3.8)
(14.0)
152.0
5.4
157.4
4.9
162.3
(148.8)
(1.6)
(150.4)
(3.8)
(154.2)
–
–
8.1
7.0
8.1
7.0
144
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Financial statements
Notes to the consolidated financial statements continued
Notes to the consolidated financial statements continued
12. Property, plant and equipment
12. Property, plant and equipment
13. Interests in joint ventures continued
£ million
£ million
Cost
Cost
At 1 January 2019
At 1 January 2019
Additions
Additions
Disposals
Disposals
Exchange movements
Exchange movements
At 31 December 2019
At 31 December 2019
Additions
Additions
Disposals
Disposals
Exchange movements
Exchange movements
At 31 December 2020
At 31 December 2020
Accumulated depreciation
Accumulated depreciation
At 1 January 2019
At 1 January 2019
Charge for the year
Charge for the year
Disposals
Disposals
Exchange movements
Exchange movements
At 31 December 2019
At 31 December 2019
Charge for the year
Charge for the year
Disposals
Disposals
Exchange movements
Exchange movements
At 31 December 2020
At 31 December 2020
Carrying amount
Carrying amount
At 31 December 2020
At 31 December 2020
At 31 December 2019
At 31 December 2019
13. Interests in joint ventures
13. Interests in joint ventures
£ million
£ million
Aggregated amounts relating to share of all joint ventures:
Aggregated amounts relating to share of all joint ventures:
Non-current assets
Non-current assets
Current assets
Current assets
Total assets
Total assets
Current liabilities
Current liabilities
Non-current liabilities
Non-current liabilities
Total liabilities
Total liabilities
Carrying amount
Carrying amount
Loans to joint ventures
Loans to joint ventures
Total interests in joint ventures
Total interests in joint ventures
Freehold land
Freehold land
and buildings
and buildings
Plant, equipment
Plant, equipment
and leasehold
and leasehold
improvements
improvements
16.2
16.2
0.3
0.3
–
–
–
–
16.5
16.5
–
–
–
–
–
–
16.5
16.5
(2.2)
(2.2)
(0.5)
(0.5)
–
–
–
–
(2.7)
(2.7)
(0.5)
(0.5)
–
–
–
–
(3.2)
(3.2)
20.8
20.8
6.9
6.9
(2.7)
(2.7)
(0.1)
(0.1)
24.9
24.9
3.1
3.1
–
–
0.1
0.1
28.1
28.1
(13.2)
(13.2)
(2.7)
(2.7)
2.7
2.7
0.1
0.1
(13.1)
(13.1)
(4.2)
(4.2)
–
–
(0.1)
(0.1)
(17.4)
(17.4)
Total
Total
37.0
37.0
7.2
7.2
(2.7)
(2.7)
(0.1)
(0.1)
41.4
41.4
3.1
3.1
–
–
0.1
0.1
44.6
44.6
(15.4)
(15.4)
(3.2)
(3.2)
2.7
2.7
0.1
0.1
(15.8)
(15.8)
(4.7)
(4.7)
–
–
(0.1)
(0.1)
(20.6)
(20.6)
13.3
13.3
13.8
13.8
10.7
10.7
11.8
11.8
24.0
24.0
25.6
25.6
2020
2020
2019
2019
25.3
25.3
115.0
115.0
140.3
140.3
(28.2)
(28.2)
(91.8)
(91.8)
(120.0)
(120.0)
24.3
24.3
57.9
57.9
82.2
82.2
21.9
21.9
101.0
101.0
122.9
122.9
(22.5)
(22.5)
(87.9)
(87.9)
(110.4)
(110.4)
18.3
18.3
37.0
37.0
55.3
55.3
Loans to joint ventures includes £(4.0) million (2019: £(5.8) million) relating to the Group’s share of losses recognised under the equity method in excess of
Loans to joint ventures includes £(4.0) million (2019: £(5.8) million) relating to the Group’s share of losses recognised under the equity method in excess of
the investment in ordinary shares.
the investment in ordinary shares.
£ million
Group share of:
Revenue
Cost of sales
Gross profit
Net operating expenses
Profit before finance costs
Net finance costs
Profit before taxation
Taxation
Share of joint ventures’ post-tax results for the year
2020
2019
96.0
(77.4)
18.6
(5.3)
13.3
(3.3)
10.0
(2.1)
7.9
99.9
(85.7)
14.2
(2.7)
11.5
(1.8)
9.7
(1.7)
8.0
The Group has five material (2019: five) joint ventures whose principal activity is residential housebuilding or development. The Group considers a joint
venture to be material when it is financially or strategically important to the Group.
The particulars of the material joint ventures for 2020 are as follows:
Joint venture
Greenwich Millennium Village Limited
Chobham Manor Limited Liability Partnership
Winstanley and York Road Regeneration LLP
Whitehill & Bordon Development Company Phase 1a Limited
Whitehill & Bordon Regeneration Company Limited
*
Interests held by subsidiary undertakings.
Country of incorporation
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Interest in the issued
ordinary share capital*
50%
50%
50%
50%
50%
Further information on the particulars of joint ventures can be found on page 172.
The following two tables show summary financial information for the material joint ventures. Unless specifically indicated, this information represents 100%
of the joint venture before intercompany eliminations.
£ million
Non-current assets
Current assets
Cash and cash equivalents
Current financial liabilities
Current other liabilities
Non-current financial liabilities*
Net assets/(liabilities) (100%)
Group share of net assets/(liabilities)
Loans to joint ventures
Total interests in material joint ventures
Revenue
Interest expense
Income tax expense
Profit/(loss) for the year
Group share of profit/(loss) for the year
* Non-current financial liabilities include amounts owed to joint venture partners.
Greenwich
Millennium
Village
2020
Chobham
Manor
2020
Winstanley and
York Road
Regeneration
2020
Whitehill &
Bordon
Development
Company
Phase 1a
2020
Whitehill &
Bordon
Regeneration
Company
2020
–
39.0
19.5
(10.0)
(2.8)
(10.0)
35.7
17.9
2.5
20.4
72.7
(0.1)
(3.6)
15.3
7.6
–
57.0
12.2
(13.9)
–
(49.7)
5.6
2.8
22.6
25.4
23.3
–
–
(1.0)
(0.5)
–
59.8
12.8
(12.2)
–
(68.4)
(8.0)
(4.0)
29.7
25.7
52.6
(5.2)
–
3.5
1.8
0.3
16.0
1.8
(7.1)
–
(7.8)
3.2
1.6
–
1.6
23.8
(1.1)
(0.5)
2.3
1.2
49.6
2.1
0.6
(9.2)
–
(40.9)
2.2
1.1
3.3
4.4
19.7
–
(0.2)
0.2
0.1
Total
2020
49.9
173.9
46.9
(52.4)
(2.8)
(176.8)
38.7
19.4
58.1
77.5
192.1
(6.4)
(4.3)
20.3
10.2
During the year, no entity charged depreciation or amortisation. No entity had discontinued operations or items of other comprehensive income.
146
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Financial statements
Notes to the consolidated financial statements continued
Notes to the consolidated financial statements continued
13. Interests in joint ventures continued
13. Interests in joint ventures continued
14. Deferred tax continued
£ million
£ million
Non-current assets
Non-current assets
Current assets
Current assets
Cash and cash equivalents
Cash and cash equivalents
Current financial liabilities
Current financial liabilities
Current other liabilities
Current other liabilities
Non-current financial liabilities*
Non-current financial liabilities*
Net assets/(liabilities) (100%)
Net assets/(liabilities) (100%)
Group share of net assets/(liabilities)
Group share of net assets/(liabilities)
Loans to joint ventures
Loans to joint ventures
Total interests in material joint ventures
Total interests in material joint ventures
Revenue
Revenue
Interest expense
Interest expense
Income tax (expense)/credit
Income tax (expense)/credit
Profit/(loss) for the year
Profit/(loss) for the year
Group share of profit/(loss) for the year
Group share of profit/(loss) for the year
* Non-current financial liabilities include amounts owed to joint venture partners.
* Non-current financial liabilities include amounts owed to joint venture partners.
Greenwich
Greenwich
Millennium
Millennium
Village
Village
2019
2019
Chobham
Chobham
Manor
Manor
2019
2019
Winstanley and
Winstanley and
York Road
York Road
Regeneration
Regeneration
2019
2019
Whitehill &
Whitehill &
Bordon
Bordon
Development
Development
Company
Company
Phase 1a
Phase 1a
2019
2019
Whitehill &
Whitehill &
Bordon
Bordon
Regeneration
Regeneration
Company
Company
2019
2019
0.4
0.4
36.2
36.2
6.9
6.9
(5.5)
(5.5)
(1.9)
(1.9)
(16.8)
(16.8)
19.3
19.3
9.7
9.7
6.1
6.1
15.8
15.8
60.1
60.1
(0.4)
(0.4)
(2.9)
(2.9)
12.9
12.9
6.5
6.5
0.9
0.9
35.9
35.9
0.7
0.7
(13.1)
(13.1)
–
–
(17.8)
(17.8)
6.6
6.6
3.3
3.3
8.3
8.3
11.6
11.6
97.5
97.5
–
–
–
–
4.9
4.9
2.5
2.5
–
–
76.9
76.9
5.6
5.6
(10.3)
(10.3)
–
–
(83.7)
(83.7)
(11.5)
(11.5)
(5.8)
(5.8)
22.1
22.1
16.3
16.3
8.5
8.5
(3.1)
(3.1)
–
–
(5.1)
(5.1)
(2.6)
(2.6)
0.4
0.4
20.8
20.8
0.3
0.3
(4.8)
(4.8)
–
–
(15.4)
(15.4)
1.3
1.3
0.7
0.7
0.6
0.6
1.3
1.3
19.2
19.2
(1.0)
(1.0)
(0.5)
(0.5)
2.4
2.4
1.2
1.2
37.3
37.3
5.8
5.8
3.3
3.3
(8.3)
(8.3)
–
–
(36.2)
(36.2)
1.9
1.9
0.9
0.9
2.8
2.8
3.7
3.7
14.5
14.5
0.9
0.9
0.1
0.1
0.9
0.9
0.4
0.4
During the year, no entity charged depreciation or amortisation. No entity had discontinued operations or items of other comprehensive income.
During the year, no entity charged depreciation or amortisation. No entity had discontinued operations or items of other comprehensive income.
Aggregated amounts relating to share of individually immaterial joint ventures:
Aggregated amounts relating to share of individually immaterial joint ventures:
£ million
£ million
Non-current assets
Non-current assets
Current assets
Current assets
Total assets
Total assets
Current liabilities
Current liabilities
Non-current liabilities
Non-current liabilities
Total liabilities
Total liabilities
Carrying amount
Carrying amount
Loans to individually immaterial joint ventures
Loans to individually immaterial joint ventures
Total interests in individually immaterial joint ventures
Total interests in individually immaterial joint ventures
The aggregate loss relating to individually immaterial joint ventures was £2.3 million (2019: nil).
The aggregate loss relating to individually immaterial joint ventures was £2.3 million (2019: nil).
2020
2020
0.3
0.3
4.6
4.6
4.9
4.9
(0.6)
(0.6)
(3.4)
(3.4)
(4.0)
(4.0)
0.9
0.9
3.8
3.8
4.7
4.7
14. Deferred tax
14. Deferred tax
£ million
£ million
At 1 January 2019
At 1 January 2019
Credit/(charge) to income
Credit/(charge) to income
Credit to other comprehensive income
Credit to other comprehensive income
Credit to statement of changes in equity
Credit to statement of changes in equity
Foreign exchange
Foreign exchange
At 31 December 2019
At 31 December 2019
(Charge)/credit to income
(Charge)/credit to income
Credit to other comprehensive income
Credit to other comprehensive income
Credit to statement of changes in equity
Credit to statement of changes in equity
Foreign exchange
Foreign exchange
At 31 December 2020
At 31 December 2020
Share-
Share-
based
based
payments
payments
Capital
Capital
allowances
allowances
Losses
Losses
Retirement
Retirement
benefit
benefit
obligations
obligations
Other
Other
temporary
temporary
differences
differences
2.3
2.3
0.3
0.3
–
–
0.8
0.8
–
–
3.4
3.4
(1.3)
(1.3)
–
–
0.8
0.8
–
–
2.9
2.9
2.4
2.4
(0.1)
(0.1)
–
–
–
–
–
–
2.3
2.3
(0.3)
(0.3)
–
–
–
–
–
–
2.0
2.0
8.5
8.5
(2.7)
(2.7)
–
–
–
–
(0.5)
(0.5)
5.3
5.3
–
–
–
–
–
–
0.6
0.6
5.9
5.9
22.6
22.6
(10.9)
(10.9)
1.7
1.7
–
–
–
–
13.4
13.4
(5.1)
(5.1)
8.6
8.6
–
–
–
–
16.9
16.9
4.9
4.9
0.5
0.5
–
–
–
–
–
–
5.4
5.4
0.6
0.6
–
–
–
–
–
–
6.0
6.0
Total
Total
2019
2019
39.0
39.0
175.6
175.6
16.8
16.8
(42.0)
(42.0)
(1.9)
(1.9)
(169.9)
(169.9)
17.6
17.6
8.8
8.8
39.9
39.9
48.7
48.7
199.8
199.8
(3.6)
(3.6)
(3.3)
(3.3)
16.0
16.0
8.0
8.0
2019
2019
2.4
2.4
4.8
4.8
7.2
7.2
(0.6)
(0.6)
(2.9)
(2.9)
(3.5)
(3.5)
3.7
3.7
2.9
2.9
6.6
6.6
Total
Total
40.7
40.7
(12.9)
(12.9)
1.7
1.7
0.8
0.8
(0.5)
(0.5)
29.8
29.8
(6.1)
(6.1)
8.6
8.6
0.8
0.8
0.6
0.6
33.7
33.7
Closing deferred tax on UK temporary differences has been calculated at the tax rates that are expected to apply (based on currently enacted law) for
the period when the asset is realised, or the liability is settled. Accordingly, the temporary differences have been calculated at 19% (2019: between 19%
and 17%).
The net deferred tax balance is analysed into assets and liabilities as follows:
£ million
Deferred tax assets
Deferred tax liabilities
2020
35.1
(1.4)
33.7
2019
31.1
(1.3)
29.8
The Group has not recognised temporary differences relating to tax losses carried forward and other temporary differences amounting to £2.4 million
(2019: £2.4 million) in the UK and £38.7 million (2019: £39.6 million) in Spain. The UK temporary differences have not been recognised as they are
predominantly non-trading in nature and insufficient certainty exists as to their future utilisation. The temporary differences in Spain have not been
recognised due to uncertainty of sufficient taxable profits in the future against which to utilise these amounts.
At the balance sheet date, the Group has unused UK capital losses of £269.5 million (2019: £269.5 million). No deferred tax asset has been recognised
in respect of the capital losses at 31 December 2020 because the Group does not believe that it is probable that these capital losses will be utilised in
the foreseeable future.
15. Inventories
£ million
Land
Development and construction costs
Part exchange and other
2020
2019
2,875.7
1,638.8
20.2
4,534.7
2,735.9
1,404.7
55.4
4,196.0
The markets in our core geographies, which are the primary drivers of our business, continue to trade positively. At 31 December 2020, the Group
completed a net realisable value assessment of inventory. This review resulted in a reallocation of nil (2019: £4.3 million) of historically booked provision
between sites which continue to hold a provision due to poor site location and complex site requirements and a small increase at one of those
historic sites.
At the balance sheet date, the Group held land and work in progress in the UK that had been written down to net realisable value of £34.5 million (2019:
£39.0 million) with associated impairments of £25.5 million (2019: £30.5 million). At 31 December 2020, Spain had land and work in progress that has
been written down to net realisable value of £19.3 million (2019: £20.3 million) with associated impairments of £38.9 million (2019: £38.1 million).
The table below details the movements on the inventory provision recorded in the year.
£ million
1 January
Net utilised
Foreign exchange
31 December
16. Other financial assets
Trade and other receivables
£ million
Trade receivables
Other receivables
2020
68.6
(6.6)
2.4
64.4
Current
Non-current
2020
127.5
61.6
189.1
2019
120.7
40.3
161.0
2020
19.3
7.0
26.3
2019
83.0
(11.8)
(2.6)
68.6
2019
31.4
12.3
43.7
Included within trade receivables are mortgage receivables of £26.7 million (2019: £34.0 million), including shared equity loans. Shared equity loans were
provided to certain customers to facilitate their house purchase and are measured at fair value through profit or loss.
Cash and cash equivalents
£ million
Cash and cash equivalents
Further information on financial assets can be found in Note 20.
2020
823.0
2019
630.4
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149
Financial statements
Notes to the consolidated financial statements continued
Notes to the consolidated financial statements continued
17. Bank and other loans
17. Bank and other loans
£ million
£ million
€100.0 million 2.02% Senior Loan Notes 2023
€100.0 million 2.02% Senior Loan Notes 2023
€15.0 million 1.65% Loan 2021
€15.0 million 1.65% Loan 2021
£ million
£ million
Amounts due for settlement within one year
Amounts due for settlement within one year
Amount due for settlement after one year
Amount due for settlement after one year
Total borrowings
Total borrowings
Further information on loan facilities can be found in Note 20.
Further information on loan facilities can be found in Note 20.
18. Trade and other payables
18. Trade and other payables
£ million
£ million
Trade payables
Trade payables
Land creditors
Land creditors
Social security and other taxes
Social security and other taxes
Customer deposits
Customer deposits
Completed site accruals
Completed site accruals
Accrued expenses and deferred income
Accrued expenses and deferred income
Other payables
Other payables
2020
2020
90.1
90.1
13.5
13.5
103.6
103.6
2020
2020
13.5
13.5
90.1
90.1
103.6
103.6
Current
Current
Non-current
Non-current
2020
2020
275.0
275.0
347.9
347.9
8.6
8.6
82.8
82.8
115.0
115.0
77.9
77.9
12.1
12.1
919.3
919.3
2019
2019
369.2
369.2
339.9
339.9
9.2
9.2
65.0
65.0
97.0
97.0
80.1
80.1
14.4
14.4
974.8
974.8
2020
2020
21.4
21.4
328.0
328.0
–
–
7.4
7.4
46.1
46.1
43.2
43.2
13.7
13.7
459.8
459.8
Revenue recognised in the current year that was included in the customer deposit balance brought forward at the beginning of the period was
Revenue recognised in the current year that was included in the customer deposit balance brought forward at the beginning of the period was
£65.0 million (2019: £65.1 million). Other payables include £19.4 million (2019: £21.0 million) of repayable grants.
£65.0 million (2019: £65.1 million). Other payables include £19.4 million (2019: £21.0 million) of repayable grants.
Land creditors are denominated as follows:
Land creditors are denominated as follows:
£ million
£ million
Sterling
Sterling
Euros
Euros
Land creditors of £430.4 million (2019: £429.8 million) are secured against land acquired for development.
Land creditors of £430.4 million (2019: £429.8 million) are secured against land acquired for development.
Further information on financial liabilities can be found in Note 20.
Further information on financial liabilities can be found in Note 20.
19. Leases
19. Leases
The Group as a lessee
The Group as a lessee
The Group’s leases consist primarily of office premises and equipment.
The Group’s leases consist primarily of office premises and equipment.
Right-of-use assets:
Right-of-use assets:
£ million
£ million
At 1 January 2020
At 1 January 2020
At 31 December 2020
At 31 December 2020
Additions during the year
Additions during the year
Lease liabilities:
Lease liabilities:
£ million
£ million
Current
Current
Non-current
Non-current
Total
Total
2020
2020
663.4
663.4
12.5
12.5
675.9
675.9
Office
Office
premises
premises
Equipment
Equipment
18.0
18.0
18.4
18.4
5.2
5.2
9.4
9.4
9.1
9.1
4.1
4.1
2020
2020
6.4
6.4
21.6
21.6
28.0
28.0
2019
2019
84.7
84.7
–
–
84.7
84.7
2019
2019
–
–
84.7
84.7
84.7
84.7
2019
2019
23.5
23.5
389.3
389.3
–
–
9.9
9.9
38.7
38.7
24.8
24.8
13.5
13.5
499.7
499.7
2019
2019
710.1
710.1
19.1
19.1
729.2
729.2
Total
Total
27.4
27.4
27.5
27.5
9.3
9.3
2019
2019
7.6
7.6
20.3
20.3
27.9
27.9
19. Leases continued
Amounts recognised in the income statement:
£ million
Depreciation charged on right-of-use office premises
Depreciation charged on right-of-use equipment
Interest on lease liabilities
Total
2020
3.7
4.2
0.4
8.3
2019
3.8
4.9
0.5
9.2
The total cash outflow for leases during the current year was £8.4 million, including £0.4 million of interest (2019: £8.9 million, including £0.5 million
of interest).
20. Financial instruments and fair value disclosures
Capital management
The Group’s policy is to maintain a strong balance sheet and to have an appropriate funding structure. Shareholders’ equity and long term debt are
used to finance intangible assets, property, plant and equipment and the medium to long term inventories. Revolving credit facilities are used to finance
net current assets, including development and construction costs. The Group’s financing facilities contain the usual financial covenants including
minimum interest cover and maximum gearing. The Group met these requirements throughout the year and up to the date of the approval of the
financial statements.
Financial assets and financial liabilities
Categories of financial assets and financial liabilities are as follows:
Financial assets
£ million
Cash and cash equivalents
Land receivables
Trade and other receivables
Mortgage receivables
Carrying value
Fair value
Fair value
hierarchy
31 December
2020
31 December
2019
31 December
2020
31 December
2019
a
a
a
b
823.0
4.6
118.2
26.7
972.5
630.4
12.8
113.5
34.0
790.7
823.0
4.6
118.2
26.7
972.5
630.4
12.8
113.5
34.0
790.7
(a) The Directors consider the carrying amounts of financial assets and financial liabilities recorded at amortised costs in the consolidated financial statements to approximate their fair value.
(b) Mortgage receivables relate to sales incentives, including shared equity loans and are measured at fair value through profit or loss. The fair value is established based on a publicly
available national house price index, being significant other observable inputs (level 2).
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 16, include £65.9 million (2019: £44.4 million) of non-financial assets.
Financial liabilities
£ million
Bank and other loans
Land creditors
Trade and other payables
Lease liabilities
Carrying value
Fair value
Fair value
hierarchy
31 December
2020
31 December
2019
31 December
2020
31 December
2019
a
b
b
b
103.6
675.9
539.2
28.0
84.7
729.2
628.2
27.9
102.9
675.9
539.2
28.0
85.8
729.2
628.2
27.9
1,346.7
1,470.0
1,346.0
1,471.1
(a) The fair value of the €100 million fixed rate loan notes has been determined by reference to external interest rates and the Directors’ assessment of the margin for credit risk (level 2).
(b) The Directors consider the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the consolidated financial statements to approximate their fair value.
Current and non-current trade and other payables, as disclosed in Note 18, include £164.0 million (2019: £117.1 million) of non-financial liabilities.
The Group has designated the carrying value of €79.0 million of foreign currency borrowings (2019: €79.0 million foreign currency borrowings) as a net
investment hedge.
The Group has no financial instruments with fair values that are determined by reference to significant unobservable inputs (level 3), nor have there been
any transfers of assets or liabilities between levels of the fair value hierarchy. There are no non-recurring fair value measurements.
Forward contracts have been entered into to offset the foreign exchange movements on intra-Group loans to buy/(sell) against Sterling: €21.0 million
(2019: €15.0 million). The fair value of the forward contracts is not material as they were entered into on or near 31 December in each year and mature
less than one month later, hence the value of the derivative is negligible.
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151
Financial statements
Notes to the consolidated financial statements continued
Notes to the consolidated financial statements continued
20. Financial instruments and fair value disclosures continued
20. Financial instruments and fair value disclosures continued
20. Financial instruments and fair value disclosures continued
Market risk
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 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 using fixed or variable rate borrowings, foreign currency borrowings and derivative financial instruments.
the exposure to these risks using fixed or variable rate borrowings, foreign currency borrowings and derivative financial instruments.
Interest rate risk management
Interest rate risk management
(a)
(a)
The Group can be exposed to interest rate risk as the Group borrows funds, when required, at variable interest rates. The exposure to variable rate
The Group can be exposed to interest rate risk as the Group borrows funds, when required, at variable interest rates. The exposure to variable rate
borrowings can fluctuate during the year due to the seasonal nature of cash flows relating to housing sales and the less certain timing of land payments.
borrowings can fluctuate during the year due to the seasonal nature of cash flows relating to housing sales and the less certain timing of land payments.
Group policy is to manage the volatility risk by a combination of fixed rate borrowings and interest rate swaps such that the sensitivity to potential changes
Group policy is to manage the volatility risk by a combination of fixed rate borrowings and interest rate swaps such that the sensitivity to potential changes
in variable rates is within acceptable levels. Group policy does not allow the use of derivatives to speculate against changes to future interest rates and
in variable rates is within acceptable levels. 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. Interest-rate hedging using derivatives has not taken place in the current or previous year. This policy
they are only used to manage exposure to volatility. Interest-rate hedging using derivatives has not taken place in the current or previous year. This policy
has not changed during the year.
has not changed during the year.
To measure the risk, variable rate borrowings and the expected interest cost for the year are forecast monthly and compared to budget using
To measure the risk, variable rate borrowings and the expected interest cost for the year are forecast monthly and compared to budget using
management’s expectations of a possible change in interest rates. Interest expense volatility remained within acceptable limits throughout the year.
management’s expectations of a possible change in interest rates. Interest expense volatility remained within acceptable limits throughout the year.
Interest rate sensitivity
Interest rate sensitivity
The effect on both income and equity, based on exposure to non-derivative floating rate instruments at the balance sheet date, is shown in the table
The effect on both income and equity, based on exposure to non-derivative floating rate instruments at the balance sheet date, is shown in the table
below. The Group does not currently have any outstanding interest rate derivatives. The 0.25% change represents a reasonably possible change in
below. The Group does not currently have any outstanding interest rate derivatives. The 0.25% change represents a reasonably possible change in
interest rates over the next financial period. The table assumes all other variables remain constant in accordance with IFRS 7.
interest rates over the next financial period. The table assumes all other variables remain constant in accordance with IFRS 7.
£ million
£ million
0.25% increase in interest rates
0.25% increase in interest rates
£ million
£ million
0.25% decrease in interest rates
0.25% decrease in interest rates
Income
Income
sensitivity
sensitivity
2020
2020
Equity
Equity
sensitivity
sensitivity
2020
2020
2.0
2.0
2.0
2.0
Income
Income
sensitivity
sensitivity
2020
2020
Equity
Equity
sensitivity
sensitivity
2020
2020
(2.0)
(2.0)
(2.0)
(2.0)
Income
Income
sensitivity
sensitivity
2019
2019
1.6
1.6
Income
Income
sensitivity
sensitivity
2019
2019
(1.6)
(1.6)
Equity
Equity
sensitivity
sensitivity
2019
2019
1.6
1.6
Equity
Equity
sensitivity
sensitivity
2019
2019
(1.6)
(1.6)
(b) Foreign currency risk management
(b) Foreign currency risk management
The Group’s overseas activities expose it to the financial risks of changes in foreign currency exchange rates. Its Spanish subsidiary is the only foreign
The Group’s overseas activities expose it to the financial risks of changes in foreign currency exchange rates. Its Spanish subsidiary is the only foreign
operation of the Group.
operation of the Group.
The Group is not materially exposed to transaction risks as all Group companies conduct their business in their respective functional currencies.
The Group is not materially exposed to transaction risks as 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
Group policy requires that transaction risks are hedged to the functional currency of the subsidiary using foreign currency borrowings or derivatives
where appropriate.
where appropriate.
The Group is exposed to the translation risk from accounting for both the income and the net investment held in a functional currency other than Sterling.
The Group is exposed to the translation risk from accounting for both the income and the net investment held in a functional currency other than Sterling.
The net investment risk may be hedged using foreign currency borrowings and derivatives. Assets and liabilities denominated in non-functional currencies
The net investment risk may be hedged using foreign currency borrowings and derivatives. Assets and liabilities denominated in non-functional currencies
are retranslated each month using the latest exchange rates. Income is also measured monthly using the latest exchange rates and compared with a
are retranslated each month using the latest exchange rates. Income is also measured monthly using the latest exchange rates and compared with a
budget held at historical exchange rates. Other than the natural hedge provided by foreign currency borrowings, the translation risk of income is not
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 and has not changed during the year.
hedged using derivatives. The policy is kept under periodic review and has not changed during the year.
Hedge accounting
Hedge accounting
Hedging activities are evaluated periodically to ensure that they are in line with Group policy.
Hedging activities are evaluated periodically to ensure that they are in line with Group policy.
The Group has designated the carrying value of €79.0 million of foreign currency borrowings (2019: €79.0 million borrowings) held at the balance sheet
The Group has designated the carrying value of €79.0 million of foreign currency borrowings (2019: €79.0 million borrowings) held at the balance sheet
date as a net investment hedge of part of the Group’s investment in Euro denominated assets.
date as a net investment hedge of part of the Group’s investment in Euro denominated assets.
The change in the carrying value £4.2 million (2019: £(4.1) million) of the borrowings designated as a net investment hedge offset the exchange movement
The change in the carrying value £4.2 million (2019: £(4.1) million) of the borrowings designated as a net investment hedge offset the exchange movement
on the foreign currency net investments and are presented in the statement of other comprehensive income.
on the foreign currency net investments and are presented in the statement of other comprehensive income.
Foreign currency sensitivity
Foreign currency sensitivity
The Group is exposed to the Euro due to its Spanish operations. The following table details how the Group’s income and equity would increase/
The Group is exposed to the Euro due to its Spanish operations. The following table details how the Group’s income and equity would increase/
(decrease) on a before tax basis following a 10% (2019: 10%) change in the currency’s value against Sterling, all other variables remaining constant.
(decrease) on a before tax basis following a 10% (2019: 10%) change in the currency’s value against Sterling, all other variables remaining constant.
The 10% change represents a reasonably possible change in the specified Euro exchange rates in relation to Sterling.
The 10% change represents a reasonably possible change in the specified Euro exchange rates in relation to Sterling.
£ million
£ million
Euro weakens against Sterling
Euro weakens against Sterling
Euro strengthens against Sterling
Euro strengthens against Sterling
Income
Income
sensitivity
sensitivity
2020
2020
Equity
Equity
sensitivity
sensitivity
2020
2020
(0.9)
(0.9)
1.1
1.1
5.5
5.5
(6.8)
(6.8)
Income
Income
sensitivity
sensitivity
2019
2019
(1.2)
(1.2)
1.5
1.5
Equity
Equity
sensitivity
sensitivity
2019
2019
4.8
4.8
(5.9)
(5.9)
Credit risk
Credit risk is the risk of financial loss where counterparties are not able to meet their obligations.
Group policy is that surplus cash, when not used to repay borrowings, is placed on deposit with the Group’s main relationship banks and with
other banks or money market funds based on a minimum credit rating and maximum exposure. There is no significant concentration of risk to any
single counterparty.
Land receivables arise from sales of surplus land on deferred terms. If the credit risk is not acceptable, then the deferred payment must have adequate
security, either by 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, other housebuilders and amounts in relation to
Help to Buy. Management consider that the credit quality of the various receivables is good in respect of the amounts outstanding and therefore credit
risk is considered to be low. There is no significant concentration of risk.
Mortgage receivables, including shared equity loans, are in connection with various historical sales promotion schemes and are measured at fair
value through profit or loss. The mortgages are secured by a second charge over the property with a low level of experienced credit losses due to
non-payment.
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 with
the use of cash and cash equivalents, borrowings, overdrafts and committed revolving credit facilities with a minimum of 12 months to maturity.
Future borrowing requirements are forecast on a monthly basis and funding headroom is maintained above forecast peak requirements to meet
unforeseen events. At 31 December 2020, the Group’s borrowings and facilities had a range of maturities with an average life of 3.8 years
(2019: 4.0 years).
In addition to fixed term borrowings, the Group has access to committed revolving credit facilities and cash balances. At the balance sheet date, the total
unused committed amount was £550.0 million (2019: £550.0 million) and cash and cash equivalents were £823.0 million (2019: £630.4 million).
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:
£ million
On demand
Within one year
More than one year and less than two years
More than two years and less than five years
More than five years
31 December 2020
£ million
On demand
Within one year
More than one year and less than two years
More than two years and less than five years
More than five years
31 December 2019
Bank and
other loans
Land
creditors
–
15.5
1.8
91.0
–
108.3
–
355.3
169.2
151.5
26.8
702.8
Bank and
other loans
Land
creditors
–
1.7
1.7
87.3
–
90.7
–
346.5
197.7
191.8
23.9
759.9
Trade
and other
payables
–
456.9
50.1
25.2
7.1
539.3
Trade
and other
payables
–
547.5
51.7
23.7
5.3
628.2
Lease
liabilities
–
6.8
6.1
11.7
4.7
29.3
Lease
liabilities
–
8.0
6.3
9.3
5.6
Total
–
834.5
227.2
279.4
38.6
1,379.7
Total
–
903.7
257.4
312.1
34.8
29.2
1,508.0
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Financial statements
Notes to the consolidated financial statements continued
Notes to the consolidated financial statements continued
21. Retirement benefit obligations
21. Retirement benefit obligations
21. Retirement benefit obligations continued
Total retirement benefit obligations of £89.5 million (2019: £85.0 million) comprise a defined benefit pension liability of £89.1 million (2019: £84.5 million)
Total retirement benefit obligations of £89.5 million (2019: £85.0 million) comprise a defined benefit pension liability of £89.1 million (2019: £84.5 million)
and a post-retirement healthcare liability of £0.4 million (2019: £0.5 million).
and a post-retirement healthcare liability of £0.4 million (2019: £0.5 million).
The Group operates the Taylor Wimpey Pension Scheme (TWPS), a defined benefit pension scheme, which is closed to both new members and to future
The Group operates the Taylor Wimpey Pension Scheme (TWPS), a defined benefit pension scheme, which is closed to both new members and to future
accrual. The Group also operates defined contribution pension arrangements in the UK, which are available to new and existing UK employees.
accrual. The Group also operates defined contribution pension arrangements in the UK, which are available to new and existing UK employees.
Defined contribution pension plan
Defined contribution pension plan
A defined contribution plan is an arrangement under which the Group pays contributions to an independently administered fund or policy; such
A defined contribution plan is an arrangement under which the Group pays contributions to an independently administered fund or policy; such
contributions are based on a fixed percentage of employees’ pay. The Group has no legal or constructive obligations to pay further contributions to
contributions are based on a fixed percentage of employees’ pay. The Group has no legal or constructive obligations to pay further contributions to
the fund/policy once the contributions have been paid. Employees’ benefits are determined by the amount of contributions paid by the Group and the
the fund/policy once the contributions have been paid. Employees’ benefits are determined by the amount of contributions paid by the Group and the
employee, together with investment returns earned on the contributions arising from the performance of each individual’s chosen investments and the
employee, together with investment returns earned on the contributions arising from the performance of each individual’s chosen investments and the
type of pension the employee chooses to buy at retirement. As a result, actuarial risk (that benefits will be lower than expected) and investment risk
type of pension the employee chooses to buy at retirement. As a result, actuarial risk (that benefits will be lower than expected) and investment risk
(that invested assets will not perform in line with expectations) fall on the employee.
(that invested assets will not perform in line with expectations) fall on the employee.
The Group’s contributions are recognised as an employee benefit expense when they are due. Prepaid contributions are recognised as an asset to
The Group’s contributions are recognised as an employee benefit expense when they are due. Prepaid contributions are recognised as an asset to
the extent that a cash refund or a reduction in the future payments is available.
the extent that a cash refund or a reduction in the future payments is available.
The Group’s defined contribution plan, the Taylor Wimpey Personal Choice Plan (TWPCP), is offered to all new and existing monthly paid employees.
The Group’s defined contribution plan, the Taylor Wimpey Personal Choice Plan (TWPCP), is offered to all new and existing monthly paid employees.
The People’s Pension is used for auto enrolment purposes for all weekly paid employees and those monthly paid employees not participating in the
The People’s Pension is used for auto enrolment purposes for all weekly paid employees and those monthly paid employees not participating in the
TWPCP. The People’s Pension is provided by B&CE, one of the UK’s largest providers of financial benefits to construction industry employers
TWPCP. The People’s Pension is provided by B&CE, one of the UK’s largest providers of financial benefits to construction industry employers
and individuals.
and individuals.
The Group made contributions to its defined contribution arrangements of £15.2 million in the year (2019: £14.5 million), which is included in the income
The Group made contributions to its defined contribution arrangements of £15.2 million in the year (2019: £14.5 million), which is included in the income
statement charge.
statement charge.
Defined benefit pension schemes
Defined benefit pension schemes
The Group’s defined benefit pension scheme in the UK is the TWPS. The TWPS is a funded defined benefit pension scheme which provides benefits
The Group’s defined benefit pension scheme in the UK is the TWPS. The TWPS is a funded defined benefit pension scheme which provides benefits
to beneficiaries in the form of a guaranteed level of pension payable for life. The level of benefits provided depends on an individual member’s length of
to beneficiaries in the form of a guaranteed level of pension payable for life. The level of benefits provided depends on an individual member’s length of
service and their salary in the final years leading up to retirement or date of ceasing active accrual if earlier. Pension payments are generally increased
service and their salary in the final years leading up to retirement or date of ceasing active accrual if earlier. Pension payments are generally increased
in line with inflation. The TWPS is closed to new members and future accrual.
in line with inflation. The TWPS is closed to new members and future accrual.
The Group operates the TWPS under the UK regulatory framework. Benefits are paid to members from a Trustee-administered fund and the Trustee is
The Group operates the TWPS under the UK regulatory framework. Benefits are paid to members from a Trustee-administered fund and the Trustee is
responsible for ensuring that the TWPS is well-managed and that members’ benefits are secure. Scheme assets are held in trust.
responsible for ensuring that the TWPS is well-managed and that members’ benefits are secure. Scheme assets are held in trust.
The TWPS Trustee’s other duties include managing the investment of scheme assets, administration of scheme benefits and exercising of discretionary
The TWPS Trustee’s other duties include managing the investment of scheme assets, administration of scheme benefits and exercising of discretionary
powers. The Group works closely with the Trustee to manage the TWPS. The Trustee of the TWPS owes fiduciary duties to the TWPS’ beneficiaries.
powers. The Group works closely with the Trustee to manage the TWPS. The Trustee of the TWPS owes fiduciary duties to the TWPS’ beneficiaries.
The appointment of the Directors to the Trustee Board is determined by the TWPS trust documentation.
The appointment of the Directors to the Trustee Board is determined by the TWPS trust documentation.
During 2017, the Group engaged with the TWPS Trustee on the triennial valuation of the TWPS with a reference date of 31 December 2016. The table
During 2017, the Group engaged with the TWPS Trustee on the triennial valuation of the TWPS with a reference date of 31 December 2016. The table
below sets out the key assumptions agreed as part of this valuation.
below sets out the key assumptions agreed as part of this valuation.
Assumptions
Assumptions
Discount rate (pre-retirement)
Discount rate (pre-retirement)
Discount rate (post-retirement)
Discount rate (post-retirement)
RPI inflation
RPI inflation
CPI inflation
CPI inflation
Mortality
Mortality
4.20%
4.20%
2.35%
2.35%
3.50%
3.50%
2.70%
2.70%
100% of S2PXA tables, CMI_2016 improvements with 1.50% trend rate and a smoothing factor of 7.5
100% of S2PXA tables, CMI_2016 improvements with 1.50% trend rate and a smoothing factor of 7.5
The result of this valuation was a Technical Provisions deficit at 31 December 2016 of £222.0 million. To meet this deficit, a revised funding plan was
The result of this valuation was a Technical Provisions deficit at 31 December 2016 of £222.0 million. To meet this deficit, a revised funding plan was
agreed in February 2018. The funding plan committed the Group to £40.0 million per annum of deficit reduction contributions from 1 April 2018 to
agreed in February 2018. The funding plan committed the Group to £40.0 million per annum of deficit reduction contributions from 1 April 2018 to
31 December 2020 and £2.0 million per annum for scheme expenses from 1 February 2018 to 31 January 2023. In addition, £5.1 million per annum is
31 December 2020 and £2.0 million per annum for scheme expenses from 1 February 2018 to 31 January 2023. In addition, £5.1 million per annum is
received by the TWPS from the Pension Funding Partnership (as described below). However, £40.0 million per annum of cash contributions were only
received by the TWPS from the Pension Funding Partnership (as described below). However, £40.0 million per annum of cash contributions were only
required whilst the TWPS remained in a Technical Provisions deficit position. Should the TWPS become fully funded, then these cash contributions would
required whilst the TWPS remained in a Technical Provisions deficit position. Should the TWPS become fully funded, then these cash contributions would
be suspended until such time that the scheme’s Technical Provisions funding level fell to below 96% at the end of any subsequent quarter.
be suspended until such time that the scheme’s Technical Provisions funding level fell to below 96% at the end of any subsequent quarter.
In April 2018, the Group paid a one-off contribution of £23.0 million into the TWPS to increase the funding level to 100% and thereby suspend any future
In April 2018, the Group paid a one-off contribution of £23.0 million into the TWPS to increase the funding level to 100% and thereby suspend any future
contributions from 31 March 2018. The funding level of the TWPS remained above the threshold of 96% until 31 December 2018. Contributions of
contributions from 31 March 2018. The funding level of the TWPS remained above the threshold of 96% until 31 December 2018. Contributions of
£40.0 million per annum therefore recommenced from 1 January 2019 and were payable throughout 2020. During April 2020 and in response to the site
£40.0 million per annum therefore recommenced from 1 January 2019 and were payable throughout 2020. During April 2020 and in response to the site
shutdowns, a temporary suspension of the deficit reduction contributions was agreed with the TWPS Trustee for the three months between April and
shutdowns, a temporary suspension of the deficit reduction contributions was agreed with the TWPS Trustee for the three months between April and
June 2020. Following this deferment, contributions of £10.3 million are to be paid between January 2021 and March 2021.
June 2020. Following this deferment, contributions of £10.3 million are to be paid between January 2021 and March 2021.
During 2020, the Group has engaged with the TWPS Trustee on the triennial valuation of the pension scheme with a reference date of 31 December
During 2020, the Group has engaged with the TWPS Trustee on the triennial valuation of the pension scheme with a reference date of 31 December
2019. At the current time discussions are ongoing with the TWPS Trustee to agree the valuation as well as future contributions (if applicable). Legislation
2019. At the current time discussions are ongoing with the TWPS Trustee to agree the valuation as well as future contributions (if applicable). Legislation
requires that agreement must be reached by 31 March 2021.
requires that agreement must be reached by 31 March 2021.
On an IAS 19 accounting basis the underlying deficit in the scheme at 31 December 2020 was £89.1 million (2019: surplus of £100.5 million). The terms
of the TWPS are such that the Group does not have an unconditional right to a refund of surplus. As a result, in 2019, the Group recognised an
adjustment to the underlying surplus in the TWPS on an IAS 19 accounting basis of £185.0 million, resulting in an IFRIC 14 deficit of £84.5 million, which
represented the present value of future contributions under the funding plan at that time. No such adjustment has been recognised as of 31 December
2020 since the scheme was in deficit on an IAS 19 accounting basis.
In 2013, the Group introduced a £100.0 million Pension Funding Partnership utilising show homes, as well as seven offices, in a sale and leaseback
structure. This provides an additional £5.1 million of annual funding for the TWPS. The assets held within the Pension Funding Partnership do not affect
the IAS 19 figures (before IFRIC 14) as they remain assets of the Group, and are not assets of the TWPS. At 31 December 2020 there was £90.3 million
of property and £21.9 million of cash held within the structure (2019: £96.0 million of property and £16.1 million of cash). The terms of this Funding
Partnership are such that, should the TWPS be in a Technical Provisions deficit at 31 December 2028, then a bullet payment will be due to the scheme
equal to the lower of £100.0 million or the Technical Provisions deficit at that time.
The Group continues to work closely with the Trustee in managing pension risks, including management of interest rate, inflation and longevity risks.
The TWPS assets are approximately 90% hedged against changes in both interest rates and inflation expectations on the scheme’s long term,
‘self-sufficiency’ basis that is currently used for investment strategy purposes. The TWPS also benefits from a bulk annuity contract which covers some
of the largest liabilities in the scheme, providing protection against interest rate, inflation and longevity risk.
The duration, or average term to payment for the benefits due, weighted by liability, is approximately 16 years.
Accounting assumptions
The assumptions used in calculating the accounting costs and obligations of the TWPS, as detailed below, are set by the Directors after consultation
with independent actuaries. The basis for these assumptions is prescribed by IAS 19 and they do not reflect the assumptions that may be used in future
funding valuations of the TWPS.
The discount rate used to determine the present value of the obligations is set by reference to market yields on high-quality corporate bonds with regard
for the duration of the TWPS. The assumption for RPI inflation is set by reference to the Bank of England’s implied inflation curve with regard to the
duration of the TWPS liabilities, with appropriate adjustments to reflect distortions due to supply and demand for inflation-linked securities. CPI inflation
is set by reference to RPI inflation as no CPI-linked bonds exist to render implied CPI inflation directly observable.
The life expectancies have been derived using mortality assumptions that were based on the results of a Medically Underwritten Mortality Study
conducted by the Group during 2017, combined with experience data. Using the results from this study, the mortality assumption is based on 106%
of S3PXA tables, CMI_2019 improvements with a 1.25% long-term trend rate, a smoothing factor of 7 and an initial addition parameter of 0.25%. The
mortality assumption used in 2019 was 107% of S2PXA tables, CMI_2018 improvements with a 1.25% long-term trend rate, a smoothing factor of 7 and
an initial addition parameter of nil.
Accounting valuation assumptions
At 31 December:
Discount rate for scheme liabilities
General pay inflation
Deferred pension increases
Pension increases*
* Pension increases depend on the section of the scheme of which each member is a part.
The current life expectancies (in years) underlying the value of the accrued liabilities for the TWPS are:
Life expectancy
Member currently aged 65
Member currently aged 45
2020
2019
1.30%
n/a
2.15%
2.10%
n/a
2.15%
2.05%-3.60% 2.05%-3.60%
2020
Male
Female
87
88
89
90
2019
Male
86
87
Female
88
89
The table below shows the impact to the present value of scheme liabilities of movements in key assumptions, measured using the same method as the
defined benefit scheme.
Assumption
Discount rate
Rate of inflation*
Life expectancy
Change in assumption
Impact on scheme liabilities
Impact on scheme liabilities (%)
Decrease by 0.1% p.a.
Increase by 0.1% p.a.
Members live 1 year longer
Increase by £41m
Increase by £25m
Increase by £104m
1.6
1.0
4.2
* Assumed to affect deferred revaluation and pensioner increases in payment.
The sensitivity of increasing life expectancy has been reduced by a medically underwritten buy-in. See the section on risks and risk management at the end of this note.
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Financial statements
Notes to the consolidated financial statements continued
Notes to the consolidated financial statements continued
21. Retirement benefit obligations continued
21. Retirement benefit obligations continued
Fair value of scheme assets of the TWPS
Fair value of scheme assets of the TWPS
Unquoted equities(a)
Unquoted equities(a)
Diversified growth funds(b)
Diversified growth funds(b)
Hedge funds(c)
Hedge funds(c)
Property
Property
Multi-asset credit
Multi-asset credit
Direct lending
Direct lending
Corporate bonds
Corporate bonds
Liability driven investment(d)
Liability driven investment(d)
Insurance policies in respect of certain members
Insurance policies in respect of certain members
Cash
Cash
31 December 2020
31 December 2020
31 December 2019
31 December 2019
Percentage of
Percentage of
total scheme
total scheme
assets
assets
4.9%
4.9%
14.9%
14.9%
7.3%
7.3%
0.8%
0.8%
10.9%
10.9%
6.9%
6.9%
4.8%
4.8%
39.6%
39.6%
8.8%
8.8%
1.1%
1.1%
£ million
£ million
118.3
118.3
357.7
357.7
175.5
175.5
19.0
19.0
261.5
261.5
167.0
167.0
115.4
115.4
951.3
951.3
211.1
211.1
27.5
27.5
Percentage of
Percentage of
total scheme
total scheme
assets
assets
5.9%
5.9%
17.0%
17.0%
7.4%
7.4%
1.2%
1.2%
11.8%
11.8%
6.1%
6.1%
4.3%
4.3%
37.2%
37.2%
8.6%
8.6%
0.5%
0.5%
£ million
£ million
134.4
134.4
388.9
388.9
169.7
169.7
27.5
27.5
269.1
269.1
139.0
139.0
97.8
97.8
849.0
849.0
196.4
196.4
10.4
10.4
2,404.3
2,404.3
100.0%
100.0%
2,282.2
2,282.2
100.0%
100.0%
(a) This amount relates to Volatility Controlled Equities (VCE). This fund has 2.5 – 8x leverage exposure, with a target of 4x. The leverage at 31 December 2020 was 3.4x (31 December
(a) This amount relates to Volatility Controlled Equities (VCE). This fund has 2.5 – 8x leverage exposure, with a target of 4x. The leverage at 31 December 2020 was 3.4x (31 December
2019: 3.1x).
2019: 3.1x).
(b) This amount relates to the Scheme’s Diversified Risk Premia (DRP) allocation. The leverage on the two funds in the DRP allocation at 31 December 2020 was 1.9x and 1.7x respectively
(b) This amount relates to the Scheme’s Diversified Risk Premia (DRP) allocation. The leverage on the two funds in the DRP allocation at 31 December 2020 was 1.9x and 1.7x respectively
(31 December 2019: 0.3x and 1.8x).
(31 December 2019: 0.3x and 1.8x).
(c) The leverage on this fund at 31 December 2020 was 0.9x (31 December 2019: 0.8x).
(c) The leverage on this fund at 31 December 2020 was 0.9x (31 December 2019: 0.8x).
(d) The bespoke Liability Driven Investment (LDI) fund is designed to protect the Scheme against movements in interest rates and inflation. The overall leverage on the LDI fund at
(d) The bespoke Liability Driven Investment (LDI) fund is designed to protect the Scheme against movements in interest rates and inflation. The overall leverage on the LDI fund at
31 December 2020 is approximately 3.7x (31 December 2019: 4x).
31 December 2020 is approximately 3.7x (31 December 2019: 4x).
The value of the annuities held by the TWPS are set equal to the value of the liabilities which these annuities match. All other fair values are provided
The value of the annuities held by the TWPS are set equal to the value of the liabilities which these annuities match. All other fair values are provided
by the fund managers and collated by Northern Trust as custodian, who independently price the securities from their preferred vendor sources where
by the fund managers and collated by Northern Trust as custodian, who independently price the securities from their preferred vendor sources where
the data is publicly available and rely on investment manager data where this information is not available. Where available, the fair values are quoted prices
the data is publicly available and rely on investment manager data where this information is not available. Where available, the fair values are quoted prices
(e.g. listed equity). Unlisted investments (e.g. private equity) are included at values provided by the fund manager in accordance with relevant guidance.
(e.g. listed equity). Unlisted investments (e.g. private equity) are included at values provided by the fund manager in accordance with relevant guidance.
Other significant assets are valued based on observable inputs.
Other significant assets are valued based on observable inputs.
There are no investments in respect of the Group’s own securities.
There are no investments in respect of the Group’s own securities.
The table below details the movements in the TWPS pension liability and assets recorded through the income statement and other
The table below details the movements in the TWPS pension liability and assets recorded through the income statement and other
comprehensive income.
comprehensive income.
£ million
£ million
At 1 January
At 1 January
Past service cost related to GMP equalisation
Past service cost related to GMP equalisation
Past service credit related to PIE exercise (Note 6)
Past service credit related to PIE exercise (Note 6)
Administration expenses
Administration expenses
Interest (expense)/income
Interest (expense)/income
Total amount recognised in income statement
Total amount recognised in income statement
Return on plan assets in excess of interest income
Return on plan assets in excess of interest income
Change in demographic assumptions
Change in demographic assumptions
Change in financial assumptions
Change in financial assumptions
Experience gain
Experience gain
Adjustment to liabilities for IFRIC 14
Adjustment to liabilities for IFRIC 14
Total remeasurements in other comprehensive income
Total remeasurements in other comprehensive income
Employer contributions
Employer contributions
Employee contributions
Employee contributions
Benefit payments
Benefit payments
At 31 December
At 31 December
2020
2020
2019
2019
Present value of
Present value of
obligation
obligation
Fair value
Fair value
of scheme
of scheme
assets
assets
Asset/(liability)
Asset/(liability)
recognised on
recognised on
balance sheet
balance sheet
Present value of
Present value of
obligation
obligation
Fair value
Fair value
of scheme
of scheme
assets
assets
Asset/(liability)
Asset/(liability)
recognised on
recognised on
balance sheet
balance sheet
(2,366.7)
(2,366.7)
(1.2)
(1.2)
–
–
–
–
(48.5)
(48.5)
(49.7)
(49.7)
–
–
(100.8)
(100.8)
(286.3)
(286.3)
2.5
2.5
188.9
188.9
(195.7)
(195.7)
–
–
–
–
118.7
118.7
2,282.2
2,282.2
–
–
–
–
(2.5)
(2.5)
47.1
47.1
44.6
44.6
159.1
159.1
–
–
–
–
–
–
–
–
159.1
159.1
37.1
37.1
–
–
(118.7)
(118.7)
(84.5)
(84.5)
(1.2)
(1.2)
–
–
(2.5)
(2.5)
(1.4)
(1.4)
(5.1)
(5.1)
159.1
159.1
(100.8)
(100.8)
(286.3)
(286.3)
2.5
2.5
188.9
188.9
(36.6)
(36.6)
37.1
37.1
–
–
–
–
(2,237.2)
(2,237.2)
–
–
15.3
15.3
–
–
(64.3)
(64.3)
(49.0)
(49.0)
–
–
46.1
46.1
(245.9)
(245.9)
17.9
17.9
(14.0)
(14.0)
(195.9)
(195.9)
–
–
–
–
115.4
115.4
2,104.2
2,104.2
–
–
–
–
(1.8)
(1.8)
61.1
61.1
59.3
59.3
187.0
187.0
–
–
–
–
–
–
–
–
187.0
187.0
47.1
47.1
–
–
(115.4)
(115.4)
(2,493.4)
(2,493.4)
2,404.3
2,404.3
(89.1)
(89.1)
(2,366.7)
(2,366.7)
2,282.2
2,282.2
(133.0)
(133.0)
–
–
15.3
15.3
(1.8)
(1.8)
(3.2)
(3.2)
10.3
10.3
187.0
187.0
46.1
46.1
(245.9)
(245.9)
17.9
17.9
(14.0)
(14.0)
(8.9)
(8.9)
47.1
47.1
–
–
–
–
(84.5)
(84.5)
21. Retirement benefit obligations continued
Accounting valuation
£ million
Fair value of scheme assets
Present value of scheme obligations
(Deficit)/surplus in scheme
IFRIC 14 limitation on recognition of surplus
Deficit after IFRIC 14 adjustment
2020
2019
2,404.3
(2,493.4)
(89.1)
–
(89.1)
2,282.2
(2,181.7)
100.5
(185.0)
(84.5)
Risks and risk management
The TWPS, in common with the majority of such defined benefit pension schemes in the UK, has a number of areas of risk. These areas of risk, and the
ways in which the Group has sought to manage them, are set out in the table below.
The risks are considered from both a funding perspective, which drives the cash commitments of the Group, and from an accounting perspective,
i.e. the extent to which such risks affect the amounts recorded in the Group’s financial statements.
Although investment decisions in the UK are the responsibility of the TWPS Trustee, the Group takes an active interest to ensure that the pension scheme
risks are managed efficiently. The Group has regular meetings with the Trustee to discuss investment performance, regulatory changes and proposals to
actively manage the position of the TWPS.
Risk
Description
Asset
volatility
In November 2017, the Trustee agreed to diversify their Diversified Risk Premia (DRP) allocation between two managers, disinvesting
half of the current DRP allocation with AQR, and allocating this to the Bridgewater Optimal fund. This transition occurred on 1 February
2018 (with £188 million allocated to the Bridgewater Optimal fund) and has led to greater diversification and reduced manager
concentration risk.
In March 2018, the Trustee put in place a de-risking framework to ensure that any asset outperformance above expectations of the
TWPS objectives was captured. This led to the TWPS de-risking from the Schroders Volatility Controlled Equities fund in Q2 2018
where c.£60 million (one third of the allocation) was disinvested.
The TWPS strategy remains well diversified through its exposure to a range of asset classes, including volatility-controlled equities,
commercial real estate debt, direct loans, fund of hedge funds, Government bonds and a broad spectrum of corporate bonds and
other fixed income exposures.
The TWPS does not target a specific asset allocation but instead bases its strategic asset allocation on the return objectives and risk
constraints agreed upon by the Trustee. These were revisited and reviewed in 2018 to ensure they reflected the TWPS latest position.
Given the TWPS’ improved funding position, the Trustee agreed that the TWPS’ full funding objective would be brought forward to
2025 (from 2030) on a low-risk, self-sufficiency basis. The TWPS risk budget was also reduced from a funding-ratio-at-risk measure
of 10% to 7.5%.
There were no significant changes to the TWPS’ asset allocation over 2020, which remains well diversified, with risk significantly below
the agreed risk budget.
Changes in
bond yields
Falling bond yields tend to increase the funding and accounting liabilities. However, the investment in bond and liability-matching
derivatives offers a degree of matching, i.e. the movement in assets arising from changes in bond yields partially matches the
movement in the funding or accounting liabilities. In this way, the exposure to movements in bond yields is reduced.
Investing
in foreign
currency
To maintain appropriate diversification of investments within the TWPS assets and to take advantage of overseas investment returns,
a proportion of the underlying investment portfolio is invested overseas. To balance the risk of investing in foreign currencies while
having an obligation to settle benefits in Sterling, a currency hedging programme, using forward foreign exchange contracts, has been
put in place to reduce the currency exposure of these overseas investments to the targeted level.
Asset/liability
mismatch
In order to manage the TWPS’ economic exposure to interest rates and inflation rates, a liability-hedging programme has been put in
place. Derivatives are being used to hedge changes in the TWPS’ funding level from changes in its liabilities in an unfunded way,
substantially reducing asset/liability mismatch risk.
Liquidity
Life
expectancy
Insurance policies, real estate and illiquid debt (which include commercial real estate debt and direct lending bonds) make up
£397 million (17%) of the asset portfolio of the TWPS. Excluding these amounts, approximately 57% of assets are managed in either
segregated accounts or daily/weekly dealt pooled funds and can be realised within a few business days under normal market
conditions. Of the remaining investments, a further 11% of assets are invested in pooled funds with monthly redemption dates.
The remaining 16% could be redeemed within approximately six to nine months of notification in normal market conditions.
The majority of the TWPS obligations are to provide a pension for the life of the member on retirement, so increases in life expectancy
will result in an increase in the TWPS’ liabilities. The inflation-linked nature of the majority of benefit payments from the TWPS increases
the sensitivity of the liabilities to changes in life expectancy. During 2014, the Group reached agreement with Partnership Life Assurance
Company Limited (now Just Group plc) to insure the benefits of 10% of members with the greatest anticipated liabilities through a
medically underwritten buy-in. By insuring these members, the Group has removed more than 10% of risk from the TWPS by
significantly reducing the longevity risk in relation to a large proportion of the liabilities.
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Financial statements
Notes to the consolidated financial statements continued
Notes to the consolidated financial statements continued
22. Provisions
22. Provisions
£ million
£ million
At 1 January 2019
At 1 January 2019
Additions
Additions
Utilisation
Utilisation
Released
Released
Other movements
Other movements
At 31 December 2019
At 31 December 2019
Additions
Additions
Utilisation
Utilisation
Released
Released
Other movements
Other movements
At 31 December 2020
At 31 December 2020
£ million
£ million
Current
Current
Non-current
Non-current
31 December
31 December
ACM cladding
ACM cladding
Leasehold
Leasehold
29.6
29.6
–
–
(5.9)
(5.9)
–
–
–
–
23.7
23.7
10.0
10.0
(5.1)
(5.1)
–
–
–
–
28.6
28.6
102.1
102.1
–
–
(29.9)
(29.9)
–
–
–
–
72.2
72.2
–
–
(12.6)
(12.6)
–
–
–
–
59.6
59.6
Other
Other
38.6
38.6
11.2
11.2
(9.0)
(9.0)
(8.2)
(8.2)
(0.1)
(0.1)
32.5
32.5
22.6
22.6
(9.0)
(9.0)
(4.0)
(4.0)
0.2
0.2
42.3
42.3
2020
2020
70.6
70.6
59.9
59.9
130.5
130.5
Total
Total
170.3
170.3
11.2
11.2
(44.8)
(44.8)
(8.2)
(8.2)
(0.1)
(0.1)
128.4
128.4
32.6
32.6
(26.7)
(26.7)
(4.0)
(4.0)
0.2
0.2
130.5
130.5
2019
2019
72.7
72.7
55.7
55.7
128.4
128.4
In 2018 the Group established an exceptional provision for the cost of replacing Aluminium Composite Material (ACM) on a small number of legacy
In 2018 the Group established an exceptional provision for the cost of replacing Aluminium Composite Material (ACM) on a small number of legacy
developments, which was increased in the year to reflect the latest estimate of costs to complete the planned works. The majority of the provision is
developments, which was increased in the year to reflect the latest estimate of costs to complete the planned works. The majority of the provision is
expected to be utilised over two years.
expected to be utilised over two years.
In 2017 the Group launched an assistance scheme to help certain customers restructure their ground rent agreements with their freeholder and
In 2017 the Group launched an assistance scheme to help certain customers restructure their ground rent agreements with their freeholder and
established an associated provision of £130.0 million to fund this. The amounts and timing of the outflows depend largely on the number and rate of
established an associated provision of £130.0 million to fund this. The amounts and timing of the outflows depend largely on the number and rate of
eligible applicants to the scheme and ongoing discussions with freeholders. The Group expects the scheme will run for several years and anticipates
eligible applicants to the scheme and ongoing discussions with freeholders. The Group expects the scheme will run for several years and anticipates
approximately £30.0 million of the remaining provision will be utilised within the next 12 months.
approximately £30.0 million of the remaining provision will be utilised within the next 12 months.
Other provisions consist of a remedial work provision covering various obligations on a limited number of sites across the Group. Other provisions also
Other provisions consist of a remedial work provision covering various obligations on a limited number of sites across the Group. Other provisions also
includes amounts for restructuring costs and legal claims and other contract-related costs associated with various matters arising across the Group,
includes amounts for restructuring costs and legal claims and other contract-related costs associated with various matters arising across the Group,
the majority of which are anticipated to be settled within a three year period; however, there is some uncertainty regarding the timing of these outflows due
the majority of which are anticipated to be settled within a three year period; however, there is some uncertainty regarding the timing of these outflows due
to the nature of the claims and the length of time it can take to reach settlement.
to the nature of the claims and the length of time it can take to reach settlement.
23. Share capital
23. Share capital
£ million
£ million
Authorised:
Authorised:
22,200,819,176 (2019: 22,200,819,176) ordinary shares of 1p each
22,200,819,176 (2019: 22,200,819,176) ordinary shares of 1p each
1,158,299,201 (2019: 1,158,299,201) deferred ordinary shares of 24p each
1,158,299,201 (2019: 1,158,299,201) deferred ordinary shares of 24p each
Issued and fully paid:
Issued and fully paid:
31 December 2019
31 December 2019
Shares issued in year
Shares issued in year
31 December 2020
31 December 2020
2020
2020
2019
2019
222.0
222.0
278.0
278.0
500.0
500.0
222.0
222.0
278.0
278.0
500.0
500.0
Number of
Number of
ordinary shares
ordinary shares
Number of deferred
Number of deferred
ordinary shares
ordinary shares
£ million
£ million
3,283,108,174
3,283,108,174
362,308,473
362,308,473
1,065,566,274
1,065,566,274
–
–
3,645,416,647
3,645,416,647
1,065,566,274
1,065,566,274
288.6
288.6
3.6
3.6
292.2
292.2
In June 2020 the Company issued 360,265,931 ordinary shares of 1p at a price of 145p to raise total net proceeds of £510.1 million after expenses.
In June 2020 the Company issued 360,265,931 ordinary shares of 1p at a price of 145p to raise total net proceeds of £510.1 million after expenses.
355,000,000 of these shares were placed via a cash box structure (the “Placing”) in which the cash box entity issued redeemable preference shares in
355,000,000 of these shares were placed via a cash box structure (the “Placing”) in which the cash box entity issued redeemable preference shares in
consideration for the receipt of the net cash proceeds arising from the placement of those shares. Taylor Wimpey plc ordinary shares were issued in
consideration for the receipt of the net cash proceeds arising from the placement of those shares. Taylor Wimpey plc ordinary shares were issued in
consideration for the transfer of the redeemable preference shares, that it did not already own, of the cash box entity. It was therefore determined that the
consideration for the transfer of the redeemable preference shares, that it did not already own, of the cash box entity. It was therefore determined that the
placing of those shares qualified for merger relief under section 612 of the Companies Act 2006 such that the excess of the value of the acquired shares
placing of those shares qualified for merger relief under section 612 of the Companies Act 2006 such that the excess of the value of the acquired shares
in the cash box entity over the nominal value of the ordinary shares issued by Taylor Wimpey plc was credited to Other Reserves. The remainder of the
in the cash box entity over the nominal value of the ordinary shares issued by Taylor Wimpey plc was credited to Other Reserves. The remainder of the
shares issued, 5,265,931, were issued via a Retail Offer open to employees and other retail investors and a Directors’ Subscription. The Placing was
shares issued, 5,265,931, were issued via a Retail Offer open to employees and other retail investors and a Directors’ Subscription. The Placing was
performed to allow the Group to pursue additional near term land acquisition opportunities.
performed to allow the Group to pursue additional near term land acquisition opportunities.
The Placing, Retail and Subscription shares placed rank pari passu in all respects with the existing ordinary shares of the Company, including, without
The Placing, Retail and Subscription shares placed rank pari passu in all respects with the existing ordinary shares of the Company, including, without
limitation, the right to receive all dividends and other distributions declared, made or paid after the date of issue.
limitation, the right to receive all dividends and other distributions declared, made or paid after the date of issue.
In addition during the year, the Company issued 2.0 million (2019: 5.1 million) ordinary shares to satisfy option exercises.
In addition during the year, the Company issued 2.0 million (2019: 5.1 million) ordinary shares to satisfy option exercises.
23. Share capital continued
The Company has two classes of shares:
– Ordinary shares of 1p, each of which carries the right to one vote at general meetings of the Company and such other rights and obligations as are set
out in the Company’s Articles of Association.
– Deferred ordinary shares of 24p, which carry no voting rights and no entitlement to any dividend. The deferred ordinary shares were issued as part of a
capital reorganisation in 2009 and have not subsequently changed.
24. Share premium
£ million
At 1 January
Shares issued in year
At 31 December
25. Other reserves
£ million
Balance at 1 January 2019
Exchange differences on translation of foreign operations
Movement in fair value of hedging instruments
Balance at 31 December 2019
Exchange differences on translation of foreign operations
Movement in fair value of hedging instruments
Shares issued in year
Balance at 31 December 2020
2020
762.9
10.2
773.1
Other
4.9
–
–
4.9
–
–
499.1
504.0
2019
762.9
–
762.9
Total other
reserves
45.0
(5.5)
4.1
43.6
5.2
(4.2)
499.1
543.7
Capital
redemption
reserve
Translation
reserve
31.5
–
–
31.5
–
–
–
31.5
8.6
(5.5)
4.1
7.2
5.2
(4.2)
–
8.2
Capital redemption reserve
The capital redemption reserve arose on an historic redemption of the Company’s shares and is not distributable.
Translation reserve
The translation reserve consists of exchange differences arising on the translation of overseas operations. It also includes changes in fair values of hedging
instruments where such instruments are designated and effective as hedges of investment in overseas operations.
Other reserve
£499.1 million of other reserves arose on the cash box placing that occurred in June 2020 and qualified for merger relief under section 612 of the
Companies Act 2006 (see Note 23).
26. Own shares
£ million
Balance at 1 January 2019
Disposed of on exercise of options
Balance at 31 December 2019
Disposed of on exercise of options
Balance at 31 December 2020
22.7
(5.1)
17.6
(6.1)
11.5
The own shares reserve represents the cost of shares in Taylor Wimpey plc purchased in the market, those held as treasury shares and those held by
the Taylor Wimpey Employee Share Ownership Trusts to satisfy options and conditional share awards under the Group’s share plans.
Million shares
Ordinary shares held in trust for bonus, option and performance award plans
2020
7.1
2019
10.7
Employee Share Ownership Trusts (ESOTs) are used to hold the Company’s shares which have been acquired on the market. These shares are used to
meet the valid exercise of options and/or vesting of conditional awards and/or award of shares under the Executive Incentive Scheme, Bonus Deferral
Plan, Performance Share Plan, Savings-Related Share Option Scheme and the matching award of shares under the Share Incentive Plan. During the year,
Taylor Wimpey plc did not purchase any of its own shares to be held in the ESOTs (2019: none).
The ESOTs’ entire holding of shares at 31 December 2020 was covered by outstanding options and conditional awards over shares at that date.
158
158
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159
Financial statements
Notes to the consolidated financial statements continued
Notes to the consolidated financial statements continued
27. Notes to the cash flow statement
27. Notes to the cash flow statement
29. Share-based payments continued
Cash and cash equivalents comprise cash at bank and other short term highly liquid investments with an original maturity of three months or less.
Cash and cash equivalents comprise cash at bank and other short term highly liquid investments with an original maturity of three months or less.
The conditional awards outstanding at 31 December 2020 had a weighted average remaining contractual life of 1.70 years (2019: 1.76 years).
Movement in net cash
Movement in net cash
£ million
£ million
Balance at 1 January 2019
Balance at 1 January 2019
Net cash flow
Net cash flow
Foreign exchange
Foreign exchange
Balance at 31 December 2019
Balance at 31 December 2019
Net cash flow
Net cash flow
Foreign exchange
Foreign exchange
Balance at 31 December 2020
Balance at 31 December 2020
Cash and cash
Cash and cash
equivalents
equivalents
Bank and
Bank and
other loans
other loans
Total
Total
net cash
net cash
734.2
734.2
(101.2)
(101.2)
(2.6)
(2.6)
630.4
630.4
191.3
191.3
1.3
1.3
823.0
823.0
(90.1)
(90.1)
–
–
5.4
5.4
(84.7)
(84.7)
(13.5)
(13.5)
(5.4)
(5.4)
(103.6)
(103.6)
644.1
644.1
(101.2)
(101.2)
2.8
2.8
545.7
545.7
177.8
177.8
(4.1)
(4.1)
719.4
719.4
28. Contingent liabilities and capital commitments
28. Contingent liabilities and capital commitments
The Group in the normal course of business has given guarantees and entered into counter-indemnities in respect of bonds relating to the Group’s own
The Group in the normal course of business has given guarantees and entered into counter-indemnities in respect of bonds relating to the Group’s own
contracts and has given guarantees in respect of the Group’s share of certain contractual obligations of joint ventures.
contracts and has 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.
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
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.
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.
The Group has no significant capital commitments at 31 December 2020 (2019: none).
The Group has no significant capital commitments at 31 December 2020 (2019: none).
29. Share-based payments
29. Share-based payments
Equity-settled share option plan
Equity-settled share option plan
Details of all equity-settled share-based payment arrangements in existence during the year are set out in the Directors’ Remuneration Report on pages
Details of all equity-settled share-based payment arrangements in existence during the year are set out in the Directors’ Remuneration Report on pages
98 to 120. The tables below show the movements in the schemes in the year as well as their weighted average exercise price (WAEP).
98 to 120. The tables below show the movements in the schemes in the year as well as their weighted average exercise price (WAEP).
Sharesave (SAYE):
Sharesave (SAYE):
Outstanding at the beginning of the year
Outstanding at the beginning of the year
Granted during the year
Granted during the year
Forfeited during the year
Forfeited during the year
Exercised during the year
Exercised during the year
Outstanding at the end of the year
Outstanding at the end of the year
Exercisable at the end of the year
Exercisable at the end of the year
2020
2020
2019
2019
Options
Options
WAEP (in £)
WAEP (in £)
Options
Options
WAEP (in £)
WAEP (in £)
19,740,433
19,740,433
18,043,668
18,043,668
(7,359,577)
(7,359,577)
(2,042,542)
(2,042,542)
28,381,982
28,381,982
1,504,748
1,504,748
1.32 19,229,800
1.32 19,229,800
8,514,599
8,514,599
0.97
0.97
(2,941,723)
(2,941,723)
1.29
1.29
(5,062,243)
(5,062,243)
1.38
1.38
1.10 19,740,433
1.10 19,740,433
1,018,291
1,018,291
1.48
1.48
1.36
1.36
1.21
1.21
1.41
1.41
1.26
1.26
1.32
1.32
1.17
1.17
The remaining Sharesave options outstanding at 31 December 2020 had a range of exercise prices from £0.97 to £1.59 (2019: £0.90 to £1.59) and a
The remaining Sharesave options outstanding at 31 December 2020 had a range of exercise prices from £0.97 to £1.59 (2019: £0.90 to £1.59) and a
weighted average remaining contractual life of 3.40 years (2019: 2.93 years).
weighted average remaining contractual life of 3.40 years (2019: 2.93 years).
Share Incentive Plan (SIP):
Share Incentive Plan (SIP):
Outstanding at the beginning of the year
Outstanding at the beginning of the year
Granted during the year
Granted during the year
Forfeited during the year
Forfeited during the year
Exercised during the year
Exercised during the year
Outstanding at the end of the year
Outstanding at the end of the year
Exercisable at the end of the year
Exercisable at the end of the year
2020
2020
2019
2019
Options
Options
WAEP (in £)
WAEP (in £)
Options
Options
WAEP (in £)
WAEP (in £)
5,789,856
5,789,856
1,874,590
1,874,590
(385,229)
(385,229)
(556,828)
(556,828)
6,722,389
6,722,389
2,810,423
2,810,423
–
–
–
–
–
–
–
–
–
–
–
–
5,386,991
5,386,991
1,480,352
1,480,352
(409,804)
(409,804)
(667,683)
(667,683)
5,789,856
5,789,856
2,729,080
2,729,080
–
–
–
–
–
–
–
–
–
–
–
–
The table above represents shares that are granted to employees on a matching basis, when the employee joins the scheme, purchased shares are
The table above represents shares that are granted to employees on a matching basis, when the employee joins the scheme, purchased shares are
matched on a 1:1 basis, these awards do not expire.
matched on a 1:1 basis, these awards do not expire.
Performance Share Plan (PSP):
Performance Share Plan (PSP):
Outstanding at the beginning of the year
Outstanding at the beginning of the year
Granted during the year
Granted during the year
Forfeited during the year
Forfeited during the year
Exercised during the year
Exercised during the year
Outstanding at the end of the year
Outstanding at the end of the year
Exercisable at the end of the year
Exercisable at the end of the year
2020
2020
2019
2019
Options
Options
WAEP (in £)
WAEP (in £)
Options
Options
WAEP (in £)
WAEP (in £)
19,466,040
19,466,040
6,876,632
6,876,632
(2,854,138)
(2,854,138)
(3,371,590)
(3,371,590)
20,116,944
20,116,944
–
–
– 18,601,569
– 18,601,569
7,489,917
7,489,917
–
–
(3,933,994)
(3,933,994)
–
–
(2,691,452)
(2,691,452)
–
–
– 19,466,040
– 19,466,040
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
The average share price at the date of exercise across all options exercised during the period was £1.80 (2019: £1.73). For share plans granted during
the current and preceding year, the fair value of the awards at the grant date was determined as follows:
Share awards with no market
conditions
Share awards with market
conditions
2020
2019
2020
2019
Model
Weighted average share price
Weighted average exercise price
Expected volatility
Expected life
Risk-free rate
Expected dividend yield
Weighted average fair value of options granted in year
Binomial
£1.28
£0.79
39%
3/5 years
0.1%
2.02%
£0.66
Binomial Monte Carlo Monte Carlo
£1.85
Nil
35%
3 years
0.8%
0.0%
£1.07
£1.60
£0.84
35%
3/5 years
0.3%
4.54%
£0.81
£2.11
Nil
25%
3 years
0.2%
0.0%
£1.17
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the expected term. The expected life used in the
model was based on historical exercise patterns.
The Group recognised a share-based payment expense of £8.2 million in the year (2019: £10.1 million), which was composed of £7.0 million in relation
to equity settled schemes and £1.2 million in relation to cash settled elements.
30. 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. The pension schemes of the Group are related parties. Arrangements between the Group and its pension schemes are disclosed in Note 21.
Transactions between the Group and its joint ventures are disclosed below. The Group has loans with joint ventures that are detailed in Note 13.
Trading transactions
During the year, Group sales to joint ventures totalled £19.9 million (2019: £15.6 million).
Remuneration of key management personnel
The key management personnel of the Group are the members of the Group Management Team (GMT) as presented on page 15. The remuneration
information for the Executive Directors is set out in the Remuneration Report on page 113. The aggregate compensation for the other members of the
GMT is as follows:
£ million
Short term employee benefits
Post-employment benefits
Total (excluding share-based payments charge)
2020
2.6
0.3
2.9
2019
2.4
0.3
2.7
In addition to the amounts above, a share-based payment charge of £0.5 million (2019: £0.9 million) related to share options held by members of
the GMT.
31. Dividends
£ million
Proposed
Interim dividend 2020: nil (2019: 3.84p) per ordinary share of 1p each
Final dividend 2020: 4.14p (2019: nil) per ordinary share of 1p each
Amounts recognised as distributions to equity holders
Paid
Final dividend 2019: nil (2018: 3.80p) per ordinary share of 1p each
Interim dividend 2020: nil (2019: 3.84p) per ordinary share of 1p each
Special dividend 2020: nil (2019: 10.70p) per ordinary share of 1p each
2020
2019
–
151.0
151.0
–
–
–
–
125.6
–
125.6
124.2
125.6
349.9
599.7
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161
Financial statements
Notes to the consolidated financial statements continued
Notes to the consolidated financial statements continued
31. Dividends continued
31. Dividends continued
32. Alternative performance measures continued
The Directors recommend a final dividend for the year ended 31 December 2020 of 4.14 pence per share (2019: nil pence per share) subject to
The Directors recommend a final dividend for the year ended 31 December 2020 of 4.14 pence per share (2019: nil pence per share) subject to
shareholder approval at the Annual General Meeting, with an equivalent final dividend charge of c.£151.0 million (2019: nil). The final dividend will be paid
shareholder approval at the Annual General Meeting, with an equivalent final dividend charge of c.£151.0 million (2019: nil). The final dividend will be paid
on 14 May 2021 to all shareholders registered at the close of business on 6 April 2021.
on 14 May 2021 to all shareholders registered at the close of business on 6 April 2021.
In accordance with IAS 10 ‘Events after the Reporting Period’, the proposed final dividend has not been accrued as a liability at 31 December 2020.
In accordance with IAS 10 ‘Events after the Reporting Period’, the proposed final dividend has not been accrued as a liability at 31 December 2020.
32. Alternative performance measures
32. Alternative performance measures
The Group uses a number of alternative performance measures (APMs) which are not defined within IFRS. The Directors use these measures in order to
The Group uses a number of alternative performance measures (APMs) which are not defined within IFRS. The Directors use these measures in order to
assess the underlying operational performance of the Group and, as such, these measures should be considered alongside IFRS measures. The following
assess the underlying operational performance of the Group and, as such, these measures should be considered alongside IFRS measures. The following
APMs are referred to throughout the year end results.
APMs are referred to throughout the year end results.
Profit before taxation and exceptional items and profit for the period before exceptional items
Profit before taxation and exceptional items and profit for the period before exceptional items
The Directors consider the removal of exceptional items from the reported results provides more clarity on the performance of the Group. They are
The Directors consider the removal of exceptional items from the reported results provides more clarity on the performance of the Group. They are
reconciled to profit before tax and profit for the period on the face of the consolidated income statement.
reconciled to profit before tax and profit for the period on the face of the consolidated income statement.
Operating profit and operating profit margin
Operating profit and operating profit margin
Throughout the Annual Report and Accounts operating profit is used as one of the main measures of performance. Operating profit is defined as profit on
Throughout the Annual Report and Accounts operating profit is used as one of the main measures of performance. Operating profit is defined as profit on
ordinary activities before net finance costs, exceptional items and tax, after share of results of joint ventures. The Directors consider this to be an important
ordinary activities before net finance costs, exceptional items and tax, after share of results of joint ventures. The Directors consider this to be an important
measure of the underlying performance of the Group. Operating profit margin is calculated as operating profit divided by total revenue. The Directors
measure of the underlying performance of the Group. Operating profit margin is calculated as operating profit divided by total revenue. The Directors
consider this to be a metric which reflects the underlying performance of the business.
consider this to be a metric which reflects the underlying performance of the business.
Profit on ordinary activities before finance costs (£m)
Profit on ordinary activities before finance costs (£m)
Adjusted for:
Adjusted for:
Share of results of joint ventures (£m)
Share of results of joint ventures (£m)
Exceptional items (£m)
Exceptional items (£m)
Operating profit (£m)
Operating profit (£m)
Revenue (£m)
Revenue (£m)
Operating profit margin
Operating profit margin
2020
2020
282.4
282.4
2019
2019
856.8
856.8
7.9
7.9
10.0
10.0
300.3
300.3
2,790.2
2,790.2
10.8%
10.8%
8.0
8.0
(14.3)
(14.3)
850.5
850.5
4,341.3
4,341.3
19.6%
19.6%
Net operating assets
Net operating assets
Net operating assets is defined as basic net assets less net cash, excluding net taxation balances and accrued dividends. Average net operating assets is
Net operating assets is defined as basic net assets less net cash, excluding net taxation balances and accrued dividends. Average net operating assets is
the average of the opening and closing net operating assets of the 12-month period. With return on net operating assets, the Directors consider this to be
the average of the opening and closing net operating assets of the 12-month period. With return on net operating assets, the Directors consider this to be
an important measure of the underlying operating efficiency and performance of the Group.
an important measure of the underlying operating efficiency and performance of the Group.
Basic net assets (£m)
Basic net assets (£m)
Adjusted for:
Adjusted for:
Cash (£m) (Note 16)
Cash (£m) (Note 16)
Borrowings (£m) (Note 17)
Borrowings (£m) (Note 17)
Net taxation (£m)
Net taxation (£m)
Accrued dividends (£m)
Accrued dividends (£m)
Net operating assets (£m)
Net operating assets (£m)
Average basic net assets (£m)
Average basic net assets (£m)
Average net operating assets (£m)
Average net operating assets (£m)
2020
2020
2019
2019
2018
2018
4,016.8
4,016.8
3,307.8
3,307.8
3,226.8
3,226.8
(823.0)
(823.0)
103.6
103.6
(32.6)
(32.6)
–
–
3,264.8
3,264.8
3,662.3
3,662.3
3,032.5
3,032.5
(630.4)
(630.4)
84.7
84.7
38.1
38.1
–
–
2,800.2
2,800.2
3,267.3
3,267.3
2,706.1
2,706.1
(734.2)
(734.2)
90.1
90.1
29.2
29.2
–
–
2,611.9
2,611.9
Return on net operating assets
Return on net operating assets is defined as operating profit divided by average net operating assets. The Directors consider this to be an important
measure of the underlying operating efficiency and performance of the Group.
Operating profit (£m)
Average net operating assets (£m)
Return on net operating assets
2020
2019
300.3
3,032.5
9.9%
850.5
2,706.1
31.4%
Tangible net assets per share
This is calculated as net assets before any accrued dividends, excluding goodwill and intangible assets, divided by the number of ordinary shares in issue
at the end of the period. The Directors consider this to be a good measure of the value intrinsic within each ordinary share.
Basic net assets (£m)
Adjusted for:
Intangible assets (£m) (Note 11)
Tangible net assets (£m)
Ordinary shares in issue (millions)
Tangible net assets per share (pence)
2020
2019
4,016.8
3,307.8
(8.1)
(7.0)
4,008.7
3,645.4
110.0
3,300.8
3,283.1
100.5
Adjusted basic earnings per share
This is calculated as earnings attributed to shareholders, excluding exceptional items and tax on exceptional items, divided by the weighted average
number of shares. The Directors consider this provides an important measure of the underlying earnings capacity of the Group. Note 10 shows a
reconciliation from basic earnings per share to adjusted basic earnings per share.
Net operating asset turn
This is defined as revenue divided by the average of opening and closing net operating assets. The Directors consider this to be a good indicator of how
efficiently the Group is utilising its assets to generate value for shareholders.
Revenue (£m)
Average net operating assets (£m)
Net operating asset turn
2020
2019
2,790.2
3,032.5
0.92
4,341.3
2,706.1
1.60
Net cash
Net cash is defined as cash and cash equivalent less total borrowings. This is considered by the Directors to be the best indicator of the financing position
of the Group. This is reconciled in Note 27.
Cash conversion
This is defined as cash (used in)/generated by operations divided by operating profit. The Directors consider this measure to be a good indication of how
efficiently the Group is turning profit into cash.
Cash (used in)/generated by operations (£m)
Operating profit (£m)
Cash conversion
2020
(165.0)
300.3
(54.9)%
2019
702.2
850.5
82.6%
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163
Financial statements
Notes to the consolidated financial statements continued
Notes to the consolidated financial statements continued
32. Alternative performance measures continued
32. Alternative performance measures continued
Adjusted gearing
Adjusted gearing
This is defined as adjusted net debt divided by basic net assets. The Directors consider this to be a more representative measure of the Group’s gearing
This is defined as adjusted net debt divided by basic net assets. The Directors consider this to be a more representative measure of the Group’s gearing
levels. Adjusted net debt is defined as net cash less land creditors.
levels. Adjusted net debt is defined as net cash less land creditors.
Cash (£m) (Note 16)
Cash (£m) (Note 16)
Loans (£m) (Note 17)
Loans (£m) (Note 17)
Net cash (£m)
Net cash (£m)
Land creditors (£m) (Note 18)
Land creditors (£m) (Note 18)
Adjusted net debt (£m)
Adjusted net debt (£m)
Basic net assets (£m)
Basic net assets (£m)
Adjusted gearing
Adjusted gearing
33. Post balance sheet events
33. Post balance sheet events
2020
2020
823.0
823.0
(103.6)
(103.6)
719.4
719.4
(675.9)
(675.9)
43.5
43.5
4,016.8
4,016.8
(1.1)%
(1.1)%
2019
2019
630.4
630.4
(84.7)
(84.7)
545.7
545.7
(729.2)
(729.2)
(183.5)
(183.5)
3,307.8
3,307.8
5.5%
5.5%
The safety of our customers is of paramount importance and we have always been guided by this principle. Following the tragic fire at Grenfell Tower,
The safety of our customers is of paramount importance and we have always been guided by this principle. Following the tragic fire at Grenfell Tower,
Taylor Wimpey moved quickly to identify where action was needed to remove ACM cladding on legacy high rise apartment buildings, even though the
Taylor Wimpey moved quickly to identify where action was needed to remove ACM cladding on legacy high rise apartment buildings, even though the
buildings concerned met the requirements of building regulations at the time construction was approved. A £40.0 million provision to cover the cost of
buildings concerned met the requirements of building regulations at the time construction was approved. A £40.0 million provision to cover the cost of
removing and replacing ACM cladding on those buildings has previously been recognised.
removing and replacing ACM cladding on those buildings has previously been recognised.
In January 2021, the Royal Institution of Chartered Surveyors (RICS) issued proposed guidance for public consultation to improve consistency in EWS1
In January 2021, the Royal Institution of Chartered Surveyors (RICS) issued proposed guidance for public consultation to improve consistency in EWS1
(External Wall Fire Review) requests. This consultation clarified the circumstances in which an EWS1 form is required. The UK Government announcement
(External Wall Fire Review) requests. This consultation clarified the circumstances in which an EWS1 form is required. The UK Government announcement
on 10 February 2021 endorsed this updated guidance, which has made fire safety improvement requirements clearer and enabled the Group to focus on
on 10 February 2021 endorsed this updated guidance, which has made fire safety improvement requirements clearer and enabled the Group to focus on
resolving issues for leaseholders using EWS1 forms as an independent framework. Whilst the Group awaits a further update from RICS, it believes that it
resolving issues for leaseholders using EWS1 forms as an independent framework. Whilst the Group awaits a further update from RICS, it believes that it
is right to provide as much clarity as possible for customers at this point.
is right to provide as much clarity as possible for customers at this point.
As a result of this clarified guidance the Group has announced an additional £125 million provision to fund the fire safety improvement works for
As a result of this clarified guidance the Group has announced an additional £125 million provision to fund the fire safety improvement works for
leaseholders in Taylor Wimpey apartment buildings constructed over the last 20 years. This decision was taken in 2021 and was informed by the RICS
leaseholders in Taylor Wimpey apartment buildings constructed over the last 20 years. This decision was taken in 2021 and was informed by the RICS
proposed guidance in January 2021 and the UK Government endorsement of the guidance in February 2021. In accordance with IAS 10 ‘Events after the
proposed guidance in January 2021 and the UK Government endorsement of the guidance in February 2021. In accordance with IAS 10 ‘Events after the
Reporting Period’, as the Group had not created this constructive obligation as of 31 December 2020 in respect of these works the additional provision is
Reporting Period’, as the Group had not created this constructive obligation as of 31 December 2020 in respect of these works the additional provision is
a non-adjusting post balance sheet event with the cost recognised in 2021.
a non-adjusting post balance sheet event with the cost recognised in 2021.
Company balance sheet
at 31 December 2020
£ million
Non-current assets
Investments in Group undertakings
Trade and other receivables
Current assets
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other payables
Net current assets
Total assets less current liabilities
Non-current liabilities
Trade and other payables
Bank and other loans
Provisions
Net assets
Equity
Share capital
Share premium
Own shares
Other reserves
Retained earnings
Total equity
Note
2020
2019
4
5
5
6
6
7
8
9
10
11
12
2,433.0
3.1
2,436.1
2,924.1
791.6
3,715.7
(1,640.3)
(1,640.3)
2,075.4
4,511.5
(1.5)
(90.1)
(1.0)
2,426.0
3.3
2,429.3
2,558.2
600.2
3,158.4
(1,638.2)
(1,638.2)
1,520.2
3,949.5
(1.4)
(84.7)
(1.0)
4,418.9
3,862.4
292.2
773.1
(11.5)
535.1
2,830.0
4,418.9
288.6
762.9
(17.6)
36.0
2,792.5
3,862.4
As permitted by Section 408 of the Companies Act 2006, Taylor Wimpey plc has not presented its own income statement. The profit of the Company
for the financial year was £36.3 million (2019: £528.6 million).
The financial statements were approved by the Board of Directors and authorised for issue on 1 March 2021. They were signed on its behalf by:
P Redfern
Director
C Carney
Director
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165
Financial statements
Company statement of changes in equity
Company statement of changes in equity
for the year to 31 December 2020
for the year to 31 December 2020
Notes to the Company financial statements
for the year to 31 December 2020
£ million
£ million
Total equity at 1 January 2019
Total equity at 1 January 2019
Profit for the year
Profit for the year
Total comprehensive income for the year
Total comprehensive income for the year
New share capital subscribed
New share capital subscribed
Utilisation of own shares
Utilisation of own shares
Cash cost of satisfying share options
Cash cost of satisfying share options
Capital contribution on share-based payments
Capital contribution on share-based payments
Dividends approved and paid
Dividends approved and paid
Total equity at 31 December 2019
Total equity at 31 December 2019
Profit for the year
Profit for the year
Total comprehensive income for the year
Total comprehensive income for the year
New share capital subscribed
New share capital subscribed
Utilisation of own shares
Utilisation of own shares
Cash cost of satisfying share options
Cash cost of satisfying share options
Capital contribution on share-based payments
Capital contribution on share-based payments
Total equity at 31 December 2020
Total equity at 31 December 2020
Share
Share
capital
capital
288.5
288.5
Share
Share
premium
premium
762.9
762.9
Own
Own
shares
shares
(22.7)
(22.7)
Other
Other
reserves
reserves
36.0
36.0
Retained
Retained
earnings
earnings
2,853.5
2,853.5
–
–
–
–
0.1
0.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5.1
5.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
528.6
528.6
528.6
528.6
–
–
–
–
2.1
2.1
8.0
8.0
(599.7)
(599.7)
Total
Total
3,918.2
3,918.2
528.6
528.6
528.6
528.6
0.1
0.1
5.1
5.1
2.1
2.1
8.0
8.0
(599.7)
(599.7)
288.6
288.6
762.9
762.9
(17.6)
(17.6)
36.0
36.0
2,792.5
2,792.5
3,862.4
3,862.4
–
–
–
–
3.6
3.6
–
–
–
–
–
–
–
–
–
–
10.2
10.2
–
–
–
–
–
–
–
–
–
–
–
–
6.1
6.1
–
–
–
–
292.2
292.2
773.1
773.1
(11.5)
(11.5)
–
–
–
–
499.1
499.1
–
–
–
–
–
–
535.1
535.1
36.3
36.3
36.3
36.3
–
–
–
–
(5.8)
(5.8)
7.0
7.0
36.3
36.3
36.3
36.3
512.9
512.9
6.1
6.1
(5.8)
(5.8)
7.0
7.0
2,830.0
2,830.0
4,418.9
4,418.9
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 meets the definition of a qualifying entity under Financial
Reporting Standard 101 (FRS 101) issued by the Financial Reporting
Council. Accordingly, these financial statements were prepared in
accordance with FRS 101 ‘Reduced Disclosure Framework’ as issued
by the Financial Reporting Council.
As permitted by FRS 101, the Company has taken advantage of the
disclosure exemptions available under that standard in relation to share-
based payments, financial instruments, capital management, presentation
of comparative information in respect of certain assets, presentation of a
cash flow statement, standards not yet effective, impairment of assets and
related party transactions.
The principal accounting policies adopted are set out below.
Going concern
The Group has prepared forecasts, including certain sensitivities, taking
into account the Principal Risks identified on pages 49 to 53. Having
considered these forecasts, the Directors remain of the view that the
Group’s financing arrangements and capital structure provide both
the necessary facilities and covenant headroom to enable the Group
to conduct its business for at least the next 12 months.
Accordingly, the Company financial statements have been prepared on
a going concern basis.
Critical accounting judgements and key sources of
estimation uncertainty
Management have not made any individual accounting judgements that
are material to the Company and does not consider there to be any key
sources of estimation uncertainty.
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 expensed
immediately. Where an impairment loss subsequently reverses, due to a
change in circumstances or in the estimates used to determine the asset’s
recoverable amount, the carrying amount of the investment is increased
to the revised estimate of its recoverable amount, so long as it does not
exceed the original carrying value prior to the impairment being recognised.
The Company values its investments in subsidiary holding companies
based on a comparison between the net assets recoverable by the
subsidiary company and the investment held. Where the net assets
are lower than the investment an impairment is recorded. For trading
subsidiaries, the investment carrying value in the Company is assessed
against the net present value of the cash flows of the subsidiary.
Borrowing costs
Capitalised finance costs are held in other receivables and amortised over
the period of the facility.
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.
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 profit before tax 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 Company’s liability for current tax is calculated using tax rates that
have been enacted or substantively enacted by the balance sheet date.
Any liability or credit in respect of group relief in lieu of current tax is also
calculated using corporation tax rates that have been enacted or
substantively enacted by the balance sheet date unless a different rate
(including a nil rate) has been agreed within the Group.
Deferred tax
Deferred tax is provided in full on temporary 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.
Deferred tax assets are recognised to the extent that it is regarded as
more likely than not that they will be recovered.
Deferred tax is measured on a non-discounted basis using the tax rates
and laws that have been enacted or substantively enacted at the balance
sheet date.
Foreign 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 after the date of
the transaction is included as an exchange gain or loss in profit and loss.
Trade and other receivables
Trade and other receivables are measured at amortised cost, less any loss
allowance based on expected credit losses. The measurement of expected
credit losses is based on the probability of default and the magnitude of the
loss if there is a default. The assessment of probability of default is based on
historical data adjusted for any known factors that would influence the
future amount to be received in relation to the receivable.
Share-based payments
The Company issues equity-settled share-based payments to certain
employees of its subsidiaries. Equity-settled share-based payments are
measured at fair value at the grant date. The fair value is expensed on a
straight-line basis over the vesting period, based on the estimate of shares
that will vest. The cost of equity-settled share-based payments granted to
employees of subsidiary companies is borne by the employing company,
without recharge. As such the Company’s investment in the subsidiary is
increased by an equivalent amount.
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’ equity.
Dividends paid
Dividends are charged to the Company’s retained earnings 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.
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Financial statements
Notes to the Company financial statements continued
Notes to the Company financial statements continued
2. Particulars of employees
2. Particulars of employees
Number
Number
Directors
Directors
2020
2020
3
3
2019
2019
4
4
The Executive Directors received all of their remuneration, as disclosed in the Remuneration Report on pages 98 to 120, from Taylor Wimpey UK Limited.
The Executive Directors received all of their remuneration, as disclosed in the Remuneration Report on pages 98 to 120, from Taylor Wimpey UK Limited.
This remuneration is reflective of the Directors’ service to the Company and all its subsidiaries.
This remuneration is reflective of the Directors’ service to the Company and all its subsidiaries.
3. Auditor’s remuneration
3. Auditor’s remuneration
£ million
£ million
Total audit fees
Total audit fees
Non-audit fees
Non-audit fees
Total
Total
A description of other services is included in Note 6 of the Group financial statements.
A description of other services is included in Note 6 of the Group financial statements.
4. Investments in Group undertakings
4. Investments in Group undertakings
£ million
£ million
Cost
Cost
At 1 January 2020
At 1 January 2020
Capital contribution relating to share-based payments
Capital contribution relating to share-based payments
At 31 December 2020
At 31 December 2020
Provision for impairment
Provision for impairment
At 1 January 2020
At 1 January 2020
At 31 December 2020
At 31 December 2020
Carrying amount
Carrying amount
At 31 December 2020
At 31 December 2020
At 31 December 2019
At 31 December 2019
All investments are unlisted and information about all subsidiaries is listed on pages 171 to 172.
All investments are unlisted and information about all subsidiaries is listed on pages 171 to 172.
5. Trade and other receivables
5. Trade and other receivables
£ million
£ million
Due from Group undertakings
Due from Group undertakings
Other receivables
Other receivables
Current
Current
2020
2020
2,922.5
2,922.5
1.6
1.6
2,924.1
2,924.1
2019
2019
2,556.3
2,556.3
1.9
1.9
2,558.2
2,558.2
Amounts due from Group undertakings are repayable on demand and are predominantly interest bearing.
Amounts due from Group undertakings are repayable on demand and are predominantly interest bearing.
6. Trade and other payables
6. Trade and other payables
£ million
£ million
Due to Group undertakings
Due to Group undertakings
Other payables
Other payables
Corporation tax creditor
Corporation tax creditor
Current
Current
2020
2020
1,635.8
1,635.8
0.8
0.8
3.7
3.7
1,640.3
1,640.3
2019
2019
1,634.6
1,634.6
1.1
1.1
2.5
2.5
1,638.2
1,638.2
2020
2020
0.2
0.2
–
–
0.2
0.2
2019
2019
0.2
0.2
–
–
0.2
0.2
Shares
Shares
5,237.3
5,237.3
7.0
7.0
5,244.3
5,244.3
(2,811.3)
(2,811.3)
(2,811.3)
(2,811.3)
2,433.0
2,433.0
2,426.0
2,426.0
Non-current
Non-current
2020
2020
–
–
3.1
3.1
3.1
3.1
Non-current
Non-current
2020
2020
–
–
1.5
1.5
–
–
1.5
1.5
2019
2019
–
–
3.3
3.3
3.3
3.3
2019
2019
–
–
1.4
1.4
–
–
1.4
1.4
7. Bank and other loans
£ million
€100.0 million 2.02% Senior Loan Notes
These loans are repayable as follows:
Amounts due for settlement after one year
8. Share capital
£ million
Authorised:
22,200,819,176 (2019: 22,200,819,176) ordinary shares of 1p each
1,158,299,201 (2019: 1,158,299,201) deferred ordinary shares of 24p each
Issued and fully paid:
31 December 2019
Shares issued in year
31 December 2020
The Company has two classes of shares:
2020
90.1
2019
84.7
90.1
84.7
2020
2019
222.0
278.0
500.0
222.0
278.0
500.0
Number of
ordinary shares
Number of deferred
ordinary shares
£ million
3,283,108,174
362,308,473
1,065,566,274
–
3,645,416,647
1,065,566,274
288.6
3.6
292.2
– Ordinary shares of 1p, each of which carries the right to one vote at general meetings of the Company and such other rights and obligations as are set
out in the Company’s Articles of Association.
– Deferred ordinary shares of 24p, which carry no voting rights and no entitlement to any dividend. The deferred ordinary shares were issued as part of
a capital reorganisation in 2009 and have not subsequently changed.
In June 2020 the Company issued 360,265,931 ordinary shares of 1p at a price of 145p to raise total net proceeds of £510.1 million after expenses.
355,000,000 of these shares were placed via a cash box structure (the “Placing”) in which the cash box entity issued redeemable preference shares
in consideration for the receipt of the net cash proceeds arising from the placement of those shares. Taylor Wimpey plc ordinary shares were issued in
consideration for the transfer of the redeemable preference shares, that it did not already own, of the cash box entity. It was therefore determined that
the placing of those shares qualified for merger relief under section 612 of the Companies Act 2006 such that the excess of the value of the acquired
shares in the cash box entity over the nominal value of the ordinary shares issued by Taylor Wimpey plc was credited to Other Reserves. The remainder
of the shares issued, 5,265,931, were issued via a Retail Offer open to employees and other retail investors and a Directors’ Subscription. The Placing
was performed to allow the Group to pursue additional near term land acquisition opportunities.
The Placing, Retail and Subscription shares placed rank pari passu in all respects with the existing ordinary shares of the Company, including, without
limitation, the right to receive all dividends and other distributions declared, made or paid after the date of issue.
In addition during the year, the Company issued 2.0 million (2019: 5.1 million) ordinary shares to satisfy option exercises.
9. Share premium
£ million
At 1 January
Shares issued in year
At 31 December
10. Own shares
£ million
Own shares
2020
762.9
10.2
773.1
2019
762.9
–
762.9
2020
11.5
2019
17.6
Number
7.1m
Number
10.7m
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169
Amounts due to Group undertakings are repayable on demand and are predominantly interest bearing.
Amounts due to Group undertakings are repayable on demand and are predominantly interest bearing.
These comprise ordinary shares of the Company:
Shares held in trust for bonus, options and performance award plans
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Financial statements
Notes to the Company financial statements continued
Notes to the Company financial statements continued
10. Own shares continued
10. Own shares continued
During the year, the Company did not purchase any of its own shares to be held in the ESOTs (2019: none). The market value of the shares held at
During the year, the Company did not purchase any of its own shares to be held in the ESOTs (2019: none). The market value of the shares held at
31 December 2020 was £11.7 million (2019: £20.8 million) and their nominal value was £0.1 million (2019: £0.1 million). Dividends on these shares have
31 December 2020 was £11.7 million (2019: £20.8 million) and their nominal value was £0.1 million (2019: £0.1 million). Dividends on these shares have
been waived except for a nominal aggregate amount in pence.
been waived except for a nominal aggregate amount in pence.
ESOTs are used to hold the Company’s shares which have been acquired on the market. These shares are used to meet the valid exercise of options
ESOTs are used to hold the Company’s shares which have been acquired on the market. These shares are used to meet the valid exercise of options
and/or vesting of conditional awards and/or award of shares under the Executive Incentive Scheme, Bonus Deferral Plan, Performance Share Plan,
and/or vesting of conditional awards and/or award of shares under the Executive Incentive Scheme, Bonus Deferral Plan, Performance Share Plan,
Savings-Related Share Option Scheme and the matching award of shares under the Share Incentive Plan.
Savings-Related Share Option Scheme and the matching award of shares under the Share Incentive Plan.
The ESOTs’ entire holding of shares at 31 December 2020 was covered by outstanding options and conditional awards over shares at that date.
The ESOTs’ entire holding of shares at 31 December 2020 was covered by outstanding options and conditional awards over shares at that date.
11. Other reserves
11. Other reserves
£ million
£ million
At 1 January
At 1 January
Shares issued in year
Shares issued in year
At 31 December
At 31 December
2020
2020
36.0
36.0
499.1
499.1
535.1
535.1
2019
2019
36.0
36.0
–
–
36.0
36.0
£499.1 million of other reserves arose on the cash box placing that occurred in June 2020 and qualified for merger relief under section 612 of the
£499.1 million of other reserves arose on the cash box placing that occurred in June 2020 and qualified for merger relief under section 612 of the
Companies Act 2006 (see Note 8). Other reserves also includes £31.5 million (2019: £31.5 million) in respect of the historical redemption of the
Companies Act 2006 (see Note 8). Other reserves also includes £31.5 million (2019: £31.5 million) in respect of the historical redemption of the
Company’s shares, which is non distributable.
Company’s shares, which is non distributable.
12. Retained earnings
12. Retained earnings
Retained earnings of £2,830.0 million (2019: £2,792.5 million) includes profit for the year and dividends received from subsidiaries of nil (2019: £500.0
Retained earnings of £2,830.0 million (2019: £2,792.5 million) includes profit for the year and dividends received from subsidiaries of nil (2019: £500.0
million). Included in retained earnings is £861.0 million (2019: £816.5 million) which is not distributable.
million). Included in retained earnings is £861.0 million (2019: £816.5 million) which is not distributable.
13. Share-based payments
13. Share-based payments
The Company has taken advantage of the FRS 101 disclosure exemption in relation to share-based payments. Details of share awards granted by
The Company has taken advantage of the FRS 101 disclosure exemption in relation to share-based payments. Details of share awards 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 29 of the Group
the Company to employees of subsidiaries, and that remain outstanding at the year end over the Company’s shares, are set out in Note 29 of the Group
financial statements. The Company did not recognise any expense related to equity-settled share-based payment transactions in the current or
financial statements. The Company did not recognise any expense related to equity-settled share-based payment transactions in the current or
preceding year.
preceding year.
14. Contingent liabilities
14. 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
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.
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
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.
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.
The Company has in issue a guarantee in respect of the Taylor Wimpey Pension Scheme (TWPS), which had an IAS 19 deficit of £89.1 million at
The Company has in issue a guarantee in respect of the Taylor Wimpey Pension Scheme (TWPS), which had an IAS 19 deficit of £89.1 million at
31 December 2020 (2019: £84.5 million). The guarantee commits the Company to ensure that the participating subsidiaries make deficit repair
31 December 2020 (2019: £84.5 million). The guarantee commits the Company to ensure that the participating subsidiaries make deficit repair
contributions in accordance with a schedule agreed with the Trustee of £40.0 million per annum, to the end of 2020, whilst the scheme is in a Technical
contributions in accordance with a schedule agreed with the Trustee of £40.0 million per annum, to the end of 2020, whilst the scheme is in a Technical
Provisions deficit. During April 2020 and in response to the site shutdowns, it was agreed with the Trustee there would be a temporary suspension of
Provisions deficit. During April 2020 and in response to the site shutdowns, it was agreed with the Trustee there would be a temporary suspension of
the agreed contributions for the three months between April and June. Those suspended contributions are to be paid instead between January 2021
the agreed contributions for the three months between April and June. Those suspended contributions are to be paid instead between January 2021
and March 2021. In addition, £5.1 million per annum from the Pension Funding Partnership and £2.0 million per annum to cover scheme expenses is due.
and March 2021. In addition, £5.1 million per annum from the Pension Funding Partnership and £2.0 million per annum to cover scheme expenses is due.
15. Dividend
15. Dividend
£ million
£ million
Proposed
Proposed
Interim dividend 2020: nil (2019: 3.84p) per ordinary share of 1p each
Interim dividend 2020: nil (2019: 3.84p) per ordinary share of 1p each
Final dividend 2020: 4.14p (2019: nil) per ordinary share of 1p each
Final dividend 2020: 4.14p (2019: nil) per ordinary share of 1p each
Amounts recognised as distributions to equity holders
Amounts recognised as distributions to equity holders
Paid
Paid
Final dividend 2019: nil (2018: 3.80p) per ordinary share of 1p each
Final dividend 2019: nil (2018: 3.80p) per ordinary share of 1p each
Interim dividend 2020: nil (2019: 3.84p) per ordinary share of 1p each
Interim dividend 2020: nil (2019: 3.84p) per ordinary share of 1p each
Special dividend 2020: nil (2019: 10.70p) per ordinary share of 1p each
Special dividend 2020: nil (2019: 10.70p) per ordinary share of 1p each
2020
2020
2019
2019
–
–
151.0
151.0
151.0
151.0
–
–
–
–
–
–
–
–
125.6
125.6
–
–
125.6
125.6
124.2
124.2
125.6
125.6
349.9
349.9
599.7
599.7
The Directors recommend a final dividend for the year ended 31 December 2020 of 4.14 pence per share (2019: nil pence per share) subject to
The Directors recommend a final dividend for the year ended 31 December 2020 of 4.14 pence per share (2019: nil pence per share) subject to
shareholder approval at the Annual General Meeting, with an equivalent final dividend charge of c.£151.0 million (2019: nil). The final dividend will be paid
shareholder approval at the Annual General Meeting, with an equivalent final dividend charge of c.£151.0 million (2019: nil). The final dividend will be paid
on 14 May 2021 to all shareholders registered at the close of business on 6 April 2021.
on 14 May 2021 to all shareholders registered at the close of business on 6 April 2021.
In accordance with IAS 10 ‘Events after the Reporting Period’, the proposed final dividend has not been accrued as a liability at 31 December 2020.
In accordance with IAS 10 ‘Events after the Reporting Period’, the proposed final dividend has not been accrued as a liability at 31 December 2020.
Particulars of subsidiaries, associates and joint ventures
The entities listed below are companies incorporated in the United Kingdom and the registered office is Gate House, Turnpike Road, High Wycombe,
Buckinghamshire, HP12 3NR. All of the below are 100% subsidiaries of the Group, either directly or indirectly held by Taylor Wimpey plc, and only have
ordinary share capital.
Admiral Developments Limited
Admiral Homes (Eastern) Limited
Admiral Homes Limited
Ashton Park Limited
BGS (Pentian Green) Holdings Limited
Broadleaf Park LLP
Bryad Developments Limited
Bryant Country Homes Limited
Bryant Group Services Limited
Bryant Homes Central Limited
Bryant Homes East Midlands Limited
Bryant Homes Limited
Bryant Homes North East Limited
Bryant Homes Northern Limited
Bryant Homes South West Limited
Bryant Homes Southern Limited
Bryant Properties Limited
Candlemakers (TW) Limited
Clipper Investments Limited
Compine Developments (Wootton) Limited
Dormant Nominees One Limited
Dormant Nominees Two Limited
Farrods Water Engineers Limited
Flyover House Limited
George Wimpey Limited
George Wimpey Bristol Limited
George Wimpey City Limited
George Wimpey City 2 Limited
George Wimpey East Anglia Limited
George Wimpey East London Limited
George Wimpey East Midlands Limited
George Wimpey Manchester Limited
George Wimpey Midland Limited
George Wimpey North East Limited
George Wimpey North London Limited
George Wimpey North Midlands Limited
George Wimpey North West Limited
George Wimpey North Yorkshire Limited
George Wimpey South East Limited
George Wimpey South Midlands Limited
George Wimpey South West Limited
George Wimpey South Yorkshire Limited
George Wimpey Southern Counties Limited
George Wimpey West London Limited
George Wimpey West Midlands Limited
George Wimpey West Yorkshire Limited
Globe Road Limited
Grand Union Vision Limited
Groveside Homes Limited
Hamme Construction Limited
Hanger Lane Holdings Limited
Hassall Homes (Cheshire) Limited
Hassall Homes (Mercia) Limited
Hassall Homes (Southern) Limited
Hassall Homes (Wessex) Limited
Haverhilll Developments Limited
Jim 1 Limited
Jim 3 Limited
Jim 4 Limited
Jim 5 Limited
L. & A. Freeman Limited
Ladbroke Grove Apartment Management
Company Limited
Laing Homes Limited
Laing Land Limited
LandTrust Developments Limited
Leawood (Management) Company Limited
Limebrook Manor LLP
MCA Developments Limited
MCA East Limited
MCA Holdings Limited
MCA Land Limited
MCA Leicester Limited
MCA London Limited
MCA Northumbria Limited
MCA Partnership Housing Limited
MCA South West Limited
MCA West Midlands Limited
MCA Yorkshire Limited
McLean Homes Limited
McLean Homes Bristol & West Limited
McLean Homes Southern Limited
McLean TW Estates Limited
McLean TW (Chester) Limited
McLean TW (Northern) Limited
McLean TW (Southern) Limited
McLean TW (Yorkshire) Limited
McLean TW Group Limited
McLean TW Holdings Limited
McLean TW Limited
McLean TW No. 2 Limited
Melbourne Investments Limited
Pangbourne Developments Limited
Prestoplan Limited
River Farm Developments Limited
South Bristol (Ashton Park) Limited
Spinks & Denning Limited
St. Dunstans Apartment Management Company
Limited
St. Katharine By The Tower Limited
St. Katharine Haven Limited
Tawnywood Developments Limited
Taylor Wimpey 2007 Limited
Taylor Wimpey Capital Developments Limited
Taylor Wimpey Commercial Properties Limited
Taylor Wimpey Developments Limited
Taylor Wimpey Garage Nominees No 1 Limited
Taylor Wimpey Garage Nominees No 2 Limited
Taylor Wimpey Holdings Limited
Taylor Wimpey International Limited
Taylor Wimpey Property Company Limited
Taylor Wimpey Property Management Limited
Taylor Wimpey SH Capital Limited
Taylor Wimpey UK Limited
Thameswey Homes Limited
The Garden Village Partnership Limited
The Junction Flat Management Company
Limited
The Wilson Connolly Employee Benefit
Trust Limited
This is G2 Limited
Thomas Lowe and Sons, Limited
Thomas Lowe Homes Limited
TW NCA Limited
TW Springboard Limited
Twyman Regent Limited
Valley Park Developments Limited
Whelmar (Chester) Limited
Whelmar (Lancashire) Limited
Whelmar (North Wales) Limited
Whelmar Developments Limited
Wilcon Homes Anglia Limited
Wilcon Homes Eastern Limited
Wilcon Homes Midlands Limited
Wilcon Homes Northern Limited
Wilcon Homes Southern Limited
Wilcon Homes Western Limited
Wilcon Lifestyle Homes Limited
Wilfrid Homes Limited
Wilson Connolly Holdings Limited
Wilson Connolly Investments Limited
Wilson Connolly Limited
Wilson Connolly Properties Limited
Wilson Connolly Quest Limited
Wimgrove Developments Limited
Wimgrove Property Trading Limited
Wimpey Construction Developments Limited
Wimpey Construction Overseas Limited
Wimpey Corporate Services Limited
Wimpey Dormant Investments Limited
Wimpey Geotech Limited
Wimpey Group Services Limited
Wimpey Gulf Holdings Limited
Wimpey Overseas Holdings Limited
170
170
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Taylor Wimpey plc Annual Report and Accounts 2020
Taylor Wimpey plc Annual Report and Accounts 2020
www.taylorwimpey.co.uk
www.taylorwimpey.co.uk
Taylor Wimpey plc Annual Report and Accounts 2020
www.taylorwimpey.co.uk 171
171
Financial statements
Particulars of subsidiaries, associates and joint ventures continued
Particulars of subsidiaries, associates and joint ventures continued
Five year review
The entities listed below are companies incorporated in the United Kingdom and the registered office is Gate House, Turnpike Road,
The entities listed below are companies incorporated in the United Kingdom and the registered office is Gate House, Turnpike Road,
High Wycombe, Buckinghamshire, HP12 3NR.
High Wycombe, Buckinghamshire, HP12 3NR.
£ million
Revenue
2020
2019
2018
2017
2016
2,790.2
4,341.3
4,082.0
3,965.2
3,676.2
Company Name
Company Name
% Owned Company Name
% Owned Company Name
% Owned
% Owned
Academy Central LLP
Academy Central LLP
Bordon Developments Holdings Limited
Bordon Developments Holdings Limited
Chobham Manor LLP
Chobham Manor LLP
Chobham Manor Property Management Limited
Chobham Manor Property Management Limited
DFE TW Residential Limited
DFE TW Residential Limited
Falcon Wharf Limited
Falcon Wharf Limited
GWNW City Developments Limited
GWNW City Developments Limited
Paycause Limited
Paycause Limited
Phoenix Birmingham Latitude Limited
Phoenix Birmingham Latitude Limited
62% Taylor Wimpey Pension Trustees Limited
62% Taylor Wimpey Pension Trustees Limited
50% Triumphdeal Limited
50% Triumphdeal Limited
50% TW Cavendish Holdings Limited
50% TW Cavendish Holdings Limited
50% Vumpine Limited
50% Vumpine Limited
50% Whitehill & Bordon Regeneration Company Limited
50% Whitehill & Bordon Regeneration Company Limited
50% Whitehill & Bordon Development Company Phase 1a Limited
50% Whitehill & Bordon Development Company Phase 1a Limited
50% Wimpey Laing Overseas Limited
50% Wimpey Laing Overseas Limited
66.67% Wimpey Laing Limited
66.67% Wimpey Laing Limited
50% Winstanley & York Road Regeneration LLP
50% Winstanley & York Road Regeneration LLP
99%
99%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
The entities listed below are companies incorporated in the United Kingdom and the registered office is Unit C, Ground Floor, Cirrus Glasgow Airport
The entities listed below are companies incorporated in the United Kingdom and the registered office is Unit C, Ground Floor, Cirrus Glasgow Airport
Business Park, Marchburn Drive, Abbotsinch, Paisley, PA3 2SJ.
Business Park, Marchburn Drive, Abbotsinch, Paisley, PA3 2SJ.
Company Name
Company Name
% Owned Company Name
% Owned Company Name
Bryant Homes Scotland Limited
Bryant Homes Scotland Limited
George Wimpey East Scotland Limited
George Wimpey East Scotland Limited
George Wimpey West Scotland Limited
George Wimpey West Scotland Limited
London and Clydeside Estates Limited
London and Clydeside Estates Limited
London and Clydeside Holdings Limited
London and Clydeside Holdings Limited
Strada Developments Limited
Strada Developments Limited
100% Taylor Wimpey (General Partner) Limited
100% Taylor Wimpey (General Partner) Limited
100% Taylor Wimpey (Initial LP) Limited
100% Taylor Wimpey (Initial LP) Limited
100% Taylor Wimpey Scottish Limited Partnership
100% Taylor Wimpey Scottish Limited Partnership
100% Whatco England Limited
100% Whatco England Limited
100% Wilcon Homes Scotland Limited
100% Wilcon Homes Scotland Limited
50%
50%
Other entities incorporated in the United Kingdom, unless otherwise stated, and the Group’s ownership share are shown below.
Other entities incorporated in the United Kingdom, unless otherwise stated, and the Group’s ownership share are shown below.
Company Name
Company Name
% Owned Registered Office
% Owned Registered Office
% Owned
% Owned
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50% 11 Tower View, Kings Hill, West Malling, ME19 4UY
50% 11 Tower View, Kings Hill, West Malling, ME19 4UY
33.33% Bath House, 6-8 Bath Street, Bristol, BS1 6HL
33.33% Bath House, 6-8 Bath Street, Bristol, BS1 6HL
50% Kent House, 14-17 Market Place, London, W1W 8AJ
50% Kent House, 14-17 Market Place, London, W1W 8AJ
100% 168 Northenden Road, Sale, Manchester, M33 3HE
100% 168 Northenden Road, Sale, Manchester, M33 3HE
17.17% 4 Capital Court, Bittern Road, Sowton Industrial Estate, Exeter, EX2 7FW
17.17% 4 Capital Court, Bittern Road, Sowton Industrial Estate, Exeter, EX2 7FW
50% Countryside House, The Drive, Great Warley, Brentwood, CM13 3AT
50% Countryside House, The Drive, Great Warley, Brentwood, CM13 3AT
54.44% 250 Aztec West, Almondsbury, Bristol, BS32 4TR
54.44% 250 Aztec West, Almondsbury, Bristol, BS32 4TR
50% Gallagher House, Gallagher Business Park, Heathcote, Warwick, CV34 6AF
50% Gallagher House, Gallagher Business Park, Heathcote, Warwick, CV34 6AF
50% Countryside House, The Drive, Great Warley, Brentwood, CM13 3AT
50% Countryside House, The Drive, Great Warley, Brentwood, CM13 3AT
19.27% 6 Drakes Meadow, Penny Lane, Swindon, SN3 3LL
19.27% 6 Drakes Meadow, Penny Lane, Swindon, SN3 3LL
75% Carretera de Ronda A-397, Km.44.5, Benahavis, Malaga, Spain
75% Carretera de Ronda A-397, Km.44.5, Benahavis, Malaga, Spain
100% 9366, 49 St NW, Edmonton, AB T6B 2L7, Canada
100% 9366, 49 St NW, Edmonton, AB T6B 2L7, Canada
Bishops Park Limited
Bishops Park Limited
Bishop’s Stortford North Consortium Limited
Bishop’s Stortford North Consortium Limited
Bromley Park (Holdings) Limited
Bromley Park (Holdings) Limited
Bromley Park Limited
Bromley Park Limited
Brunswick Dock (Liverpool) Management Company Limited
Brunswick Dock (Liverpool) Management Company Limited
Capital Court Property Management Limited
Capital Court Property Management Limited
Countryside 27 Limited
Countryside 27 Limited
Emersons Green Urban Village Limited
Emersons Green Urban Village Limited
Gallagher Bathgate Limited
Gallagher Bathgate Limited
Greenwich Millennium Village Limited
Greenwich Millennium Village Limited
Haydon Development Company Limited
Haydon Development Company Limited
Los Arqueros Golf and Country Club S.A.
Los Arqueros Golf and Country Club S.A.
Morrison Land Development Inc
Morrison Land Development Inc
Newcastle Great Park (Estates) Limited
Newcastle Great Park (Estates) Limited
NGP Management Company (Cell F) Limited
NGP Management Company (Cell F) Limited
NGP Management Company (Commercial) Limited
NGP Management Company (Commercial) Limited
NGP Management Company (Town Centre) Limited
NGP Management Company (Town Centre) Limited
NGP Management Company Residential (Cell G) Limited
NGP Management Company Residential (Cell G) Limited
North Swindon Development Company Limited
North Swindon Development Company Limited
Padyear Limited
Padyear Limited
Quedgeley Urban Village Limited
Quedgeley Urban Village Limited
Redhill Park Limited
Redhill Park Limited
St George Little Britain (No.1) Limited
St George Little Britain (No.1) Limited
St George Little Britain (No.2) Limited
St George Little Britain (No.2) Limited
Taylor Wimpey de España S.A.U.*
Taylor Wimpey de España S.A.U.*
100% C/Aragón 223-223 A, 07008 Palma de Mallorca, Spain
100% C/Aragón 223-223 A, 07008 Palma de Mallorca, Spain
Taylor Woodrow (Gibraltar) Limited
Taylor Woodrow (Gibraltar) Limited
Weaver Developments (Woodfield Plantation) Limited
Weaver Developments (Woodfield Plantation) Limited
Wisley Property Investments Limited
Wisley Property Investments Limited
100% 17 Bayside Road, Gibraltar
100% 17 Bayside Road, Gibraltar
50% Quay Point, Lakeside Boulevard, Doncaster, DN4 5PL
50% Quay Point, Lakeside Boulevard, Doncaster, DN4 5PL
100% 27 Hospital Road, George Town, Cayman Islands
100% 27 Hospital Road, George Town, Cayman Islands
* 9% cumulative, redeemable preference shares are held in addition to ordinary shares.
* 9% cumulative, redeemable preference shares are held in addition to ordinary shares.
Profit on ordinary activities before finance costs and tax
Adjust for: Share of results of joint ventures
Adjust for: Exceptional items
Operating profit
Net finance costs
Profit for the financial year before taxation and exceptional items
Exceptional items
Taxation charge including taxation on exceptional items
Profit for the financial year
Balance sheet
Intangible assets
Property, plant and equipment
Right-of-use assets
Interests in joint ventures
Non-current trade and other receivables
Non-current assets (excluding tax)
Inventories
Other current assets (excluding tax and cash)
Trade and other payables excluding land creditors
Land creditors
Lease liabilities
Provisions
Net current assets (excluding tax and net cash)
Trade and other payables excluding land creditors
Land creditors
Retirement benefit obligations
Lease liabilities
Provisions
Non-current liabilities (excluding debt)
Cash and cash equivalents
Bank and other loans
Taxation balances
Basic net assets
282.4
7.9
10.0
300.3
(25.9)
274.4
(10.0)
(47.4)
217.0
8.1
24.0
27.5
82.2
26.3
168.1
4,534.7
189.1
(571.4)
(347.9)
(6.4)
(70.6)
3,727.5
(131.8)
(328.0)
(89.5)
(21.6)
(59.9)
(630.8)
823.0
(103.6)
32.6
856.8
8.0
(14.3)
850.5
(28.9)
821.6
14.3
(162.0)
673.9
7.0
25.6
27.4
55.3
43.7
159.0
4,196.0
161.0
(634.9)
(339.9)
(7.6)
(72.7)
3,301.9
(110.4)
(389.3)
(85.0)
(20.3)
(55.7)
(660.7)
630.4
(84.7)
(38.1)
828.8
5.3
46.1
880.2
(23.4)
856.8
(46.1)
(154.1)
656.6
3.2
21.6
27.1
48.3
55.7
155.9
4,188.2
134.7
(684.8)
(359.5)
(8.2)
(76.9)
3,193.5
(112.2)
(379.1)
(133.6)
(19.2)
(93.4)
(737.5)
734.2
(90.1)
(29.2)
706.5
7.6
130.0
844.1
(32.1)
812.0
(130.0)
(126.7)
555.3
3.9
22.8
–
50.9
60.1
137.7
4,075.7
122.2
(705.0)
(319.5)
–
(87.3)
3,086.1
(111.0)
(319.6)
(64.8)
–
(74.3)
(569.7)
600.5
(88.7)
(28.6)
766.4
1.2
0.5
768.1
(34.7)
733.4
(0.5)
(143.6)
589.3
3.5
21.0
–
50.3
87.2
162.0
3,984.0
91.4
(721.8)
(266.3)
–
(28.0)
3,059.3
(109.0)
(333.5)
(234.1)
–
(5.1)
(681.7)
450.2
(85.5)
(4.0)
4,016.8
3,307.8
3,226.8
3,137.3
2,900.3
6.3p
6.5p
110.0p
–
3,645.4
77,435
288
9,609
20.6p
20.3p
100.5p
18.34
3,283.1
75,612
269
15,719
20.1p
21.3p
98.3p
15.28
3,278.1
75,995
264
14,933
17.0p
20.2p
95.7p
13.79
3,275.4
74,849
264
14,541
18.1p
18.1p
88.6p
10.91
3,270.3
76,234
255
13,881
50%
50%
3rd Floor Citygate, St. James’ Boulevard, Newcastle upon Tyne, NE1 4JE
3rd Floor Citygate, St. James’ Boulevard, Newcastle upon Tyne, NE1 4JE
Statistics
16.79% 6 Drakes Meadow, Penny Lane, Swindon, SN3 3LL
16.79% 6 Drakes Meadow, Penny Lane, Swindon, SN3 3LL
50% Hanson House, 14 Castle Hill, Maidenhead, SL6 4JJ
50% Hanson House, 14 Castle Hill, Maidenhead, SL6 4JJ
50% 250 Aztec West, Almondsbury, Bristol, BS32 4TR
50% 250 Aztec West, Almondsbury, Bristol, BS32 4TR
50% 5 Market Yard Mews, 194 – 204 Bermondsey Street, London SE1 3TQ
50% 5 Market Yard Mews, 194 – 204 Bermondsey Street, London SE1 3TQ
50%
50%
Berkeley House, 19 Portsmouth Road, Cobham, KT11 1JG
Berkeley House, 19 Portsmouth Road, Cobham, KT11 1JG
Basic earnings per share
Adjusted basic earnings per share
Tangible net assets per share
Dividends paid (pence per share)
Number of ordinary shares in issue at the year end (millions)
UK short term landbank (plots)
UK average selling price (£’000)
UK completions (homes including JVs)
The results for 2016 shown above include unaudited adjustments for the adoption of IFRS 9 and IFRS 15 in 2018.
172
172
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Taylor Wimpey plc Annual Report and Accounts 2020
www.taylorwimpey.co.uk 173
173
Shareholder information
2021 Annual General Meeting
Dear Shareholder,
Annual General Meeting (AGM)
The 2021 AGM of Taylor Wimpey plc (the Company) will be held at the Company’s registered office at Gate House, Turnpike Road, High Wycombe,
Buckinghamshire, HP12 3NR on Thursday 22 April 2021 at 10:00am.
The safety and security of our shareholders and colleagues remains our priority. Even if the national lockdown has ended and the vaccination programme
continues to progress well, the safety measures expected to be in place at the time of the AGM (as announced by the UK Government on 22 February
2021) would not permit two households mixing together indoors. In light of this, shareholders will unfortunately not be permitted to attend the
AGM in person. The Company will ensure that the legal requirements to hold the AGM are met by the attendance of a minimum number of Director
shareholders and / or employee shareholders.
Each year the Board looks forward to meeting our shareholders in person and considers it an important part of our shareholder engagement as it allows
the Board to present the Company’s strategy and performance to shareholders and also gives shareholders the opportunity to ask the Board questions.
In light of the fact that we are holding a closed meeting we are pleased to be able to provide an electronic facility for shareholders to follow the AGM
remotely and submit questions to the Board on the business of the meeting, should they wish to do so. This can be done by accessing the AGM section
of our website at www.taylorwimpey.co.uk/2021AGM and following the link to the audiocast on the day of the AGM.
You will then be prompted to enter your unique 11 digit ‘Investor Code’ (IVC), including any leading zeros, and ‘PIN’. Your PIN is the last 4 digits of your
IVC. This will authenticate you as a shareholder. More information on how to join the AGM can be found on page 182.
Shareholders are also welcome to submit questions in advance of the meeting by email to CoSec@taylorwimpey.com. Please provide any advance
questions by 10:00am on Tuesday 20 April 2021. A full transcript of the questions asked at the AGM and the answers provided will be made available
on the Company’s website as soon as practicable following the conclusion of the AGM.
How to vote
The Company’s Articles of Association do not currently permit the Company to hold a hybrid meeting therefore shareholders will be unable to vote in real
time at the AGM. As shareholders will not be permitted to attend the AGM this year, to ensure your vote is counted, you are encouraged to appoint the
Chairman of the AGM as your proxy as early as possible by registering your vote online at: www.signalshares.com or returning your proxy form to our
Registrar. In order for your vote to count, our Registrar must receive your vote by 10:00am on Tuesday 20 April 2021. Further information on how you
can submit your proxy can be found on page 180 in this Notice.
If you are a CREST member, register your vote through the CREST system by completing and transmitting a CREST proxy instruction as described in
the procedural notes on pages 180 to 181.
Voting on all resolutions will be by way of a poll. All valid proxy votes will be included in the poll to be taken at the AGM. The results of the vote will be
announced on the Company’s website and by a Regulatory Information Service as soon as practicable after the AGM.
Articles of Association
Whilst we hope that by the time of the 2022 AGM, large gatherings will once again be safe and permitted, the Board are seeking shareholder approval
to adopt new, amended Articles of Association (the New Articles). Amongst other things, the amendments will facilitate the holding of ‘hybrid’ meetings which
shareholders may attend and participate in via electronic means or in person. The amendments to allow such meetings are in line with best practice and
are consistent with recent changes that have been proposed by other listed companies. Other changes are detailed in the explanatory note to resolution
22 and include provisions relating to untraced shareholders. The New Articles are available for inspection as set out on page 181 of this Notice.
Recommendation
Your Directors are of the opinion that the resolutions are in the best interests of the Company and its shareholders as a whole and recommend you to
vote in favour of them. Each Director will be doing so in respect of all of their own beneficial shareholding.
Yours faithfully
Notice of Annual General Meeting
Notice is hereby given of the eighty sixth Annual General Meeting (the
AGM) of the Company to be held on 22 April 2021 at 10:00am at Gate
House, Turnpike Road, High Wycombe, Buckinghamshire, HP12 3NR
for the purposes set out below. Please note, no physical attendance
is permitted.
Ordinary business
Ordinary resolutions:
1. To receive the Directors’ Report, Strategic Report, Directors’
Remuneration Report, Independent Auditor’s Report and Financial
Statements for the year ended 31 December 2020.
2. To declare due and payable on 14 May 2021 a final dividend of
4.14 pence per ordinary share of the Company for the year ended
31 December 2020 to shareholders on the register at close of
business on 6 April 2021.
3. To re-elect as a Director, Irene Dorner.
4. To re-elect as a Director, Pete Redfern.
5. To re-elect as a Director, Chris Carney.
6. To re-elect as a Director, Jennie Daly.
7. To re-elect as a Director, Gwyn Burr.
8. To re-elect as a Director, Angela Knight CBE.
9. To re-elect as a Director, Robert Noel.
10. To re-elect as a Director, Humphrey Singer.
11. To elect as a Director, Lord Jitesh Gadhia.
12. To elect as a Director, Scilla Grimble.
13. To appoint PricewaterhouseCoopers LLP (PwC) as Auditor of the
Company, to hold office until the conclusion of the next general
meeting at which accounts are laid before the Company.
14. Subject to the passing of resolution 13, to authorise the Audit
Committee to determine the remuneration of the Auditor on behalf of
the Board.
15. That the Board be generally and unconditionally authorised to allot
shares in the Company and to grant rights to subscribe for or convert
any security into shares in the Company:
a.
up to a nominal amount of £12,152,284 (such amount to be
reduced by any allotments or grants made under paragraph b
below, in excess of £12,152,284); and
b. comprising equity securities (as defined in the Companies Act
2006) up to a nominal amount of £24,304,568 (such amount to be
reduced by any allotments or grants made under paragraph a
above) in connection with an offer by way of a rights issue:
i.
to ordinary shareholders in proportion (as nearly as may be
practicable) to their existing holdings; and
to holders of other equity securities as required by the rights
of those securities or as the Board otherwise considers
necessary,
and so the Board may impose any limits or restrictions and make
any arrangements which it considers necessary or appropriate to
deal with treasury shares, fractional entitlements, record dates,
legal, regulatory or practical problems in, or under the laws of, any
territory or any other matter, such authorities to apply until the end
of the next Annual General Meeting of the Company (or, if earlier,
until the close of business on 21 July 2022) but, in each case,
so that the Company may make offers and enter into agreements
during this period which would, or might, require shares to be
allotted or rights to subscribe for or convert securities into shares
to be granted after the authority ends; and the Board may allot
shares or grant rights to subscribe for or convert securities into
shares under any such offer or agreement as if the authority had
not ended.
Special resolutions:
16. That if resolution 15 is passed, the Board be given power to allot equity
securities (as defined in the Companies Act 2006) for cash under the
authority given by that resolution and / or to sell ordinary shares held
by the Company as treasury shares for cash as if Section 561 of the
Companies Act 2006 did not apply to any such allotment or sale, such
power to be limited:
a.
to the allotment of equity securities and sale of treasury shares in
connection with an offer of, or invitation to apply for, equity
securities (but in the case of the authority granted under paragraph
b of resolution 15, by way of a rights issue only):
i.
to ordinary shareholders in proportion (as nearly as practicable)
to their existing holdings; and
to holders of other equity securities, as required by the rights
of those securities, or as the Board otherwise considers
necessary,
ii.
and so that the Board may impose any limits or restrictions and
make any arrangements which it considers necessary or
appropriate to deal with treasury shares, fractional entitlements,
record dates, legal, regulatory or practical problems in, or under
the laws of, any territory or any other matters; and
b. in the case of the authority granted under paragraph a of resolution
15 and / or in the case of any sale of treasury shares, to the
allotment of equity securities or sale of treasury shares (otherwise
than under paragraph a above) up to a nominal amount of
£1,822,842.
Such power to apply until the end of the next Annual General
Meeting of the Company (or, if earlier, until the close of business on
21 July 2022) but, in each case, during this period the Company
may make offers, and enter into agreements, which would, or
might, require equity securities to be allotted (and treasury shares
to be sold) after the power ends and the Board may allot equity
securities (and sell treasury shares) under any such offer or
agreement as if the power had not ended.
Alice Marsden
Group General Counsel and Company Secretary
ii.
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, solicitor, bank manager, accountant, or other
independent financial adviser authorised under the Financial Services and Markets Act 2000.
If you have sold or otherwise transferred all of your shares in Taylor Wimpey plc, please pass this document together with the
accompanying documents to the purchaser or transferee, or to the person who arranged the sale or transfer so they can pass these
documents to the person who now holds the shares. If you have sold or transferred part only of your holding of shares in the Company,
please consult the person who arranged the sale or transfer.
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17. That if resolution 15 is passed, the Board be given the power in
addition to any power granted under resolution 16 to allot equity
securities (as defined in the Companies Act 2006) for cash under the
authority granted under paragraph a of resolution 15 and / or to sell
ordinary shares held by the Company as treasury shares for cash as
if Section 561 of the Companies Act 2006 did not apply to any such
allotment or sale, such power to be:
a.
limited to the allotment of equity securities or sale of treasury
shares up to a nominal amount of £1,822,842; and
b. used only for the purposes of financing a transaction which the
Board determines to be an acquisition or other capital investment
of a kind contemplated by the Statement of Principles on
Disapplying Pre-Emption Rights most recently published by
the Pre-Emption Group prior to the date of this Notice or for the
purposes of refinancing such a transaction within six months of its
taking place.
Such power to apply until the end of the next Annual General Meeting
of the Company (or, if earlier, until the close of business on 21 July
2022) but, in each case, during this period the Company may make
offers, and enter into agreements, which would, or might, require
equity securities to be allotted (and treasury shares to be sold) after
the power ends and the Board may allot equity securities (and sell
treasury shares) under any such offer or agreement as if the power
had not ended.
18. That the Company be authorised for the purposes of Section 701
of the Companies Act 2006 to make market purchases (within the
meaning of Section 693(4) of the Companies Act 2006) of the ordinary
shares of 1 pence each of the Company (ordinary shares), provided
that:
a.
the maximum number of ordinary shares hereby authorised
to be purchased shall be 364,568,532;
b. the minimum price (exclusive of expenses) which may be paid
c.
for ordinary shares is 1 pence per ordinary share;
the maximum price (exclusive of expenses) which may be paid
for an ordinary share is the highest of:
i.
an amount equal to 105% 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; and
the higher of the price of the last independent trade and the
highest independent bid on the trading venues where the
purchase is carried out;
ii.
d. the authority hereby conferred shall expire at the earlier of the
e.
conclusion of the next Annual General Meeting of the Company
and 21 October 2022 unless such authority is renewed prior
to such time; and
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:
19. That the Directors’ Remuneration report for the year ended
31 December 2020, as set out on pages 98 to 120 of the Annual
Report and Accounts for the financial year ended 31 December 2020,
be approved in accordance with Section 439 of the Companies
Act 2006.
20. That in accordance with Sections 366 and 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; and
incur political expenditure not exceeding £250,000 in aggregate,
during the period beginning with the date of passing this resolution
and the conclusion of the next Annual General Meeting of the
Company.
c.
For the purposes of this resolution the terms ‘political donations’,
‘political parties’, ‘independent election candidates’, ‘political
organisations’ and ‘political expenditure’ have the meanings given
by Sections 363 to 365 of the Companies Act 2006.
Special resolutions:
21. That a general meeting other than an Annual General Meeting of the
Company may continue to be called on not less than 14 clear days’
notice.
22. To approve and adopt the draft Articles of Association in the form
produced to the AGM and initialled by the Chairman of the meeting
for the purpose of identification as the Articles of Association of the
Company in substitution for, and to the exclusion of, all existing Articles
of Association of the Company, with effect from the conclusion of
the AGM.
By order of the Board
Alice Marsden
Group General Counsel and Company Secretary
Taylor Wimpey plc
Gate House
Turnpike Road
High Wycombe
Buckinghamshire
HP12 3NR
Registered in England and Wales No. 296805
1 March 2021
Explanatory notes to the resolutions
Ordinary business
Ordinary resolutions
Ordinary resolutions require more than half of the votes cast to be
in favour.
Resolution 1: To receive the Annual Report and Financial Statements
English company law requires the Directors to lay the Financial Statements
of the Company for the year ended 31 December 2020 and the reports
of the Directors, namely the Strategic Report, Directors’ Report, Directors’
Remuneration Report, and Auditor’s Report (the Annual Report); before
a general meeting of the Company.
Resolution 2: To declare a final dividend
The Directors recommend the payment of a final dividend of 4.14 pence
per ordinary share in respect of the year ended 31 December 2020.
If approved at the AGM, the dividend will be paid on 14 May 2021 to
shareholders who are on the Register of Members at the close of business
on 6 April 2021.
Dividend Re-Investment Plan
Subject to shareholders approving the dividend as set out in resolution 2
at the AGM scheduled for 22 April 2021, the Company will be offering a
Dividend Re-Investment Plan (DRIP). The DRIP is provided and
administered by the DRIP plan administrator, Link Market Services
Trustees Limited, which is authorised and regulated by the Financial
Conduct Authority (FCA). The DRIP offers shareholders the opportunity
to elect to invest cash dividends received on their ordinary shares, in
purchasing further ordinary shares of the Company. These shares would
be bought in the market, on competitive dealing terms.
The DRIP will operate automatically in respect of the final dividend for 2020
(unless varied beforehand by shareholders) and all future dividends,
including any special dividends, until such time as you withdraw from
the DRIP or the DRIP is suspended or terminated in accordance with
its terms and conditions.
Shareholders are again reminded to check the position with regard to any
dividend mandates that are in place, should you wish to either participate
in the DRIP or to discontinue or vary any participation, as existing
mandates will apply to all dividend payments (including special dividends)
unless or until revoked.
CREST
For shares held in uncertificated form (CREST), please note that elections
continue to apply only to one dividend and a fresh election must be made,
via CREST, for each dividend.
Full details of the terms and conditions of the DRIP and the actions
required to make or revoke an election, both in respect of ordinary
dividends (i.e. in this case, the 2020 final dividend) and any special
dividends, are available at www.signalshares.com or on request from
the Registrar, Link Group, 10th Floor, Central Square, 29 Wellington Street,
Leeds, LS1 4DL, email: shares@linkgroup.co.uk or call
+44 (0)371 664 0381. Calls are charged at the standard geographic rate
and will vary by provider. Calls outside the United Kingdom will be charged
at the applicable international rate. The Registrar is open between 9:00am
and 5:30pm, Monday to Friday excluding public holidays in England
and Wales.
Resolutions 3-12: Election of Directors
In accordance with the 2018 UK Corporate Governance Code (the Code)
which states that all directors should be subject to annual election by
shareholders, the Board has resolved that all Directors of the Company
will retire and, being eligible, offer themselves for re-election by
shareholders at the AGM. Jitesh Gadhia and Scilla Grimble will also offer
themselves for election by shareholders at the AGM.
Details of the 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 98 to 120 of the Annual
Report. Full biographical information concerning each Director can be
found on pages 64 and 65 of the Annual Report.
The following summary information is given in support of the Board’s
proposal for the re-election or election, as appropriate, of each Director
of the Company.
Irene Dorner – offers herself for re-election.
Irene was appointed as a Non Executive Director and Chairman-designate
on 1 December 2019. Irene formally assumed the position of Chairman
on 26 February 2020. Irene’s strong leadership skills, coupled with her
deep commercial experience, provides strong leadership of the Board;
the effective independent challenge of the Non Executive Directors; and
the further development of the Group’s strong cultural principles.
Pete Redfern – offers himself for re-election.
Pete has been Chief Executive since July 2007 and was previously Group
Chief Executive of George Wimpey Plc.
Chris Carney – offers himself for re-election.
Chris has been the Group Finance Director since 20 April 2018.
Jennie Daly – offers herself for re-election.
Jennie has been the Group Operations Director since 20 April 2018.
Gwyn Burr – offers herself for re-election.
Gwyn has been an Independent Non Executive Director since 1 February
2018. The Board is satisfied that she is independent in character and
judgement in applying her expertise at meetings of the Board and of the
Remuneration Committee (which she chairs) and the Nomination and
Governance Committee, and that she will be able to allocate sufficient
time to the Company to discharge her responsibilities effectively. Gwyn’s
many years of experience in marketing and customer service align to key
areas of the Group’s strategy as it continues to be customer-focused in
its operations.
Angela Knight CBE – offers herself for re-election.
Angela has been an Independent Non Executive Director since
1 November 2016. The Board is satisfied that she is independent in
character and judgement in applying her expertise at meetings of the
Board and of the Audit Committee, the Nomination and Governance
Committee and the Remuneration Committee, and that she will be able to
allocate sufficient time to the Company to discharge her responsibilities
effectively. Angela’s insight into the public sector gained through many
years’ experience as a Member of Parliament and in a variety of roles
within HM Treasury offer the Board additional perspective in the key public
sector area as it relates to housing and development activities.
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Robert Noel – offers himself for re-election.
Robert has been an Independent Non Executive Director since 1 October
2019. Rob became the Company’s Senior Independent Director on
21 April 2020. The Board is satisfied that he is independent in character
and judgement in applying his expertise at meetings of the Board and
of the Audit Committee and the Nomination and Governance Committee,
and that he will be able to allocate sufficient time to the Company to
discharge his responsibilities effectively. Rob is an experienced CEO and
has particularly deep property expertise which assists the Board in
assessing large scale land opportunities.
Humphrey Singer – offers himself for re-election.
Humphrey has been an Independent Non Executive Director since
9 December 2015. The Board is satisfied that he is independent in
character and judgement in applying his expertise at meetings of the Board
and of the Audit Committee (which he Chairs) and the Nomination and
Governance Committee, and that he will be able to allocate sufficient time
to the Company to discharge his responsibilities effectively. Humphrey’s
detailed knowledge and experience of financial reporting by major listed
companies makes him well-qualified to hold to account the external auditor
and properly assess the Group’s internal audit and control processes.
Lord Jitesh Gadhia - offers himself for election.
Jitesh was appointed to the Board as an Independent Non Executive
Director on 1 March 2021. The Board is satisfied that he is independent
in character and judgement and will be able to allocate sufficient time to
the Company to discharge his responsibilities effectively. Jitesh’s executive
and non executive experience and involvement in public affairs will bring an
additional perspective to the Board dynamic.
Scilla Grimble – offers herself for election.
Scilla was appointed to the Board as an Independent Non Executive
Director on 1 March 2021. The Board is satisfied that she is independent
in character and judgement and will be able to allocate sufficient time to
the Company to discharge her responsibilities effectively. Scilla’s significant
financial, risk, technology and property experience enhance the Board’s
skill set.
The Board confirms that each of the above Directors has recently been
subject to formal performance evaluation (with the exception of Scilla and
Jitesh who had not been appointed at the time of the Board Evaluation),
details of which are set out in the Nomination and Governance Committee
report in the Annual Report on pages 80 to 89, and that each continues to
demonstrate commitment and to be an effective member of the Board
able to devote sufficient time in line with the Code to fulfil their role
and duties.
Resolution 13: Appointment of PwC as Auditor of the Company
The Company is required to appoint auditors at each general meeting at
which accounts are laid before the shareholders. It is therefore proposed
that the Auditor is appointed from the conclusion of the 2021 AGM until
the conclusion of the next general meeting at which accounts are laid
before shareholders. Following the transparent and robust tender process
for the appointment of our external Auditor during 2020, as detailed on
pages 94 to 96, the Board recommends the appointment of PwC as the
Company’s Auditor.
Resolution 14: Authorisation of the Audit Committee to agree on behalf
of the Board the remuneration of PwC as Auditor
The Board seeks shareholders’ authority for the Audit Committee to
determine on behalf of the Board the remuneration of the external Auditor
for their services. The Board has adopted a procedure governing the
appointment of the external Auditor to carry out non-audit services, details
of which are given in the Audit Committee report. Details of non-audit
services performed by the external Auditor in 2020 are given in Note 6
on page 143 of the Annual Report.
Resolution 15: Authority to allot shares
The Directors wish to renew the existing authority to allot unissued shares
in the Company, which was granted at the Company’s last Annual General
Meeting held on 23 April 2020 which is due to expire at the conclusion
of this AGM. Accordingly, paragraph a of resolution 15 would give the
Directors the authority to allot ordinary shares or grant rights to subscribe
for or convert any securities into ordinary shares up to an aggregate
nominal amount equal to £12,152,284 (representing 1,215,228,400
ordinary shares). This amount represents approximately one-third of the
issued ordinary share capital of the Company as at 26 February 2021,
the latest practicable date prior to publication of this Notice of Meeting.
In line with guidance issued by The Investment Association (The IA),
paragraph b of resolution 15 would give the Directors authority to allot
ordinary shares or grant rights to subscribe for or convert any securities
into ordinary shares in connection with a rights issue in favour of ordinary
shareholders up to an aggregate nominal amount equal to £24,304,568
(representing 2,430,456,800 ordinary shares), as reduced by the nominal
amount of any shares issued under paragraph a of resolution 15.
This amount (before any reduction) represents approximately two-thirds of
the issued ordinary share capital of the Company as at 26 February 2021,
the latest practicable date prior to publication of this Notice of Meeting.
The Company does not hold any shares in treasury.
The authorities sought under paragraphs a and b of resolution 15 will
expire at the earlier of 21 July 2022 and the conclusion of the next Annual
General Meeting of the Company.
The Directors have no present intention to exercise either of the authorities
sought under this resolution. However, if they do exercise the authorities,
the Directors intend to follow The IA recommendations concerning their
use (including as regards the Directors standing for re-election in
certain cases).
Special Resolutions
Special resolutions require at least a 75% majority of votes cast to be cast
in favour.
Resolutions 16 and 17: Authority to dis-apply pre-emption rights
Resolutions 16 and 17 would give the Directors the power to allot ordinary
shares (or sell any ordinary shares which the Company holds in treasury)
for cash without first offering them to existing shareholders in proportion
to their existing shareholdings.
The power set out in resolution 16 would be, similar to previous years,
limited to: (a) allotments or sales in connection with pre-emptive offers and
offers to holders of other equity securities if required by the rights of those
shares, or as the Board otherwise considers necessary, or (b) otherwise up
to an aggregate nominal amount of £1,822,842 (representing 182,284,200
ordinary shares).
This aggregate nominal amount represents approximately 5% of the
issued ordinary share capital of the Company (excluding treasury shares)
as at 26 February 2021, the latest practicable date prior to publication
of this Notice.
Special business
Ordinary resolutions
Ordinary resolutions require more than half of the votes cast to be cast
in favour.
In respect of the power under resolution 16b, the Directors confirm their
intention to follow the provisions of the Pre-Emption Group’s Statement
of Principles regarding cumulative usage of authorities within a rolling three
year period where the Principles provide that usage in excess of 7.5%
of the issued ordinary share capital of the Company (excluding treasury
shares) should not take place without prior consultation with shareholders.
Resolution 17 is intended to give the Company flexibility to make non
pre-emptive issues of ordinary shares in connection with acquisitions and
other capital investments as contemplated by the Pre-emption Group’s
Statement of Principles. The power under resolution 17 is in addition to
that proposed by resolution 16 and would be limited to allotments or sales
of up to an aggregate nominal amount of £1,822,842 (representing
182,284,200 ordinary shares) in addition to the power set out in resolution
16. This aggregate nominal amount represents an additional 5% of the
issued ordinary share capital of the Company (excluding treasury shares)
as at 26 February 2021, the latest practicable date prior to publication
of this Notice.
The powers under resolutions 16 and 17 will expire at the earlier of
21 July 2022 and the conclusion of the next Annual General Meeting
of the Company.
Resolution 18: Authority to make market purchases of shares
Any purchases under this authority would be made in one or more
tranches and would be limited in aggregate to 10% of the ordinary shares
of the Company in issue at the close of business on 26 February 2021.
The minimum price (exclusive of expenses) which may be paid for an
ordinary share is 1 pence per ordinary share. The maximum price to be
paid on any exercise of the authority would not exceed the highest of (i)
105% 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; and (ii) the higher of the price of the last independent trade
and the highest current independent bid on the trading venues where the
purchase is carried out. Shares purchased pursuant to these authorities
could 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% of the Company’s issued
share capital. Accordingly, any shares bought back over the 10% limit will
be cancelled. The Company currently holds no shares in treasury.
This is a standard resolution, sought by the majority of public listed
companies at Annual General Meetings.
The Board’s current intention of utilising this authority is generally limited to
acquiring shares for the various share scheme arrangements. Although the
Board will continue to keep the matter under review, the Board would only
consider a more formal share purchase programme if it would result in an
increase in earnings per share and was in the best interests of
shareholders generally, having regard to all relevant circumstances.
The total number of options and conditional share awards to subscribe for
ordinary shares outstanding as at the close of business on 26 February
2021 was 42,510,244, representing approximately 1.2% of the issued
ordinary share capital of the Company as at that date and approximately
1.3% 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 21 October 2022 and the
conclusion of the Company’s next Annual General Meeting.
Resolution 19: Approval of the Directors’ Remuneration Report
The Remuneration Committee of the Board (the Committee) is seeking
shareholders’ approval of the Directors’ Remuneration Report in resolution
19, which will be proposed as an ordinary resolution.
The Directors are required to prepare the Directors’ Remuneration Report,
comprising an annual report detailing the remuneration of the Directors and
a statement by the Chair of the Committee. The Company is required to
seek shareholders’ approval in respect of the contents of this Report on an
annual basis (excluding the part containing the Directors’ Remuneration
Policy, which was approved by shareholders at the Company’s 2020 AGM
when it was proposed for its latest three-yearly vote). This vote on the
Directors’ Remuneration Report is an advisory one only.
Resolution 20: Authority to make political donations
In order to comply with its obligations under the Companies Act 2006 and
to avoid any inadvertent infringement of that Act, the Board wishes to
renew its existing authority for a general level of political donation and / or
expenditure. Resolution 20 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 (as set out in resolution 20) with a separate amount specified as
permitted for each. An amount not exceeding £250,000 for each head of
the authority has been proposed. In accordance with the Companies Act
2006, resolution 20 extends approval to all of the Company’s subsidiaries.
This authority will expire at the conclusion of the next Annual General
Meeting of the Company, unless renewal is sought at that meeting.
The Company and the Group do not make any donations to political
parties or organisations and do not intend to going forward, but do support
certain industry-wide bodies such as the Home Builders Federation in the
UK. Whilst the Board does not regard this as political in nature, in certain
circumstances such support together with donations made for charitable
or similar purposes could possibly be treated as a donation to a political
organisation under the relevant provisions of the Companies Act 2006.
For example, a donation to a humanitarian charity which may also operate
as a political lobby, sponsorship, subscriptions, paid leave to employees
fulfilling public duties and payments to industry representative bodies could
constitute a donation to a political organisation within the current definitions
in the Companies Act 2006.
Details of the Company’s and the Group’s charitable donations appear on
page 36 of the Annual Report.
Special resolution
Special resolutions require at least a 75% majority of votes cast to be cast
in favour.
Resolution 21: Notice of general meetings
The Companies (Shareholders’ Rights) Regulations 2009 have increased
the notice period required for general meetings of the Company to 21 clear
days unless shareholders agree to a shorter notice period, which cannot
be less than 14 clear days. At the last AGM, a resolution was passed
approving the Company’s ability to call general meetings (other than
Annual General Meetings, which will continue to be held on at least 21
clear days’ notice) on not less than 14 clear days’ notice. As this approval
will expire at the conclusion of this AGM, resolution 21 proposes its
renewal. The shorter notice period of 14 clear days would not be used as a
matter of routine for any general meeting, but only where the flexibility is
merited by the business of a particular meeting and is thought to be to the
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Notes to the notice of Annual General Meeting continued
advantage of shareholders as a whole. The renewed approval will be
effective until the Company’s next Annual General Meeting, when it is
intended that a similar resolution will be proposed.
Note that in order to be able to call a general meeting on less than 21
clear days’ notice, the Company must in respect of that meeting make
available electronic voting to all shareholders.
Resolution 22: Amendment to the Company’s Articles of Association
Resolution 22 seeks to adopt the New Articles which reflect changes in
both market practice and legal and regulatory requirements. In particular,
the proposed amendments will facilitate hybrid meetings by enabling
shareholders to participate via electronic means or in person. The
intended purpose and effect of the major amendments are set out below.
Untraced shareholders
The New Articles amend the position in relation to untraced shareholders.
Rather than requiring the Company to take out two newspaper
advertisements, the New Articles require the Company to use reasonable
efforts to trace the shareholder in question and to inform the shareholder
by way of a notice to their last known address.
These changes reflect best practice and provide the Company with
appropriate flexibility in connection with locating untraced shareholders.
Operation of general meetings
The New Articles contain specific provisions to clarify that the Company
can hold hybrid general meetings (including annual general meetings) and
to set out how such meetings are to be conducted. Under the New
Articles, the Company may hold hybrid general meetings in such a way
that enables members to attend and participate in the business of the
meeting by attending a physical location or by attending by means of
an electronic facility. Voting at hybrid meetings will, by default, be decided
on a poll. Hybrid meetings may be adjourned in the event of a
technological failure.
The New Articles allow the Company, where appropriate, to make
changes to the arrangements for general meetings (including the
introduction, change or cancellation of electronic facilities) after notice of
the meeting has been issued. The New Articles also explicitly allow the
Company to introduce health and safety arrangements at its meetings.
These changes were introduced to provide the Board greater flexibility to
align with technological advances, changes in investor sentiment and
evolving best practice, particularly in light of the COVID-19 pandemic and
the uncertain duration of social distancing measures and restrictions on
gatherings. The Board believes that hybrid meetings will allow for greater
shareholder and stakeholder engagement over the coming years in a way
that is more convenient for all parties. Absent exceptional circumstances,
members of the Board intend to continue the practice of attending
general meetings of the Company in person.
The New Articles also specifically refer to the possibility of satellite /
multi-venue meetings, such as the use of overflow rooms. Satellite
meetings are legally valid even without such a provision but it has been
added for clarity.
These changes are primarily contained in articles 49, 50, 53, 56, 57, 59
and 60 in the New Articles.
Gender neutrality
As part of the Company’s continued support of gender diversity, all
references to gender have been made neutral throughout the New Articles.
General
Other changes which are of a minor, technical or clarifying nature or
which have been made to remove provisions in the Current Articles which
duplicate English company law are not noted.
Procedural notes
1. To be entitled to attend and vote at the AGM (and for the purpose of
the determination by the Company of the votes which shareholders
may cast), shareholders must be registered on the Register of
Members of the Company by 6:00pm on 20 April 2021 (or, in the
event of any adjournment, on the date which is two days before the
time of the adjourned meeting).
2. As at 26 February 2021 (being the latest practicable date prior to
the publication of this notice) the Company’s issued share capital
consisted of 3,645,685,322 ordinary shares, carrying one vote each.
Therefore, the total voting rights in the Company as at 26 February
2021 were 3,645,685,322.
3. A shareholder entitled to attend and vote at the AGM may appoint a
proxy or proxies to exercise all or any of their rights at the AGM. A
proxy need not be a shareholder of the Company. In the case of joint
holders, where more than one of the joint holders purports to appoint
a proxy, only the appointment submitted by the most senior holder will
be accepted. Seniority is determined by the order in which the names
of the joint holders appear in the Company’s Register of Members in
respect of the joint holdings (the first-named being the most senior).
As shareholders will not be permitted to attend the AGM this year,
to ensure their votes are counted shareholders are strongly
encouraged to appoint the Chairman of the AGM as their proxy.
4. To be valid, any proxy appointment must be received by Link Group
at PXS 1, 10th Floor, Central Square, 29 Wellington Street, Leeds
LS1 4DL, or, if you want to use an envelope the address to use is
FREEPOST PXS, 10th Floor, Central Square, 29 Wellington Street,
Leeds, LS1 4DL or, electronically via the internet at www.signalshares.
com or, if you are a member of CREST, via the service provided by
Euroclear UK and Ireland Limited at the electronic address provided
in note 9, in each case no later than 10:00am on 20 April 2021.
Please note that all proxy appointments received after this time will be
void. A proxy appointment sent electronically at any time that is found
to contain any virus will not be accepted.
5. If you require a paper proxy form, or if you require additional forms,
please contact Link Group, by email at enquiries@linkgroup.co.uk,
or by telephone on +44 (0)371 664 0300 (calls are charged at the
standard geographic rate and will vary by provider. Calls outside the
United Kingdom will be charged at the applicable international rate.
Lines are open between 9:00am to 5:30pm, Monday to Friday
excluding public holidays in England and Wales).
6. Any person to whom this notice is sent who is a person nominated
under Section 146 of the Companies Act 2006 to enjoy information
rights (a ‘Nominated Person’) may, under an agreement between them
and the shareholder by whom they were nominated, have a right to
be appointed (or to have someone else appointed) as a proxy for the
AGM. If a Nominated Person has no such proxy appointment right
or does not wish to exercise it, they may, under any such agreement,
have a right to give instructions to the shareholder as to the exercise
of voting rights. Such persons should direct any communications and
enquiries to the registered holder of the shares by whom they were
nominated and not to the Company or its Registrar.
7. The statement of the rights of shareholders in relation to the
appointment of proxies in notes 3 and 4 above does not apply to
Nominated Persons. The rights described in these notes can only
be exercised by shareholders of the Company.
8. CREST members who wish to appoint a proxy or proxies through
the CREST electronic proxy appointment service may do so by using
the procedures described in the CREST Manual. CREST personal
members or other CREST sponsored members, and those CREST
members who have appointed a service provider(s), should refer to
(calls are charged at the standard geographic rate and will vary by
provider. Calls outside the United Kingdom will be charged at the
applicable international rate. Lines are open between 9:00am to
5:30pm, Monday to Friday excluding public holidays in England
and Wales).
15. A copy of this Notice, and other information required by Section 311A
of the Companies Act 2006, can be found at www.taylorwimpey.
co.uk/corporate.
16. Voting on all resolutions at this year’s AGM will be conducted by way
of a poll. The results of the poll will be announced via a Regulatory
Information Service and made available at www.taylorwimpey.co.uk/
corporate as soon as practicable after the AGM.
17. A copy of the Company’s current Articles of Association and the New
Articles (along with a marked up copy to show the proposed changes)
will be available for inspection during normal business hours (excluding
Saturdays, Sundays and bank holidays) at the Company’s registered
office: Gate House, Turnpike Road, High Wycombe, Buckinghamshire,
HP12 3NR and on the Company website at www.taylorwimpey.co.
uk/2021AGM from the date of this Notice until the close of the AGM.
The New Articles will also be available for inspection at the AGM at
least 15 minutes prior to the start of the meeting and up until the close
of the meeting.
18. The documents listed below are available for inspection at an agreed
time at the Company’s registered office. If you wish to inspect these
documents email CoSec@taylorwimpey.com during normal business
hours on any weekday (excluding public holidays). Copies of these
documents will also be available on the audiocasting facility before and
during the AGM.
– Copies of the Executive Directors’ service contracts.
– Copies of the letters of appointment of the Chairman of the Board
and the Independent Non Executive Directors.
– A copy of the full Annual Report and Financial Statements of the
Company for the year ended 31 December 2020, including the
Directors’ Remuneration Report referred to in resolution 19. This
document is also available on our website at www.taylorwimpey.
co.uk/corporate
19. Personal data provided by shareholders at or in relation to the AGM
(including names, contact details, votes and Shareholder Reference
Numbers), will be processed in line with the Company’s privacy policy
which is available at www.taylorwimpey.co.uk/privacy-policy.
their CREST sponsor or voting service provider(s), who will be able
to take the appropriate action on their behalf.
9. In order for a proxy appointment or instruction made using the CREST
service to be valid, it must be properly authenticated in accordance
with Euroclear UK and Ireland Limited’s specifications, and must
contain the information required for such instruction, as described in
the CREST Manual (available via www.euroclear.com/CREST). The
message, regardless of whether it constitutes the appointment of a
proxy or is an amendment to the instruction given to a previously
appointed proxy must, in order to be valid, be transmitted so as to be
received by the issuer’s agent (ID RA10) by 10:00am on 20 April 2021.
For this purpose, the time of receipt will be taken to be the time
(as determined by the time stamp applied to the message by the
CREST Application Host) from which the issuer’s agent is able to
retrieve the message by enquiry to CREST in the manner prescribed
by CREST. After this time any change of instructions to proxies
appointed through CREST should be communicated to the appointee
through other means.
10. The Company may treat as invalid a CREST Proxy instruction in the
circumstances set out in Regulation 35(5)(a) of the Uncertificated
Securities Regulations 2001.
11. Any corporation which is a member can appoint one or more
corporate representatives who may exercise on its behalf all of its
powers as a member provided that they do not do so in relation to
the same shares.
12. Under Section 527 of the Companies Act 2006 members meeting the
threshold requirements set out in that section have the right to require
the Company to publish on a website a statement setting out any
matter relating to:
–
The audit of the Company’s accounts (including the Auditor’s
Report and the conduct of the audit) that are to be laid before
the AGM; or
– Any circumstance connected with an auditor of the Company
ceasing to hold office since the previous meeting at which annual
accounts and reports were laid in accordance with Section 437
of the Companies Act 2006.
The Company may not require the shareholders requesting any such
website publication to pay its expenses in complying with Sections
527 or 528 of the Companies Act 2006. Where the Company is
required to place a statement on a website under Section 527 of the
Companies Act 2006, it must forward the statement to the Company’s
Auditor not later than the time when it makes the statement available
on the website. The business which may be dealt with at the AGM
includes any statement that the Company has been required under
Section 527 of the Companies Act 2006 to publish on a website.
13. Under section 319A of the Companies Act 2006, shareholders have
the right to ask questions at the AGM relating to the business of the
AGM. The Company must cause to be answered any such question
relating to the business being dealt with at the AGM but no such
answer need be given if: (i) to do so would interfere unduly with the
preparation for the meeting or involve the disclosure of confidential
information; (ii) the answer has already been given on a website in the
form of an answer to a question; or (iii) it is undesirable in the interests
of the Company or the good order of the AGM that the question be
answered. For further information on how shareholders can ask
questions at the AGM see page 182.
14. Shareholders have the right to request information to enable them to
determine that their vote on a poll was validly recorded and counted.
If you require confirmation please contact Link Group, by email at
enquiries@linkgroup.co.uk, or by telephone on +44 (0)371 664 0300
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181
Shareholder information
Notes to the notice of Annual General Meeting continued
Shareholder facilities
How to join the meeting
In light of the fact that we are holding a closed meeting we are pleased
to be able to provide an electronic facility for shareholders to follow the
AGM remotely and submit questions to the Board on the business of
the meeting, should they wish to do so. This can be done by accessing
the AGM section of our website at www.taylorwimpey.co.uk/2021AGM
and following the link to the audiocast on the day of the AGM.
Audiocast
The electronic meeting will be broadcast in audio format with
presentation slides. Once logged in, and at the commencement of
the meeting, you will be able to listen to the proceedings of the meeting
on your device, as well as being able to see the slides of the meeting
(which will include the resolutions to be put forward to the meeting),
these slides will progress automatically as the meeting progresses.
Once you have followed the link, you will then be prompted to enter
your unique 11 digit ‘Investor Code’ (IVC), including any leading zeros,
and ‘PIN’. Your PIN is the last 4 digits of your IVC. This will authenticate
you as a shareholder.
Your IVC can be found on your share certificate, or Signal Shares users
(www.signalshares.com) will find this under ‘Manage your account’
when logged in to the Signal Shares portal. You can also obtain this
by contacting Link Group, our Registrar, by calling +44 (0)371 277 1020.
Lines are open from 9:00am to 5:30pm Monday to Friday, calls
are charged at the standard geographic rate and will vary by provider.
Calls outside the UK will be charged at the applicable international rate.
Access to the AGM will be available 30 minutes before the start of
the AGM, although you will not be able to submit questions until the
meeting is declared open.
If you wish to appoint a proxy and for them to attend the AGM via the
electronic facility on your behalf, please submit your proxy appointment
in the usual way, before contacting Link Group no later than 5:30pm
on 20 April 2021 on +44 (0)371 277 1020 in order to obtain their IVC
and PIN.
If your shares are held within a nominee and you wish to attend the AGM
via the electronic facility, you will need to contact your nominee as soon
as possible. Your nominee will need to have completed a corporate
letter of representation and presented this to Link Group, our Registrar,
no later than 72 hours before the start of the meeting in order that they
can obtain your unique IVC and PIN to enable you to attend the
electronic meeting.
Questions
Questions will be invited during the meeting when formally announced
by the Chairman. Shareholders attending electronically may ask
questions via the website by submitting their question in writing via the
Q&A box which is found underneath the speaker details on the left hand
side of the player. Once you have typed your question please click the
‘Submit’ button.
Shareholders are also welcome to submit questions in advance of
the meeting by email to CoSec@taylorwimpey.com. Please provide
any advance questions by 10:00am on Tuesday 20 April 2021.
A full transcript of the questions asked at the AGM and the answers
provided will be made available on the Company’s website as soon
as practicable following the conclusion of the AGM.
Requirements
An active internet connection is required at all times in order to allow
you to join the meeting and submit questions and listen to the
audiocast. It is the user’s responsibility to ensure you remain connected
for the duration of the meeting.
Shareholders’ services
Web communications
The Company makes documents and information available to shareholders
by electronic means and via a website, rather than by sending hard copies.
This way of communicating is enabled in accordance with the Companies
Act 2006, Rule 6 of the Disclosure and Transparency Rules and the
Company’s Articles of Association.
Making documents and information available electronically:
a. Enables the Company to reduce printing and postage cost.
b. Allows faster access to information and enables shareholders
to access documents on the day they are published on the
Company’s website.
c. Reduces the amount of resources consumed, such as paper,
and lessens the impact of printing and mailing activities on the
environment.
The Company provides hard copy documentation to those shareholders
who have requested this and is, of course, happy to provide hard copies
to any shareholders upon request.
The Company’s website is www.taylorwimpey.co.uk and shareholder
documentation made available electronically is generally accessible at
www.taylorwimpey.co.uk/corporate.
Electronic communications
The Company also encourages shareholders to elect to receive notification
of the availability of Company documentation by means of an email.
Shareholders can sign up for this facility by logging onto our website
at www.taylorwimpey.co.uk/corporate/investors/shareholder-centre.
Online facilities for shareholders
You can access our Annual and Interim Reports and copies of recent
shareholder communications online at www.taylorwimpey.co.uk/corporate.
You can manage your shareholding in Taylor Wimpey via Link Group’s
shareholder portal, which can be accessed online at www.signalshares.com.
Dividend Re-Investment Plan
You can choose to invest your cash dividends, including any special
dividends, in purchasing Taylor Wimpey shares on the market under the
terms of the Dividend Re-Investment Plan (DRIP). For further information
on the DRIP and how to join, contact Link Group.
Shareholders are again reminded to check the position with regard to any
dividend mandates that are in place, should you wish to either participate
in the DRIP or discontinue or vary any participation, as existing mandates
will apply to all dividend payments (including special dividends) unless or
until revoked.
CREST
The Company offers shareholders who hold their Taylor Wimpey shares
in CREST a facility for the receipt of dividends through the CREST system.
For shares held in uncertificated form (CREST), please note that elections
continue to apply only to one dividend and a fresh election must be made,
via CREST, for each dividend.
Full details of the terms and conditions of the DRIP and the actions
required to make or revoke an election, both in respect of ordinary
dividends (i.e. in this case, the 2020 final dividend) and any special
dividends, are available at www.signalshares.com or on request from the
Registrar, Link Group, 10th Floor, Central Square, 29 Wellington Street,
Leeds, LS1 4DL, email: shares@linkgroup.co.uk, tel: +44 (0)371 664 0381.
Calls are charged at the standard geographic rate and will vary by provider.
Calls outside the United Kingdom will be charged at the applicable
international rate. Lines are open between 9:00am and 5:30pm Monday to
Friday excluding public holidays in England and Wales.
Dividend mandates
We strongly encourage all shareholders to receive their cash dividends
by direct transfer to a bank or building society account. This ensures that
dividends are credited promptly to shareholders without the cost and
inconvenience of having to pay in dividend cheques at a bank. If you
wish to use this cost-effective and simple facility please register for the
shareholder portal at www.signalshares.com and register your bank
mandate online or complete and return the dividend mandate form
attached to your dividend cheque. Additional mandate forms may be
obtained from Link Group.
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 Link Group who will be pleased to carry out your
instructions in this regard.
Share dealing services
We have arranged both telephone and online share dealing services. Link
Share Dealing Services allows you to buy and sell shares in a large number
of companies that have Link as their registrar. The services are operated
by Link Group. To use the services either visit www.linksharedeal.com or
telephone +44 (0)371 664 0445. Calls are charged at the standard
geographic rate and will vary by provider. Calls outside the United
Kingdom will be charged at the applicable international rate. Lines are
open between 8:00am and 4:30pm Monday to Friday excluding public
holidays in England and Wales. To deal, you will need to provide your
surname, postcode, date of birth and investor code (which can be found
on your share certificate or any form of proxy you have been sent).
Shareholders are not in any way obliged to use this service when dealing in
the Company’s shares.
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 available on our website at www.taylorwimpey.co.uk/
corporate.
Gifting shares to charity
If you have a small holding of Taylor Wimpey 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 in 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 Link Group or
approach ShareGift directly on www.sharegift.org or telephone them
on +44 (0)20 7930 3737.
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www.taylorwimpey.co.uk
Taylor Wimpey plc Annual Report and Accounts 2020
183
Principal operating addresses
UK
Taylor Wimpey plc
Gate House
Turnpike Road
High Wycombe
Buckinghamshire
HP12 3NR
Tel: +44 (0)1494 558323
Website: www.taylorwimpey.co.uk
Registered in England and Wales number 296805
Details of all our operating locations are available on our website
www.taylorwimpey.co.uk
Taylor Wimpey UK Limited
Gate House
Turnpike Road
High Wycombe
Buckinghamshire
HP12 3NR
Tel: +44 (0)1494 558323
Spain
Taylor Wimpey de España S.A.U
C/Aragón
223-223A
07008 Palma de Mallorca
Mallorca
Spain
Tel: +34 971 706570
Fax: +34 971 706565
Shareholder information
Shareholder facilities continued
Unsolicited approaches to shareholders and ‘Boiler Room’ scams
We receive reports from time to time from Taylor Wimpey shareholders
who have each received what appear to be fraudulent approaches from
third parties with respect to their shareholding in the Company. In some
cases these are ‘cold calls’ and in others correspondence. They generally
purport to be from a firm of solicitors or an investment company and offer,
or hold out the prospect of, large gains on Taylor Wimpey shares or other
investments you may hold.
The approaches normally include the seeking of an advance payment from
the shareholder, the disclosure of the shareholder’s bank details or the sale
of an unrelated investment. Shareholders are advised to be extremely wary
of such approaches and deal with firms authorised by the UK Financial
Conduct Authority (FCA). More information is available on our website
www.taylorwimpey.co.uk/corporate/shareholder-information/boiler-room-
scams and you can check whether an enquirer is properly authorised and
report scam approaches by contacting the FCA on www.fca.org.uk/
consumers or by calling 0800 111 6768. This is a freephone number from
the UK and lines are open Monday to Friday, 8:00am to 6:00pm and
Saturday 9:00am to 1:00pm.
Annual General Meeting
10:00am on 22 April 2021 at:
Gate House, Turnpike Road, High Wycombe, Buckinghamshire,
HP12 3NR.
Shareholders will not be permitted to attend in person, but they are
encouraged to join via the electronic facility detailed on page 182.
Proxy instructions must be received by 10:00am on 20 April 2021.
Group General Counsel and Company Secretary
Alice Marsden
Gate House
Turnpike Road
High Wycombe
Buckinghamshire
HP12 3NR
Tel: +44 (0)1494 558323
Registrar
For any enquiries concerning your shareholding or details of shareholder
services, please contact:
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Email: enquiries@linkgroup.co.uk
Tel: +44 (0)371 664 0300
Calls are charged at the standard geographic rate and will vary by provider.
Calls outside the United Kingdom will be charged at the applicable
international rate. Lines are open between 9:00am and 5:30pm,
Monday to Friday excluding public holidays in England and Wales.
Auditors
PwC (subject to shareholder approval at the 2021 AGM)
Solicitors
Slaughter and May
Stockbrokers
Citigroup Global Markets Limited
Credit Suisse International
184
Taylor Wimpey plc Annual Report and Accounts 2020
www.taylorwimpey.co.uk
More online
View our Annual Report and Accounts online:
www.taylorwimpey.co.uk/corporate
Further information about our sustainability activities and policies
can be found within our Sustainability Report on our website:
www.taylorwimpey.co.uk/corporate/sustainability
This is a certified climate neutral print product for which carbon emissions have been
calculated and offset by supporting recognised carbon offset projects. The carbon offset
projects are audited and certified according to international standards and demonstrably
reduce emissions. The climate neutral label includes a unique ID number specific to this
product which can be tracked at www.climatepartner.com, giving details of the carbon
offsetting process including information on the emissions volume and the carbon offset
project being supported.
Designed and produced by Black Sun Plc www.blacksunplc.com
Printed by Park Communications on FSC® certified paper.
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