Taylor Wimpey plc Annual Report and Accounts 2021 www.taylorwimpey.co.uk Annual Report and Accounts 2021 ## building ## momentum Contents ![img-0.jpeg](img-0.jpeg) ![img-1.jpeg](img-1.jpeg) # Strategic report 7. Highlights 2021 8. Chairman's statement 9. Chief Executive's statement 10. Our investment code 11. They believe building construction 10. Our key priorities 11. Our market and impact 10. Market trends and outcomes 12. Our business model 13. Our strategy and key our research indicators 12. Our current strategy 10. Materials assessment 12. Markettrends program and targets 14. Research & development 15. Section 17.1 (1) statement 15. System issues 15. Task Function Center-related system of knowledge 16. Sustainability Accounting Standards (ESAS) (1) (2) (3) 17. Agro Financial information statement 19. Risk management 18. Financial Data and opportunities 20. Future financial teams # Directors' report 22. Experiences of a glance 23. Financial Policies 30. Chairman's letter 30. Ingredients and Governance (Committee report) 28. Audit Committee report 100. Executive and Committee report 125. Statutory regulatory and other documents # Financial statements 126. Independent directors report 126. Consolidated income statement 127. Consolidated statement of compensation income 128. Consolidated statement of cash tax liability 139. Consolidated statement of cash tax liability 140. Consolidated cash flow statement 141. Notes to the consolidated financial statements 172. Company balance sheet 173. Company statement of changes (consolidated) 174. Notes to the Company financial statements 179. Particulars of subsistence, recoupled and per customer 178. Fair year review # Shareholder information 154. Notice of Annual General Meeting 155. Notice to the National Annual General Meeting 151. Shareholder profiles ![img-2.jpeg](img-2.jpeg) ![img-3.jpeg](img-3.jpeg) ![img-4.jpeg](img-4.jpeg) ## We have a clear purpose to ## deliver great homes and create ## thriving communities and a ## strategy to ensure the long term ## sustainability of the business, ## for all stakeholders. During ## 2021, we have continued to ## drive performance through ## a business-wide commitment ## to our key priorities: ### Operational excellence and discipline driving ### an increase in operating margin / p10 ### Progressing recent land acquisitions through ### planning to facilitate outlet growth in late 2022 ### and volume growth in 2023 / p12 ### Continue to deliver consistently great build ### quality, customer service and employee ### experience and identify where we can add ### value / p14 ### Further embedding sustainability through the ### business, targeting areas where we can make ### the most difference to future proof the ### business / p16 Our Annual Report and Accounts 2021 and online Sustainability Supplement and ESG Addendum 2021 can be viewed at www.taylorwimpey.co.uk/corporate www.taylorwimpey.co.uk/corporate www.twitter.com/taylorwimpeyplc www.linkedin.com/company/taylor-wimpey 1Taylor Wimpey plc Annual Report 2021 Strategic report Highlights 2021 # 2021 highlights Group financial highlights Group completions including joint ventures 14,302 ![img-5.jpeg](img-5.jpeg) Revenue £4,284.9m ![img-6.jpeg](img-6.jpeg) Operating profit* £828.6m ![img-7.jpeg](img-7.jpeg) Profit before tax £679.6m ![img-8.jpeg](img-8.jpeg) Total dividend per share paid in the year 8.28p ![img-9.jpeg](img-9.jpeg) Year end net cash† £837.0m ![img-10.jpeg](img-10.jpeg) Tangible net assets per share‡ 118.1p ![img-11.jpeg](img-11.jpeg) Operating profit margin 19.3% 2020: 10.8% Return on net operating assets†† 24.7% 2020: 9.9% Cash conversion§§ 69.4% 2020: (54.9)% Alternative Performance Measures The Group uses Alternative Performance Measures (APMs), such as those indicated above with a footnote symbol, 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. Please see page 71 for definitions. 2 Taylor Wimpey plc Annual Report 2021 ESG (environmental, social, governance) highlights | | | Reduction in direct | | Employee engagement | | --- | --- | --- | --- | --- | | | | CO | 2 emissions intensity | score | | UK operational highlights | | since 2013 | | | | | | 50% | | 91% | | Customer satisfaction | Customer satisfaction | | | | 2020: 30% 8-week score (%) 9-month recommend score Annual Injury Incidence Rate Affordable homes as % ## 92% 79% (per 100,000 employees of total UK completions and contractors) | 2020: 92% | 2020: 78% | | | | --- | --- | --- | --- | | | | 214 | 18% | | Construction Quality | Net private sales rate per | | | | | | 2020: 151 | 2020: 20% | | Review average score | outlet per week | | | (out of 6) Contributions to local Construction waste ## 4.67 communities, via planning recycled ## 0.91 obligations 2020: 4.45 2020: 0.76 | | | £418m | 97% | | --- | --- | --- | --- | | Number of homes | Plots in UK short term | | | | | | 2020: £287m | 2020: 97% | | inorderbook | landbank | | | ## 10,009 c.85k 2020: 10,685 2020: c.77k Read more about our approach to ESG on page 7 and pages 16 and 17 Read more about our operations on pages 6 to 17 and 66 to 69 We participate in various benchmarks Taylor Wimpey plc is a customer-focused homebuilder operating at a local and have been awarded a number of level from 23 regional businesses across the UK. We also have operations in industry accreditations Spain. Our operational review focuses on the UK as the majority of metrics are not comparable in our Spanish business. There is a short summary of the We participate in several global and sectoral Spanish business in the Group financial review of operations. The Group benchmarks. We are a constituent of the financial review is presented at Group level, which includes Spain, unless Dow Jones Sustainability Europe Index and otherwise indicated. included in the S&P Global Sustainability Yearbook 2022. We are part of FTSE4Good, have an AA rating from MSCI and have received an ESG Risk Rating of Low from Sustainalytics. We are a member of Next Generation, the sustainability benchmark for UK housebuilders, ranking third and receiving a Gold Award for 2021. We disclose our performance to CDP and received the following scores: CDP Climate Change A- (2020: B), CDP Water B (2020: B), and CDP Forests B- for deforestation and forest risk commodities (2020: B). We have also been recognised by CDP as a Supplier Engagement Leader and received a Supplier Engagement score of A for our approach to engaging suppliers on climate change. 3Taylor Wimpey plc Annual Report 2021 Strategic report Chairman’s statement ### Dividend / Share Buyback In line with our Ordinary Dividend Policy, we are pleased to announce that the 2021 final dividend of 4.44 pence per share will be paid in May, subject to shareholder approval at the 2022 Annual General Meeting (AGM). In combination with the 2021 interim dividend, this gives total ordinary dividends for the year of 8.58 pence per share. Details of our resolutions for the 2022 AGM can be found on pages 185 to 189. We are also pleased to announce that we will be returning up to £150 million of excess cash in respect of 2021 by way of a share buyback. When approving this method, the Board took into account stakeholders’ needs and all relevant circumstances. The share buyback is expected to benefit shareholders through the opportunity for increased future dividends per share on the remaining shares. The Board expects that the share buyback will result in an increase in earnings per share Irene Dorner and considers it to be in the best interests of Chairman shareholders generally. ## Creating value for all Stakeholder engagement We recognise that we can only achieve ## ofour stakeholders our purpose, to deliver great homes and create thriving communities, if we take account of the views of all of our strong focus on cost efficiency. This resulted stakeholders in our decision making. The ### Alongside an excellent in profit before tax of £679.6 million (2020: Board is responsible for ensuring that our ### operational performance in £264.4 million). More information can be business is sustainable in the long term by ### 2021, we are pleased to have found within our Group financial review. respecting and taking into account the needs and views of all our stakeholders in our ### delivered value to all of our We started 2022 in a very strong position with decision making process. an excellent order book amounting to 10,009 ### stakeholders in a real and | | homes (31 December 2020: 10,685 homes) | Our employees are what makes Taylor | | --- | --- | --- | | sustainable way while | excluding joint ventures, valued at £2,550 | Wimpey so special. Our performance in | | | million (31 December 2020: £2,684 million) | 2021, both from a financial and operational | ### continuing to build momentum. and were 47% forward sold for 2022 private perspective, is down to all of their hard work ### This Annual Report and | | completions (2021: 54%). Despite wider | and determination. Despite the majority of | | --- | --- | --- | | Accounts showcases how we | economic uncertainty, forward indicators | Board meetings taking place virtually in | | | continue to show good underlying demand | 2021, we did have the opportunity to visit the | ### have achieved this. for our homes and pricing remains positive. South Midlands business unit, where we met employees in the office and out on site. It was 2021 has proven to be a very successful year Following the equity raise in June 2020, we great to see the site operating at normal for Taylor Wimpey, but it has not been without stepped up our activity in the land market to levels in a COVID-secure way, ensuring the its challenges. As the world continued to take advantage of the opportunities before health and safety of everyone on site whilst respond and adapt to the COVID-19 competition returned and have successfully delivering for our customers. | pandemic, we remained, and continue to be, | added c.29k new plots to the short term | | | --- | --- | --- | | focused on delivering improved operating | landbank over the last 18 months, including | We have also taken the opportunity to | | margin and setting the business up well for | converting c.9k plots from our strategic land | moreclearly articulate the role of the Board’s | | accelerated volume growth, from 2023. | pipeline. These sites will enhance our portfolio | Employee Champion, who is responsible for | | | and deliver a strong financial performance. | championing the employee voice in the | | 2021 performance | We are laser focused on continuing to drive | boardroom and strengthening the link between | | I am delighted to report that in 2021 we | momentum by progressing land through the | the Board and employees. Gwyn Burr, Non | | completed 14,302 homes across the Group | planning system to deliver outlet-led growth | Executive Director, was our Employee | | (2020: 9,799) including joint ventures. This | from 2023. | Champion during 2021 and attended three | | is a 46% increase on 2020 performance, as | | National Employee Forum (NEF) meetings. As | During 2021, the Competition and Markets the business steadily increased operations. Gwyn will be stepping down from the Board in Authority’s (CMA) investigation into the Group operating profit increased to £828.6 2022, Robert Noel, our Senior Independent historical sale of leasehold properties with million (2020: £300.3 million), with an operating Director, has been asked to take on the doubling ground rent clauses by the profit margin of 19.3% (2020: 10.8%) as we Employee Champion role. In 2022, in addition Company was closed, following the optimised selling price and we maintained our to attending the NEF meetings, the Employee agreement of voluntary undertakings. Champion will also hold in person 4 Taylor Wimpey plc Annual Report 2021 | conversations with small groups of junior to | stakeholders and this is something we will be | everyone at Taylor Wimpey, I would like to | | --- | --- | --- | | mid-level employees in each Division, including | working on throughout 2022. Our ESG | express our sincere thanks for the leadership | | those from the regional offices, sites and sales | strategy will continue to be aligned to our | that he has provided to the Company which | | centres, to listen to their views on any topics | purpose, ensuring that we play our part in | has seen it return c.£2.85 billion to | | they may wish to raise, outside of the NEF and | creating a sustainable future for everyone. | shareholders since 2007. | without senior management being present, to In 2021, we participated in various benchmarks Following a rigorous process led by the further encourage openness. The Board are and were awarded a number of industry Nomination and Governance Committee, interested to hear the feedback received as accreditations, including a Gold Award in the we were delighted to announce earlier this part of these sessions. | | Next Generation benchmark (a homebuilder | year that Jennie Daly, our Group Operations | | --- | --- | --- | | I continued to meet with investors in 2021 | specific sustainability benchmark). We are | Director, will succeed Pete as Chief Executive | | to build on the dialogue established following | pleased with the levels of engagement across | following the conclusion of the 2022 AGM. | | the virtual Chairman’s roadshow I conducted | the business with good progress against our | Jennie joined the business in 2014 and has | | in Autumn 2020. To allow for an open | key targets. To ensure that we remain focused | held a number of senior roles within the | | conversation in respect of the issues most | on minimising the impact we have on climate | business before being appointed to the | | important to each shareholder, no formal | change and protecting our planet for future | Board as Group Operations Director in 2018. | | agenda was set in advance of each meeting. | generations, we have added ‘natural resources | Prior to joining Taylor Wimpey, Jennie also | | Investors were keen to hear my and the | and climate change’ as a Principal Risk and the | held senior roles at Redrow plc, so is an | | Board’s perspective on a variety of key | Board will continue to monitor progress. | experienced industry executive. Jennie | | themes, such as ESG, fire safety and | Further information on this new Principal Risk, | has consistently played a key role in the | | succession. I value the insight I gained from | and on the also newly added Principal Risk of | Company’s operational and strategic | | these meetings which I have fed back to the | ‘cyber risk’, can be found on page 65. | development, as her remit has gradually | | Board to consider as part of our decision | | grown to include all of our central operational | We take a science-based approach to making process. Once again shareholders functions and has made a valuable carbon reduction, and the Science Based were unfortunately not permitted to attend contribution to the Board. The Board is Targets initiativehas confirmed that our the 2021 AGM in person, however confident that Jennie’s wealth of knowledge operational carbon reduction target is shareholders were able to listen throughout and experience, alongside her values and consistent with the reductions required to the proceedings and ask the Directors leadership style, makes her the right person keep warming to 1.5ºC. We have made questions in real time during the meeting to lead the Company to deliver improved excellent progress towards our carbon through an audiocast facility. margin and volume growth, whilst ensuring reduction target. Against our 2019 baseline, long term value for all our stakeholders. we have achieved a 13% reduction in direct Fire safety carbon emissions intensity(scope 1 and 2 In late January, we also announced that It has long been our view that customers and emissions per 100 square metres of in light of upcoming changes to their leaseholders should not have to pay for fire completed homes)and a 20% absolute commitments on other boards, Angela safety remediation works to ensure their reduction. Our current target was published Knight CBE and Gwyn Burr will be stepping buildings are safe and mortgageable. We last year but our commitment to climate down from the Board on 26 April following took early and proactive action, committing action goes back much further. Since 2013, the conclusion of the 2022 AGM. The strong significant funding to address fire safety and we have achieved a 50% reduction inour progress Gwyn Burr has made as Employee cladding issues on our buildings, with total direct carbon emissions intensity. Champion will continue under Robert Noel amounts provided up to March 2021 of £165 as her successor in that role. A search million. Taylor Wimpey’s decision a year ago We support the UK’s commitment to reach process is underway to find their meant that funding was in place to bring all net zero carbon by 2050. We will be replacements to ensure that the Board our affected buildings, going back 20 years developing our net zero transition plan continues to hold the most appropriate from January 2021, up to current EWS1 and a net zero target during 2022. An balance of skills and operational experience. standard. The Board receives regular environmental measure has been included in updates on the progress of remediation the Executive Directors’ annual bonus plan 2022 AGM works and the topic of fire safety and (the Executive Incentive Scheme) and This year’s AGM will take place in person cladding is included on every Board meeting requires the Executive Directors to have a at the Crowne Plaza Hotel in Marlow, as it agenda for discussion. We consider that fire credible net zero carbon transition plan is closer to our Head Office and I am very safety is an industry wide issue that needs an approved by the Board alongside the much looking forward to the opportunity to industry wide solution and we will continue to achievement of a measurable carbon meet many of our shareholders in person. work with the Government to play our part to reduction target. The intention is to then help to resolve these wider issues. introduce an environmental measure in the Looking forward wider annual bonus scheme for 2023 2022 will be a period of transition at Taylor ESG performance. Further details on the role of Wimpey, whilst the new Chief Executive the Board in ESG matters can be found on The elements of ESG have always been takes the lead and drives our business to its page 79 and specific ESG performance an important part of working for Taylor full potential. I am confident that Jennie is the measures can be found on page 107. Wimpey and have positively contributed to right person to achieve this, and she has the our culture and ways of doing business, for full support of the Board and the Group Chief Executive succession example in respect of health and safety, our Management Team. | number one priority, and our approach to | We announced in December that Pete Redfern | | | --- | --- | --- | | employee engagement. | will be stepping down as Chief Executive after | I want to finish by saying thank you to our | | | nearly 15 years in the role. Pete has made an | employees, customers, shareholders, | During the year we have conducted an invaluable contribution to the business in this subcontractors and suppliers for their independent review to assess the progress time, including having successfully led the continued support. I am incredibly proud of we have made in defining what ESG means Company through the financial crisis and the all that Taylor Wimpey has achieved in 2021 for us and identified areas that would benefit pandemic. During his time as Chief Executive, and look forward to building on this success from further attention. The Board was he has created an excellent culture which is in 2022 and beyond. pleased to receive positive feedback in terms renowned throughout the industry for doing of the extent to which important elements of the right thing. Given the strength of the ESG are built into our day to day business business, both Pete and I believe that it is the operations and it is helpful to understand right time for new leadership as we start the how we can improve our communications in Irene Dorner next chapter. On behalf of the Board and this area to ensure this is visible to all of our Chairman 5Taylor Wimpey plc Annual Report 2021 Strategic report Chief Executive’s statement ## Optimising ## performance ## to benefit all ## stakeholders ### I want to begin my last Chief ### Executive statement at Taylor ### Wimpey by, firstly, thanking all ### the individuals and the teams ### across the business for their Pete Redfern Chief Executive ### daily hard work, dedication ### and – on a personal note – ### their support. | I’m pleased to report that we have | stakeholder relationships (and you can read | saddened by the tragic events in Ukraine | | --- | --- | --- | | delivered an excellent performance in 2021, | more about this on pages 38 to 47). I am | and, together with our employees, we will be | | significantly increasing profit, margins and | particularly proud to share that, not only do | pledging our support to the humanitarian | | home completions in a challenging year for | we continue to be a 5-star homebuilder as | effort. You can read more about our people | | the industry with pressure on the availability | rated by customers in the Home Builders | on pages 40 to 41. While voluntary turnover | | and cost of certain materials. It has also | Federation (HBF) customer survey, but we | increased in the year, alongside Annual Injury | | not been a ‘normal’ year for our people, | are also, once again, the highest rated major | Incidence Rate, it is worth noting that the | | customers, subcontractors or suppliers, | housebuilder in the National House Building | 2020 comparators were impacted by | | amidst changing COVID-19 restrictions. | Council’s (NHBC) independently measured | COVID-19. You can read more about our key | | However by working together, our | 2021 Construction Quality Review (CQR). | operational performance metrics on pages | | construction sites have continued to operate | This is an outstanding effort and truly reflects | 24 to 27. | | safely and efficiently and we have continued | the efforts and the pride and passion of our | | I have been in this role for nearly 15 years to serve our customers. We have continued people across the business. and over 20 years with the business and it to prioritise the safety and wellbeing of As Irene set out in her Chairman’s letter, our has been an incredible journey. I am very everyone working for, and with us, and that employees are what make Taylor Wimpey proud of what we have achieved at Taylor of our customers, and have increased special. We are deeply shocked and Wimpey and the culture we have built and I engagement and collaboration. This has will miss it greatly. Whilst there is always continued to strengthen these key much more we can do and need to do, the ### Our investment case 1. Strong momentum following 2. Clear levers to improve Our approach to land differentiates Taylor significant recent land investment operating margin Wimpey and has enabled us to build an to drive outlet growth and excellent landbank which will underpin strong volumes volume and margin growth potential and returns to shareholders. We are focused on ## execution and delivering value from our c.50 21-22% outstanding landbank and via our talented additional outlets to be added in the period operating profit margin target teams, in a responsible way to benefit all H1 2021 to H1 2023 stakeholders. Read more in relation to our key strengths 3. Highly cash generative with a 4. Delivering for all stakeholders and resources on page 22 commitment to return excess cash ## c.£150 million 5-star 2022 buyback HBF customer satisfaction rating 6 Taylor Wimpey plc Annual Report 2021 business is in excellent health with a very 18,000 in the medium term whilst generating ### Our approach to ESG strong balance sheet, and an outstanding compelling returns. short term landbank and strategic land In the following pages 10 to 17, the GMT pipeline, with real forward momentum. In discuss our key priorities as we continue to Our purpose is to build great homes and particular, our approach, with your support build momentum. These underpin our create thriving communities. We will do so as shareholders, to landbuying during the confidence in future delivery. sustainably, making sure those communities pandemic, at a time when there was are themselves sustainable for the future. | significantly reduced competition, has set us | We support the UK’s commitment to reach | | | --- | --- | --- | | up extremely well for the future. It enabled us | net zero carbon by 2050. In 2022, we will | Environmental, social and governance (ESG) | | to accelerate our landbuying, at attractive | develop our net zero transition plan and net | has always been an important part of | | margins, creating a balanced portfolio which | zero target. We are reviewing the net zero | working for Taylor Wimpey. | | will benefit the business for several years. | criteria published by the SBTi and will use | | | Importantly, this has created strong | this to guide our approach. We expect to | Social and Governance | | momentum, opportunity and growth and a | publish our target in 2023. For the | Our teams see the social and governance | | route to increased, and very compelling, | housebuilding sector, the majority of | aspects of ESG as ‘business as usual’, | | shareholder returns. With such exciting | emissions are associated with the production | including our contributions to, and involvement | | prospects for the future, it is undoubtedly the | and manufacture of materials and the energy | in, local communities and our strong culture. | | right time to hand over the business to | used by customers once they have moved | This is also evident in our key performance | | someone new as the Company embarks on | into new homes (scope 3). This means | indicators (see pages 24 to 27) and our | | the next chapter. | achieving net zero emissions will require | stakeholder interactions (see pages 34 to 35). | | | system-level changes and coordinated | As we embed our ambitious environmental | On 7 February, the Board announced action by multiple parties, from suppliers to strategy we will further increase our focus on that Jennie Daly has been appointed as governments, and at all points along the this important area. More information can be CEO, effective from the conclusion of the value chain. We are committed to working found on pages 14 to 15. AGM on 26 April 2022. This follows a with our peers, suppliers and others to help thorough recruitment and selection process We are committed to transparent disclosure tackle this challenge. Our plan will include led by the Nomination and Governance of our ESG performance and are aligning our details of specific measures and key Committee of the Board, that considered a reporting with the recommendations of the milestones designed to provide future long list of industry and non-industry Taskforce on Climate-related Financial measurable targets against which the candidates, along with extensive consultation Disclosures (TCFD) and the Sustainability delivery of the plan can be assessed. We with shareholders which is discussed on Accounting Standards Board (SASB) have also introduced a carbon-reduction pages 90 and 91. recommended disclosures for our sector, related measure into our Executive Incentive among other standards. This can be found I am delighted with the Board’s decision Scheme for 2022. on pages 48 to 57 and a full list of targets to appoint Jennie. Jennie is a phenomenal and our progress against these targets is operator and with her vast and varied Upcoming regulatory changes included in our Sustainability Supplement experience and leadership capability, I am The industry will face a number of planned, 2021, available on our website. very confident that she will deliver the value fundamental changes in the short to medium from our outstanding landbank for all term. Whilst there are obvious challenges, Environment of Taylor Wimpey’s stakeholders. we believe that these changes offer an We were one of the first UK developers to opportunity to further strengthen our set a carbon reduction target verified by the Building momentum to deliver customer proposition and drive value. We will Science Based Targets initiative (SBTi), improved operating margin and see the first of these come into effect in including a 1.5 degrees target for our 2022, with the New Homes Ombudsman accelerated volume growth operational emissions. Our environment and a change in building regulations as well Our purpose is to deliver great homes and strategy (Building a better world), launched as the effective removal of Help to Buy for create thriving communities. We seek to in 2021, also includes ambitious targets for reservations this year ahead of the scheme’s deliver this with a strategy set to optimise increasing nature on our developments, closure in March 2023. We have been long term shareholder returns in a cutting waste and improving resource preparing for these changes for some time, responsible way, while delivering attractive efficiency. This can be found on pages and this is reflected in our landbuying and sustainable returns and adding value 28 to 29. approach and in our processes. More to all stakeholders. | | information can be found on pages 12 and 13. | We are committed to achieving net zero and | | --- | --- | --- | | We are focused on excellent operational | | in 2022 we will develop a plan to achieve | | delivery and increasing financial performance. | UK market environment and | this. More details can be found on page 17. | This is visible at all levels in the business and current trading reflected in our 2021 full year performance, The 2022 spring selling season has started with improvements across key financial and well, reflecting the underlying strength of operational metrics. The 2020 equity raise demand for our homes, underpinned by low and our approach to landbuying has interest rates and good mortgage availability. continued to differentiate Taylor Wimpey, Land activity as we added a significant amount of The net private sales rate for the year to date (w/e 27 February 2022) was 1.02 per outlet Our short term owned and controlled attractively valued land to our portfolio. per week (2021 equivalent period: 0.91). At landbank has increased by c.8k plots to This timely land acquisition and the hard that time, we were more than 60% forward c.85k plots as at 31 December 2021 (31 work by our teams in bringing it through the sold for private completions in 2022 and December 2020: c.77k plots). During the planning system has positioned the business have continued to grow our order book well early stages of the pandemic, we took the for high-quality outlet-led volume growth into the second half of the year. As at 27 strategic decision to increase investment in at a time when the land market has become February 2022, our total order book land on an opportunistic basis. Accordingly, increasingly competitive. excluding joint ventures was £2,899 million over the 18 months to 31 December 2021 With the strength of our landbank and (2021 equivalent period: £2,796 million), we have strengthened our landbank adding operational excellence we aim to grow comprising 10,934 homes (2021 equivalent c.29k new plots to our short term landbank. annual completions to between 17,000 and period: 11,054 homes). 7Taylor Wimpey plc Annual Report 2021 Strategic report Chief Executive’s statement continued | Our high-quality landbank remains a key | in place to bring all our affected buildings, | Assuming the market remains broadly stable, | | --- | --- | --- | | competitive advantage and value driver and | going back 20 years from January 2021, | we continue to expect to deliver low single | | underpins our confidence in delivering our | up to current EWS1 standard. | digit year on year completions growth in | | medium term target of 21-22% operating | | 2022 and to make further progress towards | We have identified all Taylor Wimpey profit margin. Our accelerated landbuying our 21-22% operating margin target. We buildings that may require works and are in provides us with a greater number of options expect 2022 year end net cash to be around active dialogue with building owners to for sustainable, profitable volume growth £600 million, depending on the timing of undertake these and are committed to amidst a challenging planning environment. land payments. resolving these issues as soon as possible We have also grown our high-quality for our customers. From April 2022, we will Build cost inflation is currently running at strategic land pipeline and are able to also be paying the new Residential Property c.6% and, at this stage, we expect sales operate selectively in today’s competitive Developer Tax (which is a 4% tax on profits) price growth to continue to offset build cost land market. that will fund the Government’s Building inflation in 2022. We remain very focused on progressing new Safety Fund for buildings over 18 metres. The additional land we have secured over acquisitions through the planning system and We are working closely with Government the last 18 months, has positioned the opening quality outlets. As at the end of through the HBF to facilitate an equitable Group to deliver high-quality, profitable and February we own or control, with planning or solution involving all industry stakeholders. sustainable growth. These additional land a Resolution to Grant (RTG), 88% of the sites We fully support the HBF's recent letter to investments differentiate Taylor Wimpey and where we intend to open an outlet in 2022 of the Government which sets out proposed will result in increased outlet openings from which we have already started on site at additional commitments from the industry in late 2022 and material volume growth from nearly one third. We own and have outline or relation to buildings over 11 metres. We 2023, generating additional value and detailed planning on 100% of 2022 expected continue to believe this is an industry-wide compelling investor returns. completions and 85% of 2023 expected issue involving many types of organisations completions. All of the remainder are currently With a continued focus on execution and and therefore needs an industry-wide controlled and most have planning or RTG. efficiency, the Board believes the Group has solution. If accepted by Government, the strong momentum to make significant HBF proposal would result in an additional Fire safety progress and deliver enhanced shareholder modest provision for Taylor Wimpey. It has long been our view that customers value in the years ahead. and leaseholders should not have to pay Guidance and outlook for fire safety remediation works to ensure Interest rates remain at close to historically their buildings are safe and mortgageable. low levels and there is good availability of We took early and proactive action, affordable mortgages. Whilst further rises in committing significant funding to address fire the base rate are anticipated this year, we Pete Redfern safety and cladding issues on our buildings, expect affordability to remain good and the Chief Executive with total amounts provided up to March cost of servicing a mortgage to remain 2021 of £165 million. Taylor Wimpey’s attractive compared to the cost of rental. decision a year ago meant that funding was ### Introducing our new CEO ### On 7 February, Jennie Daly was announced “It is an honour and privilege to take as CEO Designate, and will take on the role ### on the role of CEO at Taylor Wimpey following the Group's AGM on 26 April 2022. ### and I am delighted to have the Jennie is currently Group Operations Director ### support of the Board and our of Taylor Wimpey and a member of the ### Board of Directors. Since 2018 and in her Executive and wider teams. This ### current role, Jennie oversees Taylor is an outstanding business with a Wimpey’s land, planning, design, technical, ### strong landbank and strategic land sustainability, production and supply chain ### functions, as well as managing the Taylor pipeline, and a talented and ### Wimpey Logistics business. She has almost committed team. Taylor Wimpey 30 years of experience in the housebuilding ### is strongly positioned to deliver and land and planning industries, with ### sustainable sector-leading growth excellent relationships across all stakeholders. ### Jennie joined Taylor Wimpey in 2014 from and returns, whilst always operating Redrow Plc where she was Managing ### as a responsible business. I am Director of its Harrow Estates business and, ### energised by the opportunities at prior to that, was Group Land Manager at ### Westbury Plc. Her early career was in local Taylor Wimpey and look forward authority and council planning roles in ### to working closely with the Board Macclesfield and Blackpool. Jennie ### and our teams to deliver on the is also a Non Executive Director of the ### Peabody Trust and of the New Homes significant potential at the company.” Quality Board Limited. Jennie Daly, Group Operations Director and CEO Designate 8 Taylor Wimpey plc Annual Report 2021 # How we are building momentum Our differentiated approach to land has created strong momentum and the opportunity for quality, profitable growth. Taylor Wimpey is well positioned to deliver strong growth and sustainable returns, whilst always operating as a responsible business. ## Our purpose 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 to 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. ## Medium term goals (2018-2023): Return on net operating assets ① **35%** 24.7% in 2021 (2020: 9.5%) Operating profit margin ② **c.21-22%** 19.3% in 2021 (2020: 10.6%) Short term landbank **4-4.5 years** c.8.1 years in 2021 (2020: c.8.1 years) Cash conversion ③ **70-100%** 69.4% in 2021 (2020: 54.8%) Remuneration report ④ See pages 105 to 124 ## Delivering against our key priorities Operational excellence and discipline driving an increase in operating margin Page 10 Continue to deliver consistently great build quality, customer service and employee experience and identify where we can add value Page 14 Progressing recent land acquisitions through planning to facilitate outlet growth in late 2022 and volume growth in 2023 Page 12 Further embedding sustainability through the business, targeting areas where we can make the most difference to future proof the business Page 16 ## Guided by our clear purpose: To build great homes and create thriving communities ### Driven through our strategy to deliver for all stakeholders and as measured by our KPIs /p 24-27 ![img-12.jpeg](img-12.jpeg) ### Embedded ESG mindset in the business and decision making /p 16-17 ### Environment strategy and targets /p 28-29 ### Always engaging with our stakeholders /p 38-47 ### Underpinned by our strong culture of doing the right thing and our core values Respectful and fair Train responsibility Better tomorrow Be proud Taylor Wimpey plc Annual Report 2021 9 Strategic report Our key priorities ### Delivering against our key 1/ Operational excellence and discipline driving an increase ### priorities: in operating margin Across the following pages, members of the Group Management Team (GMT) discuss how the Group is working to achieve our four ## key priorities. Optimising ## performance What is your operating margin target? ### Group Operations Director and Our operating profit margin target is 21-22%. ### CEO Designate Jennie Daly This is the primary performance focus for ### and Group Finance Director the business and we continue to target ### Chris Carney discuss our a number of areas to achieve this; focused on cost, process simplification ### approach to optimising and standardisation, enhancing the core ### performance and increasing drivers of value for our business. ### operating margin. What gives you confidence in achieving your medium term margin? We have a strong embedded margin in the landbank, and together with the new land acquisitions, this underpins our confidence in achieving our operating target. We have embedded a disciplined cost mindset across ### “We are making ### good progress ### on our primary ### performance ### focus to return ### the business ### to 21-22% ### operating margin.” Jennie Daly Group Operations Director and CEO Designate 10 Taylor Wimpey plc Annual Report 2021 ### “We have ### embedded a ### disciplined cost ### mindset across ### the business.” Chris Carney Group Finance Director Medium term operating margin target ## 21-22% 2021: 19.3% 2020: 10.8% Read more on our Group financial review onpages66 to 71 | the business and taken a number of | In 2022, we expect to continue to make | We believe that financial results must be | | --- | --- | --- | | proactive actions to reduce cost and | progress towards our 21-22% target. | achieved in the right way and as a | | optimise financial performance. In late 2020 | | responsible business we acknowledge both | | and into 2021 we also completed a review | Read more on our financial performance on | our obligations to the communities we | pages 66 to 69 and restructure of the business, including operate in and the opportunity to work with removing a layer of senior management. This our stakeholders to create value together. How has the increase in operating gives our Managing Directors an enhanced We believe that by doing this, we can deliver margin been achieved in 2021? level of ownership. enhanced value through the housing cycle The improvement in 2021 operating margin and benefit shareholders. This is also Going forward, we will continue to benefit has been supported by increased focuson important in a heavily regulated and from higher volumes and better margin land, the balance between price and sales rate to scrutinised sector. | as well as further operational improvements | offset build cost inflation; annualised cost | | | --- | --- | --- | | from our new house types and our recently | savings arising from the 2020 restructure; | Our trading performance reflects the | | rolled out customer relationship management | increased volumes driving more efficient | strong momentum within the business and | | (CRM) system. | recovery of fixed costs and the absence of | our confidence in achieving our target of | | | non-recurring COVID-19 related costs. | returning the business to a 21-22% | Why is operating margin important? operating margin. Operating margin is a measure of quality. Why is this the right target? We are fully focused on long term, It recognises the balance between strategic Our targets are set to be stretching. We sustainable shareholder value with a clear investments and operational efficiency and is also believe it is important for our targets and deliverable plan to grow volumes and set within a wider set of strategic objectives. to be sustainable, rather than deliver drive improved margins. peaks and troughs. What was your operating profit for 2021 Whilst there may be years, in the right Read more about our investment case on page 6 and what is the guidance for operating environment and market, where margin margin in 2022? can be higher, we believe 21-22% is a In 2021 we delivered an operating profit of sustainable level to target and allows us to £828.6 million (2020: £300.3 million), also deliver quality for our other stakeholders. delivering an operating profit margin of It also takes into account our broad 19.3% (2020: 10.8%). geographic mix and the levels of customer service and quality we want to maintain. 11Taylor Wimpey plc Annual Report 2021 Strategic report Our key priorities continued ### “We are focused ### on progressing ### “The 2020 equity raise ### land through the ### and our approach to ### planning stages ### landbuying has continued to ### and on opening ### differentiate Taylor Wimpey, ### new outlets ### as we approved and added ### efficiently.” ### significantly more land than ### any other housebuilder in the Andrew Wilkinson ### last 18 months. In a time when Divisional Chair North West, North East and ### the land market has become Yorkshire ### increasingly competitive, this ### allows us to focus on setting ### the business up to deliver ### outlet-led volume growth.” Jennie Daly Group Operations Director and CEO Designate Backed by last year’s equity raise, we ### 2/ Progressing recent land acquisitions through planning stepped up our activity in the land market in mid-2020 when there was limited ### to facilitate outlet growth in late 2022 and volume growth competition and successfully increased our ### in 2023 land pipeline with high-quality sites that will deliver a strong financial performance. What impact has the 2020 equity raise had? ## Planning for We added c.29k new plots to the short term landbank over the last 18 months to the end of December 2021, including converting c.9k units from our strategic land pipeline. These ## growth sites have been acquired at attractive margins and returns in line with our medium term operating margin target of 21-22%. We also added c.16k potential new plots to our strategic pipeline in that period. ### Group Operations Director and What kind of land did you buy? These sites are across all regions of our ### CEO Designate Jennie Daly, business and are a healthy balance of large ### Andrew Wilkinson Divisional and small sites. Our focus across each area of the business is ensuring that this ### Chair and Lee Bishop, Group momentum is maintained through disciplined ### MD Strategic Land, discuss operational execution, progressing land ### why Taylor Wimpey’s through the planning stages and ensuring new outlets are opened, as expected. ### approach to landbuying ### positions the Company for How many plots are in the landbank? As at 31 December 2021, our short term ### profitable growth and creates landbank stood at c.85k plots (2020: c.77k ### a competitive advantage. plots). A total of 49% of this short term landbank has been strategically sourced (2020: 50%). During 2021 we acquired 12 Taylor Wimpey plc Annual Report 2021 14,450 plots (2020: 7,644 plots). As at 31 What’s next? ### Securing land from the December 2021, we were building on, or We have an excellent short term landbank ### equity raise due to start in the first quarter of 2022, on with secure pipeline at attractive returns due 97% of sites with implementable planning. to our strategic land pipeline and opportunistic landbuying. The average cost of land as a proportion of average selling price within the short term We remain laser focused on efficiently owned landbank remains low at 14.6% TW Bristol progressing recently acquired land through | (2020:15.2%). The average selling price in | the planning system, to facilitate outlet growth | Two other housebuilders were originally | | --- | --- | --- | | the short term owned landbank in 2021 | in late 2022 and volume growth in 2023. We | selected as preferred bidders on this 450 | | increased by 4.9% to £302k (2020: £288k). | are positioning our business to deliver annual | unit site but we were able to re-engage with | | | completions in line with our previous | the seller when that deal did not progress | | What is strategic land and why is | | amidst the COVID-19 crisis. Backed by our | guidance of between 17,000 and 18,000 in it important? equity raise in June 2020, we achieved the medium term. We are progressing the | Strategic land is any land that doesn’t have | land through the planning stages as expected, | favourable deal terms due to the certainty | | --- | --- | --- | | a residential planning consent at the time we | providing excellent momentum for growth. | we were able to provide and the speed | | take a commercial interest. | | at which we could execute, exchanging | | | Please read about our investment case on page 6 | unconditional contracts in July 2020 with | Our strategic land pipeline remains a key a fixed completion for January 2021. strength both as an important input to the The site is an excellent fit for our Bristol short term landbank and in providing an business and, having opened our outlet enhanced supply of land with greater control in December 2021, is on track to deliver over the planning permissions we receive. the first legal completions in April 2022. We have one of the largest strategic pipelines in the sector which stood at c.145k potential plots at the end of December 2021 (31 December 2020: c.139k potential plots). During 2021, we converted a further c.8k plots from the strategic pipeline to the short term landbank (2020: c.4k plots). We continue to seek new opportunities and added a net 6k new potential plots to the ## c.29k strategic pipeline in 2021 (2020: 2k). In the year, 50% of our completions were sourced new plots added to the short term landbank from the strategic pipeline (2020: 55%). over the 18 months to 31 December 2021 ## c.16k potential new plots added to the strategic pipeline over the last 18 months to the end of December 2021 ### “In a land ### constrained ### environment and ### a competitive ### market, strategic ### land is a key ### strength and ### underpin of future ### profitability.” Lee Bishop Group Managing Director Strategic Land 13Taylor Wimpey plc Annual Report 2021 Strategic report Our key priorities continued Continuing to deliver consistently great ### 3/ Continue to deliver consistently great build quality, build quality and customer service ### customer service and employee experience and identify We began the investment in customer service and increasing build quality several ### where we can add value years ago. Not only was this the right thing to do for customers, it also set the business up very well for upcoming changes in the New Homes Ombudsman and building ## Continually regulations. We are delighted to have been confirmed as, once again, leading the sector in CQR scores and we have maintained our HBF 5 star rating. ## raising our How can you improve on quality? We aim to improve this further by ensuring our quality assurance processes are embedded at every stage of build. ## standards Our Consistent Quality Approach (CQA) guidelines ensure our Site Managers, subcontractors, production and customer ### Our Divisional Chairs What is your top priority? service teams all have a consistent Health and safety is the number one priority understanding of the finishing standards we ### Shaun White, Nigel Holland at Taylor Wimpey. We will never compromise expect on all Taylor Wimpey homes. We also ### and Group HR Director, on this commitment to our people and publish a customer version, so it is clearer for everyone who works on or visits a Taylor customers what they can expect from us. ### Anne Billson-Ross, discuss Wimpey site. We embed a safety culture We updated our scope of operations for ### our approach to build quality through training, awareness and visible subcontractors in 2021, which sets out our ### and people. health and safety leadership. This continued expectations for build quality. This is part of to be the top scoring area in our employee the contract for subcontractors. Key product survey at 97% overall, with 96% of our suppliers provide training to our Site employees agreeing we take health and Managers, Quality Managers and trade safety seriously. This continues to be the subcontractors on the correct installation of first item discussed at every plc Board their products to ensure a quality build. meeting and every regional management Subcontractors also attend training sessions team meeting. run by our quality, site and safety teams, and by the NHBC. ### “We are very ### pleased to be ### rated once again ### as a 5 star | “We are delighted | homebuilder | | --- | --- | | to have been | by our customers | | confirmed as, | in 2021.” | ### once again, Nigel Holland ### leading the sector Divisional Chair Central, ### in construction South West and Spain ### quality.” Shaun White Divisional Chair, Midlands and Wales 14 Taylor Wimpey plc Annual Report 2021 ### 2021 employee ### survey results ### “Quality is Health and safety ### incentivised from ## 96% ### the top of the of employees agree that ### organisation.” Taylor Wimpey takes health and safety seriously Anne Billson-Ross Group HR Director Overall employee engagement score ## 91% ## 95% of employees are proud to work for Taylor Wimpey ## 96% of employees feel they can be their authentic self at work Read more on our KPIs onpages 24 to 27 Quality is incentivised from the top of the install air source heat pumps but fewer gas set by the Ombudsman, as well as new organisation. A significant proportion of our engineers. We are working in our business, consumer rights such as third party home Executive Incentive Scheme is linked to and with our peers, subcontractors, inspections. We have signed the new code customer service and build quality. We track suppliers, industry associations and of conduct that supersedes the UK progress and calculate bonus payouts using educational organisations to help address this. Consumer Code for Home Builders. a combination of internal and independent How are you improving customer Read more on our approach to customer service, external measures: HBF 8-week and service? quality and our employees on pages 38 to 41 9-month customer survey results; Construction Quality Review (CQR) scores We are very pleased to be rated once again Read more about our remuneration targets in conducted independently by the NHBC, and as a 5 star homebuilder by our customers In our Remuneration Report on pages 105 to 124 | the average reportable items per inspection | 2021. During the year we introduced a | | --- | --- | | found during NHBC inspections at key | Customer Director role which sits on the | | stages of the build. We also integrate | management team in each regional business | | customer service and quality into our | to further elevate the voice of the customer. | | all-employee bonus scheme. | We also rolled out our new customer | relationship management system across the What are you doing to address the business. You can read more information on skills shortage? this on page 38. With a well known industry skills shortage, The sector continues to face scrutiny and we have taken a proactive approach to our pressure from social media and pressure early talent programmes and direct labour groups, with the potential for greater model. Building the skills of our current and oversight from Government through a New future workforce is essential to address the Homes Ombudsman. We are supportive of skills shortage in our industry and also to set the introduction of an independent New up the business to deal with future changes. Homes Ombudsman and will endeavour to With the introduction of the Future Homes deliver both the letter and the spirit of Standard and other regulatory and technical regulations and maintain this same ethos in changes, the types of skills we need are our relationships with our customers. We are changing. For example, from 2025 we may aligning our processes to make sure we need significantly more people qualified to meet the expectations and timescales being 15Taylor Wimpey plc Annual Report 2021 Strategic report Our key priorities continued ### “We have a very ### strong culture at ### “Success means ### Taylor Wimpey at ### building homes ### every level of the ### and places that ### business, with a ### enhance people’s ### core principle to ### quality of life and ### ‘do the right ### foster local ### thing’.” ### community ### relationships, Alice Black ### and which deliver Group General Counsel andCompany Secretary ### outcomes that ### are measurably ### positive ### for nature.” Ian Drummond Divisional Chair Scotland Success means building homes and places ### 4/ Further embedding sustainability through the business, that enhance people’s quality of life and foster local community relationships, and which ### targeting areas where we can make the most difference to deliver outcomes that are measurably positive ### future proof the business for nature. This means playing a significant role in the UK’s decarbonisation efforts. It means minimising waste and maximising biodiversity. It means reducing energy consumption and emissions in our, and ## Creating a our supply chain’s processes, as well as downstream in our customers’ homes. We exist to build great homes and create ## sustainable thriving communities and we aim to do so sustainably, making sure those communities are themselves sustainable for the future. We believe that by delivering on our purpose we will contribute to delivering ## future UN Sustainable Development Goal 11: ‘making cities and human settlements inclusive, safe, resilient and sustainable’. What have you done so far? What we do – building quality homes in ### Alice Black, Group General We were one of the first UK developers to which people can live happy, fulfilled lives, ### Counsel and Company set a carbon reduction target verified by the creating genuine places and providing skilled Science Based Targets initiative (SBTi), ### Secretary, Ingrid Osborne employment – truly matters. However, we including a 1.5 degrees target for our believe how we do it matters just as much. ### and Ian Drummond Divisional operational emissions. Our environment We have a considerable environmental and strategy, launched in 2021, also includes ### Chairs, discuss our approach societal footprint and so the way we go ambitious targets for increasing nature on about building great homes and ### to ESG at Taylor Wimpey. our developments, cutting waste and communities, our processes, our behaviours, improving resource efficiency. We have our ambition, makes a big difference. made excellent progress towards our carbon 16 Taylor Wimpey plc Annual Report 2021 | reduction target. Against our 2019 baseline, | 2021, this included contributing to the | use by 75% by 2030, and we are conducting | | --- | --- | --- | | we have achieved a 13% reduction in direct | development of the Future Homes Delivery | a range of research to help us meet this. | | carbon emissions intensity (scope 1 and 2 | Plan for our sector and inputting into the | From 2025, in line with regulation, the new | | emissions per 100 square metres of | work of the Future Homes Hub. | homes we build will be zero carbon ready. | completed homes) and a 20% absolute In 2022 we will develop our net zero During 2020 and 2021, we conducted reduction. Our current target was published transition plan and a net zero target. We are research to enable us to update the technical last year but our commitment to climate reviewing the net zero criteria published by specification for our homes in preparation for action goes back much further. Since 2013, the SBTi in 2021 and will use this to guide changes to Building Regulations and the we’ve achieved a 50% reduction in our direct our approach. We expect to publish our Future Homes Standard. With the phasing in carbon emissions intensity. A full list of target in 2023. The plan will include details of of the new Part L and F in England from targets can be found on pages 28 and 29 specific measures and key milestones June 2022, late summer 2022 in Wales and and are included in our Sustainability designed to provide future measurable Section 6 in Scotland from October 2022, Supplement 2021, available on our website. | | targets against which the delivery of the plan | homes will have enhanced fabric standards | | --- | --- | --- | | We are committed to transparent disclosure | can be assessed. We have also introduced a | with the additional features that may include | | of our ESG performance and are aligning our | carbon-reduction related measure into our | heat recovery systems and PV panels. | | reporting with the recommendations of the | Executive Incentive Scheme for 2022. | Collectively, this will achieve a meaningful | | TCFD and the SASB recommended | | reduction of 31% in carbon emissions from | New homes, designed for net zero and built disclosures for our sector, among other home energy use in line with emerging sustainably, will play a critical role in helping standards. You can see more on this on building regulations, compared with our the UK meet its decarbonisation targets, by pages 50 to 57. current specification. We are also preparing reducing domestic energy usage – particularly for the phase-out of gas central heating for heating. | What is next? | | systems from 2025 in England and Wales | | --- | --- | --- | | We are committed to achieving net zero | Our homes already integrate energy-efficient | (2024 in Scotland) and will be running Future | | and in 2022 we will develop a plan to achieve | walls and windows; insulated loft spaces; | Homes Standard product trials during 2022. | | this. For the housebuilding sector, the | 100% low energy light fittings and LED | | | majority of emissions are associated with | recessed downlights; and energy-efficient | Read more about how we support the SDGs at | | | appliances. This reduces running costs for our | www.taylorwimpey.co.uk/corporate/sustainability | the production and manufacture of materials and the energy used by customers once customers and helps cut carbon emissions. Read our investment case on page 6 | they have moved into new homes (scope 3). | Over the next few years there will be | | --- | --- | | This means achieving net zero emissions | significant changes to new build homes | | will require system-level changes and | in the UK reflecting the introduction of the | | coordinated action by multiple parties, from | Future Homes Standard and new regulation | | suppliers to governments, and at all points | on overheating, electric vehicle charging and | | along the value chain. We are committed | other environmental issues. Our target is to | | to working with our peers, suppliers and | reduce emissions from customer homes in | others to help tackle this challenge. During ### “Our target is to reduce ### emissions from customer ### homes in use by 75% by ### 2030, and we are conducting ### a range of research to ### prepare for upcoming ### regulatory changes and the ### move towards net zero ### ready homes.” Ingrid Osborne Divisional Chair London and South East 17Taylor Wimpey plc Annual Report 2021 Strategic report Our market environment New homes construction was growing House price growth, interest rates before the COVID-19 pandemic took hold in and affordability ## The UK | early 2020, albeit still significantly below the | When considering our market context, it is | | --- | --- | | 300k target. Output has recovered in 2021 | important to look at the wider market. | | but is below 2019 levels. Many | Activity in the second hand market has the | ## housing | housebuilders expect to recover to 2019 | greatest influence on pricing as second hand | | --- | --- | | levels within the next couple of years, but | home sales make up the majority of housing | | even surpassing 2019 production will likely | transactions, with new build generally | ## market | still fall well short of the 300k target meaning | accounting for around 15-20%. 2021 saw | | --- | --- | | we are likely to see a structural undersupply | significant increases in house prices led by | | of housing for some time. We intend to play | the second hand market of c.10% in the year | ## recovered our part in addressing the housing shortage to November (Source: ONS). and, assuming the market remains broadly Whilst this was stronger than in recent years, stable, we expect to significantly increase our ## strongly in it was partially offset by annual wage growth annual completions in the next few years. of 4.2% in the three months to November Our 2021 performance 2021, helping to maintain affordability. ## 2021 Growth was less pronounced for new build In 2021, total home completions (including where the Stamp Duty Land Tax holiday had joint ventures) increased by 47% to 14,087 less of an impact. We estimate that market- (2020: 9,609) as we recovered volumes ### This section considers our led house price growth for our regional mix following 2020’s COVID-19 disruption. We was c.4% in the 12 months to 31 December delivered 2,501 affordable homes including ### industry context, how supply, 2021 (2020: c.1.9%). joint ventures (2020: 1,904), equating to 18% ### demand and external and of total completions (2020: 20%). In December 2021, economic research ### regulatory factors influenced group Capital Economics estimated that Our net private reservation rate for 2021 was mortgage payments were equivalent to 39% ### our year as well as their 0.91 homes per outlet per week (2020: 0.76). of the medium full time salary which is below Cancellation rates for the full year were at ### potential impact on the short the historical average of 43%. The Bank of normal levels of 14% (2020: 20%). Average ### and longer term. England (BoE) base rate rose from its historic selling prices on private completions low of 0.1% to 0.25% in December 2021 increased by 3% to £332k (2020: £323k), while a second rise in February 2022 saw it Undersupplied market with the overall average selling price increase to 0.5%. Given rising inflation, it is There is a recognised housing shortage in increasing to £300k (2020: £288k). widely expected that BoE interest rates will the UK with new home completions falling We ended the year with a total order book rise during 2022 to 1.25% according to significantly below the UK Government’s valued at £2,550 million (31 December 2020: some market commentators (Source: The target of 300k new homes per year. The £2,684 million), excluding joint ventures, Times). At 1% mortgage payments would Government has considered several means which represents 10,009 homes rise to the long run average of 43% of salary, of addressing the housing shortage, from (31 December 2020: 10,685). We traded suggesting homes will remain affordable for reform to the planning system, to methods of from an average of 225 outlets in 2021 most of our customers (Source: Capital stimulating building and improving (2020: 240) and entered 2022 with Economics). The Government’s 2014 affordability, such as Help to Buy and its 228 outlets (31 December 2020: 239). Mortgage Market Review introduced 95% mortgage guarantee scheme. affordability thresholds for mortgage providers including a stress test that factors in a 3% rise in interest rates. ### Key market data The home ownership rate in England UK first time buyers mortgage payments as a percentage oftake home pay / interest rates (%) Interest rate % 35 60 16 14 50 34 12 40 10 33 30 8 % % of take home pay 32 6 20 75 4 31 10 2 70 30 0 0 1990 2000 2010 2021 1983 1990 2000 2010 2021 65 Owner occupiers Average age of first time buyers Interest rate % % of take home pay 60 At just under 65%, home ownership rates in England are much lower than the mid Despite two rate rises since the historic low of 0.1%, interest rates remain low in an 55 2000s peak of c.71%. Average age of first time buyers is just above 32. historic context. 50 18 Taylor Wimpey plc Annual Report 2021 Source: Department for Levelling Up, Housing and Communities Source: Nationwide, Bank of England | UK employment | additional commitments from the industry in | planning consents but in 2020, planning was | | --- | --- | --- | | UK employment fared better than many had | relation to buildings over 11 metres. We | impacted by COVID-19 disruptions and | | feared through the pandemic. The | continue to believe this is an industry-wide | consents for the comparable period fell to | | Government’s Coronavirus Job Retention | issue involving many types of organisations | 277k. Bottlenecks have continued with 2021 | | Scheme helped safeguard many jobs during | and therefore needs an industry-wide | consents estimated at 272k. We are aware | | the crisis and since that scheme ended in | solution. If accepted by Government, the | of difficulties in the planning system and have | | September 2021, the economy has seen | HBF proposal would result in an additional | factored this into our expectations and | | some improvement. The UK unemployment | modest provision for Taylor Wimpey. | budgeting for new outlet openings | rate was 4.1% in the three months to Environmental regulation Help to Buy November 2021 and there have been labour The need to reach carbon net zero and halt During 2021, approximately 19% of total shortages in key areas, with a record 1.2 biodiversity loss has led a to number of new sales used the Help to Buy scheme (2020: million vacancies (Source: ONS). By environmental regulations. The most notable 46%) at an average price of £283k (2020: November 2021 UK GDP had surpassed its is the Future Homes Standard (FHS). From £286k). The reduction reflects changes to pre-COVID level (February 2020) for the first 2022-2023 Parts L and F of the FHS require the scheme in 2021 when access was time by 0.7%. | | changes to insulation and ventilation to | limited to first time buyers and with the | | --- | --- | --- | | Fire safety | enable carbon reductions of 31% in new | introduction of regional price caps. Since its | | We took early and proactive action, | homes. We are meeting these challenges | introduction in 2014, Help to Buy has aided | | committing significant funding to address fire | with modified designs (see page 45 for | many of our customers to buy their homes. | | safety and cladding issues on our buildings, | further information). From 2025 the FHS will | The scheme is due to end on 31 March | | with total amounts provided up to March | require new homes to produce 75-80% less | 2023. To ensure that first time buyers will | | 2021 of £165 million. Taylor Wimpey’s | carbon. This means replacing gas central | continue to have access to housing, the | | decision a year ago meant that funding was | heating systems with alternative heating | Government and industry have put in place | | in place to bring all our affected buildings, | sources such as air source heat pumps. We | deposit guarantee schemes to enable | | going back 20 years from January 2021, up | are committed to achieving net zero and, in | customers to access 95% mortgages at | | to current EWS1 standard. | 2022, we will set out a plan to achieve this. | affordable levels. This mirrors the 5% | | | Achieving net zero will require wider | mortgage requirement currently needed to | In 2021, the UK Government introduced a structural changes beyond the control of the take part in Help to Buy. new 4% tax on the profits of property housing industry (for more information see developers to bring high rise buildings in line Supply chain page 16 and 17). with the current EWS1 standard, that we will 2021 was a challenging year in which the be paying from April 2022. In a recent letter Land and planning industry faced well publicised supply to the homebuilding industry in February The land market was competitive in 2021 as constraints for certain materials such as 2022, the Government suggested a further many companies that had delayed purchase timber and tiles, as well as a general £4 billion may be required to bring potentially decisions during 2020 returned to the shortage of haulage. We managed these unsafe mid rise buildings up to the required market. According to Savills data, in the third pressures effectively, benefiting from our standards. This raises the potential for quarter UK greenfield land values had grown scale and strong partner relationships. additional costs for the industry. The Home by 7.1% and urban values by 5.7%, year on During 2021, house price inflation fully offset Builders Federation (HBF) has since written year. Having added significantly to our build cost inflation amidst wider industry to the Government with a proposal. | | landbank since June 2020 and with the | pressure on the cost and availability of | | --- | --- | --- | | We are working closely with Government | benefit of the largest strategic pipeline in the | certain materials. Our national scale and | | through the HBF to facilitate an equitable | sector, we are able to operate selectively. | strong partner relationships and agreements | | solution involving all industry stakeholders. | | enabled us to effectively manage these | The planning system has faced challenges We fully support the HBF's recent letter to pressures. Underlying build cost inflation in during the pandemic. In the 12 months to the Government which sets out proposed 2021 was c.4% (2020: c.3%). December 2019, there were 326k new UK house price development England net additional dwellings and new build completions % 40 250 30 200 20 150 10 £k 100 0 300 50 -10 250 -20 0 200 | | 1981 1990 2000 | ii | | 2010 | 2021 | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | 2000 | 2002 | 2004 | 2006 | 2008 | 2010 | 2012 | 2014 | 2016 | 2018 | 2020 | 2021 | | 150 | | Price £k | Annual change % | | | Net additional dwellings (000s) | | | | | | New build completions (000s) | | | | | | 100 House price inflation was more modest than in recent cycles ahead of a stronger The data covers England only, but demonstrates that overall production has been uplift in 2021. running at lower levels than the Government’s national target of 300k new homes per 50 year and has been further impacted by COVID-19 disruptions in 2020. 0 19Taylor Wimpey plc Annual Report 2021 Source: Nationwide Source: Department for Levelling Up, Housing and Communities Strategic report Market trends and response Key drivers 2021 backdrop Interest rates and Interest rates and mortgage availability determine housing – The UK faced inflationary pressures from – UK Consumer Price Index (CPI) Inflation – Interest rates expected to gradually rise – B: Mortgage Customer service affordability and accessibility for our customers. Interest the second quarter of 2021 owing to rose to 4.8% in December 2021 leading at a modest rate and remain at affordable availability and and quality mortgage availability rates remain at historically low levels and for customers able disruption to global supply chains as a some commentators to expect interest levels. housing demand Responsible | to access the housing market a 2021 study by Halifax | result of COVID-19 and other factors. | rates to rise to slightly above 1% by the | – Government backed high LTV mortgages | sourcing | | --- | --- | --- | --- | --- | | found servicing mortgage payments was, on average, £800 | – In December 2021, the UK base rate | end of 2022. | could be offered to buyers of new build. | | | cheaper thanrenting. | was raised to 0.25% from the historic | – Mortgage payments are expected to | – Deposit Unlock is a scheme developed | | | | low of 0.1%. A second rise in January | continue to be affordable at around the | by the homebuilding industry in | | At 7.8 times median income for England and Wales in 2020 2022 saw the rate move to 0.5%. medium term average of 43% (Source: conjunction with mortgage providers that (Source: ONS), the house prices to earnings multiple – Mortgage products have been widely Capital Economics) with monthly is intended to help customers with low remains high. Stricter rules on mortgage lending were available at low interest rates but some mortgage repayments highly competitive deposits gain access to the housing introduced in 2014, aimed at ensuring customers will be ultra-low rates have ended. in comparison to rental payments. market. The scheme will provide able to meet their mortgage payments if interest rates competitive rate mortgages to customers increase, including a stress test for an up to 3% increase on with a 5% deposit and is expected to be prevailing rates. In 2021, theaverage age of a first time appealing to customers when Help to buyer was 32 (Source: Nationwide), suggesting there Buy ends in England in March 2023. remains considerable unmet demand. Employment, skills The UK employment rate has implications on consumer – UK unemployment was 4.1% in the three – Healthy employment and wage growth – A long term healthy employment outlook – D: Attract and People and skills confidence and our customers’ desire and ability to buy months to December 2021, compared to underpins housing demand. is important for housing as well as the retain high- and labour homes. 5.2% for October to December 2020. – Taken in isolation, with job vacancies at rest of the economy. calibre availability – Job vacancies in December 2021 were record highs, the near term UK – A potential long term skills shortage employees A healthy employment outlook is important for general at a record high of over 1.2 million employment outlook remains favourable could impact the industry. consumer confidence in the housing market and the wider (Source: ONS). for housing demand. – Attracting and retaining skilled workers to economy. | | | – The labour market is under pressure with | – Potential for some bottlenecks in certain | construction is important for the long | | | --- | --- | --- | --- | --- | --- | | | In previous cycles, higher unemployment has been a | shortages in certain areas such as | areas and industry labour inflation. | term health of the industry. Many major | | | | contributory factor to a weaker housing market. | manufacturing and haulage and | | housebuilders have strategies aimed at | | | | | hospitality and social care. | | attracting new talent to the industry. | | | Help to Buy | Help to Buy has been popular with our customers, | – From March 2021, the scheme moved | – The Help to Buy scheme is due to end | – The Government continues to target an | – A: Government | Sustainable homes | supporting them to get onto the housing ladder and in | into its next phase, with access limited to | on 31 March 2023, with reservations | increase in housebuilding. | policies, | and communities | | --- | --- | --- | --- | --- | --- | | moving up the housing ladder. | first time buyers and with regional | under the scheme effectively ending | – The Government and industry deposit | regulations and | | | | maximum price caps. | December 2022. | schemes are designed to help customers | planning | | Under the current scheme the Government will lend up to – While the proportion of our customers – Changes have been well flagged giving with low mortgages, who may otherwise 20% of the value of a new build home (40% within Greater using Help to Buy reduced, the UK us the opportunity to prepare. have been reliant on Help to Buy, gain London) via anequity loan (interest free for five years) to housing market continued to be strong, – The Government has introduced its 95% access to housing. homebuyers able to meet certain criteria, including raising a driven by unsatisfied demand and we mortgage guarantee scheme. 5% deposit. The scheme is due to end in 2023. enjoyed healthy levels of sales – We will be using Deposit Unlock on a suggesting the targeted reduction in the small number of selected developments use of Help to Buy was appropriate. in England and Scotland in the first quarter of 2022. Climate change The Future Homes Standard (FHS) outlines new regulations – During 2020 and 2021, we conducted a – Opportunity to produce more energy – The Government committed to net zero – A: Government Sustainable homes aimed at making new homes more energy-efficient. Part L range of research to update the technical efficient homes for our customers with UK emissions by 2050 and we are policies, and communities relates to the conservation of fuel and power and Part F specification for our homes in preparation our new house types. working on designs to make our future regulations and Environment | covers ventilation. These measures will now come into | for changes to Building Regulations Part | – Potential increase in green mortgages | new homes net zero ready, including the | planning | | --- | --- | --- | --- | --- | | force in June 2022 and will allow for a one year transitional | L and F and the eventual introduction of | making new homes comparably cheaper | replacement of gas central heating | | | period. Further change will come in 2025 when gas central | the FHS. | to buy than less energy efficient second | systems with alternative technologies | | | heating systems will no longer be allowed in new | | hand stock. | such as air source heat pumps. | | | developments. | | – Potential competitive advantage and | – For homes to become net zero there will | | | | | premium for new more energy efficient | need to be changes to the UK’s energy | | | | | homes. | infrastructure to move away from our | | reliance on gas. Land and planning The planning system was impacted by the pandemic and – The Government released its Levelling up – We have built our land position which – More readily available land could, in – A: Government Responsible this year has seen some industry wide delays in planning White Paper in February 2022. On increases our range of options in a some instances, lead to greater policies, sourcing environment | decisions due to a shortage of resources. The Government | planning matters, it retained its | period where the planning system is | competition. | regulations and | | --- | --- | --- | --- | --- | | has been assessing the planning system, with the aim | commitments to targeting 300k new | facing resourcing issues and also moving | – Given our substantial landbank and | planning | | ofstreamlining processes and ensuring each area has a | homes per year, making Local Plans | into a planning environment that may | strategic pipeline in attractive locations, | | | local plan. The White Paper on wide ranging planning | simpler and shorter and developing | undergo change. | less friction in the planning system could | | | reform was delayed until 2022 in order that the new | models for a new infrastructure levy with | – Improved speed in planning could lead to | enable an uptick in construction activity. | | | housing minister could assess proposed reforms. | enhanced compulsory purchase powers | further efficiencies in our process and | | | | | to support town centre regeneration and | speed of build once land is acquired | | | | | re-use of brownfield land. Further detail | – Potential overhaul to the planning system | | | | | over how this will be delivered is | could lead to delays while transition is in | | | | | expected in a planning bill in 2022. | progress. | | | 20 Taylor Wimpey plc Annual Report 2021 | Read more about | Read more about key | | --- | --- | | our Principal Risks | issues for our | | on pages 62 to 65 | stakeholders on pages | 32 to 37 Driver short term opportunities and risks Driver long term opportunities and risks Links to Principal Material issues Risks Interest rates and Interest rates and mortgage availability determine housing – The UK faced inflationary pressures from – UK Consumer Price Index (CPI) Inflation – Interest rates expected to gradually rise – B: Mortgage Customer service affordability and accessibility for our customers. Interest the second quarter of 2021 owing to rose to 4.8% in December 2021 leading at a modest rate and remain at affordable availability and and quality mortgage availability rates remain at historically low levels and for customers able disruption to global supply chains as a some commentators to expect interest levels. housing demand Responsible | to access the housing market a 2021 study by Halifax | result of COVID-19 and other factors. | rates to rise to slightly above 1% by the | – Government backed high LTV mortgages | sourcing | | --- | --- | --- | --- | --- | | found servicing mortgage payments was, on average, £800 | – In December 2021, the UK base rate | end of 2022. | could be offered to buyers of new build. | | | cheaper thanrenting. | was raised to 0.25% from the historic | – Mortgage payments are expected to | – Deposit Unlock is a scheme developed | | | | low of 0.1%. A second rise in January | continue to be affordable at around the | by the homebuilding industry in | | At 7.8 times median income for England and Wales in 2020 2022 saw the rate move to 0.5%. medium term average of 43% (Source: conjunction with mortgage providers that (Source: ONS), the house prices to earnings multiple – Mortgage products have been widely Capital Economics) with monthly is intended to help customers with low remains high. Stricter rules on mortgage lending were available at low interest rates but some mortgage repayments highly competitive deposits gain access to the housing introduced in 2014, aimed at ensuring customers will be ultra-low rates have ended. in comparison to rental payments. market. The scheme will provide able to meet their mortgage payments if interest rates competitive rate mortgages to customers increase, including a stress test for an up to 3% increase on with a 5% deposit and is expected to be prevailing rates. In 2021, theaverage age of a first time appealing to customers when Help to buyer was 32 (Source: Nationwide), suggesting there Buy ends in England in March 2023. remains considerable unmet demand. Employment, skills The UK employment rate has implications on consumer – UK unemployment was 4.1% in the three – Healthy employment and wage growth – A long term healthy employment outlook – D: Attract and People and skills confidence and our customers’ desire and ability to buy months to December 2021, compared to underpins housing demand. is important for housing as well as the retain high- and labour homes. 5.2% for October to December 2020. – Taken in isolation, with job vacancies at rest of the economy. calibre availability – Job vacancies in December 2021 were record highs, the near term UK – A potential long term skills shortage employees A healthy employment outlook is important for general at a record high of over 1.2 million employment outlook remains favourable could impact the industry. consumer confidence in the housing market and the wider (Source: ONS). for housing demand. – Attracting and retaining skilled workers to economy. | | | – The labour market is under pressure with | – Potential for some bottlenecks in certain | construction is important for the long | | | --- | --- | --- | --- | --- | --- | | | In previous cycles, higher unemployment has been a | shortages in certain areas such as | areas and industry labour inflation. | term health of the industry. Many major | | | | contributory factor to a weaker housing market. | manufacturing and haulage and | | housebuilders have strategies aimed at | | | | | hospitality and social care. | | attracting new talent to the industry. | | | Help to Buy | Help to Buy has been popular with our customers, | – From March 2021, the scheme moved | – The Help to Buy scheme is due to end | – The Government continues to target an | – A: Government | Sustainable homes | supporting them to get onto the housing ladder and in | into its next phase, with access limited to | on 31 March 2023, with reservations | increase in housebuilding. | policies, | and communities | | --- | --- | --- | --- | --- | --- | | moving up the housing ladder. | first time buyers and with regional | under the scheme effectively ending | – The Government and industry deposit | regulations and | | | | maximum price caps. | December 2022. | schemes are designed to help customers | planning | | Under the current scheme the Government will lend up to – While the proportion of our customers – Changes have been well flagged giving with low mortgages, who may otherwise 20% of the value of a new build home (40% within Greater using Help to Buy reduced, the UK us the opportunity to prepare. have been reliant on Help to Buy, gain London) via anequity loan (interest free for five years) to housing market continued to be strong, – The Government has introduced its 95% access to housing. homebuyers able to meet certain criteria, including raising a driven by unsatisfied demand and we mortgage guarantee scheme. 5% deposit. The scheme is due to end in 2023. enjoyed healthy levels of sales – We will be using Deposit Unlock on a suggesting the targeted reduction in the small number of selected developments use of Help to Buy was appropriate. in England and Scotland in the first quarter of 2022. Climate change The Future Homes Standard (FHS) outlines new regulations – During 2020 and 2021, we conducted a – Opportunity to produce more energy – The Government committed to net zero – A: Government Sustainable homes aimed at making new homes more energy-efficient. Part L range of research to update the technical efficient homes for our customers with UK emissions by 2050 and we are policies, and communities relates to the conservation of fuel and power and Part F specification for our homes in preparation our new house types. working on designs to make our future regulations and Environment | covers ventilation. These measures will now come into | for changes to Building Regulations Part | – Potential increase in green mortgages | new homes net zero ready, including the | planning | | --- | --- | --- | --- | --- | | force in June 2022 and will allow for a one year transitional | L and F and the eventual introduction of | making new homes comparably cheaper | replacement of gas central heating | | | period. Further change will come in 2025 when gas central | the FHS. | to buy than less energy efficient second | systems with alternative technologies | | | heating systems will no longer be allowed in new | | hand stock. | such as air source heat pumps. | | | developments. | | – Potential competitive advantage and | – For homes to become net zero there will | | | | | premium for new more energy efficient | need to be changes to the UK’s energy | | | | | homes. | infrastructure to move away from our | | reliance on gas. Land and planning The planning system was impacted by the pandemic and – The Government released its Levelling up – We have built our land position which – More readily available land could, in – A: Government Responsible this year has seen some industry wide delays in planning White Paper in February 2022. On increases our range of options in a some instances, lead to greater policies, sourcing environment | decisions due to a shortage of resources. The Government | planning matters, it retained its | period where the planning system is | competition. | regulations and | | --- | --- | --- | --- | --- | | has been assessing the planning system, with the aim | commitments to targeting 300k new | facing resourcing issues and also moving | – Given our substantial landbank and | planning | | ofstreamlining processes and ensuring each area has a | homes per year, making Local Plans | into a planning environment that may | strategic pipeline in attractive locations, | | | local plan. The White Paper on wide ranging planning | simpler and shorter and developing | undergo change. | less friction in the planning system could | | | reform was delayed until 2022 in order that the new | models for a new infrastructure levy with | – Improved speed in planning could lead to | enable an uptick in construction activity. | | | housing minister could assess proposed reforms. | enhanced compulsory purchase powers | further efficiencies in our process and | | | | | to support town centre regeneration and | speed of build once land is acquired | | | | | re-use of brownfield land. Further detail | – Potential overhaul to the planning system | | | | | over how this will be delivered is | could lead to delays while transition is in | | | | | expected in a planning bill in 2022. | progress. | | | 21Taylor Wimpey plc Annual Report 2021 Strategic report Our business model ## Creating value through ## our business model Key strengths What we do and resources People – Highly experienced management team – Talented, skilled and engaged workforce with investment in training and in young talent Financial position – Robust balance sheet – Established track record of generating cash and returning excess cash to shareholders Approach to ESG ### – Strong health and safety culture 3 1 – 5 star customer service ### Realising Investment homebuilder and industry- ### value Selecting land leading build quality Optimising the – Major contributor to local housebuilding economies and communities process – Embedding sustainability and climate action throughout the business – Strong culture of doing the right thing Land ### – Well located landbank in areas 2 people want to live and best in ### class strategic land pipeline Development Managing the community – Proven track record in and planning process converting strategic land into short term landbank Business – National scale and well-placed with 23 established regional businesses – Efficient supply chain management, augmented by our Taylor Wimpey Logistics division 22 Taylor Wimpey plc Annual Report 2021 Principal Risks key: A: Government policies, regulations and planning D: Attract and retain high-calibre employees G: Health, safety and environment B: Mortgage availability and housing demand E: Land availability H: Natural resources and climate change (New) C: Availability and costs of materials and F: Quality and reputation I: Cyber security (New) subcontractors Why we do it How we do it Prioritising sustainability The value we created in 2021 | | Investment | We continue to look for opportunities in | – We take account of sustainability | Investors | | --- | --- | --- | --- | --- | | | | the right locations that optimise our value | issues from the start of the landbuying | | | 1 | Shareholder capital | | | | | | | and meet our returns criteria. We | process, including biodiversity net | | management ## continue to focus on being responsive to gain, flood risk, proximity and access c.85k Ensuring long term sustainability | | land market conditions. In 2020, we | to infrastructure and services, | | | --- | --- | --- | --- | | of the business through securing | | | plots in our UK short term | | | completed an opportunity-led equity | sustainable transport, community | | | a quality land pipeline, located in | | | landbank (2020:c.77k) | | | raise. In 2021, we continued to transact | wellbeing and local economic | | places people want to live, with this increased land investment, development. good planning prospects. Our establishing a landbank to support – By focusing on placemaking we plan, strong land position comprises Investors growth in future years. design, layout and deliver schemes that both short term land (land with At this stage in the business model create successful and sustainable new some form of planning permission) ## we seek to manage the following communities, where our customers c.£3.4bn and strategic land (land with no Principal Risks: A, D, E, F, G, H can enjoy a good quality of life. residential planning at the time – We are prioritising nature by targeting land on the balance sheet we take a commercial interest). Relevant stakeholders: Customers, increased biodiversity on our (2020: c.£2.9bn) Investors, Employees developments. | | Development | We design and plot the right houses in | – In 2021, we contributed £418 million | Customers, Communities | | --- | --- | --- | --- | --- | | | | an efficient manner to generate strong | to local communities via planning | | | 2 | Protecting capital | | | | | | | returns while maximising available land | obligations (2020: £287 million). This | | and adding value ## resources and creating attractive places funded a range of infrastructure and 77 Progressing land through the | | to live. We engage extensively with | facilities including: affordable housing; | | | --- | --- | --- | --- | | planning system is the key way we | | | planning applications granted | | | communities, before and during the | green spaces; community, commercial | | | add value to the land we acquire. | | | (2020: 68) | | | lifetime of each development. We factor | and leisure facilities; transport | | Securing good quality planning in stakeholders’ needs, addressing infrastructure; heritage buildings; and permissions benefits both our land environmental and other local issues and public art. portfolio and the communities in Partners building community facilities to create – We also invest in public and which we build, providing much thriving communities. community transport, walkways and needed new homes, affordable ## At this stage of the business model cycle paths through our planning 11.1k housing, infrastructure and we seek tomanage the following obligations. In 2021, 67% of our UK community facilities through Principal Risks: A, B, F, G, H completions were within 500m of a subcontractors worked on planning obligations. public transport node and 86% average during 2021 Relevant stakeholders: Customers, within 1,000m. (2020: 12.3k) Communities, Investors, Employees Realising value | | | We build quality homes safely and | – We are working in our business and | Customers, Investors, | | --- | --- | --- | --- | --- | | 3 | Optimising stakeholder | | | | | | | efficiently, getting the customer | with suppliers and peers to reduce | Employees | | | returns | proposition right and optimising sales | energy use and waste, improve | | | Key to this is building quality | | price. This includes working closely with | resource efficiency and increase our | | | homes which are attractive to | | our supply chain and our central logistics | use of recycled materials and those | c.14.3k | | customers. Health and safety is | | function, TW Logistics, to ensure we | with lower embodied carbon. | | | our first priority and is not an area | | maximise the opportunities our scale | | new homes (including joint | – We have rigorous policies and | we will compromise. We seek to | affords. We develop deep knowledge | procedures in place to address health | ventures) completed for our | | --- | --- | --- | --- | | do the right thing, and deliver our | and foster close relationships with our | and safety risks, supported by training, | customers (2020: 9.8k) | | strategy in a way that benefits all | supply chain to improve pricing, visibility | communication and visible leadership. | | | our stakeholders. | and security of supply. We work with our | | | | | subcontractors to make improvements | | Employees | As a national housebuilder we to our processes and operations. We benefit from our scale in terms have implemented additional checks and of pricing and the visibility and ## driven higher measures to remove 5.4k certainty we are able to provide unnecessary costs and ensure we are to our partners and look to directly employed on average operating efficiently to maximise maximise and optimise the stakeholder returns. during 2021 (2020: 6.0k) efficiency of our operations. At this stage of the business model we seek tomanage the following Principal Risks: C, D, F, G, I Relevant stakeholders: Customers, Investors, Employees, Partners | Read more about our approach to | Read more on how we create | | --- | --- | | identifying and managing risk on | valuefor all stakeholder groups | | pages 59 to 65 | onpages34 to 47 | 23Taylor Wimpey plc Annual Report 2021 Strategic report Our strategy and key performance indicators Read more about our Principal Risks on pages 61 to 65 Strategic pillar Performance in 2021 Priorities going forward – We are pleased that we continue – We will see the New Homes Ombudsman ### Customers and to maintain our 5 star rating. come into effect in 2022 and we are ### communities | | – Our 9-month satisfaction scores give | continuing to align our processes to meet | | --- | --- | --- | | | us insight into how customers feel about | expectations and timescales set by | | | the homes and places we build over the | the Ombudsman. | | | longer term, and we are pleased to see | – Continue to embed CRM system into | | | an improvement in the year. | the business and generate insights | | | – We elevated the voice of the customer | and increased collaboration between | | | in the regional businesses this year by | departments. | | | introducing a Customer Director role | – Utilise our new standard house type range | | | which sits on the regional businesses’ | which reflects customer feedback and | | | management teams. | incorporates increased open plan living, | | | – Embedded our Customer Hub, where | more natural light and improved storage. | | Principal Risks | all initial customer calls are diverted to. | | | A, B, C, D, E, F, G, H, I | – Rolled out customer relationship | | management (CRM) system, using Read more in relation to our Microsoft Dynamics software, to all 23 stakeholders on pages 38 to 39, regional businesses. 42 to 43 and 44 to 45 – We continue to lead the volume – Great build quality continues to be ### Build quality | | housebuilders in build quality. | important for long term customer | | --- | --- | --- | | | – Due to the increase in productivity on site | satisfaction and reduced remediation | | | during the year, the average reportable | costs and waste. | | | items per inspection increased marginally. | – We aim to improve build quality further by | | | – We updated our scope of operations for | ensuring our quality assurance processes | | | subcontractors in 2021, which sets out | are embedded at every stage of build. Our | | | our expectations for build quality. This is | Consistent Quality Approach guidelines | | | part of the contract for subcontractors. | ensure our Site Managers, subcontractors, | | Principal Risks | – Key product suppliers provide training on | production and customer service teams all | | A, C, D, F, G, H | the correct installation of their products to | have a consistent understanding of the | | | ensure a quality build. | finishing standards we expect on all Taylor | | Read more in relation to our | | Wimpey homes. We also publish a | stakeholders on pages 38 to 39, customer version, so it is clearer for 42 to 43 and 44 to 45 customers what they can expect from us. – We have grown our short term landbank – Our strong landbank continues to be a key ### Optimising our and in today’s competitive land market are differentiator for us, and allows us to buy ### strong landbank able to operate selectively with the benefit land selectively, choosing good quality of the largest strategic pipeline in the sector. land at attractive returns. – Our strategic land pipeline remains a key – Continue to utilise our strategic land strength both as an important input to the pipeline to support the short term landbank. short term landbank and in providing an – Continue to buy land selectively at returns enhanced supply of land with greater that maximise value for our shareholders. control over the planning permissions – Remain very focused on progressing new we receive. acquisitions through the planning system – We continue to source a large and opening quality outlets. proportion of completions from our – Our new house type range will help to strategic land pipeline. support best use of our landbank through – Our landbank years metric continues to improved plotting efficiency. run ahead of our target as we continue to process land bought as a result of our equity raise in June 2020, when we saw a short term opportunity in the land market to invest for the long term. – Land cost as a percentage of average selling price on approvals has returned to a low level. – Opportunistic landbuying during the pandemic has allowed us to be selective in a more competitive environment, Principal Risks supporting future land cost as a A, D, E percentage of average selling price on approvals. Read more in relation to our stakeholders on pages 42 to 43 and 44 to 45 24 Taylor Wimpey plc Annual Report 2021 Principal Risks key: A: Government policies, regulations and planning D: Attract and retain high-calibre employees G: Health, safety and environment B: Mortgage availability and housing demand E: Land availability H: Natural resources and climate change C: Availability and costs of materials and F: Quality and reputation I: Cyber security subcontractors Link to remuneration KPI | | | | | Objective: We strive to achieve 90% or | | | | | Objective: We strive to improve this score | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Customer satisfaction | | | | | Customer satisfaction | | | | | | | | | | above in this question, which equates to a | | | | | and understand the reasons behind and | | 8-week score ‘would you | | | | five-star rating. | 9-month score ‘would you | | | | underlying drivers of this customer feedback. | | recommend?’ | | | | | recommend?’ | | | | | | | | | | Definition: Percentage of customers who | | | | | Definition: Percentage of customers who | | | | | | would recommend Taylor Wimpey to a friend | | | | | would recommend Taylor Wimpey to a friend | | | | | | as measured by the National New Homes | | | | | as measured by the National New Homes | | | | | | Survey undertaken by the NHBC on behalf of | | 77% | 78% | 79% | Survey undertaken by the NHBC nine | | | | 92% | 92% | | | | | | | | | 89% | | | the HBF eight weeks after legal completion. | | | | | months after legal completion. | | | | | | Why it is key to our strategy: Identifying | | | | | Why it is key to our strategy: We think | | | | | | and serving the needs of our customers by | | | | | about how customers live in the homes and | | | | | | delivering a high-quality product is key to our | | | | | places we build for longer than the first few | | | | | | ambition to become a customer-focused | | | | | months after they move in. Ensuring our | | | | | | homebuilder. | | | | | customer satisfaction remains high in the | months following completion is important. Read more on pages 106 to 108 Note: The 8-week ‘would you recommend’ score for 2021 relates to customers who legally completed between October 2020 and September 2021, with the comparators relating to the same period in the prior years. The 9-month ‘would you recommend’ score for 2021 relates to customers who legally completed between October 2019 and September 2020, with the comparator relating to the same period in the prior years. | | | Objective: To achieve an average score of | | | Objective: Reduce defects found during | | --- | --- | --- | --- | --- | --- | | Construction Quality | | | Average reportable items | | | | | | four out of six across Taylor Wimpey. | | | buildstages. | | Review | | | per inspection | | | | | | Definition: The average score, out of six, | | | Definition: The average number of defects | | | | achieved during an in-depth annual review of | | | found per plotduring NHBC inspections at | | | | construction quality on a site-specific basis. | | | key stages of the build. | | | 4.67 | Why it is key to our strategy: Right first | | 0.28 | Why it is key to our strategy: Reducing | 4.45 0.26 4.13 time continues to be a key priority within our the number of defects per plot is crucial to 0.24 customer-focused approach. CQRs focus on ensuring we deliver consistently high-quality construction quality and understanding ‘why homes for our customers, whilst also or how’ given levels of quality have resulted. minimising the cost of rectifications. Read more on pages 106 to 108 | | Objective: We aim to source more than | | Objective: Increase landbank efficiency – | | --- | --- | --- | --- | | Strategically sourced | | Landbank years | | | | 40% of our completions from the strategic | | reduce length ofshort term owned and | | completions | pipeline per annum in the medium term. | | controlled landbank years by c.1year to | 4-4.5years. Definition: Number of completions on land which originally did not have a residential Definition: The years of land supply in our 56% planning permission when we acquired a short term landbank based at current 55% commercial interest in it, expressed as a completion levels. 50% percentage of total completions. c.8.1 Why it is key to our strategy: We seek to | Why it is key to our strategy: The strategic | | use our high-quality landbank more efficiently | | --- | --- | --- | | pipeline enhances our ability to increase the | c.6.1 | to deliver growth, bothin the number and | | contribution per legal completion because of | | quality of homes built for a wider range | c.4.8 the inherent margin uplift from strategic ofcustomers. plots. It also allows us to take a long term view of sites. Objective: To maintain at current levels or Land cost as % of average reduce our average land cost. selling price on approvals 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 18.3% value for our shareholders. 16.2% 16.1% 25Taylor Wimpey plc Annual Report 2021 19 20 21 19 20 21 19 20 21 19 20 21 19 20 21 19 20 21 19 20 21 Strategic report Our strategy and key performance indicators continued Strategic pillar Performance in 2021 Priorities going forward – Voluntary employee turnover has – We embed a safety culture through ### Be the employer increased following a year of very low training, awareness and visible health and ### of choice in our | | employee turnover as a result of the | safety leadership. We continue to focus | | --- | --- | --- | | industry | uncertainty caused by the pandemic. | on continuing to improve health and safety | | | – Recruitment to early talent programmes | on our sites. | | | has increased in the year. Increasing the | – Work with the sector to collectively | | | future skills and talent within our business | address the skills shortage. | | | is essential for long term sustainability, | – In 2022, we will explore how we can | | | particularly in the face of a well-known | increase flexibility for on site roles. | | | industry skills shortage. | – To support attracting, selecting and | | | – Due to the restructure of the business and | retaining diverse candidates we will run an | | | increased employee turnover, in 2021 the | inclusive leadership coaching programme | | | number of directly employed key trades | for Managing Directors in 2022. | | | and apprentices reduced. | – Benchmark our policies and practices | | | – Health and safety is the number one | against the Stonewall Diversity Benchmark. | | | priority at Taylor Wimpey and we will never | – Offer training which progresses careers | | | compromise on this commitment to our | and strengthens succession pipelines to | | | people and everyone who works on or | drive business continuity and level of | | | visits a Taylor Wimpey site. | knowledge and experience in a highly | | | – Our AIIR remains well below both the HBF | competitive skills sector. | Home Builder Average AIIR of 264 and Health and Safety Executive construction industry average AIIR of 353, but we will continue to seek to improve this. We believe the increase in the accident rate is due to higher than average turnover among operatives and an increase in Principal Risks production on our sites. D, F, G, H – We conducted an employee survey in 2021, high scoring areas in this survey Read more in relation to our included health and safety, diversity and stakeholders on pages inclusion, and our vision and strategy. 40 to 41 and 42 to 43 – We generated a strong sales rate in 2021, – Continue to focus on generating ### Best in class in the context of a supportive backdrop efficiencies. ### efficient engine | | of low interest rates and good mortgage | – Continue to prioritise a strong order book. | | --- | --- | --- | | room | availability. | – We remain focused on optimising sales | | | – Entered 2021 with a strong order book | prices to support margins and shareholder | | | position, reflecting continued strong | returns. | | | demand for our homes and supporting | – Our new house type range supports | | | visibility. | efficiencies and the transition to upcoming | | | – Private legal completions per outlet were | new regulations. In 2022, we will start to | | | particularly strong in the year, recovering | sell homes from our new house type range. | from the impact of COVID-19. – In 2021, we successfully built the prototypes of the new house type range and tested these with customers. – In the year, we relocated our Taylor Wimpey Logistics (TWL) business to more efficient space in Peterborough. TWL helps drive efficiencies and quality and gives good visibility of supply. – Embedded cost discipline mindset in the business. Principal Risks A, B, C, D, E, F, G, I Read more in relation to our stakeholders on pages 38 to 39 and 40 to 41 26 Taylor Wimpey plc Annual Report 2021 Principal Risks key: A: Government policies, regulations and planning D: Attract and retain high-calibre employees G: Health, safety and environment B: Mortgage availability and housing demand E: Land availability H: Natural resources and climate change C: Availability and costs of materials and F: Quality and reputation I: Cyber security subcontractors KPI Objective: We aim to attract andretain the Objective: To reduce the impact of the Voluntary employee Number recruited into best people intheindustry and give them industry skills shortage and future-proof turnover opportunities to develop to their full potential. early talent programmes our business. Weaim to keep this within a range of 5-15%. Definition: The amount of people recruited Definition: Voluntary resignations divided by onto one of our early talent programmes 116 number of total employees. including graduates, management trainees 19.0% and site management trainees. Why it is key to our strategy: Our 105 | | | employees are one of our greatest | | Why it is key to our strategy: Creating a | | --- | --- | --- | --- | --- | | | | competitive advantages and they are crucial | | more consistent framework and | | 12.9% | | toexecuting our strategy. Low employee | | development path for early and ongoing | | | | turnover supports greater depth of | | talent management will underpin our future | | | 9.4% | | 47 | | | | | experience, continuity and development of | | growth and customer-focused approach. We | | | | skills within our teams. | | 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. | | Objective: To improve quality, reduce | | Objective: We are committed to providing a | | --- | --- | --- | --- | | Directly employed key | | Health and Safety Annual | | | | bottlenecks in key trade supply, reduce the | | safe place in which our employees and | | tradespeople, including | impact of the industry skills shortage and | Injury Incidence Rate | subcontractors canwork and our customers | | trade apprentices | future-proof the business. | (per 100,000 employees and | can live. | contractors) | Definition: The number of key tradespeople | Definition: Reportable (allreportable) injury | | --- | --- | | directly employed by TaylorWimpey | frequency rate per 100,000 employees | | including bricklayers, joiners, carpenters, | andcontractors (Annual Injury Incidence Rate). | painters, scaffolders and trade apprentices. 1,169 Why it is key to our strategy: Health and Why it is key to our strategy: Against 214 safety is our non-negotiable top priority. 1,038 | | industry-wide skills shortages and uncertainty | | | Aswell as having a moral duty tomaintain | | --- | --- | --- | --- | --- | | | we aim to future-proof our workforce. We do | | | safety on site, accidents and injuries can | | 743 | | 156 | 151 | | | | this by developing skills to build quality | | | have a detrimental impact on the business | | | homes and behaviours which align our | | | through additional costs, delays and / or | | | business to our customer-focused approach. | | | reputational damage. | Objective: Ensure an efficient sales rate Objective: We focus on building a strong Net private sales rate Order book volume that captures market demand and is order book for thefuture while balancing our balanced with achieving the right sales customers’ needs. This is particularly price for our homes. important in an uncertainmarket. 0.96 Definition: The average number of private Definition: The total number of homes in 0.91 sales made per outlet per week. our year end order book. 10,685 | 0.76 | | 9,725 | 10,009 | | | --- | --- | --- | --- | --- | | | Why it is key to our strategy: We want to | | | Why it is key to our strategy: Astrong | | | become a moreefficient and agile business | | | order book provides our customers with | | | that can respond quickly toopportunities in | | | good visibility and provides greater stability | | | the market, creating increased value | | | for business planning and enhances our | | | forourshareholders. | | | ability todeliver the best experience for | customers whilst driving themost value for our shareholders. Objective: To improve efficiency on our Objective: We focus on building a strong Private legal completions Order book value sites and increase the number of legal order book for thefuture while balancing our per outlet completions per outlet. customers’ needs. This is particularly important in an uncertainmarket. Definition: The number of private legal completions peroutlet. Definition: The total value of homes in our yearend order book. Why it is key to our strategy: We are 51.0 working to increase new home supply for a Why it is key to our strategy: Astrong 48.2 wider range of customers by improving £2,684m order book provides our customers with £2,550m efficiency across our sites. good visibility and provides greater stability £2,176m for business planning and enhances our 31.5 ability todeliver the best experience for customers whilst driving themost value for shareholders. 27Taylor Wimpey plc Annual Report 2021 19 20 21 19 20 21 19 20 21 19 20 21 19 20 21 19 20 21 19 20 21 19 20 21 Strategic report Environmental strategy Our environment strategy ## Building a Our key objectives and targets Supporting targets Performance update | | Climate change | – Reduce operational energy intensity by 32% for UK building sites by 2025 | | | | --- | --- | --- | --- | --- | | better world | | | 13% | 72% | | | Protect our planet and our future by playing | – Purchase 100% REGO-backed (Renewable Energy Guarantees of Origin) | | | | | our part in the global fight to stop climate | green electricity for all new sites | | | | | | | reduction in | of our total electricity | change. – Reduce emissions from customer homes in use by 75% by 2030 operational carbon consumption from REGO feedback, including investor feedback and ### Climate change and the | | | Achieve our science-based carbon | | emissions intensity | backed renewable energy | | --- | --- | --- | --- | --- | --- | | | research with customers. It has been reviewed | | – Reduce embodied carbon per home by 21% by 2030 | | | | biodiversity crisis are | | reduction target: | | from a 2019 baseline | | | | and approved by our Board of Directors. | | – Reduce car and grey fleet emissions by 50% by 2025 | | | – Reduce operational carbon emissions ### threatening the future of Many environmental issues for our sector are – Update our policies and processes to reflect the risks and opportunities intensity by 36% by 2025 from a ## 20% 50% ### today’s young people and systemic. Achieving net zero in housebuilding from a changing climate by 2022 2019 baseline | | will require system-level changes and | | | reduction in absolute | reduction in operational | | --- | --- | --- | --- | --- | --- | | generations to come. | | – Reduce carbon emissions intensity from | – Make it easier for close to 40,000 customers to work from home and enable | | | | | coordinated action by multiple parties, from | | | operational carbon | carbon emissions intensity | | | | our supply chain and customer homes | more sustainable transport choices through 36,000 EV charging points and | | | | | suppliers to governments, and at all points | | | emissions from a 2019 | since 2013 | | Our environment strategy, Building a Better | | by 24% by 2030 from a 2019 baseline | 3,000 additional bike stands by the mid 2020s | | | | | along the value chain. We work with others | | | baseline | | World, is our response to this crisis. It sets to tackle industry-wide challenges directly out how we will play our part in creating a Nature Include our wildlife enhancements on all suitable new sites: All business units received and through industry organisations. During greener, healthier future for our customers, ## 100 guidance on: 2021, we contributed to the development of Improve access to and enable enjoyment – Hedgehog highways from 2021 colleagues and communities, and reduce | | the Future Homes Delivery Plan and into the | of nature for customers and communities | | | – Installation of hedgehog | | --- | --- | --- | --- | --- | --- | | and mitigate environmental risks to | | | – Bug hotels (at least 20% of homes) from 2021 | new sites included a | | | | work of the Future Homes Hub, including a | by regenerating the natural environment on | | | highways | | our business. | | | | hedgehog highway | | – Bat boxes (at least 5% of homes) from 2022 project with Next Generation to develop a our developments. – Bug hotels and bee bricks Our environment strategy common set of sustainability metrics for the – Bird boxes (at least 80% of homes) from 2023 Increase natural habitats by 10% on new – Nature friendly planting Our strategy focuses on the key new homes sector. sites from 2023 and include our priority – Wildlife ponds from 2024 ## 3 environmental impacts for our business: – Biodiversity net gain wildlife enhancements from 2021. – Reptile and amphibian hibernation sites from 2025 Reducing operational carbon emissions climate change, nature, resources and regional business have We are working on a range of projects to – All new sites have planting that provides food for local species waste. It commits us to take action across installed beehives reduce energy use on our sites and are throughout the seasons our value chain – reducing the environmental | | partnering with cabin manufacturer, Danzer | – Help customers engage with nature and create 20,000 more | | | --- | --- | --- | --- | | impacts of the goods and services we buy | | | Nature partnerships | | | and the Carbon Trust to design and to trial | nature-friendly gardens by 2025 | | | and helping customers reduce their own | | | with Buglife and | new energy efficient portacabins. We are footprint and achieve their aspiration of a – 200 beehives on our sites by 2025 Hedgehog Street also developing an energy-efficiency greener and healthier lifestyle. approach to retrofitting our existing cabins. 1 Resources and waste – Engage with suppliers to meaningfully reduce plastic packaging on our Volume of waste Our carbon reduction target has been ## We purchase 100% renewable electricity sites by 2025 (tonnes of construction 97% Protect the environment and improve approved by the Science Based Targets waste per 100 sqm build) for new sites during construction which efficiency for our business and our – Help 20,000 customers to increase recycling at home by 2025 initiative (SBTi). The SBTi has confirmed that of construction waste is around 72% of our total electricity customers by using fewer and more our operational target is consistent with – Reduce operational mains water intensity by 10% from a 2019 baseline recycled consumption (2020: 58%) and reduces sustainable resources. reductions required to keep warming to by 2025 (2020: 97%) our operational carbon footprint. We have | 1.5°C, the most ambitious goal of the Paris | | Cut our waste intensity by 15% by 2025 | | | | --- | --- | --- | --- | --- | | | successfully tested hydrotreated vegetable | | – Make it easier for 20,000 customer households in water stressed regions | | | Agreement. Our scope 3 goal meets the | | and use more recycled materials. | | | | | oil as a lower carbon alternative to diesel for | | to install a water butt by 2025 | | | SBTi’s criteria for ambitious value chain | | By 2022, publish a ‘towards zero waste’ | | | | | on site plant equipment and our flexible car | | | 45,000 | – Measure the environmental footprint of the key materials in our homes reductions, in line with current best practice. strategy for our sites. benefit scheme ‘MyDrive’ enables employees and set a reduction target paint pots reused | Development of our strategy has been | to have access to a new low emission car. | | | | --- | --- | --- | --- | | | | – Measure air quality in our homes and on our sites by 2021 | or recycled | | informed by our materiality assessment, risk | Around 43% of vehicles in our company car | | | | | | – Give customers the information they need to maintain good air quality | (2020: 19,400) | | management processes and stakeholder | scheme are now EV or hybrid (2020: 30%). | | | in their homes by the end of 2021 A home for nature on our sites We are partnering with nature organisations to help us apply best practice approaches As a major landowner, we can play a and engage customers and colleagues. In significant role across our developments in 2021, we worked with Hedgehog Street, a improving the UK’s biodiversity, making the campaign by the British Hedgehog communities of the future richer in ecological Preservation Society and People’s Trust for as well as economic terms. Endangered Species to integrate hedgehog We take a holistic approach starting with site highways across over 100 new sites. We design and layout, and encompassing use of also worked with Buglife, The Invertebrate green infrastructure, wildlife enhancements Conservation Trust, to install bee bricks and and wildlife friendly planting. We conduct an bug hotels. We supported our brick supplier, ecological impact assessment for all sites, Ibstock, on development of their first range that identifies protected species or habitats. of bee bricks and have trialled them at one We use ecologists’ reports to identify the of our sites. measures needed, and these We celebrated best practice with a special recommendations are embedded into the commendation for biodiversity in our annual Site Specific Environmental Action Plan, part of Placemaking Awards. our Environmental Management System. All new sites will integrate a biodiversity net gain approach from 2023, and some already do so. 28 Taylor Wimpey plc Annual Report 2021 Our environment strategy Our key objectives and targets Supporting targets Performance update | Climate change | – Reduce operational energy intensity by 32% for UK building sites by 2025 | | | | --- | --- | --- | --- | | | | 13% | 72% | | Protect our planet and our future by playing | – Purchase 100% REGO-backed (Renewable Energy Guarantees of Origin) | | | | our part in the global fight to stop climate | green electricity for all new sites | | | | | | reduction in | of our total electricity | change. – Reduce emissions from customer homes in use by 75% by 2030 operational carbon consumption from REGO Achieve our science-based carbon emissions intensity backed renewable energy – Reduce embodied carbon per home by 21% by 2030 reduction target: from a 2019 baseline – Reduce car and grey fleet emissions by 50% by 2025 – Reduce operational carbon emissions – Update our policies and processes to reflect the risks and opportunities intensity by 36% by 2025 from a ## 20% 50% from a changing climate by 2022 2019 baseline | – Reduce carbon emissions intensity from | – Make it easier for close to 40,000 customers to work from home and enable | reduction in absolute | reduction in operational | | --- | --- | --- | --- | | our supply chain and customer homes | more sustainable transport choices through 36,000 EV charging points and | operational carbon | carbon emissions intensity | | by 24% by 2030 from a 2019 baseline | 3,000 additional bike stands by the mid 2020s | emissions from a 2019 | since 2013 | baseline | Nature | Include our wildlife enhancements on all suitable new sites: | | All business units received | | --- | --- | --- | --- | | | | 100 | guidance on: | | Improve access to and enable enjoyment | – Hedgehog highways from 2021 | | | | of nature for customers and communities | | | – Installation of hedgehog | | | – Bug hotels (at least 20% of homes) from 2021 | new sites included a | | | by regenerating the natural environment on | | | highways | hedgehog highway – Bat boxes (at least 5% of homes) from 2022 our developments. – Bug hotels and bee bricks – Bird boxes (at least 80% of homes) from 2023 Increase natural habitats by 10% on new – Nature friendly planting sites from 2023 and include our priority – Wildlife ponds from 2024 ## 3 – Biodiversity net gain wildlife enhancements from 2021. – Reptile and amphibian hibernation sites from 2025 regional business have – All new sites have planting that provides food for local species installed beehives throughout the seasons | – Help customers engage with nature and create 20,000 more | Nature partnerships | | --- | --- | | nature-friendly gardens by 2025 | with Buglife and | | – 200 beehives on our sites by 2025 | Hedgehog Street | 1 Resources and waste – Engage with suppliers to meaningfully reduce plastic packaging on our Volume of waste ## sites by 2025 (tonnes of construction 97% Protect the environment and improve waste per 100 sqm build) efficiency for our business and our – Help 20,000 customers to increase recycling at home by 2025 of construction waste customers by using fewer and more – Reduce operational mains water intensity by 10% from a 2019 baseline recycled sustainable resources. by 2025 (2020: 97%) 8.71 Cut our waste intensity by 15% by 2025 – Make it easier for 20,000 customer households in water stressed regions 7.50 and use more recycled materials. to install a water butt by 2025 6.52 By 2022, publish a ‘towards zero waste’ ## – Measure the environmental footprint of the key materials in our homes 45,000 strategy for our sites. and set a reduction target paint pots reused – Measure air quality in our homes and on our sites by 2021 or recycled – Give customers the information they need to maintain good air quality (2020: 19,400) in their homes by the end of 2021 Resource efficiency stairwell holes during construction). This is now being rolled out and will save over 3,000 Building homes at volume generates high tonnes of timber and up to 1,000 tonnes of levels of material waste. To minimise our CO 2 over the next five years. We have also ecological impact we aim to use fewer and reduced off-cuts by specifying timber and more sustainable materials and make sure as plaster board sizes to suit our configurations, little as possible of what we do use is wasted. while greater use of modular components We already source many materials with constructed off site is reducing waste. recycled content and lower embodied As well as designing out waste, we are also carbon and energy and will increase this. training colleagues, publishing a waste Examples include use of timber frame, league table and incentivising Site Managers recycled glass mineral wool insulation, by linking their performance bonus to recycled plastic in uPVC windows, recycled progress on waste reduction. chipboard and recycled aggregates. Our approach includes partnering with suppliers. For example, during 2021, we worked with a supplier to develop a reusable alternative to temporary decking and joists (used to prevent accidents by covering 1. We have improved our waste data collection processes and are now capturing data for some construction waste not previously included in our reporting. Our data now also includes hazardous waste. As a result we have restated our waste data for the last three years. 29Taylor Wimpey plc Annual Report 2021 19 20 21 Strategic report Materiality assessment ## Understanding what matters ## most to our stakeholders Our materiality assessment methodology | 1. Issue identification | 2. Stakeholder research | 3. Internal interviews | 4. Review | | --- | --- | --- | --- | | A long list of issues was | We sought the views of | andresearch | The long list of issues were | | identified based on our current | investors, local government, | We carried out internal interviews | grouped and plotted on our | | priorities, our previous materiality | non-governmental organisations | and research with senior leaders, | materiality matrix. This was | | assessment, business strategy, | (NGOs), academics, registered | functional leads, and graduates. | then reviewed and refined, | | our main impacts and risks, long | social landlords and sustainable | | including through meetings | | term and market trends, the UN | business organisations. We also | | with our Chief Executive | | Sustainable Development Goals | drew on consumer research, a | | andmembers of our Group | | and other external frameworks. | Government policy review and | | Management Team. | amedia scan. | We conduct a regular materiality assessment | We regularly update our assessment. | Our Legacy, Engagement and Action for the | | --- | --- | --- | | to make sure we focus on the sustainability | Thelast update was in early 2020. | Future (LEAF) committee has reviewed the | | issues (environmental, social and economic) | | Goals and their relevance to our business. | | of most importance to our business and | Read more in our Sustainability Supplement 2021 | We used this analysis to inform our | | ourstakeholders. | | materiality process and in the development | Read more in Stakeholders on pages 38 to 47 of our environment strategy. An index is To determine materiality, we look at the included on our website, showing how we impact or potential impact of an issue on United Nations Sustainable can support the goals. ourbusiness strategy (from a performance, cost or risk perspective). We also consider the Development Goals Read more about how we support the SDGs at impact of our business on the issue andthe We support the United Nations Sustainable www.taylorwimpey.co.uk/corporate/sustainability | importance of the issue to our stakeholders | Development Goals (SDGs), which aim to | | --- | --- | | such as colleagues, customers, investors and | unite governments, businesses and the third | | communities. This is sometimes known as a | sector to end poverty, fight inequality and | | ‘double materiality’ approach. | address climate change. | | We use the results of our assessment | By delivering on our purpose, we will | | toinform our reporting and disclosure, | contribute, in particular, to delivering UN | | development of our environment strategy | Sustainable Development Goal 11: ‘making | | and our approach to ESG governance and | cities and human settlements inclusive, safe, | | risk management. | resilient and sustainable’. | ### Highlights in delivering ### onstakeholder priorities Sustainable homes Land, planning and Environment Customer service and quality andcommunities communityengagement | £418m | 21% | 50% | | 92% | | --- | --- | --- | --- | --- | | contributed to local | of our homes were built on | reduction in our direct | | customer satisfaction | | communities via planning | brownfield land | CO | 2 emissions intensity | 8-week score | | obligations | | since 2013 | | | 30 Taylor Wimpey plc Annual Report 2021 Our materiality matrix Key to material issues The issues identified in our materiality matrix have been grouped to create a list ofnine material issues. Sustainable homes andcommunities Responsible sourcing Corresponding colours have been used to show how Land, planning and community engagement People and skills theissues have been grouped. Customer service and quality Charitable giving Health, safety and wellbeing Governance and management Environment Affordability & Fire safety Climate change supply of housing mitigation & adaptation Build quality (inc flood risk) Placemaking, design Sustainable homes & lifestyles & community infrastructure Health, safety & wellbeing Biodiversity (employees) Sustainable transport Ethics, culture, Customer health & wellbeing governance & transparency Air quality Land, planning, community engagement Site environmental Ethical sourcing & human rights Customer & remediation service / Access to skills satisfaction Choice of land Innovation (greenfield, brownfield) Sustainable materials Inclusion & diversity Resource use & waste Accessible & adaptive homes Privacy / data security Labour relations Water use efficiency Taxation & remuneration policies Employee engagement Charitable giving Medium Internal view – importance to the business People and skills Health, safety and wellbeing Responsible sourcing Charitable giving | 96% | 214 | A | £1.1m | | --- | --- | --- | --- | | employees feel they can be | Annual Injury Incidence Rate | Supplier Engagement score | donated and fundraised | | their authentic self at work | (per 100,000 employees | from CDP for our approach | forcharities and local | | | and contractors) | to engaging suppliers on | community causes | climate change 31Taylor Wimpey plc Annual Report 2021 Medium HighExternal view – importance to stakeholders High Strategic report Material issues progress andtargets ## Material issues progress andtargets We focus on the sustainability issues that We set targets for each of our material A summary of our new targets can be found in | aremost material for our business and | issuesto help focus our efforts and drive | our Sustainability Supplement 2021. | | --- | --- | --- | | theareas where we can have a positive | progress. This includes the targets which | | | impact through the homes we build, how | arepart of our environment strategy. | | wedevelop our people and our approach During 2021 we made good progress In recognising the important link between the tothe environment. acrossmany of our target areas including Company’s material issues and risk quality, customer service, carbon management, our material issues have been aligned to our Principal Risks, as set out on reduction and waste. pages 61 to 65. Sustainable homes and communities Targets Progress Status Make it easier for close to 40,000 customers to work We are improving our data collection process for this target and expect to report progress next year. from home and enable more sustainable transport choices through 36,000 EV charging points and 3,000 additional bike stands by the mid 2020s Help 20,000 customers to increase recycling at home We will be working on this target during 2022. by 2025 Make it easier for 20,000 customer households in water As a first step, we are mapping our regions to identify areas of current and potential water stressed regions to install a water butt by 2025 stress.We are also reviewing our plotting for house types to understand the best locations for waterbutt installation. Give customers the information they need to maintain We added information and advice to help customers maintain good internal air quality at home to good air quality in their homes by the end of 2021 our House to Home Manual, Maintenance Guide and Touchpoint online portal. Add an environmental category to our We added a biodiversity commendation category to our awards. This was awarded to one of placemakingawards our strategic land sites which demonstrated good connectivity, biodiversity net gain, inclusion of species enhancements and nature friendly planting schemes as well as good use of green and blue infrastructure. Roll-out our new standard house type range and We built 10 pilot plots for our new standard house types in 2021, and gathered feedback from develop a range of standard apartments colleagues, customers and suppliers on the new designs. The range will be rolled out during 2022. We’ve also developed concept designs for our standard apartment range that will be tested in 2022. Land, planning and community engagement Targets Progress Status Update our policies and processes to reflect the risks We have conducted climate scenario analysis and will be further developing our approach in 2022 and opportunities from a changing climate by 2022 as we develop our net zero transition plan. Continue to strengthen our engagement and Due to the pandemic, 2021 presented a number of challenges for engaging with local communities. relationship with the local communities in which However, by utilising social media, online exhibitions and virtual forums we were able to ensure a weoperate broad section of the community could participate. Customer service and quality Targets Progress Status Achieve a CQR score of at least 4.1 in each of our In 2021, our average score was 4.67 (2020: 4.45) compared to an industry benchmark group regional businesses and at least 75% of build stages average of 4.43. We met our target to achieve at least a 4.1 rating by 2021 in each regional business toscore 4 or above in all regional businesses and 91% of build stages scored at least four. Resolve at least 70% of customer issues within 28 days In 2021, we achieved 53% (2020: 52%). The pandemic and rules around self-isolation affected the speed at which we were able to resolve defects and move customers into new homes. Resolve all complaints or have agreed an action plan We achieved this for 75.9% of complaints in 2021. We were disappointed to miss this goal, which within 8 weeks was due in part to the impact of COVID-19 and self-isolation rules on our teams' ability to respond promptly to customer issues. Our CRM system and the introduction of Customer Director roles in our regional businesses will help us to improve performance. Maintain a recommend score of at least 90% in the HBF In 2021, 92% of customers in the 8-week survey would recommend us to a friend (2020: 92%). 8-week survey, which equates to a 5-star rating Thismeans we met our target to maintain a 5-star rating. Improve our 9-month customer satisfaction survey score Our score for 2021 was 79.2% (2020: 78.2%). Achieve a 4.5 star rating on Trustpilot We maintained our 4 star rating but did not increase this to 4.5 star. 32 Taylor Wimpey plc Annual Report 2021 Key to material issues ● Achieved / on track to meet target ● Not achieved ## Health, safety and wellbeing | Targets | Progress | Status | | --- | --- | --- | | Maintain or lower our ABI, compared with 2020 | Our AIIR increased slightly year on year but remains well below the average for the sector. | ● | | Train customer service teams on conducting safety risk assessments when responding to customer call-outs | We trained our customer service teams to assess any safety risks to employees, contractors or customers to ensure we respond safely to customer call-outs. | ● | | Update our Construction, Design and Environmental Management Manual and roll out a training and audit programme | We began the update process in 2021 and this will continue during 2022. We will audit implementation during 2022. | ● | | Run a dust awareness campaign for subcontractors | Our campaign reminded everyone on our sites of the importance of dust control and correct use of PPE. We also updated the equipment used to wet dust, which can now be operated by one rather than two people, minimising exposure. | ● | | Train business unit management teams to record safety observations when visiting sites | Our Accident and Incident Reporting System, SHE Assure, is being rolled out and training will take place in 2022. | ● | | Support Site Managers to improve safety performance through site inspections and follow up by our safety team and HSE Advisors | All sites have monthly inspection and development visits from our external HSE Advisors. We increased this to two visits per month during 2021 to provide further support to Site Managers. | ● | ## Environment | Targets | Progress | Status | | --- | --- | --- | | Achieve our science-based carbon reduction target: reduce operational carbon emissions intensity by 36% by 2025; reduce carbon emissions intensity from our supply chain and customer homes by 24% by 2030 | Our operational emissions intensity (scope 1 and 2), decreased by 10% against our 2019 baseline, meaning we are on track to our target. We are developing our methodology and expect to report progress on carbon emissions from our supply chain and customer homes from 2022. | ● | | Increase natural habitats by 10% on new sites from 2023 and include our priority wildlife enhancements from 2021 | We are developing our biodiversity net gain measurement approach for launch in 2023. We began the roll-out of wildlife enhancements on our sites starting with hedgehog highways, low bricks and bug hotels. | ● | | Cut our waste intensity by 15% by 2020 and use more recycled materials. By 2022, publish a 'towards zero waste' strategy for our sites. | We have reduced waste intensity by 13% since 2019. We will publish our towards zero waste strategy during 2022. We are reviewing opportunities to expand our use of recycled materials and measure progress. | ● | A full summary of our environmental targets and performance can be found on pages 26 and 28. ## Responsible sourcing | Targets | Progress | Status | | --- | --- | --- | | Roll out our sustainability questions to national partner suppliers | We rolled out the questionnaire to Group suppliers during 2021 and will be reviewing the results in early 2022. | ● | | Launch new digital tender system for Group suppliers and integrate sustainability compliance into the tender process | Group suppliers are required to confirm compliance with our standards via our digital tender system, including in relation to employment standards, modern slavery and the real living wage. Further requirements on climate change and waste will be added during 2022. | ● | | Increase the proportion of homes built using timber frame to 20% | We are working towards reaching 20% usage of timber frame and increasing consistency of use across our regions. | ● | ## People and skills | Targets | Progress | Status | | --- | --- | --- | | Launch our updated Equality, Diversity and Inclusion policy, Maternity, Patients and Adoption Leave policy, and first Menopause policy | We published our updated Equality, Diversity and Inclusion policy, Maternity and Adoption Leave policy, and first Menopause policy during 2021, and made a policy summary available to all employees explaining the changes. | ● | | Introduce reverse mentoring with LGBTQ+ colleagues, following successful pilot with black, Asian and minority ethnic employees in 2020 | We ran reverse mentoring for 10 senior leaders in 2021 who were partnered with colleagues who are black, Asian or from another ethnic minority and/or who identify as LGBTQ+. | ● | | Launch our updated Wellbeing Policy | We launched our Wellbeing Policy which sets out our commitment and the support we offer to create a workplace where health and wellbeing concerns are addressed in an open and supportive way. | ● | | Roll out respectful workplace training to site management teams to ensure every site provides an inclusive work environment | We treated our training in two business units and received positive feedback from colleagues. We will extend the training to nine further business units in 2022. | ● | ## Charitable giving | Targets | Progress | Status | | --- | --- | --- | | Hold our Taylor Wimpey Challenge and participate in the Housebuilders Challenge event | 2021 saw 169 participants take part in the Taylor Wimpey Challenge-raising over £100k of which £75k was donated to the Youth Adventure Trust and over £28k to other charities. We also entered 15 teams for the Youth Adventure Trust Housebuilder Challenge event raising over £4%. | ● | | Continue to support St Mungo's Construction Skills programme with a focus on helping people progress from training and into work | Our donation of £132k in 2021 directly supported two Construction Skills Tutors working in the St Mungo's Construction Skills Training Centres in Brent and Camden. The centres help people recovering from homelessness to gain new skills and qualifications, build their confidence and find employment in the construction industry. | ● | | Run a graduate challenge to raise money for the Prince's Trust | Our graduates entered the Prince's Trust 'Million Makers' challenge to raise money to support vulnerable young people. They raised over £37k through two initiatives. | ● | Taylor Wimpey plc Annual Report 2021 33 ![img-13.jpeg](img-13.jpeg) Strategic report Stakeholder engagement ## Stakeholder performance and priorities | | Key material issues forthese | | Engagement performance | | | --- | --- | --- | --- | --- | | Our stakeholder groups | stakeholders How we engage | | metrics and highlights in 2021 Priorities for 2022 | | | Our customers | Sustainable homes | – We engage directly with customers at our developments, | – 5-star housebuilder as measured by NHBC ‘would you recommend’ score. | – We are aligning our processes to make sure we meet the | | | and communities | via our customer portal (Touchpoint), through emails, letters and | – Received positive feedback from customer research, interviewing | expectations and timescales being set by the Ombudsman | | | | meetings and through social media. | prospective home buyers on our new house type range. | which will be introduced in 2022. | Environment – We monitor customer views through focus groups, satisfaction – Introducing a Customer Director role which sits on the regional – Test concept designs for our standard apartment range. Health, safety and wellbeing surveys, Trustpilot reviews and post-occupancy research. businesses’ management team. – Maintain high levels of customer service and a score of – Our website is updated with relevant information. – During 2021, the Competition and Markets Authority’s investigation over 90% in the HBF 8-week survey which equates to Customer service and quality – The Chief Executive wrote to all customers to update on into the historical sale of leasehold properties with doubling ground a 5-star rating. Land, planning and our approach to restrictions throughout the pandemic. rentclauses by the Company was closed, following the agreement – Continue to work on implementing our environment strategy community engagement of voluntary undertakings. and developing even more energy-efficient homes. Our employees People and skills – We engage with our employees and gather feedback through – Completed a Talkback employee survey in 2021 captured views from – Continue to build a diverse and inclusive culture. meetings, appraisals, focus groups, employee surveys, our internal 66% of employees. It showed an overall engagement score of 91% – During 2022, we will be exploring how we can increase Customer service and quality magazine and newsletter, Company wide emails, and our national with 95% of employees being proud to work for Taylor Wimpey. Higher flexibility for on-site roles including Site Manager positions. Health, safety and wellbeing andregional employee forums. scoring areas included health and safety, diversity and inclusion, and – Extend our Respectful Workplace training to site and office – We encourage employees to share feedback and this can be sent our vision and strategy. management teams to ensure every location in which we to the Chief Executive via email. – Our technical academies cover production, sales and customer service, work provides an inclusive environment. In 2022 we will – A member of the Board is an Employee Champion. They attend providing structured career and skills development, which often enable extend our programme across nine further business units. National Employee Forummeetings and are responsible for employees to gain a formal qualification. We also run online masterclass – In 2022, the Employee Champion will hold in person championing the employee voice in the boardroom and strengthening sessions for employees to hear from internal and external experts. conversations with small groups of junior to mid-level the link between the Board and employees. – We ran on-site training academies for apprentices at two of our sites. employees in each Division, including those from the – We engage with employees on the financial performance of the – We have increased several elements of our benefits provision that are regional offices, sites and sales centres, to listen to their Company via employee emails following the release of the Company's important to our employees, including the introduction of new incentive views, outside of the NEF and without senior management trading updates, full year and half year results. arrangements, enhancements to our Maternity Policy, our wellbeing being present, to further encourage openness. provisions, and other benefits that assist our employees financially. – Further limit the CO 2 impact of our car fleet. Our partners Charitable giving – We engage with our subcontractors and suppliers on a wide range – In 2021, we asked Group suppliers to complete a questionnaire – During 2022, we will be begin setting improvement targets for ofmatters and initiatives through meetings, workshops, working covering policies, processes and performance on modern slavery, categories of suppliers in areas such as embodied carbon and Environment groups,engagement sessions and our membership of the Supply Chain climate change, product embodied carbon, waste, packaging, waste as part of our work to prepare for the Future Homes Responsible sourcing Sustainability School (SCSS). environmental management systems and governance. The responses Standard and to reduce our scope 3 carbon footprint. – The Chief Executive wrote to suppliers to update on our approach to will help us identify gaps, establish a baseline and work with suppliers – Continue to work with the SCSS, an industry collaboration, Health, safety and wellbeing restrictions and offer support during the pandemic. to improve performance. to help engage our suppliers on sustainability. Sustainable homes – Our engagement with our local and national charity partners is overseen – We fully support the HBF's recent additional proposal to address fire – Add further requirements on climate change and waste for andcommunities by our Charity Committee. safety improvement works, and are working closely with Government Group suppliers to comply with via our digital tender system. Land, planning and – We engage with local authorities, parish councils, Homes England, the through the HBF to facilitate an equitable solution involving all industry – Entered in to a new three-year commitment with St Mungo’s community engagement Greater London Authority, the Department for Levelling Up, Housing stakeholders. We continue to believe this is an industry wide issue which to support their Construction Skills Programme. and Communities and other public sector organisations to understand needs an industry solution. their priorities and share our views. We engage directly and through our – 2021 saw 169 participants take part in the Taylor Wimpey Challenge membership of industry organisations such as the Home Builders raising over £103k of which over £75k was donated to the Youth Federation and the British Property Federation. Adventure Trust and over £28k to other charities. Our investors Environment – We engage with investors throughout the year through results – As a results of the ongoing global pandemic, investor communicators – Continue to engage with investors regularly. presentations, meetings, roadshows, conferences, telephone continue to use technology. – Maximise investor engagement using learnings from Customer service and quality and videocalls. – Held virtual roadshows in the year with our investors. COVID-19 such as engagement using technology to People and skills – We engage via our regulatory reporting including the Annual Report – Chairman engaged with large investors via virtual meetings following integrate with existing methods. andAccounts, our full year results, half year results, trading updates succession announcements. – Our primary performance focus is on returning the business Health, safety and wellbeing and our Annual General Meeting. – Attended virtual conferences in the year. to 21-22% operating margin and we continue to target a Sustainable homes – When possible, we conduct visits to our sites and we participate – Continued to hold ad hoc virtual meetings with investors throughout number of areas to achieve this; focused on cost, process andcommunities in benchmarks and disclosure initiatives. the year. simplification and standardisation enhancing the core drivers Governance and management – Held virtual results presentations. of value for our business. Our communities Environment – We engage with local communities at every site, from planning – Due to the pandemic, most consultations took place online during 2021 – Launch home welcome nature packs for customers andthroughout construction, including through meetings, and we used social media, online exhibitions and virtual forums to ensure during2022. Charitable giving exhibitions,workshops, newsletters, information boards, social abroad section of the community could participate. – Continue to engage local communities early in the process. Health, safety and wellbeing mediaand our website. – Contributed £418 million to local communities via planning obligations – Utilise our Community Communications Plan to help foster – We collaborate with non-governmental organisations (NGOs), (2020:287 million), to fund a range of infrastructure and facilities including: asense of community among new residents. Sustainable homes academia and expert organisations to learn from their insights. affordable housing; green spaces; community, commercial and leisure – Update our guidance on nature and green space including andcommunities – Our Community Communications Plan guides teams on actions facilities; transport infrastructure; heritage buildings; and public art. our Green Infrastructure Guide. Responsible sourcing theycan take throughout the development process to help foster – We aim to install infrastructure at an early stage of the build process to – Continue to focus on strong placemaking. asense of community among new residents. help the new community become established quickly. – In 2021 we ran our fourth internal placemaking competition adding a newCommendation for a best approach to Landscape and Biodiversity, shortlisted by our sustainability team. 34 Taylor Wimpey plc Annual Report 2021 Read more about stakeholder engagement and climate change on page 49. | | Key material issues forthese | | Engagement performance | | | --- | --- | --- | --- | --- | | Our stakeholder groups | stakeholders How we engage | | metrics and highlights in 2021 Priorities for 2022 | | | Our customers | Sustainable homes | – We engage directly with customers at our developments, | – 5-star housebuilder as measured by NHBC ‘would you recommend’ score. | – We are aligning our processes to make sure we meet the | | | and communities | via our customer portal (Touchpoint), through emails, letters and | – Received positive feedback from customer research, interviewing | expectations and timescales being set by the Ombudsman | | | | meetings and through social media. | prospective home buyers on our new house type range. | which will be introduced in 2022. | Environment – We monitor customer views through focus groups, satisfaction – Introducing a Customer Director role which sits on the regional – Test concept designs for our standard apartment range. Health, safety and wellbeing surveys, Trustpilot reviews and post-occupancy research. businesses’ management team. – Maintain high levels of customer service and a score of – Our website is updated with relevant information. – During 2021, the Competition and Markets Authority’s investigation over 90% in the HBF 8-week survey which equates to Customer service and quality – The Chief Executive wrote to all customers to update on into the historical sale of leasehold properties with doubling ground a 5-star rating. Land, planning and our approach to restrictions throughout the pandemic. rentclauses by the Company was closed, following the agreement – Continue to work on implementing our environment strategy community engagement of voluntary undertakings. and developing even more energy-efficient homes. Our employees People and skills – We engage with our employees and gather feedback through – Completed a Talkback employee survey in 2021 captured views from – Continue to build a diverse and inclusive culture. meetings, appraisals, focus groups, employee surveys, our internal 66% of employees. It showed an overall engagement score of 91% – During 2022, we will be exploring how we can increase Customer service and quality magazine and newsletter, Company wide emails, and our national with 95% of employees being proud to work for Taylor Wimpey. Higher flexibility for on-site roles including Site Manager positions. Health, safety and wellbeing andregional employee forums. scoring areas included health and safety, diversity and inclusion, and – Extend our Respectful Workplace training to site and office – We encourage employees to share feedback and this can be sent our vision and strategy. management teams to ensure every location in which we to the Chief Executive via email. – Our technical academies cover production, sales and customer service, work provides an inclusive environment. In 2022 we will – A member of the Board is an Employee Champion. They attend providing structured career and skills development, which often enable extend our programme across nine further business units. National Employee Forummeetings and are responsible for employees to gain a formal qualification. We also run online masterclass – In 2022, the Employee Champion will hold in person championing the employee voice in the boardroom and strengthening sessions for employees to hear from internal and external experts. conversations with small groups of junior to mid-level the link between the Board and employees. – We ran on-site training academies for apprentices at two of our sites. employees in each Division, including those from the – We engage with employees on the financial performance of the – We have increased several elements of our benefits provision that are regional offices, sites and sales centres, to listen to their Company via employee emails following the release of the Company's important to our employees, including the introduction of new incentive views, outside of the NEF and without senior management trading updates, full year and half year results. arrangements, enhancements to our Maternity Policy, our wellbeing being present, to further encourage openness. provisions, and other benefits that assist our employees financially. – Further limit the CO 2 impact of our car fleet. Our partners Charitable giving – We engage with our subcontractors and suppliers on a wide range – In 2021, we asked Group suppliers to complete a questionnaire – During 2022, we will be begin setting improvement targets for ofmatters and initiatives through meetings, workshops, working covering policies, processes and performance on modern slavery, categories of suppliers in areas such as embodied carbon and Environment groups,engagement sessions and our membership of the Supply Chain climate change, product embodied carbon, waste, packaging, waste as part of our work to prepare for the Future Homes Responsible sourcing Sustainability School (SCSS). environmental management systems and governance. The responses Standard and to reduce our scope 3 carbon footprint. – The Chief Executive wrote to suppliers to update on our approach to will help us identify gaps, establish a baseline and work with suppliers – Continue to work with the SCSS, an industry collaboration, Health, safety and wellbeing restrictions and offer support during the pandemic. to improve performance. to help engage our suppliers on sustainability. Sustainable homes – Our engagement with our local and national charity partners is overseen – We fully support the HBF's recent additional proposal to address fire – Add further requirements on climate change and waste for andcommunities by our Charity Committee. safety improvement works, and are working closely with Government Group suppliers to comply with via our digital tender system. Land, planning and – We engage with local authorities, parish councils, Homes England, the through the HBF to facilitate an equitable solution involving all industry – Entered in to a new three-year commitment with St Mungo’s community engagement Greater London Authority, the Department for Levelling Up, Housing stakeholders. We continue to believe this is an industry wide issue which to support their Construction Skills Programme. and Communities and other public sector organisations to understand needs an industry solution. their priorities and share our views. We engage directly and through our – 2021 saw 169 participants take part in the Taylor Wimpey Challenge membership of industry organisations such as the Home Builders raising over £103k of which over £75k was donated to the Youth Federation and the British Property Federation. Adventure Trust and over £28k to other charities. Our investors Environment – We engage with investors throughout the year through results – As a results of the ongoing global pandemic, investor communicators – Continue to engage with investors regularly. presentations, meetings, roadshows, conferences, telephone continue to use technology. – Maximise investor engagement using learnings from Customer service and quality and videocalls. – Held virtual roadshows in the year with our investors. COVID-19 such as engagement using technology to People and skills – We engage via our regulatory reporting including the Annual Report – Chairman engaged with large investors via virtual meetings following integrate with existing methods. andAccounts, our full year results, half year results, trading updates succession announcements. – Our primary performance focus is on returning the business Health, safety and wellbeing and our Annual General Meeting. – Attended virtual conferences in the year. to 21-22% operating margin and we continue to target a Sustainable homes – When possible, we conduct visits to our sites and we participate – Continued to hold ad hoc virtual meetings with investors throughout number of areas to achieve this; focused on cost, process andcommunities in benchmarks and disclosure initiatives. the year. simplification and standardisation enhancing the core drivers Governance and management – Held virtual results presentations. of value for our business. Our communities Environment – We engage with local communities at every site, from planning – Due to the pandemic, most consultations took place online during 2021 – Launch home welcome nature packs for customers andthroughout construction, including through meetings, and we used social media, online exhibitions and virtual forums to ensure during2022. Charitable giving exhibitions,workshops, newsletters, information boards, social abroad section of the community could participate. – Continue to engage local communities early in the process. Health, safety and wellbeing mediaand our website. – Contributed £418 million to local communities via planning obligations – Utilise our Community Communications Plan to help foster – We collaborate with non-governmental organisations (NGOs), (2020:287 million), to fund a range of infrastructure and facilities including: asense of community among new residents. Sustainable homes academia and expert organisations to learn from their insights. affordable housing; green spaces; community, commercial and leisure – Update our guidance on nature and green space including andcommunities – Our Community Communications Plan guides teams on actions facilities; transport infrastructure; heritage buildings; and public art. our Green Infrastructure Guide. Responsible sourcing theycan take throughout the development process to help foster – We aim to install infrastructure at an early stage of the build process to – Continue to focus on strong placemaking. asense of community among new residents. help the new community become established quickly. – In 2021 we ran our fourth internal placemaking competition adding a newCommendation for a best approach to Landscape and Biodiversity, shortlisted by our sustainability team. 35Taylor Wimpey plc Annual Report 2021 Strategic report Section 172 (1) statement ## How the Board considered ## stakeholders during the year Section 172 (1) Statement The Board recognises that stakeholder as the regular reports from customer service, engagement is essential to understand what HR, investor relations and the Divisional Our Directors are bound by their duties matters most to our stakeholders and the Chairs. The Board has an annual schedule of under the Companies Act 2006 (the Act) to likely impact of any key decisions. We have ‘teach-in’ sessions with our key Heads of promote the success of the Company for the a long history of engaging with all of our Function (such as Sales and Marketing, Land benefit of our shareholders as a whole, stakeholders and the Board continues to and Planning, Customer Service, Investor having regard to our other key stakeholders. highly value the feedback that this Relations, Sustainability and Supply Chain) We believe that in order to progress our engagement provides. Details of how we where they will receive in-depth updates strategy and achieve long term sustainable engaged with our different groups of about each group of stakeholders. In success, the Board must consider all stakeholders during 2021 and how this addition, the Board regularly engages directly stakeholders relevant to a decision and informed what the Board considers matters to with our investors and employees, and satisfy themselves that any decision upholds them most can be found on pages 34 to 37. further information around the direct our culture of ‘doing the right thing’. engagement that took place in 2021 can be The Board receives an update from the Our values, as set out on page 9, are key to found on pages 84 and 85. Executive Directors at each Board meeting how we do business and are closely aligned which details any substantial engagement The Board is aware that in some situations, to the matters the Directors must consider as since the last meeting. In addition, there are stakeholders’ interests will be conflicted and part of their Section 172 duties. standing agenda items at each meeting to they may have to prioritise interests. The ensure that the Board receive relevant Board, led by the Chairman, ensures that as updates on all of our key stakeholders; such part of its decision making process, the Directors assess the impact of the decision on our stakeholders and the likely consequences of any decision in the long term. The diagram below shows how the How the Board fulfils its Section 172 duties Board approaches its decision making. On the next page, we have set out examples Setting our culture, values and strategy of key decisions made by the Board and provided further details about the decision The Board sets our culture and values; and these are key to how we do business making process. and how we achieve our purpose. Diverse set of skills, knowledge and experience The Directors collectively have a diverse set of skills, knowledge, experience and stakeholder expertise which assists the Board in making decisions. This contributes to their ability to make well informed decisions which promote our long term sustainable success. As part of a Director’s induction, they receive a detailed briefing on their duties as a Director. Board information The Board receives detailed papers from Management which provide details on the likely long term impact ofadecision and how stakeholders have been considered in the development of the proposal, includinganyrelevant engagement. The Board also has an annual schedule of ‘teach-ins’ where the functional heads of departments deliver updates on key activities during the year which feeds into the decision making process. Board discussion and decision As part of its discussion, the Board provides rigorous evaluation, risk management and challenge toensure a decision promotes long term sustainable success. The Board uses the stakeholder engagement summarised on pages 34and35 to inform their decision making process. Monitoring The Board receives regular updates on key decisions and the actions taken in respect of them. Thisis done through regular reports submitted by Management to each Board meeting andverbalupdates as necessary. 36 Taylor Wimpey plc Annual Report 2021 | Fire safety improvement works | Chief Executive succession | Land acquisition | | --- | --- | --- | | In 2021, the Board approved an additional | Following an extensive search and | The Board regularly assesses significant | | provision to fund fire safety improvement | recruitment process Jennie Daly, our Group | land acquisitions. An example of this during | | works for apartments built by the Company | Operations Director, was announced as our | 2021 was the approval to acquire a piece | | going back 20 years from January 2021. | next Chief Executive. | of land in Richmond. | | Criteria considered | Criteria considered | Criteria considered | | A, C, D, E | A, B, C, D, E, F | A, C, D, E, F | | Relevant stakeholders | Relevant stakeholders | Relevant stakeholders | | – Customers | – Customers | – Customers | | – Partners | – Employees | – Employees | | – Investors | – Investors | – Investors | | – Communities | – Communities | – Communities | | – Partners | – Partners | – Partners | | Decision making process | Decision making process | Decision making process | | – The health and safety of all our stakeholders is of | – The Chief Executive is responsible for developing, | – Our West London business unit sought approval | | paramount importance and we are guided by the | leading and managing the execution of our | from the Board to acquire a brownfield | | principle of ‘doing the right thing’. | strategy, and is therefore instrumental in delivering | regeneration site with detailed planning | | – It has long been the Board’s view that customers | long term value for all of our stakeholders. | permission that would deliver 453 much needed | | and leaseholders should not bear the cost of | – The Nomination and Governance Committee led | homes in Richmond, Greater London. | | investment to ensure their buildings are safe | the search for our new Chief Executive, supported | – A detailed report containing key financial | | and mortgageable. | by a well-reputed executive search firm in order to | information and stakeholder considerations was | | – The Board considered the impact this provision | assess both internal and external candidates. | provided to the Board. The report also set out the | | would have on our shareholders and considered | – The key selection criteria included in the candidate | excellent transport links and close proximity to | | that the provision was in the best long term | profile required identification of an individual who | public amenities. | | interests of all stakeholders. | leads with purpose, boldly drives operational | – The Board considered that the acquisition | | – We have now identified all buildings that may | performance and fosters the strong culture of the | supported our approach to landbuying following | | require fire safety improvement works and are in | Company. These key areas are strongly aligned to | the 2020 equity raise and would support | | active dialogue with building owners to arrange | our values and also the key criteria under Section | outlet-led growth from 2023 as the site would | | these. We are committed to resolving these | 172 (1) of the Companies Act. | open as an outlet in late 2022, and would deliver | | issues as soon as possible for our customers. | – Following a thorough recruitment and selection | enhanced returns for shareholders. | | – We are working closely with Government through | process that considered a long list of industry and | – The site would deliver 173 affordable homes | | the HBF to facilitate an equitable solution involving | non-industry candidates, along with extensive | in Richmond which is an affluent area where | | all industry stakeholders. The Board fully support | consultation with shareholders, the Board was | local residents may struggle to get on the | | the HBF’s recent letter to the Government which | delighted to announce the appointment of Jennie | property ladder. | | sets out proposed additional commitments from | Daly as Chief Executive. | – Sustainability is integrated into our developments | | the industry. The Board considers that this is an | – Given Jennie’s extensive sector and stakeholder | through our placemaking standards, energy | | industry-wide issue involving many types of | expertise, her exceptional leadership and | efficient home design and construction policies | | organisations and therefore needs an industry | operational focus, the Board considers that she | and processes. These ensure we reduce our | | solution. If accepted by Government, the HBF | is the right person to promote the long term | impact on the environment and create | | proposal would result in an additional modest | success of the Company for the benefit of all | developments and homes where customers can | | provision for the Company. | our stakeholders. | enjoy a good quality of life and reduce their own | | – To further support the wider issue, the Company | | impact on the environment. | | will be paying The Residential Property Developer | | – The Board approved the land acquisition as it | | Tax levy in 2022 which was introduced to help | | considered that the acquisition was in the long | | contribute to the cost of cladding remediation work. | | term interest of all its stakeholders. | – Further information can be found on pages 38 and 39. Our values Our values Our values Key to decision criteria Key to our values A: The likely consequences of any decision in the D: The impact of our operations on the community Respectful and fair long term and the environment Take responsibility B: The interests of our employees E: The desirability of maintaining a reputation for Better tomorrow high standards of business conduct C: The need to foster our business relationships Be proud with suppliers, customers and others F: The need to act fairly as between members 37Taylor Wimpey plc Annual Report 2021 Strategic report Stakeholders and the spirit of regulations and maintain ### Our customer proposition this same ethos in our relationships with ## Our ### is closely tied to our purpose our customers. We are aligning our processes ### and centres on delivering to make sure we meet the expectations and timescales being set by the Ombudsman, as ## Customers great homes and thriving well as new consumer rights such as third ### communities. It is important party home inspections. We have signed the new code of conduct that supersedes the ### that our customers can trust us UK Consumer Code for Home Builders. ### to do the right thing. New house type range SDGs Our standard house types are designed to | Customers satisfaction | be high-quality, energy-efficient homes that | | --- | --- | | We track customer satisfaction using the | are cost-effective and safe to build. They can | | HBF 8-week and 9-month survey results. | be adapted to reflect local character and | | In 2021, 92% of customers in the 8-week | scheme design and are used for the majority | | survey would recommend us to a friend | of our homes. | (2020: 92%). This means we met our target We have worked with architects to update 2021 highlights to maintain a 5-star rating. We continue to our standard house types and successfully believe that a wider range of customer care – Achieved an average quality score of4.67 piloted homes in the range in 2021. These and quality measures are necessary to compared with an industry benchmark house types will replace our existing ensure we are delivering for our customers. group average score of4.43 standard house type range. Our site designs Our 9-month satisfaction scores give us – Achieved a recommend score of 92% have incorporated the new house types from insight into how customers feel about the in the HBF 8-week survey which equates October 2021 with the first site using new homes and places we build over the longer to a 5-star rating house types to go on sale in August 2022. term. Our score for 2021 was 79.2% The new range incorporates more open plan – Successfully launched pilot of our new (2020: 78.2%). living, more natural light and improved house types incorporating several years We encourage customers to leave reviews storage, reflecting customer feedback and of customer insights on Trustpilot. At the end of 2021, with over the results of our research and development. – Improved our 9-month customer 1,799 reviews, we had a 4 out of 5-star The new homes include at least one study satisfaction survey score | | rating (end of 2020: 4 out of 5) with a trust | area with space for a desk and easy access | | --- | --- | --- | | – Provided for additional £125 million | score of 3.9 out of 5 (2020: 4 out of 5). We | to broadband and electricity sockets, to | | funding to support fire safety improvement | acknowledge that we do not always get it | enable working from home. | | works for leaseholders in TaylorWimpey | right and sometimes fall short of our targeted | | Our design team has worked closely with apartment buildings, including those standards. Where this is the case, we remain our central procurement team and these below 18 metres, built over the last committed to working closely with our new houses offer standardisation and 20 years, to ensure they meet current customers to put this right and learn from plotting efficiency benefits. Most of our new RICS EWS1 guidance our mistakes. house types will offer improved accessibility, In 2021, we introduced a Customer Director meaning they can be adapted more easily 2022 priorities | | role which sits on the management team in | for people with disabilities. These house | | --- | --- | --- | | – Continue to target an average quality | each regional business. This will further elevate | types will also more readily accommodate | | score of above 4 across the business | the voice of the customer in our regions. We | the required changes as we transition to | | | also rolled out our new customer relationship | the Future Homes Standard and we have | – Maintain high levels of customer service management (CRM) system across the established a clear timeline to adapt to the and a score of over 90% in the HBF business. This provides clearer data on necessary changes. 8-week survey which equates to a customer issues, complaints and defects 5-star rating which will help us to further improve quality – Continue to progress work on bringing and customer service. The results are Closure of the CMA process historic buildings up to current standards | | reviewed by Customer Directors and used to | During 2021, the Competition and Markets | | --- | --- | --- | | – Continue to work on implementing our | identify any trends or recurring issues and | Authority’s (CMA) investigation into the | | environment strategy and developing even | put measures in place to address them. | historical sale of leasehold properties with | | more energy-efficient homes | | doubling ground rent clauses by the | Our customers are rightly demanding more – Signing the new code of conduct that Company was closed, following the of us. As well as rolling out new house types supersedes the UK Consumer Code for agreement of voluntary undertakings. designed to meet their changing needs, we Home Builders All leaseholders of Taylor Wimpey-owned continue to provide a high standard of ten-year doubling ground rent leases, or training to our Sales Executives through our Read more in relation to our business model those that have already gone through own Sales Academy. Our sales staff are on pages 22 and 23 our Ground Rent Review Assistance further supported by our CRM system which Scheme (GRRAS) and converted their Read more in relation to our KPIs on pages is now live across all regional businesses and Taylor Wimpey-owned lease to an RPI-based 24 and 25 is delivering the expected customer service structure, will be offered the option to and operating benefits. | Read more in relation to our remuneration | | convert to a fixed ground rent. The cost of | | --- | --- | --- | | on pages 105 to 124 | The sector continues to face scrutiny and | implementing the undertakings is expected | | | pressure from social media and pressure | to fall within the original provision made | | | groups, with the potential for greater | in 2017. | oversight from Government through a single New Homes Ombudsman. We are supportive of the introduction of an Fire safety improvement works independent New Homes Ombudsman It has long been our view that customers and and will endeavour to deliver both the letter leaseholders should not have to pay for fire 38 Taylor Wimpey plc Annual Report 2021 ### Greener house ### types Our new houses are designed to integrate the services and equipment required to meet changing energy efficiency standards, including waste water heat recovery, flue gas heat recovery, photovoltaic panels, car charging points and eventually air source heat pumps. Our focus on build quality helps ensure that our finished homes achieve the specified energy efficiency standards and that ventilation systems are installed correctly to provide good indoor air quality. safety remediation works to ensure their of 4.67 (2020: 4.45) from a possible score of Opportunities in green building buildings are safe and mortgageable. We six, once again the highest score for a volume The way we design and build our homes took early and proactive action, committing housebuilder. This compares with an industry enables our customers to live a more significant funding to address fire safety and benchmark group average score of 4.43. We sustainable and resource efficient lifestyle cladding issues on our buildings, with total aim to improve this further by ensuring our and there is more that can be done. During amounts provided up to March 2021 of quality assurance processes are embedded 2020 and 2021, we conducted research to £165million. Taylor Wimpey’s decision a at every stage of build. enable us to update the technical specification year ago meant that funding was in place Our Consistent Quality Approach (CQA) for our homes in preparation for changes to to bring all our affected buildings, going back guidelines ensure our Site Managers, Building Regulations and the FHS. 20 years from January 2021, up to current subcontractors, production and customer EWS1 standard. New homes are already considerably more service teams all have a consistent energy-efficient than many older homes. The We have identified all Taylor Wimpey understanding of the finishing standards energy savings we will secure to meet the buildings that may require works and are in we expect on all Taylor Wimpey homes. FHS will make our homes increasingly active dialogue with building owners to We also publish a customer version, so attractive to customers, with lower running undertake these and are committed to it is clearer for customers what they can costs and a greatly reduced environmental resolving these issues as soon as possible expect from us. We updated our scope footprint. The increasing take up of more for our customers. From April 2022, we will of operations for subcontractors in 2021, cost effective green mortgages offers a also be paying the new Residential Property which sets out our expectations for the potential competitive advantage for new Developer Tax (which is a 4% tax on profits) management and delivery of build quality. homes compared to older housing stock. that will fund the Government’s Building Key product suppliers provide training to our Safety Fund for buildings over 18 metres. Site Managers, Quality Managers and trade subcontractors on the correct installation We are working closely with Government of their products to ensure a quality build. through the HBF to facilitate an equitable | solution involving all industry stakeholders. | Quality is incentivised from the top of the | | --- | --- | | We fully support the HBF's recent letter to | organisation with a significant percentage | | the Government which sets out proposed | of our Executive Incentive Scheme linked to | | additional commitments from the industry in | customer service and build quality, and this | | relation to buildings over 11 metres. We | is one of our Principal Risks. We track | | continue to believe this is an industry-wide | progress and calculate bonus payouts using | | issue involving many types of organisations | a combination of internal and independent | | and therefore needs an industry-wide | external measures: HBF 8-week and | | solution. If accepted by Government, the | 9-month customer survey results; CQR | | HBF proposal would result in an additional | scores conducted independently by the | | modest provision for Taylor Wimpey. | NHBC, and the average reportable items | which is the average number of defects found per plot during NHBC inspections at Build quality key stages of the build. We also integrate Since the introduction of the measure, we customer service and quality into our all have led the volume housebuilders in build employee bonus scheme. quality as measured by the NHBC CQR score, which measures build quality at key build stages. In 2021, we scored an average 39Taylor Wimpey plc Annual Report 2021 Strategic report Stakeholders continued up from a lower than normal turnover rate in ### We want to be known as the 2020 as a result of the pandemic. ## Our ### employer of choice in our ### sector and beyond, recruiting Skills ## Employees With a well known industry skills shortage, ### a diverse workforce and we have taken a proactive approach to early ### offering industry-leading talent and direct labour. Building the skills of ### development opportunities. our current and future workforce is essential to address the skills shortage in our industry and also to set up the business to deal with future changes. SDGs Health and safety We offer a range of entry-level roles such as | | Health and safety is the number one priority | apprenticeships, trainees and graduates to | | --- | --- | --- | | | at Taylor Wimpey and we will never | encourage people into our business with | | | compromise on this commitment to our | these positions making up c.9% of our | | | people and everyone who works on or visits | workforce (2020:14%). We support our | | | a Taylor Wimpey site. We embed a safety | regional businesses to develop local links | | | culture through training, awareness and | with colleges, universities and schools and | | 2021 highlights | visible health and safety leadership and we | encourage a diverse range of candidates to | | | work closely with our contractors and | consider careers in housebuilding. We | – Continued to focus on Health and Safety subcontractors on this. Our Annual Injury currently directly employ 743 key trades as the number one priority and on initiatives Incidence Rate (AIIR) was 214 in 2021 (2020: including apprentices (2020: 1,038). The promoting metal health and wellbeing | | 151) and our AIIR for reportable injuries per | reduction partly reflects the restructure of the | | --- | --- | --- | | – Achieved over 90% engagement score | 100,000 employees and contractors remains | business in 2020, as well as voluntary | | in most recent employee survey | well below both the HBF Home Builder | employee turnover. However, we remain | | – Accredited Living Wage Employer, | Average AIIR of 264 and Health and Safety | committed to developing future talent and to | | by Living Wage Foundation | Executive construction industry average AIIR | working both internally and with the wider | | | of 353, but we will continue to seek to | sector to attract future talent into our industry. | – Recognised in 2021 NHBC Pride in the improve this. We believe the increase in the Job Awards with 72 Quality Awards, 25 accident rate is due to higher than average Seal of Excellence Awards, three Regional turnover among operatives and an increase Training and development Awards and the Supreme Award in production on our sites. Around 36% of We focus on training and developing our – Launched our new Equality, Diversity and employees. Key areas of focus are accidents are slips, trips and falls. Our AIIR Inclusion Policy and remain committed to management and leadership, personal for major injuries per 100,000 employees and equality of opportunity in all of our development skills (e.g. presentation, contractors was 73 in 2021 (2020: 58). employment practices, policies and communication, negotiation and time procedures across the business management) and technical knowledge and Culture and people capabilities. Our technical academies cover – Continued to run our National and Local Employee Forums We have a very strong culture at Taylor production, sales and customer service, Wimpey at every level of the business, with providing structured career and skills – Continued our reverse mentoring with the core principle to ‘do the right thing’. We development, which often enable employees ethnically diverse and LGBTQ+ colleagues continue to benefit from a talented and to gain a formal qualification. We also run – Updated our performance review process engaged workforce, as reflected in our 2021 online masterclass sessions for employees to in response to employee feedback employee survey with an overall employee hear from internal and external experts. engagement score of over 90%, with a 66% 2022 priorities We also run on-site training academies for response rate. Health and safety was once apprentices at two of our sites. We assess – Continue to prioritise Health and Safety again our top scoring area in the survey at the impact of our training and development 97%, and 95% of employees are proud to – Maintain a strong culture of doing the using metrics such as productivity, retention, work for Taylor Wimpey. The employee right thing and high engagement levels build quality and customer satisfaction survey also outlined slightly lower scoring – Increase employee voice through the scores and sales. We have updated our areas which we will work to improve, such continued work of Local and National performance review process in response to as future development opportunities and Employee Forums and employee networks feedback from our employee survey. Shorter career progression. term performance objectives are now set – We will set clear and measurable internal We are pleased to report that Taylor Wimpey and reviewed multiple times throughout the goals to help accelerate diversity within our was once again recognised in the NHBC year and line managers are being trained on business and drive accountability Pride in the Job Awards, achieving a total the new approach. – Continue to improve communication of 72 Quality Awards (2020: 53), 25 Seal of throughout the business, led by highly Excellence Awards (2020: 19) and three visible senior leaders during period of Inclusion, diversity and Regional Awards in 2021 (2020: two), whilst leadership change Lee Dewing, Site Manager at our Whitacres gender balance – Focus on building the skills of our current development in Hambleton, Selby, was Diversity and inclusion is a key area we and future workforce awarded a Supreme Award. want to continue to strengthen, creating a – Plans for the continued development of workplace where colleagues feel championed During 2021 we directly employed, on the Board’s Employee Champion role and supported regardless of their background, average, 5,271 people across the UK (2020: identity, age, gender, ethnicity or disability. 5,948) and provided opportunities for, on Read more in relation to our business model We see diversity as an opportunity to truly average, a further 11.1k operatives (2020: on pages 22 and 23 embrace our colleagues’ backgrounds and 12.3k) on our sites. Our voluntary employee perspectives which in turn helps drive the turnover rate is higher than normal at 19.0% Read more in relation to our KPIs on pages business forward and achieve success. 26 and 27 (2020: 9.4%). We believe this reflects a catch However, we and the housebuilding industry, 40 Taylor Wimpey plc Annual Report 2021 | can and need to do more. In 2021, we | wellbeing provisions, and other benefits that | and has over 30 years’ experience in the | | --- | --- | --- | | launched our new Equality, Diversity and | assist our employees financially. | property sector. Rob and Gwyn have been | | Inclusion Policy and remain committed to | | working closely to share employee | In our 2022 Gender Pay Gap Report, our equality of opportunity in all of our perspectives already gathered and plans for median gender pay gap has narrowed, still in employment practices, policies and the continued development of the Employee favour of women and the mean pay gap also procedures across the business. Our Champion role. remains small, likewise in favour of women. Company-wide approach has focused on More information can be found in our Gender bringing our colleagues together through Pay Gap report on our website. Employee survey multiple diversity-focused networks, training and events. We have significantly advanced Our full employee survey in 2021 captured our leaders’ capabilities and understanding views from 66% of employees. It showed an Employee engagement on diversity and inclusion with programmes overall engagement score of 91% with 95% of We are proud of how committed our like Respectful Workplace which commits employees being proud to work for employees are to the long term success our senior leaders to multiple practical steps Taylor Wimpey. Higher scoring areas included of the Company and we seek feedback and and activities to help us achieve a more health and safety, diversity and inclusion, and engagement with all employees. This includes inclusive and respectful culture. our vision and strategy. The survey also regular email updates from the Chief Executive showed that colleagues think we can do more We ran reverse mentoring for 10 senior as well as updates from the GMT and other to ensure that employee views are heard across leaders in 2021 who were partnered with senior management. It is important that the business consistently, to develop our line BAME colleagues and / or colleagues who management is accessible and visible so managers to support their teams, to provide identify as LGBTQ+. in addition to regular visits to the different clarity on career opportunities, to benchmark businesses we operate employee forums We recognise that building a diverse culture pay and reward, and to report back on actions including the National and Local employee means embracing all aspects of diversity, taken following the survey. forums where employee representatives including race, religion, mental and physical are able to feedback and ask questions of ability, socio-economic backgrounds, members of the Board and other senior sexuality, and more. In 2022, we will set clear Wellbeing management directly. The Board also has an internal goals to help accelerate measurable We support colleagues to help them maintain appointed Employee Champion to strengthen change and to ultimately drive accountability. good mental, physical, social and financial the Board’s engagement with employees. The We are pleased to have increased several health, which has been particularly important Board’s Employee Champion, Gwyn Burr will elements of our benefits provision that are during the pandemic. Mental health is a be retiring from the Taylor Wimpey Board of important to our employees, including the significant concern for the construction Directors on 26 April 2022 and we are pleased introduction of new incentive arrangements, industry. We partner with mental health that Robert Noel, Senior Independent Director, enhancements to our Maternity Policy, our charity, Mates in Mind, to deliver mental health has agreed to take on this important role. training for colleagues. We have over 150 Rob joined the Taylor Wimpey Board in 2019 Mental Health First Aiders across our business who support managers and employees when mental health issues arise. We use the Thrive mental health app, which has been approved by the NHS and provides tools and support ### Employee Networks for employees to manage and improve mental wellbeing. We are a signatory to the Building Mental Health Charter. We were pleased that | Following a number of new and updated | 93% of our employees in our latest survey | | --- | --- | | policies launched in 2021, employee | agreed that they know how to access support | | networks were formed to offer further | for mental health and wellbeing at work. | support to our employees. These include: – Working Parents Network to support the launch of our updated Maternity Policy, Paternity Policy and Adoption Policy – Embracing the Change Network to support our new Menopause Policy – Race and Ethnicity Network to support our updated Equality, Diversity & Inclusion Policy Networks provide a forum for colleagues to share experiences, support each other, and help to create a fully inclusive workplace. Read more about our employee networks on page 96. 41Taylor Wimpey plc Annual Report 2021Taylor Wimpey plc Annual Report 2021 Strategic report Stakeholders continued relationships as a bulk purchaser and as a ### Our partnerships are very single point of delivery. The division also ## Our ### important tous and we take helps us ensure adherence to standard ### that responsibility seriously. specification through strictly controlled build packs, with safety critical and cost sensitive ## Partners We strongly believe that items also managed by TWL. ### thebest partnerships are fair Quality and training ### and mutually beneficial. During 2021 we rolled out a Nationwide Supplier Training programme focused on on-site training, competency and site-based audit programme for site teams, direct trades SDGs Supply chain and subcontractors. This is delivered by the Collaboration brings benefits and the suppliers’ technical representatives potential for time and cost savings for both supporting ‘right first time’ build and Taylor Wimpey and also our suppliers. This improving quality and consistency to provide includes increasing efficiency by reducing a better higher-quality customer experience. stock items and improving visibility on programming for material demands. We updated our scope of operations for 2021 highlights subcontractors in 2021, which sets out our We adopt a collaborative forecasting expectations for the management and approach with our supply chain aided by our – Received a CDP Supplier Engagement delivery of build quality. Key product internal logistics function, Taylor Wimpey score of A for our approach to engaging suppliers provide training to our Site Logistics (TWL). In 2021, the industry suppliers on climate change Managers, Quality Managers and trade experienced pressures on the cost and – Nationwide Supplier Training programme subcontractors on the correct installation of availability of certain materials and a general rolled out in 2021 their products to ensure a quality build. The shortage of drivers for haulage. Whilst training means that teams understand the – Donated and fundraised over £999,000 for challenging, we were able to effectively installation needs of the products they are registered charities (2020: over £668,000). manage these pressures, aided by our scale working with and that these products will – Became an accredited Living Wage and strong partner relationships and work effectively and safely. This is followed Employer, as set by the Living Wage agreements and delivered 2021 completions by an on-site audit. Subcontractors also Foundation which covers people working in line with our expectations. Being a national attend training sessions run by our quality, for us via subcontractor or supplier builder allowed us to direct materials site and safety teams, and by the NHBC. service companies between regions to areas of acute shortages during the year. We collaborate with our – Updated our scope of operations Ethical sourcing supplier partners giving them good visibility for subcontractors in 2021 on our Our Supply Chain Policy explains our supplier of our build plans and product requirements, expectations for build quality standards for safety, quality, ethics, human building trust and helping improve security of rights and the environment. Our Supplier Code 2022 priorities supply. Over the past several years as part of of Conduct requires suppliers to respect our Brexit preparations as well as our drive to – Begin setting improvement targets for workers’ human rights and prohibits all forms continuously improve Group operational categories of suppliers in areas such as of modern slavery. It is embedded into our efficiency, we have worked hard to embodied carbon and waste as part of our Framework Agreements with Group suppliers understand our supply chain, establishing work to prepare for the Future Homes (those managed by our Group procurement highly detailed ‘root to tip’ knowledge Standard and to reduce our scope 3 team). Group suppliers are required to confirm of our material and component supplies, carbon footprint compliance with our standards via our digital to help identify early and mitigate – Work with the Supply Chain Sustainability tender system, including in relation to potential bottlenecks. School (SCSS), an industry collaboration, employment standards, modern slavery and to help engage our suppliers the real living wage. Further requirements on Taylor Wimpey Logistics on sustainability climate change and waste will be added We relocated our central logistics hub, during 2022. | – Add further requirements on climate | TWL to Peterborough last year, improving | | | --- | --- | --- | | change and waste for Group suppliers to | transport links with our suppliers and the rest | In 2021, we asked Group suppliers to | | comply with via our digital tender system | of the business. TWL is central to our drive | complete a questionnaire covering policies, | | – Entered in to a new three-year | to optimise efficiency in our procurement and | processes and performance on modern | | commitment with St Mungo’s to support | materials supply and distribution. TWL | slavery, climate change, product embodied | | their Construction Skills Programme | provides a central hub for suppliers enabling | carbon, waste, packaging, environmental | | | us to consolidate supplies and provide them | management systems and governance. The | | Read more in relation to our business model | in build packs to our sites, on a just in time | responses will help us identify gaps, establish | | on pages 22 and 23 | basis. This improves visibility and site | a baseline and work with suppliers to | | | efficiency and has certain practical | improve performance. During 2022, we will | Read more in relation to our KPIs on pages advantages such as lessening frequency of begin setting improvement targets for 26 and 27 | large vehicles on smaller sites with limited | categories of suppliers in areas such as | | --- | --- | | road access. As TWL consolidates supplier | embodied carbon and waste as part of our | | deliveries, it provides a buffer against supplier | work to prepare for the Future Homes | | fluctuations and availability challenges and it | Standard and to reduce our scope 3 carbon | | centrally manages new product | footprint. We also work with the Supply | | implementation alleviating availability gaps. | Chain Sustainability School (SCSS), an | | TWL has direct access to site build | industry collaboration, to help engage our | | programmes and scheduling of call-offs | suppliers on sustainability and give them | | which helps us maximise the use of standard | access to training and resources. | house type templates, again improving our efficiency. TWL leverages commercial 42 Taylor Wimpey plc Annual Report 2021 ### St. Mungo’s ### Construction ### Skills Training ### Hubs St Mungo’s Construction Skills Programme helps people recovering from homelessness to gain new skills and qualifications. In 2021, we donated £132,000 to support two tutors working in the St Mungo’s Construction Skills Training Centres, running training in areas such as painting and decorating, plumbing, lock fitting, tilling, dry lining and bricklaying. In 2021 we entered in to a new three-year commitment with St Mungo’s to support the establishment of a third Construction Skills Programme in their new Recovery College in Leicester. We’re donating £315,000 over three years that will help train around 40 clients per year. We have been recognised by CDP as paid at least the real living wage, as set by authorities to monitor progress. Once planning a Supplier Engagement Leader and the Living Wage Foundation. This is above permission is granted, our technical teams received a Supplier Engagement score of A the statutory living wage. monitor compliance with planning agreements for our approach to engaging suppliers on and obligations. We also track build rates to climate change. make sure that each scheme is being Central and local government managed efficiently and new homes are | Subcontractors | We engage with local authorities, parish | delivered on time. This is overseen by the | | --- | --- | --- | | With the introduction of the Future Homes | councils, Homes England, the Greater | Managing Director in each regional business. | | Standard and other regulatory and technical | London Authority (GLA), Department for | As at 31 December 2021, we were building on | | changes, the types of skills we need are | Levelling Up, Housing and Communities | or due to start in the first quarter of 2022 on | | changing. For example, from 2025 we may | (DLUHC) and other public sector | 97% of sites with implementable planning. | | need significantly more people qualified to | organisations to understand their priorities | | | install air source heat pumps but fewer | and share our views. We engage directly and | Charity partnerships | | gas engineers. | through our membership of industry | We focus on three priorities that are connected | | | organisations such as the HBF and the | to our business: aspiration and education in | | Small and local suppliers | British Property Federation (BPF). Examples | disadvantaged areas, tackling homelessness | | We work with many small and medium sized | of how we engaged with central Government | and local projects that have a direct link to our | | (SME) businesses who provide labour, trades | on issues relating to planning and | regional businesses and developments. During | | and services to our construction sites. Many | sustainability in 2021 are included in our | 2021, we continued our partnership with our | | of our partners are local and family-run | Sustainability Supplement. | national charities as well as local charity partners | | businesses and working with them | | across the UK albeit meetings were held virtually | Local planning authorities | supportsthe local economy around our sites. | | this year. Our six national charities are the Youth | | --- | --- | --- | | We hold regular subcontractor engagement | We aim to work constructively with planning | Adventure Trust, End Youth Homelessness, | | sessions in our regional businesses and offer | authorities to agree the details of our | Crisis, CRASH, St Mungo’s and Foundations | | other support to help local SMEs do | planning obligations for each development, | Independent Living Trust. In 2021 colleagues | | business with us. | including affordable housing, local | raised £103,000 through the Taylor Wimpey | | | infrastructure, and facilities. We use the | Challenge and our graduates entered the | | Real Living Wage | results of our community engagement to | Prince’s Trust ‘Million Makers’ challenge to raise | | In 2021, we became an accredited Living | help us develop planning proposals that are | money to support vulnerable young people. In | | Wage Employer, meaning that all our directly | financially viable and meet local needs. Each | total, during 2021, we donated and fundraised | | employed staff and all those working for us | planning application integrates a clear | c.£1 million for registered charities (2020: | | via a subcontractor or service company are | development plan, enabling planning | over£668k). | 43Taylor Wimpey plc Annual Report 2021 Strategic report Stakeholders continued 4. Further embedding sustainability ### The combination of our through the business, targeting areas ## Our ### operational performance, where we can make the most difference ### strong landbank and cash to future proof the business ## Investors position enables Taylor Ensuring a sustainable business is in the interests of all of our stakeholders and is at ### Wimpey to deliver significant the heart of the Board’s decision making ### and reliable future shareholder process. Whilst it is important to adjust to near term market considerations, we make ### returns. our decisions in the interest of the long term sustainability of the business. This is 2021 highlights particularly important in a highly regulated and political industry. – Dividend of 8.58 pence per share for 2021 Building momentum We have a very clear focus and strategy. We reaffirmed our commitment to play our – Aligned our reporting with TCFD and We continue to build momentum to deliver part in addressing the environmental crisis SASB reporting frameworks what we have set out through achieving the through the launch of our ambitious – Included in Standard & Poor’s following four priorities: environmental strategy in early 2021. During Sustainability Yearbook 2021 2021, we have clarified our ESG governance | – Implemented our new environmental | 1. Operational excellence and discipline | responsibilities and processes at Board level | | --- | --- | --- | | strategy | driving an increase in operating margin | and identified ‘Natural resources and climate | | | Our primary performance focus is on | change’ as a Principal Risk. During 2022 | – Member of Next Generation, the delivering a 21-22% operating margin and we we will develop our net zero transition plan sustainability benchmark for UK continue to target a number of areas to and target. housebuilders, ranking third and receiving a Gold Award for 2021, and an A- rating achieve this; focused on cost, process from CPD Climate Change simplification and standardisation enhancing Dividends and cash returns the core drivers of value for our business. – Delivered annualised savings of Our aim is to continue to provide a reliable c.£16 million in 2021 as a result of We have a strong embedded margin in the income stream to our shareholders, organisational and cost restructure landbank, which together with the new land throughout the cycle, including during a acquisitions, gives us confidence in achieving – Made further progress towards ‘normal downturn’ via an ordinary cash our operating margin target. | medium term operating profit margin | | dividend. Taylor Wimpey is inherently a highly | | --- | --- | --- | | of 21-22% | We have embedded a disciplined cost | cash generative business through the cycle | | | mindset across the business and taken a | supported by strong operational | – Spent over £1 billion on land and number of proactive actions to reduce cost performance and our high quality landbank, grew balance sheet land position by and optimise financial performance. In late which allows us to operate flexibly in the land £510 million | | 2020 and into 2021 we also completed a | market. We use cash generated by the | | --- | --- | --- | | 2022 priorities | review and restructure of the business, | business to fund our investment in land and | | | including removing a layer of senior | work in progress to support our future | – Continue to improve operating margin management. growth. As we operate in a cyclical industry, towards our 21-22% medium term target we maintain a strong balance sheet at all – Bring through new outlets for volume 2. Progressing recent land acquisitions times and are comfortable with modest growth in 2023/24 through planning to facilitate outlet gearing after adjusting for land creditors. growth in late 2022 and volume growth – Run Future Homes Standard product Given the cash generative nature of our trials during 2022 in 2023 business we aim to provide a reliable income We remain focused on efficiently progressing – Develop our net zero transition plan stream to our shareholders, throughout the recently acquired land through the planning and target cycle including during a ‘normal downturn, system, positioning our business to deliver via an ordinary cash dividend. Our Ordinary – Host an investors and analyst update to annual completions in line with our previous Dividend Policy is to pay out to shareholders meet our new CEO guidance of between 17,000 and 18,000 in approximately 7.5% of net assets, paid in the medium term. We are progressing the Read more in relation to our business model two equal instalments in May and November. land through the planning stages, providing on pages 22 and 23 In line with the Ordinary Dividend Policy, we excellent momentum for growth. will return a 2021 final dividend (of 4.44 Read more about our investment case on page 6 pence per share), to be paid on 13 May 3. Continue to deliver consistently great 2022, subject to shareholder approval. build quality, customer service and employee experience and identify where Our intention remains to return cash we can add value generated by the business in excess of that needed by the Group to fund land We began the investment in customer investment, all working capital, taxation and service and increasing build quality several other cash requirements of the business, and years ago. Not only was this the right thing to once the ordinary dividend has been met. do for customers, but it has also set the | business up very well for upcoming changes | Following the strong performance of the | | --- | --- | | with the introduction of the New Homes | business during 2021, we are today | | Ombudsman and building regulations. We | announcing our intention to return excess | | are delighted to have been confirmed as | cash of c.£150 million in 2022 through the | | once again leading the sector in the NHBC | implementation of a share buyback | | CQR score and we have maintained our HBF | programme, with an initial tranche of c.£75 | | 5-star rating. | million expected to be completed by no later | than 3 June 2022. 44 Taylor Wimpey plc Annual Report 2021 ![img-14.jpeg](img-14.jpeg) "Jennie has extensive experience in the housebuilding sector and has demonstrated exceptional leadership and a razor-sharp operational focus. Her strong focus on execution, combined with her customer and people-focused skills, set her apart from the other candidates we were considering." **Irene Dorner** Chairman ![img-15.jpeg](img-15.jpeg) #### CEO succession Following the announcement in late 2021 that Pete Redfern would be stepping down as CEO, the Board, led by the Nomination and Governance Committee, conducted a rigorous search and recruitment process. The Board engaged extensively with major shareholders to bear their views on the succession process. On 7 February 2022, it was announced that Jennie fully would be appointed as the new CEO, effective from the conclusion of the Company's AGM on 26 April 2022. Jennie has over 30 years' experience in the housebuilding and land and planning industries and is currently Group 1 Operations Director. #### ESG credentials We participate in several global and sectoral benchmarks. We are a constituent of the Dow Jones Sustainability Europe Index and included in the S&P Sustainability Yearbook 2022. We are part of FTSE4Good, have an AA rating from MSCI and have received an ESG Risk Rating of Low from Sustainability. We are a member of Next Generation, the sustainability benchmark for UK housebuilders, ranking third and receiving a Gold Award for 2021. We disclose our performance to CDP and received the following scores: CDP Climate Change A (2020; B), CDP Water B (2020; B), and CDP Forests B- for deforestation and forest risk commodities (2020; B). We have been recognised by CDP as a Supplier Engagement Leader and received a Supplier Engagement score of A for our approach to engaging suppliers on climate change. We support the Task Force on Climate-related Financial Disclosures (TCFD), and have enhanced our disclosure this year in line with its recommendations. We also disclose our performance against the criteria identified for our sector by the Sustainability Accounting Standards Board (SASB). #### Opportunities in green building Other the next five years there will be significant changes to new build homes in the UK reflecting the UK's climate change targets, the introduction of the Future Homes Standard and new regulation on overheating, electric vehicle charging and other environmental issues. Our target is to reduce emissions from customer homes in use by 75% by 2030, and we are conducting a range of research to help us meet this. From 2025, in line with regulation, the new homes we build will be net zero carbon ready. The way we design and build our homes enables our customers to live a more sustainable and resource efficient lifestyle and there is more that can be done. We are conducting a range of research to prepare for upcoming regulatory changes and to move towards net zero ready homes. During 2020 and 2021, we conducted research to enable us to update the technical specification for our homes in preparation for changes to Building Regulations and the Future Homes Standard (read more on pages 18 to 21). The energy savings we will secure to meet the Future Homes Standard will make our homes increasingly attractive to customers, with lower running costs and a greatly reduced environmental footprint. The increasing take up of more cost effective green mortgages offers a potential competitive advantage for new homes compared to older housing stock. #### Modern methods of construction We are integrating more off site construction techniques which help improve the efficiency of build as well as the quality of key components such as smart roofs which are used where we build a room in the roof. Our approach also includes increased use of timber frame and off site components such as spandrel panels, smart roof panelised cassette roofs, cassette timber floors and dormers. Other research projects include working with industry peers on reducing packaging and waste, air quality, and use of recycled materials. #### Timber frame Timber frame can have a significantly lower carbon footprint than traditional 'brick and block' building techniques due to the materials and use of off site manufacture (OSM) techniques. Newly planted replacement trees from sustainably managed forests may take more carbon out of the atmosphere than the more mature trees used for timber frame, which in turn act as a carbon store within buildings for the long term. This makes it an excellent alternative to more carbon intensive bricks and blocks. There is evidence that OSM in factories can generate less waste, require less transport and logistics, and result in more airtight components than those made on site, all contributing to carbon efficiency. Increasing use across our business will be one of our focus areas in 2022. We aim to reach 20% timber frame usage and increase consistency of use across our regions. Taylor Winpage plc Annual Report 2021 45 ![img-16.jpeg](img-16.jpeg) Strategic report Stakeholders continued # Our Communities SDGs 2021 highlights - Rolled out our new environmental strategy and set a science-based carbon reduction target - Contributed £418 million to local communities in which we build across the UK via planning obligations (2020: £287 million) - Delivered 2,501 affordable homes including joint ventures (2020: 1,964) - Highly Commended in Sustainable Housebuilder of the Year category at the Housebuilder Awards 2022 priorities - Make it easier for close to 40,000 customers to work from home and enable more sustainable transport choices through 35,000 EV charging points and 3,000 additional bike stands by the mid 2020s - Update our Placemaking Guide and Guide to Design and Access Statement to reflect the latest government guidance and best practice - Update our guidance on nature and green space including our Green Infrastructure Guide - Develop our technical specification for net zero carbon ready homes during 2022 and 2023 Read more in relation to our business model on pages 32 and 33 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. Our approach We focus on placemaking and design and invest in affordable homes, infrastructure and research and development to help us create great places to live. Increasingly we are focused on changes to our homes and communities that enable customers to live more sustainably. In 2021, we contributed £418 million to the local communities in which we build across the UK via planning obligations (2020: £287 million). This funded a range of infrastructure and facilities including: affordable housing; green spaces; community, commercial and leisure facilities; transport infrastructure; heritage buildings; and public art. These enhance our schemes and benefit the wider community. We aim to install infrastructure at an early stage of the build process to help the new community become established quickly. 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 £10k to other organisations, such as scout groups, local football teams and various local community causes (2020: £94k). Housebuilding, particularly in its early stages, can be disruptive. We are committed to working with local people and communities. 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. Placemaking We believe that the plan, design, layout and delivery of our schemes can assist in creating successful and sustainable new communities where our customers can enjoy a good quality of life. Our placemaking standards are based on Building for a Healthy Life and aligned with the National Design Guide and National Model Code. Our Director of Design and Group Urban Designer are qualified architects and urban designers and we have a Design Lead in each regional business and strategic land team to champion good design at the regional level. We design walkable neighbourhoods where customers can enjoy an active, healthy lifestyle and make sustainable transport choices. This includes 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 also invest in public and community transport, walkways and cycle paths through our planning obligations. In 2021, 67% of our UK completions were within 500m of a public transport node and 86% were within 1,000m. Affordable homes A lack of affordable housing is one of the biggest challenges facing people across the UK. We can play a part in addressing this problem by increasing the supply of new housing and making our homes affordable to a greater number and wider range of people. Most 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 2021 we delivered 2,501 affordable homes including joint ventures (2020: 1,964), equaling to 18% of total completions (2020: 20%). 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 community consultations. 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. Due to the pandemic, most consultations took place online during 2021 and we used social media, online exhibitions and virtual forums to ensure a broad section of the community could participate. Our Political and Community Engagement Toolkit helps our teams to consistently engage a wide range of stakeholders in the planning process. In addition, our Community Communications Plan, guides teams on actions they can take throughout the development process to help foster a sense of community among new residents. 46 Taylor Wimpey plc Annual Report 2021 Economic impacts Engagement with nature Our developments provide a boost to the Integrating green spaces, nature and wildlife local economy, both during construction and into our developments makes them more once new residents move in. Our Economic attractive places to live and can have a Benefits Toolkit identifies and helps us positive impact on residents’ wellbeing and understand and communicate the social and customer satisfaction. economic benefits our sites will generate; the Our environment strategy targets, launched in number of direct site and indirect supply 2021, include biodiversity net gain chain jobs that our developments will create requirements and go beyond regulation to and their economic value; expected revenue deliver priority wildlife enhancements, including gains for local businesses; the impact of new hedgehog highways, bug hotels, bird boxes infrastructure and amenities; and new and wildlife friendly planting. New sites will revenue for local authorities, including from integrate our priority improvements that council tax and business rates. encourage wildlife to make a home on We often transform previously developed, our developments. derelict or contaminated land into new In 2021, we worked with Hedgehog Street, communities, which helps support urban a campaign by the British Hedgehog redevelopment and regeneration. Around Preservation Society and People’s Trust for 21% of our homes in 2021 were built on Endangered Species to integrate hedgehog brownfield land (2020: 25%) which includes highways across 100 new sites. We also infill sites. All our developments, including worked with Buglife – The Invertebrate those on greenfield sites, are built to our Conservation Trust, to install bee bricks and environmental standards and comply with bug hotels. the UK’s environmental and planning regulations and any additional standards We’ve added user-friendly guides on set by the local planning authority. nature-friendly gardening to our website and will launch home welcome nature packs for customers during 2022. ### Placemaking ### principles in ### action Our approach to placemaking encompasses social, environmental and economic sustainability criteria. In 2021, we ran our fourth annual Placemaking Competition which recognises best practice in design and layout, based on our placemaking principles. This year’s overall winning scheme was Cambourne West Phase 1 in Cambridgeshire. The new West Cambourne Extension provides new connections, an abundance of open space, and easily accessible and central parks, play areas and community facilities. 47Taylor Wimpey plc Annual Report 2021 Strategic report Task Force on Climate-related Financial Disclosures ## Climate change risks and opportunities ### Climate change will affect Our climate focus areas ourbusiness from increased We are focusing on the following areas in relation to climate change, seeking both to mitigate our impact on climate change and to prepare for the future impacts of climate change on our ### regulation to changing business, supply chain and customers. We take a science-based approach and aim to ### stakeholder expectations continually review and improve performance. ### andphysical impacts such as ### increased risks from flooding Operations Supply chain Customer homes ### and overheating. Almost Energy-efficiency Working with suppliers Working towards andcarbon reductions and others to address zero carbon ready ### three-quarters of the UK’s onourconstruction embodied carbon in the homes for customers ### local authorities have now sites,car fleet and offices, materials, services and and supporting ### declared a climate emergency supporting a sustainable products we use sustainable lifestyles business culture and ### and we are increasingly business practices ### subject to additional climate- ### related requirements through | the planning process. | Collaboration and | Skills | The Group is one of the | | --- | --- | --- | --- | | | engagement | Building our knowledge | first UK homebuilders to | | Our purpose is to build great homes | Working with | base and ensuring our | set science-based targets | | andcreate thriving communities. Climate | government, industry | colleagues and trade | across our value chain, | | change andthe biodiversity crisis are part of | associations, investors, | subcontractors have | including a 1.5 degrees | | our operating context – they impact our | peer companies and | theskills needed for | target for our operational | | ability toachieve our purpose and are | others to address the | thetransition to a low | emissions | | threatening the future of today’s young | climate crisis | carbon economy | | people and generations to come. Our environment strategy, Building a Better World, is our response to the environmental crisis and the physical and transition risks posed by climate change. It sets out how we will play our part in creating a greener, healthier future for our customers, colleagues and communities, with ambitious targets up to 2030. It is summarised on pages 28 and 29. We have made progress on aligning our Board reviewed and approved our Responding to the Task Force reporting to the TCFD recommendations as environment strategy and climate targets and onClimate-related Financial | | set out by the FCA in Listing Rule 9.8.6 and | established ‘Natural resources and climate | | --- | --- | --- | | Disclosures | will further develop our approach during 2022. | change’ as a new Principal Risk. | | The Task Force on Climate-related Financial | Our progress against the recommendations of | | Executive level: Our CEO has ultimate Disclosures (TCFD) is a framework for TCFD can be found on page 50. responsibility for achieving our climate Companies to report climate-related risks targets. Sustainability (including climate and opportunities. In 2020, The Financial change) is a standing agenda item for GMT Governance for climate change Conduct Authority (FCA) introduced a meetings and members receive a monthly requirement for UK premium listed Board level: Our Board of Directors update from the Director of Sustainability. companies to report against the TCFD isresponsible for oversight of our The GMT members have received briefings framework, for periods beginning on or after environmental, social, governance (ESG) on climate change risks and opportunities to 1 January 2021. initiatives and this includes climate-related deepen their understanding of this topic. risks and opportunities. From 2022, they will The framework consists of four themes – receive an ESG update twice a year, which will LEAF Committee: Ingrid Osborne, Divisional governance, risk management, strategy, and include updates on progress made towards Chair for London and South East and a metrics and targets, and has 11 disclosure climate change targets during theperiod. The member of our GMT, oversees implementation recommendations for reporting on the Chair of the Legacy, Engagement and Action of our climate change programme. Ingrid financial impact of climate change. We for the Future (LEAF) Committee and our chairs our LEAF committee, which is support the aims of the TCFD, disclose Director of Sustainability will also attend the responsible for reviewing climate strategy, consistently with its recommendations, and Board on atleast one separate occasion risks and opportunities. It meets four times a aim toimprove the quality of our disclosure during the year. Board ESG competencies are year. LEAF members include the heads of our yearon year. indicated on page 79. During 2021, the sustainability, technical, production, customer 48 Taylor Wimpey plc Annual Report 2021 Governance Board of Directors Oversight of the business response to climate risks and opportunities Group Management Team Review and approve climate strategy, scrutinise performance, review progress on climate strategy and targets LEAF Committee Managing Directors Cross-Functional Working Groups (functional oversight) (operational implementation) Analyse climate risk and Drive implementation at local level Environment Strategy Working Group opportunities and develop Road to Net Zero Carbon thebusiness response, WorkingGroup monitor progress Waste and Resources WorkingGroup | and design functions and representatives | Plan and input intothe work of the Future | An initial review assessed the risks | | --- | --- | --- | | from our regional businesses. | Homes Hub. Read more about our | associated for the housebuilding sector | | | stakeholder engagement on pages 34 and 35. | fromthree scenarios: | The Director of Sustainability is responsible | for monitoring climate-related issues | We participate in CDP Climate Change and | – Orderly transition: Global action meets | | --- | --- | --- | | andupdating our Climate Change and | publish our submission on our website. We | the requirements of the Paris Climate | | Sustainability Risk and Opportunity Register. | received a score of A- for 2021 (2020: B). We | Change agreement and global warming | | He oversees our reporting and disclosures | were also included on the Financial Times | is kept to well below 2 degrees celsius | | on climate change, and the assurance of | European Climate Leaders list during 2021. | and preferably to 1.5 degrees celsius, | | ourclimate data and reports to our CEO. | | compared to pre-industrial levels. This | We work with the Carbon Trust on many included significant regulatory change, and Cross-functional working groups, including aspects of climate change. Since 2017, we changes to interactions with customers, our Environment Strategy Working Group have held the Carbon Trust Standard for investors and planners, and some changes and our Road to Net Zero Carbon Working ouroverall approach to carbon management, to how and what we build. However, the Group, support effective governance of including our policy, strategy and verification physical changes to the climate are limited climate change. of our data and processes. We are the first and manageable. homebuilder to achieve this. Operational level: The Managing Director – Climate breakdown: This is where there ineach regional business has responsibility is insufficient action, or a failure to act, and for achieving our climate change targets global warming is significant, with heating Strategy atthe local level. They have nominated at about 4-6 degrees compared to Climate change presents risks and aSustainability Sponsor within their pre-industrial levels. In this scenario, opportunities for our business including management team and a Sustainability physical changes to the climate dominate. those related to the transition to a lower Champion to assist with implementation – Disorderly transitions: This is where the carbon economy and those associated with anddata collection. Each regional business Paris goals are not met in time, but climate the physical impacts of climate change. We receives a quarterly report on resource use breakdown is avoided. Here there is assess climate risks and opportunities using (including energy use) and from 2022 will be significant regulatory change, changes to short (0-2 years), medium (3-10 years) and set a resource use reduction target. They are interactions with customers, investors and long term (10+ years) horizons looking at kept updated about climate-related issues planners, and to how and what we build. their potential impacts on our business, via workshops, masterclasses and briefings. The physical changes to the climate are strategy and financial planning. Our significant and require future planning. approach is informed by our materiality Stakeholder engagement assessment and climate scenario analysis. Follow up workshops looked in more detail Our stakeholder engagement informs our at a ‘disorderly transition’ scenario which approach to climate change. This includes Climate scenario analysis was considered the most likely scenario. customer research and collaborating Our preliminary scenario analysis process Theresults of this analysis and other risk withsuppliers through the Supply Chain was conducted in association with the assessment are presented in the risks and Sustainability School and our procurement Carbon Trust and reviewed by our GMT opportunities table. Further scenario analysis processes. We work with others to tackle in2020. will be undertaken in the future. industry-wide challenges including through the HBF. During 2021, we contributed to the development of the Future Homes Delivery 49Taylor Wimpey plc Annual Report 2021 Strategic report Task Force on Climate-related Financial Disclosures continued Implementing the TCFD recommendations - progress to date TCFD recommendation Progress to date Next steps Governance Describe the Board’s oversight We have established and disclosed During 2022, the Board will be further of climate-related risks and responsibility for climate risks at Board developing its oversight of our ESG Disclose the opportunities. level. The Board has conducted an priorities and determining how ESG organisation’s ESG mapping exercise to ensure that progress can be assessed more governance around all ESG matters are considered by the consistently. climate-related Board or one of its Committees. risks and opportunities. Describe management’s role We have established and disclosed An environmental measure has been inassessing and managing climate- responsibility for climate risks at included in the Executive Directors’ related risks and opportunities. Executive, Director and operational annual bonus plan and the intention level. is to introduce an environmental measure in the wider annual bonus Climate change has been added as scheme for 2023 performance. See a Principal Risk within ‘Natural page 107. resources and climatechange’. | Strategy | Describe the climate-related risks and | The table on pages 52 and 53 | Further scenario analysis is planned | | --- | --- | --- | --- | | | opportunities the organisation has | includes an initial assessment of the | to deepen our understanding of | | | identified over the short, medium, and | possible impact of climate risks and | climate risk. | Disclose the actual long term. opportunities on the business over the and potential short, medium and long term. impacts of | climate-related | Describe the impact of climate-related | We have used the findings of our | As part of future scenario analysis | | --- | --- | --- | --- | | risks and | risks and opportunities on the | scenario analysis to enhance our | exercises we will be further exploring | | opportunities on | organisation’s businesses, strategy, | understanding of the impact of climate | and aiming to quantify the potential | | the organisation’s | and financial planning. | risks on financial planning and business | impacts of climate change on the | | businesses, | | strategy, see pages 52 and 53. | business, strategy and financial | | strategy, and | | | planning. | financial Describe the resilience of the We have conducted our first scenario Further scenario analysis is planned planning where organisation’s strategy, taking into analysis focusing on a disorderly to deepen our understanding of such information consideration different climate-related transition scenario. climate risk. is material. scenarios, including a 2°C or lower scenario. | Risk | Describe the organisation’s processes | This process is outlined in Risk | Our planned further climate scenario | | --- | --- | --- | --- | | management | for identifying and assessing climate- | management on pages 59 and 60 | analysis will consider the potential | | | related risks. | and in Principal Risks on page 65. | financial impacts of climate risks. | Disclose how the We have linked our climate targets organisation to the risks and opportunities as set identifies, assesses, out by TCFD, on page 54. and manages | climate-related | Describe the organisation’s processes | This process is outlined in Risk | During 2022 we will be updating our | | --- | --- | --- | --- | | risks. | for managing climate-related risks. | Management on pages 59 and 60 and | policies and processes to reflect | | | | in the section on Principal Risks on | climate change mitigation and | | | | page 65. We have linked our climate | adaptation risks and opportunities. | targets to the risks and opportunities as set out by TCFD, on page 54. | | Describe how processes for | Climate change is fully integrated | The newly established Principal Risk | | --- | --- | --- | --- | | | identifying, assessing, and managing | intoour top down and bottom up risk | will be monitored by the Audit | | | climate-related risks are integrated | management process and during | Committee and senior management, | | | into the organisation’s overall risk | 2021 has been added as a Principal | assessing its impact on the Group’s | | | management. | Risk within ‘Natural resources and | strategic objectives and ensuring | | | | climatechange’. | appropriate mitigations are in place. | | Metrics and | Disclose the metrics used by the | We publish a range of performance | We will continue to keep our climate | | targets | organisation to assess climate-related | data to support our environment | reporting under review andto develop | | | risks and opportunities in line with its | strategy, see pages 28 and 29. | additional metrics where needed to | Disclose the strategy and risk management support disclosure to investors and metrics and targets process. otherstakeholders. used to assess and | manage relevant | Disclose Scope 1, Scope 2, and, if | We disclose greenhouse gas | We are committed to continuous | | --- | --- | --- | --- | | climate-related | appropriate, Scope 3 greenhouse gas | emissions data for scopes | improvement in our data processes | | risks and | (GHG) emissions, and the related risks. | 1, 2 and 3 on page 55. | and data quality. | opportunities where Describe the targets used by the Our ambitious science-based carbon During 2022 we will be developing our such information organisation to manage climate- reduction target has been approved net zero transition plan andtarget. is material. related risks and opportunities and by the Science Based Targets initiative performance against targets. (SBTi), see pages 28 and 29. 50 Taylor Wimpey plc Annual Report 2021 Impact on financial statements Reported balance sheet, income statement andcash flow We include known costs associated with regulation designed to affect the impact of climate change (e.g. building regulations PartL (conservation of fuel and power) and Part F (ventilation)) within the assessment ofthe value of inventory charged to cost ofsales. Where a forecast site margin is affected by a change in estimated costs to complete, the impact is recognised across allplots completed on that site in the current and future years. The carrying value of work in progress and land is assessed via a net realisable value exercise and any adjustments required are made within the financial statements. Our Climate Change Register guides the Specifically, relating to land and the possible Risk management climate change adaptation of our business impact from climate change, the Group uses The Board has overall responsibility for risk practices and the homes we build. For the latest environmental reports to assess management and our approach to risk eachclimate-related risk and opportunity the impact from flooding on the viability of combines a top-down and bottom-up theregister identifies: risk driver, description the land. review. The assessment, mitigation and of risk, potential impact, time frame, whether The Group does not have intangible assets, monitoring of sustainability and climate- therisk or opportunity is direct or indirect, such as goodwill, that require an annual related risks is included as part of our overall likelihood and magnitude of impact. impairment assessment and thus the impact risk management process, the outcomes of Thisisastanding item on every LEAF of climate change on the future cash flows which are formally reported once a year and Committee agenda. The Committee makes required to perform this assessment are reviewed at two other times during the year. recommendations to the GMT on how notrequired. As part of this process, the individual tomitigate, transfer, accept, or control sustainability and climate-related risks are climate-related risks. We prioritise our Going concern and viability considered through functional and business climatechange risks and opportunities ‘Natural resources and climate change’ have unit risk registers, our climate change and based on their materiality to our business, been added as a Principal Risk following a sustainability risk and opportunity register measured inpercentage of profit before tax review of the Group’s Principal Risks, and and on a regular basis by senior (PBT). Apercentage of PBT greater than are therefore considered as part of the going management, assessing the impact they 20% isconsidered a major impact. A large concern and viability assessment. Given the may have on the Group’s strategy, looking risk interms of likelihood is a greater than timeframe over which both are considered atshort, medium and in particular longer 50%chance. | (12 months and five years respectively) the | term emerging risks which may arise as the | | --- | --- | | future impact of climate change on the | area continues to evolve. The Group’s new | | operating costs of the business and its | Principal Risk ‘Natural resources andclimate | | supply chain, beyond those known costs | change’ (see page 65), recognises | | already included within the Group’s | theincreasing significance a transition to | ### Transition to net zero carbon forecasts, are not considered material. alow carbon economy has on both our operations and the world in which we live In addition, the Group’s viability assessment and conduct business. | considers a reduction in volumes which, | We were one of the first UK developers to | | --- | --- | | although not explicitly linked, could come | set Science Based Targets across our value | | about through tighter planning requirements | chain, including a 1.5 degrees target for | | in response to addressing the impact of | operational emissions. This is our first step | | climate change or through the reduced | on the road to net zero carbon. | availability or increased cost of materials During 2022 we will develop our net zero dueto restrictions in the supply chain due transition plan and net zero target. This will toclimate change. reduce regulatory, policy, taxation and stakeholder climate risks by aligning us with the UK’s net zero commitment. We are reviewing the SBTi Corporate Net Zero Standard published in 2021 and will use this to guide our approach. We will also take account of the ‘Metrics, Targets, and Transition Plans’ guidance issued by TCFD. We expect to publish our net zero target and plan in 2023. Our new homes will be net zero ready from 2025 as we phase out gas boilers and switch to all electric homes. 51Taylor Wimpey plc Annual Report 2021 Strategic report Task Force on Climate-related Financial Disclosures continued Our risks and opportunities The table below builds on our disclosure from last year and includes an initial assessment of the possible impact of these risks and opportunities on the business and financial statements. Description What are the risks? What are the opportunities? Our response Regulation, policy, taxation Changes to how sites and homes are designed affects land values and As policy requirements around heating andinsulation impact We prepare for regulatory changes through our research and development. increasescosts. the second hand market, new build homes will become Our R&D programme focuses on opportunities in green building (see page Regulatory changes and updates to building regulations (e.g. increasingly attractive. 39) and skills training (see page 40). Our Road to Net Zero Carbon working Future Homes Standard), variation in local planning Increased demand for new skills and products (e.g. air source heat pumps) group is leading our response. We conducted energy-efficiency research to requirements (e.g. in relation to flooding and biodiversity), impacts the supply chain resulting in increased build costs and shortages Meeting regulatory requirements in a more efficient way than update our home specification in 2021 (see page 17). expected net zero related policy changes and increases in tax of materials, products and skills. our competitors makes usa better investment case. and insurance premiums. We share our views with the Government on proposed regulatory changes Direct and indirect financial impacts from increased taxation and Meeting Local Planning Authority requirements in relation to both directly and via industry organisations such as the HBF. We are Time frame: Short, medium and long term insurance costs. climate change results could result in being more competitive supporting the Future Homes Delivery Plan – a sector wide plan to embed in land acquisitions. Materiality: High Risk of financial penalties from non-compliance with changing regulation. key environmental issues into home building up to 2050. Risk type: Transition (policy and legal) We work closely with supply chain partners and use our scale to ensure Opportunity type: Products, markets reliable and cost appropriate access to the skills and materials we need today and in the future (see page 42). We have been recognised by the CDP as a Supplier Engagement Leader and received a Supplier Engagement score of A for our approach to engaging suppliers on climate change. We work closely with planning authorities to understand and integrate their requirements, and with land owners to ensure that constraints are reflected in land values. Stakeholders Not meeting changing customer and stakeholder expectations in relation to Reputational benefits from meeting and exceeding customer Our environment strategy has been established to help us meet and exceed climate change reduces demand for our homes and impacts our reputation. expectations in relation to climate change and home energy changing stakeholder expectations, with a clear governance structure in Shifts in stakeholder preference and expectations in relation to efficiency makes homes more attractive tocustomers. place. This includes targets specifically related to enabling customers to live a the environment. Not meeting changing investor expectations results in reduced valuation more sustainable lifestyle. We regularly update our materiality assessment impacting market capitalisation and access to capital. Growth in green mortgages drives increased demand for new Time frame: Medium term (see pages 30 and 31) and integrate sustainability into customer research. build homes. Materiality: Medium to high Climate change and sustainability are integrated into our marketing strategy. There may also be marketing opportunities to positively Risk type: Transition (market, reputation) We regularly engage with investors on ESG matters and participate in differentiate new build homes as climate regulation impacts a range of disclosure initiatives including CDP, TCFD, SASB and DJSI Opportunity type: Products, markets the second hand homes market. (see page 3). Enhanced access to capital from meeting investor expectations and accessing new sources of green finance. Recruitment and retention of staff. Physical impacts Changing weather patterns and extreme weather events cause production Warmer, drier summers enable increasedoutput. We are increasing the amount of sustainability related data we collect from delays, materials shortages and increased costs, as well as increased suppliers and using this to develop our approach to mitigating material Changing weather patterns and an increase in extreme Integration of additional landscaping features to mitigate overheating and poor indoor air quality risks in highly insulated homes. supply risks. weather events. flood risk and other climate concerns enhance placemaking. Increased flood risk and biodiversity concerns impact our land bank and/or Sustainability issues including flood risk are considered from the start of Time frame: Medium and long term restrict future land supplies which mean that the carrying value of land may the land buying process. We take the risk of flooding on our developments Materiality: Medium need to be written down and land costs may increase. extremely seriously and identify potential flood risk as part of our site selection Risk type: Physical (acute and chronic) process. We do not buy land unless we can mitigate flood risk. We use the Environment Agency’s flood mapping tools and a digital platform for Opportunity type: Resilience assessing and managing sustainability and technical risks associated with land, that draws on external environmental databases. We integrate sustainable drainage features on our sites to manage water run off and reduce flow rates. We are developing our approach to biodiversity net gain to enable us to manage biodiversity risks. We will be updating our policies and processes to reflect climate change mitigation and adaptation risks and opportunities during 2022 which will help us respond to physical climate risks. Technology Changes in home design to accommodate technology impacts Efficiency improvements and cost savings for the business Our R&D programme helps us to identify beneficial new technology and test procurement and skillsstrategies. and customers. its performance to ensure it meets our quality, safety and technical standards. Increased use of technology including lower carbon Wealready integrate many lower carbon materials and off-site construction technology and materials, off-site manufacturing, adaptation Customers’ understanding of the use and benefit of some sustainable techniques and components into our homes, and will increase this. We technologies. solutions and technologies may be inconsistent with their performance prioritise customer communication with the introduction of new technology resulting in complaints. Time frame: Short and medium term and will be training our sales andmarketing teams to support customers. Materiality: Low to medium Risk type: Transition (technology, reputation) Opportunity type: Resource efficiency, energy efficiency 52 Taylor Wimpey plc Annual Report 2021 Description What are the risks? What are the opportunities? Our response Regulation, policy, taxation Changes to how sites and homes are designed affects land values and As policy requirements around heating andinsulation impact We prepare for regulatory changes through our research and development. increasescosts. the second hand market, new build homes will become Our R&D programme focuses on opportunities in green building (see page Regulatory changes and updates to building regulations (e.g. increasingly attractive. 39) and skills training (see page 40). Our Road to Net Zero Carbon working Future Homes Standard), variation in local planning Increased demand for new skills and products (e.g. air source heat pumps) group is leading our response. We conducted energy-efficiency research to requirements (e.g. in relation to flooding and biodiversity), impacts the supply chain resulting in increased build costs and shortages Meeting regulatory requirements in a more efficient way than update our home specification in 2021 (see page 17). expected net zero related policy changes and increases in tax of materials, products and skills. our competitors makes usa better investment case. and insurance premiums. We share our views with the Government on proposed regulatory changes Direct and indirect financial impacts from increased taxation and Meeting Local Planning Authority requirements in relation to both directly and via industry organisations such as the HBF. We are Time frame: Short, medium and long term insurance costs. climate change results could result in being more competitive supporting the Future Homes Delivery Plan – a sector wide plan to embed in land acquisitions. Materiality: High Risk of financial penalties from non-compliance with changing regulation. key environmental issues into home building up to 2050. Risk type: Transition (policy and legal) We work closely with supply chain partners and use our scale to ensure Opportunity type: Products, markets reliable and cost appropriate access to the skills and materials we need today and in the future (see page 42). We have been recognised by the CDP as a Supplier Engagement Leader and received a Supplier Engagement score of A for our approach to engaging suppliers on climate change. We work closely with planning authorities to understand and integrate their requirements, and with land owners to ensure that constraints are reflected in land values. Stakeholders Not meeting changing customer and stakeholder expectations in relation to Reputational benefits from meeting and exceeding customer Our environment strategy has been established to help us meet and exceed climate change reduces demand for our homes and impacts our reputation. expectations in relation to climate change and home energy changing stakeholder expectations, with a clear governance structure in Shifts in stakeholder preference and expectations in relation to efficiency makes homes more attractive tocustomers. place. This includes targets specifically related to enabling customers to live a the environment. Not meeting changing investor expectations results in reduced valuation more sustainable lifestyle. We regularly update our materiality assessment impacting market capitalisation and access to capital. Growth in green mortgages drives increased demand for new Time frame: Medium term (see pages 30 and 31) and integrate sustainability into customer research. build homes. Materiality: Medium to high Climate change and sustainability are integrated into our marketing strategy. There may also be marketing opportunities to positively Risk type: Transition (market, reputation) We regularly engage with investors on ESG matters and participate in differentiate new build homes as climate regulation impacts a range of disclosure initiatives including CDP, TCFD, SASB and DJSI Opportunity type: Products, markets the second hand homes market. (see page 3). Enhanced access to capital from meeting investor expectations and accessing new sources of green finance. Recruitment and retention of staff. Physical impacts Changing weather patterns and extreme weather events cause production Warmer, drier summers enable increasedoutput. We are increasing the amount of sustainability related data we collect from delays, materials shortages and increased costs, as well as increased suppliers and using this to develop our approach to mitigating material Changing weather patterns and an increase in extreme Integration of additional landscaping features to mitigate overheating and poor indoor air quality risks in highly insulated homes. supply risks. weather events. flood risk and other climate concerns enhance placemaking. Increased flood risk and biodiversity concerns impact our land bank and/or Sustainability issues including flood risk are considered from the start of Time frame: Medium and long term restrict future land supplies which mean that the carrying value of land may the land buying process. We take the risk of flooding on our developments Materiality: Medium need to be written down and land costs may increase. extremely seriously and identify potential flood risk as part of our site selection Risk type: Physical (acute and chronic) process. We do not buy land unless we can mitigate flood risk. We use the Environment Agency’s flood mapping tools and a digital platform for Opportunity type: Resilience assessing and managing sustainability and technical risks associated with land, that draws on external environmental databases. We integrate sustainable drainage features on our sites to manage water run off and reduce flow rates. We are developing our approach to biodiversity net gain to enable us to manage biodiversity risks. We will be updating our policies and processes to reflect climate change mitigation and adaptation risks and opportunities during 2022 which will help us respond to physical climate risks. Technology Changes in home design to accommodate technology impacts Efficiency improvements and cost savings for the business Our R&D programme helps us to identify beneficial new technology and test procurement and skillsstrategies. and customers. its performance to ensure it meets our quality, safety and technical standards. Increased use of technology including lower carbon Wealready integrate many lower carbon materials and off-site construction technology and materials, off-site manufacturing, adaptation Customers’ understanding of the use and benefit of some sustainable techniques and components into our homes, and will increase this. We technologies. solutions and technologies may be inconsistent with their performance prioritise customer communication with the introduction of new technology resulting in complaints. Time frame: Short and medium term and will be training our sales andmarketing teams to support customers. Materiality: Low to medium Risk type: Transition (technology, reputation) Opportunity type: Resource efficiency, energy efficiency 53Taylor Wimpey plc Annual Report 2021 Strategic report Task Force on Climate-related Financial Disclosures continued has confirmed that our operational target Metrics and targets isconsistent with reductions required to We have established metrics and targets keep warming to 1.5°C, the most ambitious toenable us to manage and mitigate our goal of the Paris Agreement. Our scope identified climate risks and ensure we 3goal meets the SBTi’s criteria for ambitious capitalise on opportunities relating to the value chain reductions, in line with current transition to a low carbon economy. best practice. We have published a science-based carbon Our carbon and energy use data is externally reduction target which has been approved assured by the Carbon Trust to a limited by the Science Based Targets initiative (SBTi). assurance level. This covers emissions from our operations (1% of total), supply chain (59% of total) More detail on our performance in 2021 is andhomes in use (40% of total). TheSBTi included in our Sustainability Supplement. Our climate targets Our targets on nature, waste and resource efficiency are included on pages 28 and 29. Targets - climate Progress Link to TCFD risk | Achieve our science-based carbon | Our operational emissions intensity (scope 1 | – Regulation, policy, taxation | | --- | --- | --- | | reduction target: | and 2), has decreased by 13% against our | – Stakeholders | | | 2019 baseline with absolute operational | – Physical impacts | – Reduce operational carbon emissions emissions falling by 20% over the same period. – Technology intensity by 36% by 2025 from a | 2019 baseline | We are improving our data to enable us | | --- | --- | | – Reduce carbon emissions intensity | to accurately report progress on our | | from our supply chain and customer | scope 3 target. | homes by 24% by 2030 from a 2019baseline Reduce operational energy intensity by There was a 1% increase in UK energy intensity – Regulation, policy, taxation 32% for UK building sites by 2025. on our 2019 baseline. We believe this is due to a – Physical impacts small change in the average fuel mix used. Purchase 100% REGO backed green We purchased 100% REGO backed renewable – Regulation, policy, taxation electricity for all new sites. electricity for new sites during construction, – Stakeholders offices, show homes, sales areas and plots before sale. This is around 72% of our total electricity consumption. Reduce embodied carbon per home We are developing our measurement systems – Regulation, policy, taxation by21% by 2030. and expect to start reporting progress on this target next year. | Reduce emissions from customer | We are developing our measurement systems | – Regulation, policy, taxation | | --- | --- | --- | | homes in use by 75% by 2030. | and expect to start reporting progress on this | – Stakeholders | | | target next year. | – Technology | | Reduce car and grey fleet emissions | We have reduced company car fleet emissions | – Stakeholders | | by50% by 2025. | (excluding grey fleet) by 36.5% since 2019. | | Around 43% of vehicles in our company car fleet are now EVor hybrid (2020: 30%). | Make it easier for 40,000 customers | We are improving our data collection process | – Physical impacts | | --- | --- | --- | | towork from home and enable more | forthis target and expect to report progress | – Technology | | sustainable transport choices through | next year. | | 36,000 EV charging points and 3,000additional bike stands by the mid2020s. | Update our policies and processes to | We will be working on this target during2022 | – Physical impacts | | --- | --- | --- | | reflect the risks and opportunities from | and have added ‘Natural resources and climate | – Technology | | a changing climate by 2022. | change’ as a new Principal Risk. | | 54 Taylor Wimpey plc Annual Report 2021 Greenhouse gas (GHG) emissions (tonnes of CO e) and energy use (MWh) 2 2021 2020 2019 2018 2017 | Scope 1 GHG emissions – combustion of fuel tonnes CO | | 2 e 17,464 16,522 21,018 20,328 18,889 | | | --- | --- | --- | --- | | Scope 2 GHG emissions – market based tonnes CO | | 2 e 2,272 1,981 3,563 4,509 4,794 | | | Scope 2 GHG emissions – location based tonnes CO | | 2 e 5,406 5,272 6,172 6,892 8,236 | | | Total scopes 1 and 2 – market based tonnes CO | | 2 e 19,736 18,503 24,581 24,837 23,683 | | | Emissions per 100sqm completed homes | tonnes CO | 2 e | 1.41 1.96 1.62 1.73 1.73 | | (scope 1 and 2) | /100sqm | | | | Total scope 3 emissions tonnes CO | | 2 e 2,632,421 1,961,431 3,869,583 2,171,973 1,826,183 | | | Purchased goods and services tonnes CO | | 2 e 1,413,410 1,114,587 2,242,225 2,143,976 1,797,288 | | | Waste generated in operations tonnes CO | | 2 e 15,446 11,255 17,550 15,845 15,793 | | | Business travel tonnes CO | | 2 e 1,464 6,593 6,303 6,405 6,812 | | | Fuel and energy related activities tonnes CO | | 2 e 5,802 4,503 5,679 5,748 6,290 | | | Downstream leased assets tonnes CO | | 2 e 6,592 6,178 2,656 - - | | | Use of sold products tonnes CO | | 2 e 1,107,417 754,625 1,476,066 - - | | | Upstream transport and distribution tonnes CO | | 2 e 39,891 29,815 64,827 - - | | | End of life treatment of sold products tonnes CO | | 2 e 29,210 20,105 33,242 - - | | | Employee commuting tonnes CO | | 2 e 13,189 13,771 21,034 - - | | Energy use Operational energy use (fuel and electricity MWh 104,870 96,195 116,207 111,085 105,123 consumption from sites, offices and fleet) Operational energy intensity (site and office fuel MWh / 100 sqm 7.5 10.2 7.6 7.7 7.7 andelectricity intensity – MWh / 100 sqm completedhomes) Our carbon and energy use data is externally assured by the Carbon Trust to a limited assurance level. Data is provided as tonnes of carbon dioxide equivalent (CO 2 e) for all operations. Scope 1 and 2 emissions are from our sites, offices, show homes and sales areas, plots before sale and car fleet. 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 https://www.taylorwimpey.co.uk/corporate/sustainability/our-approach/climate-change-and-nature for more detail on our calculations. Energy data and energy efficiency measures The energy consumption figure in the table is a Group figure. 98.74% of this total energy consumption is from the UK and offshore areas and 1.26% from Spain. 98.24% of total scope 1 and scope 2 emissions are from the UK and offshore areas and 1.76% 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, by publishing our Energy Dos and Don’ts Guide and running masterclass sessions for our teams, partnering with cabin manufacturer Danzer and the Carbon Trust to design and trial new energy efficient portacabins, 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. We have successfully tested hydrotreated vegetable oil as a lower carbon alternative to diesel for plant on site and plan to extend its use during 2022. This reporting meets the SECR (Streamlined Energy and Carbon Reporting) requirements. Scope 3 data for 2018 and prior years includes fewer categories of emissions. It therefore cannot be directly compared with data for 2019 onwards. 55Taylor Wimpey plc Annual Report 2021 Strategic report Sustainability Accounting Standards Board Disclosures # SASB index The following table discloses our performance against the others set by the Sustainability Accounting Standards Board (SASB) Standard for the Home Builders sector. Data relates to the period 1 January 2021-31 December 2021. A number of the SASB criteria are not directly applicable to the UK and in these cases we have sought to provide equivalent data. A note on terminology: Our sites are single pieces of land which typically get outlive planning permission as a single entity. They range in size from 50-5,000 homes. Outlets are sites with a sales centre. 'Plots' are homes prior to completion which are equivalent to 'lots' (the term used in the SASB standard). Responses do not cover our business in Spain which accounts for less than 2% of total completions. | Code | SASB criteria | Our approach | | --- | --- | --- | | **Land use and ecological impacts** | | | | IF-HB-160a.1 | Number of (1) lots and (2) homes delivered on redevelopment sites | In 2021, 21% of completions (excluding joint ventures) were on brownfield land (2020: 25%). | | IF-HB-160a.2 | Number of (1) lots and (2) homes delivered in regions with High or Extremely High Baseline Water Stress | We estimate that around 42% of our plots are built in areas of high water stress, around 5,000 homes. No homes are built in areas of extremely high stress. This is based on the baseline water stress map published by the World Resources Institute's (WRI) Water Risk Atlas tool, Aqueduct. | | IF-HB-160a.3 | Total amount of monetary losses as a result of legal proceedings associated with environmental regulations | We received an Environment Agency notice that a small firm would be payable in relation to all run-off due to a burst water main after groundworks at a development of our Exeter business. | | IF-HB-160a.4 | Discussion of process to integrate environmental considerations into site selection, site design, and site development and construction | Our environment strategy includes targets to reduce our environmental footprint across our value chain focusing on climate change and energy, nature, resources and waste. Environmental factors are integrated into our processes, including: **Landbuying:** 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. Our internal processes and guidance documents help us to identify and address relevant sustainability issues for each site. These include our Sustainable Development Checklist which helps us to assess factors such as how well connected the site is to transport lines and the potential impact on habitats and species. We use a digital platform for assessing and managing sustainability risks at site level, called LEADIT (Land and Environment Assessment of Development Risk). It includes a pre-acquisition screening and risk assessment process for potential new sites covering issues including remediation, flood risk, biodiversity, air quality and archaeology. **Placemaking:** Our placemaking standards help our teams to plan, design and deliver schemes that promote social, environmental and economic sustainability. They are based on best practice such as the Building for a Healthy Life framework and cover factors such as promoting sustainable transport, connectivity with nature and resident wellbeing. All new sites now include our priority wildlife enhancements and from 2020 new sites will include 10% biodiversity net gain. **Construction:** Our Health, Safety and Environmental Management System covers all site activities and helps us to keep noise, dust and disturbance to a minimum, to prevent pollution incidents, reduce waste and water use and to protect biodiversity. It requires all operational sites to carry out mandatory environmental checks and to have a Site Specific Environmental Action Plan. All sites have individual site waste management plans. | | **Workforce health and safety** | | | | IF-HB-320a.1 | Total recordable incident rate (TRIR) and (2) fatality rate for (a) direct employees and (b) contract employees | We measure health and safety performance using an Annual Injury Incidence Rate (AIR) metric and we report a consolidated figure for direct employees and contractors. Our AIR for reportable injuries per 100,000 employees and contractors was 214 in 2021 (2020: 151). Reportable injuries are those covered by the UK's Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDCOR). The average AIR for our sector was 264. This is calculated by the Home Builders Federation. There were no fatalities. | | **Design for resource efficiency** | | | | IF-HB-410a.1 | Number of homes that obtained a certified HEPB/Hides Score and (2) average score | The Energy Performance Certificate (EPC) is a UK equivalent to the HEPB Index. Properties are assessed by an accredited assessor. On average, our standard homes are designed to achieve an EPC rating of 8. We don't currently collate data on the final EPC ratings for our properties so this figure is estimated based on our standard house type designs. Our homes include: energy-efficient walls and windows, insulated loft spaces, 100% low energy light fittings and LED recessed desirability, and energy-efficient appliances. An increasing number of our homes include photovoltaic (PV) panels and additional energy efficiency measures such as mechanical ventilation with heat recovery. | | IF-HB-410a.2 | Percentage of installed water fixtures certified to WaterSense® specifications | Our homes are designed to achieve a maximum internal water use of 120 litres per person per day and 6 litres external use in line with Building Regulations. All our homes in England and Wales have water meters fitted, and all homes have low flow tape and showers, and dual flush toilets. WaterSense is not applicable to the UK. Water efficiency is covered by Building Regulations Part G - Sanitation, hot water safety and water efficiency. This focuses on the expected performance of the whole home. Compliance is assessed based on water consumption figures provided by product manufacturers including for WCs, taps, baths, showers and appliances. | 56 Taylor Winpey plc Annual Report 2021 | Code | SAOB criteria | Our approach | | --- | --- | --- | | **Design for resource efficiency continued** | | | | IF-HB-410a.3 | Number of homes delivered certified to a third-party multi-attribute green building standard | All our homes are subject to UK building regulations which include standards for energy and water efficiency (criteria IF-HB-410a.1 and IF-HB-410a.2). With the phasing in of the new Port I, from June 2022, homes will have enhanced fabric standards with the additional features that may include heat recovery systems and IPs panels. Collectively, this will achieve a 31% reduction in home energy use compared with our current specification. There are no current widely used third-party multi-attribute green building standards designed specifically for homes in the UK. | | IF-HB-410a.4 | Description of risks and opportunities related to incorporating resource efficiency into home design, and how benefits are communicated to customers | Risks and opportunities relating to home energy and resource efficiency are considered as part of our climate change risk management processes which are outlined on pages 52 and 53. Our homes integrate features to help customers live a resource efficient lifestyle (see IF-HB-410a.1 and IF-HB-410a.2) and we are well prepared for the forthcoming changes to Building Regulations (see IF-HB-410a.3) and the Future Homes Standard (see page 17). We communicate the resource efficiency benefits of our new homes to potential customers, via our Sales Executives, our website, marketing materials, Thom House to Home: manual, Maintenance Guide and Touchpoint Portal. This includes the energy rating of their home and the energy savings they can expect to achieve in relation to an average second hand home. We also include information on how customers can further reduce home energy and water use and create a mature friendly garden. Our Sales Executives have been trained on how to communicate energy and resource efficiency benefits to our customers. | | **Community impacts of new developments** | | | | IF-HB-410b.1 | Description of how proximity and access to infrastructure, services, and economic centers affect site selection and development decisions | Proximity and access to infrastructure, services, and economic centres influence site selection and development decisions. For each scheme, we assess the current level of facilities and services to assess whether they are sufficient to support the scale of proposed development. We aim for future residents to have convenient access to local facilities and services via walking, cycling or public transport. Where the current level of facilities or services is not adequate, we contribute to improving local facilities. The UK's NPPF also requires consideration of the opportunities presented by existing or planned investment in infrastructure. During 2021, we contributed £418 million to local communities via planning obligations (2020: £287 million) to fund infrastructure and facilities including affordable housing, green spaces, community and leisure facilities, transport, educational funding, jobs for local people, heritage buildings and public art. Around 67% of our UK competitors were within 500m of a public transport route and around 86% within 1,000m. | | IF-HB-410b.2 | Number of (1) lots and (2) homes delivered on infill sites | This data is not currently collected. However, the majority of brownfield land in the UK would meet the definition of an infill site. Brownfield land is previously developed land and most sites are served by existing physical installations such as roads, power lines, sewer and water. In 2021, 21% of completions excluding joint ventures were on brownfield land (2020: 25%). | | IF-HB-410b.3 | Number of homes delivered in compact developments and (2) average density | We believe that all our schemes meet the criteria for compact development. | | **Climate change adaptation** | | | | IF-HB-420a.1 | Number of lots located in 100-year flood zones | We don't currently collate this data but expect to be able to do so in future as we roll out our LEADR system for managing environmental site-rises. 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 that input during our planning consultations. We carry out a flood risk assessment on all our sites and do not buy land unless we can mitigate flood risk. Flood risk is controlled well in the UK through the planning process. Flood risk is one of the factors considered in our climate change scenario analysis, see pages 52 and 53. | | IF-HB-420a.2 | Description of climate change risk exposure analysis, degree of systematic portfolio exposure, and strategies for mitigating risks | Climate change risks have the potential to impact our business strategy through increased costs, reduced productivity and reputational damage. Our approach to governance, risk management, climate strategy and scenario analysis are outlined in detail on pages 48 to 53. Climate change is now included as a Principal Risk within 'Natural resources and climate change', see page 65. In 2021, we scored A- in our CDP Climate Change disclosure, and we are the only UK homebuilder to hold the Carbon Trust Standard for carbon management. Our carbon reduction target has been verified by the Science Based Targets initiative, see page 38. | | **Activity metrics** | | | | IF-HB-000.A | Number of controlled lots | As at 31 December 2021, our short term landbank stood at c.854 plots (2020: c.774 plots). Our short term landbank is owned or controlled land with planning permission or a resolution to grant planning permission. | | IF-HB-000.B | Number of homes delivered | Total home completions in the UK were 14,087 in 2021, including joint ventures. | | IF-HB-000.C | Number of active selling communities | We traded from an average of 225 outlets in 2021 (2020: 240). Our net private sales rate per outlet per week for the year was 0.91 (2020: 0.76). | 1. The developable area of land for each site is calculated using net hectares or net acres. This means the total land area that will be developed excluding public open space and land used for community facilities and some infrastructure. Taylor Whipple plc Annual Report 2021 57 Strategic report ## 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. Our impact and related Read Performance Overview Our policies Principal Risks more Environmental matters | Building a better world, our | Sustainability Policy – Our commitment to balance long term growth | More information can be foundwithin: | | | --- | --- | --- | --- | | ambitious environment strategy, | with our responsibilities to the environment, society and the communities | | | | | | Building a better world | 28 to 29 | | including our science-based carbon | inwhich we operate | | | | | | Climate change risks and | 48 to 55 | reduction target Climate Policy – Outlines our approach to reduce greenhouse gas opportunities 50% reduction in direct carbon emissions from our operations, supply chain and homes Creating a sustainable future 16 to 17 emissions intensity since 2013 Health Safety and Environmental (HSE) Policy – Outlines our ongoing Principal Risks and uncertainties 65 100 sites included a hedgehog commitment to continual improvement of our HSE performance highway in2021 Supply Chain Policy – Sets out our commitment to work with trusted 97% of construction waste recycled 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 Employees 95% of employees feel proud to Equality, Diversity and Inclusion policy – Outlines our commitment to More information can be found within: work for Taylor Wimpey create an inclusive workplace and a workforce that reflects the diversity Our strategy and key performance 26 to 27 of the communities in which we operate | 96% of employees feel that they can | | indicators | | | --- | --- | --- | --- | | be their authentic self at work | Grievance and Harassment Policy – Ensures that any reports are | | | | | | Stakeholders - Our employees | 40 to 41 | investigated and addressed appropriately 50% of plc Board positions held Corporate governance - Equality, 93 to 97 by women diversity and inclusion Principal Risks and uncertainties 63 Human rights Continue to train employees to Anti-Slavery, Human Trafficking and Human Rights Policy More information can be found within: identify signs of modern slavery and – Themeasures we uphold to safeguard against modern slavery Stakeholders - Our partners 42 to 43 human trafficking for which Supplier Code of Conduct – The principles that our suppliers, weoperate a zero tolerance policy contractors and business partners are required to adhere to in ensuring human rights are respected and modern slavery is not taking place Supply Chain Policy Social matters Contributed £418 million to Community Policy – Outlines our commitment to be a responsible More information can be foundwithin: | communities via our planning | housebuilder, building homes and communities that enhance the local | | | | --- | --- | --- | --- | | | | Stakeholder performance | 34 to 35 | | obligations | areatomeet the needs of new and existing residents | | | and priorities | In 2021, around 18% of our | Donations Policy – Our approach to making charitable donations and | | | | --- | --- | --- | --- | | | | Stakeholders - Our partners | 42 to 43 | | completions were designated | ourpolicy not to make political donations | | | | | | Stakeholders - Our communities | 46 to 47 | affordable Charity and Community Support Policy – Our commitment to supporting charities and local community groups in the areas we operate Anti-bribery and anti-corruption | Continue to train our employees and | Anti-Corruption Policy – Our approach to combat risks of bribery, | More information canbe found within: | | | --- | --- | --- | --- | | raise awareness of the procedures | including the key principles employees should follow | | | | | | Corporate governance - | 81 | inplace Fraud Mitigation and Response Policy – This policy formalises the Boardleadership and Company Strict rules in relation to recording, Company’s attitude to fraud and its response to instances, or allegations, purpose giving or receiving of gifts 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 Business model c.14k new homes completed for Community Policy More information canbe found within: customers in 2021 Sustainability Policy Creating value through 22 to 23 Strong short term landbank of c.85k ourbusinessmodel Customer service Policy – Our approach and commitments to provide plots, as at 31 December 2021 excellent customer service Non-financial KPIs Achieved a recommend score of Customer Service Policy More information canbe found within: 92% in the HBF 8-week survey Health Safety and Environmental Policy Our strategy and key performance 24 to 27 which equates to a five-star rating indicators Communications and Investor Relations Policy – Sets out our Our Annual Injury Incidence Rate commitment to conduct clear, open and accurate communication with Building a better world 28 to 29 (AIIR) for reportable injuries per allofthe Company’s stakeholder groups 100,000 employees and contractors Policy embedding, due diligence and outcomes was 214 in 2021 Board leadership and 78 to 81 Company Purpose Board Activities 82 Audit Committee Report 98 to 104 58 Taylor Wimpey plc Annual Report 2021 Risk management ## Risk management The Board takes a proactive approach to the Identification of risks ### As with any business, Taylor management of these and regularly reviews Our risk management and internal control ### Wimpey faces risks and both internal and external factors to identify frameworks define the procedures to ### uncertainties in the course of and assess the impact on the business and manage and mitigate risks facing the in turn identify the Principal Risks that would ### its operations. It is only by business, rather than eliminate risk altogether impact delivery of the Group strategy. and can only provide reasonable and not ### timely identification, effective The Chief Executive is primarily responsible absolute assurance against material ### management and monitoring for the management of the risks, with the misstatement or loss. support of the Group Management Team ### of these risks that we are able Identifying risks is a continual process and (GMT) and other senior managers located in risk registers are maintained throughout the ### to deliver our strategy and the business. In line with the 2018 UK Group at an individual site level, at the ### strategic goals. Corporate Governance Code, the Board business unit level and at Group-wide holds formal risk reviews, at least half yearly functional levels. The business unit and and routinely considers risk at each Board Governance functional registers are reviewed twice a year meeting as appropriate. as part of our formal risk assessment The Board has overall responsibility for risk The formal assessment includes a robust process. In determining the risk, oversight, for maintaining a robust risk consideration of the Principal Risks to ensure consideration is given to both internal and management and internal control system and they remain appropriate as well as a review external factors. The registers document for determining the Group’s appetite for of the key and emerging risks identified by both the inherent risks before consideration exposure to the Principal Risks to the the business, their risk profile and mitigating of any mitigations and residual risks after achievement of its strategy. factors. At the Board meeting in March 2022, consideration of effective mitigations. The Audit Committee supports the Board in the Board completed its annual assessment A consolidated view of the risk environment, the management of risk and is responsible of risks. This followed the Audit Committee’s including potential emerging risks, is for reviewing the effectiveness of the risk formal assessment of risk in December discussed, challenged and approved by the management and internal control processes 2021, which was supported by a detailed GMT and Audit Committee before being during the year. risk assessment by the GMT and their review presented to the Board, ensuring all key risks The Board recognises the importance of of the effectiveness of internal controls in known to the Group are being actively identifying and actively monitoring our mitigating the risks. The diagram below monitored and appropriate mitigations / strategic, reputational, financial and illustrates the internal governance process actions are in place to ensure each risk falls operational risks, and other longer term within the Group around risk management. within the tolerance set by the Board. threats, trends and challenges facing the business. Risk Management Framework Our risk management approach involves a top-down review of risks by senior Board approval management and the Board, combined with a bottom-up review by each individual function and business unit. Audit Committee review Monitoring GMT review of key, principal and emerging risks Communication & reporting Consolidation of key risks Functions and business units risk identification and assessment Inputs (e.g. business change, external factors, workshops) 59Taylor Wimpey plc Annual Report 2021 Strategic report Risk management continued | Evaluation of risks | COVID-19 | Specific risk areas other than the | | --- | --- | --- | | A risk scoring matrix is used to ensure risks | As a business, we continue to operate under | Principal Risks | | are evaluated on a consistent basis. Our | our COVID-19 working protocols, to ensure | The Group considers other specific risk areas | | matrix considers likelihood based on | the continued safety of our staff, customers, | recognising the increasing complexity of the | | probability of occurrence and impact based | suppliers and subcontractors. The risks | industry in which it operates, and which are | | on financial, reputational, customer, health | associated with the pandemic are reducing | in addition to its identified Principal Risks. | | and safety, employees, environmental, | as the country progresses with its | Whilst we continue to recognise the risks | | operational, legal and regulatory and IT | vaccination programme and lifts the | associated with leaving the EU and the | | perspectives, to help determine those risks | restrictions on its economy. Nevertheless, | effects of the COVID-19 pandemic, the | | that are considered to be key in delivering | the continuing effects of the pandemic, the | Board views these potential risks as an | | our strategy. Key risks are defined as those | potential for future variants, and the potential | integral part of our Principal Risks rather than | | with a residual score equal to or greater than | subsequent economic or operational | as separate standalone risks. We continue to | | 12 and these are reviewed and monitored by | disruption, remain built into the assessment | monitor and mitigate the impacts on our | | the Board as part of our bi-annual risk | of our individual risks. | supply chain and labour force and the overall | | assessment process. | | economic market impacting mortgage | Emerging risks Each risk is evaluated at the inherent and availability and demand. Emerging risks are defined as those where residual levels, with consideration given to Housing and fire safety continues to remain the extent and implications are not yet fully the target residual risk levels based on our high on the agendas of the Government and understood, with consideration given to the risk appetite and tolerance. All identified risks the main political parties. The sector potential time frame of occurrence and are aligned to our Principal Risks to help continues to face increasing scrutiny and velocity of impact that these could have on validate the continuance of such or the pressure from social media and pressure the Group. As part of our risk management identification of potential new Principal Risks. groups, together with greater oversight from process, these are monitored and reviewed Government through a single New Homes on an ongoing basis and discussed and Management of risks Ombudsman. We endeavour to deliver both agreed by the Board. Ownership and management of the Principal, the letter and the spirit of regulations and key and emerging risks is assigned to Our emerging risks are grouped into the maintain this same ethos in our relationships members of the GMT or senior management categories listed in the table below, which with our customers. as appropriate. They are responsible for also contains some narrative description reviewing the operating effectiveness of the against each category indicating example internal control systems, for considering and focus areas into which the identified implementing risk mitigation plans and for the emerging risks fall. ongoing review and monitoring of the identified risk. This includes the monitoring Category Example focus area of progress against agreed KPIs as an Environmental / climate Unpredictable weather patterns integral part of the business process and core activities. Operational / build Supply chain issues related to regulation changes Risk appetite and tolerance Political / economic Continuing impact of COVID-19 on the economic The risk appetite and tolerance levels for the landscape and the potential for devolution Group are set by the Board. In setting these, Technological Artificial intelligence the Board has considered the expectations of its shareholders and other stakeholders Social Customer demographics and preferences and recognises the distinction between Governmental Changing Government policies 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 62 to 65. The residual risk ratings of all our Principal Risks continue to be within their respective established risk tolerance levels. 60 Taylor Wimpey plc Annual Report 2021 Principal Risks and uncertainties ## Our Principal Risks and uncertainties Principal Risks overview Strategic Risk change The table opposite summarises the Group’s Our values pillars inyear Principal Risks and uncertainties, showing A. Government policies, how each links to our corporate values and regulationsand planning strategic objectives. Control of each of these is critical to the ongoing success of the B. Mortgage availability business. As such, their management is andhousingdemand primarily the responsibility of the Chief Executive and the GMT, together with the C. Availability and costs of roles noted in the Principal Risks tables on materialsand subcontractors pages 62 to 65. During the year, two new D. Attract and retain high-calibre Principal Risks have been added, reflecting employees an increase in their risk profile, as reflected in the table opposite and for which further E. Land availability details can be found on page 65. Three of our existing Principal Risks have seen an increase in their residual rating F. Quality and reputation following a review of the current industry and market dynamics and the introduction of the G. Health, safety and environment New Homes Ombudsman. The Board has finalised its assessment of these risks and of any changes to the H. Natural resources and climate residual risk profile during the year. change (NEW) Link to material issues I. Cyber security (NEW) The Board recognises the importance of stakeholder engagement, the material issues that matter the most to them and the need for a strong linkage to risk management. Key to strategic pillars Key to our values Key to risk change To demonstrate this linkage, an exercise was | performed during the year to align each of | Build quality | Respectful and fair | Increased risk | | --- | --- | --- | --- | | our material issues (as disclosed on page 31) | Be the employer of choice in our industry | Take responsibility | No change | | to our Principal Risks, which is further | Best in class efficient engine room | Better tomorrow | Decreased risk | | detailed in the Principal Risks tables on | Customers and communities | Be proud | | pages 62 to 65. Optimising our strong landbank Principal Risks heat map Key HighLow Likelihood Inherent The heat map opposite illustrates the relative Residual inherent and residual positioning of our Principal Risks from an impact and likelihood perspective, including the two new Principal Risks. Further information on our Principal Risks is detailed in the Principal Risk tables on pages 62 to 65. HighLow Impact 61Taylor Wimpey plc Annual Report 2021 Strategic report Principal Risks and uncertainties continued A. Government policies, regulations and planning Risk description The industry in which we operate is becoming increasingly regulated. Failure to adhere to Government regulations could impact our operational performance and our ability to meet our strategic objectives. Changes to the planning system or planning delays could result in missed opportunities to optimise our landbank, affecting profitability and production delivery. Residual rating Residual risk change Risk appetite Accountability Key mitigations in year Moderate Low – Group Operations Director – Ongoing and regular review of building regulations – Regional Managing Directors – Consultation with Government agencies – New house type range – COVID-19 risk assessments for all operations – Ground Rent Review Assistance Scheme – Cladding fire safety provision Link to material issues Link to strategy Link to values Example key risk indicators Opportunities Governance and – Removal of Help to Buy – To build enhanced collaborative networks with management – New Government regulations stakeholders and peers, to monitor the implications of (e.g. around planning and climate) regulatory change Responsible sourcing – Delays in planning – Lead the business in addressing pressing environmental issues, including reducing our carbon footprint and – Sentiment towards the industry targeting biodiversity (e.g. Cladding fire safety remediation) B. Mortgage availability and housing demand Risk description A decline in the economic environment, driven by sustained growth in interest rates, low wage inflation or increasing levels of unemployment, could result in tightened mortgage availability and challenge mortgage affordability for our customers resulting in a direct impact on our volume targets. Residual rating Residual risk change Risk appetite Accountability Key mitigations in year Moderate Low – UK Sales and Marketing Director – Evaluation of new outlet openings based on local – Regional Sales and Marketing market conditions Directors – Pricing and incentives review – Review of external data (e.g. HBF, mortgage lenders) Link to material issues Link to strategy Link to values Example key risk indicators Opportunities Sustainable homes and – Interest rate increases – To continue to develop strong working relationships with communities – Levels of unemployment established mainstream lenders and those wishing to increase volume in the new build market Responsible sourcing – Volume of enquiries / people visiting our developments – UK household spending – Loan to value metrics C. Availability and costs of materials and subcontractors Risk description Increase in housing demand and production or a breakdown within the supply chain 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. Residual rating Residual risk change Risk appetite Accountability Key mitigations in year Moderate Low-moderate – Group Operations Director – Central procurement and key supplier agreements – Head of Procurement – Supplier and subcontractor relationships – Group Commercial Director – Contingency plans for critical path products – Direct trade and apprenticeship programmes Link to material issues Link to strategy Link to values Example key risk indicators Opportunities People and skills – Material and trade shortages – To develop and implement different build methods as – Material and trade price increases alternatives to conventional brick and block Responsible sourcing – Level of build quality and waste produced from sites – Longer build times – Number of skilled trades 62 Taylor Wimpey plc Annual Report 2021 D. 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. Residual rating Residual risk change Risk appetite Accountability Key mitigations in year Low Moderate – Group HR Director – Production Academy – Every employee managing people – Management training – Graduate programme – Apprenticeship programme – Enhanced remote working procedures – Educational masterclasses – Taylor Wimpey challenge Link to material issues Link to strategy Link to values Example key risk indicators Opportunities People and skills – Employee engagement score – To further develop in-house capability, expertise and – Number of, and time to fill, knowledge Charitable giving vacancies – Employee turnover levels E. Land availability Risk description An inability to secure land at an appropriate cost, the purchase of land of poor quality or in the wrong location or the incorrect timing of land purchases in relation to the economic cycle could impact future profitability. Residual rating Residual risk change Risk appetite Accountability Key mitigations in year Low Moderate – Divisional Chairs – Critically assess opportunities – Regional Managing Directors – Land quality framework – Regional Land and Planning Directors – Managing Director Group Strategic Land Link to material issues Link to strategy Link to values Example key risk indicators Opportunities Land, planning and – Movement in landbank years – A strong balance sheet allows us to invest when land community engagement – Number of land approvals market conditions are attractive – Timing of conversions from strategically sourced land 63Taylor Wimpey plc Annual Report 2021 Strategic report Principal Risks and uncertainties continued 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. Residual rating Residual risk change Risk appetite Accountability Key mitigations in year Moderate Low – Customer Director – Customer-ready Home Quality Inspection (HQI) – UK Head of Production – Consistent Quality Approach (CQA) – Director of Design – Quality Managers in the business Link to material issues Link to strategy Link to values Example key risk indicators Opportunities | Governance and | – Customer satisfaction metrics | – To better understand the needs of our customers | | --- | --- | --- | | management | (8-week and 9-month) | enabling increased transparency of our build profile. | | Responsible sourcing | – Number of NHBC claims | – To lead the industry in quality standards (our CQR score) | | | – Construction Quality Review | and reduce the number of reportable items identified | Sustainable homes and (CQR) scores through monitoring defects at every stage of build communities – Average reportable items per Customer service and inspection found during NHBC quality inspections at key stages of the build G. Health, safety and environment 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. Residual rating Residual risk change Risk appetite Accountability Key mitigations in year | Low Low – Head of Health, Safety | | – Embedded HSE system | | --- | --- | --- | | | and Environment | – HSE training and inductions | | | – Group Operations Director | – COVID-19 protocols | – Director of Design – Every employee and subcontractor Link to material issues Link to strategy Link to values Example key risk indicators Opportunities Health, safety and – Increase in near misses – To lead the industry in health and safety and to reduce wellbeing and fatalities the amount and level of incidents Environment – Health and safety audit outcomes – Number of reportable health and Sustainable homes and safety incidents communities 64 Taylor Wimpey plc Annual Report 2021 H. Natural resources and climate change (NEW) Risk description An inability to reduce our environmental footprint, the challenges of a degraded environment including the impacts of climate change, nature loss and water scarcity on our business, supply chain scarcity due to environmental change and the increasing desire of our customers to live more sustainably could impact our reputation, ability to attract investment and obtain planning permission and the delivery of our strategic targets. Residual rating Residual risk change Risk appetite Accountability Key mitigations in year Moderate Low – Director of Sustainability – Published environment strategy – Regional Managing Directors – Adoption of Science Based Targets – Climate change governance, including LEAF committee – Achievement of Carbon Trust Standard – HBF and investor liaison – Training and development in-house and in our supply chain – Data collection and management Link to material issues Link to strategy Link to values Example key risk indicators Opportunities Sustainable homes and – Energy use and GHG emissions – Sustainable homes and developments attractive communities – % Biodiversity net gain to customers Environment – Construction waste generation – A sustainable business of choice for investors and waste to landfill – Advantageous planning positions I. Cyber security (NEW) Risk description The Group places increasing reliance on IT to conduct its operations and the requirement to maintain the accuracy and confidentiality of its information systems and the data contained therein. A cyber-attack leading to the corruption, loss or theft of data could result in reputational and operational damage. Residual rating Residual risk change Risk appetite Accountability Key mitigations in year Moderate Low-moderate – IT Director – Complex passwords policy – Multi-factor authentication for remote access – Regular security patching and penetration testing – Risky logins check – Intrusion detection and prevention systems – Suspected phishing emails process – Mandated cyber training for all staff – Embedding security in new project deliverables Link to material issues Link to strategy Link to values Example key risk indicators Opportunities Governance and – Number of devices with critical – Together with our service partners, provide a level of management and high open vulnerabilities security to reinforce our reputation as a trusted partner – Number of devices without latest patching in place – Phishing test results – Cyber Training completion statistics – Number of users with administrative privileges to critical systems 65Taylor Wimpey plc Annual Report 2021 Strategic report Group financial review ## Focused on ## operational ## delivery and ## financial ## performance ### In 2021, we have continued ### toprioritise returning the ### business to c.21-22% ### operating margin through ### focusing on cost, process Chris Carney Group Finance Director ### simplification and ### standardisation. of exceptional costs relating to the cladding interest, in line with current EWS1 guidance, ### Group financial review fire safety provision, which is detailed below. covering cladding and the whole of the ### of operations Excluding these exceptional costs the net external wall systems including balconies. As operating expenses were £203.8 million, a result of this the Group announced an Income statement | | which was predominantly made up of | additional £125.0 million provision to fund | | --- | --- | --- | | The numbers referenced below are statutory | administrative costs of £211.0 million (2020: | cladding fire safety improvement works | | numbers unless otherwise stated. | £206.8 million). These increased from the | which has been charged to exceptional items | | | prior year as the savings in the current year | in line with our policy. The prior year | Group revenue increased to £4,284.9 million from the restructuring that occurred in 2020 exceptional charge of £10.0 million arose in 2021 (2020: £2,790.2 million), reflecting were more than offset by increases in following a review of ongoing works to the increase in completions in the UK performance based remuneration and share replace Aluminium Composite Material (ACM) (excluding joint ventures) to 13,929 (2020: based payment charges that reflected the cladding on a small number of legacy 9,412) with the comparative period impacted improved trading in the year. developments. by site closures due to COVID-19. UK | average selling prices rose 4.0% to £299.8k | This resulted in a profit on ordinary activities | The net finance expense of £24.0 million | | --- | --- | --- | | (2020: £288.3k) and average selling prices | before net finance costs of £698.2 million | (2020: £25.9 million) principally includes | | on private completions increased by 2.8% to | (2020: £282.4 million), £823.2 million (2020: | imputed interest on land acquired on | | £332.2k (2020: £323.2k) in the UK, primarily | £292.4 million) excluding exceptional items. | deferred terms, bank interest and interest on | | due to house price inflation partly offset by | | the pension scheme. The decrease | During the year, completions from joint changes to product mix. compared with the prior year is mainly due to ventures were 158 (2020: 197). The total a reduction in the net bank interest payable, Group gross profit increased to £1,027.0 order book value of joint ventures as at which in 2020 reflected the full draw down of million (2020: £496.7 million), representing a 31December 2021 was £74 million the previously unutilised £550 million gross margin of 24.0% (2020: 17.8%). The (31December 2020: £51 million), revolving credit facility, which was fully repaid increase in margin over the prior year was representing 151 homes (31 December in the first half of 2020, following the mainly driven by the lack of COVID-19 costs 2020: 118). temporary closure of sites. In addition, (£60.3 million) seen in 2020 as well as fixed Our share of joint ventures profits in the year changes in foreign exchange rates in the year costs being absorbed across more was £5.4 million (2020: £7.9 million). When resulted in a small foreign exchange loss completions in the current year. including this in the profit on ordinary compared with a gain in the prior year. Net operating expenses of £328.8 million activities before net finance costs the Profit on ordinary activities before tax (2020: £214.3 million) include £125.0 million resulting operating profit was £828.6 million increased to £679.6 million (2020: £264.4 (2020: £300.3 million), delivering million). The pre-exceptional tax charge was an operating profit margin of 19.3% £147.9 million (2020: £49.1 million). This (2020: 10.8%). represents an underlying tax rate of 18.4% | In March 2021, we announced that we | (2020: 17.9%) which includes a £2.6 million | | --- | --- | | would cover the costs to bring all Taylor | credit (2020: £1.4 million credit) arising from | | Wimpey apartment buildings going back | the remeasurement, in part, of the Group’s | | 20 years from 1 January 2021, irrespective | UK deferred tax assets at 25.0% following | | of height or whether we retain a legal | the changes to the corporation tax rates | 66 Taylor Wimpey plc Annual Report 2021 of sales commissions incurred following the ### “During 2021, we have greater number of reservations compared ### positioned the business with the prior year, and this flowed through ### for outlet-led volume to an operating profit of £14.6 million for 2021 (2020: £15.8 million) and an operating ### growth from 2023, profit margin of 19.0% (2020: 25.0%). ### generating additional The total plots in the landbank stood at ### valueand compelling 2,779 (31December 2020: 2,819), with ### investor returns.” net operating assets at £108.9 million (31December 2020: £111.5 million). Balance sheet Value distributed during 2021 Net assets at 31December 2021 increased by 7.4% to £4,314.0 million (31December Contribution to local communities 2020: £4,016.8 million), with net operating via planning obligations assets** increasing by £185.8 million to £3,450.6 million (31December 2020: ## £3,264.8 million). Return on net operating £417.7m assets** increased to 24.7% (2020: 9.9%) as 2020: £286.6m the increase in average net operating assets over the year, compared with the prior year, was more than offset by the increase in Employment operating profit over the same period. Group † net operating asset turn* was 1.28 times ## £278.0m (2020: 0.92). 2020: £264.9m Land enacted by the UK Government in the first Land at 31December 2021 increased by Net investment in land and WIP | half of the year. A tax credit of £23.8 million | £510.0 million in the year to £3,385.7 million | | | --- | --- | --- | | was recognised in respect of the exceptional | as the Group continued to invest in land | | | charge (2020: £1.7 million). This resulted | | £293.2m | opportunities following the equity raise in a total tax charge of £124.1 million completed in June 2020. The increased land 2020: £362.2m (2020: £47.4 million), at a rate of 18.3% investment also meant that land creditors (2020: 17.9%). increased to £806.4 million (31December Pension contributions 2020: £675.9 million) with new obligations As a result, profit for the year was exceeding payments in the period. Included £555.5million (2020: £217.0 million). ## within the gross land creditor balance is £31.5m Basic earnings per share was 15.3 pence £59.0 million of UK land overage (2020: 6.3 pence). The adjusted basic 2020: £52.3m commitments (31December 2020: †† earnings per share was 18.0 pence £64.9million). £314.2 million of the land (2020: 6.5 pence). Taxes creditors is expected to be paid within 12months and £492.2 million thereafter. Spain ## £151.9m At 31December 2021 the UK short term Our Spanish business primarily sells second landbank comprised 85,376 plots homes to European and international 2020: £136.4m (31December 2020: 77,435), with a net customers, with a small proportion of sales book value of £2.9 billion (31December being primary homes for Spanish occupiers. Dividends 2020: £2.5 billion). Short term owned land The business has continued to face market comprised £2.8 billion (31December 2020: disruption as a result of international travel ## £2.4 billion), representing 62,660 plots £301.5m restrictions imposed during the COVID-19 (31December 2020: 53,731). The controlled pandemic. However, it has performed well 2020: (nil) short term landbank represented against this backdrop and sales rates have 22,716plots (31December 2020: 23,704). recovered as restrictions have eased, with the 2021 sales rate comparable with 2019. The value of long term owned land increased to £298 million (31December 2020: We completed 215 homes in 2021 (2020: £217million), representing 37,425 plots 190) at an average selling price of €417k (31December 2020: 36,968), with a further (2020: €375k), and our total order book total controlled strategic pipeline of 107,809 as at 31December 2021 of 324 homes plots (31December 2020: 101,676). Total (31December 2020: 126 homes), reflects potential revenue in the owned and the recovery in the year as noted above. controlled landbank increased to £59 billion Gross margin decreased to 24.3% (2020: in the year (31December 2020: £54 billion). 31.1%), primarily due to the increased level 67Taylor Wimpey plc Annual Report 2021 Strategic report Group financial review continued 2021 Group results UK Spain Group Completions including joint ventures 14,087 215 14,302 Revenue (£m) 4,208.1 76.8 4,284.9 Operating profit (£m) 814.0 14.6 828.6 Operating profit margin (%) 19.3 19.0 19.3 Profit before tax and exceptional items (£m) 804.6 Profit for the year (£m) 555.5 Basic earnings per share (p) 15.3 Adjusted basic earnings per share (p) 18.0 | Work in progress (‘WIP’) | Pensions | The most recent funding test at December | | --- | --- | --- | | Total WIP has reduced as completions | Following the 31December 2016 triennial | 2021 showed a surplus of £43 million and | | originally planned for completion in Q4 2020 | valuation, the Group agreed a recovery plan | a funding level of 101.7% and as a result | | were delayed into the first half of the current | with the Trustee to pay deficit reduction | no payment into escrow is due in the first | | year resulting in a greater WIP balance at | contributions of up to £40.0 million per | quarter of 2022. | | the end of the prior year. Whilst the number | annum for the period from April 2018 to | | At 31 December 2021, the IAS 19 of outlets at 31 December 2021 was lower December 2020. During 2020 and in valuation of the Scheme was a surplus of than at the start of the year, the average response to the site shutdowns, a temporary £149.9million (31December 2020: deficit WIP per UK outlet was broadly flat at suspension of the agreed deficit reduction of £89.1 million). Due to the rules of the £6.5 million (31 December 2020: £6.6 million), contributions was agreed with the Trustee for TWPS, any surplus cannot be recovered by reflecting a continuing investment in build the three months between April and June the Group and therefore a deficit has been on active sites. 2020 and as a result, the recovery plan recognised on the balance sheet under period was extended to 31 March 2021. IFRIC14. The deficit being equal to the Provisions and deferred tax During 2020, the Group engaged with the present value of the remaining committed Provisions increased to £245.1 million Taylor Wimpey Pension Scheme (‘TWPS’) payments under the 2019 triennial valuation. (31December 2020: £130.5 million) due Trustee on the triennial valuation of the No such adjustment was recognised at to the £125.0 million cladding fire safety pension scheme with a reference date of 31December 2020 since the deficit on an provision recognised in the period. There 31December 2019. In March 2021, a new IAS 19 accounting basis exceeded the was continued utilisation of the existing funding arrangement was agreed with the present value of committed payments at that provision as works have been carried out as Trustee that commits the Group to paying time. Retirement benefit obligations of well as utilisation of the Ground Rent Review £20.0 million per annum into an escrow £37.3million at 31December 2021 Assistance Scheme (‘GRRAS’) provision as account between April 2021 and March (31December 2020: £89.5 million) comprise claims have been received and processed. 2024. The first six months of contributions a defined benefit pension liability of During the year the Group agreed voluntary between 1 April 2021 and 30 September £37.0million (31December 2020: £89.1 undertakings with the CMA which built on 2021 were guaranteed. From 1 October million) and a post-retirement healthcare the existing GRRAS scheme, the cost of 2021, payments into the escrow account liability of £0.3 million (31December 2020: these undertakings fall within the original are subject to a quarterly funding test with £0.4 million). provision made by the Group in 2017. the first funding test having an effective date The Group continues to work closely with the Our net deferred tax asset of £26.2 million of 30 September 2021. Contributions to the Trustee in managing pension risks, including (31December 2020: £33.7 million) relates to escrow are suspended should the TWPS management of interest rate, inflation and our pension deficit, employee share schemes Technical Provisions funding position at any longevity risks. | and the temporary differences of our Spanish | quarter end be 100% or more and would | | | --- | --- | --- | | business, including brought forward trading | restart should the funding subsequently fall | Net cash and financing position | | losses. The decrease in the pension deficit in | below 98%. | | Net cash increased to £837.0 million at the period decreased the deferred tax asset The Group continues to provide a 31December 2021 from £719.4 million at recognised, with some offset as the deferred contribution for Scheme expenses and also 31December 2020, due to strong cash tax asset has been remeasured, in part, at makes contributions via the Pension Funding generation from operating activities being 25.0% (31December 2020: 19.0%) following Partnership. Total Scheme contributions and partially offset by an increase in land the UK enacted change in rate in the period. expenses in 2021 were £17.4 million (2020: investment, and the payment of dividends £37.1 million) with a further £10.0 million paid in the year. into the escrow account (2020: nil). Further payments into escrow are subject to quarter-end funding tests and would amount to an additional £5.0 million being paid into escrow in 2022 each quarter if the funding test is not met at the respective quarter end. 68 Taylor Wimpey plc Annual Report 2021 Final dividend pence per share ## 4.44 (2020: 4.14) 2022 share buyback ## c.£150m | Average net cash for the year was | The 2021 final ordinary dividend will be | reconciliations to the equivalent statutory | | --- | --- | --- | | £788.1million (31December 2020: | paid as a cash dividend, and shareholders | measures are included innote 32 of the | | £399.3 million). | in the United Kingdom have the option to | financial statements. | reinvest all of their dividend under the In the year to 31December 2021, the inflow Dividend Re-Investment Plan (DRIP), Going concern of cash from operations as a result of the details of which are available on our website The Directors remain of the view that the improved trading led to cash conversion of www.taylorwimpey.co.uk/corporate. Group’s financing arrangements and balance 69.4% of operating profit (2020: (54.9)%). sheet strength provide both the necessary Our intention remains to return cash | Net cash, combined with land creditors, | | | | liquidity and covenant headroom to enable | | --- | --- | --- | --- | --- | | | ‡‡‡‡ | | generated by the business in excess of that | | | resulted in an adjusted gearing | | of (0.7)% | | the Group to conduct its business for at least | needed by the Group to fund land (31December 2020: (1.1)%). the next 12 months. Accordingly, the investment, all working capital, taxation and At 31December 2021 our committed financial statements are prepared on a going other cash requirements of the business, and borrowing facilities were £634 million of concern basis, see note 1 of the financial once the ordinary dividend has been met. which £550 million was undrawn. The statements for further details of the Following the strong performance of assessment performed. average maturity of the committed borrowing the business during 2021, we are today facilities at 31December 2021 was 2.9 years announcing our intention to return excess (31December 2020: 3.8 years). cash of c.£150 million in 2022 through the implementation of a share buyback Dividends programme, with an initial tranche of Subject to shareholder approval at the AGM c.£75million expected to be completed scheduled for 26 April 2022 the 2021 final Chris Carney by no later than 3 June 2022. ordinary dividend of 4.44 pence per share Group Finance Director will be paid on 13 May 2022 to shareholders Alternative Performance Measures on the register at the close of business on The Group uses Alternative Performance 1April 2022 (2020 final dividend: 4.14 pence Measures (APMs) as key financial performance per share). In combination with the 2021 indicators to assess underlying performance interim dividend of 4.14 pence per share this of the Group. The APMs used are widely gives total ordinary dividends for the year of used industry measures and form the 8.58 pence per share (2020 ordinary measurement basis of the key strategic KPIs dividend: 4.14 pence per share). (operating margin, return on net operating assets, and cash conversion). Aportion of executive remuneration is alsodirectly linked to some of the APMs. Definitions and 69Taylor Wimpey plc Annual Report 2021 Strategic report ## Viability disclosure | In accordance with the 2018 UK Corporate | In assessing the Group’s prospects and | A range of sensitivity analysis for these | | --- | --- | --- | | Governance Code, the Directors and the | long-term viability due consideration is | riskstogether with likely mitigating actions | | senior management team have assessed | givento: | that would be adopted in response to | | theprospects and financial viability of | | thesecircumstances were modelled, | – The Group’s current performance, which theGroup for a period longer than the including asevere but plausible downside includes the current year performance 12months required for the purposes of scenario inwhich the impacts were (pages 2 to 3) and the output from the the‘going concern’ provision. aggregated together. annual business planning process and financing arrangements; The impact from ‘Natural resources and Time period – The wider economic environment and climate change’ (H) is not deemed to be The Directors have assessed the viability of mortgage market (further details of which material within the five year forecast period, the Group over a five-year period, taking are provided on pages 18 to 21), as well albeit known costs from regulation have account of the Group’s current financial as changes to Government policies and been included in the modelling (e.g. updates position, current market circumstances and regulations, including those influenced by to Parts L&F of the building regulations in the potential impact of the Principal and sustainability, climate change and the England and Future Homes Standard). Emerging Risks facing the Group. The environment, that could impact the Directors have determined this as an Group’s business model including the Assessment of viability appropriate period over which to assess recent announcement on the Future The Group adopts a disciplined annual theviability based on the following: | | Homes Standard (further details of which | business planning process involving the | | --- | --- | --- | | – It is aligned with the Group’s bottom-up | are provided on page 19) and Residential | management teams of the 23 UK business | | five-year budgeting and forecasting cycle; | Property Developer Tax; | units and Spain, and the Group’s senior | | and | – Strategy and business model flexibility, | management, and is built on a bottom-up | | – Five years represents a reasonable | including build quality, customer dynamics | basis. This planning process comprises a | | estimate of the typical time between | and approach to land investment. Further | budget for the next financial year, together | | purchasing land, its progression through | detail is provided on pages 22 to 27; and | with a forecast for the following four financial | | the planning cycle, building out the | – Principal Risks associated with the | years (‘forecast’). | | development and selling homes to | Group’s strategy and business model | | The financial planning process considers the customers from it. including those which have the most Group’s profitability and Income Statement, impact on our ability to remain in operation Five years is also a reasonable period for Balance Sheet including landbank, gearing and meet our liabilities as they fall due. consideration given the following broader and debt covenants, cash flows and other external trends: key financial metrics over the forecast period. Principal Risks The forecast also incorporates the likely – The cyclical nature of the market in which The Principal Risks, to which the Group are market impact of the planned changes the Group operates, which tends to follow subject, have undergone a comprehensive toHelp to Buy and considers the impact of the economic cycle; review by the GMT and Board in the current the Government announcements for example – Consideration of the impact of year. Consideration is given to the risk on transitional arrangements for the Future Government policy, planning regulations likelihood based on the probability of Homes Standard and the Building Safety and the mortgage market; occurrence and potential impact on our Levy. These financial forecasts are based – Long term supply of land, which is business, together with the effectiveness of ona number of key assumptions, the most supported by our strategic landbank; and mitigations. The full list of Principal Risks, important of which include: | – Changes in technology and customer | including mitigations, can | | | --- | --- | --- | | expectations. | be found on pages 62 to 65 and are | – Timing and volume of legal completions | | | referenced ‘A’ to ‘I’. | ofnew homes sold, this includes annual | | Assessment of prospects | | production volumes and sales rates over | The Directors identified the Principal We consider the long-term prospects of the life of the individual developments; Risksthat have the most impact on the theGroup in light of our business model. – Average selling prices achieved; longer-term prospects and viability of the Ourstrategy to deliver sustainable value is – Build costs and cost of land acquisitions, Group, and as such these have been used in achieved through delivering high quality including the impact from the updates to themodelling of a severe but plausible homes in the locations where people want Parts L & F of the building regulations in downside scenario,as: | tolive, with excellent customer service, | | England and the Future HomesStandard; | | --- | --- | --- | | whilstcarefully managing our cost base | – Government policies, regulations and | – Working capital requirements; and | | andthe Group’s balance sheet. | planning (A); | – Capital repayment plan, where we have | | | – Mortgage availability and housing | assumed the payment of the ordinary | | | demand(B); | dividend in line with the previous policy, | | | – Availability and costs of materials and | which is a minimum of £250 million or | | | subcontractors (C); | 7.5% of the Group’s net assets, | | | – Quality and reputation (F); and | throughout the period as well as the | | | – Cyber Security (I) | distribution of excess capital to | shareholders in 2022 via a share buyback. 70 Taylor Wimpey plc Annual Report 2021 Stress testing our risk resilience Costs (Principal Risk: A, F, I) a one-off Approval of the Strategicreport exceptional charge and cash cost of £150 This Strategic report on pages 2 to 71 was The assessment considers sensitivity million for an unanticipated event, change in approved by theBoard of Directors and analysis on a series of realistically possible, Government regulations or financial penalty signed on its behalf by but severe and prolonged, changes to (e.g. from a Cyber Security breach). principal assumptions. In determining these we have included macro-economic and Within the scenario build costs are forecast industry-wide projections as well as matters to reduce with lower volumes reducing specific to the Group. pressure on the availability of materials and resources and land cost remains flat as the The severe but plausible downside scenario possible increase in availability due to lower reflects the aggregated impact of the Pete Redfern volumes is offset by a restriction in supply. sensitivities, taking account of a sharp Chief Executive An estimate for the cost of the Future Homes decline in customer confidence, disposable Standard has been assumed. incomes, and mortgage availability. To | arriveat our stress test we have drawn on | The mitigating actions considered in the | | --- | --- | | experience gained managing the business | model include a reduction in land investment, | | through previous economic downturns and | a reduction in the level of production and | | the COVID-19 pandemic. | work in progress held and reducing our | overhead base to reflect the lower volumes. We have applied the sensitivities | encountered at those times, as well as | If these scenarios were to occur, we also | | --- | --- | | themitigations adopted, to our 2022 | have a range of additional options to maintain | | expectations in order to test the resilience | our financial strength, including: a reduction | | ofour business. As a result, we have stress | in capital expenditure, the sale of assets, | | tested our business against the following | reducing the dividend, and or raisingdebt. | severe but plausible downside scenario The Group’s liquidity (defined as cash and which can be attributed back to the Group’s undrawn committed facilities) was £1,471 Principal Risks that have been identified as million at 31 December 2021. This is sufficient having the most impact on the longer-term to absorb the financial impact of each of the prospects and viability of the Group. risks modelled in the stress andsensitivity Volume (Principal Risk: A, B, C, F) a analysis, individually and inaggregate. declinein total volumes of 20% from 2021, | recovering by the end of the forecast period. | Confirmation of viability | | --- | --- | | Price (Principal Risk: B) a reduction to | Based on the results of this analysis, the | | current selling prices of 20%, recovering | Directors have a reasonable expectation | | bythe end of the forecast period. | thatthe Group will be able to continue | inoperation and meet its liabilities as theyfalldue over the five-year period oftheirassessment. †† Definitions Adjusted basic earnings per share represents earnings attributed to the shareholders of the parent, excluding exceptional items and * Operating profit is defined as profit on ordinary activities before tax on exceptional items, divided by the weighted average number net finance costs, exceptional items and tax, after share of results of shares in issue during the period. of joint ventures. ‡ Net cash is defined as total cash less total borrowings. ** Return on net operating assets (RONOA) is defined as rolling ‡‡ Cash conversion is defined as operating cash flow divided by 12-month operating profit divided by the average of the opening operating profit on a rolling 12-month basis, with operating cash flow and closing net operating assets, which is defined as net assets less defined as cash generated from operations (which is before taxes net cash, excluding net taxation balances and accrued dividends. paid, interest paid and payments related to exceptional charges). † * Net operating asset turn is defined as 12-month rolling total ‡‡‡‡ Adjusted gearing is defined as adjusted net debt divided by net revenue divided by the average of opening and closing net assets. Adjusted net debt is defined as net cash less land creditors. operating assets. † Tangible net assets per share is defined 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. 71Taylor Wimpey plc Annual Report 2021 Governance Corporate Governance ## Governance at a glance In accordance with Section 4, Principle N, How we comply with the Code The 2018 UK Corporate Provision 27 of the Code, the Board considers The Corporate Governance section of this Governance Code statement that, taken as a whole, this Annual Report and Annual Report and Accounts explains how ofcompliance Accounts is fair, balanced and understandable the Code principles have been applied, as and provides the information necessary for set out below: shareholders to assess the Company’s For the year ended 31 December 2021, position, performance, business model and 1. Board leadership Pages 78 to 85 the Company complied with: | | strategy. The Board was able to reach this | and Company | | | --- | --- | --- | --- | | – All of the provisions of the 2018 UK | conclusion after receiving advice from the | purpose | | | Corporate Governance Code (the Code), | Audit Committee. More information can be | | | | except for Provision 38 (Executive Director | found on page 104. | | Pages 86 to 87 | 2. Division pension contributions) which we will comply of responsibilities with by 1 April 2024. The Code can be found at www.frc.org.uk 3. Composition, Pages 88 to 97 – The Financial Conduct Authority’s succession Disclosure and Transparency Rules andevaluation sub-chapters 7.1-7.2 and Listing Rules 9.8.6R, 9.8.7R and 9.8.7AR 4. Audit, risk and Pages 98 to 104 – The BEIS Directors’ Remuneration internal control Reporting Regulations and Narrative Reporting Regulations 5. Remuneration Pages 105 to 124 Highlights | Undertook a formal, rigorous and | Implemented a revised Equality, | | --- | --- | | transparent recruitment and selection | Diversity and Inclusion Policy | | process for therole of Chief Executive | Page 94 | Page 90 Published the Company’s fifth Reported on the likely impact of the Gender Pay Gap Report Company’s activities on the climate Page 94 Page 48 Continued to be a member of the Further developed the Company’s FTSE4Good Index succession and contingency plans Page 79 Page91 Arranged a thorough induction process | Completed the annual internal | following the appointment of Jitesh | | --- | --- | | evaluation of the Board, | Gadhia and Scilla Grimble as Non | | its Committees, the Chairman and | Executive Directors | | individual Directors | Page 91 | Page 92 Enhanced the role of, and employee | Met the FTSE Women Leaders Targets | engagement with, the Board’s Employee | | --- | --- | | in relation to Board diversity | Champion | | Page 93 | Page 84 | Met the Parker Review ‘Beyond One by21’ recommendation Page 93 72 Taylor Wimpey plc Annual Report 2021 Directors’ skills matrix Customer Operational Financial Property service Economics Public sector Marketing Risk IT ESG Irene Dorner Pete Redfern Chris Carney Jennie Daly Robert Noel Gwyn Burr Jitesh Gadhia Scilla Grimble Angela Knight Humphrey Singer Board composition (as at 31 December 2021) Non Executive Directors’ tenure Board independence Board meetings via Microsoft Teams and in person 3 21 30% 60% 2 7 3-4 5-6 Independent ### 2022 AGM The Board is pleased to be able to hold the AGM in person after two years of COVID-19 restrictions, and is looking forward to meeting shareholders, hearing their views and answering their questions. More information about the 2022 AGM is available on page 184. 73Taylor Wimpey plc Annual Report 2021 10% In person Microsoft Teams Non 1-2 Chairman independent years years years Governance Board of Directors 54321 Executive DirectorsChairman Independent Non Executive Directors 1. Irene Dorner 2. Pete Redfern 3. Chris Carney 4. Jennie Daly 5. Robert Noel (a) Chairman N R Chief Executive Group Finance Group Operations Independent Non (c) Director Director and CEO Executive Director A N (b) designate | | | Joined April 2018 | Joined April 2018 | Joined October 2019 | | --- | --- | --- | --- | --- | | Joined December 2019 | Joined July 2007 | | | | | and appointed Chairman | | Skills and experience | Skills and experience | Skills and experience | Skills and experience | | | Chris is a Chartered | Jennie has a wealth of | Rob has over 30 years’ | | --- | --- | --- | --- | --- | | February 2020 | Pete was previously | | | | | | | Accountant and has worked | experience in the | experience in the property | Group Chief Executive of Skills and experience in both private practice with housebuilding industry sector. He was Chief Executive George Wimpey Plc, having Irene has strong leadership Deloitte and for Associated gained from roles which of Land Securities Group PLC successively held the posts skills and commercial British Foods plc. Since joining included strategic land from 2012 to 2020 and was of Finance Director and experience gained during in 2006, he has successively oversight at Westbury plc previously Property Director at Chief Executive of her career spanning more held the roles of Group and Managing Director of Great Portland Estates plc and George Wimpey’s than 30 years in banking Financial Controller; Finance Harrow Estates Plc. She a director of Nelson Bakewell, UK Housing operations. and also through her various Director of Taylor Wimpey UK joined the Company in the property services group. He has full day to day non executive roles. Her long (the Group’s main operating 2014 from Redrow plc, He is a former President of the responsibility for delivering and distinguished career at company); Managing Director as UK Planning Director, British Property Federation. the Company’s strategy | HSBC included a number of | | of the Company’s South | before becoming UK Land | | | --- | --- | --- | --- | --- | | | in a profitable, safe and | | | Rob has been the Company’s | | senior positions, including | | Thames business unit; and | Director in 2015. | | | | environmentally responsible | | | Senior Independent Director | | CEO of HSBC Malaysia; | | Divisional Chair for the London | | | | | manner and has significant | | Jennie oversees our land, | since April 2020. | | CEO and President of HSBC | | and South East Division, where | | | | | financial, operational and | | planning, design, technical, | | | in the United States; Group | | he oversaw significant progress | | External appointments | | | management experience, | | sustainability, production and | | | Managing Director of HSBC | | in the operational and financial | | Rob is Chairman at | | | gained from his various roles | | supply chain functions; and | | | Holdings and member of the | | performance of the Division. | | Hammerson plc and a Trustee | | | in industry and from his time | | manages the Taylor Wimpey | | | Group Management Board. | | | | of the Natural History Museum. | | | at KPMG. | As Group Finance Director, | Logistics business. | | | Irene was Chairman of Virgin | | Chris has operational | | | | Money (UK) plc for seven | External appointments | | External appointments | | responsibility for managing months prior to its acquisition Pete is the Senior Independent Jennie is currently a non the Company’s finances and in 2018 and was also a non Director at Travis Perkins plc executive director at New also oversees the information executive director of AXA SA. and is Chair of the Youth Homes Quality Board Limited technology and pension Adventure Trust charity. and at the Peabody Trust, functions. | External appointments | however she will step down | | --- | --- | | Irene is currently a non | from the Peabody Trust at | | executive director at | the end of June 2022. | Rolls-Royce Holdings plc but will be stepping down on 12 May 2022. She also Chairs Key to committees Skills and experience Control Risks Limited, a risk Alice, a solicitor, was previously consultancy business. She is a the Group General Counsel A Audit Committee Trustee of the South East Asia and Company Secretary of Rainforest Research N Nomination and Thomas Cook Group plc and Partnership, an Honorary Governance Committee has also worked in the legal Fellow of St. Anne’s College, R Remuneration Committee profession. Alice oversees Oxford and Chair of the compliance with legal and Chairship of the Committee Trustees for the Hampstead regulatory obligations and also Theatre. manages the Company’s Legal and Secretariat Departments. She has significant legal, Company Secretary commercial, transactional, regulatory and corporate Alice Black governance related experience. Group General Counsel and Company Secretary Joined November 2019 74 Taylor Wimpey plc Annual Report 2021 9 10876 Independent Non Executive Directors | 6. Gwyn Burr | | | 7. Lord Jitesh Gadhia | | | 8. Scilla Grimble | | 9. Angela Knight | | 10. Humphrey Singer | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Independent Non | | | Independent Non | | | Independent Non | | Independent Non | | Independent Non | | | | (d) | | | (e) | | | | | (f) | | | | Executive Director | | N R | Executive Director | | N R | Executive Director | A N | Executive Director | | Executive Director | A N | A N R | Joined February 2018 | Joined March 2021 | Joined March 2021 | Joined November 2016 | Joined December 2015 | | --- | --- | --- | --- | --- | | Skills and experience | Skills and experience | Skills and experience | Skills and experience | Skills and experience | | Gwyn has over 25 years’ | Jitesh has over 20 years’ | Scilla has over 15 years’ | Angela brings to the Board a | Humphrey has a wealth | | executive experience, | executive experience, | executive experience in the | wealth of experience gained at | of financial experience and | | principally in marketing and | principally in banking and | corporate finance and retail | a senior level in both the public | expertise in the areas of both | | customer service in the retail | private equity, having held | sectors, having held senior | and private sectors. Previously, | digital solutions and customer | | sector, which included the | senior roles at Blackstone, | roles at UBS, Tesco plc, and | Angela was a Member of | service. Previously he was | | roles of Customer Director | Barclays Capital and | Marks and Spencer Group plc. | Parliament from 1992 to 1997, | Chief Finance Officer at Marks | | and Customer Service and | ABN AMRO. | | including two years as the | and Spencer Group plc, Group | Along with her significant | Colleague Director at J | | | Economic Secretary at HM | Finance Director at Dixons | | --- | --- | --- | --- | --- | | | He previously supported | financial and risk-related | | | | Sainsbury plc. She previously | | | Treasury, and Chair of the | Retail plc, and earlier held | | | the Letwin Review of the | experience, Scilla also has | | | | held non executive positions | | | Office of Tax Simplification at | senior finance-related roles | | | build out rate of residential | experience of technology in a | | | | with the Principality Building | | | HM Treasury until the end of | within Dixons and Coca Cola | | | homes, and was a non | customer-facing environment | | | | Society Limited, Sainsbury’s | | | February 2019. | Enterprises. | | | executive director at UK | and has broad property | | | Bank plc, DFS Furniture plc, Financial Investments Limited experience from her time at External appointments External appointments Wembley National Stadium and Senior Independent both Tesco plc and Marks and Angela is the Chair at Pool Re, Humphrey is Chief Financial Limited and the Financial Director at Calisen plc. Spencer Group plc. and a non executive director at Officer at Belron Group. Ombudsman Service. Arbuthnot Latham & Co., | | External appointments | External appointments | | | --- | --- | --- | --- | | External appointments | | | Provident Financial plc, and | | | Jitesh has been a member | Scilla is Chief Financial Officer | | | Gwyn is the Senior Independent | | | Encore Capital Group, Inc. In | | | of the House of Lords since | at Moneysupermarket.com | | | Director at Hammerson plc and | | | addition, she is a member of the | | | 2016. He is a non executive | Group plc. | | | Made.com Group Plc; and a | | | governing body of The Astana | director of Compare The Market non executive director at Just Financial Services Authority. Limited, a director of Accord Eat Takeaway.com N.V. plc Healthcare Limited, a member and Metro AG (a German of the Board of UK Government listed company). Investments Limited, and a Trustee of the British Asian Trust. It has also been announced that Jitesh will be joining the Board of Rolls-Royce Holdings plc from 1 April 2022 as a non executive director. Upcoming Board changes Board attendance during 2021 At the conclusion of the AGM on 26 April 2022: Number of meetings attended in 2021 (a) Pete Redfern will step down as Director (a) and Chief Executive Irene Dorner, Chairman 8/9 (b) Jennie Daly will become Chief Executive Pete Redfern, Chief Executive 9/9 (c) Robert Noel will become the Board’s Chris Carney, Group Finance Director 9/9 Employee Champion Jennie Daly, Group Operations Director and CEO designate 9/9 (d) Gwyn Burr will step down from the Board | Robert Noel, Senior Independent Director 9/9 | | (e) Jitesh Gadhia will become Chair of the | | --- | --- | --- | | Gwyn Burr, Non Executive Director 9/9 | | Remuneration Committee | | | (b) | (f) Angela Knight will step down from the Board | | Jitesh Gadhia | , Non Executive Director 7/7 | | (b) Scilla Grimble , Non Executive Director 7/7 Angela Knight, Non Executive Director 9/9 Humphrey Singer, Non Executive Director 9/9 (a) Irene Dorner was unable to attend one Board meeting during the year. More information can be found on page 78. 75Taylor Wimpey plc Annual Report 2021 (b) Appointed as a Non Executive Director on 1 March 2021. Governance Corporate governance: Chairman’s letter ### The challenge of maintaining ### good governance during this ### period of change has been ### effectively met. Dear shareholder My second year as Chairman featured almost as many new challenges as the first year, when we worked our way through the Irene Dorner impact of a global pandemic. Our Board Chairman has overseen the gradual rebuilding of our operations towards pre-COVID-19 levels and the actions taken to ensure land acquired following the equity raise progresses through the planning system to deliver outlet-led growth, whilst conducting an in-depth Stakeholder engagement for driving progress towards the Company’s external and internal search for the ESG initiatives and this report sets out how The Board leads the Company’s stakeholder Company’s new Chief Executive. the Company has addressed this key area engagement programme and ensures that the | The challenge of maintaining good governance | views of different categories of stakeholders, | during 2021 and our plans to continue doing | | --- | --- | --- | | during this period of increasing activity on a | and consideration of how the Group’s current | so during 2022, benefiting from the learnings | | number of different fronts has, I believe, been | activities and future proposals may impact | from an external assessment of our work in | | effectively met. This Governance report sets | upon those stakeholders, are considered by | this area to date. | | out the key areas we have considered as a | the Board and the GMT on a regular basis. | | Please see pages 7 and 79 for more information. Board; the Board Committees; and the A key area of focus for us is shareholder processes established throughout the Group’s communication, including soliciting their Climate change businesses and operations; the influence of views and taking them into account in We are all conscious that climate change has stakeholder engagement in our thinking, our decision making. I have continued my rightly received greater attention worldwide debate and decision making; and how that direct engagement with our shareholders, during 2021 and that efforts continue to has been brought together to maintain strong in addition to our planned investor relations reduce the pace of that change. To that end, governance throughout 2021 and present a programme undertaken each year. The Financial Stability Board, an international robust outlook for 2022 and beyond. body that monitors and makes Equally important is maintaining, and seeking recommendations about the global financial Culture to further improve, two-way communication system, created the Task Force on Climate- Underpinning the Group’s corporate between the Board and our employees. related Financial Disclosures (TCFD) to governance is the culture embedded at Whilst this remains a priority for the entire improve and increase reporting of climate- every level of the business of ‘doing the right Board, the appointment during 2020 of related financial information. This reporting thing’. This has continued to be the Gwyn Burr as the Board’s Employee became mandatory for UK listed companies cornerstone of our leadership and of the Champion has further improved this process for 2021 reporting and beyond, in Group Management Team (GMT), who work of inclusion, consultation, and information. accordance with Listing Rule 9.8. The together to ensure this is reflected in our I am confident that when Gwyn leaves the Company’s reporting in this area, including everyday business practices and our Board after the Annual General Meeting additional disclosures around risks and engagement with stakeholders. (AGM), Robert Noel will continue to further opportunities, is set out on pages 48 to 57, develop and strengthen these areas when We hold ourselves accountable to a similar together with details as to how this reporting he takes over the role of the Board’s high standard in our approach to governance, has been overseen by the Audit Committee Employee Champion. whereby we seek to comply with and exceed, on page 99. to the extent reasonably possible and Information on the processes embedded to appropriate, new corporate governance ensure that this employee engagement takes standards in advance of their formal place appears on page 84. application to subsequent reporting years. Environmental, social and governance Information on the Group’s cultural principles and Environmental, social and governance (ESG) the ways in which we monitor their application considerations have consistently featured on and continued appropriateness, appears on pages 40 and 83. the Board’s and its Committees’ agendas through the year and are built into the Company’s strategy, planning and day to day business operations. We have responsibility 76 Taylor Wimpey plc Annual Report 2021 | Equality, diversity and inclusion | including as Interim Divisional Chair of one | The Board continues to recognise the | | --- | --- | --- | | Further improving equality, diversity and | of our operating divisions. She is well-known | importance of it, its Committees, and | | inclusion across the Group is embedded in | and well-respected in the wider industry, with | individual Directors, each being subject to | | our day to day business operations. Led by | 30 years’ experience in the housebuilding | a rigorous performance evaluation every year. | | the Group HR team, supported by the GMT | and land and planning industries. Jennie will | This annual evaluation is externally facilitated | | and overseen by the Board, the further | have the benefit of a substantial handover | at least every three years, in accordance with | | progress made in these areas during 2021 | period from Pete prior to his departure. With | the Code. The 2021 evaluation was internally | | and plans for further improvement during | her strong focus on execution, combined | facilitated, and details of the process followed, | | 2022, are set out on page 95. | with her customer and people-focused skills, | the outcomes, and proposed actions to | | | I, and the Board as a whole, are confident | be taken to address potential areas of | In 2021, the Company continued to exceed that she is the ideal person to lead the improvement or further enhancement, the FTSE Women Leaders Review target on Group in the next exciting chapter of growth are set out on page 92. gender, namely, to have at least 33% female and delivery. representation on the Board; and has also 2022 AGM met the Parker Review target of having at More details of Jennie’s experience and career to I am pleased to be able to announce that the least one person of colour on the Board by date appear on page 74. Company’s 2022 AGM will be held in person the end of 2021. at 10:30am on 26 April 2022 in the Secondly, we have announced that two of We have made further progress below Board Winterlake Suite at the Crowne Plaza our Non Executive Directors, Gwyn Burr and level, with female representation on the GMT Marlow, Fieldhouse Lane, Marlow, SL7 1GJ. Angela Knight, will be stepping down with and their direct reports combined, having I hope you will be able to attend and I and effect from the conclusion of the 2022 AGM increased from 23% in 2020 to 24% as at the other Board members look forward to and will therefore not be seeking re-election 31December 2021. However, this progress meeting shareholders, hearing their views, at the AGM. I would like to thank both Gwyn needs to continue and the Company’s and answering their questions. In the event and Angela for their long service and valued revised Equality, Diversity and Inclusion that shareholders are unable to attend the counsel during their tenure on the Board; Policy, together with details of the progress AGM, they are invited to submit questions in their membership of Board Committees; and made during 2021 and plans for 2022, advance to be answered at the AGM. More Gwyn’s additional valued contributions both appears on pages 93 to 97. details of the AGM and the business to be as Chair of the Remuneration Committee considered, are set out on pages 184 to 191. Board composition and as the Board’s Employee Champion. Conclusion and outlook | Following the appointments of Jitesh Gadhia | We have engaged the services of a reputed | | | --- | --- | --- | | and Scilla Grimble in March 2021, the | executive search firm to support the | As demonstrated in the results of our internal | | Nomination and Governance Committee | recruitment process for new Non Executive | Board evaluation, your Board continues to be | | conducted a thorough review of our Board | Directors, with a focus on operational and | effective and to work well as a team, having | | and concluded that the composition, | customer service expertise. | been further enhanced by the skills and | | structure, and balance of skills and | | knowledge brought to the table by the two | Succession planning for key Board positions experience on the Board was appropriate new appointees during the year. Throughout is regularly reviewed by the Nomination at the time. 2021 I am confident that we continued to and Governance Committee, with training have the right balance of skills, expertise, The following changes were recently and development plans for Board members experience and professionalism to continue to announced to the composition of our Board. and their potential successors focused on deliver strong governance, within our culture likely timescales for future change. Details Firstly, we have announced that Pete of ‘doing the right thing’. Following our of training and development activities Redfern will be stepping down as a Director announcement that Gwyn Burr and Angela undertaken by the Board, individually and as Chief Executive at the conclusion of Knight will be stepping down at the and collectively, during 2021 is set out the AGM on 26 April 2022. This is, of course, conclusion of our AGM, we also have the on page 78. | a significant development for the Company | opportunity to carefully reassess our Board | | --- | --- | | as Pete has been Chief Executive since the | composition to ensure we maintain such high | | merger in 2007 which created Taylor | standards in the future. | Wimpey and was previously George Wimpey’s Chief Executive from 2006. Pete introduced the culture of ‘doing the right thing’ and has continued to lead the Irene Dorner Company with consistently high standards Chairman of corporate governance. ## 50% We were delighted to announce on 2 March 2022 7 February 2022 that Jennie Daly, our Board gender diversity current Group Operations Director, will succeed Pete Redfern as Chief Executive ## 95% with effect from the conclusion of the AGM. Jennie has been with the Group for eight of employees are proud years and has extensive knowledge and to work for the Company practical experience of all stages of the land acquisition and development business, ## 50% reduction in direct (scope 1 and 2) carbon emissions intensity since 2013 77Taylor Wimpey plc Annual Report 2021 Governance Corporate governance: Board leadership and Company purpose ## Board leadership and ## Companypurpose The Board and its Committees There was full attendance at all meetings The Group General Counsel and Company byall Directors, except the Chairman who Secretary acts as Secretary to the Board At the date of this report, the Board consists was not available for one meeting which and its Committees and attends all meetings. of ten Directors, namely: the Chairman; three wasinstead chaired by Robert Noel as the A formal agenda and reports are issued Executive Directors; and six Non Executive Company’s Senior Independent Director. electronically to Directors ahead of all Board Directors. Their names, responsibilities and After the meeting, both Rob Noel and Alice and Committee meetings at least one week other details appear on pages 74 and 75. Black, in her role as Secretary, briefed Irene prior to the meeting, in order to allow sufficient The role of the Non Executive Directors is Dorner on the business of the meeting and time for detailed review and consideration. tooffer advice, guidance and constructive any decisions that were taken. In addition, Formal minutes are prepared in respect challenge to the Executive Directors, using prior to the meeting, Irene’s views on the of all Board and Committee meetings. their wide ranging experience gained in business proposed in the meeting agenda The Secretary provides regular briefings business and from their diverse backgrounds were sought and shared with the other to the Board on relevant regulatory and in the areas described on pages 74 and 75. Board members during the meeting. Details governance matters, supplemented by of the attendance of each Director at Board Appointments and succession briefings from independent advisers and Committee meetings are set out in the where necessary. During 2021 the Nomination and tables on pages 75, 88, 98 and 105. | Governance Committee reviewed the | | During 2021, the Board received briefings | | --- | --- | --- | | composition, structure, succession planning, | Board responsibilities | ontopics including ESG. These were | | and balance of skills and experience on the | | delivered by independent experts and the | The Board discharges its responsibilities Board and the Board Committees. Following Board will continue to include additional topics byproviding strategic and entrepreneurial the appointments of Jitesh Gadhia and on the agenda for future information briefings. leadership of the Company, within a Scilla Grimble on 1 March 2021, described framework of strong governance, effective The Chairman, Chief Executive and Secretary on page 88, the Nomination and Governance controls and a strong culture emphasising meet sufficiently in advance of each Board Committee considered the Board openness and transparency, which enables meeting in order to ensure action points from composition was appropriate, and this will be opportunities and risks to be assessed and previous meetings have been implemented kept under review following the Board managed appropriately. In addition, the and to prepare the agenda andmatters to be changes at the 2022 AGM. Board sets the Company’s strategic covered at the next and atfuture Board More information about the planned direction, ensures that the necessary meetings asappropriate. succession of Jennie Daly to the Chief financial and human resources are in place A similar process is undertaken by each Executive role and the recruitment, for the Company to meet its objectives, and Committee Chair with relevant members assessment and decision making reviews management performance. More of Management. | process undertaken by the Nomination | information about each member of the | | | --- | --- | --- | | and Governance Committee in planning | Board’s role can be found on page 87. | An annual plan for the following year’s | | and concluding the Chief Executive | | meetings is approved by the Board and each | | succession; together with the progress to | Information and professional | Committee in the final meeting of each year. | | date on recruiting new Non Executive | development | | | Directors, can be found on pages 90 to 91. | In normal business conditions, all Directors | | visit Group operations on a regular basis, Board attendance engaging with employees at all levels in order During 2021 the Board held eight formal to foster and maintain an understanding of meetings and one business update call in the business. January in order to update the Board on the The role of the National Employee Forum ### previous year end performance and provide Company purpose (NEF) has been steadily enhanced over the an initial trading update in the new year. past four years enabling a representative of The Board regularly considers the number theBoard, usually the Board’s Employee The Company’s purpose is to build great and frequency of Board meetings that take Champion, Gwyn Burr, to continue hearing homes and create thriving communities. This place each year and has concluded that nine employee sentiment first hand. This dialogue purpose is described in more detail, together meetings is appropriate. There are processes operates as an effective, two-way information with the way it links to the Group’s strategy; in place to convene additional Board loop between the Board and the NEF as is strongly supported by our values; and meetings as and when necessary. theemployees’ representative body and we guides operational planning and will continue to develop the link between The Chairman held a meeting with the Non performance, on pages 22 to 27. employees and the Employee Champion in Executive Directors at the conclusion of each 2022. More information about employee Examples of the Board’s leadership formal Board Meeting, without the Executive engagement can be found on page 84. towardsachieving this purpose during 2021 Directors being present, and, as required by are described on pages 81 and 82, including the Code, theSenior Independent Director, the Board’s consideration of held a meeting with the Non Executive keystakeholders and the ways in which Directors without the Chairman being present. consideration of their interests informed the Board’s decision making during 2021 and will continue to do so during 2022. 78 Taylor Wimpey plc Annual Report 2021 Independent performance indicators ### Environmental, social The Board is aware of the increasing level ### andgovernance ofinvestor interest in climate change risk | Environmental, social and governance (ESG) | andthat consideration is being given when | | --- | --- | | has always been an important part of | reassessing risk and asset values to reflect | | working for Taylor Wimpey and our approach | this in revised capital allocations. It is | | is set out on page 7. The Board receives | therefore pleasing to be able to report that | | regular briefings and updates on the | the Company’s commitment to ESG and | | progress of the Group’s ESG initiatives. | progress, particularly in respect of our | | These briefings allow the Board to assess | sustainability initiatives, is being recognised, | | the significant ESG risks to the Company’s | as the Company: | short and long term value. They also – Is a constituent of the Dow Jones informed the Board as to the Company’s Sustainability Europe Index and compliance with the new requirements FTSE4Good effective for this reporting year. – Is included in the S&P Sustainability Yearbook 2022 How progress is driven and – Has received an AA rating from MSCI performanceoverseen – Has received an ESG Risk Rating of Low In light of the increasing focus on ESG from Sustainalytics matters by stakeholders, and its importance – Is a member of Next Generation, the in relation to Group strategy and operations, sustainability benchmark for UK the Board decided during the year that ESG housebuilders, ranking third and oversight would be the responsibility of the receivinga Gold Award for 2021 full Board, in order to ensure that all of the – Discloses performance to CDP and Executive Directors are involved in the received the following scores: CDP considerations and can then drive the Climate Change A- (2020: B), CDP Water necessary action and any change through Security B (2020:B), and CDP Forests B- the organisation. The Nomination and for forest commodities and deforestation Governance Committee still has an important (2020: B) role to play in some key areas of ESG and – Is assessed to be at level 2 in the latest these are described more fully in the update of the Institutional Shareholder Nomination and Governance Committee Services (ISS) Governance Quality Score report on pages 89 and 93. for the Company’s ESG performance, | The financial implications for the Company | indicating a low level of comparative risk | | --- | --- | | ofESG are overseen by the Audit Committee | for governance, including the lowest level | | as part of its review of the annual financial | of comparative risk for the key areas of | | statements, as described in more detail on | Board structure, compensation, and | | pages 98 to 104. This includes financial | shareholder rights | impacts from climate change which are New reporting reported in compliance with the TCFD, as set out on page 50. The Board welcomed the Policy Statement and associated guidance issued by the The implementation of ESG initiatives across Financial Conduct Authority setting out the Group is led by the Chief Executive and details of how greater reporting inthis area the GMT. is mandatory for this and future reporting | Social and governance aspects of ESG are | periods under the Listing Rules. The | | --- | --- | | considered ’business as usual’ and this is | Company’s new reporting in this area is set | | evident in our key performance indicators | out on pages 48 to 55 of this Annual Report; | | and stakeholder interaction. | and our continued disclosure of performance | against criteria identified for oursector by the Sustainability Accounting Standards Board, appears on pages 56 to 57. Further details of ESG risks and value enhancement pursuit appear on pages 48 and 49 and in the Sustainability Supplement and ESG Addendum 2021, which is available on our website at taylorwimpey.co.uk/corporate/sustainability 79Taylor Wimpey plc Annual Report 2021 Governance Corporate governance: Board leadership and Company purpose continued Advice available to the Board and executing the strategic plans for the ### Our governance related Group and the annual budgetary process. All Directors have access to the advice ### documents These are subject to formal review and andservices of the Secretary and Company approval by the Board. The Chief Executive Secretariat team. The Board has an The following documents are available to and the Board conduct regular reviews of established procedure whereby Directors view on the Company’s website. These were actual results and future projections with may take independent professional advice reviewed during the year, updated where comparisons against budget and prior year atthe Company’s expense where they judge necessary, and relevant reporting against performance, together with various treasury it necessary to do so in order to discharge these is provided to the Board or relevant reports. Disputes that may give rise to their responsibilities as Directors. Committee. significant litigation or contractual claims Health, safety and environment are monitored at each Board meeting, Schedule of matters reserved for with specific updates on any material The Board’s continuing commitment to theBoard developments or new matters presented conducting its operations to high standards by the Group General Counsel and of health, safety and environmental Company Secretary. management is demonstrated by receipt of Division of responsibilities detailed reports on health, safety and The Group has clearly defined policies, environmental matters as the first substantive processes and procedures governing all item at each Board meeting. More details, on areas of the business, which will continue to these and other initiatives in these areas, can Articles of Association be reviewed and refined in order to meet the | be found in the stakeholders section on | requirements of the business and changing | | | --- | --- | --- | | pages 34 to 47, in our Sustainability | market circumstances. | | | Supplement and ESG Addendum for 2021 | | Terms of Reference of the Nomination | There is a clearly identifiable organisational and the Company’s detailed carbon and Governance Committee structure and a framework of delegated reporting, as set out on page 55. authority approved by the Board, within which individual responsibilities of senior Diversity executives of Group companies are identified Terms of Reference of the As part of our ESG agenda, the Company and can be monitored. These are set out in AuditCommittee is committed to supporting diversity and the Operating Framework, which is available our policy is to appoint or promote, as for review online by any employee through appropriate, the best person for the role the Company’s intranet. Terms of Reference of the in question, without taking account of RemunerationCommittee factors such as background, age, gender, Defined authority limits continue to be ethnicity or disability. The policy has been closelymonitored in response to prevailing reinforced through training sessions on market conditions. unconscious bias for management teams A number of further Board mandated Every employee should have a set of throughout the Company’s business units policies can be found on our website performance objectives agreed for each year and its head office functions. www.taylorwimpey.co.uk/corporate/ in addition to a personal development plan. our-company/governance/our-policies More information can be found on page 93. Theannual employee performance appraisal process is competency based, with individual Management objectives cascaded down from the Progress in achieving the Group’s strategy appropriate business objectives. The process is reviewed at appropriate Board meetings also identifies training needs to support through the year and is reported on pages achievement of objectives. 24 to 27. The Chief Executive has responsibility for preparing, reviewing 80 Taylor Wimpey plc Annual Report 2021 ### Operational oversight Whistleblowing Operational oversight of the Company’s business is undertaken by the Chief Executive leading the GMT. The GMT is the The Company’s Whistleblowing Policy is most senior executive committee and its supported by a clear process that includes membership is set out on pages 10 to 17. an independent third party whistleblowing The GMT is responsible for the day to day hotline that any person, including employees management of the Company’s operations of the Company, may, in confidence, raise and is responsible for making key strategic concerns about possible improprieties in decisions. financial reporting, other operational matters The Board also receives regular reports and or inappropriate behaviours in the workplace. minutes from the meetings of the Company’s All whistleblowing cases are investigated by Treasury Committee which is chaired by the Head of Internal Audit, Group HR theGroup Finance Director. The Treasury Director and / or the Group General Counsel Committee is responsible for monitoring and Company Secretary depending on the andreviewing the Company’s financial risks, nature of the issue, and (where appropriate) financial and treasury policies, financial the Head of HSE. facilities, covenant compliance and insurance Whistleblowing incidents and their outcome programme in light of current and proposed are reported to the Board, on an anonymous strategic and operational requirements. The basis, in line with the Code. Whistleblowing Treasury Committee is also responsible for featured regularly on the Board’s agenda making recommendations to the Board or during 2021, with formal half yearly reviews GMT, as appropriate, regarding policy or and interim updating on significant matters, operational changes in these areas. which allowed the Board to regularly review The Treasury Committee also continuously the adequacy of the Policy in line with its monitors the operation of the Group’s requirement to do so under the Code. The supplier payment policy and practices anonymous report that is provided to the andadvises the Board of any significant Board of concluded investigations is also variances, together with remedial actions shared with the GMT. proposed or taken. The Policy includes the ability for workers to make protected disclosures with regard to Risk matters arising under the Modern Slavery Act | During 2021, the continued embedding | with regard to our business and its supply | | --- | --- | | ofprevious enhancements made to the | chain. Following a review of the process | | Group’s risk management process around | andits administration, and the continuing | | enhanced reporting, tracking and monitoring | high-profile awareness campaign around | | of risks, together with additional enhancements | theCompany’s businesses and offices, the | | made during the year, have further | Board is satisfied that the Policy and its | | strengthened the effective management of | administration remain effective. | the Principal, key and emerging risks, which led to the addition of two new Principal Risks as set out on page 61. Their associated management and mitigation actions and plans were reviewed and assessed by may be a party, the Director gives due notice Internal Audit as part of its programme of departments, which requires written to the Board in accordance with the work during the year. To achieve its confirmation of continuing compliance and Companies Act 2006 and the Company’s objectives in respect of risk management maintaining the gifts and hospitality register. Articles. In such cases, unless allowed by and internal control for the year, the Audit As part of the annual reminder, senior theArticles, a Director is not permitted to Committee undertook a number of actions, managers are required to review training participate in any discussions or decisions as set out in more detail in the Audit videos on anti-corruption, anti-money relating to the contract or arrangement. Committee Report on page 101. laundering and competition law. The Board undertakes a regular review of | Anti-bribery and anti-corruption | Ensuring there is no conflict | each Director’s interests, if any, outside the | | --- | --- | --- | | In line with the Bribery Act 2010, the | of interest | Company. In addition, all proposed new | | Company has written policies on its | | appointments and interests of Directors | In order to assist Directors in complying zero-tolerance approach to bribery and arecleared in advance with the Board, withtheir duty to avoid conflicts (or potential corruption. These policies are available for whichalso considers the impact on the time conflicts) of interest the Board must first give review externally on the Company’s website commitments of the Director concerned. its clearance to potential conflicts of interest and internally on the intranet. The risk to the Following these reviews, the Board remains (which includes directorships or Company of non-compliance would be satisfied that all Directors are able to allocate theirinterests in outside companies and significant reputational damage, potential sufficient time to the Company to enable organisations) following which, an entry is financial penalties and the possible exclusion them to discharge their responsibilities as then made in the statutory register which from certain approved partner arrangements. Directors effectively, and that any current theCompany maintains for this purpose. These risks are mitigated by training for external appointments do not detract from Whenever any Director considers that he or senior managers and by issuing an annual the extent or quality of time that the Director she is, or may be, interested in any contract reminder, which includes the current versions is able to devote to the Company. or arrangement to which the Company is or of the policies, to all businesses and key 81Taylor Wimpey plc Annual Report 2021 Governance Corporate governance: Board leadership and Company purpose continued ## Board activities Strategy and execution Organisational capacity Financial oversight Governance and values Stakeholders impacted Stakeholders impacted Stakeholders impacted Stakeholders impacted – Customers – Customers – Employees – Employees – Employees – Employees – Partners – Partners – Partners – Partners – Investors – Investors – Investors – Investors – Communities – Communities | Business updates | Operational performance | | Financial resources | Compliance | | --- | --- | --- | --- | --- | | – Received updates on the | – Received health, safety and | | – Received a detailed review of | – Received regular updates | | Company’s land purchases | | environmental reports at | the Company’s financial | on relevant governance and | | following the equity raise | | everymeeting | position, including borrowing | regulatory developments during | | during2020 | – Received regional, divisional and | | facilities and financial | the year, from both internal and | | – Received a customer | | Company performance updates | alternatives, at each meeting | externalsources | | serviceupdate, with a focus on | – Received regular reports from | | – Agreed the 2022 budget | – Approved the Company’s fifth | | the introduction of the New | | the Company’s brokers and | – Reviewed financial performance | Modern Slavery Act 2015 | | Homes Quality Board and | | investor relations team | reports, including the availability | statement in 2021after | | Ombudsman service | | | of financial, people and | reviewing its operations and | – Visited a regional business – Reviewed an update on supplychain resources, supply chain unit office and three | theCompany’s supply | | development sites | at eachmeeting | – Received two whistleblowing | | --- | --- | --- | --- | --- | | chainperformance | | | | updates and interim updates | | | National Employee Forum (NEF) | | Reporting | | | – Received a sales and | | | | as required | | | – Received updates from the | | – Reviewed and approved, with | | | marketingupdate | | | prior advice from the Audit | – Reviewed the Company’s 2020 | Board’s Employee Champion – Received a demonstration of Committee, the full year andhalf Gender Pay Gap Report following every NEF meeting thenew customer management year results statements – Reviewed the Committees’ Employees system platform – Reviewed and approved each Terms of Reference – Approved the Board’s Employee – Reviewed an update on the trading statement made during AGM Champion’s key activities Company’s IT systems and the year – As a result of the pandemic, – Considered the results of | cyber security activities | | | held the 2021 AGM without | | --- | --- | --- | --- | | | theemployee survey and | Excess capital returns | | | – Received regular updates on | | – Considered the Company’s | shareholders in attendance but | actions proposed HRmatters Dividend Policy and return of with the opportunity for Succession planning excess capital to shareholders shareholders to pre-submit COVID-19 – The Board considered and questions or ask them live – Monitored the impact of the Pensions approved the recommendation | COVID-19 pandemic on the | | | – At the 2021 AGM, proposed the | | --- | --- | --- | --- | | | from the Nomination and | – Received updates on the | | | Company and its stakeholders | | | appointment of PwC as the | | | Governance Committee to | financial position of the | | Company’s external Auditors ESG appoint the new ChiefExecutive Company’s pension fund and which was approved by over – Oversaw the Company’s itsfunding objectives 98% of votes ESGinitiatives Risk Board evaluation Compliance – Received regular updates on the – Oversaw the internally facilitated – Reviewed and approved Company’s risk management Board evaluation, identifying the2020 Annual Report – Conducted two assessments areas for further improvement andAccounts ofrisk and progress made on and agreed actions to be taken mitigating actions Fire Safety Shareholders – Considered reports on fire – Sought shareholder and safetyand cladding matters institutional feedback, both at atevery meeting the AGM and half year and full CMA year results presentations, in – Received regular reports on addition to shareholder engagement with the CMA engagement conducted by the regarding the Company’s Chairman and Remuneration historic leasehold properties Committee Chair 82 Taylor Wimpey plc Annual Report 2021 ## How our Board monitors culture Our Board considers that good governance value’ and that culture should be the subject The Board is led in these respects by the should not only be focused on how our of a continuous focus rather than only in Chairman, who ensures our Board operates Board operates, but also on the culture times of a crisis. Our Board is responsible for correctly, setting its own culture and, by within which the Company’s employees defining and setting the Company’s culture, extension, that of the Company in its operate on a day to day basis in order to values and standards from the top. Culture is operations and its dealings with all achieve our purpose. We are proud of the established by leadership and by example, stakeholders. The observance of that culture to ‘do the right thing’ at Taylor but this also needs to be underpinned by culturethroughout business operations is led Wimpey and see it as a key strength of the clear policies and codes of conduct which by the Chief Executive and the GMT. organisation. ensure that the Company’s obligations to its The Board reviews several important shareholders and other stakeholders are A healthy culture is important and we fully indicators of the Company’s culture, clearly understood and met. agree with the Financial Reporting Council including those set out below. (FRC) that it both ‘protects and generates The principles of good governance are Board and employee engagement Employee perception and retention embedded throughout Taylor Wimpey and The Board’s Employee Champion, Gwyn Our voluntary employee turnover of manifest themselves in a number of different Burr, Non Executive Director, continued 19.0% (2020: 9.4%) has increased ways, including the following: to strengthen the availability and following a very low year in 2020 as – An absolute and non-negotiable frequency of communication between the a result of the uncertainty during the requirement throughout our business Board and employees. Gwyn attended COVID-19 pandemic. toensure the health and safety of all of our three NEF meetings throughout the year stakeholders that work at, or visit our and reported back to the Board on topics offices and developments discussed, as described in more detail – The requirement to observe good on page 85. businesspractice, including abiding by allapplicable laws and regulations that relate to our business | – The provision of mandatory training to | 2021 Action: The two-way communication | 2021 Action: Conducted an Employee Survey | | --- | --- | --- | | allof our businesses on key legislation | channel was further strengthened by the | and identified priorities which were acted | | andregulations relating to our areas | introduction of Local Employee Forums at | upon during 2021 and inform plans in this | | | business unit level, to feed into the NEF. | area during 2022. | ofoperation – Our Group-wide Operating Framework More information can be found on pages More information can be found on pages control document setting out certain rules 84 to 85. 26 to 27. of operation, common procedures, other areas of best practice and delegated authority limits Health and safety Employee surveys – A system of controls and checks Our Annual Injury Incidence Rate per Following the results of the Company’s underpinned by a rigorous Internal Audit 100,000 employees and contractors was latest employee survey, a benchmarking Department and in turn overseen by the 214 (2020: 151), well below the HBF exercise was undertaken, resulting in Audit Committee Home Builder and Health and Safety salary increases for 1,307 employees in – Regular and embedded risk assessment Executive construction industry averages. addition to the 2% general salary increase and monitoring processes The Board reviews health, safety and for all employees. We will continue to – Encouraging and investigating any environmental matters as the first benchmark key roles throughout the year disclosures made either directly or through substantive item at each Board meeting. when necessary, to ensure that we an independent third party whistleblowing continue to offer a market-competitive During 2021, our health and safety team hotline available to employees, remuneration package. delivered training to over 2,000 individuals subcontractors, suppliers, customers on sites and rolled out a new HSE andthe general public reporting system, improving data records and insight into likely root causes of incidents. | 2021 Action: The NEF was consulted on | 2021 Action: Initiatives in response to | | --- | --- | | Health and Safety improvement strategy and | feedback contained in the results of the 2021 | | this area scored well in the Employee Survey | Employee Survey, as described on page 26. | reported on page 41. More information can be found on page 40. More information can be found on pages 26 to 27. 83Taylor Wimpey plc Annual Report 2021 Governance Corporate governance: Board leadership and Company purpose continued ## How the Board engaged with shareholders and employees ## during the year ### Shareholders Investor relations programme Employees The Company operates a structured investor The Board actively seeks andencourages The Board recognises the importance relations programme, based around formal engagement with investors, including ofengaging with the workforce and has announcements and publications of the full itsmajor institutional shareholders and therefore adopted two of the methods year and half year results. The Board is kept shareholder representative bodies. setout in Provision 5 of the Code. regularly apprised on the investor relations The Company has continued its longstanding programme and receives a detailed report The Board’s Employee Champion practice of engaging with its shareholders in ateach meeting. Gwyn Burr was the Board’s Employee a proactive manner. The Company’s brokers also attend Board Champion throughout 2021 and is meetings from time to time as required to responsible for championing the ‘employee Chairman meetings give their perspective on institutional voice’ in the boardroom and strengthening Irene Dorner held six meetings with key shareholder sentiment. the link between the Board and employees. investors and shareholder representative During the year, the Board took the bodies throughout 2021, representing Remuneration consultation opportunity to define the main activities of 22.3%of our issued share capital. A variety The Remuneration Committee also wrote the Board’s Employee Champion, and these of key themes were discussed such as to14 shareholders and three institutional can befound on page 87 and in the Division ESGand succession. shareholder advisers, holding in aggregate ofResponsibilities document on the 50% of our issued shares, to ask for Company’s website. 2021 Annual General Meeting feedback and offered the opportunity for a Shareholders were not able to attend Gwyn regularly attends the NEF, attending conversation on the proposed remuneration the2021 AGM in person as a result of three meetings during 2021. After each arrangements for the Executive Directors theCOVID-19 pandemic. meeting she provides an update to the for2022 and the proposed remuneration Board on the items discussed during the In a similar way to the 2020 AGM, the arrangements for Pete Redfern when he meeting. The topics covered during these Boardput in place arrangements for leaves the business. meetings can be found in the NEF section shareholders to listen to the business of the opposite. Gwyn and the Chairman, via the meeting by dialling into an audiocast facility. Secretary, have the opportunity to suggest Shareholders were also given the opportunity agenda items at each NEF meeting, and the to ask questions in real time on the call. Board’s Employee Champion ensures that Alternatively, they were able to submit they feed back any areas of concern raised questions in advance of the meeting to the by the NEF members. During 2021, it was Company Secretary by email and these were agreed that the standing ‘open discussion’ answered during the meeting. item on eachNEF agenda was moved to the The Company also took the opportunity to start of the meeting so that NEF members amend its Articles of Association to allow could raise any concerns without the risk of hybrid meetings in the future, so that if running out of time in the meeting. shareholders are unable to attend meetings Thischange has resulted in a significant again in the future, they will be able to vote increase in discussions and debate. inreal time. Following engagement with employees at the | The Board is looking forward to reverting to | NEF, Gwyn suggested and it has been | | --- | --- | | an ‘in person’ AGM in 2022, which will allow | agreed that in 2022 the Board’s Employee | | our Board members to meet and speak | Champion will meet with small groups of | | directly with our shareholders. | junior to mid-level employees in each division | to gather feedback directly from employees outside of the NEF in an informal setting and without senior management being present, to further encourage openness. These meetings will be called ‘Employee Focus Groups’ and will include both site and office based staff. The sessions will be facilitated by the Employee Champion with the support of the Company Secretary and there will be no set agenda with participants being encouraged to feed back on any topics theychoose to. The Employee Champion will feed back to the Chairman and Chief Executive shortly after each meeting to ensure any area of concern can be appropriately addressed quickly, and will also provide an update to the Board. 84 Taylor Wimpey plc Annual Report 2021 The NEF During 2021 the following key ensure that each local group had representation that mirrors the business The NEF has been in place for over four activities took place: structure and provides flexibility for additional years and continues to be effective. The NEF – The NEF membership was extended to members as required. These updated forums is chaired by Tim Betts, regional Managing ensure that it had representation from all are referred to as ‘Local Employee Forums’ Director of our South East business unit, who parts of the business. (LEF), comprising of a member from each has confirmed that there continues to be a – Received briefings on key development function and department or a representative healthy level of debate which has led to key areas in the business, including an update for groupings of smaller departments. changes in key processes and procedures, on land acquisition following the equity Each LEF is responsible for communicating such as providing input on proposed action raise, implementation of the Environment feedback from the NEF to their business plans following the employee survey. Strategy, and the employee survey. unit and to feed any areas of concern up All NEF members participated in a number Employee Consultative Committees had to the NEF. This will strengthen the input of training courses aimed at building their been established for over 10 years at each into the NEF and the Board from the confidence and encouraging them to look business unit, however it was considered Company’s employees. beyond their region and consider issues from that their size and structure did not a national perspective. appropriately reflect the different functions within the business. The structure of these More information on how the Board engaged Committees was reviewed during 2021 to with our other stakeholders and key decisions made by the Board whilst considering our stakeholders can be found on pages 36 and 37. Local Employee National Employee Employee Focus Forum Forum Groups (new in 2022) Group Management Team Board’s Employee Champion Taylor Wimpey plc Board 85Taylor Wimpey plc Annual Report 2021 Governance Corporate governance: Division of responsibilities ## A clear and effective structure | There is a clear and effective division of | generating value for all of the company’s | In line with the Code, the clearly defined | | --- | --- | --- | | responsibilities between the Board and the | stakeholders. To support this principle, the | rolesand responsibilities of the Chairman, | | Group Management Team (GMT) which | Board has established a framework of | Chief Executive and Senior Independent | | isakey foundation of the Company’s | delegated financial, commercial and | Director have been reviewed during 2021 | | stronggovernance. | operational authorities which define the | and have been signed by Irene Dorner, Pete | | | scope and powers of the Chief Executive | Redfern and Robert Noel in their respective | We believe that a successful company is and the GMT. capacities. In addition, the main activities of ledby an effective and entrepreneurial board, the Board’sEmployee Champion have been whose role is to promote the long term included in the document in 2021. sustainable success of the company, ### 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 influence its culture – Defines which matters are reserved for the decision of the Board – Oversees the Company’s ESG initiatives – Establishes the Company’s risk appetite and oversees processes designed to ensure compliance – Reviews the Whistleblowing Policy and associated investigations and outcomes – Ensures effective engagement with shareholders and other stakeholders Audit Committee Nomination and Remuneration Committee GovernanceCommittee Chaired by Humphrey Singer Chaired by Irene Dorner Chaired by Gwyn Burr – Monitors, reviews and advises the Board – Reviews the balance, diversity, independence – Advises the Board on remuneration policy at ontheCompany’s financial reporting and and effectiveness of the Board executive and senior management level relatedannouncements – Oversees the candidate profile shortlisting – Ensures that remuneration is geared to the – Undertakes a detailed half yearly review of criteria, interview, selection and appointment of enhancement of shareholder value theCompany’s risk assessment and mitigation new Directors tothe Board – Ensures that targets are appropriate and processes and outcomes, and makes – Reviews the succession and contingency support the delivery of the strategy, whilst recommendations to the Board planning for the Board, its Committees, and appropriately limiting risk taking and reflecting – Oversees the relationship with the Company’s across the Company’s senior positions ESG considerations external Auditors – Reviews the training and development plans – Ensures that rewards for achieving or exceeding – Oversees the reporting of Internal Audit forthe Board, its Committees, and across the agreed targets are not excessive investigations and reviews the implementation Company’s senior positions – Promotes the alignment of executive interests ofany changes required – Reviews, sets targets for and drives the with those of the Company’s shareholders – Monitors the continuous improvements in Company’s equality, diversity and inclusion andwith the Company culture, including by information technology, data protection and strategy setting executive shareholding guidelines resilience to cyber attacks – Reviews the Company’s corporate governance andstipulating post-employment holding practices and procedures requirements for certain employees – Reviews AGM resolutions and makes related – Reviews the remuneration arrangements recommendations to the Board for approval available to the wider workforce and considers these when setting the executive remuneration Chief Executive and the GMT – Responsible for the day to day management of the Company’s key strategic and operational activities More information about our GMT members can be found on pages 10 to 17 and on our website. 86 Taylor Wimpey plc Annual Report 2021 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 Company – Facilitate and promote constructive Board relations – Ensure an appropriate induction and development – Chair Board meetings and set Board and communication programme is in place for individual Directors meetingagendas – Ensure Directors receive accurate, timely and – Agree the Chief Executive’s personal objectives – Ensure high standards of corporate governance clearinformation – Ensure there is effective communication and debate – Demonstrate objective judgement – Set the Company’s cultural tone from the top with shareholders – Build a well balanced and highly effective Board – Enable an annual review of the Board’s effectiveness – Maintain an appropriate balance between the – Engage individually with the Directors, as required interests of stakeholders – Promote a Board culture of openness and debate to encourage constructive challenge Chief Executive – Develop and implement the Company’s strategy – Regularly review the organisational structure, – Maintain relationships with investors and advise the – Recommend the strategic plan and related including developing the GMT and planning Board accordingly annualbudget forsuccession – Set the Company’s culture from the top, particularly – Ensure the effective day to day running of – Manage the Group’s risk profile and establish with regard to compliance and sustainability theCompany effective internal controls – Agree the Company’s annual budget proposal, prior – Ensure coherent leadership of the Company – Ensure the Chairman and the Board are kept to formal agreement with the Board advised and updated regarding any key matters – Oversee the customer service, sales and marketing, and sustainability functions Group Finance Director – Manage the Company’s operational financial affairs, – Oversee the Company’s risk profile, in conjunction – Agree the Company’s annual budget proposal from including any treasury and tax matters with the GMT a financial perspective, prior to formal agreement – Oversee the finance, information technology and with the Chief Executive and then the Board pension departments Group Operations Director – Manage the Company’s operational development – Oversee the commercial department, operational – Agree the Company’s annual budget from an process, from land acquisition, through planning supply chain and logisticssupport operational perspective, prior to formal agreement applications, to design and production – Oversee the Company’s risk profile, in conjunction with the Group Finance Director, Chief Executive with the GMT and then the Board Senior Independent Director – Act as a sounding board for the Chairman – Act as intermediary for the other Directors, – Lead the search for a new Chairman, – Chair Board meetings in the absence of whennecessary whennecessary theChairman – Lead the evaluation of the Chairman’s performance – Be available to shareholders who wish to discuss matters which cannot be resolved otherwise Non Executive Directors – Provide effective and constructive challenge to the – Serve on Board Committees – Keep abreast of shareholders’ views Executive Directors – Provide advice and experience to the Company – Assist in developing and approving the Company’s strategy Employee Champion – Responsible for championing the ‘employee voice’ in – Gather the views of employees through a variety of – Liaise with Senior Management on a regular basis the boardroom and strengthening the link between formal and informal channels and identify any areas on matters of employee engagement and culture the Board and employees of concern Group General Counsel and Company Secretary – Advise the Board on matters of corporate – Provide support to the Chairman and the Non – Keep abreast of shareholders’ views governance, compliance and legal issues Executive Directors – Oversee the Company’s Secretariat and – Responsible for all legal and compliance matters – Ensure effective support to the Board during LegalDepartments relating to the Company meetings and whilst setting agendas 87Taylor Wimpey plc Annual Report 2021 Governance Corporate governance: Composition, succession and evaluation ## Nomination and Governance ## Committee report Nomination and Governance Main objectives Committee summary – To ensure there are formal, rigorous The Committee is chaired by Irene Dorner, and transparent procedures for the Chairman of the Board. The Committee appointment of new Directors to the consists of six Non Executive Directors Board, its Committees and other senior andthe Chairman of the Board. positions in the Company – To keep the Board’s corporate Committee meetings were also attended, governance arrangements under review by invitation, by the Chief Executive, Group and to ensure that both the Company and Finance Director, Group Operations Director, the Board operate in a manner consistent Group General Counsel and Company with corporate governance best practice Secretary, Deputy Company Secretary, Assistant Company Secretary, Group HR 2022 objectives Director, Head of HR (Strategy), and the National Employee Forum (NEF) Chairman. – Ensure an effective induction programme takes place for the new Chief Executive – Ensure a formal, rigorous and transparent Committee members Meetings attended recruitment process for the appointment of Irene Dorner (Chair) 5/5 new Non Executive Directors takes place, followed by an effective induction Robert Noel 5/5 programme Gwyn Burr 5/5 – Continue to drive the equality, diversity and inclusion agenda to make progress Irene Dorner (a) Jitesh Gadhia 4/4 towards the Company’s targets and Chairman of the Nomination (a) Scilla Grimble 4/4 to ensure it is embedded within the and Governance Committee Company’s culture and aligned to Angela Knight 5/5 the strategy Humphrey Singer 5/5 – Continue to monitor succession and contingency plans across the Company (a) Appointed to the Committee on 1 March 2021. – Ensure the Company continues to have the Non Executive Directors and will be kept necessary level of skills and leadership on under review during 2022. the Board and Group Management Team | (GMT) to effectively deliver the strategy | Corporate governance | | --- | --- | | – Continue to develop the Company’s | The Committee’s objectives include oversight | | corporate governance processes | of the Company’s corporate governance | | and to maintain corporate governance | practices, and we have successfully | | best practice | undertaken this role during 2021 through | regular updates to the Committee and monitoring of the proper operation of the Company’s governance processes. The appointment of Scilla Grimble and Throughout 2022 we will continue to develop Dear Shareholder JiteshGadhia as Non Executive Directors on these processes to ensure that corporate As Chairman of the Nomination and 1 March 2021 enhanced the range of skills governance best practice is complied with at Governance Committee (the Committee), and diversity on our Board and Committees. all levels of theorganisation. I am pleased to present the 2021 report of More information about Scilla and Jitesh’s the Committee on behalf of the Board. recruitment and induction process can be Board evaluation found on page 91. During 2021, the Board’s annual internally Board composition facilitated evaluation was successfully 2021, and the beginning of 2022, have However, following our announcement that undertaken by myself with the assistance of introduced a new period of transition for both GwynBurr and Angela Knight, Non the Group General Counsel and Company our Board and the Company following Executive Directors, will be stepping down Secretary. The Committee assessed the the announcement that Pete Redfern, from the Board on 26 April 2022 due to progress made towards addressing the key Chief Executive, would be leaving the changes in their commitments to other points raised as part of the 2020 externally Company following nearly 15 years Boards, a recruitment process is underway facilitated Board evaluation. Following the of outstanding service. to identify new Non Executive Directors to conclusion of the 2021 Board evaluation, a join our Board. Further details of the process We have undertaken a formal, rigorous and number of key actions to be taken during and the skills and expertise we are seeking transparent recruitment process to appoint 2022 were identified and progress towards can be found on page 91. a successor and we are very pleased to these will be reported in the 2022 Annual announce the appointment of Jennie Daly, During 2021, the Committee considered the Report and Accounts. our Group Operations Director, as the balance of skills and experience of the Non I am proud of the results of the evaluation Company’s next Chief Executive following Executive Directors, their time commitments and consider our Board to be operating well the conclusion of the 2022 Annual General and succession plans and at that time with a healthy balance of discussion, debate Meeting (AGM) on 26 April 2022. More considered the balance to be appropriate. and expertise. More information about the information about this process can be found This balance has been reassessed whilst Board evaluation process, key actions and on page 90. preparing for the recruitment of the new progress made can be found on page 92. 88 Taylor Wimpey plc Annual Report 2021 | The Committee’s annual performance | for oversight of the Company’s ESG | The Committee looks forward to supporting | | --- | --- | --- | | evaluation concluded that the Committee | initiatives has now been handed over to | Jennie as she takes on the role as the | | remains effective and the review of the | the Board and more information as to the | Company’s Chief Executive during 2022 and | | Committee’s Terms of Reference concluded | rationale for this change and our plans for | also to the recruitment and induction process | | that they remain appropriate and in line with | 2022 can be found on page 79. | of our new Non Executive Directors. I believe | | best practice. The Committee’s Terms of | | these new appointments to the Board will | Equality, diversity and inclusion | Reference can be found on our website. | | allfurther enhance our strong culture of | | --- | --- | --- | | | Throughout 2021, and continuing into | corporate governance and ensure our Board | | Environmental, social and governance | 2022,equality, diversity and inclusion remain | and Committees continue to operate | | (ESG) | a key priority for the Committee and I am | effectively for the benefit of our stakeholders. | | In 2021, ESG remained a key focus for the | proud of our continued progress in this area. | | | Committee and the Company’s progress | During 2021, the Committee oversaw the | | | hasbeen recognised by a number of | development and implementation of the | | | accreditations, including being placed third | Company’s revised Equality, Diversity and | | | inthe Next Generation benchmark, and | Inclusion Policy. More information about the | Irene Dorner | | continuing to be a constituent of the Dow | revised Policy and actions taken in this area | Chairman of the Nomination | | Jones Sustainability Europe Index and the | can be found on pages 93 to 97. | and Governance Committee | FTSE4Good Index Series. Responsibility 2 March 2022 Committee activities during 2021 | | | February | | May | June | October | | December | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Topic Activity / review | | | 2021 | 2021 | 2021 | | 2021 | | 2021 | | Succession | Considered performance, succession and contingency | | | | | | | | | | planning | planning for the Executive Directors and all employees | | | | | | | | | Received an update on the GMT’s performance and continued development Chief Executive succession planning Equality, Considered the Company’s approach to equality, diversity diversity and and inclusion, including new and revised policies and inclusion progress made in these areas ESG Received an update on ESG, including a progress update on the Company’s Environment Strategy and approval of the Company’s Water Policy National Received an update on the enhanced structure and role of Employee the Board’s Employee Champion Forum (NEF) Received an update from the NEF Chairman Annual Report Reviewed and approved the Committee’s report in the andAccounts 2020 Annual Report and Accounts Reviewed and approved the 2021 Notice of Annual General Meeting Governance Recommended to the Board the approval of the Directors’ Conflicts of Interests Register Received an update on the Company’s corporate governance activities Reviewed and approved the Matters Reserved for the Board and Division ofResponsibilities documents Agreed the policies published on the Company’s website Reviewed and approved the approach to the 2021 Board evaluation process Reviewed and recommended to the Board the amendments made to the Company’s Articles ofAssociation Reviewed the independence of the Non Executive Directors Recommended the renewal of a Non Executive Director’s three year term Reviewed and recommended to the Board a fee for the role of the Board’s Employee Champion Committee Reviewed the Committee’s performance and compliance governance with its Terms of Reference during 2020 Reviewed and agreed the Committee’s annual plan for 2022 89Taylor Wimpey plc Annual Report 2021 Governance Corporate governance: Composition, succession and evaluation continued ### “I am delighted that, ### following a thorough ### recruitment and selection ### process, the Board has ### appointed Jennie Daly as ### the Company’s new Chief ### Executive. Jennie has ### extensive experience in ### the housebuilding sector ### and has demonstrated ### exceptional leadership and ### a razor-sharp operational ### focus. Her strong focus on ### execution, combined with ### her customer and people- ### focused skills, set her apart ### from the other candidates ### we were considering. I look ### forward to continuing to ### work closely with her as would be based on merit and objective ### Chief Executive succession ### criteria. The Committee requested Egon we execute our next phase ### planning and recruitment Zehnder to conduct an internal and external ### of growth.” ### process market scanning exercise and produce a diverse longlist of candidates for consideration against the role profile by the Committee. In December 2021, it was announced that After considering the longlist the Committee Irene Dorner Pete Redfern would be stepping down from produced a shortlist of preferred candidates. Chairman | his role as the Company’s Chief Executive | A four phased approach to the interview | | --- | --- | | after nearly 15 years of outstanding service in | process was agreed, consisting of an | | the role. | interview with the Chairman and Senior | Independent Director; a separate interview The Committee, led by Irene Dorner as with the Audit and Remuneration Committee the Committee Chairman, undertook the Chairs; an additional interview with the search and recruitment process for Pete’s Chairman; and finally a presentation to, and successor. An additional Committee a Q&A opportunity for, the Committee. The meeting, outside of the usual meeting external candidates were also invited to meet calendar, was held in December 2021 to Committee purpose with the Group Finance Director. Following ensure the careful management and and responsibilities each interview, feedback was provided execution of the recruitment process. A small tothe Chairman and working hub; and The Committee is responsible for: working hub was formed at the outset discussed by the whole Committee at consisting of the Chairman, Senior – Maintaining formal, rigorous and transparent itsmeetings during the process. A final Independent Director, Group HR Director procedures for Board appointments. meetingwas held in February 2022 for the and Group General Counsel and Company – Ensuring all Board appointments are Committee to discuss their views and agree Secretary. The working hub was responsible made on merit and assessed against a recommendation to the Board. | for the day to day oversight of the | | objective criteria. | | --- | --- | --- | | recruitment process to ensure progress was | Following approval by the Board, on | – Overseeing and advising the Board on the | | being made against the agreed plan. | 7February 2022 it was announced that | identification, assessment and selection of | | | Jennie Daly would be appointed as the | candidates for appointment to the Board. | The Committee appointed Egon Zehnder Company’s new Chief Executive from the – Regularly reviewing succession planning at in 2021 to assist with the search process. conclusion of the AGM on 26 April 2022. senior levels and contingency planning and Egon Zehnder confirmed that they had no More information about Jennie, her procedures across the Company. other connection to the Company or any experience and previous roles can be – Guiding the Board on diversity Director other than as appointed by the foundon pages 8 and 74. considerations and driving the Company’s Company to assist with executive and non equality, diversity and inclusion agenda. executive appointments. Jennie and Pete will work closely on a – Regularly assessing the Board’s thorough handover process ahead of Key to the recruitment process was the composition, balance, diversity, Jennie’s formal appointment. More Committee’s development of the role profile experience, skill sets and individual information on the handover process to ensure that the process would identify Directors’ time commitments. will be reported in the Company’s 2022 the best candidate and the appointment – Leading the annual Board Annual Report and Accounts. evaluation process. – Regularly briefing the Board on corporate governance and compliance considerations and developments. 90 Taylor Wimpey plc Annual Report 2021 | Board balance and skills | On 1 March 2021, Scilla Grimble and Jitesh | The Company also operates a Group Talent | | --- | --- | --- | | As at 31 December 2021, six out of ten | Gadhia were appointed as Non Executive | Management Board which is chaired by | | Board members were Non Executive | Directors and more information about the | theChief Executive and comprises of the | | Directors, and the other members of the | appointment process followed can be found | Divisional Chairs, Group Managing Director | | Board were the Chairman and three Executive | in the 2020 Annual Report and Accounts. | of Strategic Land and HR representatives. | | Directors. The Committee considers this | | The Group Talent Management Board, | More information about the recruitment balance to be appropriate and this will be supported by the Divisional Talent process for the Chief Executive role can be kept under review to maintain compliance Management Boards, regularly review found opposite. with corporate governance best practice. succession plans and related development Succession planning requirements across the operational roles During 2021, the Committee considered within the Company. Actions taken to In order to ensure there are effective thestructure, size, diversity, and composition support succession plans include the succession plans in place for the Board, of the Board, as well as the skills, knowledge development of career paths linked to GMT and heads of functions levels within the and experience of each Board member and experience, exposure and education, an Company, the Committee has visibility of a confirmed that the appropriate balance has assessment and development centre, and wide range of employees who have been been maintained to provide constructive the promotion of the Company’s mentoring identified as potential succession candidates challenge as well as guidance and support scheme. in the short, medium and long term. The inorder to continue to deliver the Committee reviews the Company’s Company’sstrategy. Contingency planning development programmes for these As announced in early 2022, Angela Knight During 2021, the Committee reviewed the individuals to ensure they have appropriate and Gwyn Burr will be stepping down from Company’s contingency cover to ensure development plans in place. the Board at the conclusion of the 2022 that the Company can respond to the The appointment of Jennie Daly as the unforeseen unavailability of any member of AGM. The Committee is leading the Company’s new Chief Executive is a good the Board, the GMT or other senior roles recruitment process, supported by an example of our succession plans in action. without impacting the current and long term experienced executive search firm, for More information about Jennie’s recruitment performance of the Company. Following additional Non Executive Directors to join the process can be found opposite. this review, the Committee was confident Board. The Committee recognises this as an opportunity to replace Gwyn’s customer that all key roles have an appropriate One aspect of individuals’ development plans expertise and insights and to add to the contingency plan in place. is for individuals below Board level to be | Board’s operational experience. Further | given the opportunity to attend Board | | --- | --- | | information about the recruitment and | meetings to present on specialist topics, | | appointment process will be included in the | project work and specific divisions’ | | 2022 Annual Report and Accounts. | performance. This not only provides valuable | exposure to the Board for these individuals, Board appointments but is also valuable to the Board and The Committee ensures that all Committee when assessing the strength of appointments to the Board are subject to the succession plans in place. During 2021, a formal, rigorous and transparent procedures, number of individuals were invited topresent are based on merit and objective criteria and to the Board on topics such as customer promote diversity of gender, social and service, supply chain, and the sales and ethnic background, and cognitive and ### marketing team’s roll out of our new “The induction personal strengths. customer relationship management system. ### process was ### thorough, highly ### valuable, and and the Board, broker reports on the ### Non Executive Director provided a useful Company and the housebuilding sector, and ### induction process insight into the information on directors’ duties. ### In addition, Jitesh and Scilla undertook the Company’s ### following induction activities during 2021: operations.” Following the Committee’s review of the | Board and Committee composition and a | – Meetings with each of the Chairman, | | | --- | --- | --- | | formal and rigorous recruitment process, | Executive Directors and NonExecutive | | | on1 March 2021, Jitesh Gadhia and Scilla | Directors | | | Grimble were appointed to the Board. | – A meeting with the Group General Counsel | Jitesh Gadhia | | | and Company Secretary | Non Executive Director | The importance of an effective induction – Meetings with members of the GMT and isrecognised by the Committee. The heads of functions Chairman is responsible for ensuring – A meeting with the Company’s external allnewly appointed Directors, including Auditors NonExecutive Directors, receive a formal – Meetings with the Company’s key advisers induction. The induction process includes and brokers training, as appropriate, on the Company’s – Visited a regional business unit office and strategy, operations, directors’ duties, the sites housebuilding sector, meetings with key – Visited a site where the new standard members of senior management and heads house type range was available to view of functions, external advisors, site visits andbusiness unit visits. Jitesh and Scilla were provided with a comprehensive pack of documents, including information about the Company 91Taylor Wimpey plc Annual Report 2021 Governance Corporate governance: Composition, succession and evaluation continued ## Board evaluation In line with the Code, there should be a formal and rigorous annual evaluation of the performance of the Board, its Committees, the Chairman and individual Directors. As the 2020 Board evaluation was undertaken externally, during 2021 the annual evaluation was undertaken internally by the Chairman and the Group General Counsel and Company Secretary. The 2021 Board evaluation focused on the following areas: - Board leadership - Strategy, culture and purpose - Board composition and succession planning - The Board's Committees - Stakeholder engagement - Support for the Board The following process was followed to complete the 2021 Board evaluation: 1. Each Director was asked to participate in the Board evaluation by completing a questionnaire 2. Five members of senior management who regularly present to the Board or one of its Committees were invited to provide feedback to the Board 3. Responses to the questionnaire were collated by the Group General Counsel and Company Secretary and shared with the Chairman on a non-attributable basis 4. Any comments specifically relating to the Chairman were shared with the Senior Independent Director 5. The Non Executive Directors met without the Chairman to review the Chairman's performance based on the non-attributable feedback 6. Each Non Executive Director was invited to have an optional one to one discussion with the Group General Counsel and Company Secretary to provide more detailed feedback 7. Feedback was shared and discussed by the Board at one of its meetings 8. The Board approved an action plan to be implemented during 2022 which will address the key comments made throughout the evaluation process The overall conclusion of the internal Board evaluation was that the Board is considered to be operating well with a healthy balance of discussion, debate and expertise. | 2020 recommendations | Actions taken during 2021 | | --- | --- | | Review Board paper structure and issue guidance on drafting Board papers. | The Chief Executive's Board report paper has been revised to include operational detail as appendices. | | Recruit additional Non Executive Director(s). | On 1 March 2021, Jitesh Gadhia and Solla Girimble were appointed to the Board. | | Focus on ESG matters. | ESG was added to the responsibilities of the Nomination and Governance Committee and subsequently handed to the Board to oversee. The Board and the Nomination and Governance Committee considered ESG matters during 2021 and more information can be found on pages 79, 82 and 89. | | Regular Board training / information sessions. | During 2021, several Board training and teach-in sessions were held, on topics including: - ESG - Customer service - Sales and marketing, including a demonstration of the Company's new Microsoft Dynamics customer relationship management system | | 2021 recommendations | Actions to be taken during 2022 | | Completion of a rigorous and thorough recruitment process to appoint the next Chief Executive and prepare a comprehensive induction programme. | The Company has announced the appointment of Jennie Daly as the Company's Chief Executive from the conclusion of the 2022 AGM on 26 April 2022. A thorough handover process from Pete Redfern is underway and the Committee will oversee an effective induction once Jennie Daly has started in her new role. | | Review the role of the Board's Employee Champion and consider ways to further strengthen engagement with employees. | The Board's Employee Champion role has been reviewed and the Board has approved the role's main activities. Additional engagement sessions, Employee Focus Groups, will be arranged for the Board's Employee Champion outside of the NEF and without senior management being present to further encourage openness. | | Further develop the Board's oversight of the Company's ESG priorities and determine ways to measure ESG progress consistently. | The Board will consider how to monitor our ESG progress and how to improve our communications in this area to ensure this progress is visible to all of our stakeholders. | | Arrange additional site visits for Board members. | Additional site visits will be offered to Board members, both on a group and individual basis as appropriate. | 92 Toplar Winpay plc Annual Report 2021 the Committee is satisfied that the Chairman We recognise the need to make further Governance met the independence criteria as set out in progress in the gender diversity of our Following the expansion in 2020 of the the Code when she became Chairman. Leadership Team (as can be seen in the Committee’s responsibilities to take the graph below), however we are pleased to The Committee also considers that each lead in respect of the Board’s corporate note that female representation in the GMT Director is able to allocate sufficient time governance, during 2021 the Committee is 36%. todischarge their responsibilities to the hascontinued to oversee the embedding Company effectively. This not only included The Committee and the Board also ofgood governance practices at all levels of Board and Committee meeting attendance, welcomes the Parker Review’s ‘Beyond the Company and its operations. The but also preparation time for meetings, visits Oneby 21’ recommendation and can Committee also acts as the first filter on all to our operating businesses and other confirm that the Company is in compliance governance developments, and continues to additional time commitments that were with this recommendation as at31 make the appropriate corporate governance required during the year. December 2021. related recommendations to the Board. This | additional responsibility has been embraced | Accordingly, at the 2022 AGM, each | More information about the Committee’s | | --- | --- | --- | | by the Committee and has been considered | Director, except Pete Redfern, Angela Knight | consideration of equality, diversity and | | a positive change which has allowed the | and Gwyn Burr, irrespective of the date | inclusion when considering the succession | | Committee to dedicate time and attention | of their appointment, will be submitted | of the Chief Executive can be found on | | specifically to governance matters. | for re-election. | page 90. | More information about the Committee’s Details of the resolutions to be proposed, Employee diversity activities in relation to corporate governance alongside supporting biographical details, The Board believes that by embracing can be found in the Committee activities canbefound in the Notice of Meeting on pages equality, diversity and inclusion across table on page 89. 184 to 191. theCompany as a whole, we will better During 2021 a working party, comprising understand how people’s differences and representatives from the Company similarities can be harnessed for the benefit Equality, diversity andinclusion Secretariat and Internal Audit departments, of all of our stakeholders and improve the Equality, diversity and inclusion remained a undertook a number of activities in order Company’s ability to deliver the strategy. key focus area of the Company in 2021 and tosupport the Committee to evolve the Equality, diversity and inclusion are this will continue in 2022. Company’s governance processes to considered at Board, Committee and GMT become more resilient, efficient and effective. Board diversity meetings each year to ensure the Company These activities included: regularly reviews progress againstits goals It is recognised that boards generally – Reviewed and completed a gap analysis performbetter when they include the best to be a diverse and inclusiveorganisation. on the Matters Reserved for theBoard. people from a range of backgrounds The Company’s Grievance and Harassment – Reviewed the Company’s policies and andexperiences. When assessing the Policies are strong and well embedded in the publication of them on the Company’s composition of the Board, the Committee organisation, ensuring that any reports are website. recommends appointments and the Board investigated and addressed appropriately – Confirmed that the Company’s delegated makes appointments based on skills, and the Company’s Whistleblowing Policy authority framework remains appropriate. experience and merit, but equality, enables employees to raise concerns diversityand inclusion will continue to internally or via an external whistleblowing Annual re-election to the Board bekeyconsiderations. hotline if preferred, to give confidence that In line with the Code, each Director is The Committee and the Board fully support there is no risk of suffering anyform of required to seek election or re-election, the FTSE Women Leaders Review which retribution as a result. as appropriate, at each year’s AGM. seeks to improve the diversity of boards The Committee is satisfied that each andsenior leadership and sets the target of Non Executive Director remains independent 33% of female representation on the Board in nature and did not identify any and the Leadership Team (comprised of circumstances that are likely to impair, or theGMT and their direct reports). could impair their independence. In addition, As at 31 December 2021 Percentage of plc Board positions Percentage of GMT positions held by Percentage of Leadership Team (a) | heldbywomen | | | women | | | positions held by women | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 50% 50% | | | 36% 64% | | | 24% 76% | | | | | Men | | | Men | | | Men | (a) The definition of our Leadership Team is our GMT and their direct reports. 93Taylor Wimpey plc Annual Report 2021 Women Women Women Governance Corporate governance: Composition, succession and evaluation continued During 2021, the Company’s new Equality, To help ensure the Company represents As at 31 December 2021 Diversity and Inclusion Policy (the Policy) society, the D&I Committee, GMT and the waslaunched, and more information about Nomination and Governance Committee Percentage of the workforce that the Policy and the key areas of focus can be arein the process of setting a number of are women found in the table opposite. The Company aspirational targets. Once set, progress will took this opportunity to enhance the previous be regularly reported to the Committee which ## 32% Policy and ensure it remains in line with best will monitor progress made towards them. practice to drive equality, diversity and 2020: 30% To support the Company’s objectives in inclusion across the Company. relation to equality, diversity and inclusion, | The Policy is supported by the work | allsenior leaders undertake training to build | Percentage of new starters during 2021 | | --- | --- | --- | | undertaken by the Diversity and Inclusion | their knowledge, awareness and understanding | that are women | | Committee (D&I Committee). The D&I | of inclusion and are supported by our regional | | | Committee is made up of a variety of | Diversity Champions who work with the | | ## 31% | members from across the Company and is | regional Managing Directors todevelop and | | | --- | --- | --- | | responsible for monitoring the Company’s | deliver a local Diversity and Inclusion Action | 2020: 33% | | progress towards operating in a truly diverse | Plan. Each of these Diversity Champions, the | | | and inclusive manner. | Divisional Chairs and the regional Managing | | Percentage of the workforce that Directors attended thethird annual Diversity (a) are BAME and Inclusion Conference held in July 2021 at which topics including privilege, allyship, ## 5% intersectionality, employee networks and neurodiversity were discussed. 2020: 4% We recognise the importance of gaining insight, knowledge and awareness from Percentage of new starters during 2021 relevant external organisations and experts in (a) that are BAME equality, diversity and inclusion. During 2021, The Company celebrated a number of the Company became a member of the ## 8% | equality, diversity and inclusion related | Employers Network for Equality and | | | --- | --- | --- | | initiatives and campaigns throughout | Inclusion, a non profit organisation and | 2020: 7% | | 2021,including: | leading employer network to promote | | equality and inclusion in the workplace. – International Women’s Day: The Company celebrated International As well as working with others to help Please find our latest Gender Pay Gap Women’s Day for the third consecutive accelerate our plans, we have positively report on our website. | year. Employees took part in talks, | raised awareness and understanding on | | | --- | --- | --- | | debates and activities to recognise | equality, diversity and inclusion matters | | | females across the Company and consider | throughout the Company and will continue to | | | some of the barriers and challenges | do so. Our actions during 2021 and plans for | (a) The term BAME (Black, Asian, Ethnic Minorities) | | preventing women progressing. | 2022 can be found on pages 95 to 97. | has been used when referring to demographic | | – Men’s Mental Health Month and | | information related to race for reporting purposes. | | | New and revised policies in 2021 | However, we do understand and recognise that | International Men’s Day: Webinars on The Company introduced a Menopause words matter, and that this acronym could lead men’s health and panel discussions on to a misconception that all ethnic minorities are what it means to be a man, masculinity, Policy which has raised awareness and part of a homogeneous group, when used in the health and vulnerability helped employees understanding of how the menopause can incorrect context. to understand and appreciate men’s affect people, both at work and at home. The issues in the workplace. Company is working towards becoming a – LGBTQ+ Pride Month: In addition to menopause friendly accredited company by flags and visual signage being displayed Henpicked, the leaders in advising on on sites during Pride Month, awareness menopause at work. sessions were run for employees to A revised Maternity, Paternity and Adoption attend. The LGBTQ+ network was also Leave Policy was published, enhancing the launched which has encouraged positive Company’s competitive maternity offer. discussions and given our colleagues the Moreinformation can be found in the table confidence to feel they are supported and opposite. listened to. The Company’s new Wellbeing Policy, – National Inclusion Week: This enabled published in 2021, is designed to support topics such as disability, neurodiversity, employees and create a healthy and happy sexuality, gender and ethnicity to be workplace where all employees feel brought to the forefront of employees’ appreciated and are treated fairly. conversations to help raise awareness andbuild an inclusive culture. – Black History Month: The Company’s proactive recognition of black history helpsour employees become more knowledgeable about race in the workplace and have greater understanding of and empathy for each other. 94 Taylor Wimpey plc Annual Report 2021 ### Our Equality, Diversity and Inclusion Policy The Company’s Equality, Diversity and Inclusion Policy is set out below in sections based on the key objectives of the Policy which are to be an employer of choice, offer 21st century leadership and to expand our reach. Employer of choice Ensure that our working environment, policies, procedures and development and progression opportunities support greater diversity andinclusion. Progress made during 2021 Future actions Respectful This programme involves webinar training for regional Managing Directors The programme will be made available workplace tounderstand the part they play in driving a respectful and inclusive site for the customer service, sales and programme andoffice culture. The programme has resulted in visual signage reminding officebased teams at the business units employees about their role in embedding a respectful workplace and how which have undertaken the first phase of they can report any concerns. An updated site induction details our the programme during 2021. expectations ofbehaviour on site and there is a zero tolerance approach A respectful workplace pulse check on which has led to subcontractors being removed from site due to inappropriate sites will be undertaken to understand comments or behaviours. how site culture has improved and to Two business units took part in the first phase of the programme during 2021 identify areas for future focus. and have seen positive changes. Nine additional business units are scheduled to take part in the programme during 2022. Parent The Company’s Maternity, Paternity and Adoption Policy was updated to Continue to provide guidance and returners make it easier to understand and navigate, and it now includes an enhanced support to those on and returning from programme maternity leave offer including a guaranteed phased return to work and a maternity, paternity and adoption leave. comprehensive ‘leading your journey on parental leave’ guide and support from the parent returners network. This programme includes coaching by executive coaching company, The Tall Wall, before, during and after parental leave for all employees returning after taking parental leave. Health and Each business unit has a Wellbeing Champion and a Mental Health First Aider Mental Health First Aiders will be wellbeing who are responsible for driving wellbeing eventsand providing support to givenrefresher training and offered colleagues throughout the year. Wellbeing Champions received training quarterly supported facilitation sessions through two online modules which covered topics such as the role of an to ensure regular feedback and support effective Wellbeing Champion, defining the difference between pressure and in understanding and addressing mental stress, identifying both internal and externalsignposting and supporting the health issues, so trends can be identified wellbeing strategy. and dealt with effectively. There have been a number of events and activities available for allemployees and their families to join which have received high levels of engagement. Site teams have been given training on topics including stress, fatigue, resilience and managing mental health. These training sessions were attended by over 500 members of the site management teams. Reverse This programme involves senior management building further understanding Continue with this programme mentoring of the challenges faced by individuals from backgrounds different to their during2022. programme ownwhilst also providing under-represented individuals with access to senior leaders to discuss development and progression opportunities. Ten senior (a) leaders undertook the programme with eight BAME and two LGBTQ+ colleagues and 100% of participants agreed that they had benefited from the programme and would recommend it. 95Taylor Wimpey plc Annual Report 2021 Governance Corporate governance: Composition, succession and evaluation continued Employer of choice continued Progress made during 2021 Future actions Employee A number of employee resource groups have been set up via Microsoft Teams Support the embedding of these resource and intranet pages for employees to engage with and support each other. networks to become integral voices of groups Each network is sponsored by a member of the GMT. influence and support for our equality, diversity and inclusion related objectives. Working parents network This network forms a community of new, existing and soon to be working parents across the Company to support each other, share experiences and be a channel for education and awareness. Embracing the change menopause network This network provides peer to peer support, raising knowledge, awareness and understanding of the menopause. Over a quarter of the attendees at the network launch webinar were men who wanted to learn more about this subject to support their colleagues and partners. Proud2B LGBTQ+ network This network helps to create an environment where LGBTQ+ colleagues can be their authentic selves. The Company’s status as a Stonewall Diversity Champion has been facilitated by the work of the network. Race and ethnicity network This network provides a safe space for employees to connect, share lived experiences to help navigate the work environment and support the Company to ensure there are no barriers to career development due to race or ethnicity. Flexible Following feedback including concerns about the culture, working hours and Focus groups with site management working for site impact that having a family could have on female employees’ ability to remain teams will be undertaken to explore the management in the site management team, there have been trials advertising part time appetite for part time roles, and consider teams Assistant Site Manager vacancies in the anticipation that more female site how they could work, how challenges managers would apply. The COVID-19 pandemic has changed employees’ could be overcome and what flexible mindsets on ways of working and spending time with their families, so this is working in site based roles could look like. an important trial to see if more part time work can be facilitated on site. 21st century leadership Ensure that line managers understand their role and responsibility in developing a more diverse and inclusive culture through the provision ofrelevant training and building awareness across the Company. Progress made during 2021 Future actions Inclusive Piloted coaching with a selection of regional Managing Directors focusing on Roll out to all regional leadership enabling leaders to explore the attributes, mindset and skills required of an Managing Directors. coaching inclusive leader. This coaching aims to enable individuals to identify and understand what behaviours and beliefs may be preventing them from being inclusive and explores how to mitigate behaviours and beliefs and create an actionable diversity and inclusion plan to drive results. Hiring and Training has been provided to all regional Directors and middle management Continue to provide training inclusion roles focusing on attracting, selecting and retaining diverse teams. This throughout 2022. training training explores the challenges in hiring and retaining diverse talent, unconscious bias, privilege and action planning to drive results. The programme has been well received and positive action has been taken, leading to an increase in the diversity of applicants. Diversity and This e-learning topic has been made available for all employees and focuses To be followed by further e-learning inclusion on ensuring everyone in the Company understands equality, diversity, modules in 2022 and 2023 to focus on e-learning inclusion, our strategy, values and their role in supporting positive change. embracing and respecting differences, bias, stereotypes, microaggressions and prejudice in actions, psychological safety and belonging, privilege and allyship. 96 Taylor Wimpey plc Annual Report 2021 Expanding our reach Develop broader recruitment channels and take positive action to expand the diversity of candidates we attract to the Company, including designing development programmes to attract and support new employees. Progress made during 2021 Future actions Future talent Recruitment processes have been adjusted to be more inclusive. We Ensure that all data collected regarding continueto use Prospects.co.uk as our main online recruitment platform applicants and those hired is reviewed as they register more candidates from minority backgrounds compared to and scrutinised to prevent any bias and any other job board. Recruitment directly from universities has been focused take positive action throughout the (a) on universities with a higher proportion of BAME students. We continue to hiring process. Expand our reach by have a balanced gender split and for 2021 46% of our graduate intake were advertising via more job boards to women and 34% of our management trainee intake were women. We have encourage further diversity of applicants. also increased the ethnic diversity of both our graduate and management trainee intake. Social media There have been focused posts on promoting the Company as an inclusive Focus on posting authentic employer and there has been an encouraging level of engagement with content,tailored to the audience to diversity and inclusion related posts. encourage engagement. Interview There has been an improvement in reaching a more diverse pool of Focus on scrutinising hiring data to conversion candidates for roles advertised, however there is further progress to be understand where further action is made in translating this into a sufficiently diverse candidate pool being required. Drive awareness and provide invited for interviews. training for interviewing managers to understand the importance and value of diversity in their team. Attraction We introduced an employer profile on Working Mums to promote the Offer a placement scheme with channels Company’s status as a flexible employer, and added further content to Womenin Construction to provide work Indeed, Glassdoor and LinkedIn profiles to promote our diversity and inclusion experience for this under-represented initiatives. Furthermore, we worked with Black Professionals in Construction to population in production based roles. (a) promote roles to an exclusively BAME candidate audience, and through the Viaour job board partnerships, we will HBF’s Careers and Skills Partnership Attract group, we can partner with target specific geographies that have a Women in Construction to provide basic career conversion training and work higher population of candidates from placements for women getting into the construction industry. underprivileged backgrounds. (a) The term BAME (Black, Asian, Ethnic Minorities) has been used when referring to demographic information related to race for reporting purposes. However, we do understand and recognise that words matter, and that this acronym could lead to a misconception that all ethnic minorities are part of a homogeneous group, when used in the incorrect context. ### Race and ethnicity network The race and ethnicity employee resource network (the network) meets on a regular ### basis and every employee, regardless of “As Sponsor for raceand background is welcome to join. ### the Race and The purpose of the network is to promote ### Ethnicity Network, awareness of race and ethnicity in the ### I am proud of workplace, be inclusive and deliver objectives ### in a light but meaningful approach and to the progress we align objectives and activities with the ### have made and Company’s values and strategy. ### the actions we This network provides employees with a safe ### environment to talk about positive and have planned for negative experiences; and enables them to ### the future.” question, challenge and support others. The network celebrates the cultural diversity of our employees, customers and communities and creates a culture of genuine inclusion Chris Carney through regular events centered around the Group Finance Director celebration of cultural diversity and by encouraging positive conversations about race and ethnicity with everyone. In addition, the network empowers our employees to reach their potential and elevates the voices of employees of all ethnicities. It also helps to identify specific barriers to retention and progression and will support the development of an action plan to combat any issues identified. 97Taylor Wimpey plc Annual Report 2021 Governance Corporate governance: Audit, risk and internal control ## Audit Committee report Audit Committee summary Main objective The Committee is chaired by Humphrey – To assist the Board in fulfilling its corporate Singer. All members of the Committee are governance responsibilities relating to the independent Non Executive Directors as Group’s risk management and internal required by the UK Corporate Governance control framework; internal audit process; Code (the Code). The Board has determined financial reporting practices including the that Humphrey Singer has recent and key accounting judgements and estimates; relevant financial experience as required and external audit process by the Code. 2022 key areas of focus Committee meetings were also attended, by | invitation, by the Chairman, Chief Executive, | – Continue to ensure that the IT operating | | --- | --- | | Group Finance Director, Group Operations | environment remains robust, supporting | | Director, other Non Executive Directors, | the business needs in a year of planned | | Group General Counsel and Company | changes to core systems and also that key | | Secretary, Assistant Company Secretary, | systems are protected against cyber and | | Group Financial Controller, Head of Internal | other threats | | Audit, Senior Internal Audit Manager, Head | – Gain assurance on required changes to | | of Tax, Head of Group Reporting, Head of | key processes and controls that may be | | Risk, Group IT Director, Head of IT Services, | affected by known legislative changes | | and the external Auditors. | impacting the industry through 2022 and | 2023, in particular the New Homes Meetings Ombudsman Service and the Future Committee members attended Homes Standard Humphrey Singer (Chair) 3/3 – Oversee the adoption of any financial (a) governance changes in 2022 resulting Scilla Grimble 2/2 from the ongoing Department for Angela Knight 3/3 Business, Energy and Industrial Strategy Humphrey Singer Robert Noel 3/3 (BEIS) consultation Chair of the Audit Committee (a) Appointed to the Committee on 1 March 2021. Membership – To gain assurance that new systems Dear Shareholder The Committee has been further enhanced and processes related to the customer On behalf of the Board, I am pleased to by the appointment on 1 March 2021 of journey are implemented within a present the 2021 Audit Committee (the Scilla Grimble, Non Executive Director. robust framework Committee) report. Scillabrings significant financial and The Committee’s review of progress against The Committee supports the Board in fulfilling risk-related experience, as described in these key areas of focus concluded that they its corporate governance responsibilities moredetail onpage 75, which has added to were all satisfactorily addressed during 2021. through the activities undertaken throughout the Committee’s skill set and further the year, as detailed opposite. enhanced the quality of its work on behalf Internal and external audit ofshareholders. The Committee continues to hold individual The main responsibilities of the Committee are summarised in the main objective above meetings with the external Auditors and with Angela Knight will step down from the and further details of the Committee’s the Head of Internal Audit, independent of Committee when she steps down from the responsibilities can be found in its Terms the Executive Directors, to discuss matters Board at the conclusion of the AGM on 26 of Reference which are available on the within its remit and any issues arising from April 2022. I would like to thank Angela for Company’s website. Following the 2021 the audits. her valued service and wise counsel during annual review of its Terms of Reference, her membership of the Committee. The audit of the 2021 financial results has it was determined that they remain been the first by PricewaterhouseCoopers Key areas of focus appropriate, in line with best practice and LLP (PwC) following shareholders’ approval reflect the Committee’s responsibilities. The Committee’s key areas of focus during of their appointment at the 2021 Annual 2021 were: General Meeting (AGM). The Committee has – To oversee the External Quality Assessment monitored their progress and is satisfied with of the Internal Audit function their performance, which will be subject to – To give continued focus to the resilience formal review, as in previous years, to identify and protection of key business systems to whether there are any areas of potential cyber and other threats improvement and to allow feedback to be shared mutually. 98 Taylor Wimpey plc Annual Report 2021 | Continuing compliance | Potential new compliance areas | The Committee will continue to ensure that | | --- | --- | --- | | Throughout the year the Committee met | A significant development during 2021 was | all applicable regulations are complied with, | | the Financial Reporting Council (FRC) | the BEIS consultation, entitled ‘Restoring | and we remain confident that the business | | guidance on Audit Committees which | Trust in Audit and Corporate Governance’. | continues to operate in a controlled and | | was incorporated into the Code. The aim | The consultation proposed a number of | well-managed way. | | of the guidance is to further improve good | reforms and new processes designed to | | | governance around the Committee’s | improve communications and engagement | | | competence; induction for new members; | between Boards, their Audit Committees and | | | audit rotation; independent assessment of | shareholders. The Committee will monitor | | | areas of judgement; and sufficiency of | the progress of these proposals andwill | | | resourcing for the Committee; all with the | report on their outcome and the implications | Humphrey Singer | | aim of ensuring that the Committee is able | for the Company at the appropriate time. | Chair of the Audit Committee | to perform its primary function of protecting 2 March 2022 shareholders’ interests in relation to the Company’s financial reporting and internal control. Committee activities during 2021 The March 2022 meeting concluded the Committee’s activities with regard to the Company’s 2021 reporting cycle which have been included in the table below. February July December March Topic Activity / review 2021 2021 2021 2022 Financial reporting Reviewed year end matters including the draft Annual Report and Accounts (and assessed the processes which ensure it is fair, balanced and understandable), significant accounting and audit issues, the draft full year results announcement and the going concern statement Reviewed the draft half year statement, including significant accounting issues, materiality and the external Auditor’s report on the statement Reviewed Accounting Issues and Accounting Standards in preparation for year end reporting Reviewed the proposed TCFD reporting External audit Reviewed the terms of business and audit engagement letter for PwC’s audit of 2021 reporting Recommended to the Board the appointment of PwC as external Auditors Reviewed PwC’s plan for the audit of the 2021 accounts and the progress of the audit to date Reviewed PwC’s report on the scope of the audit of the 2021 accounts, including key audit risks and regional checks conducted around the business Disclosed relevant audit information to the external Auditors and the required evidence in support of it Reviewed the final report from PwC following completion of the audit of the 2021 accounts Internal control and Reviewed the fraud incident and response report risk Concluded the prior year’s risk review including agreeing Principal Risks, consideration of emerging risks, and monitoring progress on mitigation actions Completed a detailed review of Principal, key and emerging risks, together with mitigation and assessment against the Company’s risk appetite Conducted the half year risk review Reviewed the viability model 99Taylor Wimpey plc Annual Report 2021 Governance Corporate governance: Audit, risk and internal control continued Committee activities during 2021 continued | | | February | | July | December | | March | | --- | --- | --- | --- | --- | --- | --- | --- | | Topic Activity / review | | | 2021 | 2021 | | 2021 | 2022 | | Committee | Reviewed the Committee’s performance against its Terms of Reference and | | | | | | | | governance | objectives for the previous year and set objectives for the next year | | | | | | | Reviewed progress on the Committee’s areas of focus Reviewed and agreed the Committee’s annual plan for the next year, designed to ensure it met its objectives and Terms of Reference Internal audit Received activity reports from Internal Audit Agreed Internal Audit’s programme of work for the next year Reviewed updates to the Internal Audit Charter Reviewed progress against Internal Audit priorities and work plan for the year Received and considered the External Quality Assessment report on the Internal Audit Department and processes and agreed the resulting actions Reviewed progress to date in achieving agreed actions flowing from the External Quality Assessment report Data and Received an update on the Company’s data and systems security, technology, systems cyber resilience and further protective measures in relation to key business security systems Distributions Advised the Board regarding the appropriateness of the proposed final dividend for 2020 Advised the Board regarding the appropriateness of the proposed interim dividend for 2021 Compliance Received an update on legal and regulatory compliance requirements across the business and confirmation that these continued to be met In carrying out these activities, the Committee relied on regular reports from Management, Internal Audit and from the external Auditors. In monitoring the financial reporting practices, the Committee reviewed accounting policies, areas of judgement highlighted by Management and the external Auditors, the going concern assumptions and compliance with accounting standards and the requirements of the Code. | Committee meetings | Committee competence | – Scilla Grimble has over 15 years’ | | --- | --- | --- | | The Committee met with the Head of | A key requirement of the FRC’s guidance on | executiveexperience in corporate finance; | | Internal Audit and with representatives | Audit Committees is that each Committee | is currently the Chief Financial Officer of | | from the external Auditors during each | member should have sufficient knowledge, | Moneysupermarket.com Group plc; | | Committee meeting in 2021, in order to | training and expertise to contribute effectively | andbrings significant financial and | | discuss any matters which either may wish | to the Committee’s deliberations. | risk-related experience. | | to raise in confidence, with only the Secretary | | – Angela Knight has broad experience | Humphrey Singer, the Committee Chair, being present. offinancial services and banking and has hasbeen a member of the Audit Committee extensive non executive director experience. since December 2015 and its Chair since Committee purpose and responsibilities – Robert Noel has considerable experience February 2018. He has extensive experience The Committee’s purpose and of the property sector and wide commercial of the financial reporting requirements of responsibilities are, in line with the experience as Chair of Hammerson plc FTSE 100 companies, of financial reporting requirements of the Code: and previously as Chief Executive of Land preparation and compliance for public Securities Group PLC. | – To establish formal and transparent | companies, and of dealing with internal and | | | --- | --- | --- | | policies and procedures to ensure the | external auditors, from his current role as | As announced on 31 January 2022, Angela | | independence and effectiveness of the | Chief Financial Officer of Belron Group and | Knight will be stepping down from the Board | | Internal Audit function and the external | from previous roles with Marks and Spencer | and the Committee at the conclusion of | | audit and satisfy itself as to the integrity of | Group plc and Dixons Carphone plc. This | the AGM. The search process for new | | financial and narrative statements. | depth of experience has given Humphrey | Non Executive Directors is underway and | | – To ensure the Annual Report and | insight intokey areas of shareholder concern | an assessment of their suitability to join | | Accounts and half year results each | andindependent experience of robustly | the Committee upon appointment will | | present a fair, balanced and | challenging and holding to account | be undertaken. | | understandable assessment of the | Management, the external Auditors and the | | The Committee is confident that its members Company’s position and prospects. Head of Internal Audit. collectively have the necessary competence – To establish procedures to manage risk, The Committee Chair is assisted on the relevant for the housebuilding sector and that oversee the internal control framework, Committee by the knowledge and the composition, balance, and expertise of and determine the nature and extent of the experience of three other Non Executive the Committee can give shareholders Principal Risks the Company is willing to Directors: confidence that the financial, reporting, risk, take in order to achieve its long term and control processes of the Company strategic objectives. aresubjected to the appropriate level of independent, robust and challenging oversight. 100 Taylor Wimpey plc Annual Report 2021 | As described in the Nomination and | It was also noted that Humphrey performs | – To continue to develop the Group’s risk | | --- | --- | --- | | Governance Committee report on page 91, | his role of Chair of the Audit Committee | processes in light of evolving best practice. | | there is a formal process of induction for | particularly effectively, with members noting | – To consider emerging risks that could | | newDirectors which includes specific | that he manages each Committee meeting in | impact on the Group’s longer term strategy. | | reference tosupporting competence in | a way that ensures a good level of debate | | To achieve these objectives, the Committee relevant Committee areas through exposure and positive challenge. undertook the following during 2021: to the appropriate areas of the Company’s Risk management and internal control – Detailed risk reviews were conducted operations and performance. Scilla Grimble’s | induction included meetings with the | The Group has an established ongoing | twice during the year, at the Committee’s | | --- | --- | --- | | Committee Chair; the Group Finance Director | process of risk management, which is | July (half year) and December (full year) | | and the other Executive Directors; members | detailed further on pages 59 to 65 and which | meetings and covered both the systems | | of the GMT; both the former and current | was in place from the start of the financial | used and the reported risks. | | external Auditors; the Head of Internal Audit; | year to the date on which the 2021 Annual | – The Committee agreed the addition of | | the IT Director; and appropriate external | Report and Accounts were approved and is | twonew Principal Risks (details on page | | bodies such as the Company’s Brokers in | consistent with the FRC’s Guidance on Risk | 61) to reflect the changing risklandscape. | | relation to financial reporting. The same | Management, Internal Control and Related | – Consideration was given to the continuing | | thorough induction process will be | Business Reporting. The Committee | impact of COVID-19 on the Principal Risks | | undertaken by any new NonExecutive | monitors the Group’s risk management and | of the Group, together with the mitigations | | Directors appointed to theCommittee. | internal control systems, including their | implemented to address the specific | | | effectiveness, on behalf of the Board and | issues identified. | | Committee evaluation | provides advice to the Board in connection | – Regular updates were received on the | | The Board evaluation for 2021, which is | with the Board’s own risk review. | continuing review of relevant historic and | | described more fully on page 92, included | | current developments and actions taken | The Committee’s objectives in relation to an appraisal of the performance of the Audit by the Company to comply with recent riskare: Committee and individually of its Chair and changes to the Government guidance on other members. – To ensure the Group’s risk profile fire safety. This included assessing and remainswithin its agreed risk appetite advising the Board on the proposed The outcome of the appraisal was that the andtolerance levels and is adequately additional provision, made and announced Committee was considered to continue to monitored and reviewed as appropriate during 2021 of £125 million, and reviewing operate effectively, with the necessary level toreflect external and internal changes. updates on usage and the balance of the of expertise and independent challenge, and – To give early consideration to the provision during the year. with no specific actions arising requiring Government’s proposals in relation to further improvement. anew regime for internal controls over financial reporting. ### Internal control Operating Framework – Primary source of the Company’s system of internal control for business operations – Approved by the GMT – Subject to regular review by the GMT and updates to ensure it remains appropriate, with any significant proposed amendments independently assessed by Internal Audit – Available on the intranet for all employees – Includes clear levels of delegated authority, responsibility and accountability Detailed Manuals – Relating to the operation of the main functions of the Company – Support the Operating Framework at a more granular level of detail Group Management Team Internal Audit – Consider and, if appropriate, approve matters requiring – Independently assess appropriateness of, and compliance with prior approval under the Operating Framework the Operating Framework and detailed manuals – Monitor adherence to the Operating Framework and detailedmanuals 101Taylor Wimpey plc Annual Report 2021 Governance Corporate governance: Audit, risk and internal control continued | – Received updates on key information | During 2021, the Group Finance Director | the resources provided by theengagement | | --- | --- | --- | | technology (IT) risks, as a consequence | hasled the GMT in undertaking a review of | team remains appropriate. | | ofthe continuing potential impact of | the Government’s developing proposals for | | The Committee intends to undertake a COVID-19 in this area. Including the further enhancement to UK companies’ formal assessment during 2022 of the resilience of the Group’s systems to internal controls through proposals set out in performance of PwC, as the external cyberattack and action taken to maintain the BEIS consultation document for reforms Auditors, in relation to the audit work carried security of systems and data. to the UK’s corporate governance, audit out in2021. This will include a questionnaire – Advised the Board in its assessment of andreporting regime. Since it is generally being distributed to the Board and key emerging risks, including potential velocity expected that these will become legal or stakeholders in the audit process to evaluate and impact on the Group’s longer term regulatory requirements to some extent, the the effectiveness of the external audit strategy, further details of which can be Company has been undertaking necessary process. | found on page 60. | and appropriate preparatory actions to | | | --- | --- | --- | | – Oversaw the further embedding across | enable it to comply within the expected time | In addition, the Committee considered | | theCompany of improvements identified | frame for changes. These actions have been | whether PwC had appropriately challenged | | inlast year’s Audit Committee report in | monitored by the Committee during 2021 | Management estimates and judgements. The | | thearea of risk, relating to the processes | and will continue to be monitored into 2022, | external Auditor’s report (starting on page | | for identifying, assessing, monitoring, | when we expect to be able to report in | 128) details the key matters that were | | reporting, and managing the residual | greater detail as to their scope and impact | considered as part of the year end audit. This | | elements of risk, including the enhanced | upon the Company; its assurance | includes details of the procedures performed | | reporting of action plans and target risk | processes; and its future financial reporting. | by PwC to assess the estimates and | | for the identified key risks. Key further | | judgements made by Management. | At its meeting in March 2022, the Board, enhancements during 2021 were the having conducted its own review and after In particular the Committee noted during issue of a standalone risk management reviewing more detailed assessments from thecourse of the audit that the external manual and the introduction of risk the Audit Committee, remained satisfied that Auditors challenged Management’s management onboarding. the systems of internal control continued to judgements and assertions on the The Board holds a formal risk review once be effective in identifying, assessing, and following matters: each year, with detailed updates provided at ranking the various risks facing the – Margin recognition and site forecasting two Audit Committee meetings during the Company; and in monitoring and reporting – Cladding fire safety and leasehold year and also routinely considers risk at each progress in mitigating their potential impact provisions Board meeting, as appropriate. It makes its on the Company. The Board also approved – Defined Benefit Pension valuations assessment of risk after overseeing, with the statement of the Principal Risks and In relation to each of these judgements the advice from the Committee, a bottom-up uncertainties set out on pages 61 to 65. external Auditors confirmed that the and top-down review of risk in all areas of External Auditors approach adopted by Management in the business, including taking account of accounting for these in the financial environmental, social and governance Re-appointment of PwC statements was appropriate. | considerations, including climate change, | Last year’s Annual Report advised that the | | | --- | --- | --- | | over various time horizons. The assessments | Company’s external Auditors were to change, | Based upon its interim assessment, as set | | use an established methodology and include | in accordance with statutory legislation and | out above, the Committee recommended to | | regularly reviewing the effectiveness of | guidance issued by the Financial Reporting | the Board, which in turn is recommending to | | theGroup’s system of internal control in | Council (FRC) as to the maximum duration | shareholders in Resolution 10 at the 2022 | | providing a responsible assessment and | ofan external auditor’s appointment. Full | AGM (on page 185), that PwC should be | | mitigation of risks. Action to mitigate the | details of the tender process and the | re-appointed as external Auditors to the | | effect of each risk is led by the Chief Executive | proposal to appoint PwC were set out in | Company. | | in conjunction with the relevant member of the | the2020 Annual Report and Accounts, which | | The Company will of course keep the matter Group Management Team (GMT). can be found on the Company’s website. under regular review, taking into account the | The Board’s monitoring of risk, its | That proposal was subsequently approved | annual performance review to be conducted | | --- | --- | --- | | management and reporting, covers all | by shareholders at the Company’s 2021 | by the Committee. The recommendation of | | controls, including financial, operational, | AGM and PwC succeeded the Company’s | PwC was free from influence by a third party | | compliance and assurance systems. | former external Auditors, Deloitte LLP | and no contractual term of the kind | | | (Deloitte), for the audit of the Company’s | mentioned in Article 16(6) of the Audit | Those systems cannot eliminate risks but 2021 and future reporting. Regulation has been imposed on the rather seek to manage both the likelihood of Company whereby there would be a their occurrence and the extentof their The Committee considers that the relationship restriction on the choice to certain categories impact and can only provide reasonable and with PwC is well established and is satisfied or lists of audit firms in the Company’s not absolute assurance against material with the effectiveness of the overall external selection of its external auditors. misstatement or loss. audit process. PwC’s performance during the handover of responsibilities from Deloitte, The Principal Risks facing the Company and Appointment of the external Auditors for and in undertaking the first full year’s audit, the Group, as assessed by the Board, are non-audit services for 2021, has been kept under regular review set out on pages 61 to 65 together with The Committee has a formal policy, reviewed by the Committee and reported to the Board information on the mitigations for each risk. on a regular basis, as to whether the as appropriate. | The Committee also oversees the actions | | Company’s external Auditors should be | | --- | --- | --- | | being taken to monitor IT initiatives which | As 2021 was the first year of PwC’s | employed to provide services other than | | aim to either directly protect against and | appointment as external Auditors, a full | audit services. In line with the Code, the | | reduce the risk of cyber-related type attacks | evaluation of their performance was not | Committee has regard to the relevant | | and fraud; support and enhance the current | performed during 2021 and instead the | regulation and ethical guidance regarding the | | IT environment including data protection; or | Committee considered the key work | provision of non-audit services by PwC. | | that are crucial in their contribution to key | performed by PwC to date and confirmed | | A review of the policy has been undertaken business initiatives aiming to enhance the that the audit process continues to be and it was confirmed that the policy is in experience of customers, suppliers effective and the quality and sufficiencyof accordance with the Revised Ethical andemployees. 102 Taylor Wimpey plc Annual Report 2021 | Standard 2019 (the Standard) issued in | Internal Audit report is provided to both the | Practice for effective internal audit in the | | --- | --- | --- | | December 2019 by the FRC. The Standard | Management responsible for the area | private and third sectors. The finding of this | | limits the circumstances in which an audit | reviewed and the GMT. These reports outline | independent evaluation was that Internal | | firm carrying out statutory audits of public | Internal Audit’s opinion of the management | Audit conforms to the CIIA’s professional | | interest entities (including the Company, as a | control framework in place together with | standards as set out in the International | | FTSE 100 listed company) may provide | actions proposed or made, as appropriate, | Professional Practice Framework. Continuous | | defined services as set out in the Standard. | where improvements are recommended. | improvement initiatives were agreed with the | | | TheChief Executive, the GMT and senior | Committee and progressed subsequently to | The Board, acting on guidance from the management consider the reports on a ensure the Internal Audit function continues Committee following its review of the regular basis and are responsible for to meet both current best practice and the continuing effectiveness of this policy, is ensuring that improvements are made as evolving needs of the Group. satisfied that it meets the Standard, and will agreed. A database of audit be conducive to the maintenance of good recommendations and improvement Cyber security governance, best practice and auditor initiatives is maintained. Follow-up and An area newly recognised as a Principal Risk independence and objectivity. | | escalation processes ensure that such | during 2021 was the potential vulnerability of | | --- | --- | --- | | PwC undertook non-audit services in the | improvements are implemented and fully | the Group’s IT systems to thevarious forms | | form of assurance work carried out in | embedded in a timely manner. Summaries | of cyber attack. This received considerable | | connection with the announcement of the | ofall Internal Audit reviews and other key | focus during 2021, as a result of being given | | Company’s 2021 half year results, which is | activities and resulting reports are also | an enhanced relative risk rating, as explained | | of direct benefit to shareholders although it is | provided to the Committee for review and | in more detail on page 65. The Committee | | not regarded as audit work for reporting | discussion. | reviewed throughout the year the plans and | | purposes. PwC also made available access | | progress in mitigating against its occurrence | The Company belongs to and participates to their subscription service providing online and impact. inindustry-wide forums and other initiatives technical resources such as factual updates aimed at combating fraud within the and changes to applicable law, regulation, Read more about cyber security risks and our housebuilding and construction industry. response and mitigation processes on pages 61 and accounting and auditing standards, at a and 65. notional value of £2,000. The Internal Audit function also reviews proposed related party transactions, The Committee recognises and supports the including employees’ house purchases importance of the independence of external fromthe Company, to provide assurance auditors. It reviewed PwC’s performance of that the formal policy and proper procedures non audit services during 2021 and is are followed. satisfied that it did not, and will not going | forward, impair the independence of the | Internal Audit works with the Company | | --- | --- | | external Auditors. As a result, the value of | Secretariat Department to consider any | | non-audit services work by PwC was | longer-term revisions to the governance | | £0.1million in 2021 (2020: £0.2 million by | processes and working environment. The | | former external Auditors, Deloitte) which | learnings and improvements from this activity | | represents approximately 13% of the audit | are being woven into the ongoing control | | fee as set out in Note 6 to the Accounts on | and risk processes and this activity will | | page 149. | continue through 2022. | An independent evaluation of the Internal Internal Audit Audit function was carried out in 2021 by the Internal Audit’s primary role is to support Chartered Institute of Internal Auditors (CIIA) theBoard and the GMT to protect the on behalf of the Committee and included assets, reputation and sustainability of the consideration of the recommendations Group. The function is led by the Head of included in the Internal Audit Code of Internal Audit who directly reports to the Chair of theCommittee, with a secondary reporting line to the Group Finance Director, and has regular direct contact with the Chairman of the Board, the Chief Executive and other Executive Directors, as required. The reporting line to the Chair of the Committee protects the function’s independence. In addition, the Chair of the Committee, and the independent evaluation carried out during 2021 described below, each assessed the independence ofthe Head of Internal Audit and confirmedthat she has maintainedindependence. 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 strategy and its key risks. Following each review, an 103Taylor Wimpey plc Annual Report 2021 Governance Corporate governance: Audit, risk and internal control continued | Going concern | drafting them, which involves the Company’s | Defined Benefit Pension valuations | | --- | --- | --- | | The Group has prepared forecasts, including | Investor Relations, Company Secretariat, and | The Committee reviewed the funding position | | various sensitivities, taking into account the | Finance functions, with guidance and input | of the Taylor Wimpey Pension Scheme and | | Principal Risks and uncertainties identified on | from other relevant functions and external | discussed and agreed the market-based | | pages 61 to 65. Having considered these | advisers. It ensured that there is a clear and | assumptions used to establish the net | | forecasts, the Directors remain of the view | unified link between this Annual Report and | pension deficit recognised on the balance | | that the Group’s financing arrangements and | Accounts and the Company’s other external | sheet as at 31 December 2021. | | capital structure provide both the necessary | reporting, and between the three main | | Cladding fire safety and leasehold provisions facilities and covenant headroom to enable sections of the Annual Report and Accounts. The Committee reviewed Management’s the Group to conduct its business for at In particular, the Committee: assessment of the costs to bring all Taylor leastthe next 12 months. The Committee – Reviewed all material matters. Wimpey apartment buildings constructed in reviewed the forecasts and the Directors’ – Ensured that it correctly reflected the twenty year period to January 2021 into expectations based thereon and agreed theCompany’s performance in the line with current EWS1 guidance, covering thatthey were reasonable. Accordingly, reportingyear. cladding and the whole of the external wall the consolidated financial statements of the – Ensured that it presented a consistent systems including balconies. The Committee Company and of the Group have each been message throughout. also reviewed updates on the progress of the prepared on a going concern basis. – Ensured that it correctly reflected the rectification of buildings identified with Company’s business model. Aluminium Composite Material cladding, Read more about our Principal Risks on pages 61 to 65. – Ensured that it correctly described the together with utilisation and estimates of the Company’s strategy. remaining provision. In addition the Viability Statement – Ensured that it fairly reflected the impact Committee reviewed the level of applications The Viability Statement is designed to be a received in respect of the Ground Rent todate, and the extent of the continuing longer term view of the sustainability of the Review Assistance Scheme, the utilisation of impact, of the COVID-19 pandemic Company’s strategy and business model the provision and the outcome of the CMA ontheCompany’s business, position, and related resourcing, in light of projected investigation, and the assessment of the andprospects. wider economic and market developments. costs of the undertakings entered into. – Considered whether it presented the The Committee considered whether there information in a clear and concise should be any change to the five year period manner,illustrated by appropriate KPIs, chosen for the Statement but remained of the tofacilitate shareholders’ access to opinion that this continued to be appropriate, relevant information. taking into account the balance sheet strength and confirmation from the Executive Significant items Directors that this period continues to broadly The items below are those that the align to the development cycle for new land. Committee has considered in discharging The Committee also reviewed the Executive itsduties and in considering the financial Directors’ expectations, the criteria upon reporting of the Group: which they were based, and the sensitivities Margin recognition and site forecasting applied, including how these linked to the | Principal Risks faced by the business, and | The cost allocation framework used across | | | --- | --- | --- | | agreed that they were reasonable. | the Group controls the way in which | | | | inventory is costed and allocated across | Recommendation | | The statement appears on pages 70 to 71 | each development. It also ensures that | | ### to the Board together with details of the processes, anycosts incurred in excess of the original assumptions, and testing which underpin it. The outcome of the above processes, budget are recognised appropriately as the site progresses. together with the views presented by PwC, Annual Report and Accounts 2021 was that the Committee recommended, and Fair, balanced and understandable The Committee reviewed reports from in turn the Board confirmed, that the 2021 Management in relation to areas of the A key requirement of our financial Annual Report and Accounts, taken as a business recognising cost excesses, and statementsis that they are fair, balanced whole, is fair, balanced and understandable, also reviewed the work undertaken by PwC andunderstandable, and that they include and provides the necessary information for which included testing of the Group-wide the information necessary for shareholders shareholders to assess the Company’s controls to monitor cost allocation. The toassess the Group’s position, performance, position, performance, business model Committee gave careful consideration to the business model and strategy. and strategy. judgements and assumptions involved, The Committee monitors the integrity of challenging Management where appropriate. theGroup’s reporting process and financial ### Following these reviews, together with Statement of compliance management, and reviews in detail the work enquiries of the GMT and the external of the external Auditors and any significant The Company has complied throughout Auditors, the Committee concluded that financial judgements and estimates made the reporting year with the provisions of there continues to be appropriate systems byManagement. The Statutory Audit Services for Large and internal controls in place, which Companies Market Investigation (Mandatory It considers the output from the above and ensured that consistent principles were Use of Competitive Tender Processes reviews the full year and half year financial applied, the treatment and presentation on and Audit Committee Responsibilities) statements before proposing them to the the income statement of the costs incurred Order 2014. Board for consideration. by the business were appropriate, and that The review of the Company’s Annual Report the external Auditors agreed with the and Accounts took the form of a detailed conclusions reached. assessment of the collaborative process of 104 Taylor Wimpey plc Annual Report 2021 ## Remuneration Committee report | Remuneration Committee | Main objectives | | --- | --- | | summary | – Establish and maintain formal and | | The Committee is chaired by Gwyn Burr. | transparent procedures for developing | | On 31 December 2021, the Committee | policy on executive remuneration to deliver | | consisted of three Non Executive Directors | the Company’s strategy and value for | | and the Chairman of the Board. Committee | shareholders; and to agree, monitor and | | meetings were also attended, by invitation, | report on the remuneration of Executive | | by the Chief Executive, Group General | Directors and senior executives | | Counsel and Company Secretary, Group HR | – Review wider workforce remuneration and | | Director, Head of Reward and Pensions, | other policies in accordance with the 2018 | | Assistant Company Secretary and | Corporate Governance Code (the Code) | representatives from Korn Ferry. 2022 objectives Meetings Committee members attended – Determine the remuneration arrangements for the incoming Chief Executive Gwyn Burr (Chair) 5/5 – Review the existing Remuneration (a) | Irene Dorner | | 4/5 | Policy and submit the revised Policy | Gwyn Burr | | --- | --- | --- | --- | --- | | | (b) | | for shareholder consideration at the | Chair of the Remuneration Committee | | Jitesh Gadhia | | 4/4 | | | 2023 Annual General Meeting (AGM) (a) Angela Knight 4/5 – Review wider workforce remuneration arrangements and take into account as (a) Irene and Angela were unable to attend one of the part of the Remuneration Policy review additional meetings outside the Committee’s – Ensure there is an effective induction ordinary meeting calendar. Both were consulted in advance of the meeting. process for the new Remuneration (b) Appointed to the Committee on 1 March 2021. Committee Chair effect from 1 April 2022 and will continue During 2022 we will be reviewing the Dear Shareholder to benchmark key roles throughout the current Policy and will be seeking shareholder As Chair of the Remuneration Committee year when necessary. Chris Carney, our approval for a new Policy at our 2023 AGM. (the Committee), I am pleased to present Group Finance Director, will also receive As part of this review, we will ensure that our our 2021 Directors’ Remuneration Report this 3% increase. Policy continues to address the factors in on behalf of the Board. This Report Provision 40 of the Code and that reward is We are pleased to have increased several provides detailed disclosures in relation clearly linked to the successful delivery of elements of our benefits provision that are to our Directors’ remuneration and an our long term strategy. important to our employees, including the overview of wider workforce remuneration introduction of new incentive arrangements, for the year ended 31 December 2021. Wider workforce remuneration enhancements to our Maternity Policy, our We continue to review the remuneration wellbeing provisions, and other benefits that Policy arrangements for the wider workforce and assist our employees financially. We were Our current Remuneration Policy (the Policy) take these into account when considering delighted that the Living Wage Foundation was approved at the 2020 AGM with 98.6% remuneration arrangements for the Executive accredited Taylor Wimpey as a Living Wage of shareholders voting in favour. Despite the Directors and senior management. We have Employer in November 2021. unprecedented challenges to the business reviewed the performance measures in the posed by the COVID-19 pandemic, we have During the year I attended three National various annual bonus schemes available continued to operate the Policy flexibly and Employee Forum (NEF) meetings in my across the business and we are confident that we are satisfied that it remains appropriate capacity as Employee Champion. At one they drive behaviours that are consistent with for the third and final year of this policy period. meeting I used this as an opportunity to seek our purpose, culture, values and strategy. Other than discretion being used to treat feedback on behalf of the Committee on We have continued to support our the Chief Executive as a ‘good leaver’ within wider workforce remuneration arrangements employees through the pandemic and have the Policy for the purpose of determining and also to explain how the Executive regularly reviewed staff salaries through incentive plan pay outs, no discretion was Director remuneration arrangements align benchmarking exercises, resulting in salary used by the Committee during the year to with the wider workforce. increases for 1,307 employees in addition to adjust incentive outturns. We have taken the opportunity to expand our the 2% annual salary increase in 2021 (as at disclosures in this area and more information 31 December 2021 there were 5,144 can be found on pages 121 to 123. employees). We have also approved a 3% salary increase for all eligible employees with 105Taylor Wimpey plc Annual Report 2021 Governance Corporate governance: Remuneration continued # Executive Director remuneration decisions and outcomes # Executive Incentive Scheme (EIS) As detailed on page 2, we delivered an excellent performance in 2021. Throughout 2021 we experienced strong demand for our homes underpinned by continued low interest rates and good mortgage availability. The business performed very well in the year, with significant improvement in operating margin, as we focused on optimising sales prices, alongside increased volume, driving strong growth in operating profit. Importantly our excellent performance was not just financial but also in delivering quality homes and in our levels of customer service. The quality of our homes, as recognised through the independent NINBC Construction Quality Review score, is an area where we continue to lead the volume industry. We are also delighted to be recognised as a five-star builder once again in the independent HBF customer satisfaction survey. Subsequently, the outturn for the 2021 EIS is 95% of the maximum following the stretch target being achieved for four of the five measures. The Committee has considered the Company's performance against the targets and the business performance more generally and is satisfied that the payment received by the Executive Directors is aligned with the Company's performance during the year and also the bonus outturns for the rest of the business. Full disclosure of the targets can be found on page 108. # Performance Share Plan (PSP) The PSP awarded in 2019, measuring performance in the 2019 to 2021 period, will vest at 22.1% following the achievement of four of the five measures above threshold performance. The pandemic, and specifically financial performance in 2020, had a significant impact on the outcome of the PSP. When approving this outcome, the Committee reviewed the performance measures and respective targets for the 2019 Award, and is satisfied that this represents an appropriate outcome based on the challenging business environment over the three year period. # Outcomes linked to performance The Committee has reviewed the EIS and PSP outcomes and consider that they accurately reflect 2021 performance therefore the performance targets were not adjusted during the year and nor was Committee discretion used to adjust the formula-driven outturn. # Salaries As disclosed in the 2018 Directors' Remuneration Report, at the time of his appointment the Committee initially set Chris Carney's salary below that of his predecessor and positioned it between the lower quartile and median of comparable market data, recognising that this was his first appointment as a pro Director. The Committee also stated then that it intended to keep his salary under periodic review as he developed further into the role. Given the continued impact of the pandemic providing material uncertainty at the time of the 2020 and 2021 salary reviews, a prudent approach was taken in respect of Chris's salary, with inflationary salary increases cancelled in 2020 and then an inflationary increase of 2% in 2021, in line with the other Executive Directors and the wider workforce. The Committee announced in the 2020 Directors' Remuneration Report that it would undertake a review of Chris Carney's salary during 2021. The Committee recognised the development of Chris's role since his appointment, particularly where it has broadened to support the revised Divisional Chairman structure introduced in 2020. This has been particularly focused on cost control, land strategy and our data management systems to further enhance our customer strategy. More generally the Committee considered that this increase was appropriate to recognise his strong performance over the three years since his appointment and concluded that Chris has been performing in line with an experienced ITSE director for some time now. Given the more stable corporate and economic outlook in 2021, the Committee decided in the summer that it was the right time to move his base salary towards the desired mid-market level. The Committee therefore determined that his salary should be increased from £447,372 to £490,000 with effect from 1 July 2021. We consider that this represents a sensible progression of Chris's base salary, effectively on a phased basis since his appointment in 2018, and having set the package at the desired mid-market level we anticipate that future increases will ordinarily be in line with the percentage increase for the wider workforce. # Chief Executive succession On 8 December 2021, we announced that Pete Redfern, our Chief Executive, would be leaving the business once a suitable candidate had been identified and a full handover has taken place. Following a thorough recruitment and selection process, Jennie Daly, our Group Operations Director, was selected to take over from Pete as Chief Executive of Taylor Wimpey, effective from 26 April 2022 (the date of the 2022 AGM). Pete will step down from the Board at this point and will remain available to the business to ensure an orderly transition until his notice period ends on 8 December 2022. The Committee, at the request of the Board, reviewed and approved the remuneration arrangements for Pete on his departure. Pete will be treated as a good keeper in line with our shareholder approved Policy for the purpose of incentive plan pay outs. He will be eligible to receive a pro rata bonus for 2022 for the proportion of the year he will be actively employed, up to the AGM, subject to the achievement of the performance conditions measured at the end of the year. Outstanding PSP Awards will be pro-rated as appropriate, and will be capable of vesting, at the normal time and subject to the achievement of performance conditions and the requirement to retain vested shares for two years. Moreover, he will be required to retain a shareholding in the business worth the equivalent to 200% of his base salary, for two years after his employment ceases. His contractual entitlements, including base salary, pension and benefits are payable in full until the expiry of his notice period on 8 December 2022. Further details of his remuneration arrangements can be found on page 115. The Committee also considered the appropriate remuneration package for Jennie Daly when she assumes the role of Chief Executive in April 2022. The package approved, which is in line with the Policy, provides a salary of £750,000 with a pension allowance in line with the rate applicable to the majority of the workforce, at 10% of salary. The annual bonus opportunity and PSP opportunity will be 150% of salary and 200% of salary, respectively, as is applicable for each Executive Director. Full details can be found on pages 115 to 117. # Chairman and Non Executive Director fees During the year the Committee, with the assistance of Korn Ferry, reviewed the Chairman's fee. Recognising that the fee level had not been reviewed since July 2018 (and Irene Donner was brought into the role on the same fee as her predecessor) and that the time commitment required for the proper performance of the role over this period has significantly increased, the fee was increased from £325,000 to £335,000 effective from 1 July 2021. The Board (excluding the Non Executive Directors) also reviewed the fee level for the Non Executive Directors with the assistance of Korn Ferry. Again recognising that the base fee had not been reviewed since 2018 and the material increase in Non Executive Director time commitment required since then, the base fee level was increased from £60,000 to £65,000 effective from 1 July 2021. 106 Taylor Wimpey plc Annual Report 2021 Shareholder engagement delivering an operating profit margin of Policy review during 2022 21-22% in the medium term. The customer 2022 is the last year for the current Policy, We consulted with our major shareholders measure requires us to retain our strong therefore the Committee, led by Jitesh, will be (representing almost 50% of our share longer term customer scores. conducting a thorough review of the Policy register) and shareholder representative bodies during the year in respect of the during the year ahead. As part of this review, Alignment to strategy salary for the Group Finance Director, the Committee will consult with shareholders The Committee considered the performance and employees to gain input on any proposed performance targets and weightings for measures and targets for the EIS and PSP to changes. The Policy will be tabled for approval variable pay arrangements in 2022 and the ensure they are aligned with the key by shareholders at our 2023 AGM. terms of the Chief Executive’s exit package performance indicators (KPIs) and strategic when he leaves the business in 2022. priorities being used across the business. Closing remarks Feedback received from shareholders was positive and we thank them for their support. As set out in the Strategic report on pages 9 On behalf of the Committee, I would like to to 11, our focus remains on returning the thank our shareholders for their continued Irene Dorner, in her capacity as Chairman of business to a 21-22% operating profit support during the year. On a personal note, the Board, continued to engage with margin in the medium term, increasing cash I would like to also express my gratitude shareholders during 2021, as noted on page returns for shareholders over the long term for the support and engagement from our 84. As a member of the Committee, Irene and delivering sustainable growth. shareholders and also our employees, was also able to engage with shareholders that has taken place during my tenure as on remuneration related matters, and provide The measures also support our commitment Chair of the Remuneration Committee. feedback to the Committee. to run the business in the long term interests of all our stakeholders. The performance Looking ahead at 2022 measures place a focus on delivering quality homes, providing the highest level of EIS customer service and minimising the impact We believe that we are now sufficiently we have on climate change and protecting advanced in relation to the Board’s the planet for future generations. environmental, social and governance (ESG) Gwyn Burr strategy to enable an environmental measure Approach to executive pension provision Chair of the Remuneration Committee to be included in the 2022 EIS and have During the year the Committee reviewed our included an environmental measure for 10% 2 March 2022 Policy approach to reducing the Executive of the overall annual bonus opportunity. Directors’ pensions over time so that they will | In setting an environmental measure this | align to the percentage rate applicable to | | --- | --- | | year, our principal objective for the end of | most of the workforce by 1 April 2024, which | | 2022 will be the preparation and approval by | was agreed in line with guidance at that time. | the Board of a credible ‘Road to Zero At our 2020 AGM over 98% of shareholders Carbon Plan’ which will be submitted to the voted in favour of our Policy, which set out Science Based Targets initiative for approval, the above approach. At our 2021 AGM over leading to a published commitment to 97% of shareholders approved the Directors’ achieve net zero carbon emissions for our Remuneration Report, which reiterated this direct operations. In addition, for this year we approach to pensions alignment. have also incorporated a tangible and stretching target for a reduction in our As referenced above, and in line with the carbon intensity. Policy, on appointment as Chief Executive Jennie Daly will receive a pension provision in Our continued focus on build quality and line with the rate applying to the majority of customer service has enabled us to further the workforce, of 10% of salary. The pension raise standards whilst maintaining the right rate for the Group Finance Director will level of production and to retain the overall continue to step down to this workforce rate split between financial measures (60%) and in line with the previously stated approach. non-financial measures (40%), we have reduced the weighting on these two Committee changes elements from 20% to 15% each, to I will be stepping down from the Board accommodate the new ESG measure. following the conclusion of the 2022 AGM. Jitesh Gadhia will succeed me as Chair of PSP the Remuneration Committee. Jitesh is an The PSP performance measures are experienced Remuneration Committee Chair unchanged for the 2022 Award cycle to and has provided invaluable input into the reflect current market conditions, business Committee’s discussions since he joined the forecasts for the Group, and progression Committee in March 2021. Angela Knight will towards our strategic priorities. We are also step down from the Board and the confident that these continue to provide a Committee at the conclusion of the AGM and good overall balance in assessing our longer I’d like to take the opportunity to thank her term performance. The target range for each for her valued counsel over the last five measure is set out on page 117. The years. Robert Noel will join the Committee financial measures represent what would be from 26 April 2022 and will add to the a record year for the Company and Committee’s skill sets and further enhance significant progression towards our target of the quality of its work. 107Taylor Wimpey plc Annual Report 2021 Governance Corporate governance: Remuneration continued ## Remuneration at a glance EIS in respect of 2021 (audited) The chart below shows the performance against the 2021 EIS measures. Summary of targets % of Measure Result maximumWeighting Entry (10% vesting) Target (50% vesting) Stretch (100% vesting) Operating profit (£) 35% £700m £780m £820m £828.6m 35% Operating profit margin (%) 15% 17% 18% 19% 19.3% 15% Cash conversion (%) 10% 170% 180% 190% 199.4% 10% Build quality 20% 4.25 4.4 4.5 4.67 20% Customer service 20% 90% 91% 92% 91.5% 15% Total 100% 95% One third of any EIS amount payable will be deferred into shares for three years. 2019 PSP Award (audited) The 2019 PSP Award performance period ended on 31 December 2021 and the chart below shows the outcome. Threshold Maximum | | Performance | | | % of | | --- | --- | --- | --- | --- | | Measure | | achieved | maximumWeighting (20% vesting) (100% vesting) | | | TSR v FTSE 100 20% Median Upper quartile | TW: 25.7% | | 5.8% | | Median: 20.3% (a) TSR v peer group 30% Median Upper quartile TW: 25.7% 0% Median: 39.9% RONOA 20% 26% 33% 27.9% 8.3% (b) (2021) Operating profit margin 15% 19% 23% 19.3% 3.9% (2021) Cash conversion 15% 70% 80% 70.9% 4.1% (b) (2019-2021) Total 100% 22.1% (a) The peer group is comprised of Barratt Developments, Bellway, Berkeley Homes, Countryside Partnerships, Crest Nicholson, Galliford Try, Persimmon, Redrow and Vistry Group. (b) The RONOA and cash conversion measures were assessed on the basis that the impact of the equity raise in 2020 was neutralised. 108 Taylor Wimpey plc Annual Report 2021 Executive Directors’ total remuneration (audited) The chart below compares the 2021 single figure for total remuneration for each of the Executive Directors with the equivalent figure for 2020. During 2020, and in light of the COVID-19 pandemic, the Executive Directors took a voluntary 30% reduction in base salary and pension from 1 April 2020 to 31 July 2020 and the 2020 EIS was cancelled. remuneration figure (£’000) | 2021 | | | | | | 40% 46% 14% | | | | £2,764 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 2020 | | | | | 90% 10% | | £1,135 | | | | | 2021 | | 40% 46% 14% | | | | | | | £1,427 | | | 2020 | 93% | | 7% | £517 | | | | | | | | 2021 | 41% | | | | | 45% 14% | | £1,278 | | | | 2020 | 94% 6% £475 | | | | | | | | | | £0 £3,000£2,000£1,000 Fixed pay EIS PSP Proposed application of the Policy in 2022 Medium Policy term element Award timeline Purpose Measure goals KPI Stakeholders Year 1 Year 2 Year 3 Year 4 Year 5 To reward the Operating profit Executive achievement of stretching Incentive objectives that support Operating profit Scheme the Company’s annual margin (Annual and strategic goals Cash conversion bonus) (EIS) Build quality Customer service Environmental To assist with retention TSR v peer group Variable payFixed pay Long Term and the incentivisation Incentive and motivation of senior RONOA Plan (PSP) executives to deliver long term returns to Operating profit shareholders margin Customer service Base To recruit and reward executives of a suitable salary calibre for the role and duties required Benefits To provide a competitive Executive Single total package of benefits to Director assist with recruitment and retention of staff Pete Redfern Chief Executive Pension To provide competitive retirement benefits to assist with recruitment Chris Carney and retention of staff Group Finance Director Performance period Deferral / holding periods Jennie Daly Group Operations Read more about our medium term Read more about our KPIs on Read more about our stakeholders Read more about our financial Director goals on page 9 pages 24 to 27 on pages 34 to 47 definitions on page 71 109Taylor Wimpey plc Annual Report 2021 Governance Corporate governance: Remuneration continued # Introduction This Report has been prepared by the Committee on behalf of the Board. The 2021 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 AGM on 23 April 2020, describing the framework within which the Company remunerates its Directors. - Annual Report on Remuneration: this sets out how the Policy was applied during 2021 and how it is proposed to be implemented during 2022. The Directors' Remuneration Policy (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 2008 (the 'Regulations'). Where required, data has been audited by PwC and this is indicated. # Remuneration Policy Report # Remuneration Policy Report (Unaudited information) Our Policy was subject to a binding shareholder vote at the AGM of the Company on 23 April 2020 and was approved by over 98% of shareholders who voted. The three year life of that Policy will expire at the 2023 AGM when we will be required to seek binding shareholder approval for a new Policy. The Policy has been included within this report for readers to assess how we have implemented remuneration arrangements during 2021 and how we intend to implement arrangements in 2022. Factual and implementation data has been updated where relevant (e.g. scenario charts and details of service contracts). The Policy, as approved by shareholders, can be found on pages 112 to 120 of the 2019 Annual Report and Accounts. 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 in this report and is also available to view on the Company's corporate website. 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 can be found on page 121. # 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 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 that is aligned with the long term interests of the Company's shareholders. This alignment is achieved through a combination of: - External 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 Awards and deferred EIS amounts. - Post-employment shareholding requirement. The above requirements ensure that a significant percentage of the overall remuneration package of our Executive Directors and senior management is subject to performance. With all packages for our Executive Directors substantially geared towards meeting challenging targets set under the EIS and PSP, the Committee believes that the pay and benefits of its # Illustration of the Remuneration Policy for 2022 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. ![img-17.jpeg](img-17.jpeg) 1. Salary is £842,247 and £901,025 for Jennie Daly and Chris Carney. Jennie Daly's salary is pro rata between her salary as Group Operations Director and Chief Executive. Chris Carney's salary is the salary he will receive in 2020. 2. Benefits are £41,928, and £20,581 for Jennie Daly and Chris Carney, respectively, being the 2021 value. 3. Pension is 10% for Jennie Daly and 14% of salary for Chris Carney. 4. For the EIS the target and maximum award is 75% and 150% of base salary, respectively, as applicable for 2022. 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, as applicable for 2022. 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' per chart is assumed to increase by 95% across the performance period. 110 Taylor Wimpey plc Annual Report 2021 Executive Directors and senior management that ensures they will not raise ESG risks by account when considering the overall adequately balance reward and risk. inadvertently motivating irresponsible remuneration structure and as part of its behaviour. More generally, the Committee overall discretion. In line with best practice, the Committee under its Terms of Reference may, where it structures the incentives for Executive considers appropriate, take ESG matters into Directors and senior management in a way Our Remuneration Policy Purpose and Performance Element linktostrategy Operation Maximum targets Salary To recruit and reward Salaries are normally reviewed annually to ensure that The maximum annual salary increase will not Company and executives of a suitable they remain positioned appropriately. There is no normally exceed the average increase which individual calibre for the role and automatic entitlement to an increase each year. applies across the wider workforce. performance are duties required. However, larger increases may be awarded factors considered Salary level and increases take into account in certain circumstances including but not when reviewing the following: limited to: salaries. – The performance, role and responsibility of each – Increase in scope or responsibilities individual Director. of the role. – The economic climate, general market conditions – To apply salary progression for a newly / and the performance of the Company. recently appointed Director. – The level of pay awards across the rest of – Where the Director’s salary has fallen the business. below the market positioning. – Salary levels in comparably-sized companies and other major housebuilders. Chairman The Chairman and Non Fees consist of a single consolidated fee for the Aggregate annual limit of £1 million imposed N/A Executive Directors’ fees Chair, an annual fee for the other Non Executives and by the Company’s Articles of Association. ofthe Board should be in line with additional fees for roles such as the Chair of the Audit and Non recognised best practice Committee, Chair of the Remuneration Committee Executive and be sufficient to attract and Senior Independent Director. Director fees and retain high calibre Set by reference to the responsibilities undertaken by non executives. the non executive, taking into account that each Non Executive Director is expected to be a member of the Nomination Committee and / or the Audit Committee and / or Remuneration Committee. Reviewed periodically but generally annually and 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. Other Provides a competitive The main benefits offered: The value of a company-provided car or a N/A package of benefits to cash allowance in lieu is of a level benefits, – Company-provided car or a cash allowance in lieu. assist with recruitment appropriate to the individual’s role and is including – Provision of a fuel card. and retention of staff. subject to review from time to time. The fuel benefits- – Life assurance. card covers the cost of all fuel, for both in-kind – Private medical insurance. business and personal use. – A 5% discount on the price of a new home Life assurance of up to four times basic salary. acquired from the Group. 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. Executive Rewards the achievement EIS awards are determined by the Committee after The maximum EIS opportunity for Executive The EIS measures of stretching financial the year end, based on annual performance against Directors is set at 150% of salary. Target is are based on a Incentive performance targets and targets set at the beginning of each year. set at 75% of salary and threshold at 0% scorecard of Scheme other objectives that if performance targets fail to be achieved. designated key One-third of any EIS is payable in shares which are (EIS) support the Company’s If an entry level of performance is achieved annual financial, held in trust for three years. annual and strategic goals. up to 10% of maximum is payable under operational and A malus and clawback mechanism applies to all each metric. environmental Compulsory deferral in participants in the event of a material misstatement of measures. shares further aligns the the Group’s accounts, error, misconduct, reputational interests of Directors with damage or corporate failure. The discovery period for shareholders. the event that would give rise to the clawback is three years from the date of payment. 111Taylor Wimpey plc Annual Report 2021 Governance Corporate governance: Remuneration continued Our Remuneration Policy continued Purpose and Performance Element linktostrategy Operation Maximum targets Performance Annual grants of Executive Directors and other designated senior The maximum award (currently in The performance share-based long term executives can receive annual PSP awards. performance shares) is normally over shares conditions are Share Plan | | incentives assist with | | with a face value of 200% of salary. In | aligned to the long | | --- | --- | --- | --- | --- | | (PSP) | | PSP awards provide alignment with shareholders as | | | | | retention, incentivisation | | exceptional circumstances this can be | term business | they deliver (subject to meeting performance and motivation of senior increased up to 300% of salary. strategy. conditions) the full value of the shares, which can executives to achieve increase and decrease in value over the three year The Committee long term sustainable performance period. may vary the returns for shareholders. measures that are The value of dividends or other distributions will A post-vesting holding included in the plan accrue during the performance and holding periods period helps align the and the weightings and will be received with any shares that vest in interests of senior between the favour of participants after the applicable executives with those of measures from performance period. Dividends will normally be the Company’s year to year. accrued and paid in shares. shareholders. Awards vest at Performance measures are normally measured over 20% for threshold three financial years. performance. 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 The Company aims to Pension benefits are provided through one or more of Pete Redfern: cash allowance from 1 April N/A provide competitive the following arrangements: 2022 of 15.62% of salary. retirement benefits that – Personal Choice Plan; Chris Carney: cash allowance of 14% of represent an appropriate – Taylor Wimpey Pension Scheme; or salary from 1 April 2022 and then reducing level of cost and risk for annually thereafter by 2% of salary until the – as a cash allowance. the Group’s shareholders. pension rate is the same as the majority of Over five years the the workforce. pension contributions will Jennie Daly: 10% of salary from 26 April reduce to the level of the 2022, aligned to the rate applicable to the workforce pension. 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 All employees including The Sharesave plan and SIP have standard terms Sharesave: Employees can elect for a N/A Executive Directors are under which all UK employees with at least three savings contract of either three or five years, share plans encouraged to become months’ service can participate. with a maximum monthly saving set by shareholders through the legislation or by HMRC. Options can be operation of all-employee exercised during the six months following the share plans such as the end of the contract. HMRC tax-advantaged SIP: Employees can elect to contribute an Sharesave plan and a amount per month or per tax year by one or Share Incentive Plan (SIP). 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. Shareholding Encourages greater levels Executive Directors are expected to achieve and Executive Directors: 200% of salary. N/A of shareholding and aligns maintain a holding of the Company’s shares at least guidelines employees’ interests with equal to 200% of salary and until this level is those of shareholders. 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. 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. 112 Taylor Wimpey plc Annual Report 2021 # Committee discretion The Committee recognizes that the exercise of discretion must be undertaken in a careful and consistent way as it is an area that will rightly come under scrutiny from shareholders and other stakeholders. The Committee confirms that any exercise of discretion would be within the available discretion 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 appropriate. 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. During the year, other than to determine that Pete Redfern should be treated as a good leader for incentive plan purposes, the Committee did not exercise any discretion to adjust any formula driven remuneration outfunds. # How shareholder views are taken into account 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 December 2021, when we consulted with major shareholders representing 50% of our issued share capital, and included the salary for the Group Finance Director, performance targets and weightings for variable pay arrangements proposed for 2022 and summarised the terms of the Chief Executive's exit package for when he leaves the business in 2022. Overall shareholders were positive in their feedback. # Wider workforce policies and practices The Committee is mindful of remuneration arrangements across the business and regularly receives reports regarding wider workforce policies and pay practices. Further details on this can be found on pages 121 to 123. # How the EIS and PSP measures and targets are 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 and wider stakeholders. 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. The proposed measures for the 2022 EIS and PSP are set out on pages 116 and 117. # 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 74 and 75. # 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 111 and 112. 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. # How the EIS and PSP measures and targets are chosen Set performance measures aligned with the strategy Set stretching targets to drive performance and taking into account the wider environment Engage with shareholders and employees on proposed arrangements Ensure that there is connectivity with the wider workforce's annual arrangements to drive consistent performance Taylor-Winey plc Annual Report 2021 113 Governance Corporate governance: Remuneration continued | In the case of an external hire, the Company | As previously announced Pete Redfern will | With regard to long term incentive plan | | --- | --- | --- | | may choose to buy-out any incentive pay or | be stepping down from the Board on 26 | awards, the rules of the PSP provide that, | | benefit arrangements which would be forfeited | April 2022 and will remain available to ensure | other than in certain good leaver | | on leaving the previous employer. This will | an orderly transition until the end of his notice | circumstances, awards lapse on cessation | | only occur where the Company feels that | period on 8 December 2022. Pete’s leaving | of employment. Where an individual is a | | it is a necessary requirement to aid the | arrangements are in line with the Policy and | good leaver, the Committee’s normal policy | | recruitment. The replacement value would | further details are provided on page 118. | is for the award to vest at the normal time | | be provided for, taking into account the | | following the application of performance | Jennie Daly and Chris Carney are proposed form (cash or shares), timing and expected targets and a pro-rata reduction to take for re-election at the 2022 AGM. Chris and value (i.e. likelihood of meeting any existing account of the proportion of the applicable Jennie will have at that date an unexpired performance criteria) of the remuneration performance period outstanding post the service contract of one year. being forfeited. Replacement share awards, if cessation. The Committee also has used, will be granted using Taylor Wimpey’s Each of the Executive Directors’ service discretion for both early vesting and reducing existing share plans wherever and to the contracts provides for: the impact of pro-rating. In doing so, it will extent possible, although in exceptional take account of the reason for the departure – The payment of a base salary. circumstances awards may also be granted and the performance of the individual – An expensed company car or a cash outside of these plans if necessary and through to the time of departure. allowance in lieu, a fuel allowance, life permitted under the Listing Rules. To ensure assurance and private medical insurance. In situations where an Executive Director is alignment from the outset with shareholders, – Employer’s contribution to a pension. dismissed, the Committee reserves the right malus and clawback provisions may also – A notice period by either side of 12 months. to make additional exit payments where such apply where appropriate and the Committee – A provision requiring a Director to mitigate payments are made in good faith: may require new Executive Directors to losses on termination. acquire Company shares up to a pre-agreed – In discharge of an existing legal obligation – Participation in the EIS. level. Shareholders will be informed of any (or by way of damages for breach of such – Participation in one or more long term buy-out payments at the time of appointment. an obligation). incentive plan. – By way of settlement or compromise In the case of an internal hire including a The Company has the right to terminate of any claim arising in connection with promotion, as previously reported, the contracts by making a payment in lieu of the termination of a Director’s office Company will honour any commitments notice. Any such payment will typically reflect or employment. entered into prior to their appointment to the the individual’s salary, benefits in kind and – To contribute towards the individual’s legal Board even where it is not consistent with pension entitlements. The Company will be fees and fees for outplacement services. the Policy prevailing at the time such mindful, on termination of an Executive commitment is fulfilled. Service contracts for all Executive Directors Director’s employment, of the need to and letters of appointment for all Non Executive mitigate costs and phase payments, which Details of the remuneration arrangements for Directors are available for inspection at the cease when the individual obtains an Jennie Daly as Chief Executive can be found on Company’s registered office during normal alternative role. There are no change of page 106. business hours and at the AGM. control provisions that apply in relation to the Directors’ contracts and policy on service contract of any Executive Director. Legacy arrangements payments for loss of office Other than in certain ‘good leaver’ Any commitment which is consistent with the It is the Company’s policy that Executive circumstances (which could include approved Remuneration Policy in force at the Directors should have contracts of redundancy, ill-health or retirement), no time that the commitment was made will be employment providing for a maximum of one payment would usually be due under the honoured, even where it is not consistent year’s notice period either way consistent EIS unless the individual remains employed with the policy prevailing at the time such with Provision 39 of the Code. at the payment date. Any payment to a good commitment is fulfilled. leaver under the EIS would be based on Name Date of appointment Notice period an assessment of their and the Company’s Pete Redfern 3 July 2007 12 months performance over the applicable period Chris Carney 20 April 2018 12 months and pro-rated for the proportion of the Jennie Daly 20 April 2018 12 months EIS year worked. Terms of engagement 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. Notice period by Company Notice period by Name Date of appointment as Director Term of appointment (months) Director (months) Irene Dorner 1 December 2019 3 years, reviewed annually 6 6 Gwyn Burr 1 February 2018 3 years, reviewed annually 6 6 Jitesh Gadhia 1 March 2021 3 years, reviewed annually 6 6 Scilla Grimble 1 March 2021 3 years, reviewed annually 6 6 Angela Knight 1 November 2016 3 years, reviewed annually 6 6 Robert Noel 1 October 2019 3 years, reviewed annually 6 6 Humphrey Singer 9 December 2015 3 years, reviewed annually 6 6 114 Taylor Wimpey plc Annual Report 2021 ## Annual Report on Remuneration The Annual Report on Remuneration will (together with the Chair's Statement and Remuneration at a Glance on pages 105 to 106) be put to an advisory shareholder vote at the AGM on 26 April 2022. Details of the resolution are set out in the Notice of Meeting on page 186. ### Total single figure of remuneration (audited) The table below sets out the total single figure of remuneration received by each Executive Director for their service and performance in 2021 (or for the performance period ending 31 December 2021 in respect of the PSPI and 2020 comparison, and total fees received by the Chairman and each Non Executive Director in 2021 and 2020. | £'000 | Year | Fees / salary^{a} | Benefits^{b} | ESR^{c} | PSP^{d} | Premium^{e} | All employee plans^{f} | Total | Total fixed remuneration | Total variable remuneration | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | **Executive** | | | | | | | | | | | | Pete Redfern | 2021 | 887 | 45 | 1,270 | 390 | 170 | 2 | 2,764 | 1,104 | 1,660 | | | 2020 | 787 | 55 | — | 118 | 173 | 2 | 1,135 | 1,017 | 118 | | Chris Carney | 2021 | 467 | 8 | 668 | 195 | 77 | 12 | 1,427 | 564 | 863 | | | 2020 | 395 | 9 | — | 39 | 73 | 2 | 518 | 479 | 39 | | Jennie Daly | 2021 | 406 | 19 | 581 | 182 | 67 | 23 | 1,278 | 515 | 763 | | | 2020 | 380 | 17 | — | 29 | 67 | 2 | 475 | 446 | 29 | | **Non Executive** | | | | | | | | | | | | Irene Dorner | 2021 | 328 | — | — | — | — | — | 328 | 328 | — | | | 2020 | 248 | — | — | — | — | — | 248 | 248 | — | | Gwyn Burr | 2021 | 90 | — | — | — | — | — | 90 | 90 | — | | | 2020 | 70 | — | — | — | — | — | 70 | 70 | — | | Jitesh Gadhia (appointed 1 March 2021) | 2021 | 53 | — | — | — | — | — | 53 | 53 | — | | | 2020 | — | — | — | — | — | — | — | — | — | | Scilla Grimble (appointed 1 March 2021) | 2021 | 53 | — | — | — | — | — | 53 | 53 | — | | | 2020 | — | — | — | — | — | — | — | — | — | | Angela Knight | 2021 | 63 | — | — | — | — | — | 63 | 63 | — | | | 2020 | 54 | — | — | — | — | — | 54 | 54 | — | | Robert Noel | 2021 | 80 | — | — | — | — | — | 80 | 80 | — | | | 2020 | 65 | — | — | — | — | — | 65 | 65 | — | | Humphrey Singer | 2021 | 80 | — | — | — | — | — | 80 | 80 | — | | | 2020 | 70 | — | — | — | — | — | 70 | 70 | — | | **Total** | **2021** | **2,507** | **72** | **2,519** | **767** | **314** | **37** | **6,216** | **2,930** | **3,286** | | | 2020 | 2,049 | 81 | — | 188 | 313 | 6 | 2,635 | 2,449 | 187 | (a) The 2020 figure takes into account the voluntary 30% reduction in salaries and fees from 1 April to 31 July 2020. (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 benefit value of the Company car provided was £29,925, £908 and £14,516 respectively). (c) The 2021 EIS outcome can be found on page 105. The 2020 EIS for the Executive Directors was cancelled in light of the COVID-19 pandemic. One third of the 2021 EIS will be deferred into shares for three years. These shares will not be subject to any further performance or non-performance measures. (d) This column shows the waiting in respect of PSPs with performance periods ending in 2021 and 2020 as set out in the table on the next page. The 2020 figure includes the value of dividends accrued during the performance period and payable on waiting and has been restated to reflect the share price on the date the award waited. The 2021 figure includes the value of dividends accrued during the performance period and the amount will be paid in shares and will be subject to the same two-year holding period. (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 that level. (f) These figures represent the value of the matching shares under the Share Incentive Plan, the value of the 30% discount on the Shareeque option price, and the payment of Special Dividends accrued on Shareeque Options exercised by Chris Carney and Jennie Daly and grossed-up for Income Tax and National Insurance. ### Salaries (audited) As explained on page 106, during 2021 the Committee reviewed Chris Carney's salary and in light of his excellent performance and the expanded remit of his role, increased his salary from £447,372 to £490,000, with effect from 1 July 2021. The Committee reviewed the Executive Directors' salaries and decided to award an increase of 3% to Chris Carney, with effect from 1 April 2022, in line with general workforce increases. Pete Redfern will not receive this increase given he is currently serving his notice period. Upon assuming the role of Chief Executive on 26 April 2022, Jennie Daly's salary will be set at £750,000. The salaries of the Executive Directors as at 1 April 2022 will therefore be as follows: | Executive Director | Salary at 1 April 2021 | Salary at 1 April 2022^{a} | Increase | | --- | --- | --- | --- | | Pete Redfern | £891,644 | £891,644 | 5% | | Chris Carney | £447,372 | £504,700 | 13% | | Jennie Daly | £408,000 | £750,000 | 84% | (a) As at 26 April 2022 for Jennie Daly. Taylor Winesworth Annual Report 2021 115 Governance Corporate governance: Remuneration continued Executive Incentive Scheme (Annual bonus) (EIS) (audited) EIS in respect of 2021 The outcome of the 2021 EIS is 95% of the maximum and detailed disclosure of the targets and performance against them can be found on page 108. One third of this amount will be paid in shares and be required to be retained in the Company’s Employee Benefit Trust for three years. These shares will not be subject to any further performance or non-performance measures. EIS for 2022 In line with the Policy, the Directors will have the opportunity to earn up to 150% of salary under the 2022 EIS. The opportunity for Jennie Daly will be based on her pro-rata salary following her promotion to Chief Executive from 26 April 2022. Pete Redfern will be eligible to participate in the 2022 EIS for the period he is actively employed in the business up to 26 April 2022 and further details can be found on page 118. The EIS performance measures and their weightings for 2022 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 next year in the usual way. The targets for the financial measures have been set so that entry performance is well ahead of 2021 outturn and achieving target will be at the top end of market expectations; the achievement of the stretch targets would require strong outperformance in favourable market conditions. The Committee is satisfied that the targets are sufficiently challenging. The Committee has introduced an environmental measure which will focus the business on the delivery of a credible plan and committed date to reach zero carbon and reduce our carbon intensity from our operations by 10% from the 2019 baseline data. Weighting Rationale (a) Operating profit 35% Increase aggregate profit. Prioritise focus on capturing house price increases and improving cost (a) Operating profit margin 15% discipline throughout the business. (a) Cash conversion 10% To maximise the generation of cashflow from profits. Deliver high quality homes with the need for less remediation to (b) Build quality 15% underpin our strategic objective. (c) Customer service 15% Continue to deliver high levels of customer service. The preparation and approval by the Board of a credible ‘Road to Zero Environmental 10% Carbon Plan’ and a reduction in carbon intensity. (a) Read more about our financial definitions on page 71. (b) The average score, out of six, achieved during an in-depth annual review of construction quality on a site-specific basis. (c) 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. Performance Share Plan (PSP) (audited) PSP awards included in the 2021 and 2020 total remuneration figures The outcome for the 2019 PSP Award against the performance measures can be found on page 108. The table below sets out the number of shares each Executive Director received after the vesting of the 2018 and 2019 PSP Awards. Value of | | | | | | | | | Standard | | | | | Value | Value of PSP | | Value of | | standard | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Number of | | | Value of | | End of | proportion of | | | Number of | | attributable to | | | shares | dividend | proportion of | | | | | shares | | award at | performance | | | award | | | shares | share price | | | vesting | equivalents | PSP (single | | | Name | | granted | grant (£’000) | | | period | | vesting | (a) | | vesting Vesting date | | increase | | (£’000) | (£’000) | figure) (£’000) | | Pete Redfern 947,769 1,714 31/12/2021 22.1% 209,456 03/03/2022 — 334 56 390 (a) 2021 Chris Carney 475,532 860 31/12/2021 22.1% 105,092 03/03/2022 — 167 28 195 Jennie Daly 442,355 800 31/12/2021 22.1% 97,760 03/03/2022 — 156 26 182 Pete Redfern 898,423 1,672 31/12/2020 6.6% 59,295 02/03/2021 — 98 20 118 (b) 2020 Chris Carney 294,149 548 31/12/2020 6.6% 19,413 02/03/2021 — 32 7 39 Jennie Daly 225,648 420 31/12/2020 6.6% 14,892 02/03/2021 — 24 5 29 (a) The 2019 PSP Award is included in the 2021 total remuneration figure. The performance against each of the performance measures are set out on page 108. A share price of 159.4 pence was used to calculate the value of the award vesting on 3 March 2022 as this was the average share price for the dealing days in the last three months of the performance period. This figure will be recalculated in the 2022 Annual Report to reflect the share price on the date the Award vests. Dividend equivalents will be paid in shares. (b) The 2018 PSP Award is included in the 2020 total remuneration figure. The overall performance of the award can be seen on page 114 of the 2020 Annual Report and Accounts. The closing share price on the date the Award vested has been used (165.9 pence). Dividend equivalents were paid in cash. PSP awards granted during 2021 End of Face value of Number performance Threshold Maximum Type % of salary award (£’000) of shares (a) period Performance measures (20%) (100%) Upper Pete Redfern Nil-cost options 200% 1,748 1,004,687 31/12/2023 TSR v peer group (40%) Median quartile RONOA (20%) 18.5% 20.5% Chris Carney Nil-cost options 200% 877 503,400 31/12/2023 Cash conversion (20%) 22% 25% Jennie Daly Nil-cost options 200% 800 459,726 31/12/2023 Customer service (20%) 78% 81% (a) The share price used to determine the number of shares awarded was based on the average closing share price (174.02 pence) over the three days prior to grant (4, 5 and 8 March 2021). 116 Taylor Wimpey plc Annual Report 2021 ### PSP awards to be granted in 2022 In line with the Policy, Chris Carney and Jennie Daly will each receive a PSP Award over shares worth 200% of salary in 2022 which will be subject to the performance measures shown in the table below. Given the long term nature of the Award, this will be based on Jennie Daly's salary as Chief Executive as she will be in the role for the majority of the performance period. As noted on page 118, Pete Redfern will not receive an Award in 2022. The performance measures remain the same as the 2021 Award as the Committee consider that these provide a good overall balance in assessing our longer term performance against the business strategy. The targets have been reviewed to reflect current market conditions and business forecasts for the Group. The PSP will operate in accordance with the Policy as set out on pages 111 and 112. Awards vest on a straight-line basis between the above threshold and maximum vesting levels. Matus 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 Committee has reviewed the targets and is confident they are stretching and appropriate in the present market outlook for the medium term. | Performance measure | Weighting | Threshold (20%) | Maximum (100%) | Relevance | | --- | --- | --- | --- | --- | | TSR v peer group^{(a)} | 40% | Median | Upper quartile | Align the rewards received by executives with the returns received by shareholders. | | Operating profit margin (2022-2024) | 20% | 19% | 21% | Maintain focus on cost and process discipline. | | RONDA (2022-2024) | 20% | 23% | 25% | Maintain focus on driving increased capital efficiency. | | Customer service (2022-2024)^{(b)} | 20% | 78% | 81% | To improve and deliver enhanced customer service. | (a) The peer group is an unweighted index comprising Barrett Developments, Bellway, Berkeley Homes, Countryside Partnerships, Crest Nicholson, Penzinmon, Redone and Stony Group. (b) This will be based on the single question "Would you recommend your builder to a friend?" from the independently measured NHBC 9-month survey, therefore will be on a different basis to the DS customer service measure. ### Directors' pension entitlements (audited) The Group Finance Director's pension contribution will be further reduced in 2022 in line with the agreed incremental reduction over a five year period to 10% of base salary, the level of pension contribution available to the majority of the wider workforce. Therefore, from 1 April 2022 Chris Carney's pension contribution will be 14% of base salary. Jennie Daly's pension contribution will be 14% of base salary from 1 April until 25 April, when she assumes the role of Chief Executive, at which point it will reduce to 10% of salary. As such, whilst the Directors' rate of pension contribution continues to reduce to the workforce rate as previously agreed, the Company was not fully compliant with Provision 38 of the Code during 2021 whilst the rate for incumbent Directors was above that of the workforce. ### Defined benefit scheme Pete Redfern is a deferred member of the Taylor Wimpey Pension Scheme (TWPS). The following table sets out the benefits payable in accordance with the rules of the TWPS. | Director | Normal Retirement age^{(c)} | Accrued pension as at 31/12/2020 (d) | Increase in accrued pension from 31/12/2020 to 31/12/2021 (e) | Accrued pension as at 31/12/2021^{(f)} (g) | | --- | --- | --- | --- | --- | | Pete Redfern | 62 | 16,335 | 71 | 16,406 | (a) In the event of early retirement before Normal Retirement Age, no additional benefits are paid. Pensions that are put into payment before Normal Retirement Age are reduced on actuarial advice to reflect early payment in line with the rules of the TWPS. (b) 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. Pensions for all deferred members 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 2009 are guaranteed to increase in line with inflation limited each year to 5%, pensions accrued after 5 April 2009 are guaranteed to increase in line with inflation limited each year to 2.5%. Pete Redfern received a cash allowance of £169,686 (2020: £173,244) in lieu of Company pension contributions. ### Non-Group pension arrangements The value of Company pension contributions in 2021 for Chris Carney and Jennie Daly was: | | 2020 (f) | 2021 (g) | | --- | --- | --- | | Chris Carney | 5,501 | 4,003 | | Jennie Daly | 5,501 | 4,029 | Chris Carney and Jennie Daly also received pension allowances of £72,828 (2020: £67,745) and £62,930 (2020: £61,299) respectively in lieu of Company pension contributions over the Tapered Annual Allowance limit introduced in April 2016. Taylor Wimpey plc Annual Report 2021 117 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 the Executive Directors who served during the year are as follows: Additional maximum Dividend Maximum shares vesting in: | Maximum | potential | | re-investment | | | | | Maximum | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | potential | awarded | | shares added | | Exercised | Lapsed | | potential | | | | shares as at | during the | | during the | | during | during | shares as at | | | | | 01/01/2021 | | year | | year | the year | the year | 31/12/2021 | | (a) | 2022 2023 2024 2025 2026 | Pete Redfern (b) Deferred shares (EIS) 625,225 – 21,875 181,313 – 465,787 266,251 199,536 – – – (c) PSP 2,701,954 1,004,687 – 59,295 839,128 2,808,218 947,769 855,762 1,004,687 – – Sharesave Plan 18,863 – – – – 18,863 18,863 – – – – Total 3,346,042 1,004,687 21,875 240,608 839,128 3,292,868 1,232,883 1,055,298 1,004,687 – – Chris Carney Deferred shares (EIS) 216,311 – 10,659 – – 226,970 126,855 100,115 – – – (c) PSP 1,199,049 503,400 – 19,413 274,736 1,408,300 475,532 429,368 503,400 – – (d) Sharesave Plan 20,891 10,545 – 11,460 – 19,976 9,431 – – – 10,545 Total 1,436,251 513,945 10,659 30,873 274,736 1,655,246 611,818 529,483 503,400 – 10,545 Jennie Daly Deferred shares (EIS) 171,811 – 8,467 – – 180,278 88,974 91,304 – – – (c) PSP 1,059,584 459,726 – 14,892 210,756 1,293,662 442,355 391,581 459,726 – – (d) Sharesave Plan 22,921 21,091 – 22,921 – 21,091 – – – – 21,091 Total 1,254,316 480,817 8,467 37,813 210,756 1,495,031 531,329 482,885 459,726 – 21,091 (a) All outstanding awards are options. The Directors do not hold any vested but unexercised share options. (b) Pete Redfern exercised his EIS deferred shares on 26 March 2021 and the closing share price was 180.1 pence. These shares were awarded on 23 March 2018 using a share price of 183.60 pence to calculate the number of shares awarded. (c) The Executive Directors exercised their 2018 PSP Award on 2 March 2021 and the closing share price was 165.9 pence. These shares were awarded on 6 March 2018 using a share price of 186.13 pence to calculate the Award. (d) Chris Carney and Jennie Daly both exercised their Sharesave Plan on 13 December 2021 and the closing share price was 167.3 pence. These shares were granted on 5 October 2016 and the option price was 130.88 pence. 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 closing share price on 31 December 2021 was 175.5 pence and the range during the year was 146.4 pence to 191.7 pence. ### Pete Redfern’s remuneration arrangements in relation to his departure On 8 December 2021 the Company announced that Pete Redfern Pete’s unvested EIS deferred shares from the 2019 EIS will would be stepping down from the Board as Chief Executive in 2022 vest at the normal time, with any shares added via the Dividend once a suitable successor had been found and following a full Re-Investment Plan, in March 2023. One-third of his 2021 EIS will handover. Following a thorough recruitment and selection process be paid in shares in March 2022, and will be released at the normal Jennie Daly was appointed as Pete’s successor with effect from the time after three years. 2022 AGM. As such Pete will step down from the Board on 26 April PSP 2022 and will remain available to the business to ensure an orderly transition until his notice period ends on 8 December 2022. Pete will also be treated as a ‘good leaver’ in respect of his outstanding PSP awards. His 2019 Award vested at the normal time On behalf of the Board, the Committee considered his remuneration in March 2022. Pete’s 2020 and 2021 Awards will be pro-rated to arrangements and can confirm that they are in line with his the date he leaves the business and will be subject to the contractual entitlements and the shareholder approved Policy. performance measures (as currently applicable) over the relevant three year period. He will be required to retain any shares that vest Base salary, benefits and pension for the two year holding period. Pete will continue to receive salary, benefits and pension in accordance with his contractual entitlements until he leaves the business. No PSP Award will be made for 2022. He will not receive the 3% salary increase for 2022 which was Post employment shareholding requirements approved for the wider workforce and Chris Carney, and his pension Pete will be required to retain shares worth at least 200% of his contributions will reduce to 15.62% of salary, on 1 April 2022 as salary for two years post employment. The number of shares will be previously agreed. Outstanding interests in all-employee share plans calculated based on the share price on his last day of employment. will be treated in line with standard leaver terms. Clawback and malus EIS Clawback and malus provisions will continue to apply post cessation He will be treated as a ‘good leaver’ in respect of the EIS and may of employment. receive a bonus for 2022 performance pro-rated to the time he is actively employed in the business up to 26 April 2022 and subject to Details of Jennie Daly’s remuneration package as Chief Executive are set the achievement of the performance measures. Any award made will out on page 106. be paid at the usual time in March 2023, with one-third being deferred in shares and released to him after three years. Payments for loss of office and to former Directors No payments have been made for loss of office or to former Directors during 2021. 118 Taylor Wimpey plc Annual Report 2021 # Chairman and Non Executive Director Fees (audited) ## Fee review in 2021 During the year the fees for the Chairman of the Board and Independent Non Executive Directors were reviewed and increased, recognising the increased time commitment required since the last reviews took place in 2018 and 2016 respectively. The increases noted below took effect on 1 July 2021. | Role | Annual fees as at 31/06/2021 | Annual fees as at 31/07/2021 | | --- | --- | --- | | Chairman of the Board | £320,000 | £335,000 | | Independent Non Executive Director | £60,000 | £65,000 | | Senior Independent Director | £17,500 | £17,500 | | Audit Committee Chair | £17,500 | £17,500 | | Remuneration Committee Chair | £17,500 | £17,500 | | The Board's Employee Champion | £10,000 | £10,000 | ## Directors' share interest register (audited) In line with the approved Policy, Executive Directors' shareholding requirements are 200% of their base salary. They 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 PSP, until such time as the guidelines have been met. Beneficially owned shares count toward the guidelines, together with the portion of the 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 200% of their base salary, or their shareholding at the time of cessation if their 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 Non Executive Directors are also encouraged to hold shares in the Company in order to align their interests with those of shareholders. | Director | Beneficially owned | | Outstanding interests in share plans | | | Share interests expressed as a % of salary | | --- | --- | --- | --- | --- | --- | --- | | | at 31/07/2021 (ordinary shares) | at 31/10/2021 (ordinary shares) | EIS deferred shares (gross) | PSP** | Shareware | | | Irene Dorner | 125,440 | 125,440 | - | - | - | - | | Pete Redfern | 2,363,494 | 2,398,991 | 465,787 | 2,608,218 | 18,863 | 520% | | Chris Carney^{(a)} | 376,484 | 400,351 | 226,970 | 1,408,300 | 19,976 | 186% | | Jennie Daly^{(a)} | 179,511 | 212,446 | 180,278 | 1,293,662 | 21,091 | 132% | | Gwyn Burr | 17,241 | 17,241 | - | - | - | - | | Jitesh Gadhia | - | 100,000 | - | - | - | - | | Sofia Grimble | - | 15,000 | - | - | - | - | | Angela Knight | 16,896 | 16,896 | - | - | - | - | | Robert Noel | 46,674 | 46,674 | - | - | - | - | | Humphrey Singer | 31,896 | 31,896 | - | - | - | - | (a) Or data appointed to 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 2021 (165.8 pence) 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. Details of the share options exercised by the Executive Directors during the year can be found on page 118. The only changes to the Directors' interests as set out above during the period between 31 December 2021 and 2 March 2022 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 372, 374 and 374 respectively. Taylor Wimpey plc Annual Report 2021 119 Governance Corporate governance: Remuneration continued Remuneration Committee Remit 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 framework which is aligned with the interests of our shareholders and designed to promote the long term success of the Company. It is also responsible for reviewing wider workforce remuneration practices and policies. Details of Committee membership and attendance at meetings can be found on page 105. The Committee reviewed its Terms of Reference in 2021 and evaluated its own performance against them. Following this review, the Committee confirmed that they remain appropriate. The Terms of Reference can be found on the Company’s corporate website. 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. The Remuneration Committee’s activities during 2021 are set out in the table below: | | | February | | September | | October | December | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Topic Activity / review | | | 2021 | | 2021 | 2021 | | 2021 | | Executive and | Reviewed benchmarking data for various | | | | | | | | | senior management | groups of senior management | | | | | | | | remuneration Considered the forecasts for inflight EIS and PSP awards Considered the performance measures and targets for the 2022 EIS and PSP Considered the remuneration arrangements for Pete Redfern when he leaves the business Wider workforce Reviewed the remuneration policies and remuneration practices for the wider workforce Considered the wider workforce bonus arrangements alignment to senior managements Reviewed and approved the Group-wide salary review Considered the Company’s 2021 Gender Pay Gap Report Considered the Company’s Ethnicity Pay Gap data Committee governance Reviewed and agreed the Committee’s annual plan for 2022 Received a market update from Korn Ferry Reviewed and approved the 2020 Directors’ Remuneration Report Reviewed the Committee’s performance and compliance with its Terms of Reference 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 2021 Korn Ferry also provided other ad hoc remuneration services outside the scope of the Committee to the Company. Korn Ferry were appointed following a comprehensive tender process. 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. Korn Ferry do not have any connection with the Company or any of the individual Directors. The Committee also receives legal advice from Slaughter and May as and when necessary. This generally relates to technical advice on share schemes. 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 2021 were: Korn Ferry £83,370 on a time and materials basis (2020: £62,920); and Slaughter and May £10,000 (2020: £nil). The Chief Executive, Group HR Director, Group General Counsel and Company Secretary, Assistant Company Secretary and Head of Reward and Pensions each attended the Committee meetings during 2021 by invitation only, but were not present for any discussions that related directly to their own remuneration. 120 Taylor Wimpey plc Annual Report 2021 How the Committee addresses the requirements under Provision 40 in the Code Principle Committee approach Clarity – We have operated a consistent approach which is well reported in our Directors’ Remuneration Reports. Our approach is understood internally by employees and externally with strong levels of shareholder support Simplicity – Executive Director remuneration arrangements have been designed, in accordance with best practice, to be as simple as possible Risk – We mitigate risk through careful plan design, including long term performance measurement, deferral, and shareholding requirements (including post cessation of employment) and discretion and clawback provisions Predictability – We look carefully at the range of likely performance outcomes when setting performance target ranges for entry, target and maximum payouts and use discretion where necessary Proportionality – Incentive plans are determined based on a proportion of base salary so there is a sensible balance between fixed pay and performance-linked elements – Performance conditions are aligned to the business strategy and shareholder experience – There are provisions to override the formula-driven outcome of incentive plans, as well as deferral and clawback mechanisms to ensure that poor performance is not rewarded Alignment to – Our overall reward framework embeds our purpose and values. Decisions on executive pay need to be taken in culture the context of the wider stakeholder experience ### Wider workforce remuneration Key highlights in 2021 | 5.5% | 1,307 | 61% | | --- | --- | --- | | average salary increase | employees received salary increases | of employees are either already | | | during the year following benchmarking | shareholders or participate in one of our | (a) outside of the annual review all-employee share plans Maternity and Paternity Leave Policy Real Living Wage Employer ## enhancements made during the year accreditation in November 2021 10% pension contribution available for the majority of the workforce (a) These increases were in addition to the 2% annual increase in April 2021. As at 31 December 2021 there were 5,144 employees. Wider workforce remuneration in 2021 The Committee regularly monitors and reviews the Company-wide remuneration arrangements to ensure that they are aligned to incentives and rewards across the Company. The Committee reviewed, by employee level, the different elements of pay and benefits across the Company. Following this review, the Committee considers that all employees receive a reward package that is aligned to the Company’s purpose and culture; and is market competitive, transparent and fair. Element Wider Workforce Senior Managers Executive Directors and GMT Competitive salary Bonus Deferred bonus in shares Long Term Incentive Plan / Medium Term Incentive Plan Shareholding requirements Paid holiday Pension All-employee share plans Flexible benefits Private healthcare 121Taylor Wimpey plc Annual Report 2021 Governance Corporate governance: Remuneration continued ### Engagement with ### the workforce As Remuneration Committee Chair and Employee Champion, Gwyn Burr attended three National Employee Forum (NEF) meetings during the year. At one of these meetings, the NEF discussed pay policies and practices across the Group and how they align with the Executive Directors’ remuneration arrangements. The performance measures in variable pay arrangements across the Group were discussed in detail to explain how the Executive Directors’ remuneration was aligned to that of the wider workforce and our strategy. CEO Pay Ratios Year Method CEO single figure (a) Lower quartile Median Upper quartile Ratio 87:1 60:1 40:1 (b) 2021 Option B £2,764,290 Salary £26,883 £33,133 £50,750 Total pay and benefits £31,651 £46,455 £69,721 Ratio 39:1 26:1 20:1 2020 Option B £1,120,451 Salary £23,233 £30,600 £47,000 Total pay and benefits £28,389 £42,492 £56,844 Ratio 93:1 73:1 48:1 2019 Option B £3,023,654 Salary £27,500 £31,277 £45,621 Total pay and benefits £32,342 £41,483 £62,418 Ratio 103:1 77:1 41:1 2018 Option B £3,151,748 Salary £26,412 £26,873 £52,458 Total pay and benefits £30,745 £41,135 £76,575 (a) The 2018, 2019 and 2020 single figures disclosed have not been restated to reflect the share price on the date the 2016, 2017 and 2018 PSP awards 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 2021. | Under Option B, using the hourly rate from | As a result of the COVID-19 pandemic the | Ratios for 2021 remain lower than our | | --- | --- | --- | | our 2021 gender pay gap data, three | CEO single figure for 2020 was significantly | pre-pandemic ratios due to a combination of | | employees have been identified as the best | lower than in 2019. The CEO single figure | the CEO single figure being lower, an | | equivalents of our lower quartile, median and | was impacted by: the voluntary 30% | increase in the average employee salary of | | upper quartile. | reduction in Executive Directors salaries and | 5.5% over the year, and employees receiving | | | pension contributions from 1 April to 31 July | higher bonus payments than in previous | Option B provides a clear methodology 2020, no cash bonus being paid to years. The lower CEO single figure is involving less adjustments to calculate Executives Directors in response to 2020 predominantly due to a lower level of vesting full-time equivalent earnings and is more performance and a low level of vesting in in respect of the 2019 PSP Award. likely to produce more robust reporting year respect of the 2018 PSP Award. The lower on year. The Committee has reviewed the As has been noted on page 105, the CEO figure caused all three ratios for 2020 to results of the calculations and is satisfied that Committee has reviewed the remuneration reduce to a greater degree than would they continue to be representative of the policies and practices for the wider otherwise have been expected. respective percentiles. workforce in conjunction with the Directors’ We increased the number of apprentices in remuneration policy review during the year. Total pay and benefit figures, during the 2020 which caused the lower quartile to The Committee is satisfied that there is a financial year ending 31 December 2021, drop in comparison to 2019. In 2021 the good level of consistency in relation to pay have been calculated for the employee at number of apprentices was less than in 2020 policies throughout Taylor Wimpey. each quartile, and for employees either side but higher than 2019 and this is the reason of the identified employees, to ensure that that the lower quartile has increased on 2020 the employees selected are a reasonable but remains lower than in 2019. Apprentices representative based on their full year’s are paid lower rates of pay and movements remuneration. in headcount can impact the lower quartile. 122 Taylor Wimpey plc Annual Report 2021 Total shareholder return graph and Chief Executive historic remuneration The graph below shows the value of £100 invested in Taylor Wimpey plc on 31 December 2011 with the value of a £100 invested in the FTSE 350 and in the average of the Housebuilders Index introduced for the 2012 PSP 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. The graph also shows the Chief Executive’s single figure remuneration over the same 10-year period. The total remuneration figure includes the EIS and PSP awards which vested based on performance in those years. The EIS and PSP percentages are the payout for each year as a percentages of the maximum award that could have been paid or received. Total shareholder return Housebuilders Index 1,000 FTSE 350 900 CEO Total Remuneration 800 700 600 500 400 300 200 100 0 31/12/202131/12/202031/12/201931/12/201831/12/201731/12/201631/12/201531/12/201431/12/201331/12/201231/12/2011 Year ending 31 December Chief Executive historic remuneration 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Total remuneration (£’000) 3,009 6,724 6,250 6,888 4,072 3,697 3,272 3,247 1,120 2,764 EIS (%) 95 90 90 78 80 66 93 50.6 – 95 PSP (%) 40 85 94 100 81 78 50 62.8 6.6 22.1 Annual percentage change in remuneration of Directors and employees 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 2020 and 31 December 2021, as set out on page 115. | | Salary / fee | (a) Benefits Annual bonus scheme | | | | | (b) | | --- | --- | --- | --- | --- | --- | --- | --- | | % change from | | % change from | % change from | % change from | % change from | % change from | | | 31/12/2019 to | | 31/12/2020 to | 31/12/2019 to | 31/12/2020 to | 31/12/2019 to | 31/12/2020 to | | | 31/12/2020 (%) | | 31/12/2021 (%) | 31/12/2020 (%) | 31/12/2021 (%) | 31/12/2020 (%) | 31/12/2021 (%) | | Pete Redfern (10) 13 2 (18) n/a n/a (c) Chris Carney (10) 18 (55) (11) n/a n/a Jennie Daly (10) 13 (6) 12 n/a n/a (d) | | Irene Dorner | | | n/a 32 – – – – | | | --- | --- | --- | --- | --- | --- | | Taylor Wimpey | | Value (£) (rebased) | (e) | | CEO remuneration (£'000) | | | Gwyn Burr | | | (3) 29 – – – – | | 10,000 (f) Jitesh Gadhia n/a n/a – – – – (f) Scilla Grimble n/a n/a – – – – 9,000 Angela Knight (10) 17 – – – – 8,000 (g) Source: Thomson Robert Noel n/a 23 – – – – Reuters Datastream. Humphrey Singer (10) 14 – – – – 7,000 (h) Average pay of a Taylor Wimpey Employee – 6 – 3 (46) 163 6,000 (a) The Executive and Non Executive Directors took a voluntary 30% reduction in base salary and fees from 1 April 2021 to 31 July 2021 in light of the COVID-19 pandemic. 5,000 (b) The Executive Incentive Scheme was cancelled in light of the COVID-19 pandemic. (c) Chris Carney received a salary increase on 1 July 2021. 4,000 (d) Irene Dorner was appointed in December 2019 and received a fee increase on 1 July 2021. (e) Gwyn Burr was appointed as the Board’s Employee Champion and received a fee of £10,000 per annum with effect from 1 January 2021. 3,000 (f) Jitesh Gadhia and Scilla Grimble were appointed in March 2021. (g) Robert Noel was appointed in October 2019 and was appointed as the Company’s Senior Independent Director on 1 August 2021. 2,000 (h) Taylor Wimpey plc does not have any employees and these figures are in relation to Taylor Wimpey UK Limited employees. 1,000 123Taylor Wimpey plc Annual Report 2021 0 Governance **Corporate governance:** Remuneration continued # **Change in Company performance relative to change in remuneration (audited)** | | 2020 | 2021 | Change (%) | | --- | --- | --- | --- | | Operating profit^{(a)} | £300.3m | **£328.6m** | 176 | | Dividends paid per ordinary share | 0.00p | **8.28p** | n/a | | Employee pay in aggregate^{(b)} | £283.1m | **£292.1m** | 4 | | Employee pay average per employee^{(b)} | £46,459 | **£54,517** | 17 | (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. Operating profit has been chosen as it is one of the Company's primary measures of performance. (b) See note 7 to the financial statements on page 149. # **Statement of shareholder voting** Votes cast by proxy and at the meeting in respect of the Directors' remuneration were as follows: | Resolution | Votes for | % | Votes against | % | Total votes (not destating withheld votes) | Votes withheld | | --- | --- | --- | --- | --- | --- | --- | | Directors' Remuneration Report for 2020 (2021 AGM) | 2,216,612,359 | 97.67 | 52,996,912 | 2.33 | 2,269,603,271 | 401,828 | | Directors' Remuneration Policy (2020 AGM) | 2,001,641,568 | 98.65 | 27,319,532 | 1.35 | 2,028,961,100 | 563,978 | Approved by the Board **Gwyn Burr** Chair of the Remuneration Committee 2 March 2022 124 Taylor Winfrey plc Annual Report 2021 Corporate governance: Statutory, regulatory and other information ## 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 Annual Report and Accounts. Certain matters which are required to be reported on appear in other sections of this Annual Report and Accounts, asdetailed below: Matter Page(s) in this Annual Report Strategic report 2 to 71 Likely future developments in the business of the Company 2 to 71 Carbon footprint reporting 48 to 57 Greenhouse gas emissions reporting 55 Stakeholder engagement 34 to 47 A description of the Company’s employee engagement practices 34 and 41 A statement of the Company’s engagement with employees in relation to the financial and economic factors that affect the performance of the Company 34 Charitable donations 43 Research and development activities 45 Viability Statement 70 to 71 2018 UK Corporate Governance Code compliance statement 72 Directors 74 to 75 A description of how the Board assesses and monitors culture 83 Retirement and re-election of Directors 93 and 184 to 191 Remuneration Committee report 105 to 124 Profit before taxation and profit after taxation 136 and 141 to 178 Changes in asset values 138 and 141 to 178 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 157 to 159 Subsidiaries and associated undertakings, including branches outside the UK 179 to 182 Directors’ dividend recommendation 184 to 191 Web communications with shareholders 191 Registrar 192 Specific disclosures required under Listing Rule 9.8.4 as appropriate to the Company Details of the Company’s long term incentive schemes 105 to 124 Shareholder waiver of future dividends 126 | Qualifying third party indemnity | – They have taken all the steps they | Capital structure | | --- | --- | --- | | In accordance with Section 234 of the | ought to have taken as a Director in | Details of the Company’s issued share | | Companies Act 2006 and following advice | order to make themselves aware of any | capital, together with information on | | from Slaughter and May, the Company has | relevant audit information and to establish | movements in the Company’s issued share | | granted an indemnity in favour of its Directors | that the Company’s external Auditors are | capital during the year, are shown in Note 23 | | and Officers and those of its Group | aware of that information. | on pages 165 to 166. | companies, including the Trustee Directors This confirmation is given and should be The Company has two classes of shares: of its Pension Trustee Company, for this interpreted in accordance with the provisions Ordinary Shares of 1p, each of which carries financial year and at the date of this report. of Section 418 of the Companies Act 2006. the right to one vote at general meetings of The indemnity is against the financial the Company and other such rights and exposure that they may incur in thecourse of More information can be found on page 127. obligations as are set out in the Company’s their professional duties as Directors and Articles of Association; and Deferred Shares, Annual General Meeting Officers of the Company and / or its which carry no voting rights. | subsidiaries / affiliates. | The Annual General Meeting (AGM) will be | | | --- | --- | --- | | | held at 10:30am on 26 April 2022 in the | The powers of the Company’s directors in | | Audit and Auditors | Winterlake Suite at the Crowne Plaza | relation to issuing or buying back the | | Each Director has, at the date of approval | Marlow, Fieldhouse Lane, Marlow, | Company’s shares are limited to those | | of this report, formally confirmed that: | Buckinghamshire, SL7 1GJ. | approved by shareholders at the AGM. | | – To the best of their knowledge there | Formal notice of the AGM is set out in the | | | is no relevant audit information of | Notice of Annual General Meeting on pages | | | which theCompany’s external Auditors | 184 to 191 and on the Company’s website. | | are unaware. 125Taylor Wimpey plc Annual Report 2021 Governance Corporate governance: Statutory, regulatory and other information continued | We have announced the Company’s | investment opportunities, appropriate | Subject to shareholder approval at the 2022 | | --- | --- | --- | | intention to return excess capital to its | gearing levels and the overall financial | AGM, the final ordinary dividend of 4.44 pence | | shareholders in 2022 of up to £150 million | position of the Company). | per share will be paid on 13 May 2022 to | | through the implementation of a share | | shareholders on the register at the close of | The Company currently holds no shares buyback programme. An initial tranche of up business on 1 April 2022. More information in treasury. | to £75 million commenced on 3 March 2022 | | can be found on pages 69 and 185. The | | --- | --- | --- | | and is expected to end no later than 3 June | There are no specific restrictions on the size | Company will be operating a Dividend | | 2022. The initial tranche of the share | of a holding, the exercise of voting rights, or | Re-Investment Plan (DRIP) for shareholders | | buyback programme is being carried out by | the transfer of shares, which are governed by | in the United Kingdom and more information | | the Company using the authority to purchase | the Company’s Articles of Association and | can be found on page 187. | | its own ordinary shares as approved by | prevailing legislation. The Directors are not | | The right to receive any dividend has been shareholders at the 2021 AGM, and in order aware of any agreement or agreements waived in part by the Trustees of the to retain the flexibility to complete the initial between holders of the Company’s shares Company’s ESOT over that Trust’s tranche and continue to return value to that may result in restrictions on the transfer combined holding of 9,112,873 shares, as at shareholders, we are asking shareholders to of securities or voting rights. 28 February 2022. More information about renew the authority for the Company to The Employee Share Ownership Trust the ESOT can be found in Note 26 on page purchase its own ordinary shares. The share (ESOT), which holds shares on trust for 167. buyback is expected to benefit shareholders employees under the Company’s various through the opportunity for increased future Important events since the year end share schemes, generally abstains from dividends per share on the remaining shares. voting at shareholder general meetings in There have been no important events Pursuant to the share buyback programme, respect of shares held by them. No person affecting the Company or any of its subsidiary the Board intends to hold 25 million of the has any special rights of control over the undertakings since 31 December 2021. shares that are repurchased in treasury and Company’s share capital and all issued the remaining shares will be cancelled. The Political donations shares are fully paid. | Board currently intends that the shares to be | | The Company has a policy of not making | | --- | --- | --- | | held in treasury will be used for future | Dividend | donations to political parties, and has not | | obligations of the Company in respect of its | The 2020 final ordinary dividend of 4.14 pence | made any during 2021 and does not intend | | employee share schemes. | per share was paid to shareholders on | to going forward. More information can be | | | 14 May 2021 and the 2021 interim ordinary | found on page 189. | The Board will use this authority to purchase dividend of 4.14 pence per share was paid shares only after careful consideration (taking to shareholders on 12 November 2021. into account market conditions, other 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. As at 28 February 2022, 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. As at 31 December 2021 As at 28 February 2022 Number of shares held Percentage of issued Number of shares held Percentage of issued Name (millions) voting share capital (millions) voting share capital BlackRock 182.5 5.00 182.5 5.00 The Capital Group Companies, Inc 164.7 4.51 164.7 4.51 Legal & General Group plc 98.5 2.70 98.5 2.70 Standard Life Investments Limited 96.5 2.64 96.5 2.64 126 Taylor Wimpey plc Annual Report 2021 Agreements and secondment opportunities for people The Directors are also responsible for The Company’s borrowing and bank facilities with disabilities. In addition, every keeping adequate accounting records that contain the usual change of control provisions reasonable effort is made for people with are sufficient to show and explain the which could potentially lead to prepayment disabilities to be retained in the employment Group’s and Company’s transactions and and cancellation by the other party upon a of the Company by investigating reasonable disclose with reasonable accuracy at any change of control of the Company. There are adjustments to the role, workplace time the financial position of the Group and no other significant contracts or agreements or equipment. Company and enable them to ensure that which take effect, alter or terminate upon a the financial statements and the Directors’ Statement of Directors’ responsibilities Remuneration Report comply with the change of control of the Company. in respect of the financial statements Companies Act 2006. Modern Slavery Act The Directors are responsible for preparing The Directors are responsible for the The Company welcomes the aims and the Annual Report and Accounts and the maintenance and integrity of the Company’s objectives of the Modern Slavery Act 2015 financial statements in accordance with website. Legislation in the United Kingdom (MSA) and continues to take its responsibilities applicable law and regulation. governing the preparation and dissemination under the MSA with the seriousness it Company law requires the Directors to of financial statements may differ from deserves and requires. The Company will prepare financial statements for each legislation in other jurisdictions. shortly be publishing its sixth statement financial year. Under that law the Directors under the MSA which will be available on Directors’ confirmations have prepared the Group financial theCompany’s website. Each of the Directors, whose names and statements in accordance with UK adopted international accounting standards and the functions are listed in the Board of Directors Employee share ownership Company financial statements in accordance pages of the Corporate Governance report The Company promotes employee share confirm that, to the best of their knowledge: with United Kingdom Generally Accepted ownership as widely as possible across Accounting Practice (United Kingdom – The Group financial statements, which theCompany. The Company has two Accounting Standards, comprising FRS 101 have been prepared in accordance with all-employee share plans, the Save As Reduced Disclosure Framework, and UK-adopted international accounting YouEarn share option plan and the Share applicable law). standards, give a true and fair view of the Incentive Plan, which are offered to all Under company law, Directors must not assets, liabilities, financial position and UK-based employees once they have approve the financial statements unless they profit of the Group. worked for the Company for three months. are satisfied that they give a true and fair – The Company financial statements, which The Company also offers a scheme whereby view of the state of affairs of the Group and have been prepared in accordance with employees who do not participate in the Company and of the profit or loss of the United Kingdom Accounting Standards, Executive Incentive Scheme (cash bonus Group for that period. In preparing the comprising FRS 101, give a true and fair scheme) are offered the opportunity to financial statements, the Directors are view of the assets, liabilities and financial exchange any cash bonus awarded for required to: position of the Company. shares in the Company, offering a 20% – The Strategic report includes a fair review enhancement to the value if taken entirely in – Select suitable accounting policies and of the development and performance of shares and retained for one year. The then apply them consistently. the business and the position of the Group scheme has operated since 2012 and in – State whether applicable UK-adopted and Company, together with a description 2021 resulted in 233,335 shares (2020: international accounting standards have of the Principal Risks and uncertainties 574,817) being acquired by 225 employees been followed for the Group financial that it faces. (2020: 294). The relatively lower number of statements and United Kingdom shares awarded in 2021 reflected the lower This Directors’ report and responsibility Accounting Standards, comprising FRS bonus level for 2020 performance received statement was approved by the Board of 101 have been followed for the Company by employees. Directors on 2 March 2022 and is signed financial statements, subject to any material departures disclosed and onits behalf by: The percentage of our employees who hold | shares in the Company, either through the | explained in the financial statements. | | --- | --- | | all-employee share plans, the bonus | – Make judgements and accounting | | exchange scheme, or any other method is | estimates that are reasonable and prudent. | | 61% (2020: 64%). | – Prepare the financial statements on | thegoing concern basis unless it is Employment of people with disabilities inappropriate to presume that the Group Alice Black The Company is committed to ensuring that and Company will continue in business. Group General Counsel and Company people with disabilities are treated fairly, The Directors are responsible for Secretary, Taylor Wimpey plc supported and encouraged to apply for safeguarding the assets of the Group and employment and to progress and receive 2 March 2022 Company and hence for taking reasonable training once employed. Working with key steps for the prevention and detection of partners, we hope to increase permanent fraud and other irregularities. 127Taylor Wimpey plc Annual Report 2021 Financial statements # Independent auditors' report to the members of Taylor Wimpey plc ## Report on the audit of the financial statements ### Opinion In our opinion: - Taylor Wimpey plc's Group financial statements and Company financial statements (the "financial statements") give a true and fair view of the state of the Group's and of the Company's affairs as at 31 December 2021 and of the Group's profit and the Group's cash flows for the year then ended; - the Group financial statements have been properly prepared in accordance with UK-adapted international accounting standards; - the Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 "Reduced Disclosure Framework", and applicable law); and - the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financial statements, included within the Annual Report and Accounts (the "Annual Report"), which comprise: the Consolidated and Company balance sheets as at 31 December 2021; the Consolidated income statement; the Consolidated statement of comprehensive income; the Consolidated cash flow statement and the Consolidated and Company statements of changes in equity for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies. Our opinion is consistent with our reporting to the Audit Committee. ### Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. ### Independence We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC's Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC's Ethical Standard were not provided. Other than those disclosed in note 6, we have provided no non-audit services to the Company or its controlled undertakings in the period under audit. ### Our audit approach #### Context Taylor Wimpey is a listed housebuilder, predominantly operating in the UK, also with a presence in Spain. The Group focuses on the sale of private dwellings, which comprised 91% of total revenue in 2021, with the majority of the remaining revenue generated through delivery of partnership housing contracts. The Group's consolidated financial statements are primarily an aggregation of the 23 UK Business Units, representing the regional UK housebuilding businesses encompassed in Taylor Wimpey UK Limited, consolidated with the Group's Spanish operations, Taylor Wimpey de España S.A.U., the Company and the share of the Group's interest in joint ventures. For the purposes of our audit, we considered Taylor Wimpey UK Limited, Taylor Wimpey de España S.A.U. and the Company to be separate components. The context of our audit is underpinned by 2021 being our first year as external auditors of the Group. As part of our audit transition, we performed specific procedures over opening balances by shadowing the prior year audit undertaken by the predecessor auditor, reviewing the predecessor auditors working papers and risk assessment, both in the UK and Spain, and re-evaluating the predecessor auditors' conclusions in respect of key sources of estimation uncertainty in the opening balance sheet at 1 January 2021. We performed process walkthroughs to understand and evaluate the key financial processes and controls across the Group and, in accordance with International Standard on Review Engagements (UK and Ireland) 2410, a review of the half year financial information. Following this work, we performed a significant amount of early audit procedures in advance of the year-end, covering each of the Business Units and the Group functions. The objective of this audit work was: - to perform initial testing in relation to the design and operating effectiveness of the controls we planned to place reliance on; - to ensure that we had a clear plan as to what work needed to be done when and where at year-end; - to perform initial substantive testing, particularly where larger samples were required; and - to enable early consideration of the key sources of estimation uncertainty before the year-end. The audit transition, half year review and pre year-end audit work were important in determining our 2021 Group audit scope, areas of focus and detailed testing approach. As we undertook each phase of this first year audit, we regularly reconsidered our risk assessment to reflect audit findings, including our assessment of the Group's control environment and the impact on our planned audit approach. In terms of risk assessment: - given the nature of the Group's operations and the methodology for recognising margin on units sold, we considered margin recognition and forecasting to be the most significant area and therefore have included this as a key audit matter; and - we considered current Government legislation and announcements, particularly in relation to cladding and fire safety, and hence also included a key audit matter in relation to this. 128 Taylor Wimpey plc Annual Report 2021 As part of our audit we also made enquiries of management to understand the process they have adopted to assess the potential impact of climate change on the financial statements. Management considers that the impact of climate change does not give rise to a material financial statement impact in the current year and we used our knowledge of the Group and the industry to evaluate management's assessment. We particularly considered the potential impact on forecast build costs, and therefore margins, of new climate related regulations, such as Part L & F of the Building Regulations. # Overview # Audit scope Our Group audit included full scope audits of Taylor Wimpey UK Limited (which includes the Group's 23 UK Business Units), Taylor Wimpey plc (the "Company") and Taylor Wimpey de España S.A.U. We also performed audit procedures over specified balances and transitions across a number of the Group's joint ventures. Finally we audited the consolidation, including consolidation adjustments. Taken together, the above procedures included operations covering 100% of revenue, 99% of profit before tax, 99% of profit before tax and exceptional items and 97% of net assets. # Key audit matters - Margin recognition and site forecasting (Group) - Cladding fire safety provision (Group) - Valuation of investments in Group undertakings and amounts due from Group undertakings (Company) # Materiality - Overall Group materiality: £40.0 million based on 5% of profit before tax and exceptional items. - Overall Company materiality: £36.0 million based on 1% of net assets capped at 90% of overall Group materiality. - Performance materiality: £30.0 million (Group) and £27.0 million (Company). # The scope of our audit As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. # Key audit matters Key audit matters are those matters that, in the auditors' professional judgement, were of most significance in the 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) identified by the auditors, including 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, and any comments we make on the results of our procedures thereon, 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. This is not a complete list of all risks identified by our audit. Taylor Wimpey plc Annual Report 2021 129 Financial statements Independent auditors' report continued # Key audit matter # Margin recognition and site forecasting (Group) Refer to page 104 (Audit Committee report) and page 146 (Critical accounting judgements and key sources of estimation uncertainty). As at 31 December 2021 the Group's inventory balance is £4,945.7 million (31 December 2020: £4,534.7 million) and is the most significant asset on the Consolidated balance sheet. The Group's margin recognition policy is based on the margin forecast for each site. These margins reflect estimated sales prices and costs for each site. This is a method of allocating the total forecast costs, representing both land and build costs, of a site to each individual unit. There is a risk that the margin forecast for the site, and consequently the margin recognised on each unit sold, is not appropriate and reflective of the actual final margin that will be recognised on a site. As a result excess profit margins would be recognised earlier, to the detriment of reduced margins on units sold at the end of the site, or vice versa. The risk is due to the high level of management estimation involved in ensuring the accuracy and completeness of an individual site forecast, and the monitoring of these estimates over time. Sales prices and build costs are inherently uncertain, as they are influenced by changes in external market factors, such as the availability and affordability of mortgages, changes in customer demand due to market uncertainty, or build cost inflation. There is higher uncertainty when a site is scheduled to be completed over a long timeframe. Management has implemented internal controls to assess site acquisition and initial forecasts to assist financial appraisal processes, and further controls to monitor the ongoing costs and sales prices within these forecasts, including changes to forecast costs as a result of new climate related regulations, e.g. Part L & F of the Building Regulations. There is a risk that these controls do not operate effectively in ensuring the accuracy and completeness of the forecasts. We consider the accuracy and completeness of forecasting and the appropriateness of margin recognition across the life of the site to be a significant financial reporting risk, and hence audit risk, for the Group. # How our audit addressed the key audit matter Our audit procedures focused in particular on assessing the judgemental elements used to determine an accurate margin, being forecast costs and forecast revenues. Our procedures included, but were not limited to: - We tested a number of key controls within the build cycle, such as: - management's review meetings, where the performance to date and expected outturn are updated, reviewed and challenged for each site on a bi-monthly basis; - review, approval and recognition of cost variations against the original site budgets; - surveyor valuations assessing the stage of completion of individual plots across all sites; and - review and approval of initial site budgets. - We assessed management's historical forecasting accuracy on all active sites in 2021, through comparison to historical forecasts from 2020 and 2019, as well as the initial site budget. We investigated significant differences or trends to understand whether they were driven by items that could reasonably have been foreseen or predicted rather than items outside of management's control such as build cost inflation; - We tested a sample of forecast costs to third party evidence, such as tender documents, or other appropriate support; - We tested a sample of forecast sales prices to the actual sales prices attained on similar properties; - We understood risks and opportunities identified in relation to sites to ensure completeness of costs within the site forecast, including consideration of the impact of future climate related regulation and requirements; - We tested a sample of actual costs incurred to third party evidence, as well as testing the allocation of costs to the correct sites; - We tested a sample of actual revenue recognised in the period to third party contracts, completion statements and bank statements; - We verified, by recalculating the margins, that the system correctly recalculates the margin following each cost or sales price amendment made by management; and - We tested that the system appropriately apportions the cost of sales associated with each plot when a sale is made. Based on the procedures performed, we did not identify any sites where we considered the actual margin recognised or forecast margin to be materially inappropriate. 130 Taylor Winopay plc Annual Report 2021 # **Key audit matter** # **Cladding fire safety provision (Group)** Refer to page 104 (Audit Committee report) and page 146 (Critical accounting judgements and key sources of estimation uncertainty). In March 2021 the Group announced it would support owners of buildings constructed by the Group going back 20 years from January 2021, including apartment buildings below 18 metres in completing remediation works required to achieve RICS EWS1 certification levels. The cost of providing this financial support was estimated at £125.0 million, and a provision was recorded on the grounds that the announcement created a constructive obligation. The provision is identified as a source of estimation uncertainty as there are several factors that could drive changes to the level of financial support required to be given in future periods. The key assumptions are the number of buildings requiring work, the cost of remediation works for each relevant building and the level of funding available to building owners under the Building Safety Fund as at the balance sheet date. Future industry guidance or regulation could also potentially change the obligation, and therefore the financial support required to be provided. Given the estimation uncertainty and the stakeholder focus on what is an industry wide issue, we identified the valuation of the cladding fire safety provision, specifically the £125m recorded during the year, as a significant audit risk. # **How our audit addressed the key audit matter** In addressing the risk that the provision was valued incorrectly, our audit procedures included, but were not limited to, the following: - We enquired with management, including the Group Management Team, to understand the rationale behind the provision and whether it met the requirements of IAS 37 for the recognition of a constructive obligation; - We recalculated and checked the integrity of management's model, to assess the accuracy of the calculation; - We tested the completeness of the buildings included by reference to publicly available information on Taylor Wimpey constructed buildings; - We tested the completeness of the provision by considering whether, for buildings where there was no provision, that conclusion was appropriate by inspecting supporting information including the results from any surveys undertaken; - We tested the valuation of the remediation costs included within the provision back to third party evidence, to corroborate the inputs into the provision calculation. Examples of audit evidence included external wall assessments to determine the extent of works required and third party evidence such as external quantity surveyor quotes. - We assessed the technical capabilities and expertise of the Group's employees and external consultants involved in assessing the expected work and costs; - We understood and assessed the estimated impact of potential contributions from the Building Safety Fund to the overall expected remediation costs; - We assessed the ability of management to forecast remediation costs by comparing original internal estimates to tendered works; - We read recent government guidelines to confirm that management's assumptions and interpretations were appropriate; and - We reviewed the disclosures included in the financial statements, including those on estimation uncertainty required by IAS 1 and those required by IAS 37. Overall, we found that, based on the audit evidence that we obtained, management's assessment of the provision was appropriate given the commitment made and the conditions that existed at the balance sheet date. We also considered the disclosures made in the financial statements to be in line with the requirements of IAS 37 'Provisions, contingent liabilities and contingent assets'. Taylor Wimpey plc Annual Report 2021 131 Financial statements Independent auditors' report continued | Key audit matter | How our audit addressed the key audit matter | | --- | --- | | **Valuation of investments in Group undertakings and amounts due from Group undertakings (Company)** *Refer to page 175 Investments in Group undertakings and Trade and other receivables notes in the Company financial statements.* The carrying value of the investments in Group undertakings and amounts due from Group undertakings in the Company accounts are £2,446.2m (2020: £2,433.0m) and £2,848.7m (£2,922.5m) respectively. The key estimate is whether the carrying values of the investments and intercompany receivables are supported by the forecast future cash flows of the underlying Group undertakings. As such it was this area where we applied the most audit effort in respect of the audit of the Company and hence why it was identified as a key audit matter. | Audit procedures included, but were not limited to, the following: – We assessed the net assets of the underlying investments to confirm that they were in excess of the carrying value of the Company's investment in Group undertakings; – We verified that future cash flows supported the recoverability of amounts due from Group undertakings and that no impairment was required; – We confirmed that the market capitalisation of the Group as at 31 December 2021 exceeded the carrying value of the investment in Group undertakings and confirmed that there were no impairment triggers in the year; and – We verified that the aggregate net current assets of subsidiary undertakings were sufficient to support the intercompany receivables and whether, in accordance with IFRS 9, an expected credit loss was required. We have no issues to report in respect of this work. | # **How we tailored the audit scope** We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the Group and the Company, the accounting processes and controls, and the industry in which they operate. The Group's consolidated financial statements are primarily an aggregation of the 23 UK Business Units, representing the regional UK housebuilding businesses, consolidated with the Group's Spanish operations, Taylor Wimpey de España S.A.U., the Company and the share of the Group's interest in joint ventures. The 23 UK Business Units operate under a common control environment, underpinned by the Group's Operating Framework. The Group engagement team's initial testing focused on the effectiveness and consistency of the design and implementation of the controls and processes, and based on this, we determined that the aggregated Business Units could be treated as one population for further testing purposes. In addition, we performed detailed audit work over the consolidation journals and specific financial statement line items within the Group's joint ventures. We instructed PwC Spain to perform procedures over Taylor Wimpey de España S.A.U.'s financial information, which forms part of the Group's consolidated financial statements. Our work covered 100% of revenue, 99% of profit before tax, 99% of profit before tax and exceptional items and 97% of net assets. We performed specific audit testing over the exceptional item, relating specifically to the cladding fire safety provision. We also performed a full scope audit of the Company financial statements which was considered a separate component for the purposes of our audit. # **Materiality** The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole. Based on our professional judgement, we determined materiality for the financial statements as a whole as follows: | | Financial statements – Group | Financial statements – Company | | --- | --- | --- | | **Overall materiality** | £40.0 million | £36.0 million | | **How we determined it** | 5% of profit before tax and exceptional items | 1% of net assets capped at 90% of overall Group materiality | | **Rationale for benchmark applied** | Profit before tax is a generally accepted auditing benchmark. On the basis that exceptional items are not reflective of the operating performance of the Group and are excluded from key alternative performance measures we have also excluded them from the benchmark amount. | We believe that total assets is the primary measure used by the shareholders in assessing the performance of the entity, which acts solely as a holding company, and is a generally accepted auditing benchmark. | 132 Taylor Wimpey plc Annual Report 2021 For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality. The range of materiality allocated across components was £12.5 million to £36.0 million. Certain components were audited to a local statutory audit materiality that was also less than our overall Group materiality. We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality was 75% of overall materiality, amounting to £30.0 million for the Group financial statements and £27.0 million for the Company financial statements. In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment and aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range was appropriate. We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £2.0 million (Group and Company audit) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons. # Conclusions relating to going concern Our evaluation of the Directors' assessment of the Group's and the Company's ability to continue to adopt the going concern basis of accounting included: - We tested the accuracy and integrity of the underlying model used by management in developing their going concern forecasts, and checked the approval of the forecasts by the Board; - We tested the key assumptions used in the model, including comparison to third party market information where appropriate and checking that the assumptions used in the "severe but plausible" scenario were sufficiently severe to model potential future economic downturn, in line with those observed in the global financial crisis in 2007-8; - We considered the historical reliability of management forecasting by comparing budgeted results to actual performance; and - We reviewed the covenants applicable to the Group's borrowings and facility and checked that the forecasts supported ongoing compliance with the covenants in the going concern assessment period. 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 the 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 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. However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group's and the Company's ability to continue as a going concern. In relation to the Directors' reporting on how they have 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. # Reporting on other information The other information comprises all of the information in the Annual Report other than the financial statements and our auditors' report thereon. The Directors are responsible for the other information, which includes reporting based on the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon. In connection with our audit of the financial statements, 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 audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based 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. We have nothing to report based on these responsibilities. With respect to the Strategic report and Directors' report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included. Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below. # Strategic report and Directors' report In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Directors' report for the year ended 31 December 2021 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements. In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic report and Directors' report. # Directors' Remuneration In our opinion, the part of the Remuneration Committee report to be audited has been properly prepared in accordance with the Companies Act 2006. Taylor Wimpay plc Annual Report 2021 133 Financial statements Independent auditors’ report ccoonnttiinnuueedd Corporate governance statement Responsibilities for the financial statements and The Listing Rules require us to review the Directors’ statements the audit in relation to going concern, longer-term viability and that part of Responsibilities of the Directors for the financial statements the corporate governance statement relating to the Company’s As explained more fully in the Statement of Directors’ responsibilities compliance with the provisions of the UK Corporate Governance in respect of the financial statements, the Directors are responsible Code specified for our review. Our additional responsibilities with for the preparation of the financial statements in accordance with the respect to the corporate governance statement as other information applicable framework and for being satisfied that they give a true and are described in the Reporting on other information section of fair view. The Directors are also responsible for such internal control this report. as they determine is necessary to enable the preparation of financial Based on the work undertaken as part of our audit, we have statements that are free from material misstatement, whether due to concluded that each of the following elements of the corporate fraud or error. governance statement is materially consistent with the financial In preparing the financial statements, the Directors are responsible statements and our knowledge obtained during the audit, and we for assessing the Group’s and the Company’s ability to continue as have nothing material to add or draw attention to in relation to: a going concern, disclosing, as applicable, matters related to going – The Directors’ confirmation that they have carried out a robust concern and using the going concern basis of accounting unless the assessment of the emerging and principal risks; Directors either intend to liquidate the Group or the Company or to – The disclosures in the Annual Report that describe those principal cease operations, or have no realistic alternative but to do so. risks, what procedures are in place to identify emerging risks and Auditors’ responsibilities for the audit of the an explanation of how these are being managed or mitigated; financial statements – The Directors’ statement in the financial statements about whether Our objectives are to obtain reasonable assurance about they considered it appropriate to adopt the going concern basis whether the financial statements as a whole are free from material of accounting in preparing them, and their identification of any misstatement, whether due to fraud or error, and to issue an material uncertainties to the Group’s and Company’s ability to auditors’ report that includes our opinion. Reasonable assurance continue to do so over a period of at least twelve months from is a high level of assurance, but is not a guarantee that an audit the date of approval of the financial statements; conducted in accordance with ISAs (UK) will always detect a material – The Directors’ explanation as to their assessment of the Group’s misstatement when it exists. Misstatements can arise from fraud or and Company’s prospects, the period this assessment covers error and are considered material if, individually or in the aggregate, and why the period is appropriate; and they could reasonably be expected to influence the economic – The Directors’ statement as to whether they have a reasonable decisions of users taken on the basis of these financial statements. expectation that the Company will be able to continue in operation Irregularities, including fraud, are instances of non-compliance and meet its liabilities as they fall due over the period of its with laws and regulations. We design procedures in line with our assessment, including any related disclosures drawing attention responsibilities, outlined above, to detect material misstatements to any necessary qualifications or assumptions. in respect of irregularities, including fraud. The extent to which our Our review of the Directors’ statement regarding the longer-term procedures are capable of detecting irregularities, including fraud, viability of the Group was substantially less in scope than an audit is detailed below. and only consisted of making inquiries and considering the Directors’ Based on our understanding of the Group and industry, we identified process supporting their statement; checking that the statement is that the principal risks of non-compliance with laws and regulations in alignment with the relevant provisions of the UK Corporate related to building regulations, including fire and building safety Governance Code; and considering whether the statement is legislation, health and safety legislation, tax and pension legislation, consistent with the financial statements and our knowledge and environmental regulation and employment law and we considered understanding of the Group and Company and their environment the extent to which non-compliance might have a material effect obtained in the course of the audit. on the financial statements. We also considered those laws and In addition, based on the work undertaken as part of our audit, we regulations that have a direct impact on the financial statements have concluded that each of the following elements of the corporate such as the Listing Rules and the Companies Act 2006. We governance statement is materially consistent with the financial evaluated management’s incentives and opportunities for fraudulent statements and our knowledge obtained during the audit: manipulation of the financial statements (including the risk of override – The Directors’ statement that they consider the Annual Report, of controls), and determined that the principal risks were related to taken as a whole, is fair, balanced and understandable, and artificial inflation of reported results via the posting of fraudulent provides the information necessary for the members to assess journals, primarily as part of the consolidation process at Group, the Group’s and Company’s position, performance, business and bias in the assumptions underpinning significant provisions. model and strategy; The Group engagement team shared this risk assessment with the component auditors so that they could include appropriate audit – The section of the Annual Report that describes the review of procedures in response to such risks in their work. Audit procedures effectiveness of risk management and internal control systems; performed by the Group engagement team and/or component and auditors included: – The section of the Annual Report describing the work of the Audit Committee. – Discussions with the Group Management Team, Business Unit Management, Internal Audit and the Audit Committee, review of We have nothing to report in respect of our responsibility to report internal audit reports and consideration of known or suspected when the Directors’ statement relating to the Company’s compliance instances of non-compliance with laws and regulation and fraud; with the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by the auditors. 134 Taylor Wimpey plc Annual Report 2021 134 Taylor Wimpey plc Annual Report 2021 - Evaluation and testing of the operating effectiveness of management's controls designed to prevent and detect irregularities, in particular their controls around margin recognition and site forecasting; - Challenging the assumptions and judgements made by management in determining their significant accounting estimates, in particular in relation to margin recognition, site forecasting and provisions; and - Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations including unusual or unexpected journal postings to the Consolidated income statement. There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected. A further description of our responsibilities for the audit of the financial statements is located on the FRC's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors' report. # Use of this report This report, including the opinions, has been prepared for and only for the Company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. ## Other required reporting ### Companies Act 2006 exception reporting Under the Companies Act 2006 we are required to report to you if, in our opinion: - we have not obtained all the information and explanations we require for our audit; or - adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not visited by us; or - certain disclosures of Directors' remuneration specified by law are not made; or - the Company financial statements and the part of the Remuneration Committee report to be audited are not in agreement with the accounting records and returns. We have no exceptions to report arising from this responsibility. ### Appointment Following the recommendation of the Audit Committee, we were appointed by the members on 22 April 2021 to audit the financial statements for the year ended 31 December 2021 and subsequent financial periods. This is therefore our first year of uninterrupted engagement. ## Other matter As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial statements form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct Authority in accordance with the ESEF Regulatory Technical Standard ('ESEF RTS'). This auditors' report provides no assurance over whether the annual financial report has been prepared using the single electronic format specified in the ESEF RTS. Sonia Copeland (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London 2 March 2022 Taylor Wimpey plc Annual Report 2021 135 Financial statements ## Consolidated income statement for the year to 31 December 2021 | | | Before | | | | | Before | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | exceptional | | Exceptional | | | exceptional | | Exceptional | | | | | | items | | items | Total | | items | | items | Total | | £ million Note | | 2021 | | 2021 | 2021 | | 2020 | | 2020 | 2020 | Continuing operations Revenue 4 4,284.9 – 4,284.9 2,790.2 – 2,790.2 Cost of sales (3,257.9) – (3,257.9) (2,293.5) – (2,293.5) Gross profit 1,027.0 – 1,027.0 496.7 – 496.7 Net operating expenses 6 (203.8) (125.0) (328.8) (204.3) (10.0) (214.3) Profit on ordinary activities before net finance costs 823.2 (125.0) 698.2 292.4 (10.0) 282.4 Finance income 8 2.4 – 2.4 3.5 – 3.5 Finance costs 8 (26.4) – (26.4) (29.4) – (29.4) Share of results of joint ventures 13 5.4 – 5.4 7.9 – 7.9 Profit before taxation 804.6 (125.0) 679.6 274.4 (10.0) 264.4 axation (charge)/credit 9 (147.9) 23.8 (124.1) (49.1) 1.7 (47.4) Profit for the year 656.7 (101.2) 555.5 225.3 (8.3) 217.0 Note 2021 2020 Basic earnings per share 10 15.3p 6.3p Diluted earnings per share 10 15.2p 6.2p djusted basic earnings per share 10 18.0p 6.5p djusted diluted earnings per share 10 18.0p 6.5p All of the profit for the year is attributable to the equity holders of the Parent Company. 136 Taylor Wimpey plc Annual Report 2021 T A A 136 Taylor Wimpey plc Annual Report 2021 ## Consolidated statement of comprehensive income for the year to 31 December 2021 ## Consolidated income statement £ million Note 2021 2020 for the year to 31 December 2021 Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of foreign operations 25 (6.9) 5.2 Movement in fair value of hedging instruments 25 4.8 (4.2) | | | Before | | | | | Before | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | exceptional | | Exceptional | | | exceptional | | Exceptional | | | Items that will not be reclassified subsequently to profit or loss: | | | | | items | | items | Total | | items | | items | Total | | | | £ million Note | | 2021 | | 2021 | 2021 | | 2020 | | 2020 | 2020 | ctuarial gain/(loss) on defined benefit pension schemes 21 37.9 (36.6) | | | Continuing operations | | | | | | | | | | | a | (charge)/credit on items taken directly to other comprehensive income 14 (5.4) 8.6 | | Revenue 4 4,284.9 – 4,284.9 2,790.2 – 2,790.2 | | | | | | | | | | | Other comprehensive income/(expense) for the year 30.4 (27.0) | | | Cost of sales (3,257.9) – (3,257.9) (2,293.5) – (2,293.5) | | | | | | | | | | | Profit for the year 555.5 217.0 | | | Gross profit 1,027.0 – 1,027.0 496.7 – 496.7 | | | | | | | | | | | Total comprehensive income for the year 585.9 190.0 | | Net operating expenses 6 (203.8) (125.0) (328.8) (204.3) (10.0) (214.3) Profit on ordinary activities before net finance costs 823.2 (125.0) 698.2 292.4 (10.0) 282.4 All of the comprehensive income for the year is attributable to the equity holders of the Parent Company. Finance income 8 2.4 – 2.4 3.5 – 3.5 Finance costs 8 (26.4) – (26.4) (29.4) – (29.4) Share of results of joint ventures 13 5.4 – 5.4 7.9 – 7.9 Profit before taxation 804.6 (125.0) 679.6 274.4 (10.0) 264.4 axation (charge)/credit 9 (147.9) 23.8 (124.1) (49.1) 1.7 (47.4) Profit for the year 656.7 (101.2) 555.5 225.3 (8.3) 217.0 Note 2021 2020 Basic earnings per share 10 15.3p 6.3p Diluted earnings per share 10 15.2p 6.2p djusted basic earnings per share 10 18.0p 6.5p djusted diluted earnings per share 10 18.0p 6.5p All of the profit for the year is attributable to the equity holders of the Parent Company. 137Taylor Wimpey plc Annual Report 2021 T A A A T x 136 Taylor Wimpey plc Annual Report 2021 Taylor Wimpey plc Annual Report 2021 137 Financial statements # Consolidated balance sheet at 31 December 2021 | £ million | Note | 2021 | 2020 | | --- | --- | --- | --- | | **Non-current assets** | | | | | Intangible assets | 11 | 6.6 | 8.1 | | Property, plant and equipment | 12 | 21.7 | 24.0 | | Right-of-use assets | 19 | 26.5 | 27.5 | | Interests in joint ventures | 13 | 85.4 | 82.2 | | Trade and other receivables | 16 | 27.5 | 26.3 | | Other financial assets | 21 | 10.0 | – | | Deferred tax assets | 14 | 26.2 | 33.7 | | | | **203.9** | **201.8** | | **Current assets** | | | | | Inventories | 15 | 4,945.7 | 4,534.7 | | Trade and other receivables | 16 | 168.2 | 189.1 | | Tax receivables | | 1.0 | – | | Cash and cash equivalents | 16 | 921.0 | 823.0 | | | | **6,035.9** | **5,546.8** | | **Total assets** | | **6,239.8** | **5,748.6** | | **Current liabilities** | | | | | Trade and other payables | 18 | (901.9) | (919.3) | | Lease liabilities | 19 | (7.0) | (6.4) | | Bank and other loans | 17 | – | (13.5) | | Tax payables | | (0.8) | (1.1) | | Provisions | 22 | (125.4) | (70.6) | | | | **(1,035.1)** | **(1,010.9)** | | **Net current assets** | | **5,000.8** | **4,535.9** | | **Non-current liabilities** | | | | | Trade and other payables | 18 | (829.3) | (459.8) | | Lease liabilities | 19 | (20.4) | (21.6) | | Bank and other loans | 17 | (84.0) | (90.1) | | Retirement benefit obligations | 21 | (37.3) | (89.5) | | Provisions | 22 | (119.7) | (59.9) | | | | **(890.7)** | **(720.9)** | | **Total liabilities** | | **(1,925.8)** | **(1,731.8)** | | **Net assets** | | **4,314.0** | **4,016.8** | | **Equity** | | | | | Share capital | 23 | 292.2 | 292.2 | | Share premium | 24 | 777.5 | 773.1 | | Own shares | 26 | (14.6) | (11.5) | | Other reserves | 25 | 541.6 | 543.7 | | Retained earnings | | 2,717.3 | 2,419.3 | | **Total equity** | | **4,314.0** | **4,016.8** | The financial statements of Taylor Wimpey plc (registered number: 206805) were approved by the Board of Directors and authorised for issue on 2 March 2022. They were signed on its behalf by: P Redfern Director C Carney Director 138 Taylor Wimpey plc Annual Report 2021 ## Consolidated statement of changes in equity for the year to 31 December 2021 | £ million | Share capital | Share premium | Own shares | Other revenues | Retained earnings | Total | | --- | --- | --- | --- | --- | --- | --- | | Total equity at 1 January 2020 | 288.6 | 782.9 | (17.6) | 43.6 | 2,230.3 | 3,357.8 | | **Other comprehensive income/(expense) for the year** | – | – | – | 1.0 | (28.0) | (27.0) | | Profit for the year | – | – | – | – | 217.0 | 217.0 | | **Total comprehensive income for the year** | – | – | – | 1.0 | 189.0 | 190.0 | | New share capital subscribed | 3.6 | 10.2 | – | 499.1 | – | 512.9 | | Utilisation of own shares | – | – | 6.1 | – | – | 6.1 | | Cash cost of satisfying share options | – | – | – | – | (8.0) | (8.0) | | Share-based payment credit | – | – | – | – | 7.0 | 7.0 | | Tax credit on items taken directly to statement of changes in equity | – | – | – | – | 1.0 | 1.0 | | Total equity at 31 December 2020 | 292.2 | 773.1 | (11.5) | 543.7 | 2,419.3 | 4,016.8 | | **Other comprehensive (expense)/income for the year** | – | – | – | (2.1) | 32.5 | 30.4 | | Profit for the year | – | – | – | – | 555.5 | 555.5 | | **Total comprehensive (expense)/income for the year** | – | – | – | (2.1) | 588.0 | 585.9 | | New share capital subscribed | – | 4.4 | – | – | – | 4.4 | | Own shares acquired | – | – | (4.2) | – | – | (4.2) | | Utilisation of own shares | – | – | 1.1 | – | – | 1.1 | | Cash cost of satisfying share options | – | – | – | – | (1.9) | (1.9) | | Share-based payment credit | – | – | – | – | 13.2 | 13.2 | | Tax credit on items taken directly to statement of changes in equity | – | – | – | – | 0.2 | 0.2 | | Dividends approved and paid | – | – | – | – | (301.5) | (301.5) | | **Total equity at 31 December 2021** | **292.2** | **777.5** | **(14.6)** | **541.6** | **2,717.3** | **4,314.0** | Taylor Wimpey plc Annual Report 2021 139 Financial statements ## Consolidated cash flow statement for the year to 31 December 2021 | £ million | Note | 2021 | 2020 | | --- | --- | --- | --- | | **Profit on ordinary activities before net finance costs** | | **698.2** | **282.4** | | Adjustments for: | | | | | Depreciation and amortisation | | 15.6 | 16.4 | | Pension contributions in excess of charge to the income statement | | (15.2) | (33.4) | | Share-based payment charge | | 13.2 | 7.0 | | Increase in provisions excluding exceptional payments | | 130.0 | 19.6 | | **Operating cash flows before movements in working capital** | | **841.8** | **292.0** | | Increase in inventories | | (293.2) | (362.2) | | Decrease/(increase) in receivables | | 32.1 | (19.5) | | Decrease in payables | | (6.0) | (75.3) | | **Cash generated from/(used in) operations** | | **574.7** | **(165.0)** | | Payments related to exceptional charges | | (15.1) | (17.7) | | Income taxes paid | | (123.0) | (107.7) | | Interest paid | | (4.7) | (10.8) | | **Net cash generated from/(used in) operating activities** | | **431.9** | **(301.2)** | | **Investing activities** | | | | | Interest received | 8 | 2.1 | 3.1 | | Dividends received from joint ventures | | 8.1 | 0.8 | | Purchase of property, plant and equipment | 12 | (2.5) | (3.1) | | Purchase of software | 11 | (2.1) | (4.9) | | Investment in pension scheme escrow | | (10.0) | – | | Amounts invested in joint ventures | | (5.9) | (19.8) | | **Net cash used in investing activities** | | **(10.3)** | **(23.9)** | | **Financing activities** | | | | | Lease capital repayments | | (6.9) | (8.0) | | Proceeds from the issue of own shares | | – | 510.1 | | Cash received on exercise of share options | | 3.6 | 0.8 | | Purchase of own shares | | (4.2) | – | | Repayment of borrowings | | (12.7) | – | | Proceeds from borrowings | | – | 13.5 | | Dividends paid | 31 | (301.5) | – | | **Net cash (used in)/generated from financing activities** | | **(321.7)** | **516.4** | | **Net increase in cash and cash equivalents** | | **99.9** | **191.3** | | **Cash and cash equivalents at beginning of year** | | **823.0** | **630.4** | | Effect of foreign exchange rate changes | | (1.9) | 1.3 | | **Cash and cash equivalents at end of year** | 27 | **921.0** | **823.0** | 140 Taylor Wimpsey plc Annual Report 2021 # Notes to the consolidated financial statements ## 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 On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and became UK adopted international accounting standards, with future changes being subject to endorsement by the UK Endorsement Board. The Group transitioned to UK adopted international accounting standards in its consolidated financial statements on 1 January 2021. There was no impact or changes in accounting policies from the transition. 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 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 (amendments) – interest rate benchmark reform – phase 2 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 1 'Presentation of Financial Statements' (amendments) – classification of liabilities as current or non-current - IAS 1 'Presentation of Financial Statements' (amendments) – disclosure of accounting policies - IAS 12 'Income Taxes' (amendments) – deferred tax related to assets and liabilities arising from a single transaction - IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors' (amendments) – definition of accounting estimates - Annual improvement in IFRS Standards 2018-2020 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 Group forecasts have been prepared that have considered the Group's current financial position and current market circumstances. The forecasts were subject to sensitivity analysis together with the likely effectiveness of mitigating actions. The assessment considers sensitivity analysis on a series of realistically possible, but severe and prolonged, changes to principal assumptions. In determining these the Group has included macro-economic and industry-wide projections as well as matters specific to the Group. The severe but 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 the stress test the Group has drawn on experience gained managing the business through previous economic downturns and the COVID-19 pandemic. As a result, the Group has stress tested the business against the following severe but plausible downside scenario which can be attributed back to the Group's Principal Risks that have been identified as having the most impact on the longer-term prospects and viability of the Group. The impact of the Principal Risk 'Natural resources and climate change' is not deemed to be material within the forecast period, albeit known costs from regulations have been included in the modelling. - Volume – a decline in total volumes of 20% from 2021, recovering by the end of the forecast period - Price – a reduction to current selling prices of 20%, recovering by the end of the forecast period - Costs – a one-off exceptional charge and cash cost of £150 million for an unanticipated event, change in Government regulations or financial penalty (e.g. from a cyber security breach) Within the scenario build costs are forecast to reduce with lower volumes reducing pressure on the availability of materials and resources and land cost remains flat as the possible increase in availability due to lower volumes is offset by a restriction in supply. An estimate for the cost of the Future Homes Standard has been assumed. 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 reducing our overhead base to reflect the lower volumes. If these scenarios were to occur, the Group also has a range of additional options to maintain its financial strength, including: a reduction in capital expenditure, the sale of assets, reducing the dividend, and or raising debt. The Group's liquidity (defined as cash and undrawn committed facilities) was £1,471 million at 31 December 2021. The undrawn facilities of £550 million mature in February 2025 with the drawn facility maturing more than one year after the current balance sheet date with €100 million due in June 2023. 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, and meet its liabilities as they fall due, for at least the next 12 months from the date of these consolidated financial statements. Consequently 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) as adopted by the UK. ### 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. Taylor Wimpey plc Annual Report 2021 141 Financial statements Notes to the consolidated financial statements continued 1. Significant accounting policies c o n t i n u e d Revenue On acquisition, the assets and liabilities and contingent liabilities of a Revenue is recognised when the performance obligation associated subsidiary are measured at their fair value at the date of acquisition. with the sale is completed. The transaction price comprises the fair Any excess of the cost of acquisition over the fair value of the value of the consideration received or receivable, net of value added identifiable net assets acquired is recognised as goodwill. Any c o n t i n u e d tax, rebates and discounts and after eliminating sales within the deficiency of the cost of acquisition below the fair value of the Group. Revenue and profit are recognised as follows: identifiable net assets acquired (i.e. discount on acquisition) is a. Housing and land sales credited to the income statement in the period of acquisition. Revenue is recognised in the income statement when control is The interest of non-controlling shareholders is stated at the non- transferred to the customer. This is deemed to be when title of controlling interest’s proportion of the fair value of the assets and the property passes to the customer on legal completion and liabilities recognised. Subsequently, all comprehensive income is the performance obligation associated with the sale is completed. attributed to the owners and the non-controlling interests. Revenue in respect of the sale of residential properties, whether The results of subsidiaries acquired or disposed of during the under the Government’s Help to Buy scheme or not, is recognised year are included in the consolidated income statement from the at the fair value of the consideration received or receivable on effective date of acquisition or up to the effective date of disposal, legal completion. as appropriate. Where a subsidiary is disposed of which constituted b. Long term contracts a major line of business, it is disclosed as a discontinued operation. Revenue arising on contracts which give the customer control over Where necessary, adjustments are made to the financial statements properties as they are constructed, and for which the Group has of subsidiaries to bring the accounting policies used into line with a right to payments for work performed, is recognised over time. those used by the Group. All intra-Group transactions, balances, Revenue and costs are recognised over time with reference to the income and expenses are eliminated on consolidation. stage of completion of the contract activity at the balance sheet date Joint ventures where the outcome of a long term contract can be estimated reliably. Undertakings are deemed to be a joint venture when the Group This is normally measured by surveys of work performed to date. has joint control of the rights and assets of the undertaking via either Variations in contract work, claims and incentive payments are voting rights or a formal agreement which includes that unanimous included to the extent that it is highly probable that they will result consent is required for strategic, financial and operating decisions. in revenue and they are capable of being reliably measured. When Joint ventures are consolidated under the equity accounting method. land is transferred at the start of a long term contract, revenue is not Loans to joint ventures form part of the Group’s net investment and recognised until control has been transferred to the customer which is assessed for recoverability on a periodic basis. On transfer of land includes legal title being passed to them. and/or work in progress to joint ventures, the Group recognises only Where the outcome of a long term contract cannot be estimated its share of any profits or losses. Joint operations arise where the reliably, contract revenue where recoverability is probable is Group has joint control of an operation but has rights to only its own recognised to the extent of contract costs incurred. The costs assets and obligations related to the operation. These assets and associated with fulfilling a contract are recognised as expenses in obligations, and the Group’s share of revenues and costs, are the period in which they are incurred. When it is probable that total included in the Group’s results. contract costs will exceed total contract revenue, the expected loss Joint ventures and joint operations are entered into to develop specific is recognised as an expense immediately. sites. Each arrangement is site or project specific and once the c. Part exchange development or project is complete the arrangement is wound down. In certain instances, property may be accepted in part consideration Segmental reporting for a sale of a residential property. The fair value is established by The Group operates in the United Kingdom and Spain. The United independent surveyors, reduced for costs to sell. Net proceeds Kingdom is split into five geographical operating segments, each generated from the subsequent sale of part exchange properties are managed by a Divisional Chair who sits on the Group Management recorded as a reduction to net operating expenses. The original sale Team. In addition, there are central operations covering the is recorded in the normal way, with the fair value of the exchanged corporate functions and Strategic Land. property replacing cash receipts. d. Cash incentives The Group aggregates the UK operations into a single reporting segment on the basis that they share similar economic characteristics. The transaction price may include cash incentives. These are In addition each Division builds and delivers residential homes, uses considered to be a discount from the purchase price offered to the consistent methods of construction, sells homes to both private acquirer and are therefore accounted for as a reduction to revenue. customers and local housing associations, follows a single UK sales Cost of sales process and operating framework, is subject to the same macro- The Group determines the value of inventory charged to cost of sales economic factors including mortgage availability and has the same based on the total budgeted cost of developing a site. Once the total cost of capital arising from the utilisation of central banking and expected costs of development are established, they are allocated to debt facilities. individual plots to achieve a consistent margin for the site. As a result, the Group has the following reporting segments: To the extent that additional costs or savings are identified as the – United Kingdom site progresses, these are recognised over the remaining plots – Spain unless they are specific to a particular plot, in which case they are recognised in the income statement at the point of sale. 142 Taylor Wimpey plc Annual Report 2021 142 Taylor Wimpey plc Annual Report 2021 Notes to the consolidated financial statements continued 1. Significant accounting policies c o n t i n u e d Leases The Group as a lessee Positive contribution The Group assesses at inception whether a contract is, or contains, Positive contribution represents the net amount of previous a lease. A lease exists if the contract conveys the right to control impairments allocated to inventory on a plot that has subsequently 1. Significant accounting policies ccoonnttiinnuueedd Revenue c o n t i n u e d the use of an identified asset for a period of time in exchange for resulted in a gross profit on completion. This is due to the combination On acquisition, the assets and liabilities and contingent liabilities of a Revenue is recognised when the performance obligation associated consideration. The Group assessment includes whether: of selling prices and costs, or product mix improvements exceeding subsidiary are measured at their fair value at the date of acquisition. with the sale is completed. The transaction price comprises the fair market assumptions in the previous net realisable value (NRV) – the contract involves the use of an identified asset; Any excess of the cost of acquisition over the fair value of the value of the consideration received or receivable, net of value added exercise. These amounts are stated before the allocation of – the Group has the right to obtain substantially all of the economic identifiable net assets acquired is recognised as goodwill. Any tax, rebates and discounts and after eliminating sales within the overheads, which are excluded from the Group’s NRV exercise. benefits from the use of the asset throughout the contract period; deficiency of the cost of acquisition below the fair value of the Group. Revenue and profit are recognised as follows: and identifiable net assets acquired (i.e. discount on acquisition) is Exceptional items a. Housing and land sales – the Group has the right to direct the use of the asset. credited to the income statement in the period of acquisition. Exceptional items are defined as items of income or expenditure Revenue is recognised in the income statement when control is The interest of non-controlling shareholders is stated at the non- which, in the opinion of the Directors, are material or unusual in At the commencement of a lease, the Group recognises a right-of- transferred to the customer. This is deemed to be when title of controlling interest’s proportion of the fair value of the assets and nature or of such significance that they require separate disclosure use asset along with a corresponding lease liability. the property passes to the customer on legal completion and liabilities recognised. Subsequently, all comprehensive income is on the face of the income statement in accordance with IAS 1 the performance obligation associated with the sale is completed. The lease liability is initially measured at the present value of attributed to the owners and the non-controlling interests. ‘Presentation of Financial Statements’. Should these items be Revenue in respect of the sale of residential properties, whether the remaining lease payments, discounted using the Group’s reversed, disclosure of this would also be as exceptional items. The results of subsidiaries acquired or disposed of during the incremental borrowing rate. The lease term comprises the non- under the Government’s Help to Buy scheme or not, is recognised year are included in the consolidated income statement from the Finance income cancellable period of the contract, together with periods covered by at the fair value of the consideration received or receivable on effective date of acquisition or up to the effective date of disposal, Interest income on bank deposits is recognised on an accruals an option to extend the lease where the Group is reasonably certain legal completion. as appropriate. Where a subsidiary is disposed of which constituted basis. Also included in interest receivable are interest and interest- to exercise that option based on operational needs and contractual b. Long term contracts a major line of business, it is disclosed as a discontinued operation. related payments the Group receives on other receivables. terms. Subsequently, the lease liability is measured at amortised cost Revenue arising on contracts which give the customer control over Where necessary, adjustments are made to the financial statements by increasing the carrying amount to reflect interest on the lease properties as they are constructed, and for which the Group has Finance costs of subsidiaries to bring the accounting policies used into line with liability and reducing it by the lease payments made. The lease a right to payments for work performed, is recognised over time. Borrowing costs are recognised on an effective interest rate basis those used by the Group. All intra-Group transactions, balances, liability is remeasured when the Group changes its assessment Revenue and costs are recognised over time with reference to the and are payable on the Group’s borrowings and lease liabilities. income and expenses are eliminated on consolidation. of whether it will exercise an extension or termination option. stage of completion of the contract activity at the balance sheet date Also included are the amortisation of fees associated with the Joint ventures where the outcome of a long term contract can be estimated reliably. Right-of-use assets are initially measured at cost, comprising arrangement of the financing. Undertakings are deemed to be a joint venture when the Group This is normally measured by surveys of work performed to date. the initial measurement of the lease liability adjusted for any lease Finance charges, including premiums payable on settlement has joint control of the rights and assets of the undertaking via either Variations in contract work, claims and incentive payments are payments made at or before the commencement date, estimated or redemption, and direct issue costs, are accounted for on an voting rights or a formal agreement which includes that unanimous included to the extent that it is highly probable that they will result asset retirement obligations, lease incentives received and initial accruals basis in the income statement using the effective interest consent is required for strategic, financial and operating decisions. in revenue and they are capable of being reliably measured. When direct costs. Subsequently, right-of-use assets are measured at method and are added to the carrying amount of the instrument to Joint ventures are consolidated under the equity accounting method. land is transferred at the start of a long term contract, revenue is not cost, less any accumulated depreciation and any accumulated the extent that they are not settled in the period in which they arise. Loans to joint ventures form part of the Group’s net investment and recognised until control has been transferred to the customer which impairment losses, and are adjusted for certain remeasurements is assessed for recoverability on a periodic basis. On transfer of land includes legal title being passed to them. Capitalised finance costs are held in other receivables and amortised of the lease liability. Depreciation is calculated on a straight-line and/or work in progress to joint ventures, the Group recognises only over the period of the facility. basis over the length of the lease. Where the outcome of a long term contract cannot be estimated its share of any profits or losses. Joint operations arise where the reliably, contract revenue where recoverability is probable is Foreign currencies The Group has elected to apply exemptions for short term leases Group has joint control of an operation but has rights to only its own recognised to the extent of contract costs incurred. The costs and leases for which the underlying asset is of low value. For these The individual financial statements of each Group company are assets and obligations related to the operation. These assets and associated with fulfilling a contract are recognised as expenses in leases, payments are charged to the income statement on a presented in the currency of the primary economic environment in obligations, and the Group’s share of revenues and costs, are the period in which they are incurred. When it is probable that total straight-line basis over the term of the relevant lease. which it operates (its functional currency). Transactions in currencies included in the Group’s results. contract costs will exceed total contract revenue, the expected loss other than the functional currency are recorded at the rates of Right-of-use assets are presented within non-current assets on the Joint ventures and joint operations are entered into to develop specific is recognised as an expense immediately. exchange prevailing on the dates of the transactions. At each face of the balance sheet, and lease liabilities are shown separately sites. Each arrangement is site or project specific and once the balance sheet date, monetary assets and liabilities that are c. Part exchange on the balance sheet in current liabilities and non-current liabilities development or project is complete the arrangement is wound down. denominated in foreign currencies other than the functional currency In certain instances, property may be accepted in part consideration depending on the length of the lease term. are retranslated at the rates prevailing at the balance sheet date. Segmental reporting for a sale of a residential property. The fair value is established by Intangible assets The Group operates in the United Kingdom and Spain. The United independent surveyors, reduced for costs to sell. Net proceeds Non-monetary assets and liabilities carried at fair value that are Brands Kingdom is split into five geographical operating segments, each generated from the subsequent sale of part exchange properties are denominated in foreign currencies are translated at the rates Internally generated brands are not capitalised. Acquired brands are managed by a Divisional Chair who sits on the Group Management recorded as a reduction to net operating expenses. The original sale prevailing at the date when the fair value was determined. Gains capitalised. Brands are stated at cost, less accumulated amortisation Team. In addition, there are central operations covering the is recorded in the normal way, with the fair value of the exchanged and losses arising on retranslation are included in the net profit or and any accumulated impairment losses. Brands are amortised over corporate functions and Strategic Land. property replacing cash receipts. loss for the period. their estimated useful life on a straight-line basis. d. Cash incentives The Group aggregates the UK operations into a single reporting On consolidation, the assets and liabilities of the Group’s overseas Software segment on the basis that they share similar economic characteristics. The transaction price may include cash incentives. These are operation are translated at exchange rates prevailing at the balance Costs that are directly associated with the acquisition or production In addition each Division builds and delivers residential homes, uses considered to be a discount from the purchase price offered to the sheet date. Income and expense items are translated at an of identifiable and unique software controlled by the Group, and that consistent methods of construction, sells homes to both private acquirer and are therefore accounted for as a reduction to revenue. appropriate average rate for the year. Exchange differences arising generate economic benefits beyond one year, are recognised as customers and local housing associations, follows a single UK sales are recognised within other comprehensive income and transferred Cost of sales intangible assets. Software development costs recognised as assets process and operating framework, is subject to the same macro- to the Group’s translation reserve. Such translation differences are The Group determines the value of inventory charged to cost of sales are amortised on a straight-line basis over three to five years from economic factors including mortgage availability and has the same recognised as income or expenses in the income statement in the based on the total budgeted cost of developing a site. Once the total the time of implementation and are stated at cost less accumulated cost of capital arising from the utilisation of central banking and period in which the operation is disposed of. expected costs of development are established, they are allocated to amortisation and any accumulated impairment losses. debt facilities. individual plots to achieve a consistent margin for the site. The Group uses foreign currency borrowings to hedge its net As a result, the Group has the following reporting segments: investment exposure to certain overseas subsidiaries. To the extent that additional costs or savings are identified as the – United Kingdom site progresses, these are recognised over the remaining plots – Spain unless they are specific to a particular plot, in which case they are recognised in the income statement at the point of sale. 143Taylor Wimpey plc Annual Report 2021 142 Taylor Wimpey plc Annual Report 2021 Taylor Wimpey plc Annual Report 2021 143 Financial statements Notes to the consolidated financial statements continued 1. Significant accounting policies c o n t i n u e d Financial assets that do not meet the criteria to be measured at amortised cost are classified by the Group as measured at FVTPL. Property, plant and equipment Fair value gains and losses on financial assets measured at FVTPL Land and buildings held for use in the production or supply of goods are recognised in the income statement and presented within net or services, or for administrative purposes, are stated in the balance c o n t i n u e d operating expenses. sheet at cost less accumulated depreciation and any accumulated The Group currently has no financial assets measured at FVOCI. impairment losses. Freehold land is not depreciated. Buildings are depreciated over 50 years. Trade and other receivables Trade and other receivables are measured at amortised cost, less Plant and equipment is stated at cost less depreciation. any loss allowance. Depreciation is charged to expense the cost or valuation of assets Shared equity loans over their estimated useful lives. Other assets are depreciated using Shared equity loans were provided to certain customers to facilitate the straight-line method, on the following bases: a house purchase. The contractual cash flows on shared equity – Plant and equipment: 20-33% per annum loans are linked to a national house price index. Under IFRS 9, – Leasehold improvements: over the term of the lease financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely The gain or loss arising on the disposal or retirement of an asset is payment of principal and interest. Accordingly, shared equity loans determined as the difference between the sale proceeds, less any are classified as FVTPL with fair value gains and losses arising on the selling expenses, and the carrying amount of the asset. This remeasurement of the loan presented in the income statement within difference is recognised in the income statement. net operating expenses. Impairment of tangible and intangible assets Cash and cash equivalents At each balance sheet date, the Group reviews the carrying amounts Cash and cash equivalents comprise cash held by the Group and short of its tangible and intangible assets to determine whether there is term bank deposits with an original maturity of three months or less any indication that those assets have suffered an impairment loss. from inception and are subject to insignificant risk of changes in value. If any such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any). Financial liabilities Where the asset does not generate cash flows that are independent Financial liabilities are initially recognised at fair value and subsequently from other assets, the Group estimates the recoverable amount of classified into one of the following measurement categories: the cash-generating unit to which the asset belongs. – Measured at amortised cost The recoverable amount is the higher of fair value less costs to sell – Measured at fair value through profit or loss (FVTPL) and value in use. In assessing value in use, the estimated future cash Non-derivative financial liabilities are measured at FVTPL when flows are discounted to their present value, using a pre-tax discount they are considered held for trading or designated as such on initial rate that reflects current market assessments and the risks specific recognition. The Group has no non-derivative financial liabilities to the asset. measured at FVTPL. If the recoverable amount of an asset or cash-generating unit is Borrowings estimated to be less than its carrying amount, the carrying amount of Borrowings are initially recognised at fair value, net of transaction the asset or cash-generating unit is reduced to its recoverable costs incurred and subsequently measured at amortised cost. amount. An impairment loss is recognised as an expense immediately in the income statement. Trade and other payables Trade and other payables are measured at amortised cost. When Where an impairment loss subsequently reverses, due to a change the acquisition of land has deferred payment terms a land creditor in circumstances or in the estimates used to determine the asset’s is recognised. Payables are discounted to present value when recoverable amount, the carrying amount of the asset or cash- repayment is due more than one year after initial recognition or generating unit is increased to the revised estimate of its recoverable the impact is material. amount, so long as it does not exceed the original carrying value prior to the impairment being recognised. A reversal of an impairment Customer deposits loss is recognised as income immediately in the income statement. Customer deposits, measured at amortised cost, are recorded as a liability on receipt and released to the income statement as revenue Financial instruments upon legal completion. Financial assets Equity instruments Financial assets are initially recognised at fair value and subsequently An equity instrument is any contract that evidences a residual classified into one of the following measurement categories: interest in the assets of the Group after deducting all of its liabilities. – Measured at amortised cost Equity instruments issued by the Parent Company are recorded as – Measured at fair value through profit or loss (FVTPL) the proceeds are received, net of direct issue costs. – Measured at fair value through other comprehensive Derivative financial instruments and hedge accounting income (FVOCI) The Group uses foreign currency borrowings and derivatives to The classification of financial assets depends on the Group’s hedge its net investment exposure to movements in exchange rates business model for managing the asset and the contractual terms of on translation of certain individual financial statements denominated the cash flows. Assets that are held for the collection of contractual in foreign currencies other than Sterling which is the functional cash flows that represent solely payments of principal and interest currency of the Parent Company. are measured at amortised cost, with any interest income recognised in the income statement using the effective interest rate method. 144 Taylor Wimpey plc Annual Report 2021 144 Taylor Wimpey plc Annual Report 2021 Notes to the consolidated financial statements continued Deferred tax 1. Significant accounting policies c o n t i n u e d Deferred tax is the tax expected to be payable or recoverable on Derivative financial instruments are measured at fair value. Changes differences between the carrying amounts of assets and liabilities in the fair value of derivative financial instruments that are designated in the financial statements and the corresponding tax bases used in and effective as hedges of net investments in foreign operations 1. Significant accounting policies ccoonnttiinnuueedd Financial assets that do not meet the criteria to be measured at c o n t i n u e d the computation of taxable profit. Deferred tax liabilities are generally are recognised directly in other comprehensive income and the amortised cost are classified by the Group as measured at FVTPL. recognised for all taxable temporary differences and deferred tax Property, plant and equipment ineffective portion, if any, is recognised immediately in the Fair value gains and losses on financial assets measured at FVTPL assets are recognised to the extent that it is probable that taxable income statement. Land and buildings held for use in the production or supply of goods are recognised in the income statement and presented within net profits will be available against which deductible temporary or services, or for administrative purposes, are stated in the balance For an effective hedge of an exposure to changes in fair value, the operating expenses. differences can be utilised. sheet at cost less accumulated depreciation and any accumulated hedged item is adjusted for changes in fair value attributable to the The Group currently has no financial assets measured at FVOCI. Such assets and liabilities are not recognised if the temporary impairment losses. Freehold land is not depreciated. Buildings are risk being hedged with the corresponding entry in the consolidated difference arises from goodwill or from the initial recognition (other depreciated over 50 years. Trade and other receivables income statement. Gains or losses from remeasuring the derivative, than in a business combination) of other assets and liabilities in Trade and other receivables are measured at amortised cost, less or for non-derivatives the foreign currency component of its carrying Plant and equipment is stated at cost less depreciation. a transaction that affects neither the taxable profit nor the any loss allowance. amount, are also recognised in the income statement. Depreciation is charged to expense the cost or valuation of assets accounting profit. Shared equity loans Changes in the fair value of derivative financial instruments that do over their estimated useful lives. Other assets are depreciated using Deferred tax liabilities are also recognised for taxable temporary Shared equity loans were provided to certain customers to facilitate not qualify for hedge accounting are recognised in the income the straight-line method, on the following bases: differences arising on investments in subsidiaries and interests in a house purchase. The contractual cash flows on shared equity statement as they arise. – Plant and equipment: 20-33% per annum joint ventures, except where the Group is able to control the reversal loans are linked to a national house price index. Under IFRS 9, Hedge accounting is discontinued if the hedged item is sold or no of the temporary difference and it is probable that the temporary – Leasehold improvements: over the term of the lease financial assets with embedded derivatives are considered in their longer qualifies for hedge accounting at which point any cumulative difference will not reverse in the foreseeable future. entirety when determining whether their cash flows are solely The gain or loss arising on the disposal or retirement of an asset is gain or loss on the hedging instrument accumulated in other payment of principal and interest. Accordingly, shared equity loans Deferred tax is measured on a non-discounted basis using the tax determined as the difference between the sale proceeds, less any comprehensive income is transferred to the income statement are classified as FVTPL with fair value gains and losses arising on the rates and laws that have been enacted or substantively enacted by selling expenses, and the carrying amount of the asset. This for the period. remeasurement of the loan presented in the income statement within the balance sheet date. difference is recognised in the income statement. net operating expenses. Provisions The carrying amount of deferred tax assets is reviewed at each Impairment of tangible and intangible assets Provisions are recognised when the Group has a present legal or Cash and cash equivalents balance sheet date and reduced to the extent that it is no longer At each balance sheet date, the Group reviews the carrying amounts constructive obligation as a result of a past event, and it is probable Cash and cash equivalents comprise cash held by the Group and short probable that sufficient taxable profits will be available to allow all or of its tangible and intangible assets to determine whether there is that the Group will be required to settle that obligation. Provisions are term bank deposits with an original maturity of three months or less part of the asset to be recovered. Deferred tax is charged or credited any indication that those assets have suffered an impairment loss. measured at the Directors’ best estimate of the expenditure required from inception and are subject to insignificant risk of changes in value. to the income statement, except when it relates to items charged or If any such indication exists, the recoverable amount of the asset to settle the obligation at the balance sheet date and are discounted credited directly to other comprehensive income or equity, in which is estimated to determine the extent of the impairment loss (if any). Financial liabilities to present value where the effect is material. case the deferred tax is also dealt with in other comprehensive Where the asset does not generate cash flows that are independent Financial liabilities are initially recognised at fair value and subsequently Inventories income or equity. from other assets, the Group estimates the recoverable amount of classified into one of the following measurement categories: Inventories are initially stated at cost and held at the lower of the cash-generating unit to which the asset belongs. Share-based payments – Measured at amortised cost this initial amount and net realisable value. Costs comprise direct The Group issues equity-settled share-based payments to certain The recoverable amount is the higher of fair value less costs to sell – Measured at fair value through profit or loss (FVTPL) materials and, where applicable, direct labour and those overheads employees. Equity-settled share-based payments are measured and value in use. In assessing value in use, the estimated future cash Non-derivative financial liabilities are measured at FVTPL when that have been incurred in bringing the inventories to their present at fair value at the date of grant. The fair value is expensed on a flows are discounted to their present value, using a pre-tax discount they are considered held for trading or designated as such on initial location and condition. Net realisable value represents the estimated straight-line basis over the vesting period, based on the Group’s rate that reflects current market assessments and the risks specific recognition. The Group has no non-derivative financial liabilities selling price less all estimated costs of completion and costs to be estimate of shares that will vest after adjusting for the effect of to the asset. measured at FVTPL. incurred in marketing, selling and distribution. Land is recognised in non-market vesting conditions. If the recoverable amount of an asset or cash-generating unit is inventory when the significant risks and rewards of ownership have Borrowings estimated to be less than its carrying amount, the carrying amount of been transferred to the Group. Employee benefits Borrowings are initially recognised at fair value, net of transaction the asset or cash-generating unit is reduced to its recoverable For defined benefit plans a finance charge is determined on the net costs incurred and subsequently measured at amortised cost. Non-refundable land option payments are initially recognised in amount. An impairment loss is recognised as an expense defined benefit pension liability. The operating and financing costs inventory. They are reviewed regularly and written off to the income immediately in the income statement. Trade and other payables of such plans are recognised separately in the income statement; statement when it is probable that the option will not be exercised. Trade and other payables are measured at amortised cost. When service costs are spread systematically over the service period of Where an impairment loss subsequently reverses, due to a change the acquisition of land has deferred payment terms a land creditor Taxation employees, past service costs are recognised as an expense at the in circumstances or in the estimates used to determine the asset’s is recognised. Payables are discounted to present value when The tax charge represents the sum of the tax currently payable and earlier of when the plan is amended or curtailment occurs, at the recoverable amount, the carrying amount of the asset or cash- repayment is due more than one year after initial recognition or deferred tax. same time as which the entity will recognise related restructuring generating unit is increased to the revised estimate of its recoverable the impact is material. costs or termination benefits. Certain liability management costs amount, so long as it does not exceed the original carrying value Current tax and financing costs are recognised in the periods in which they prior to the impairment being recognised. A reversal of an impairment Customer deposits The tax currently payable is based on taxable profit for the year. arise. Actuarial gains and losses are recognised immediately in loss is recognised as income immediately in the income statement. Customer deposits, measured at amortised cost, are recorded as a Taxable profit differs from profit before tax as reported in the income the statement of comprehensive income. liability on receipt and released to the income statement as revenue statement because it excludes items of income or expense that are Financial instruments upon legal completion. taxable or deductible in other years, and it further excludes items The retirement benefit obligation recognised in the consolidated Financial assets that are never taxable or deductible. The Group’s liability for current statement of financial position represents either the net deficit Equity instruments Financial assets are initially recognised at fair value and subsequently tax is calculated using tax rates that have been enacted or position of the scheme or, should the scheme be in an IAS 19 An equity instrument is any contract that evidences a residual classified into one of the following measurement categories: substantively enacted at the balance sheet date. accounting surplus, the IFRIC 14 liability equal to the present interest in the assets of the Group after deducting all of its liabilities. value of future committed cash contributions. – Measured at amortised cost Equity instruments issued by the Parent Company are recorded as – Measured at fair value through profit or loss (FVTPL) the proceeds are received, net of direct issue costs. Payments to defined contribution schemes are charged as an – Measured at fair value through other comprehensive expense as they fall due. Derivative financial instruments and hedge accounting income (FVOCI) The Group uses foreign currency borrowings and derivatives to The classification of financial assets depends on the Group’s hedge its net investment exposure to movements in exchange rates business model for managing the asset and the contractual terms of on translation of certain individual financial statements denominated the cash flows. Assets that are held for the collection of contractual in foreign currencies other than Sterling which is the functional cash flows that represent solely payments of principal and interest currency of the Parent Company. are measured at amortised cost, with any interest income recognised in the income statement using the effective interest rate method. 145Taylor Wimpey plc Annual Report 2021 144 Taylor Wimpey plc Annual Report 2021 Taylor Wimpey plc Annual Report 2021 145 Financial statements Notes to the consolidated financial statements continued Provision for leasehold 2. Critical accounting judgements and key sources The value of this provision has been established using information of estimation uncertainty available to management at 31 December 2021, together with a Preparation of the financial statements requires management to range of assumptions including the number of units which have make significant judgements and estimates. Management have been sold by the original Taylor Wimpey customer and as such are considered whether there are any such sources of estimation or not eligible for the original GRRAS scheme, and the final deed of accounting judgements in forming the financial statements and variation valuations for those freeholders with whom the Group has highlight the following areas. In identifying these areas, management not yet agreed a settlement. Following the agreement of voluntary have considered the size of the associated balance and the potential undertakings with the CMA the level of uncertainty of assumptions likelihood of changes due to macro-economic factors. has decreased. Whilst, as at 31 December 2021, final outcomes Critical accounting judgements are not known with absolute certainty it is not anticipated that any reasonable possible changes would lead to a material adjustment Management have not made any individual critical accounting in the value of the provision held. See Note 22 for further details on judgements that are material to the Group. the provision. Key sources of estimation uncertainty Key sources of estimation uncertainty are those which present 3. General information a significant risk of potential material misstatement to carrying Taylor Wimpey plc is a public company limited by shares, amounts of assets or liabilities within the next financial year. incorporated and domiciled in the United Kingdom under Employee benefits the Companies Act and is registered in England and Wales. The value of the defined benefit plan liabilities is determined by using The Company’s registered office is Taylor Wimpey plc, Gate House, various assumptions, including discount rate, future rates of inflation, Turnpike Road, High Wycombe, Buckinghamshire, HP12 3NR. The growth, yields, returns on investments and mortality rates. As actual nature of the Group’s operations and its principal activities are set changes in these values may differ from those assumed, this is a out in the Strategic Report on pages 2 to 71. key source of estimation uncertainty within the financial statements. These financial statements are presented in pounds Sterling as Changes in these assumptions over time and differences to the the currency of the primary economic environment in which the actual outcome will be reflected in the statement of comprehensive Group operates. income. Note 21 details the main assumptions in accounting for the Group’s defined benefit pension scheme, along with sensitivities of the liabilities to changes in these assumptions. Other sources of estimation uncertainty Cost allocation 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 development costs between units built in the current year and in future years. It also has to estimate costs to complete, including those driven by climate related regulation such as the implementation of Parts L&F, on such developments, and make estimates relating to future sales price margins on those developments and units. In making these assessments, there is a degree of inherent uncertainty. The Group has developed internal controls to assess and review carrying values and the appropriateness of estimates made. Cladding fire safety provision In 2018 the Group established an exceptional provision for the cost of replacing ACM on a small number of legacy developments, which was increased in 2020 to reflect the latest estimate of costs to complete the planned works. Following the guidance issued by RICS in the current year the Group announced an additional £125.0 million provision to fund cladding fire safety improvements. The Group has estimated the provision based on the number of buildings that may require works under EWS1 requirements, costs to carry out the identified works and eligibility of buildings for the UK Government’s Building Safety Fund. In determining the total cost of works across a number of different buildings, management initially used internal QS estimates, which have increasingly been supported by externally sourced quotations, where available, both of which contain inherent estimation uncertainty, however it is not anticipated that any reasonable possible changes would lead to a material adjustment in the value of the provision. The scope of works may also be impacted by future industry guidance or regulations. 146 Taylor Wimpey plc Annual Report 2021 146 Taylor Wimpey plc Annual Report 2021 # 4. Revenue An analysis of the Group's continuing revenue is as follows: | £ million | 2021 | 2020 | | --- | --- | --- | | Private sales | 3,890.3 | 2,507.9 | | Partnership housing | 363.1 | 269.3 | | Land & other | 31.5 | 13.0 | | | 4,284.9 | 2,790.2 | 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 | 2021 | 2020 | | --- | --- | --- | | Recognised at a point in time | 3,939.2 | 2,573.7 | | Recognised over time | 345.7 | 216.5 | | | 4,284.9 | 2,790.2 | At 31 December 2021, the aggregate amount of the transaction price allocated to unsatisfied performance obligations on construction contracts was £584.3 million (2020: £572.3 million), of which approximately half is expected to be recognised as revenue during 2022. # 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. 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 and operating framework, 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 reflects the two reportable segments of the UK and Spain. Revenue in Spain arises entirely on private sales. 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 | 2021 | | | 2020 | | | | --- | --- | --- | --- | --- | --- | --- | | | UK | Spain | Total | UK | Spain | Total | | Revenue | | | | | | | | External sales | 4,208.1 | 76.8 | 4,284.9 | 2,726.9 | 63.3 | 2,790.2 | | Result | | | | | | | | Profit before joint ventures, finance costs and exceptional items | 808.6 | 14.6 | 823.2 | 276.6 | 15.8 | 292.4 | | Share of results of joint ventures | 5.4 | - | 5.4 | 7.9 | - | 7.9 | | Operating profit (Note 32) | 814.0 | 14.6 | 828.6 | 284.5 | 15.8 | 300.3 | | Exceptional items (Note 6) | (125.0) | - | (125.0) | (10.0) | - | (10.0) | | Profit before net finance costs | 689.0 | 14.6 | 703.6 | 274.5 | 15.8 | 290.3 | | Net finance costs | | | (24.0) | | | (29.9) | | Profit before taxation | | | 679.6 | | | 264.4 | | Taxation charge | | | (124.1) | | | (47.4) | | Profit for the year | | | 555.5 | | | 217.0 | Taylor Wimpey plc Annual Report 2021 147 Financial statements Notes to the consolidated financial statements continued # 5. Operating segments continued | £ million | 2021 | | | 2020 | | | | --- | --- | --- | --- | --- | --- | --- | | | UK | Spain | Total | UK | Spain | Total | | Assets and liabilities | | | | | | | | Segment operating assets | 5,013.6 | 192.6 | 5,206.2 | 4,635.1 | 174.6 | 4,809.7 | | Joint ventures | 85.4 | - | 85.4 | 82.2 | - | 82.2 | | Segment operating liabilities | (1,757.3) | (83.7) | (1,841.0) | (1,564.0) | (63.1) | (1,627.1) | | Net operating assets | 3,341.7 | 108.9 | 3,450.6 | 3,153.3 | 111.5 | 3,264.8 | | Net current taxation | | | 0.2 | | | (1.1) | | Net deferred taxation (Note 14) | | | 26.2 | | | 33.7 | | Net cash (Note 27) | | | 837.0 | | | 719.4 | | Net assets | | | 4,314.0 | | | 4,016.8 | | £ million | 2021 | | | 2020 | | | | --- | --- | --- | --- | --- | --- | --- | | | UK | Spain | Total | UK | Spain | Total | | Other information | | | | | | | | Property, plant and equipment additions | 2.4 | 0.1 | 2.5 | 2.8 | 0.3 | 3.1 | | Right-of-use asset additions | 6.1 | 0.6 | 6.7 | 9.1 | 0.2 | 9.3 | | Software additions | 2.1 | - | 2.1 | 4.9 | - | 4.9 | | Property, plant and equipment depreciation | (4.6) | (0.1) | (4.7) | (4.6) | (0.1) | (4.7) | | Right-of-use asset depreciation | (7.1) | (0.2) | (7.3) | (7.6) | (0.3) | (7.9) | | Amortisation of intangible assets | (3.6) | - | (3.6) | (3.8) | - | (3.8) | # 6. Net operating expenses and profit on ordinary activities before net finance costs Profit on ordinary activities before net finance costs for continuing operations has been arrived at after charging/(crediting): | £ million | 2021 | 2020 | | --- | --- | --- | | Administration expenses | 211.0 | 206.8 | | Other expenses | 13.1 | 7.2 | | Other income | (20.3) | (9.7) | | Exceptional items | 125.0 | 10.0 | 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. During 2021 positive contribution of £4.1 million was recognised (2020: £4.6 million). | Exceptional items: £ million | 2021 | 2020 | | --- | --- | --- | | Provision in relation to cladding fire safety | 125.0 | 10.0 | | Exceptional items | 125.0 | 10.0 | # Cladding fire safety In 2018 the Group established an exceptional provision for the cost of replacing AOM on a small number of legacy developments, which was increased by £10.0 million in 2020 to reflect the latest estimate of costs to complete the planned works. During 2021 the Group announced its intention to support building owners and leaseholders with 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 going back 20 years from January 2021, including apartment buildings below 18 metres. As a result the Group has recognised an additional £125.0 million provision and, in line with Group policy, recognised it as an exceptional item. 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 the Group will fund and oversee the improvement works of apartment buildings in its 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, the Group will contribute funding to bring those buildings up to the standards required by current Royal Institution of Chartered Surveyors (RICS) EWS1 guidance. Whilst the legal responsibility continues to rest with the building owner, the Group will also provide advice and other assistance where appropriate. 148 Taylor Wimpey plc Annual Report 2021 Notes to the consolidated financial statements continued 6. Net operating expenses and profit on ordinary activities before net finance costs c o n t i n u e d Profit on ordinary activities before net finance costs has been arrived at after charging: £ million 2021 2020 | 5. Operating segments ccoonnttiinnuueedd | | | Cost of inventories recognised as an expense in cost of sales 3,135.0 2,094.2 | c o | n t | i n | u e d | | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2021 2020 | Property, plant and equipment depreciation (Note 12) 4.7 4.7 | | | | | | £ million | UK Spain Total UK Spain Total | | Right-of-use asset depreciation (Note 19) 7.3 7.9 | | | | | | ssets and liabilities | | | mortisation of intangible assets (Note 11) 3.6 3.8 | | | | | Segment operating assets 5,013.6 192.6 5,206.2 4,635.1 174.6 4,809.7 Joint ventures 85.4 – 85.4 82.2 – 82.2 During 2020 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 included unproductive site overhead costs incurred during the controlled Segment operating liabilities (1,757.3) (83.7) (1,841.0) (1,564.0) (63.1) (1,627.1) closure and lockdown period which would ordinarily be capitalised to WIP and expensed as plots legally completed of £29.9 million; additional Net operating assets 3,341.7 108.9 3,450.6 3,153.3 111.5 3,264.8 costs incurred by the business due to extended site durations resulting from the reduced productivity levels as the Group implemented Net current taxation 0.2 (1.1) its operational processes under the COVID-secure guidelines totalling £17.4 million; and incremental costs incurred by the business in Net deferred taxation (Note 14) 26.2 33.7 responding to COVID-19, including to meet its health and safety requirements and complying with Government guidelines, of £15.4 million. No costs in relation to COVID-19 have been separately identified in 2021. Net cash (Note 27) 837.0 719.4 Net assets 4,314.0 4,016.8 The remuneration paid to the Group’s external auditors, PricewaterhouseCoopers LLP (2020: Deloitte LLP), is as follows: £ million 2021 2020 2021 2020 Fees payable for the audit of the Company’s annual accounts and consolidated financial statements 0.2 0.2 £ million UK Spain Total UK Spain Total Fees payable to the Company’s auditors and its associates for other services to the Group: Other information he audit of the Company’s subsidiaries pursuant to legislation 0.6 0.3 Property, plant and equipment additions 2.4 0.1 2.5 2.8 0.3 3.1 otal audit fees 0.8 0.5 Right-of-use asset additions 6.1 0.6 6.7 9.1 0.2 9.3 Other assurance services 0.1 0.2 Software additions 2.1 – 2.1 4.9 – 4.9 otal non-audit fees 0.1 0.2 Property, plant and equipment depreciation (4.6) (0.1) (4.7) (4.6) (0.1) (4.7) otal fees 0.9 0.7 Right-of-use asset depreciation (7.1) (0.2) (7.3) (7.6) (0.3) (7.9) mortisation of intangible assets (3.6) – (3.6) (3.8) – (3.8) Non-audit services in 2021 and 2020 predominantly relate to work undertaken as a result of PricewaterhouseCoopers LLP’s (2020: Deloitte LLP’s) role as auditors, or work resulting from knowledge and experience gained as part of the role. In 2021 the fees relating to other 6. Net operating expenses and profit on ordinary activities before net finance costs assurance services primarily related to the review of the interim statements and also included £2,000 for a subscription service providing Profit on ordinary activities before net finance costs for continuing operations has been arrived at after charging/(crediting): factual updates and changes to applicable law, regulation or accounting and auditing standards. In 2020, non-audit fees predominantly related to the review of the interim statements and also included £50,000 of other services related to enhanced assurance. £ million 2021 2020 dministration expenses 211.0 206.8 7. Staff costs Other expenses 13.1 7.2 Number 2021 2020 Other income (20.3) (9.7) Monthly average number employed Exceptional items 125.0 10.0 United Kingdom 5,271 5,948 Spain 87 81 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. | 5,358 6,029 | | --- | --- | | During 2021 positive contribution of £4.1 million was recognised (2020: £4.6 million). | £ million 2021 2020 | | Exceptional items: £ million 2021 2020 | Remuneration | | Provision in relation to cladding fire safety 125.0 10.0 | Wages and salaries 278.0 264.9 | | Exceptional items 125.0 10.0 | Redundancy costs 0.4 5.5 | Social security costs 28.9 28.7 Cladding fire safety Other pension costs 14.1 15.2 In 2018 the Group established an exceptional provision for the cost of replacing ACM on a small number of legacy developments, which was 321.4 314.3 increased by £10.0 million in 2020 to reflect the latest estimate of costs to complete the planned works. During 2021 the Group announced its intention to support building owners and leaseholders with investment to ensure their apartment buildings are safe and meet current EWS1 The information relating to Director and Senior Management remuneration required by the Companies Act 2006 and the Listing Rules of the (External Wall Fire Review) requirements. This applies to Taylor Wimpey apartment buildings constructed going back 20 years from January Financial Conduct Authority is contained in Note 30 and pages 105 to 124 in the Directors’ Remuneration Report. 2021, including apartment buildings below 18 metres. As a result the Group has recognised an additional £125.0 million provision and, in line with Group policy, recognised it as an exceptional item. 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 the Group will fund and oversee the improvement works of apartment buildings in its 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, the Group will contribute funding to bring those buildings up to the standards required by current Royal Institution of Chartered Surveyors (RICS) EWS1 guidance. Whilst the legal responsibility continues to rest with the building owner, the Group will also provide advice and other assistance where appropriate. 149Taylor Wimpey plc Annual Report 2021 A A A A T T T T 148 Taylor Wimpey plc Annual Report 2021 Taylor Wimpey plc Annual Report 2021 149 Financial statements Notes to the consolidated financial statements continued # 8. Finance income and finance costs | Finance income £ million | 2021 | 2020 | | --- | --- | --- | | Interest receivable | 2.4 | 3.1 | | Foreign exchange gain | - | 0.4 | | | 2.4 | 3.5 | | Finance costs | | | | --- | --- | --- | | £ million | 2021 | 2020 | | Interest on bank and other loans | (5.0) | (8.3) | | Foreign exchange loss | (0.8) | - | | | (5.8) | (8.3) | | Unwinding of discount on land creditors and other items | (19.2) | (19.3) | | Interest on lease liabilities (Note 19) | (0.4) | (0.4) | | Net interest on pension liability (Note 21) | (1.0) | (1.4) | | | (26.4) | (29.4) | # 9. Taxation charge Tax (charged)/credited in the income statement is analysed as follows: | £ million | | 2021 | 2020 | | --- | --- | --- | --- | | Current tax: | | | | | UK: | Current year | (122.0) | (38.5) | | | Adjustment in respect of prior years | 2.3 | (0.6) | | Overseas: | Current year | (2.5) | (2.2) | | | Adjustment in respect of prior years | (0.1) | - | | Deferred tax: | | | | | UK: | Current year | (2.7) | (5.5) | | | Adjustment in respect of prior years | (0.3) | (0.2) | | Overseas: | Current year | 1.2 | (0.4) | | | Adjustment in respect of prior years | - | - | Corporation tax is calculated at 19.0% (2020: 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 18.4% (2020: 17.9%). The tax charge for the year includes an exceptional credit of £23.8 million relating to the cladding fire safety provision. The tax charge for the prior year includes an exceptional credit of £1.7 million relating to the cladding fire safety provision. The charge for the year can be reconciled to the profit per the income statement as follows: | £ million | 2021 | 2020 | | --- | --- | --- | | Profit before tax | 679.6 | 264.4 | | Tax at the UK corporation tax rate of 19.0% (2020: 19.0%) | (129.1) | (50.2) | | Net over/(under) provision in respect of prior years | 1.9 | (0.9) | | Net impact of items that are not taxable or deductible | 2.6 | 2.8 | | Recognition of deferred tax asset relating to Spanish business | 2.2 | 1.1 | | Other rate impacting adjustments | (1.7) | (0.2) | | Tax charge for the year | (124.1) | (47.4) | 150 Taylor Wimpsey plc Annual Report 2021 (1) (1) Notes to the consolidated financial statements continued 10. Earnings per share 2021 2020 Basic earnings per share 15.3p 6.3p Diluted earnings per share 15.2p 6.2p 8. Finance income and finance costs djusted basic earnings per share 18.0p 6.5p Finance income £ million 2021 2020 djusted diluted earnings per share 18.0p 6.5p Interest receivable 2.4 3.1 Foreign exchange gain – 0.4 Weighted average number of shares for basic earnings per share – million 3,639.3 3,471.2 2.4 3.5 Weighted average number of shares for diluted earnings per share – million 3,649.0 3,473.6 Finance costs Adjusted basic and adjusted diluted earnings per share, which exclude the impact of exceptional items and any associated net tax amounts, £ million 2021 2020 are presented to provide a measure of the underlying performance of the Group. A reconciliation of earnings attributable to equity shareholders Interest on bank and other loans (5.0) (8.3) used for basic and diluted earnings per share to that used for adjusted earnings per share is shown below. Foreign exchange loss (0.8) – £ million 2021 2020 (5.8) (8.3) Earnings for basic and diluted earnings per share 555.5 217.0 Unwinding of discount on land creditors and other items (19.2) (19.3) djust for exceptional items (Note 6) 125.0 10.0 Interest on lease liabilities (Note 19) (0.4) (0.4) djust for tax on exceptional items (23.8) (1.7) Net interest on pension liability (Note 21) (1.0) (1.4) Earnings for adjusted basic and adjusted diluted earnings per share 656.7 225.3 (26.4) (29.4) Million 2021 2020 Weighted average number of shares for basic earnings per share 3,639.3 3,471.2 9. Taxation charge Share options 9.7 2.4 Tax (charged)/credited in the income statement is analysed as follows: Weighted average number of shares for diluted earnings per share 3,649.0 3,473.6 £ million 2021 2020 Current tax: UK: Current year (122.0) (38.5) 11. Intangible assets djustment in respect of prior years 2.3 (0.6) £ million Brands Software Total Overseas: Current year (2.5) (2.2) Cost djustment in respect of prior years (0.1) – t 1 January 2020 140.2 17.2 157.4 | (122.3) (41.3) | | dditions – 4.9 4.9 | | --- | --- | --- | | Deferred tax: | | t 31 December 2020 140.2 22.1 162.3 | | UK: Current year (2.7) (5.5) | | dditions – 2.1 2.1 | | | djustment in respect of prior years (0.3) (0.2) | Disposals – (0.9) (0.9) | Overseas: Current year 1.2 (0.4) t 31 December 2021 140.2 23.3 163.5 djustment in respect of prior years – – (1.8) (6.1) ccumulated amortisation (124.1) (47.4) t 1 January 2020 (140.2) (10.2) (150.4) Charge for the year – (3.8) (3.8) Corporation tax is calculated at 19.0% (2020: 19.0%) of the estimated assessable profit for the year in the UK. Taxation outside the UK is t 31 December 2020 (140.2) (14.0) (154.2) calculated at the rates prevailing in the respective jurisdictions. The effective tax rate, before exceptional items, is 18.4% (2020: 17.9%). The Charge for the year – (3.6) (3.6) tax charge for the year includes an exceptional credit of £23.8 million relating to the cladding fire safety provision. The tax charge for the prior year includes an exceptional credit of £1.7 million relating to the cladding fire safety provision. The charge for the year can be reconciled to the Disposals – 0.9 0.9 profit per the income statement as follows: t 31 December 2021 (140.2) (16.7) (156.9) £ million 2021 2020 Profit before tax 679.6 264.4 Carrying amount ax at the UK corporation tax rate of 19.0% (2020: 19.0%) (129.1) (50.2) t 31 December 2021 – 6.6 6.6 Net over/(under) provision in respect of prior years 1.9 (0.9) t 31 December 2020 – 8.1 8.1 Net impact of items that are not taxable or deductible 2.6 2.8 Recognition of deferred tax asset relating to Spanish business 2.2 1.1 The amortisation of software is recognised within administration expenses in the income statement. Other rate impacting adjustments (1.7) (0.2) ax charge for the yea (124.1) (47.4) 151Taylor Wimpey plc Annual Report 2021 T T r A A A A A A A A A A A A A A A A A A A 150 Taylor Wimpey plc Annual Report 2021 Taylor Wimpey plc Annual Report 2021 151 Financial statements Notes to the consolidated financial statements continued # **12. Property, plant and equipment** | £ million | Residual land and buildings | Plant, equipment and household improvements | Total | | --- | --- | --- | --- | | **Cost** | | | | | At 1 January 2020 | 16.5 | 24.9 | 41.4 | | Additions | – | 3.1 | 3.1 | | Exchange movements | – | 0.1 | 0.1 | | At 31 December 2020 | 16.5 | 28.1 | 44.6 | | Additions | – | 2.5 | 2.5 | | Disposals | – | (0.7) | (0.7) | | Exchange movements | – | (0.1) | (0.1) | | **At 31 December 2021** | **16.5** | **29.8** | **46.3** | # **Accumulated depreciation** | At 1 January 2020 | (2.7) | (13.1) | (15.8) | | --- | --- | --- | --- | | Change for the year | (0.5) | (4.2) | (4.7) | | Exchange movements | – | (0.1) | (0.1) | | At 31 December 2020 | (3.2) | (17.4) | (20.6) | | Change for the year | (0.9) | (3.8) | (4.7) | | Disposals | – | 0.7 | 0.7 | | Exchange movements | – | – | – | | **At 31 December 2021** | **(4.1)** | **(20.5)** | **(24.6)** | # **Carrying amount** | **At 31 December 2021** | **12.4** | **9.3** | **21.7** | | --- | --- | --- | --- | | At 31 December 2020 | 13.3 | 10.7 | 24.0 | # **13. Interests in joint ventures** | £ million | 2021 | 2020 | | --- | --- | --- | | Aggregated amounts relating to share of all joint ventures: | | | | Non-current assets | 16.7 | 25.3 | | Current assets | 145.1 | 115.0 | | Total assets | 161.8 | 140.3 | | Current liabilities | (43.7) | (28.2) | | Non-current liabilities | (100.0) | (91.8) | | Total liabilities | (143.7) | (120.0) | | Carrying amount | 24.4 | 24.3 | | Loans to joint ventures | 61.0 | 57.9 | | Total interests in joint ventures | 85.4 | 82.2 | Loans to joint ventures includes £(6.3) million (2020: £(4.0) million) relating to the Group's share of losses recognised under the equity method in excess of the investment in ordinary shares. 152 Taylor Wimpsey plc Annual Report 2021 Notes to the consolidated financial statements continued 13. Interests in joint ventures c o n t i n u e d £ million 2021 2020 Group share of: Revenue 99.9 96.0 12. Property, plant and equipment c o n t i n u e d Cost of sales (87.5) (77.4) Plant, equipment Gross profit 12.4 18.6 | | Freehold land | and leasehold | | | --- | --- | --- | --- | | £ million | and buildings | improvements Total | Net operating expenses (3.3) (5.3) | | Cost | | | Profit before net finance costs 9.1 13.3 | | t 1 January 2020 16.5 24.9 41.4 | | | Net finance costs (2.2) (3.3) | | dditions – 3.1 3.1 | | | Profit before taxation 6.9 10.0 | | Exchange movements – 0.1 0.1 | | | axation (1.5) (2.1) | | t 31 December 2020 16.5 28.1 44.6 | | | Share of joint ventures’ post-tax results for the year 5.4 7.9 | dditions – 2.5 2.5 Disposals – (0.7) (0.7) The Group has five material (2020: 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. Exchange movements – (0.1) (0.1) t 31 December 2021 16.5 29.8 46.3 The particulars of the material joint ventures for 2021 are as follows: Interest in the issued Joint venture Country of incorporation ordinary share capital* ccumulated depreciation Greenwich Millennium Village Limited United Kingdom 50% t 1 January 2020 (2.7) (13.1) (15.8) Chobham Manor Limited Liability Partnership United Kingdom 50% Charge for the year (0.5) (4.2) (4.7) Winstanley and York Road Regeneration LLP United Kingdom 50% Exchange movements – (0.1) (0.1) Whitehill & Bordon Development Company Phase 1a Limited United Kingdom 50% t 31 December 2020 (3.2) (17.4) (20.6) Whitehill & Bordon Regeneration Company Limited United Kingdom 50% Charge for the year (0.9) (3.8) (4.7) * Interests held by subsidiary undertakings. Disposals – 0.7 0.7 Exchange movements – – – Further information on the particulars of joint ventures can be found on page 180. t 31 December 2021 (4.1) (20.5) (24.6) 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. Carrying amount Whitehill & | t 31 December 2021 12.4 9.3 21.7 | | | | | | | | | | Bordon | Whitehill & | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Greenwich | | | | | Winstanley | | Development | | | Bordon | | | t 31 December 2020 13.3 10.7 24.0 | | Millennium | | Chobham | | and York Road | | | | Company | Regeneration | | | | | | | Village | | Manor | Regeneration | | | | Phase 1a | Company | | Total | | | £ million | | 2021 | | 2021 | | | 2021 | | 2021 | | 2021 | 2021 | Non-current assets – – – – 32.8 32.8 13. Interests in joint ventures Current assets 46.5 73.0 61.3 8.1 8.7 197.6 £ million 2021 2020 Cash and cash equivalents 22.4 37.1 2.6 1.2 2.1 65.4 ggregated amounts relating to share of all joint ventures: Current financial liabilities (6.4) (43.6) (3.1) (5.4) (6.6) (65.1) Non-current assets 16.7 25.3 Current other liabilities (2.4) – – (0.8) (0.2) (3.4) Current assets 145.1 115.0 Non-current financial liabilities* (27.8) (56.3) (73.4) (0.3) (34.2) (192.0) otal assets 161.8 140.3 Net assets/(liabilities) (100%) 32.3 10.2 (12.6) 2.8 2.6 35.3 Group share of net assets/(liabilities) 16.2 5.1 (6.3) 1.4 1.3 17.7 Current liabilities (43.7) (28.2) Loans to joint ventures 7.5 27.4 31.4 – 0.1 66.4 Non-current liabilities (100.0) (91.8) Total interests in material joint ventures 23.7 32.5 25.1 1.4 1.4 84.1 otal liabilities (143.7) (120.0) Revenue 39.9 66.0 11.2 27.7 26.0 170.8 Interest (expense)/income (0.5) – (3.7) (0.6) 0.9 (3.9) Carrying amount 24.4 24.3 Income tax expense (1.7) – – (0.8) (0.2) (2.7) Loans to joint ventures 61.0 57.9 Profit/(loss) for the year 7.2 4.6 (4.6) 3.2 0.6 11.0 otal interests in joint ventures 85.4 82.2 Group share of profit/(loss) for the year 3.6 2.3 (2.3) 1.6 0.3 5.5 Loans to joint ventures includes £(6.3) million (2020: £(4.0) million) relating to the Group’s share of losses recognised under the equity method * Non-current financial liabilities include amounts owed to joint venture partners. in excess of the investment in ordinary shares. 153Taylor Wimpey plc Annual Report 2021 A A A A A A A A A A T T T A A T 152 Taylor Wimpey plc Annual Report 2021 Taylor Wimpey plc Annual Report 2021 153 Financial statements Notes to the consolidated financial statements continued 13. Interests in joint ventures c o n t i n u e d Whitehill & | | | | | | | | | | | | | | Bordon | Whitehill & | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | Greenwich | | | | Winstanley and | | | Development | | | Bordon | | | | | | | | Millennium | | Chobham | | | York Road | | | Company | Regeneration | | | | | c o | n | t i n | u e d | | Village | | Manor | Regeneration | | | | Phase 1a | Company | | Total | | £ million | | | | | | 2020 | | 2020 | | | 2020 | | 2020 | | 2020 | 2020 | Non-current assets – – – 0.3 49.6 49.9 Current assets 39.0 57.0 59.8 16.0 2.1 173.9 Cash and cash equivalents 19.5 12.2 12.8 1.8 0.6 46.9 Current financial liabilities (10.0) (13.9) (12.2) (7.1) (9.2) (52.4) Current other liabilities (2.8) – – – – (2.8) Non-current financial liabilities* (10.0) (49.7) (68.4) (7.8) (40.9) (176.8) Net assets/(liabilities) (100%) 35.7 5.6 (8.0) 3.2 2.2 38.7 Group share of net assets/(liabilities) 17.9 2.8 (4.0) 1.6 1.1 19.4 Loans to joint ventures 2.5 22.6 29.7 – 3.3 58.1 Total interests in material joint ventures 20.4 25.4 25.7 1.6 4.4 77.5 Revenue 72.7 23.3 52.6 23.8 19.7 192.1 Interest expense (0.1) – (5.2) (1.1) – (6.4) Income tax expense (3.6) – – (0.5) (0.2) (4.3) Profit/(loss) for the year 15.3 (1.0) 3.5 2.3 0.2 20.3 Group share of profit/(loss) for the year 7.6 (0.5) 1.8 1.2 0.1 10.2 * Non-current financial liabilities include amounts owed to joint venture partners. During the current and prior 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: £ million 2021 2020 Non-current assets 0.3 0.3 Current assets 13.6 4.6 otal assets 13.9 4.9 Current liabilities (9.5) (0.6) Non-current liabilities (4.0) (3.4) otal liabilities (13.5) (4.0) Carrying amount 0.4 0.9 Loans to individually immaterial joint ventures 0.9 3.8 otal interests in individually immaterial joint ventures 1.3 4.7 The aggregate loss relating to individually immaterial joint ventures was £0.1 million (2020: £2.3 million). 14. Deferred tax Retirement Other Share-based Capital benefit temporary £ million payments allowances Losses obligations differences Total t 1 January 2020 3.4 2.3 5.3 13.4 5.4 29.8 (Charge)/credit to income (1.3) (0.3) – (5.1) 0.6 (6.1) Credit to other comprehensive income – – – 8.6 – 8.6 Credit to statement of changes in equity 0.8 – – – – 0.8 Foreign exchange – – 0.6 – – 0.6 t 31 December 2020 2.9 2.0 5.9 16.9 6.0 33.7 Credit/(charge) to income 0.9 0.4 1.2 (2.7) (1.6) (1.8) Charge to other comprehensive income – – – (5.4) – (5.4) Credit to statement of changes in equity 0.1 – – – – 0.1 Foreign exchange – – (0.4) – – (0.4) t 31 December 2021 3.9 2.4 6.7 8.8 4.4 26.2 154 Taylor Wimpey plc Annual Report 2021 A T T T A A 154 Taylor Wimpey plc Annual Report 2021 Notes to the consolidated financial statements continued 14. Deferred tax c o n t i n u e d 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 rates between 19% and 25% (2020: 19%), depending on when the asset will unwind. 13. Interests in joint ventures ccoonnttiinnuueedd c o n t i n u e d The net deferred tax balance is analysed into assets and liabilities as follows: Whitehill & | | | | | | | | | | Bordon | Whitehill & | | | £ million 2021 2020 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Greenwich | | | | Winstanley and | | | Development | | | Bordon | | | | | Millennium | | Chobham | | | York Road | | | Company | Regeneration | | | Deferred tax assets 27.6 35.1 | | | | Village | | Manor | Regeneration | | | | Phase 1a | Company | | Total | | | £ million | | 2020 | | 2020 | | | 2020 | | 2020 | | 2020 | 2020 | Deferred tax liabilities (1.4) (1.4) | | Non-current assets – – – 0.3 49.6 49.9 | | | | | | | | | | | | | 26.2 33.7 | Current assets 39.0 57.0 59.8 16.0 2.1 173.9 In the Autumn Budget 2021, a new 4% residential property developer tax (RPDT) was announced which will be effective from 1 April 2022. Cash and cash equivalents 19.5 12.2 12.8 1.8 0.6 46.9 Although now enacted, at the balance sheet date, the legislation for the RPDT had not been substantively enacted and therefore Current financial liabilities (10.0) (13.9) (12.2) (7.1) (9.2) (52.4) measurement of the Group’s UK deferred tax assets do not reflect this change. From 1 April 2023, the UK Corporation Tax rate is legislated Current other liabilities (2.8) – – – – (2.8) to increase to 25%. This increase in rate had been enacted by the balance sheet date so has been reflected in the measurement of the Non-current financial liabilities* (10.0) (49.7) (68.4) (7.8) (40.9) (176.8) Group’s closing UK deferred tax assets. Net assets/(liabilities) (100%) 35.7 5.6 (8.0) 3.2 2.2 38.7 The Group has not recognised temporary differences relating to tax losses carried forward and other temporary differences amounting to £1.9 Group share of net assets/(liabilities) 17.9 2.8 (4.0) 1.6 1.1 19.4 million (2020: £2.4 million) in the UK and £27.4 million (2020: £38.7 million) in Spain. The UK temporary differences have not been recognised Loans to joint ventures 2.5 22.6 29.7 – 3.3 58.1 as they are predominantly non-trading in nature and insufficient certainty exists as to their future utilisation. The temporary differences in Spain Total interests in material joint ventures 20.4 25.4 25.7 1.6 4.4 77.5 have not been recognised due to uncertainty of sufficient taxable profits in the future against which to utilise these amounts. Revenue 72.7 23.3 52.6 23.8 19.7 192.1 At the balance sheet date, the Group has unused UK capital losses of £269.5 million (2020: £269.5 million). No deferred tax asset has been Interest expense (0.1) – (5.2) (1.1) – (6.4) recognised in respect of the capital losses at 31 December 2021 because the Group does not believe that it is probable that these capital Income tax expense (3.6) – – (0.5) (0.2) (4.3) losses will be utilised in the foreseeable future. Profit/(loss) for the year 15.3 (1.0) 3.5 2.3 0.2 20.3 Group share of profit/(loss) for the year 7.6 (0.5) 1.8 1.2 0.1 10.2 15. Inventories £ million 2021 2020 * Non-current financial liabilities include amounts owed to joint venture partners. Land 3,385.7 2,875.7 During the current and prior year, no entity charged depreciation or amortisation. No entity had discontinued operations or items of other Development and construction costs 1,548.1 1,638.8 comprehensive income. Part exchange and other 11.9 20.2 Aggregated amounts relating to share of individually immaterial joint ventures: 4,945.7 4,534.7 £ million 2021 2020 Non-current assets 0.3 0.3 The markets in our core geographies, which are the primary drivers of our business, continue to trade positively. At 31 December 2021, the Group completed a net realisable value assessment of inventory, considering each site individually and based on estimates of sales price, Current assets 13.6 4.6 costs to complete and costs to sell. At 31 December 2021 the provision held in the United Kingdom was £19.3 million (2020: £25.5 million) otal assets 13.9 4.9 and £35.5 million in Spain (2020: £38.9 million). The table below details the movements on the inventory provision recorded in the year. Current liabilities (9.5) (0.6) £ million 2021 2020 Non-current liabilities (4.0) (3.4) 1 January 64.4 68.6 otal liabilities (13.5) (4.0) Net utilised (7.0) (6.6) Foreign exchange (2.6) 2.4 Carrying amount 0.4 0.9 31 December 54.8 64.4 Loans to individually immaterial joint ventures 0.9 3.8 otal interests in individually immaterial joint ventures 1.3 4.7 16. Other financial assets The aggregate loss relating to individually immaterial joint ventures was £0.1 million (2020: £2.3 million). Trade and other receivables Current Non-current | 14. Deferred tax | | | | | | | | | | £ million 2021 2020 2021 2020 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | Retirement | | | Other | | rade receivables 105.7 127.5 15.8 19.3 | | | Share-based | | Capital | | | benefit | temporary | | | | | £ million | payments | allowances | | Losses | obligations | | differences | | Total | Other receivables 62.5 61.6 11.7 7.0 | | t 1 January 2020 3.4 2.3 5.3 13.4 5.4 29.8 | | | | | | | | | | 168.2 189.1 27.5 26.3 | (Charge)/credit to income (1.3) (0.3) – (5.1) 0.6 (6.1) Included within trade receivables are mortgage receivables of £17.9 million (2020: £26.7 million), including shared equity loans. Shared equity Credit to other comprehensive income – – – 8.6 – 8.6 loans were provided to certain customers to facilitate their house purchase and are measured at fair value through profit or loss. Credit to statement of changes in equity 0.8 – – – – 0.8 Cash and cash equivalents Foreign exchange – – 0.6 – – 0.6 £ million 2021 2020 t 31 December 2020 2.9 2.0 5.9 16.9 6.0 33.7 Cash and cash equivalents 921.0 823.0 Credit/(charge) to income 0.9 0.4 1.2 (2.7) (1.6) (1.8) Charge to other comprehensive income – – – (5.4) – (5.4) Further information on financial assets can be found in Note 20. Credit to statement of changes in equity 0.1 – – – – 0.1 Foreign exchange – – (0.4) – – (0.4) t 31 December 2021 3.9 2.4 6.7 8.8 4.4 26.2 155Taylor Wimpey plc Annual Report 2021 A T T T A A T 154 Taylor Wimpey plc Annual Report 2021 Taylor Wimpey plc Annual Report 2021 155 Financial statements Notes to the consolidated financial statements continued # **17. Bank and other loans** | £ million | 2021 | 2020 | | --- | --- | --- | | €100.0 million 2.02% Senior Loan Notes 2023 | 84.0 | 90.1 | | €15.0 million 1.65% Loan 2021 | – | 13.5 | | | 84.0 | 103.6 | | £ million | 2021 | 2020 | | --- | --- | --- | | Amounts due for settlement within one year | – | 13.5 | | Amount due for settlement after one year | 84.0 | 90.1 | | Total borrowings | 84.0 | 103.6 | Further information on loan facilities can be found in Note 20. # **18. Trade and other payables** | £ million | Current | | Non-current | | | --- | --- | --- | --- | --- | | | 2021 | 2020 | 2021 | 2020 | | Trade payables | 274.3 | 275.0 | 19.3 | 21.4 | | Land creditors | 314.2 | 347.9 | 492.2 | 328.0 | | Social security and other taxes | 8.8 | 8.6 | – | – | | Customer deposits | 82.4 | 82.8 | 20.9 | 7.4 | | Completed site accruals | 122.6 | 115.0 | 40.9 | 46.1 | | Accrued expenses and deferred income | 92.3 | 77.9 | 44.7 | 43.2 | | Other payables | 7.3 | 12.1 | 11.3 | 13.7 | | | 901.9 | 919.3 | 629.3 | 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 £92.8 million (2020: £85.0 million). Other payables include £13.9 million (2020: £19.4 million) of repayable grants. Land creditors are denominated as follows: | £ million | 2021 | 2020 | | --- | --- | --- | | Staring | 782.1 | 663.4 | | Euros | 24.3 | 12.5 | | | 806.4 | 675.9 | Land creditors of £523.1 million (2020: £430.4 million) are secured against land acquired for development. Further information on financial liabilities can be found in Note 20. # **19. Leases** # **The Group as a lessee** The Group's leases consist primarily of office premises and equipment. | Right-of-use assets £ million | Office premises | Equipment | Total | | --- | --- | --- | --- | | At 1 January 2021 | 18.4 | 9.1 | 27.5 | | **A1 31 December 2021** | **17.6** | **8.9** | **26.5** | | **Additions during the year** | **2.4** | **4.3** | **6.7** | | Lease liabilities £ million | 2021 | 2020 | | --- | --- | --- | | Current | 7.0 | 6.4 | | Non-current | 20.4 | 21.6 | | Total | 27.4 | 28.0 | 156 Taylor Wimpey plc Annual Report 2021 Notes to the consolidated financial statements continued 19. Leases c o n t i n u e d mounts recognised in the income statemen : £ million 2021 2020 Depreciation charged on right-of-use office premises 3.1 3.7 17. Bank and other loans c o n t i n u e d Depreciation charged on right-of-use equipment 4.2 4.2 £ million 2021 2020 Interest on lease liabilities 0.4 0.4 €100.0 million 2.02% Senior Loan Notes 2023 84.0 90.1 otal 7.7 8.3 €15.0 million 1.65% Loan 2021 – 13.5 84.0 103.6 The total cash outflow for leases during the current year was £7.3 million, including £0.4 million of interest (2020: £8.4 million, including £0.4 million of interest). £ million 2021 2020 | mounts due for settlement within one year – 13.5 | | 20. Financial instruments and fair value disclosures | | --- | --- | --- | | mount due for settlement after one yea | 84.0 90.1 | Capital management | | otal borrowings 84.0 103.6 | | The Group’s policy is to maintain a strong balance sheet and to have an appropriate funding structure. Shareholders’ equity and term | debt are used to finance non-current assets and the medium to long term inventories. Revolving credit facilities are used to finance net Further information on loan facilities can be found in Note 20. 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. The Ordinary Dividend Policy is to return c.7.5% of net assets to shareholders annually, which will be at least £250 18. Trade and other payables million per annum, in two equal instalments. Current Non-current | £ million 2021 2020 2021 2020 | Financial assets and financial liabilities | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | rade payables 274.3 275.0 19.3 21.4 | Categories of financial assets and financial liabilities are as follows: | | | | | | | | | | | Land creditors 314.2 347.9 492.2 328.0 | Carrying value Fair value | | | | | | | | | | | Social security and other taxes 8.8 8.6 – – | Financial assets | Fair value | 31 December | | 31 December | | 31 December | | 31 December | | | | £ million | hierarchy | | 2021 | | 2020 | | 2021 | | 2020 | Customer deposits 82.4 82.8 20.9 7.4 Cash and cash equivalents a 921.0 823.0 921.0 823.0 Completed site accruals 122.6 115.0 40.9 46.1 Land receivables a 18.7 4.6 18.7 4.6 ccrued expenses and deferred income 92.3 77.9 44.7 43.2 Other financial assets a 10.0 – 10.0 – Other payables 7.3 12.1 11.3 13.7 rade and other receivables a 105.0 118.2 105.0 118.2 901.9 919.3 629.3 459.8 Mortgage receivables b 17.9 26.7 17.9 26.7 1,072.6 972.5 1,072.6 972.5 Revenue recognised in the current year that was included in the customer deposit balance brought forward at the beginning of the period was £82.8 million (2020: £65.0 million). Other payables include £13.9 million (2020: £19.4 million) of repayable grants. a. 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. Land creditors are denominated as follows: 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 £ million 2021 2020 a publicly available national house price index, being significant other observable inputs (level 2). Sterling 782.1 663.4 Land receivables and trade and other receivables are included in the balance sheet as trade and other receivables for current and non-current Euros 24.3 12.5 amounts. Current and non-current trade and other receivables, as disclosed in Note 16, include £54.1 million (2020: £65.9 million) of non- 806.4 675.9 financial assets. Carrying value Fair value Land creditors of £523.1 million (2020: £430.4 million) are secured against land acquired for development. Financial liabilities Fair value 31 December 31 December 31 December 31 December £ million hierarchy 2021 2020 2021 2020 Further information on financial liabilities can be found in Note 20. Bank and other loans a 84.0 103.6 84.8 102.9 Land creditors b 806.4 675.9 806.4 675.9 19. Leases rade and other payables b 543.3 539.2 543.3 539.2 The Group as a lessee Lease liabilities b 27.4 28.0 27.4 28.0 The Group’s leases consist primarily of office premises and equipment. 1,461.1 1,346.7 1,461.9 1,346.0 | Right-of-use assets: | | Office | | | --- | --- | --- | --- | | £ million | premises Equipment Total | | 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 | | t 1 January 2021 18.4 9.1 27.5 | | | 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 t 31 December 2021 17.6 8.9 26.5 their fair value. dditions during the year 2.4 4.3 6.7 Current and non-current trade and other payables, as disclosed in Note 18, include £181.5 million (2020: £164.0 million) of non-financial liabilities. Lease liabilities: The Group has designated the carrying value of €79.0 million of foreign currency borrowings (2020: €79.0 million foreign currency borrowings) £ million 2021 2020 as a net investment hedge, equating to £66.4 million (2020: £71.2 million). Current 7.0 6.4 The Group has no financial instruments with fair values that are determined by reference to significant unobservable inputs (level 3), nor have Non-current 20.4 21.6 there been any transfers of assets or liabilities between levels of the fair value hierarchy. There are no non-recurring fair value measurements. otal 27.4 28.0 157Taylor Wimpey plc Annual Report 2021 A A A A T T A A T r T T T A t 156 Taylor Wimpey plc Annual Report 2021 Taylor Wimpey plc Annual Report 2021 157 Financial statements Notes to the consolidated financial statements continued 20. Financial instruments and fair value disclosures c o n t i n u e d Forward contracts have been entered into to offset the foreign exchange movements on intra-Group loans to buy/(sell) against Sterling: €9.5 million (2020: €21.0 million), equivalent to £8.0 million (2020: £18.9 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. c o n t i n u e d Market risk The Group’s activities expose it to the financial risks of changes in both foreign currency exchange rates and interest rates. The Group aims to manage the exposure to these risks using fixed or variable rate borrowings, foreign currency borrowings and derivative financial instruments. (a) Interest rate risk management 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. Group policy is to manage the volatility risk of interest rates 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 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. 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. Interest rate sensitivity The effect on both income and equity, based on exposure to non-derivative floating rate instruments and cash and cash equivalents 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 interest rates over the next financial period. The table assumes all other variables remain constant in accordance with IFRS 7. | | Income | | Equity | Income | | Equity | | --- | --- | --- | --- | --- | --- | --- | | | sensitivity | sensitivity | | sensitivity | sensitivity | | | £ million | 2021 | | 2021 | 2020 | | 2020 | 0.25% increase in interest rates 2.3 2.3 2.0 2.0 | | Income | | Equity | Income | | Equity | | --- | --- | --- | --- | --- | --- | --- | | | sensitivity | sensitivity | | sensitivity | sensitivity | | | £ million | 2021 | | 2021 | 2020 | | 2020 | 0.25% decrease in interest rates (2.3) (2.3) (2.0) (2.0) (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 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. Group policy requires that transaction risks are hedged to the functional currency of the subsidiary using foreign currency borrowings or derivatives where appropriate. The Group is 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 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 hedged using derivatives. The policy is kept under periodic review and has not changed during the year. Hedge accounting 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 (2020: €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, equating to £66.4 million (2020: £71.2 million). The change in the carrying value of £4.8 million (2020: £4.2 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. 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/(decrease) on a before tax basis following a 10% (2020: 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. 158 Taylor Wimpey plc Annual Report 2021 158 Taylor Wimpey plc Annual Report 2021 Notes to the consolidated financial statements continued | 20. Financial instruments and fair value disclosures c | o n | t i | n u | e d | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | Income | | Equity | Income | | Equity | | | | | | | sensitivity | sensitivity | | sensitivity | sensitivity | | | £ million | | | | | 2021 | | 2021 | 2020 | | 2020 | Euro weakens against Sterling (0.9) 5.1 (0.9) 5.5 20. Financial instruments and fair value disclosures ccoonnttiinnuueedd c o n t i n u e d Forward contracts have been entered into to offset the foreign exchange movements on intra-Group loans to buy/(sell) against Sterling: Euro strengthens against Sterling 1.1 (6.2) 1.1 (6.8) €9.5 million (2020: €21.0 million), equivalent to £8.0 million (2020: £18.9 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. Credit risk Credit risk is the risk of financial loss where counterparties are not able to meet their obligations. 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 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 manage the exposure to these risks using fixed or variable rate borrowings, foreign currency borrowings and derivative financial instruments. 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. (a) Interest rate risk management Land receivables arise from sales of surplus land on deferred terms. If the credit risk is not acceptable, then the deferred payment must have The Group can be exposed to interest rate risk as the Group borrows funds, when required, at variable interest rates. The exposure to variable 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 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 management to be sufficient in relation to the carrying amount of the receivable to which it relates. land payments. Group policy is to manage the volatility risk of interest rates 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 Trade and other receivables comprise mainly amounts receivable from various housing associations, other housebuilders and amounts in to speculate against changes to future interest rates and they are only used to manage exposure to volatility. Interest-rate hedging using relation to Help to Buy. Management consider that the credit quality of the various receivables is good in respect of the amounts outstanding derivatives has not taken place in the current or previous year. This policy has not changed during the year. and therefore credit risk is considered to be low. There is no significant concentration of risk. To measure the risk, variable rate borrowings and the expected interest cost for the year are forecast monthly and compared to budget using Mortgage receivables, including shared equity loans, are in connection with various historical sales promotion schemes and are measured at management’s expectations of a possible change in interest rates. Interest expense volatility remained within acceptable limits throughout 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 the year. due to non-payment. Interest rate sensitivity The carrying amount of financial assets, as detailed above, represents the Group’s maximum exposure to credit risk at the reporting date The effect on both income and equity, based on exposure to non-derivative floating rate instruments and cash and cash equivalents at the assuming that any security held has no value. balance sheet date, is shown in the table below. The Group does not currently have any outstanding interest rate derivatives. The 0.25% Liquidity risk change represents a reasonably possible change in interest rates over the next financial period. The table assumes all other variables remain 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 constant in accordance with IFRS 7. manages liquidity risk by continuously monitoring forecast and actual cash flows, matching the expected cash flow timings of financial assets Income Equity Income Equity and liabilities with the use of cash and cash equivalents, borrowings, overdrafts and committed revolving credit facilities with a minimum of | | sensitivity | | sensitivity | | sensitivity | | sensitivity | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | £ million | | 2021 | | 2021 | | 2020 | | 2020 | 12 months to maturity. Future borrowing requirements are forecast on a monthly basis and funding headroom is maintained above forecast | | 0.25% increase in interest rates 2.3 2.3 2.0 2.0 | | | | | | | | | peak requirements to meet unforeseen events. At 31 December 2021, the Group’s borrowings and facilities had a range of maturities with | an average life of 2.9 years (2020: 3.8 years). In addition to €100.0 million fixed term borrowings maturing June 2023, the Group has access to a committed revolving credit facility, expiring | | Income | | Equity | Income | Equity | | | --- | --- | --- | --- | --- | --- | --- | | | sensitivity | sensitivity | | sensitivity | sensitivity | February 2025, and cash balances. The borrowings and facilities contain financial covenants based on minimum tangible net worth, maximum | | £ million | 2021 | | 2021 | 2020 | 2020 | | gearing and minimum interest cover. At the balance sheet date, the total unused committed amount was £550.0 million (2020: £550.0 million) 0.25% decrease in interest rates (2.3) (2.3) (2.0) (2.0) and cash and cash equivalents were £921.0 million (2020: £823.0 million). The maturity profile of the anticipated future cash flows including interest, using the latest applicable relevant rate, based on the earliest date (b) Foreign currency risk management on which the Group can be required to pay financial liabilities on an undiscounted basis, is as follows: The Group’s overseas activities expose it to the financial risks of changes in foreign currency exchange rates. Its Spanish subsidiary is the only Bank and Land Trade and Lease foreign operation of the Group. £ million other loans creditors other payables liabilities Total The Group is not materially exposed to transaction risks as all Group companies conduct their business in their respective functional On demand – – – – – currencies. Group policy requires that transaction risks are hedged to the functional currency of the subsidiary using foreign currency Within one year 1.7 320.8 471.0 7.4 800.9 borrowings or derivatives where appropriate. More than one year and less than two years 84.9 312.2 48.4 6.3 451.8 The Group is exposed to the translation risk from accounting for both the income and the net investment held in a functional currency other More than two years and less than five years – 181.5 15.8 12.1 209.4 than Sterling. The net investment risk may be hedged using foreign currency borrowings and derivatives. Assets and liabilities denominated More than five years – 23.3 8.1 2.6 34.0 in non-functional currencies are retranslated each month using the latest exchange rates. Income is also measured monthly using the latest 31 December 2021 86.6 837.8 543.3 28.4 1,496.1 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 hedged using derivatives. The policy is kept under periodic review and has not changed during the year. Bank and Land Trade and Lease Hedge accounting £ million other loans creditors other payables liabilities Total Hedging activities are evaluated periodically to ensure that they are in line with Group policy. On demand –– ––– The Group has designated the carrying value of €79.0 million of foreign currency borrowings (2020: €79.0 million borrowings) held at the Within one year 15.5 355.3 456.9 6.8 834.5 balance sheet date as a net investment hedge of part of the Group’s investment in Euro denominated assets, equating to £66.4 million More than one year and less than two years 1.8 169.2 50.1 6.1 227.2 (2020: £71.2 million). More than two years and less than five years 91.0 151.5 25.2 11.7 279.4 The change in the carrying value of £4.8 million (2020: £4.2 million) of the borrowings designated as a net investment hedge offset the More than five years – 26.8 7.1 4.7 38.6 exchange movement on the foreign currency net investments and are presented in the statement of other comprehensive income. 31 December 2020 108.3 702.8 539.3 29.3 1,379.7 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/(decrease) on a before tax basis following a 10% (2020: 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. 159Taylor Wimpey plc Annual Report 2021 158 Taylor Wimpey plc Annual Report 2021 Taylor Wimpey plc Annual Report 2021 159 Financial statements Notes to the consolidated financial statements continued ## 21. Retirement benefit obligations Total retirement benefit obligations of £37.3 million (2020: £89.5 million) comprise a defined benefit pension liability of £37.0 million (2020: £89.1 million) and a post-retirement healthcare liability of £0.3 million (2020: £0.4 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 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 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 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 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. 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 Group's defined contribution plan, the Taylor Wimpey Personal Choice Plan (TWPCP), is offered to all new and existing monthly paid employees and is provided by Scottish Widows. 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 and individuals. The Group made contributions to its defined contribution arrangements of £14.1 million in the year (2020: £15.2 million), which is included in the income statement charge. ### 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 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 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 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 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. Following the 31 December 2016 triennial valuation, the Group agreed a recovery plan with the TWPS Trustee to pay deficit reduction contributions of £40.0 million per annum for the period from April 2018 to December 2020, whilst the TWPS was in a Technical Provisions deficit. During April 2020 and in response to the site shutdowns, it was agreed with the TWPS Trustee that there would be a temporary suspension of the agreed deficit reduction contributions for the three months between April and June 2020. Those suspended contributions were instead paid between January 2021 and March 2021 in the amount of £10.3 million. During 2020, the Group engaged with the TWPS Trustee on the triennial valuation of the TWPS with a reference date of 31 December 2019. The table below sets out the key assumptions agreed as part of this valuation. ### Assumptions | Discount rate (pre-retirement) | 2.35% per annum above the yield on the nominal gilt yield curve. Illustrative rate of 3.51% using the 15-year spot rate from the curve | | --- | --- | | Discount rate (post-retirement) | 0.50% per annum above the yield on the nominal gilt yield curve. Illustrative rate of 1.66% using the 15-year spot rate from the curve | | RPI inflation | Implied inflation gilt yield curve. Illustrative rate of 3.40% using the 15-year spot rate from the curve | | CPI inflation | RPI less 0.8%. Illustrative rate of 2.60% using the 15-year spot rate from the curve | | Mortality | 104% of S3PVA tables, CMI 2019 improvements with 1.50% long-term trend rate, a smoothing factor of 7 and an initial addition parameter of 0.5% | The result of this valuation was a Technical Provisions deficit at 31 December 2019 of £36.0 million. In March 2021, a new funding arrangement was agreed with the TWPS Trustee that commits the Group to paying up to £20.0 million per annum into an escrow account between April 2021 and March 2024. The first six months of contributions (£10.0 million) between 1 April 2021 and 30 September 2021 were guaranteed. From 1 October 2021, payments into the escrow account are subject to a quarterly funding test with the first funding test having an effective date of 30 September 2021. Contributions to the escrow are suspended should the TWPS Technical Provisions funding level at any quarter end be 100% or more and would restart only if the funding level subsequently falls below 98%. The Group continues to contribute £5.1 million per annum from the Pension Funding Partnership and £2.0 million per annum to cover scheme expenses. 160 Taylor Wimpey plc Annual Report 2021 ## 21. Retirement benefit obligations continued The escrow account, over which the TWPS Trustee holds a fixed charge, is recognised in other financial assets and at 31 December 2021 was £10.0 million (31 December 2020: nil). Transfers out of the escrow account (either to the TWPS or the Group) are subject to the 2019 biennial funding arrangement entered into between the Group and the Trustee and as such the funds are restricted from use by the Group for other purposes and are therefore not classified as cash or cash equivalents. Interest earned by the escrow account is retained within the escrow account. On an IAS 19 accounting basis the underlying surplus in the TWPS at 31 December 2021 was £149.9 million (2020: deficit of £89.1 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 2021, the Group recognised an adjustment to the underlying surplus in the TWPS on an IAS 19 accounting basis of £186.9 million, resulting in an IFRIC 14 deficit of £37.0 million, which represented the present value of future contributions under the funding plan. No such adjustment was recognised as of 31 December 2020 since the TWPS deficit on an IAS 19 accounting basis exceeded the IFRIC 14 deficit. In 2015, the Group introduced a £100.0 million Pension Funding Partnership that utilises the Group's show homes, as well as six 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 2021 there was £81.8 million of property and £31.0 million of cash held within the structure (2020: £90.3 million of property and £21.9 million of cash). The terms of the Funding Partnership are such that, should the TWPS be in a Technical Provisions deficit at 31 December 2020, then a bullet payment will be due to the TWPS 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 96% hedged against changes in both interest rates and inflation expectations on the scheme's long term funding 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 to the TWPS liabilities. 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 100% of S3PVA tables, CMI_2020 improvements with a 1.25% long-term trend rate, a smoothing factor of 7, an initial addition parameter of 0.25% and a w2020 parameter of 15%. The mortality assumption used in 2020 was 100% of S3PVA 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%. | Accounting valuation assumptions | 2021 | 2020 | | --- | --- | --- | | At 31 December: | | | | Discount rate for scheme liabilities | 1.85% | 1.30% | | General pay inflation | n/a | n/a | | Deferred pension increases | 2.50% | 2.15% | | Pension increases* | 2.15%-3.70% | 2.05%-3.60% | * Pension increases depend on the section of the TWPS 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 | 2021 | | 2020 | | | --- | --- | --- | --- | --- | | | Male | Female | Male | Female | | Member currently aged 65 | 86 | 89 | 87 | 89 | | Member currently aged 45 | 88 | 90 | 88 | 90 | Taylor Winney plc Annual Report 2021 161 Financial statements Notes to the consolidated financial statements continued ## 21. Retirement benefit obligations continued 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 | Change in assumption | Impact on scheme liabilities | Impact on scheme liabilities (%) | | --- | --- | --- | --- | | Discount rate | Decrease by 0.1% p.a. | Increase by £35m | 1.4 | | Rate of inflation^{a} | Increase by 0.1% p.a. | Increase by £20m | 0.8 | | Life expectancy | Members live 1 year longer | Increase by £90m | 3.7 | $^{a}$ Assumed to affect deferred revaluation and pensioner increases in payment. The sensitivity of increasing life expectancy has been reduced by the medically underwritten buy-in. See the section on risks and risk management at the end of this note. | 31 December 2021 Fair value of scheme assets of the TWPS | Level 1 £ million | Level 2 £ million | Level 3 £ million | Total £ million | Percentage of total scheme assets | | --- | --- | --- | --- | --- | --- | | Equity^{a)} | – | 43.4 | – | 43.4 | 1.7% | | Diversified growth funds^{b)} | – | 357.8 | – | 357.8 | 14.6% | | Hedge funds^{c)} | – | – | 189.8 | 189.8 | 7.8% | | Property | 2.7 | – | 6.7 | 9.4 | 0.4% | | Multi-asset credit | 0.4 | 274.0 | – | 274.4 | 11.2% | | Direct lending | 1.3 | – | 144.8 | 146.1 | 6.0% | | Fixed income | 2.4 | 102.4 | – | 104.8 | 4.3% | | Liability driven investment^{d)} | (252.5) | 1,376.6 | – | 1,124.1 | 46.0% | | Insurance policies in respect of certain members | – | – | 191.0 | 191.0 | 7.8% | | Cash | 4.5 | – | – | 4.5 | 0.2% | | | (241.2) | 2,154.2 | 532.3 | 2,445.3 | 100.0% | | 31 December 2020 Fair value of scheme assets of the TWPS | Level 1 £ million | Level 2 £ million | Level 3 £ million | Total £ million | Percentage of total scheme assets | | --- | --- | --- | --- | --- | --- | | Equity^{a)} | – | 118.3 | – | 118.3 | 4.9% | | Diversified growth funds^{b)} | – | 357.7 | – | 357.7 | 14.9% | | Hedge funds^{c)} | – | – | 175.5 | 175.5 | 7.3% | | Property | 0.3 | – | 18.7 | 19.0 | 0.8% | | Multi-asset credit | – | 261.5 | – | 261.5 | 10.9% | | Direct lending | 1.3 | – | 165.7 | 167.0 | 6.9% | | Fixed income | 5.0 | 110.4 | – | 115.4 | 4.8% | | Liability driven investment^{d)} | (42.9) | 994.2 | – | 951.3 | 39.6% | | Insurance policies in respect of certain members | – | – | 211.1 | 211.1 | 8.8% | | Cash | 27.5 | – | – | 27.5 | 1.1% | | | (8.8) | 1,842.1 | 571.0 | 2,404.3 | 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 2021 was 2.6x (31 December 2020: 3.4x). b. This amount relates to the Scheme's Diversified Risk-Previa (DRP) allocation. The leverage on the two funds in the DRP allocation at 31 December 2021 was 1.0x and -0.2x respectively (31 December 2020: 1.5x and 1.7x). c. The leverage on this fund at 31 December 2021 was 0.8x (31 December 2020: 0.9x). d. The Isoprobe Liability Driven Investment (IDI) fund is designed to protect the Scheme against movements in interest rates and inflation. The overall leverage on the IDI fund at 31 December 2021 was approximately 3.1x (31 December 2020: 3.7x). 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 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. Other significant assets are valued based on observable inputs. There are no investments in respect of the Group's own securities. 162 Taylor Wimpsey plc Annual Report 2021 Notes to the consolidated financial statements continued 21. Retirement benefit obligations c o n t i n u e d The table below details the movements in the TWPS pension liability and assets recorded through the income statement and other comprehensive income. 2021 2020 | 21. Retirement benefit obligations ccoonnttiinnuueedd | | c o | n | t i n | u e d | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | Fair value of | | Asset/(liability) | | Fair value of | | Asset/(liability) | | The table below shows the impact to the present value of scheme liabilities of movements in key assumptions, measured using the same | | | | | | Present value | | scheme | recognised on | Present value | | scheme | recognised on | | | £ million | | | | | of obligation | | assets | balance sheet | of obligation | | assets | balance sheet | method as the defined benefit scheme. t 1 Januar (2,493.4) 2,404.3 (89.1) (2,366.7) 2,282.2 (84.5) ssumption Change in assumption Impact on scheme liabilities Impact on scheme liabilities (%) Past service cost related to GMP equalisation – – – (1.2) – (1.2) Discount rate Decrease by 0.1% p.a. Increase by £35m 1.4 dministration expenses – (2.2) (2.2) – (2.5) (2.5) Rate of inflation* Increase by 0.1% p.a. Increase by £20m 0.8 Interest (expense)/income (31.7) 30.7 (1.0) (48.5) 47.1 (1.4) Life expectancy Members live 1 year longer Increase by £93m 3.7 Total amount recognised in income statement (31.7) 28.5 (3.2) (49.7) 44.6 (5.1) * Assumed to affect deferred revaluation and pensioner increases in payment. Remeasurement gain on scheme assets – 102.9 102.9 – 159.1 159.1 The sensitivity of increasing life expectancy has been reduced by the medically underwritten buy-in. See the section on risks and risk Change in demographic assumptions 29.3 – 29.3 (100.8) – (100.8) management at the end of this note. Change in financial assumptions 131.6 – 131.6 (286.3) – (286.3) Percentage of | 31 December 2021 | | | | | | | Experience (loss)/gain (39.0) – (39.0) 2.5 – 2.5 | | --- | --- | --- | --- | --- | --- | --- | --- | | | Level 1 | Level 2 | Level 3 | Total | total scheme | | | | Fair value of scheme assets of the TWPS | £ million | £ million | £ million | £ million | | assets | djustment to liabilities for IFRIC 14 (186.9) – (186.9) 188.9 – 188.9 | (a) Equity – 43.4 – 43.4 1.7% Total remeasurements in other comprehensive income (65.0) 102.9 37.9 (195.7) 159.1 (36.6) (b) Diversified growth funds – 357.8 – 357.8 14.6% Employer contributions – 17.4 17.4 – 37.1 37.1 (c) Hedge funds – – 189.8 189.8 7.8% Employee contributions – – – ––– Property 2.7 – 6.7 9.4 0.4% Benefit payments 107.8 (107.8) – 118.7 (118.7) – Multi-asset credit 0.4 274.0 – 274.4 11.2% t 31 December (2,482.3) 2,445.3 (37.0) (2,493.4) 2,404.3 (89.1) Direct lending 1.3 – 144.8 146.1 6.0% Fixed income 2.4 102.4 – 104.8 4.3% ccounting valuation (d) | Liability driven investment | (252.5) 1,376.6 – 1,124.1 46.0% | £ million 2021 2020 | | --- | --- | --- | | Insurance policies in respect of certain members – – 191.0 191.0 7.8% | | Fair value of scheme assets 2,445.3 2,404.3 | | Cash 4.5 – – 4.5 0.2% | | Present value of scheme obligations (2,295.4) (2,493.4) | | (241.2) 2,154.2 532.3 2,445.3 100.0% | | Surplus/(deficit) in scheme 149.9 (89.1) | IFRIC 14 limitation on recognition of surplus (186.9) – | | | | | | Percentage of | | Deficit after IFRIC 14 adjustment (37.0) (89.1) | | --- | --- | --- | --- | --- | --- | --- | --- | | 31 December 2020 | Level 1 | Level 2 | Level 3 | Total | total scheme | | | | Fair value of scheme assets of the TWPS | £ million | £ million | £ million | £ million | | assets | | (a) Equity – 118.3 – 118.3 4.9% (b) Diversified growth funds – 357.7 – 357.7 14.9% (c) Hedge funds – – 175.5 175.5 7.3% Property 0.3 – 18.7 19.0 0.8% Multi-asset credit – 261.5 – 261.5 10.9% Direct lending 1.3 – 165.7 167.0 6.9% Fixed income 5.0 110.4 – 115.4 4.8% (d) Liability driven investment (42.9) 994.2 – 951.3 39.6% Insurance policies in respect of certain members – – 211.1 211.1 8.8% Cash 27.5 – – 27.5 1.1% (8.8) 1,842.1 571.0 2,404.3 100.0% 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 2021 was 2.6x (31 December 2020: 3.4x). 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 2021 was 1.0x and -0.2x respectively (31 December 2020: 1.9x and 1.7x). c. The leverage on this fund at 31 December 2021 was 0.8x (31 December 2020: 0.9x). 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 2021 was approximately 3.1x (31 December 2020: 3.7x). 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 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. Other significant assets are valued based on observable inputs. There are no investments in respect of the Group’s own securities. 163Taylor Wimpey plc Annual Report 2021 A A A A A A y 162 Taylor Wimpey plc Annual Report 2021 Taylor Wimpey plc Annual Report 2021 163 Financial statements Notes to the consolidated financial statements continued ## 21. Retirement benefit obligations continued ### 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** | 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 invests across a number of managers to reduce 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. In Q2 2021, due to the improved funding position of the TWPS, the TWPS Trustee de-risked by disinvesting from the Schroders Equity Sentinel fund (£133 million), the Bridgewater Optimal fund (£29 million) and the AOP Diversified Risk Premia fund (£16 million). The proceeds from these disinvestments, c.£148 million, were allocated to the Scheme's Liability Driven Investment (LDI) portfolio. In Q3 2021, c.£50 million of excess collateral in the LDI portfolio was allocated to the Insight High Grade ABS fund to provide additional return whilst retaining liquidity within the portfolio. 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 2021 to ensure they reflected the TWPS latest position. Given the TWPS' funding position, the Trustee reaffirmed the target date of 2023 to reach full funding on the long-term funding objective basis. The TWPS risk budget was also reduced from a funding-ratio-at-risk measure of 7.5% to 8.0%. There were no significant changes to the TWPS' asset allocation over 2021, which remains well diversified, with risk continuing to be 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** | Insurance policies, real estate and liquid debt (which include commercial real estate debt and direct lending bonds) make up £347 million (14%) of the asset portfolio of the TWPS. Excluding these amounts, approximately 50% of assets are managed in either segregated accounts or daily/weekly dealt posted 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 posted funds with monthly redemption dates. The remaining 16% could be redeemed within approximately six to nine months of notification in normal market conditions. | | **Life expectancy** | 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. | | **Climate risk** | The TWPS Trustee recognises that climate change is a financial risk affecting the TWPS assets. The TWPS Trustee integrates the monitoring of appropriate climate risk metrics into its risk management framework and considers these metrics when making investment decisions. The TWPS Trustee requires its appointed investment managers to integrate climate change risks and opportunities into their investment processes as applied to the assets of the TWPS. | 164 Taylor Winney plc Annual Report 2021 # 22. Provisions | £ million | Cladding fee valves | Leasehold | Other | Total | | --- | --- | --- | --- | --- | | At 1 January 2020 | 23.7 | 72.2 | 32.5 | 128.4 | | Additions | 10.0 | - | 22.6 | 32.6 | | Utilisation | (5.1) | (12.6) | (9.0) | (25.7) | | Released | - | - | (4.0) | (4.0) | | Foreign exchange | - | - | 0.2 | 0.2 | | At 31 December 2020 | 28.6 | 59.6 | 42.3 | 130.5 | | Additions | 125.0 | - | 19.8 | 144.8 | | Utilisation | (9.1) | (6.0) | (8.0) | (23.1) | | Released | - | - | (6.8) | (6.8) | | Foreign exchange | - | - | (0.3) | (0.3) | | At 31 December 2021 | 144.5 | 53.6 | 47.0 | 245.1 | | £ million | 2021 | 2020 | | --- | --- | --- | | Current | 125.4 | 70.6 | | Non-current | 119.7 | 59.9 | | 31 December | 245.1 | 130.5 | In 2018 the Group established an exceptional provision for the cost of replacing ACM on a small number of legacy developments, which was increased by £10.0 million in 2020 to reflect the latest estimate of costs to complete the planned works. Following the guidance issued by RICS in the period the Group announced an additional £125.0 million provision to fund cladding fire safety improvements (see Note 6). It is expected that around a quarter of the remaining provision will be utilised over the next 12 months. 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. Following the agreement of voluntary undertakings with the CMA the Group expects that the majority 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 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 to the nature of the claims and the length of time it can take to reach settlement. # 23. Share capital | £ million | 2021 | 2020 | | --- | --- | --- | | Authorised: | | | | 22,200,819,176 (2020: 22,200,819,176) ordinary shares of 1p each | 222.0 | 222.0 | | 1,158,299,201 (2020: 1,158,299,201) deferred ordinary shares of 24p each | 278.0 | 278.0 | | | 500.0 | 500.0 | | | Number of ordinary shares | Number of deferred ordinary shares | £ million | | --- | --- | --- | --- | | Issued and fully paid: | | | | | 31 December 2020 | 3,645,418,647 | 1,065,566,274 | 292.2 | | Shares issued in year | 3,174,532 | - | - | | 31 December 2021 | 3,648,591,179 | 1,065,566,274 | 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. 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. Taylor Wimpey plc Annual Report 2021 165 Financial statements Notes to the consolidated financial statements continued # **23. Share capital continued** 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. During the year, the Company issued 3.2 million (2020: 2.0 million) ordinary shares to satisfy option exercises. 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 | 2021 | 2020 | | --- | --- | --- | | At 1 January | 773.1 | 762.9 | | Shares issued in year | 4.4 | 10.2 | | At 31 December | 777.5 | 773.1 | # **25. Other reserves** | £ million | Capital redemption reserve | Translation reserve | Other | Total other reserves | | --- | --- | --- | --- | --- | | Balance at 1 January 2020 | 31.5 | 7.2 | 4.9 | 43.6 | | Exchange differences on translation of foreign operations | – | 5.2 | – | 5.2 | | Movement in fair value of hedging instruments | – | (4.2) | – | (4.2) | | Shares issued in year | – | – | 499.1 | 499.1 | | Balance at 31 December 2020 | 31.5 | 8.2 | 504.0 | 543.7 | | Exchange differences on translation of foreign operations | – | (6.9) | – | (6.9) | | Movement in fair value of hedging instruments | – | 4.8 | – | 4.8 | | **Balance at 31 December 2021** | **31.5** | **6.1** | **504.0** | **541.6** | # **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 the fair value 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). 166 Taylor Wintney plc Annual Report 2021 Notes to the consolidated financial statements continued 26. Own shares £ million Balance at 1 January 2020 17.6 Disposed of on exercise of options (6.1) 23. Share capital ccoonnttiinnuueedd Balance at 31 December 2020 11.5 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. Shares acquired 4.2 Disposed of on exercise of options (1.1) During the year, the Company issued 3.2 million (2020: 2.0 million) ordinary shares to satisfy option exercises. Balance at 31 December 2021 14.6 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 The own shares reserve represents the cost of shares in Taylor Wimpey plc purchased in the market, those held as treasury shares and those as are set out in the Company’s Articles of Association. held by the Taylor Wimpey Employee Share Ownership Trusts to satisfy options and conditional share awards under the Group’s share plans. – Deferred ordinary shares of 24p, which carry no voting rights and no entitlement to any dividend. The deferred ordinary shares were issued Million shares 2021 2020 as part of a capital reorganisation in 2009 and have not subsequently changed. Ordinary shares held in trust for bonus, option and performance award plans 9.1 7.1 24. Share premium Employee Share Ownership Trusts (ESOTs) are used to hold the Company’s shares which have been acquired on the market. These shares £ million 2021 2020 are used to meet the valid exercise of options and/or vesting of conditional awards and/or award of shares under the Executive Incentive t 1 January 773.1 762.9 Scheme, Bonus Deferral Plan, Performance Share Plan, Savings-Related Share Option Scheme and the matching award of shares under Shares issued in year 4.4 10.2 the Share Incentive Plan. During the year, Taylor Wimpey plc purchased £4.2 million of its own shares to be held in the ESOTs (2020: none). t 31 Decembe 777.5 773.1 The ESOTs’ entire holding of shares at 31 December 2021 was covered by outstanding options and conditional awards over shares at that date. | 25. Other reserves | | | | | | 27. Notes to the cash flow statement | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Capital | | | | Cash and cash equivalents comprise cash at bank and other short term highly liquid investments with an original maturity of three months or less. | | | | | | | redemption | | Translation | | Total other | | | | | | | £ million | | reserve | | reserve Other | reserves | Movement in net cash | | | | | | Balance at 1 January 2020 31.5 7.2 4.9 43.6 | | | | | | | Cash and cash | Bank and | | Total | | | | | | | | £ million | equivalents | other loans | net cash | | Exchange differences on translation of foreign operations – 5.2 – 5.2 Balance at 1 January 2020 630.4 (84.7) 545.7 Movement in fair value of hedging instruments – (4.2) – (4.2) Net cash flow 191.3 (13.5) 177.8 Shares issued in year – – 499.1 499.1 Foreign exchange 1.3 (5.4) (4.1) Balance at 31 December 2020 31.5 8.2 504.0 543.7 Balance at 31 December 2020 823.0 (103.6) 719.4 Exchange differences on translation of foreign operations – (6.9) – (6.9) Net cash flow 99.9 12.7 112.6 Movement in fair value of hedging instruments – 4.8 – 4.8 Foreign exchange (1.9) 6.9 5.0 Balance at 31 December 2021 31.5 6.1 504.0 541.6 Balance at 31 December 2021 921.0 (84.0) 837.0 Capital redemption reserve For movements in lease liabilities in the year see Note 19. The capital redemption reserve arose on an historic redemption of the Company’s shares and is not distributable. Translation reserve 28. Contingent liabilities and capital commitments The translation reserve consists of exchange differences arising on the translation of overseas operations. It also includes changes in the fair The Group in the normal course of business has given guarantees and entered into counter-indemnities in respect of bonds relating to the value of hedging instruments where such instruments are designated and effective as hedges of investment in overseas operations. Group’s own contracts and has given guarantees in respect of the Group’s share of certain contractual obligations of joint ventures. Other reserve The Group has entered into counter-indemnities in the normal course of business in respect of performance bonds. £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 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 Companies Act 2006 (see Note 23). 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. The Group has no significant capital commitments at 31 December 2021 (2020: none). 167Taylor Wimpey plc Annual Report 2021 A A r 166 Taylor Wimpey plc Annual Report 2021 Taylor Wimpey plc Annual Report 2021 167 Financial statements Notes to the consolidated financial statements continued ## 29. Share-based payments Equity-settled share option plan Details of all equity-settled share-based payment arrangements in existence during the year are set out in the Directors' Remuneration Report on pages 105 to 124. The tables below show the movements in the schemes in the year as well as their weighted average exercise price (WAEP). | Shareware (BAYS) | 2021 | | 2020 | | | --- | --- | --- | --- | --- | | | Options | WAEP (in €) | Options | WAEP (in €) | | Outstanding at the beginning of the year | 28,381,982 | 1.10 | 19,740,433 | 1.32 | | Granted during the year | 3,544,980 | 1.42 | 18,043,668 | 0.97 | | Forfeited during the year | (4,732,096) | 1.10 | (7,359,577) | 1.29 | | Exercised during the year | (3,174,532) | 1.39 | (2,042,542) | 1.38 | | Outstanding at the end of the year | 24,020,334 | 1.11 | 28,381,982 | 1.10 | | Exercisable at the end of the year | 1,189,180 | 1.31 | 1,504,748 | 1.48 | The remaining Sharewave options outstanding at 31 December 2021 had a range of exercise prices from £0.97 to £1.59 (2020: £0.97 to £1.59) and a weighted average remaining contractual life of 2.89 years (2020: 3.40 years). | Share Incentive Plan (SIP) | 2021 | | 2020 | | | --- | --- | --- | --- | --- | | | Options | WAEP (in €) | Options | WAEP (in €) | | Outstanding at the beginning of the year | 6,722,389 | - | 5,789,856 | - | | Granted during the year | 1,440,388 | - | 1,874,590 | - | | Forfeited during the year | (811,540) | - | (385,229) | - | | Exercised during the year | (854,730) | - | (556,828) | - | | Outstanding at the end of the year | 6,496,507 | - | 6,722,389 | - | | Exercisable at the end of the year | 2,891,221 | - | 2,810,423 | - | 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. | Performance Share Plan (PSP) | 2021 | | 2020 | | | --- | --- | --- | --- | --- | | | Options | WAEP (in €) | Options | WAEP (in €) | | Outstanding at the beginning of the year | 20,116,944 | - | 19,466,940 | - | | Granted during the year | 1,967,813 | - | 6,876,632 | - | | Forfeited during the year | (5,995,692) | - | (2,854,138) | - | | Exercised during the year | (357,217) | - | (3,371,590) | - | | Outstanding at the end of the year | 15,731,848 | - | 20,116,944 | - | | Exercisable at the end of the year | - | - | - | - | The conditional awards outstanding at 31 December 2021 had a weighted average remaining contractual life of 1.35 years (2020: 1.70 years). The average share price at the date of exercise across all options exercised during the period was £1.68 (2020: £1.80). 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 | | | --- | --- | --- | --- | --- | | | 2021 | 2020 | 2021 | 2020 | | Model | Binomial | Binomial | Monte Carlo | Monte Carlo | | Weighted average share price | £1.61 | £1.28 | £1.79 | £2.11 | | Weighted average exercise price | £1.07 | £0.79 | Nil | Nil | | Expected volatility | 41% | 39% | 41% | 25% | | Expected life | 3/5 years | 3/5 years | 3 years | 3 years | | Risk-free rate | 0.5% | 0.1% | 0.1% | 0.2% | | Expected dividend yield | 4.36% | 2.02% | 0.0% | 0.0% | | Weighted average fair value of options granted in year | £0.73 | £0.66 | £0.95 | £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 £13.3 million in the year (2020: £8.2 million), which was composed of £13.2 million in relation to equity settled schemes and £0.1 million in relation to cash settled elements (2020: £7.0 million and £1.2 million). 168 Taylor Wimpsey plc Annual Report 2021 ### 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 £22.9 million (2020: £19.9 million) and purchases totalled £24.2 million (2020: £6.7 million). At 31 December 2021 receivables from joint ventures were £69.0 million (31 December 2020: £63.9 million) and payables were £0.7 million (31 December 2020: £0.3 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 pages 10 to 17. The remuneration information for the Executive Directors is set out in the Remuneration Report on page 115. The aggregate compensation for the other members of the GMT is as follows: | £ million | 2021 | 2020 | | --- | --- | --- | | Short term employee benefits | 4.6 | 2.6 | | Post-employment benefits | 0.3 | 0.3 | | Total (excluding share-based payments charge) | 4.9 | 2.9 | In addition to the amounts above, a share-based payment charge of £1.7 million (2020: £0.5 million) related to share options held by members of the GMT. ### 31. Dividends | £ million | 2021 | 2020 | | --- | --- | --- | | **Proposed** | | | | Interim dividend 2021: 4.14p (2020: nil) per ordinary share of 1p each | 150.8 | - | | Final dividend 2021: 4.44p (2020: 4.14p) per ordinary share of 1p each | 162.0 | 151.0 | | | 312.8 | 151.0 | | Amounts recognised as distributions to equity holders | | | | **Paid** | | | | Final dividend 2020: 4.14p (2019: nil) per ordinary share of 1p each | 150.7 | - | | Interim dividend 2021: 4.14p (2020: nil) per ordinary share of 1p each | 150.8 | - | | | 301.5 | - | The Directors recommend a final dividend for the year ended 31 December 2021 of 4.44 pence per share (2020: 4.14 pence per share) subject to shareholder approval at the Annual General Meeting, with an equivalent final dividend charge of c.£162.0 million based on the number of shares in issue at the end of the year (2020: £150.7 million). The final dividend will be paid on 13 May 2022 to all shareholders registered at the close of business on 1 April 2022. In accordance with IAS 10 'Events after the Reporting Period', the proposed final dividend has not been accrued as a liability at 31 December 2021. Taylor Wimpey plc Annual Report 2021 169 Financial statements Notes to the consolidated financial statements continued ### 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 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. # 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 reconciled to profit before tax and profit for the period on the face of the consolidated income statement. # 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 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. | | 2021 | 2020 | | --- | --- | --- | | Profit on ordinary activities before net finance costs (£m) | 698.2 | 282.4 | | Adjusted for: | | | | Share of results of joint ventures (£m) (Note 13) | 5.4 | 7.9 | | Exceptional items (£m) (Note 6) | 125.0 | 10.0 | | Operating profit (£m) | 828.6 | 300.3 | | Revenue (£m) (Note 4) | 4,284.9 | 2,790.2 | | Operating profit margin | 19.3% | 10.8% | # 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 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. | | 2021 | 2020 | 2019 | | --- | --- | --- | --- | | Basic net assets (£m) | 4,314.0 | 4,016.8 | 3,307.8 | | Adjusted for: | | | | | Cash (£m) (Note 16) | (921.0) | (823.0) | (830.4) | | Borrowings (£m) (Note 17) | 84.0 | 103.6 | 84.7 | | Net taxation (£m) | (26.4) | (32.6) | 38.1 | | Accrued dividends (£m) | - | - | - | | Net operating assets (£m) | 3,450.6 | 3,264.8 | 2,800.2 | | Average basic net assets (£m) | 4,165.4 | 3,662.3 | | | Average net operating assets (£m) | 3,357.7 | 3,032.5 | | # Return on net operating assets Return on net operating assets is defined as rolling 12-month operating profit divided by the average of opening and closing net operating assets. The Directors consider this to be an important measure of the underlying operating efficiency and performance of the Group. | | 2021 | 2020 | | --- | --- | --- | | Operating profit (£m) | 828.6 | 300.3 | | Average net operating assets (£m) | 3,357.7 | 3,032.5 | | Return on net operating assets | 24.7% | 9.9% | # 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. | | 2021 | 2020 | | --- | --- | --- | | Basic net assets (£m) | 4,314.0 | 4,016.8 | | Adjusted for: | | | | Intangible assets (£m) (Note 11) | (6.6) | (8.1) | | Tangible net assets (£m) | 4,307.4 | 4,008.7 | | Ordinary shares in issue (millions) | 3,648.6 | 3,645.4 | | Tangible net assets per share (pence) | 118.1 | 110.0 | 170 Toplar Winpay plc Annual Report 2021 Notes to the consolidated financial statements continued 32. Alternative performance measures c o n t i n u e d Adjusted basic and diluted earnings per share This is calculated as earnings attributed to shareholders of the parent, excluding exceptional items and tax on exceptional items, divided 32. Alternative performance measures by the weighted average number of shares in issue during the period. The Directors consider this provides an important measure of the c o n t i n u e d The Group uses a number of alternative performance measures (APMs) which are not defined within IFRS. The Directors use these measures underlying earnings capacity of the Group. Note 10 shows a reconciliation from basic and diluted earnings per share to adjusted basic in order to assess the underlying operational performance of the Group and, as such, these measures should be considered alongside IFRS and diluted earnings per share. measures. The following APMs are referred to throughout the year end results. Net operating asset turn Profit before taxation and exceptional items and profit for the period before exceptional items This is defined as 12 month rolling total revenue divided by the average of opening and closing net operating assets. The Directors consider The Directors consider the removal of exceptional items from the reported results provides more clarity on the performance of the Group. this to be a good indicator of how efficiently the Group is utilising its assets to generate value for shareholders. They are reconciled to profit before tax and profit for the period on the face of the consolidated income statement. 2021 2020 Operating profit and operating profit margin Revenue (£m) (Note 4) 4,284.9 2,790.2 Throughout the Annual Report and Accounts operating profit is used as one of the main measures of performance. Operating profit is defined verage net operating assets (£m) 3,357.7 3,032.5 as profit on ordinary activities before net finance costs, exceptional items and tax, after share of results of joint ventures. The Directors consider Net operating asset turn 1.28 0.92 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. Net cash 2021 2020 Net cash is defined as total cash less total borrowings (bank and other loans). This is considered by the Directors to be the best indicator of Profit on ordinary activities before net finance costs (£m) 698.2 282.4 the financing position of the Group. This is reconciled in Note 27. djusted for: Cash conversion Share of results of joint ventures (£m) (Note 13) 5.4 7.9 This is defined as cash generated from/(used in) operations, which excludes payments relating to exceptional charges, divided by operating | Exceptional items (£m) (Note 6) 125.0 10.0 | profit on a rolling 12 month basis. The Directors consider this measure to be a good indication of how efficiently the Group is turning profit | | | --- | --- | --- | | Operating profit (£m) 828.6 300.3 | into cash. | | | Revenue (£m) (Note 4) 4,284.9 2,790.2 | | 2021 2020 | | Operating profit margin 19.3% 10.8% | Cash generated from/(used in) operations (£m) 574.7 (165.0) | | Operating profit (£m) 828.6 300.3 Net operating assets Cash conversion 69.4% (54.9)% 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, Adjusted gearing the Directors consider this to be an important measure of the underlying operating efficiency and performance of the Group. This is defined as adjusted net debt divided by basic net assets. The Directors consider this to be a more representative measure of the | | 2021 2020 2019 | Group’s gearing levels. Adjusted net debt is defined as net cash less land creditors. | | | --- | --- | --- | --- | | Basic net assets (£m) 4,314.0 4,016.8 3,307.8 | | | 2021 2020 | | djusted for: | | Cash (£m) (Note 16) 921.0 823.0 | | | Cash (£m) (Note 16) (921.0) (823.0) (630.4) | | Loans (£m) (Note 17) (84.0) (103.6) | | | Borrowings (£m) (Note 17) 84.0 103.6 84.7 | | Net cash (£m) 837.0 719.4 | | | Net taxation (£m) (26.4) (32.6) 38.1 | | Land creditors (£m) (Note 18) (806.4) (675.9) | | | Accrued dividends (£m) – –– | | djusted net debt (£m) 30.6 43.5 | | | Net operating assets (£m) 3,450.6 3,264.8 2,800.2 | | Basic net assets (£m) 4,314.0 4,016.8 | | | verage basic net assets (£m) 4,165.4 3,662.3 | | djusted gearing (0.7)% (1.1)% | | verage net operating assets (£m) 3,357.7 3,032.5 33. Post balance sheet events Return on net operating assets There were no material subsequent events affecting the Group after 31 December 2021 that need to be disclosed. Return on net operating assets is defined as rolling 12-month operating profit divided by the average of opening and closing net operating assets. The Directors consider this to be an important measure of the underlying operating efficiency and performance of the Group. 2021 2020 Operating profit (£m) 828.6 300.3 verage net operating assets (£m) 3,357.7 3,032.5 Return on net operating assets 24.7% 9.9% 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. 2021 2020 Basic net assets (£m) 4,314.0 4,016.8 djusted for: Intangible assets (£m) (Note 11) (6.6) (8.1) Tangible net assets (£m) 4,307.4 4,008.7 Ordinary shares in issue (millions) 3,648.6 3,645.4 | Tangible net assets per share (pence) 118.1 110.0 | | | | 171Taylor Wimpey plc Annual Report 2021 | | --- | --- | --- | --- | --- | | A A A A A A | | A A A | | | | 170 | Taylor Wimpey plc Annual Report 2021 | | Taylor Wimpey plc Annual Report 2021 171 | | Financial statements # Company balance sheet at 31 December 2021 | £ million | Note | 2021 | 2020 Restated | | --- | --- | --- | --- | | **Non-current assets** | | | | | Investments in Group undertakings | 4 | 2,446.2 | 2,433.0 | | Trade and other receivables | 5 | 2,243.0 | 2,239.9 | | | | **4,689.2** | **4,672.9** | | **Current assets** | | | | | Trade and other receivables | 5 | 609.2 | 687.3 | | Cash and cash equivalents | | 877.1 | 791.6 | | | | **1,486.3** | **1,478.9** | | **Current liabilities** | | | | | Trade and other payables | 6 | (1,439.3) | (1,640.3) | | | | **(1,439.3)** | **(1,640.3)** | | **Net current assets/(liabilities)** | | **47.0** | **(161.4)** | | **Total assets less current liabilities** | | **4,736.2** | **4,511.5** | | **Non-current liabilities** | | | | | Trade and other payables | 6 | (0.6) | (1.5) | | Bank and other loans | 7 | (84.0) | (90.1) | | Provisions | | (1.0) | (1.0) | | **Net assets** | | **4,650.6** | **4,418.9** | | **Equity** | | | | | Share capital | 8 | 292.2 | 292.2 | | Share premium | 9 | 777.5 | 773.1 | | Own shares | 10 | (14.6) | (11.5) | | Other reserves | 11 | 535.1 | 535.1 | | Retained earnings | 12 | 3,060.4 | 2,830.0 | | **Total equity** | | **4,650.6** | **4,418.9** | * Certain balances in the comparative balance sheet have been restated as explained in Note 5. 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 £519.3 million (2020: £38.3 million). The financial statements were approved by the Board of Directors and authorised for issue on 2 March 2022. They were signed on its behalf by: P Redfern Director C Carney Director 172 Taylor Wimpey plc Annual Report 2021 ## Company statement of changes in equity for the year to 31 December 2021 | £ million | Share capital | Share premium | Own shares | Other revenues | Retained earnings | Total | | --- | --- | --- | --- | --- | --- | --- | | Total equity at 1 January 2020 | 288.6 | 762.9 | (17.6) | 36.0 | 2,792.5 | 3,862.4 | | Profit for the year | - | - | - | - | 36.3 | 36.3 | | **Total comprehensive income for the year** | - | - | - | - | 36.3 | 36.3 | | New share capital subscribed | 3.6 | 10.2 | - | 499.1 | - | 512.9 | | Utilisation of own shares | - | - | 6.1 | - | - | 6.1 | | Cash cost of satisfying share options | - | - | - | - | (5.8) | (5.8) | | Capital contribution on share-based payments | - | - | - | - | 7.0 | 7.0 | | Total equity at 31 December 2020 | 292.2 | 773.1 | (11.5) | 535.1 | 2,800.0 | 4,418.9 | | Profit for the year | - | - | - | - | 519.3 | 519.3 | | **Total comprehensive income for the year** | - | - | - | - | 519.3 | 519.3 | | New share capital subscribed | - | 4.4 | - | - | - | 4.4 | | Own shares acquired | - | - | (4.2) | - | - | (4.2) | | Utilisation of own shares | - | - | 1.1 | - | - | 1.1 | | Cash cost of satisfying share options | - | - | - | - | (0.6) | (0.6) | | Capital contribution on share-based payments | - | - | - | - | 13.2 | 13.2 | | Dividends approved and paid | - | - | - | - | (301.5) | (301.5) | | **Total equity at 31 December 2021** | **292.2** | **777.5** | **(14.6)** | **535.1** | **3,060.4** | **4,650.6** | Taylor Winney plc Annual Report 2021 173 Financial statements ## Notes to the Company financial statements for the year to 31 December 2021 Taxation 1. Significant accounting policies The tax charge represents the sum of the tax currently payable and The following accounting policies have been used consistently, unless deferred tax. otherwise stated, in dealing with items which are considered material. Current tax Basis of preparation The tax currently payable is based on taxable profit for the year. The Company meets the definition of a qualifying entity under Taxable profit differs from profit before tax because it excludes items Financial Reporting Standard 101 (FRS 101) issued by the Financial of income or expense that are taxable or deductible in other years Reporting Council. Accordingly, these financial statements were and it further excludes items that are never taxable or deductible. prepared in accordance with FRS 101 ‘Reduced Disclosure Framework’ as issued by the Financial Reporting Council. The Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under that standard in relation to Any liability or credit in respect of group relief in lieu of current tax is share-based payments, financial instruments, capital management, also calculated using corporation tax rates that have been enacted presentation of comparative information in respect of certain assets, or substantively enacted by the balance sheet date unless a different presentation of a cash flow statement, standards not yet effective, rate (including a nil rate) has been agreed within the Group. impairment of assets and related party transactions. Deferred tax The principal accounting policies adopted are set out below. 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 Going concern pay less tax, at a future date, at rates expected to apply when they The Group has prepared forecasts, including certain sensitivities, crystallise based on current tax rates and law. taking into account the Principal Risks identified on pages 61 to 65. Deferred tax assets are recognised to the extent that it is regarded Having considered these forecasts, the Directors remain of the view as more likely than not that they will be recovered. that the Group’s financing arrangements and capital structure provide both the necessary facilities and covenant headroom to enable the Deferred tax is measured on a non-discounted basis using the tax Group to conduct its business for at least the next 12 months. rates and laws that have been enacted or substantively enacted at the balance sheet date. Accordingly, the Company financial statements have been prepared on a going concern basis. Foreign currencies Critical accounting judgements and key sources of Transactions denominated in foreign currencies are recorded in estimation uncertainty Sterling at actual rates as of the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the year Management have not made any individual accounting judgements end are reported at the rates of exchange prevailing at the year end. that are material to the Company and does not consider there to be any key sources of estimation uncertainty. 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 Investments in Group undertakings profit and loss. Investments are included in the balance sheet at cost less any provision for impairment. The Company assesses investments for Trade and other receivables impairment whenever events or changes in circumstances indicate Trade and other receivables are measured at amortised cost, less any that the carrying value of an investment may not be recoverable. If any loss allowance based on expected credit losses. The measurement such indication of impairment exists, the Company makes an estimate of expected credit losses is based on the probability of default and of the recoverable amount of the investment. If the recoverable amount the magnitude of the loss if there is a default. The assessment of is less than the value of the investment, the investment is considered probability of default is based on historical data adjusted for any to be impaired and is written down to its recoverable amount. An known factors that would influence the future amount to be impairment loss is expensed immediately. Where an impairment loss received in relation to the receivable. subsequently reverses, due to a change in circumstances or in the Share-based payments estimates used to determine the asset’s recoverable amount, the The Company issues equity-settled share-based payments to certain carrying amount of the investment is increased to the revised employees of its subsidiaries. Equity-settled share-based payments estimate of its recoverable amount, so long as it does not exceed are measured at fair value at the grant date. The fair value is expensed the original carrying value prior to the impairment being recognised. on a straight-line basis over the vesting period, based on the estimate The Company values its investments in subsidiary holding of shares that will vest. The cost of equity-settled share-based companies based on a comparison between the net assets payments granted to employees of subsidiary companies is borne by recoverable by the subsidiary company and the investment held. the employing company, without recharge. As such the Company’s Where the net assets are lower than the investment an impairment investment in the subsidiary is increased by an equivalent amount. is recorded. For trading subsidiaries, the investment carrying value in the Company is assessed against the net present value of the cash Own shares flows of the subsidiary. 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 Borrowing costs benefit trusts for the purpose of funding certain of the Company’s Capitalised finance costs are held in other receivables and amortised share option plans, is shown as a reduction in shareholders’ equity. over the period of the facility. Dividends paid Provisions Dividends are charged to the Company’s retained earnings reserve Provisions are recognised at the Directors’ best estimate when the in the period of payment in respect of an interim dividend, and in the Company has a present obligation as a result of a past event and period in which shareholders’ approval is obtained in respect of the it is probable that the Company will have to settle the obligation. Company’s final dividend. 174 Taylor Wimpey plc Annual Report 2021 174 Taylor Wimpey plc Annual Report 2021 ## 2. Particulars of employees | Number | 2021 | 2020 | | --- | --- | --- | | Directors | 3 | 3 | The Executive Directors received all of their remuneration, as disclosed in the Remuneration Report on pages 105 to 124, from Taylor Wimpey UK Limited. This remuneration is reflective of the Directors' service to the Company and all its subsidiaries. ## 3. Auditor's remuneration | £ million | 2021 | 2020 | | --- | --- | --- | | Total audit fees | 0.2 | 0.2 | | Non-audit fees | - | - | | Total | 0.2 | 0.2 | A description of other services is included in Note 6 of the Group financial statements. ## 4. Investments in Group undertakings | £ million | Shares | | --- | --- | | **Cost** | | | At 1 January 2021 | 6,244.3 | | Capital contribution relating to share-based payments | 13.2 | | **At 31 December 2021** | **5,257.5** | | **Provision for impairment** | | | At 1 January 2021 | (2,811.3) | | **At 31 December 2021** | **(2,811.3)** | ## Carrying amount | **At 31 December 2021** | **2,445.2** | | --- | --- | | At 31 December 2020 | 2,433.0 | All investments are unlisted and information about all subsidiaries is listed on pages 179 to 182. ## 5. Trade and other receivables | £ million | Current | | Non-current | | | --- | --- | --- | --- | --- | | | 2021 | 2020 Received* | 2021 | 2020 Received* | | Due from Group undertakings | 607.8 | 685.7 | 2,240.9 | 2,236.8 | | Other receivables | 1.4 | 1.6 | 2.1 | 3.1 | | | 609.2 | 687.3 | 2,243.0 | 2,239.9 | * Following a reassessment of when certain receivables are expected to be realised, the Company identified that it had classified certain amounts due from Group undertakings as current that were not expected to be settled or realised within 12 months of the balance sheet date. The comparatives have been restated, reclassifying £2,236.8 million to non-current. Amounts due from Group undertakings are repayable on demand and are predominantly interest bearing. ## 6. Trade and other payables | £ million | Current | | Non-current | | | --- | --- | --- | --- | --- | | | 2021 | 2020 | 2021 | 2020 | | Due to Group undertakings | 1,436.2 | 1,635.8 | - | - | | Other payables | 1.4 | 0.8 | 0.8 | 1.5 | | Corporation tax creditor | 1.7 | 3.7 | - | - | | | 1,439.3 | 1,640.3 | 0.8 | 1.5 | Amounts due to Group undertakings are repayable on demand and are predominantly interest bearing. Taylor Wimpey plc Annual Report 2021 175 Financial statements Notes to the Company financial statements continued # **7. Bank and other loans** | £ million | 2021 | 2020 | | --- | --- | --- | | €100.0 million 2.02% Senior Loan Notes | 84.0 | 90.1 | | These loans are repayable as follows: | | | | Amounts due for settlement after one year | 84.0 | 90.1 | # **8. Share capital** | £ million | 2021 | 2020 | | --- | --- | --- | | Authorised: | | | | 22,200,819,176 (2020: 22,200,819,176) ordinary shares of 1p each | 222.0 | 222.0 | | 1,158,299,201 (2020: 1,158,299,201) deferred ordinary shares of 24p each | 278.0 | 278.0 | | | 500.0 | 500.0 | | | Number of ordinary shares | Number of deferred ordinary shares | £ million | | --- | --- | --- | --- | | Issued and fully paid: | | | | | 31 December 2020 | 3,645,416,647 | 1,065,566,274 | 292.2 | | Shares issued in year | 3,174,532 | - | - | | **31 December 2021** | **3,648,591,179** | **1,065,566,274** | **292.2** | 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. 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. During the year, the Company issued 3.2 million (2020: 2.0 million) ordinary shares to satisfy option exercises. # **9. Share premium** | £ million | 2021 | 2020 | | --- | --- | --- | | At 1 January | | 773.1 | | Shares issued in year | 4.4 | 10.2 | | At 31 December | | 777.5 | 762.9 773.1 # **10. Own shares** | £ million | 2021 | 2020 | | --- | --- | --- | | Own shares | 14.6 | 11.5 | | These comprise ordinary shares of the Company: | Number | Number | | --- | --- | --- | | Shares held in trust for bonus, options and performance award plans | 9.1m | 7.1m | 176 Taylor Wimpey plc Annual Report 2021 ## 10. Own shares continued During the year, Taylor Wimpey plc purchased £4.2 million of its own shares to be held in the ESOTs (£620: none). The market value of the shares held at 31 December 2021 was £16.0 million (2020: £11.7 million) and their nominal value was £0.1 million (2020: £0.1 million). Dividends on these shares have 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 and/or vesting of conditional awards and/or award of shares under the Executive Incentive Scheme, Bonus Defense Plan, Performance Share 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 2021 was covered by outstanding options and conditional awards over shares at that date. ## 11. Other reserves | £ million | 2021 | 2020 | | --- | --- | --- | | At 1 January | | 535.1 | | Shares issued in year | = | 499.1 | | At 31 December | 535.1 | 535.1 | 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 Companies Act 2006 (see Note 8). Other reserves also includes £31.5 million (2020: £31.5 million) in respect of the historical redemption of the Company's shares, which is non-distributable. ## 12. Retained earnings Retained earnings of £3,060.4 million (2020: £2,830.0 million) includes profit for the year and dividends received from subsidiaries of £590.0 million (2020: nil). Included in retained earnings is £895.2 million (2020: £861.0 million) which is not distributable. ## 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 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 preceding year. ## 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 own contracts. Provision is made for the Directors' best estimate of known legal claims and legal actions in progress. The Group takes legal advice as to the likelihood of success of claims and actions and no provision is made where the Directors consider, based on that advice, that the action is unlikely to succeed. The Company has in issue a guarantee in respect of the Taylor Wimpey Pension Scheme (TWPS), which had an underlying IAS 19 surplus of £149.9 million at 31 December 2021 (2020: £89.1 million deficit). This guarantee commits the Company to ensuring that the participating subsidiary meets its obligations under any schedule of contributions agreed with the TWPS Trustee from time to time. Following the 2019 valuation, Taylor Wimpey UK Limited is required to contribute up to £20.0 million per annum into an escrow account between April 2021 and March 2024. The first six months of contributions (£10.0 million) between 1 April 2021 and 30 September 2021 were guaranteed. From 1 October 2021, payments into the escrow account are subject to a quarterly funding test with the first funding test having an effective date of 30 September 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. Taylor Wimpey plc Annual Report 2021 177 Financial statements Notes to the Company financial statements continued # **15. Dividend** | £ million | 2021 | 2020 | | --- | --- | --- | | **Proposed** | | | | Interim dividend 2021: 4.14p (2020: nil) per ordinary share of 1p each | 150.8 | – | | Final dividend 2021: 4.44p (2020: 4.14p) per ordinary share of 1p each | 162.0 | 151.0 | | | 312.8 | 151.0 | | Amounts recognised as distributions to equity holders | | | | **Paid** | | | | Final dividend 2020: 4.14p (2019: nil) per ordinary share of 1p each | 150.7 | – | | Interim dividend 2021: 4.14p (2020: nil) per ordinary share of 1p each | 150.8 | – | | | 301.5 | – | The Directors recommend a final dividend for the year ended 31 December 2021 of 4.44 pence per share (2020: 4.14 pence per share) subject to shareholder approval at the Annual General Meeting, with an equivalent final dividend charge of £162.0 million based on the number of shares in issue at the end of the year (2020: £150.7 million). The final dividend will be paid on 13 May 2022 to all shareholders registered at the close of business on 1 April 2022. In accordance with IAS 10 'Events after the Reporting Period', the proposed final dividend has not been accrued as a liability at 31 December 2021. 178 Taylor Wimpsey plc Annual Report 2021 Notes to the Company financial statements continued ## 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 Hassall Homes (Mercia) Limited Taylor Wimpey Developments Limited 15. Dividend Admiral Homes (Eastern) Limited Hassall Homes (Southern) Limited Taylor Wimpey Garage Nominees No 1 £ million 2021 2020 | | Admiral Homes Limited | Hassall Homes (Wessex) Limited | Limited | | --- | --- | --- | --- | | Proposed | | | Taylor Wimpey Garage Nominees No 2 | | | Ashton Park Limited | Haverhilll Developments Limited | | | Interim dividend 2021: 4.14p (2020: nil) per ordinary share of 1p each 150.8 – | | | Limited | | | BGS (Pentian Green) Holdings Limited | J.R. Young (Assemblies) Limited | | | Final dividend 2021: 4.44p (2020: 4.14p) per ordinary share of 1p each 162.0 151.0 | | | Taylor Wimpey Holdings Limited | | | Bryad Developments Limited | Jim 1 Limited | | Taylor Wimpey International Limited 312.8 151.0 Bryant Country Homes Limited Jim 3 Limited Taylor Wimpey Property Company Limited mounts recognised as distributions to equity holders Bryant Group Services Limited Jim 4 Limited Taylor Wimpey Property Management Paid Bryant Homes Central Limited Jim 5 Limited Limited Final dividend 2020: 4.14p (2019: nil) per ordinary share of 1p each 150.7 – Bryant Homes East Midlands Limited L. & A. Freeman Limited Taylor Wimpey SH Capital Limited Bryant Homes Limited Laing Homes Limited Interim dividend 2021: 4.14p (2020: nil) per ordinary share of 1p each 150.8 – Taylor Wimpey UK Limited Bryant Homes North East Limited Laing Land Limited 301.5 – Thameswey Homes Limited Bryant Homes Northern Limited LandTrust Developments Limited The Garden Village Partnership Limited Bryant Homes South West Limited Limebrook Manor LLP The Directors recommend a final dividend for the year ended 31 December 2021 of 4.44 pence per share (2020: 4.14 pence per share) The Wilson Connolly Employee Benefit subject to shareholder approval at the Annual General Meeting, with an equivalent final dividend charge of c.£162.0 million based on the Bryant Homes Southern Limited MCA Developments Limited Trust Limited number of shares in issue at the end of the year (2020: £150.7 million). The final dividend will be paid on 13 May 2022 to all shareholders Bryant Properties Limited MCA East Limited This is G2 Limited registered at the close of business on 1 April 2022. Candlemakers (TW) Limited MCA Holdings Limited Thomas Lowe and Sons, Limited In accordance with IAS 10 ‘Events after the Reporting Period’, the proposed final dividend has not been accrued as a liability Clipper Investments Limited MCA Land Limited Thomas Lowe Homes Limited at 31 December 2021. Compine Developments (Wootton) Limited MCA Leicester Limited TW NCA Limited Dormant Nominees One Limited MCA London Limited TW Springboard Limited Dormant Nominees Two Limited MCA Northumbria Limited Twyman Regent Limited Farrods Water Engineers Limited MCA Partnership Housing Limited Valley Park Developments Limited Flyover House Limited MCA South West Limited Whelmar (Chester) Limited George Wimpey Limited MCA West Midlands Limited Whelmar (Lancashire) Limited George Wimpey Bristol Limited MCA Yorkshire Limited Whelmar (North Wales) Limited George Wimpey City Limited McLean Homes Limited Whelmar Developments Limited George Wimpey City 2 Limited McLean Homes Bristol & West Limited Wilcon Homes Anglia Limited George Wimpey East Anglia Limited McLean Homes Southern Limited Wilcon Homes Eastern Limited George Wimpey East London Limited McLean TW Estates Limited Wilcon Homes Midlands Limited George Wimpey East Midlands Limited McLean TW (Chester) Limited Wilcon Homes Northern Limited George Wimpey Manchester Limited McLean TW (Northern) Limited Wilcon Homes Southern Limited George Wimpey Midland Limited McLean TW (Southern) Limited Wilcon Homes Western Limited George Wimpey North East Limited McLean TW (Yorkshire) Limited Wilcon Lifestyle Homes Limited George Wimpey North London Limited McLean TW Group Limited Wilfrid Homes Limited George Wimpey North Midlands Limited McLean TW Holdings Limited Wilson Connolly Holdings Limited George Wimpey North West Limited McLean TW Limited Wilson Connolly Investments Limited George Wimpey North Yorkshire Limited McLean TW No. 2 Limited Wilson Connolly Limited George Wimpey South East Limited Melbourne Investments Limited Wilson Connolly Properties Limited George Wimpey South Midlands Limited Pangbourne Developments Limited Wilson Connolly Quest Limited George Wimpey South West Limited Prestoplan Limited Wimgrove Developments Limited George Wimpey South Yorkshire Limited River Farm Developments Limited Wimgrove Property Trading Limited George Wimpey Southern Counties Limited South Bristol (Ashton Park) Limited Wimpey Construction Developments Limited George Wimpey West London Limited Spinks & Denning Limited Wimpey Construction Overseas Limited George Wimpey West Midlands Limited St. Katharine By The Tower Limited Wimpey Corporate Services Limited George Wimpey West Yorkshire Limited St. Katharine Haven Limited Wimpey Dormant Investments Limited Globe Road Limited Tawnywood Developments Limited Wimpey Geotech Limited Grand Union Vision Limited Taylor Wimpey 2007 Limited Wimpey Group Services Limited Groveside Homes Limited Taylor Wimpey Capital Developments Wimpey Gulf Holdings Limited Hamme Construction Limited Limited Wimpey Overseas Holdings Limited Hanger Lane Holdings Limited Taylor Wimpey Commercial Properties Limited Hassall Homes (Cheshire) Limited 179Taylor Wimpey plc Annual Report 2021 A 178 Taylor Wimpey plc Annual Report 2021 Taylor Wimpey plc Annual Report 2021 179 Financial statements Particulars of subsidiaries, associates and joint ventures continued 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. Company Name % Owned Company Name % Owned | cademy Central LLP 62% | riumphdeal Limited 50% | | --- | --- | | Bordon Developments Holdings Limited 50% | umpine Limited 50% | | Chobham Manor LLP 50% | Whitehill & Bordon Development Company BV Limited 50% | | Chobham Manor Property Management Limited 50% | Whitehill & Bordon Development Company Phase 1a 50% | | DFE TW Residential Limited 50% | Whitehill & Bordon Regeneration Company Limited 50% | | Falcon Wharf Limited 50% | Wimpey Laing Overseas Limited 50% | | GWNW City Developments Limited 50% | Wimpey Laing Limited 50% | | Paycause Limited 66.67% | Winstanley & York Road Regeneration LLP 50% | aylor Wimpey Pension Trustees Limited 99% 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. Company Name % Owned Company Name % Owned | Bryant Homes Scotland Limited 100% | aylor Wimpey (General Partner) Limited 100% | | --- | --- | | George Wimpey East Scotland Limited 100% | aylor Wimpey (Initial LP) Limited 100% | | George Wimpey West Scotland Limited 100% | aylor Wimpey Scottish Limited Partnership 100% | | London and Clydeside Estates Limited 100% | Whatco England Limited 100% | | London and Clydeside Holdings Limited 100% | Wilcon Homes Scotland Limited 100% | Strada Developments Limited 50% Other entities incorporated in the United Kingdom, unless otherwise stated, and the Group’s ownership share are shown below. Company Name % Owned Registered Office Bishops Park Limited 50% 11 Tower View, Kings Hill, West Malling, ME19 4UY Bishop’s Stortford North Consortium Limited 33.14% Bath House, 6-8 Bath Street, Bristol, BS1 6HL Bromley Park (Holdings) Limited 50% Kent House, 14-17 Market Place, London, W1W 8AJ Bromley Park Limited Countryside 27 Limited 50% Countryside House, The Drive, Great Warley, Brentwood, CM13 3AT Emersons Green Urban Village Limited 54.44% 250 Aztec West, Almondsbury, Bristol, BS32 4TR Gallagher Bathgate Limited 50% Gallagher House, Gallagher Business Park, Warwick, CV34 6AF | Greenwich Millennium Village Limited 50% | Countryside House, The Drive, Great Warley, Brentwood, CM13 3AT | | --- | --- | | Haydon Development Company Limited 19.27% | 6 Drakes Meadow, Penny Lane, Swindon, SN3 3LL | | Morrison Land Development Inc 100% | 9366, 49 St NW, Edmonton, AB T6B 2L7, Canada | | Newcastle Great Park (Estates) Limited 50% | 3rd Floor Citygate, St. James’ Boulevard, | Newcastle upon Tyne, NE1 4JE | North Swindon Development Company Limited 28.35% | | 6 Drakes Meadow, Penny Lane, Swindon, SN3 3LL | | --- | --- | --- | | Padyear Limited 50% | | Hanson House, 14 Castle Hill, Maidenhead, SL6 4JJ | | Quedgeley Urban Village Limited 50% | | 250 Aztec West, Almondsbury, Bristol, BS32 4TR | | St George Little Britain (No.1) Limited | 50% | Berkeley House, 19 Portsmouth Road, Cobham, KT11 1JG | St George Little Britain (No.2) Limited | aylor Wimpey de España S.A.U. 100% | C/Aragón 223-223 A, 07008 Palma de Mallorca, Spain | | --- | --- | | aylor Woodrow (Gibraltar) Limited 100% | 17 Bayside Road, Gibraltar | | Weaver Developments (Woodfield Plantation) Limited 50% | Quay Point, Lakeside Boulevard, Doncaster, DN4 5PL | | Wisley Property Investments Limited 100% | 27 Hospital Road, George Town, Cayman Islands | 180 Taylor Wimpey plc Annual Report 2021 T T A T V T T T T 180 Taylor Wimpey plc Annual Report 2021 Particulars of subsidiaries, associates and joint ventures continued The following entities are Management Companies that are limited by guarantee (unless otherwise stated) and are temporary parts of the Group. All are incorporated in the United Kingdom and their assets are not held for the benefit of the Group. Company Name Reference Company Name Reference bbotsford Park (No.3) Residents Association Limited 1 Humberstone Residents Estate Management Company Limited 9 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. lbion Lock (Sandbach) Management Company Limited 2 Hunters Meadow Residents Association Limited 1 lyn Meadows Management Company Limited 2 Jasmine Park (Whirley) Management Company Limited 1 Company Name % Owned Company Name % Owned cademy Central LLP 62% riumphdeal Limited 50% psham Grange (Topsham) Management Company Limited 6 K Reach (EA) Management Company Limited 4 Bordon Developments Holdings Limited 50% umpine Limited 50% Barker Butts Lane Management Company Limited 1 Kentmere Place Residents Association Limited 1 Chobham Manor LLP 50% Whitehill & Bordon Development Company BV Limited 50% Battersea Exchange Management Company Limited 1 Kesgrave K Management Company Limited 1 Chobham Manor Property Management Limited 50% Whitehill & Bordon Development Company Phase 1a 50% Beaulieu Grange Residents Association Limited 1 Kingsbourne (Nantwich) Community Management Company 11 Limited DFE TW Residential Limited 50% Whitehill & Bordon Regeneration Company Limited 50% Biggleswade Management Company Limited* 3 Kingsley Grange (Wickford) Residents Association Limited 11 Falcon Wharf Limited 50% Wimpey Laing Overseas Limited 50% Billington Grove (SM) Management Company Limited 4 Ladbroke Grove Apartment Management Company Limited* 1 GWNW City Developments Limited 50% Wimpey Laing Limited 50% Brantham Residential Estate Management Company Limited 1 Lark View (Thetford) Residents Association Limited 4 Paycause Limited 66.67% Winstanley & York Road Regeneration LLP 50% Broadleaf Park (Rownhams) Management Company Limited 6 Leawood (Management) Company Limited 1 aylor Wimpey Pension Trustees Limited 99% Broadway Fields Residents Management Company Limited 1 Leybourne Grange Management Community Interest Company 1 Broughton Gate (Milton Keynes) Management Company 4 Lion Mills (EA) Management Company Limited 4 The entities listed below are companies incorporated in the United Kingdom and the registered office is Unit C, Ground Floor, Cirrus Glasgow Limited Airport Business Park, Marchburn Drive, Abbotsinch, Paisley, PA3 2SJ. Brunswick Dock (Liverpool) Management Company Limited* 5 Macintosh Mills Car Park (Management) Limited 1 Company Name % Owned Company Name % Owned Buckingham Park (Weedon Hill) Management Company 4 Manor Court (Prescot) Management Company Limited 1 Bryant Homes Scotland Limited 100% aylor Wimpey (General Partner) Limited 100% Limited | George Wimpey East Scotland Limited 100% | aylor Wimpey (Initial LP) Limited 100% | | | | | --- | --- | --- | --- | --- | | | | Capital Court Property Management Limited* 13 | Manor Park Sprowston Residents Management Company | 11 | | George Wimpey West Scotland Limited 100% | aylor Wimpey Scottish Limited Partnership 100% | | Limited | | | London and Clydeside Estates Limited 100% | Whatco England Limited 100% | Cliddesdon Reach Management Company Limited 1 Melton Manor (Melton Mowbray) Residents Company Limited 9 | | | | London and Clydeside Holdings Limited 100% | Wilcon Homes Scotland Limited 100% | Concept (EA) Management Company Limited 4 Millers Brow Management Company Ltd 1 | | | | Strada Developments Limited 50% | | Coppice Place Management Company Limited 4 Monmore Grange Management Company Limited 1 | | | Cotswold View Residents Association Limited 1 Netherton Grange Residents Management Company Limited 4 Other entities incorporated in the United Kingdom, unless otherwise stated, and the Group’s ownership share are shown below. Denne Road Management Company Limited 1 Newbridge Gardens Management Company (No 1) Limited 7 Company Name % Owned Registered Office Diglis Water Estate Management Company Limited 1 Newbridge Gardens Management Company (No 2) Limited 7 Bishops Park Limited 50% 11 Tower View, Kings Hill, West Malling, ME19 4UY Dunton Green Management Company (No.1) Limited 1 NGP Management Company (Cell A) Limited* 17 Bishop’s Stortford North Consortium Limited 33.14% Bath House, 6-8 Bath Street, Bristol, BS1 6HL Dunton Green Management Company (No.2) Limited 1 NGP Management Company (Cell D) Limited* 17 Bromley Park (Holdings) Limited 50% Kent House, 14-17 Market Place, London, W1W 8AJ Edlogan Wharf Community Interest Company 1 NGP Management Company (Cell E) Limited* 17 Bromley Park Limited Emberton Grange Management Company Limited 1 NGP Management Company (Cell F) Limited* 17 Countryside 27 Limited 50% Countryside House, The Drive, Great Warley, Brentwood, CM13 3AT Glasdir Management Company Limited 1 NGP Management Company Residential (Cell G) Limited* 17 Emersons Green Urban Village Limited 54.44% 250 Aztec West, Almondsbury, Bristol, BS32 4TR Great Hall Park Residents Association Limited 1 NGP Management Company (Commercial) Limited* 17 Gallagher Bathgate Limited 50% Gallagher House, Gallagher Business Park, Warwick, CV34 6AF Greenfields Park (EA) Management Company Limited 7 NGP Management Company (Town Centre) Limited* 17 Greenwich Millennium Village Limited 50% Countryside House, The Drive, Great Warley, Brentwood, CM13 3AT Handley Gardens Management CIC 8 Nightingale Park Residents Association Limited 11 Haydon Development Company Limited 19.27% 6 Drakes Meadow, Penny Lane, Swindon, SN3 3LL Hanwell Fields 3B Management Company Limited 1 North Wharf Gardens Management Company Limited 1 | Morrison Land Development Inc 100% | 9366, 49 St NW, Edmonton, AB T6B 2L7, Canada | | | | | --- | --- | --- | --- | --- | | | | Hastings Manor (Hugglescote) Residents Management | 9 | Nunnery Fields (Management No.1) Limited 7 | | Newcastle Great Park (Estates) Limited 50% | 3rd Floor Citygate, St. James’ Boulevard, | Company Limited | | | Newcastle upon Tyne, NE1 4JE Haybridge (Wells) Management Company Limited 6 Nunnery Fields (Management) Limited 7 North Swindon Development Company Limited 28.35% 6 Drakes Meadow, Penny Lane, Swindon, SN3 3LL Hayes Green Management Company Limited 4 Onyx Apartments Management Company Limited 1 Padyear Limited 50% Hanson House, 14 Castle Hill, Maidenhead, SL6 4JJ Heathy Wood Estate Management Company Limited 10 Orchard Grove (Comeytrowe) Management Company Limited 6 Quedgeley Urban Village Limited 50% 250 Aztec West, Almondsbury, Bristol, BS32 4TR Heritage Park Gravesend Residents Association (No.1) Limited 1 Orsett Village Residents Association Limited 11 St George Little Britain (No.1) Limited 50% Berkeley House, 19 Portsmouth Road, Cobham, KT11 1JG Heritage Park Gravesend Residents Association (No.2) Limited 1 Pages Priory Phase Two (Leighton Buzzard) Management 4 St George Little Britain (No.2) Limited Company Limited aylor Wimpey de España S.A.U. 100% C/Aragón 223-223 A, 07008 Palma de Mallorca, Spain Heritage Park Gravesend Residents Association (No.3) Limited 1 Palace View Apartments Management Company Limited 1 aylor Woodrow (Gibraltar) Limited 100% 17 Bayside Road, Gibraltar Heritage Park Gravesend Residents Association (No.4) Limited 1 Parc Nedd Residents Association Limited 1 Weaver Developments (Woodfield Plantation) Limited 50% Quay Point, Lakeside Boulevard, Doncaster, DN4 5PL Heritage Park Gravesend Residents Association (No.5) Limited 1 Parklands (Woburn Two) Management Company Limited 4 Wisley Property Investments Limited 100% 27 Hospital Road, George Town, Cayman Islands Hethersett Residents Management Company Limited 11 Peartree Village Management Limited 12 181Taylor Wimpey plc Annual Report 2021 A T T T T T T T V A A A A 180 Taylor Wimpey plc Annual Report 2021 Taylor Wimpey plc Annual Report 2021 181 Financial statements Particulars of subsidiaries, associates and joint ventures continued Company Name Reference Company Name Reference Peninsula (EA1) Management Company Limited 4 The Coach Houses (Northampton) Residents Association Limited 1 Plas Brymbo Landscaping Management Company Limited 1 The Copse (Mawsley) Management Company Limited 9 Plas Brymbo Management Company Limited 1 The Grange Number One Desborough Management Company 1 Limited Poppyfields (Benwick) Residents Association Limited 1 The Highgate (Durham) Management Company Limited* 1 Postmark Residents Management Company Limited 1 The Junction Flat Management Company Limited* 1 Q.Hill (EA 2) Management Company Limited 11 The Laurels (Kirby Cross) Management Company Limited 1 Queen Eleanor’s Heights Residents Association Limited 1 The Merriemont Management Company Limited* 1 Redhill Gardens Residents Management Company Limited 1 The Middlefield Springs Management Company Limited 1 Redhill Park Limited* 18 The Orchard (Willow Street) Management Company Limited 1 Regency Place (Shiplake) Management Company Limited 1 The Orchard Grove (Playground) Management Company 1 Limited* Romans Gate (Old Stratford) Residents Association Limited 1 The Pennington Wharf Community Management Company 11 Limited Saxon Park Management Company Limited 1 The Ruxley Towers Management Company Limited* 1 Sherford 1A Parcel 4 Management Company Limited 16 The Seasons Residents Association Limited 1 Sherford 1A Parcel 5 Management Company Limited 16 The Silverdale 9 Flats Management Company Limited 1 Sherford Estate Management Company Limited 13 The Silverdale 9 Houses Management Company Limited 1 Southgate Maisonettes (27 And 28) Limited 1 The Spinney Residents Management Company Limited* 1 Speakman Gardens Residents Association Limited 1 The Swan Gardens Management Company Limited* 1 St Crispin Area H Management Company Limited 1 The Weekley Wood Management Company Limited* 1 St Dunstans Apartment Management Company Limited* 1 The Wharf Lane (Solihull) No.1 Management Company Limited 1 Stanbury View (Parklands) Management Company Limited 1 The Willowfields Management Company Limited* 1 Stortford Fields Estate Management Company Limited 14 The Woodlands at Shevington Management Company Limited 2 Stour Valley Management Phase 1 Limited 15 The Woodway Gate Management Company No.1 Limited 1 Summer Downs Residents Management Company Limited 1 Webheath (Redditch) Management Company Limited 16 Telford Millennium Management Company Limited 1 Westbridge Park (Auckley) Management Company Limited 2 Thamesview (Plots 425 To 560) Residents Association Limited 1 Willow Lake (Bletchley One) Management Company Limited 4 The Avenue Number 4 Management Company Limited 1 Willow Lake (Bletchley Two) Management Company Limited 4 The Avenue Number 5 Management Company Limited 1 Willowcroft (SM) Management Company Limited 9 The Beaumont Park Management Company Limited* 1 Winnington Village Community Management Company Limited 2 The Breme Park (Bromsgrove) Management Company Limited 1 Wootton Meadows Residents Association Limited 1 The Burleigh Rise Management Company Limited* 1 Wyrley View Residents Management Company Limited 1 * Private Limited Company Reference Registered Address Reference Registered Address | 1 Gate House, Turnpike Road, High Wycombe, | | 10 Park Point 17 High Street, Longbridge, | | | --- | --- | --- | --- | | | Buckinghamshire, HP12 3NR | | Birmingham, B31 2UQ | | 2 Chiltern House, 72-74 King Edward Street, | | 11 RMG House, Essex Road, | | | | Macclesfield, SK10 1AT | | Hoddesdon, EN11 0DR | | 3 Newton House, 2 Sark Drive, Newton Leys, | | 12 Countryside House, The Drive Great Warley, | | | | Milton Keynes, MK3 5SD | | Brentwood, Essex, CM13 3AT | | 4 Queensway House, 11 Queensway, | | 13 4 Capital Court, Bitten Road, Sowton Industrial Estate, | | | | New Milton, BH25 5NR | | Exeter, EX2 7FW | | 5 168 Northenden Road, Sale, | | 14 Gateway House, 10 Coopers Way, | | | | Manchester, M33 3HE | | Southend-On-Sea, SS2 5TE | | 6 Fisher House, 84 Fisherton Street, | | 15 154-155 Great Charles Street Queensway, B3 3LP | | Salisbury, SP2 7QY 7 94 Park Lane, Croydon, CR0 1JB 16 Whittington Hall, Whittington Road, Worcester, Worcestershire, WR5 2ZX | 8 1 London Road, Brentwood, | | 17 3rd Floor Citygate, St James’ Boulevard, Newcastle Upon | | | --- | --- | --- | --- | | | Essex, CM14 4QP | | Tyne, United Kingdom, NE1 4JE | | 9 2 Hills Road, Cambridge, CB2 1JP | | 18 5 Market Yard Mews, 194-204 Bermondsey Street, London, | | SE1 3TQ 182 Taylor Wimpey plc Annual Report 2021 182 Taylor Wimpey plc Annual Report 2021 Particulars of subsidiaries, associates and joint ventures continued ## Five year review (unaudited) £ million 2021 2020 2019 2018 2017 Revenue 4,284.9 2,790.2 4,341.3 4,082.0 3,965.2 Profit on ordinary activities before net finance costs and tax 698.2 282.4 856.8 828.8 706.5 djust for: Share of results of joint ventures 5.4 7.9 8.0 5.3 7.6 Company Name Reference Company Name Reference djust for: Exceptional items 125.0 10.0 (14.3) 46.1 130.0 Peninsula (EA1) Management Company Limited 4 The Coach Houses (Northampton) Residents Association Limited 1 Operating profit 828.6 300.3 850.5 880.2 844.1 Plas Brymbo Landscaping Management Company Limited 1 The Copse (Mawsley) Management Company Limited 9 Net finance costs (24.0) (25.9) (28.9) (23.4) (32.1) Plas Brymbo Management Company Limited 1 The Grange Number One Desborough Management Company 1 Limited Profit for the financial year before taxation and exceptional items 804.6 274.4 821.6 856.8 812.0 Poppyfields (Benwick) Residents Association Limited 1 The Highgate (Durham) Management Company Limited* 1 Exceptional items (125.0) (10.0) 14.3 (46.1) (130.0) Postmark Residents Management Company Limited 1 The Junction Flat Management Company Limited* 1 axation charge including taxation on exceptional items (124.1) (47.4) (162.0) (154.1) (126.7) Q.Hill (EA 2) Management Company Limited 11 The Laurels (Kirby Cross) Management Company Limited 1 Profit for the financial year 555.5 217.0 673.9 656.6 555.3 Queen Eleanor’s Heights Residents Association Limited 1 The Merriemont Management Company Limited* 1 Balance sheet Redhill Gardens Residents Management Company Limited 1 The Middlefield Springs Management Company Limited 1 Intangible assets 6.6 8.1 7.0 3.2 3.9 Redhill Park Limited* 18 The Orchard (Willow Street) Management Company Limited 1 Property, plant and equipment 21.7 24.0 25.6 21.6 22.8 Regency Place (Shiplake) Management Company Limited 1 The Orchard Grove (Playground) Management Company 1 Right-of-use assets 26.5 27.5 27.4 27.1 – Limited* Interests in joint ventures 85.4 82.2 55.3 48.3 50.9 Romans Gate (Old Stratford) Residents Association Limited 1 The Pennington Wharf Community Management Company 11 Other financial assets 10.0 – – – – Limited Non-current trade and other receivables 27.5 26.3 43.7 55.7 60.1 Saxon Park Management Company Limited 1 The Ruxley Towers Management Company Limited* 1 Non-current assets (excluding tax) 177.7 168.1 159.0 155.9 137.7 Sherford 1A Parcel 4 Management Company Limited 16 The Seasons Residents Association Limited 1 Inventories 4,945.7 4,534.7 4,196.0 4,188.2 4,075.7 Sherford 1A Parcel 5 Management Company Limited 16 The Silverdale 9 Flats Management Company Limited 1 Other current assets (excluding tax and cash) 168.2 189.1 161.0 134.7 122.2 Sherford Estate Management Company Limited 13 The Silverdale 9 Houses Management Company Limited 1 rade and other payables excluding land creditors (587.7) (571.4) (634.9) (684.8) (705.0) Southgate Maisonettes (27 And 28) Limited 1 The Spinney Residents Management Company Limited* 1 Land creditors (314.2) (347.9) (339.9) (359.5) (319.5) Speakman Gardens Residents Association Limited 1 The Swan Gardens Management Company Limited* 1 Lease liabilities (7.0) (6.4) (7.6) (8.2) – St Crispin Area H Management Company Limited 1 The Weekley Wood Management Company Limited* 1 Provisions (125.4) (70.6) (72.7) (76.9) (87.3) St Dunstans Apartment Management Company Limited* 1 The Wharf Lane (Solihull) No.1 Management Company Limited 1 Net current assets (excluding tax and net cash) 4,079.6 3,727.5 3,301.9 3,193.5 3,086.1 Stanbury View (Parklands) Management Company Limited 1 The Willowfields Management Company Limited* 1 rade and other payables excluding land creditors (137.1) (131.8) (110.4) (112.2) (111.0) Stortford Fields Estate Management Company Limited 14 The Woodlands at Shevington Management Company Limited 2 Land creditors (492.2) (328.0) (389.3) (379.1) (319.6) Stour Valley Management Phase 1 Limited 15 The Woodway Gate Management Company No.1 Limited 1 Retirement benefit obligations (37.3) (89.5) (85.0) (133.6) (64.8) Summer Downs Residents Management Company Limited 1 Webheath (Redditch) Management Company Limited 16 Lease liabilities (20.4) (21.6) (20.3) (19.2) – Telford Millennium Management Company Limited 1 Westbridge Park (Auckley) Management Company Limited 2 Provisions (119.7) (59.9) (55.7) (93.4) (74.3) Thamesview (Plots 425 To 560) Residents Association Limited 1 Willow Lake (Bletchley One) Management Company Limited 4 Non-current liabilities (excluding debt) (806.7) (630.8) (660.7) (737.5) (569.7) The Avenue Number 4 Management Company Limited 1 Willow Lake (Bletchley Two) Management Company Limited 4 Cash and cash equivalents 921.0 823.0 630.4 734.2 600.5 The Avenue Number 5 Management Company Limited 1 Willowcroft (SM) Management Company Limited 9 Bank and other loans (84.0) (103.6) (84.7) (90.1) (88.7) The Beaumont Park Management Company Limited* 1 Winnington Village Community Management Company Limited 2 a ation balances 26.4 32.6 (38.1) (29.2) (28.6) The Breme Park (Bromsgrove) Management Company Limited 1 Wootton Meadows Residents Association Limited 1 Basic net assets 4,314.0 4,016.8 3,307.8 3,226.8 3,137.3 The Burleigh Rise Management Company Limited* 1 Wyrley View Residents Management Company Limited 1 | * Private Limited Company | | | | Statistics | | --- | --- | --- | --- | --- | | Reference Registered Address Reference Registered Address | | | | Basic earnings per share 15.3p 6.3p 20.6p 20.1p 17.0p | | 1 Gate House, Turnpike Road, High Wycombe, | | 10 Park Point 17 High Street, Longbridge, | | djusted basic earnings per share 18.0p 6.5p 20.3p 21.3p 20.2p | | | Buckinghamshire, HP12 3NR | | Birmingham, B31 2UQ | | angible net assets per share 118.1p 110.0p 100.5p 98.3p 95.7p 2 Chiltern House, 72-74 King Edward Street, 11 RMG House, Essex Road, Dividends paid (pence per share) 8.28 – 18.34 15.28 13.79 Macclesfield, SK10 1AT Hoddesdon, EN11 0DR Number of ordinary shares in issue at the year end (millions) 3,648.6 3,645.4 3,283.1 3,278.1 3,275.4 3 Newton House, 2 Sark Drive, Newton Leys, 12 Countryside House, The Drive Great Warley, UK short term landbank (plots) 85,376 77,435 75,612 75,995 74,849 Milton Keynes, MK3 5SD Brentwood, Essex, CM13 3AT UK average selling price (£’000) 300 288 269 264 264 | 4 Queensway House, 11 Queensway, | | 13 4 Capital Court, Bitten Road, Sowton Industrial Estate, | | | | --- | --- | --- | --- | --- | | | New Milton, BH25 5NR | | Exeter, EX2 7FW | UK completions (homes including JVs) 14,087 9,609 15,719 14,933 14,541 | | 5 168 Northenden Road, Sale, | | 14 Gateway House, 10 Coopers Way, | | | | | Manchester, M33 3HE | | Southend-On-Sea, SS2 5TE | The results for 2017 excludes the impact of IFRS 16, which was adopted in 2018. | | 6 Fisher House, 84 Fisherton Street, | | 15 154-155 Great Charles Street Queensway, B3 3LP | | | Salisbury, SP2 7QY 7 94 Park Lane, Croydon, CR0 1JB 16 Whittington Hall, Whittington Road, Worcester, Worcestershire, WR5 2ZX | 8 1 London Road, Brentwood, | | 17 3rd Floor Citygate, St James’ Boulevard, Newcastle Upon | | | --- | --- | --- | --- | | | Essex, CM14 4QP | | Tyne, United Kingdom, NE1 4JE | | 9 2 Hills Road, Cambridge, CB2 1JP | | 18 5 Market Yard Mews, 194-204 Bermondsey Street, London, | | SE1 3TQ 183Taylor Wimpey plc Annual Report 2021 A A T T T T A T x 182 Taylor Wimpey plc Annual Report 2021 Taylor Wimpey plc Annual Report 2021 183 Shareholder information ## 2022 Annual General Meeting Dear Shareholder Annual General Meeting (AGM) The 2022 AGM of Taylor Wimpey plc (the Company) will be held in the Winterlake Suite at the Crowne Plaza Marlow, Fieldhouse Lane, Marlow, SL7 1GJ on Tuesday 26 April 2022 at 10:30am. The Board is looking forward to the opportunity to meet the Company’s shareholders again in person. As we no longer have an office in central London, we have taken the decision to move our AGM to a venue closer to our Head Office in High Wycombe and will be serving light refreshments both before and after the meeting, rather than a full luncheon. Attending the AGM If you wish to attend and vote at the AGM in person, please bring with you the shareholder attendance card or notice of availability letter. It will help to authenticate your right to attend, speak and vote, and will help us to register your attendance without delay. For the safety and comfort of those attending the AGM, large bags, cameras, recording equipment and similar items will not be allowed into the building and in the interests of security, by attending the AGM you hereby agree to be searched, upon request, together with any bags and other possessions. There is wheelchair access to the venue for shareholders who require it or those with reduced mobility. However, where required, attendees are strongly advised to bring their own carers to assist with their general mobility around the venue. An induction loop system operates in the meeting room. Directions to the venue can be found on the reverse of your attendance card or notice of availability. Light refreshments comprising of tea, coffee and pastries will be available from 9:30am and after the end of the AGM. How to vote If you would like to vote on the resolutions in this Notice of Meeting but cannot attend the AGM, please register your vote online at www.signalshares.com or return your proxy form to our Registrar as soon as possible. In order for your vote to count, our Registrar must receive your proxy form no later than 10:30am on Friday 22 April 2022. 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 page 190. Shareholder questions In the event that shareholders are unable to attend the AGM, shareholders are invited to submit questions by email to CoSec@taylorwimpey.com. Please provide any advance questions by 10:30am on Friday 22 April 2022. The questions will be answered by the Board during the AGM. The answers provided will be made available on the Company’s website as soon as practicable following the conclusion of the AGM. 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, Alice Black Group General Counsel and Company Secretary 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. 184 Taylor Wimpey plc Annual Report 2021 # Notice of Annual General Meeting Notice is hereby given of the eighty seventh Annual General Meeting (the AGM) of the Company to be held on Tuesday 28 April 2022 at 10:30am in the Winterlake Suite at the Crowne Plaza Marlow, Fieldhouse Lane, Marlow, SL7 1GJ for the purposes set out below. # 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 2021. 2. To declare due and payable on 13 May 2022 a first dividend of 4.44 pence per ordinary share of the Company for the year ended 31 December 2021 to shareholders on the register at close of business on 1 April 2022. 3. To re-elect as a Director, Irene Dorner. 4. To re-elect as a Director, Janine Daly. 5. To re-elect as a Director, Chris Carney. 6. To re-elect as a Director, Robert Noel. 7. To re-elect as a Director, Humphrey Singer. 8. To re-elect as a Director, Lord Jitesh Geitha. 9. To re-elect as a Director, Sofia Gombe. 10. To re-appoint PricewaterhouseCoopers LLP (PwC) as external Auditors of the Company, to hold office until the conclusion of the next general meeting at which accounts are laid before the Company. 11. Subject to the passing of resolution 10, to authorise the Audit Committee to determine the remuneration of the external Auditors on behalf of the Board. 12. 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 £12,163,069 (such amount to be reduced by any allotments or grants made under paragraph b below, in excess of £12,163,069); and b. comprising equity securities (as defined in the Companies Act 2006) up to a nominal amount of £24,326,138 (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 ii. 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 25 July 2023) 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: 13. That if resolution 12 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 12, by way of a rights issue only): i. to ordinary shareholders in proportion (as nearly as practicable) to their existing holdings; and ii. to holders of other equity securities, as required by the rights of those securities, or as the Board otherwise considers necessary, 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 12 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 £1,824,480. 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 25 July 2023) 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. Taylor Wimpay plc Annual Report 2021 185 Notes to the notice of Annual General Meeting continued 14. That if resolution 12 is passed, the Board be given the power in addition to any power granted under resolution 13 to allot equity securities (as defined in the Companies Act 2006) for cash under the authority granted under paragraph a of resolution 12 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 £1,824,460; 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 25 July 2023) 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. 15. 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(d) 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 364,892,070; - b. the minimum price (exclusive of expenses) which may be paid for ordinary shares is 1 pence per ordinary share; - c. 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 - ii. 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; d. the authority hereby conferred shall expire at the earlier of the conclusion of the next Annual General Meeting of the Company and 25 October 2023 unless such authority is renewed prior to such time; and e. 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: - 16. That the Directors' Remuneration Report for the year ended 31 December 2021, as set out on pages 115 to 124 of the Annual Report and Accounts for the financial year ended 31 December 2021, be approved in accordance with Section 439 of the Companies Act 2006. - 17. 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 - c. 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. 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 resolution: - 18. 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. By order of the Board # Alice Black 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 2 March 2022 186 Taylor Wimpey plc Annual Report 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 2021 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 4.44 pence per ordinary share in respect of the year ended 31 December 2021. If approved at the AGM, the dividend will be paid on 13 May 2022 to shareholders who are on the Register of Members at the close of business on 1 April 2022. # Dividend Re-Investment Plan Subject to shareholders approving the dividend as set out in resolution 2 at the AGM scheduled for 26 April 2022, the Company will be offering residents in the United Kingdom 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 2021 (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 their 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 2021 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)371 904 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 9.05am and 5.30pm, Monday to Friday excluding public holidays in England and Wales. # Resolutions 3-6: Re-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, with the exception of Pete Redfern, Gwyn Burr and Angela Knight CBE, all Directors of the Company will retire and, being eligible, offer themselves for re-election by shareholders at the AGM. As previously announced, Pete Redfern, Gwyn Burr and Angela Knight CBE will step down from the Board at the conclusion of the 2022 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 115 to 124 of this Annual Report and Accounts. Full biographical information concerning each Director can be found on pages 74 and 75. The following summary information is given in support of the Board's proposal for each Director standing for re-election. # Irene Dorner – offers himself 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 28 February 2020. Irene's strong leadership skills, coupled with her deep commercial experience, provide 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. Irene also Chairs the Nomination and Governance Committee. # Jennie Daly – offers himself for re-election Jennie has been the Group Operations Director since 20 April 2018 and will become the Company's Chief Executive following the conclusion of the 2022 AGM. # Chris Carney – offers himself for re-election Chris has been the Group Finance Director since 20 April 2018. # Robert Neal – offers himself for re-election Robert has been a 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, 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 Chief Executive and has particularly deep property expertise which assists the Board in assessing large scale and opportunities. At the conclusion of the AGM Rob will become a member of the Remuneration Committee and will take on the role of the Board's Employee Champion. # Humphrey Singer – offers himself for re-election Humphrey has been a 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, 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 Auditors and properly assess the Group's internal audit and control processes. # Lord Jitesh Gathia – offers himself for re-election Jitesh has been a Non Executive Director since 1 March 2021. The Board is satisfied that he is independent in character and judgement in applying his expertise at meetings of the Board, the Remuneration 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. Jitesh's executive and non executive experience and involvement in public affairs has added an additional perspective to the Board dynamic. Following the conclusion of the AGM, Jitesh will assume the role of Chair of the Remuneration Committee. He has extensive remuneration committee experience and serves as Chair of the Remuneration Committee of Compare The Market Limited. Taylor Winopur plc Annual Report 2021 187 Shareholder information Notes to the notice of Annual General Meeting continued # **Scilla Grimble – offers herself for re-election** Scilla has been a Non Executive Director since 1 March 2021. The Board is satisfied that she is independent in character and judgement in applying her expertise at meetings of the Board, the Audit Committee and the Nomination and Governance Committee, and that she will be able to allocate sufficient time to the Company to discharge her responsibilities effectively. Scilla's significant financial, risk, technology and property experience enhanced the Board's skill set following her appointment. The Board confirms that each of the above Directors has recently been subject to formal performance evaluation, details of which are set out in the Nomination and Governance Committee report in the Annual Report on pages 88 to 97, and that each continues to demonstrate commitment and is an effective member of the Board who is able to devote sufficient time in line with the Code to fulfil their role and duties. # **Resolution 10: Re-appointment of PwC as external Auditors of the Company** The Company is required to appoint external auditors at each general meeting at which accounts are laid before the shareholders. It is therefore proposed that the external Auditors are appointed from the conclusion of the 2022 AGM until the conclusion of the next general meeting at which accounts are laid before shareholders. The Board recommends the reappointment of PwC as the Company's external Auditors. # **Resolution 11: Authorisation of the Audit Committee to agree on behalf of the Board the remuneration of PwC as external Auditors** The Board seeks shareholders' authority for the Audit Committee to determine on behalf of the Board the remuneration of the external Auditors for their services. The Board has adopted a procedure governing the appointment of the external Auditors 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 Auditors in 2021 are given in Note 6 on page 149 of the Annual Report. # **Resolution 12: 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 AGM held on 22 April 2021 which is due to expire at the conclusion of this AGM. Accordingly, paragraph a of resolution 12 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 £12,163,069 (representing 1,216,306,900 ordinary shares). This amount represents approximately one third of the issued ordinary share capital of the Company as at 28 February 2022, 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 12 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 £24,326,138 (representing 2,432,613,800 ordinary shares), as reduced by the nominal amount of any shares issued under paragraph a of resolution 12. This amount (before any reduction) represents approximately two-thirds of the issued ordinary share capital of the Company as at 28 February 2022, 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 12 will expire at the earlier of 25 July 2023 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 13 and 14: Authority to dis-apply pre-emption rights** Resolutions 13 and 14 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 13 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 £1,824,460 (representing 182,446,000 ordinary shares). This aggregate nominal amount represents approximately 5% of the issued ordinary share capital of the Company (excluding treasury shares) as at 28 February 2022, the latest practicable date prior to publication of this Notice. In respect of the power under paragraph b of resolution 13, 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 14 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 14 is in addition to that proposed by resolution 13 and would be limited to allotments or sales of up to an aggregate nominal amount of £1,824,460 (representing 182,446,000 ordinary shares) in addition to the power set out in resolution 13. This aggregate nominal amount represents an additional 5% of the issued ordinary share capital of the Company (excluding treasury shares) as at 28 February 2022, the latest practicable date prior to publication of this Notice. The powers under resolutions 13 and 14 will expire at the earlier of 25 July 2023 and the conclusion of the next Annual General Meeting of the Company. # **Resolution 15: 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 28 February 2022. 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 $ 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 (i) 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 188 Taylor Whippy plc Annual Report 2021 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 shares 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. As at 28 February 2022, the Company holds no shares in treasury. This is a standard resolution, sought by the majority of public listed companies at Annual General Meetings. We have announced the Company's intention to return excess capital to its shareholders in 2022 of up to £150 million through the implementation of a share buyback programme. An initial tranche of up to £75 million commenced on 3 March 2022 and is expected to end no later than 3 June 2022. The initial tranche of the share buyback programme is being carried out by the Company using the authority to purchase its own ordinary shares as approved by shareholders at the 2021 AGM, and in order to retain the flexibility to complete the initial tranche and continue to return value to shareholders, we are asking shareholders to renew the authority for the Company to purchase its own ordinary shares. The share buyback is expected to benefit shareholders through the opportunity for increased future dividends per share on the remaining shares. Pursuant to the share buyback programme, the Board intends to hold 25 million of the shares that are repurchased in treasury and the remaining shares will be cancelled. The Board currently intends that the shares to be held in treasury will be used for future obligations of the Company in respect of its employee share schemes. The Board will use this authority to purchase shares only after careful consideration (taking into account market conditions, other investment opportunities, appropriate gearing levels and the overall financial position of the Company). The total number of options and conditional share awards to subscribe for ordinary shares outstanding as at the close of business on 28 February 2022 was 23,608,764, representing approximately 0.6% of the issued ordinary share capital of the Company as at that date and approximately 0.7% 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 25 October 2023 and the conclusion of the Company's next Annual General Meeting. ## Special business ### Ordinary resolutions Ordinary resolutions require more than half of the votes cast to be cast in favour. #### Resolution 16: 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 16, 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, a statement by the Chair of the Committee and the remuneration at a glance section. 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 17: 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 17 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 17) 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 17 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 43 of the Annual Report and Accounts. ## Special resolution Special resolutions require at least a 75% majority of votes cast to be cast in favour. #### Resolution 18: 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 18 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 exerted by the business of a particular meeting and is thought to be the 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 make available electronic voting to all shareholders in respect of that meeting. ## 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 Friday 22 April 2022 (or, in the event of any adjournment, on the date which is two working days before the time of the adjourned meeting). Taylor Wimpay plc Annual Report 2021 189 Shareholder Information Notes to the notice of Annual General Meeting continued 2. As at 28 February 2022 (being the latest practicable date prior to the publication of this notice) the Company is issued share capital consisted of 3,848,920,705 ordinary shares, carrying one vote each. Therefore, the total voting rights in the Company as at 28 February 2022 were 3,848,920,705. 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). 4. To be valid, any proxy appointment must be received by Link Group at PKS 1, 10th Floor, Central Square, 29 Wellington Street, Leeds, LS1 4DL, or, if you want to use an envelope the address to use is FREEPORT PKS, 10th Floor, Central Square, 29 Wellington Street, Leeds, LS1 4DL or, electronically via the internet at www.agnalshares.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 10:30am on Friday 22 April 2022. 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, if any, 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 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 (© R410) by 10:30am on Friday 22 April 2022. 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 20(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 external Auditors 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. 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 (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.laylonelibrary.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 190 Taylor Wimpay plc Annual Report 2021 www.taylorwimpey.co.uk/corporate as soon as practicable after the AGM. 17. A copy of the Company's Articles of Association will be available for inspection during normal business hours (excluding Saturdays, Sundays and public holidays) at the Company's registered office: Gate House, Turnpike Road, High Wycombe, Buckinghamshire, HP12 3NR from the date of this Notice until the close of the AGM. 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 (excluding Saturdays, Sundays and public holidays). Copies of these documents will also be available 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 Non Executive Directors. - A copy of the full Annual Report and Financial Statements of the Company for the year ended 31 December 2021, including the Directors' Remuneration Report referred to in resolution 16. This document is also available on our corporate website. 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. # Shareholder facilities # 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 costs. 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 end 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 registering on our website at www.taylorwimpey.co.uk/corporate/investors/shareholder-centre. # Online facilities for shareholders You can access our Annual Report, half year and full year statements, and copies of recent shareholder communications online via our corporate website. 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 Residents in the United Kingdom can choose to invest their 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 their 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 2021 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)371 654 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 and Accounts, 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 account. Please contact Link Group who will be pleased to carry out your instructions in this regard. Taylor Wimpey plc Annual Report 2021 191 Shareholder information Shareholder facilities # **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 corporate website. # **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, On 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 at www.sharegift.org or telephone them on +44 (0)20 7930 3737. # **Unsolicited approaches to shareholders and 'Boiler Room' exams** We receive reports from time to time from Taylor Wimpey shareholders who have 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. 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 telephone number from the UK and lines are open Monday to Friday, 8.00am to 6.30pm and Saturday 9.00am to 1.00pm. # **Annual General Meeting** 10:30am on 26 April 2022 at: The Winterlake Suite, Crowne Plaza Marlow, Fieldhouse Lane, Marlow, SL7 1DJ. Proxy instructions must be received by 10:30am on Friday 22 April 2022. # **Group General Counsel and Company Secretary** Alice Black 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 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. # **External Auditors** PricewaterhouseCoopers LLP # **Solicitors** Slaughter and May # **Stockbrokers** Citigroup Global Markets Limited Credit Suisse International # **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 192 Taylor Wimpey plc Annual Report 2021 ## 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 supplement and ESG addendum 2021 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. Taylor Wimpey plc Annual Report and Accounts 2021 www.taylorwimpey.co.uk