Annual Report and Accounts 2022 ## Built on ## resilience Taylor Wimpey plc Annual Report and Accounts 2022 B 3 Our approach to ESG Strategic report 2 At a glance 3 Our approach to ESG 4 2022 highlights 6 Chair’s statement 10 Chief Executive’s statement 13 Our investment case 14 Our market environment 18 Market trends, opportunities and risks 20 Culture and values 21 Strategy framework 22 Strategic cornerstones 30 Our key performance indicators 34 Business model 36 Material issues and targets 40 Stakeholder engagement and priorities 44 Section 172(1) statement 46 Operational review 46 Operational performance 49 Customers and employees 51 Sustainable building 52 Climate and environment 54 Task Force on Climate-related Financial Disclosures 56 Our path to net zero 70 Non-financial information statement 72 Risk management 75 Principal Risks and uncertainties 80 Group financial review 84 Viability statement Directors’ report 86 Governance at a glance 88 Board of Directors ### Our reporting suite 92 Group Management Team 94 Chair’s introduction Our Annual Report and Accounts 100 Board leadership and Company purpose 2022 can be viewed at Annual Report and Accounts 2022 Built on 106 Nomination and Governance Committee report www.taylorwimpey.co.uk/corporate resilience | along with our Notice of Annual | 115 Audit Committee report | | --- | --- | | General Meeting 2023. | 124 Remuneration Committee report | | The Annual Report covers key | 149 Statutory, regulatory and other information | sustainability and financial disclosures. Financial statements Taylor Wimpey plc Annual Report and Accounts 2022 B 152 Independent auditors’ report 160 Consolidated income statement | | More information on our materiality | 161 Consolidated statement of comprehensive income | | --- | --- | --- | | | process, sustainability activities | 162 Consolidated balance sheet | | Building on | and policies can be found in our | 163 Consolidated statement of changes in equity | sustainability Sustainability Supplement and 164 Consolidated cash flow statement ESG Addendum 2022. 165 Notes to the consolidated financial statements 196 Company balance sheet 197 Company statement of changes in equity 198 Notes to the Company financial statements 203 Particulars of subsidiaries, associates and joint ventures 208 Five year review Shareholder information 209 Notice of Annual General Meeting 212 Notes to the Notice of Annual General Meeting 219 Shareholder facilities Sustainability Supplement and ESG Addendum 2022 ## Built on ## resilience ## We delivered a strong financial and ## operational performance in 2022. ## During 2022, UK housing market conditions ## changed at pace, with significantly higher ## interest rates and rising cost of living ## impacting customer affordability and ## confidence. ## Our purpose does not change – we will ## continue to build great homes and create ## thriving communities. ## We have taken a proactive approach, with ## early decisive action to increase operational ## efficiency and drive financial performance ## to protect and strengthen the business. ## We are differentiated by our high-quality ## landbank, strong balance sheet, experienced ## management team, and an unwavering focus ## on operational execution. ## Our resilience positions us well to continue ## to deliver value in all market conditions. Taylor Wimpey plc Annual Report and Accounts 2022 1 Strategic report ### We are one of the UK’s leading ### residential developers, operating ## At a glance across five divisions and at a local ### level from 22 regional businesses ### across the UK. We also have ### operations in Spain. ### We have a clear purpose to build ## A national housebuilder great homes and create thriving ### communities. ## operating at a local level ### As a responsible developer, ### we are committed to working with ### local people and making ### a positive contribution to the ### communities in which we operate. ### We are committed to operating ### responsibly and delivering value ### for all our stakeholders. A national housebuilder operating at alocallevel TaylorWimpey was established from the merger of George Wimpey and Taylor Woodrow in2007, companies that date back over 100 years: – Health and safety is TaylorWimpey’s number one priority, with a strong culture focused on doing theright thing – Continue to lead the volume industry in quality, as independently measured by the NHBC construction qualityscore – Five-star housebuilder, focused on delivering quality homes and great customer service – Only housebuilder with its own logistics business, TaylorWimpey Logistics (TWL) – Highly engaged workforce employing over 5,000 people in the UK and providing employmentfor a further 11.1k subcontractors on our sites in 2022 – Strong and long-standing relationships with charity partnerships donating c.£1 million annually – Only volume housebuilder to hold the Carbon Trust Standard for our approach to carbon management – Adopted science-based targets to help reduce greenhouse gas emissions with net zero target of 2045, five years ahead of regulation – Differentiated Dividend Policy with priority to maintain a strong balance sheet and continue to pay ordinary dividends through a normal cycle For more information on customers and employees please see our Operational review on pages 49 to 51 2 Taylor Wimpey plc Annual Report and Accounts 2022 ### Where we operate ### Scotland, North North West and ### East andNorth Yorkshire ### Yorkshire ### 4 regional 3 regional ### businesses businesses | London and | Midlands and | | --- | --- | | South East | Wales | | 5 regional | 5 regional | | businesses | businesses | ### Central, South ### West andSpain ### 5 UK regional ### businesses and 1 ### Spanish regional UK map key ### business Head office Regional offices ## Five- 14,154 232 ### Group completions average Spain map key ## star ### incl. joint ventures UK outlets Regional offices ### (2021: 14,302) (2021: 225) ### HBF customer ### satisfaction rating ### (2021: five-star) ### Our approach to ESG We explain more about our approach in the following sections: Our purpose is to build great homes and create thriving Environment communities. This has always been an important part of Climate and environment within Pages 52 to 53 working for TaylorWimpey with ESG threaded through the Operational review all our stakeholder interactions. Our teams see the TCFD Pages 54 to 69 social and governance aspects of ESG as ‘business as Social usual’, including our strong culture and contributions to, Stakeholders Pages 40 to 43 and involvement in, local communities. The importance Customers and employees within Pages 49 to 51 the Operational review we place on ESG was formalised through the creation of our Environment Strategy and with the addition of Governance Board Leadership and Company purpose Pages 100 to 102 Sustainability as a strategic cornerstone with specific Anti-bribery and anti-corruption Page 101 key performance indicators. More detail on this can Modern slavery Page 150 be found on pages 26 to 27 and on page 33. Succession planning Page 108 Employee engagement Pages 104 to 105 Read more in our Sustainability Supplement and ESG Addendum 2022 Taylor Wimpey plc Annual Report and Accounts 2022 3 Strategic report ## 2022 highlights ### Group financial highlights ### Group completions Revenue Operating profit* ### including joint ventures | 14,154 | | | £4,419.9m | | | £923.4m | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 22 | | 14,154 | 22 | | £4,419.9m | 22 | | | £923.4m | | 21 | | 14,302 | 21 | | £4,284.9m | 21 | | £828.6m | | | 20 | 9,799 | | 20 | £2,790.2m | | 20 | £300.3m | | | | Profit before tax | | | Total dividend per share | | | Year end net cash* | | | | ### paid in the year | £827.9m | | | | 9.06p | | | | | £863.8m | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 22 | | | £827.9m | 22 | | | | 9.06p | 22 | | | £863.8m | | | 21 | | £679.6m | | 21 | | | 8.28p | | 21 | | | £837.0m | | | 20 | £264.4m | | | 20 | | | | | 20 | | £719.4m | | | | Tangible net assets | | | | Operating profit margin* | | | | | Return on net | | | | | | per share* | | | | | | | | | operating assets* | | | | | | 126.5p | | | | 20.9% | | | | | 26.1% | | | | | | 22 | | | 126.5p | 22 | | | 20.9% | | 22 | | | | 26.1% | | 21 | | | 118.1p | 21 | | 19.3% | | | 21 | | | 24.7% | | | 20 | | | 110.0p | 20 | 10.8% | | | | 20 | 9.9% | | | | Our Operational review focuses on the UK (unless stated otherwise) as the majority of metrics are not comparable in our Spanish business. There is a short summary of the Spanish business in the Group financial review. The Group financial review is presented at Group level, which includes Spain, unless otherwise indicated. Joint ventures are excluded from the Operational review and are separated out in the Group financial review, unless stated otherwise. * Alternative Performance Measures The Group uses Alternative Performance Measures (APMs), such as those indicated above with a footnote symbol, as important financial performance indicators to assess underlying performance of the Group. The Group's two financial targets are operating profit margin and return on net operating assets. Definitions and reconciliations of our APMs to the equivalent statutory measures are included in Note 32 of the financial statements. Please see page 85 for definitions. 4 Taylor Wimpey plc Annual Report and Accounts 2022 ### UK operational highlights ESG (environmental, social, governance) ### highlights ### Customer Customer Reduction in direct Employee ### satisfaction 8-week satisfaction 9-month CO emissions engagement 2 | score | recommend score | intensity since 2013 | score | | --- | --- | --- | --- | | 90% | 78% | 51% | 93% | | (2021: 92%) | (2021: 79%) | (2021: 50%) | (2021: 91%) | | Construction | New outlets opened | Annual Injury | Affordable homes | | Quality Review | in the year | Incidence Rate (per | as % of total UK | | average score | | 100,000 employees | completions | | (out of 6) | | and contractors) | | | 4.81 | 104 | 166 | 21% | | (2021: 4.67) | (2021: 84) | (2021: 214) | (2021: 18%) | | Average selling | Plots in short term | Contributions to local | Construction | | price on private | landbank | communities, via | waste recycled | | completions | | planning obligations | | | £352k | c.83k | £455m | 98% | | (2021: £332k) | (2021: c.85k) | (2021: £418m) | (2021: 97%) | Read more about our operations on pages 46 to 53 Read more about our approach to ESG on pages 26 to 27 and 54 to 69 We participate in various benchmarks and have been awarded a number of industry accreditations Read more in our Sustainability Supplement and ESG Addendum 2022 Accreditations Awards Taylor Wimpey plc Annual Report and Accounts 2022 5 Strategic report ## Chair's statement # Delivering strong results in a changing market We have delivered an excellent performance in 2022 against a changing market backdrop, particularly in the second half of the year and are well positioned with a strong balance sheet, highly experienced management team and a clear strategy to continue to deliver for stakeholders. Irene Dorner Chair ### Built on resilience We delivered a strong financial and operational performance in 2022. The UK, along with much of the global economy, has faced a number of challenges this year, and in my last letter to you as Taylor Wimpey Chair, I'd like to acknowledge the hard work and dedication of our teams in navigating this changing landscape and delivering strong results. 'Built on resilience' is an apt theme for this year's report because we have spent several years enhancing the strength and sustainability of Taylor Wimpey. In addition to presenting our 2022 performance, this report will demonstrate we are a business able to navigate different market backdrops and well positioned for changing market conditions. The strength and sustainability of our business, and the strategy we have in place to achieve this, are clearly of vital importance to all our stakeholders and are addressed throughout this report. The business has a strong balance sheet, excellent landbank and strategic pipeline, highly experienced management, and engaged and dedicated employees. We have always accepted that we operate in a cyclical industry and, running the business with the cycle in mind, means we are well placed to weather current conditions and emerge stronger on the other side. Ultimately, our market benefits from strong underlying customer demand for new homes and, notwithstanding short term conditions, we continue to see good levels of interest in our homes and are confident that the medium to long term fundamentals of our business remain highly attractive. Although I will be stepping down from the role of Chair for personal family reasons following the Annual General Meeting (AGM) on 27 April 2023, I look forward to continuing to play an active role on the Board as a Non Executive Director. I leave the role of Taylor Wimpey Chair in extremely capable hands with Robert Noel, along with the benefit of continuity of leadership in a changing market environment. ### 2022 performance We delivered excellent progress against our strategy despite a more challenging second half of 2022. Total Group completions (including joint ventures) were 14,154 (2021: 14,302). We increased our operating profit margin* to 20.9% (2021: 19.3%) thanks to strong operational cost discipline and focus on price optimisation and ended the year with an operating profit* of £923.4 million (2021: £828.6 million). This resulted in a profit before tax of £827.9 million (2021: £679.6 million). Despite a difficult planning backdrop we increased our UK sales outlets as guided, to end the year with 259 outlets (2021: 228). We ended the year with an order book valued at £1,941 million (31 December 2021: £2,550 million), excluding joint ventures, which represents 7,499 homes (31 December 2021: 10,009 homes). We continue to focus on providing a reliable return to our shareholders through our Ordinary Dividend Policy to return 7.5% of net assets or at least £250 million per year. In 2022, we returned £474 million to shareholders by way of dividends and the share buyback programme amounting to £150 million. Subject to shareholder approval at the AGM scheduled for 27 April 2023, the 2022 final ordinary dividend of 4.78 pence per share will be paid on 12 May 2023 to shareholders on the register at the close of business on 31 March 2023 (2021 6 Taylor Wimpey plc Annual Report and Accounts 2023 final dividend: 4.44 pence per share). In combination with the 2022 interim dividend of 4.62 pence per share this gives total ordinary dividends for the year of 9.40 pence per share (2021 ordinary dividend: 8.58 pence per share). We see Health and Safety as business as usual in the very best sense, but I am nonetheless pleased that we have continued our very high standards, where our Annual Injury Incidence Rate (AIR) per 100,000 employees of 195 (2021: 21.6) is significantly below the industry benchmark. The health and wellbeing of our employees and subcontractors must remain our number one priority and we will continue to strive for improvement. We have retained our focus on build quality and are once again the highest rated major housebuilder in the independently measured 2022 NHBC Construction Quality Review (CQR). We are pleased to remain a five-star builder in the HBP survey for customer satisfaction but recognise there are areas we need to improve and, building on our volume industry-leading quality, we have a plan in place to drive higher customer service standards. More information on our 2022 trading and operational performance can be found within our Operating review on pages 46 to 53 and our Group financial review on pages 80 to 83. # A changing market environment Along with much of the world, the UK economy has entered a more challenging market environment compared to recent years. Just as we were beginning to emerge from the huge human and economic costs of COVID-19, throughout 2022 the UK had to absorb a number of political and economic shocks, in particular in relation to the impact of the war in Ukraine. The energy price crisis, disruption of food supply and the residual effect of COVID-19 led to generally high inflation, causing central banks to substantially and rapidly increase interest rates. In the UK, the mkt budget of 23 September preceded a sudden spike in mortgage rates for our customers. Together with cost of living challenges, more expensive mortgage borrowing had an immediate and tangible impact on our sales from the third quarter of 2022. These are difficult times for the UK economy at large and, given reduced market demand, we expect our 2023 compilations to be lower than 2022. However, we have always known we operate in a cyclical industry and have run the business with the cycle in mind so are well prepared. Read more in our market review on pages 14 to 19. # Management experience more important than ever Inevitably, it is in more challenging times that the strength, diversity, skills and experience of the management team are most called upon. I am pleased to say we not only have a vastly experienced team in place but one that has operated in most market conditions. This is an important strength and differentiator when you consider that, aside from the significant disruption owing to COVID-19, the market has been largely supportive in the 14 years since the global financial crisis. Our senior executive committee, the Group Management Team (GMT) has a total of c.150 years' service at Taylor Wimpey and even longer experience in the building sector. # Providing a reliable return to our shareholders In line with our Ordinary Dividend Policy to return 7.5% of net assets or at least £250 million to shareholders throughout the cycle, we announced a final ordinary dividend of 4.78 pence per share, which is subject to shareholder approval at the Annual General meeting (AGM). Together with the 2022 interim dividend of 4.62 pence per share this gives total ordinary dividends for the year of 9.40 pence per share (2021: 8.58 pence per share). In addition, the Group returned £150 million in capital by way of a share buyback in the year, which increases both earnings per share and dividend per share for our shareholders. Given the current levels of market uncertainty the Board is not proposing any return of excess capital at this time but will continue to review this position throughout the year. Details of our resolutions for the 2022 AGM can be found on pages 210 to 211. 2022 final ordinary dividend per share 4.78p (2021: 4.44p) 2022 ordinary dividend for year 9.40p (2021: 8.58p) 2022 was also a year of transition for our executive management. Jennie Daly took on the role of Chief Executive following the AGM in April. Jennie has a wealth of experience in the housing sector and has moved quickly to put her stamp on our business. At an investor event in May, Jennie launched a clear vision to the market, laying out the strategic cornerstones which feature prominently in this report: land, operational excellence, sustainability and capital allocation (read more on pages 21 to 29). As someone with a deep understanding of the business and wider industry and passionate about our long term success, Jennie has been able to have an immediate impact and her tightened operational focus has set us up well for a changing market. The Board has met frequently to discuss the challenges and we have continued to engage with our stakeholders as we weighed key decisions. The Board uses a number of indicators both current and forward looking to regularly determine the outlook for our marketplace. As a consequence, we have been able to move quickly to protect value. Jennie talks more about our actions to prepare for changing market conditions in her statement on page 11. Taylor Wimpey plc Annual Report and Accounts 2023 7 Strategic report Chair's statement continued ## Stakeholder engagement The Board is responsible for ensuring our business is sustainable in the long term by respecting and taking account of the needs and views of all our stakeholders in our decision-making process. We continue to recognise the vital importance of effective stakeholder engagement and in this respect 2022 was a busy year. On behalf of the Board, I conducted a number of meetings in late 2021 and early 2022 with major investors to hear their views on our Chief Executive succession process. I also met with investors to discuss wider themes relating to strategy and ESG. In 2022, following the easing of COVID-19 restrictions, the Board was pleased to be able to invite shareholders in person to the AGM in April. This AGM saw Pete Redfern step down from the Board and Jennie Daly take up her appointment as Chief Executive. I am pleased that she moved quickly to introduce her vision to the market in May 2022, only a month after taking up the role, via an in-person meeting in central London. This event was attended by a number of major investors and our covering analysts, and was also made available online shortly after the meeting. Following the meeting we received positive feedback for the clarity of the strategy and messaging. This year the Board and I visited a number of our regional businesses and sites across the country and I continue to be impressed with our operational progress and the culture throughout the Taylor Wimpey business. In addition to their regular visits around our business, both Jennie and Group Finance Director Chris Carney, together with members of our GMT, hold regular live video conference updates that are accessible to all of our employees. We conducted an employee survey in the year which returned an excellent engagement score of 93%. There remain areas employees would like us to improve such as communication between regional businesses and functions, workloads, and ensuring all employees have a regular performance discussion with their Line Manager. Following the survey, each regional business and department is charged with taking the results and implementing tangible actions in the areas identified as in need of improvement. ## Employee engagement score **93%** (2021: 91%) **Mean gender pay gap** (in favour of women) **-2%** (2021: -6% in favour of women) ## Board changes It has been a privilege to serve as Chair of Taylor Wimpey and I know I leave the business in extremely capable hands as I step down from the role of Chair following the 2023 AGM in April. I have been impressed with the talent and culture at Taylor Wimpey during my three years as Chair. I would like to thank my Board colleagues, the GMT and all of our employees across the business for their dedication, commitment and hard work over the last three years. I have prioritised engaging with the full range of Taylor Wimpey stakeholders during my tenure as Chair and I would like to thank all of you for your constructive dialogue. I know this is something that Rob Noel will continue to build on when he succeeds me. Rob will succeed me as Chair following the AGM on 27 April and his appointment represents excellent continuity for the business. Rob joined the Board as an Independent Non Executive Director in October 2019 and subsequently became the Senior Independent Director in April 2020 and for the last year has been the Board's Employee Champion, responsible for championing the employee voice in the boardroom and strengthening the link between the Board and employees. His appointment follows a thorough search process involving external advisers which considered both internal and external candidates. He has over 30 years' experience in the property sector, including eight years as the CEO of Lend Securities Group PLC. Rob is also Chair of Hammerson plc and brings deep commercial experience and continuity of leadership as we face a dynamic market environment. This year the Board was also pleased to welcome Mark Castle and Clodagh Moriarty as new Non Executive Directors. Mark has significant operational experience in all aspects of the construction sector and Clodagh has 20 years of varied customer-focused experience across retail, strategy, digital transformation and e-commerce. ## Diversity and inclusion Diversity and inclusion continues to be a focus for Taylor Wimpey and I am pleased to see tangible progress with our Equality, Diversity and Inclusion Strategy. We realise we have further to go and in 2023 we are pleased to be publishing the Company's first Diversity Report, ahead of regulation. We have also set ourselves a number of stretching diversity targets, which are focused on increasing our female and ethnic minority representation at various levels of the business, and which build on our important early entry programmes. We have established support structures such as our system of employee networks sponsored by senior management, to support employees and actively promote diversity. We have made changes to our recruitment processes and are training our managers to be aware of issues such as cultural bias, inclusive leadership and creating a respectful workplace. Our 2022 mean gender pay gap was 2% still in favour of women (2021: 6% in favour of women) and the median pay gap was also small at 1% in favour of men (2021: 5% in favour of women). You can read more about our approach throughout this report and in our Diversity Report on our website. 8 Taylor Wimpey plc Annual Report and Accounts 2022 Building a sustainable future Our ESG strategy will continue to be aligned to our purpose, ensuring that we play our part in creating a sustainable future for everyone. In 2022, we built upon the work of our Environment Strategy to advance our Net Zero Transition Plan which will support the UK’s commitment to reach net zero carbon by 2050 and submitted our net zero targets to the Science Based Targets initiative (SBTi) for independent assessment. The process involved comprehensive engagement with external and internal stakeholders and you can read more about this throughout this integrated report. We will add an environmental measure to the long-term incentive plan available for the Executive Directors and other eligible employees. We were awarded a number of industry accreditations, including being named in Sustainalytics’s newly released 2023 Top-Rated ESG Companies List. In addition, ### TaylorWimpey ranked seventh out of the FTSE 100 and Chair Designate Robert Noel was the highest scoring housebuilder in the Responsibility I would first like to thank Irene for her excellent stewardship over the last 100 Index Walk Score that assesses companies on their few years. I and the rest of the Board are delighted that she has agreed commitment to key social, environmental, and ethical to continue to serve on the Board, so we may continue to benefit from objectives. her deep experience and wise counsel. 2023 AGM It is an honour and a privilege to take on the role of Chair at TaylorWimpey. This year’s AGM will take place in person at the Crowne The Company has a clear purpose and strong culture, and this will be key Plaza Hotel Gerrards Cross, and we are very much looking in navigating changing market conditions. We exist to build great homes forward to the opportunity to once again meet many of our and thriving communities, creating value for all our stakeholders and I look shareholders in person. To further encourage shareholder forward to maintaining our strong relationships with both shareholders engagement and accessibility, a live audiocast of our AGM andkey stakeholders. will be available to qualifying shareholders. As has been the Currently, the UK economy is stuttering and demand for housing has case in our previous AGMs, shareholders will also be able weakened. Having been in the wider property sector for over three tosubmit their vote in advance by proxy and email questions decades, I am used to the cyclical nature of demand and in my time in advance of the meeting. at TaylorWimpey I have witnessed the focus the management team has put into ensuring the business is well prepared for a changing market. Looking forward Along with ensuring good governance, it is the Board’s responsibility Whilst still very early in the year, current trading shows signs to establish the strategy. I am confident that the Board has the breadth of improvement but remains at lower levels than in recent and depth of experience required to do this given the industry experience years. Our management team has been quick to protect the represented, along with the external perspectives of different industries. long term interests of our business and retains close scrutiny In addition, our Group Management Team has extensive experience in on our cost base, while retaining the flexibility to respond to housebuilding, including dealing with all market conditions. market opportunities as they emerge. We will continue to manage all of the aspects within our control to protect TaylorWimpey is an excellent business with a strong record of good long stakeholder interests and we remain confident in the medium term decision making. Key priorities, such as maintaining a strong balance to long term outlook for our business. sheet and establishing a high-quality landbank and strategic pipeline over decades, give us robustness and flexibility for all market conditions. On a personal note, I would like to thank our shareholders and all our stakeholders for their engagement throughout my I look forward to working with my Board colleagues and the wider teams tenure as Chair. I would also like to end by thanking the in supporting the business through this more challenging time and know Board and TaylorWimpey colleagues for their commitment that TaylorWimpey will emerge strongly. and support. It has been my absolute pleasure and a The need for UK housing is unquestionable and our market fundamentals privilege to be Chair of the TaylorWimpey Board and I look remain very attractive over the medium to longer term. forward to continuing to work with them and for you all as aNon Executive Director. Robert Noel Irene Dorner Chair Designate Chair * Definitions and reconciliations of our APMs to the equivalent statutory measures are included in Note 32 of the financial statements. Please see page 85 for definitions. Taylor Wimpey plc Annual Report and Accounts 2022 9 Strategic report # Chief Executive's statement # Focusing on operational excellence and efficiency We are an excellent business benefiting from a high-quality and well-located landbank, a strong balance sheet and unwavering focus on operational execution. Chief Executive ## Revenue **£4,419.9m** (2021: £4,284.9m) Group operating profit* **£923.4m** (2021: £828.6m) Group operating profit margin* **20.9%** (2021: 19.3%) New UK outlets opened **104** (2021: 84) 10 Taylor Wimpey plc Annual Report and Accounts 2022 ## Dear shareholders I am delighted to be writing my first letter to you as Chief Executive of Taylor Wimpey. Whilst I took up the role of Chief Executive in April 2022, I know Taylor Wimpey well from my eight years with the Company as Land and Planning Director, Group Operations Director and Divisional Chair. Starting out as a planning officer in a local authority, I have 30 years' experience in land, planning and housing which has given me detailed insights into the operational areas that generate the most value and will help drive our future successes which is particularly important in a changing market. ## 2022 strong operational and financial performance I am very pleased to report that 2022 demonstrated that we continue to be a strong business, delivering an excellent set of 2022 full year results in line with expectations. In 2022 we delivered an increase in revenue to £4,419.9 million (2021: £4,284.9 million) and delivered a record operating profit* of £923.4 million (2021: £828.6 million) and increased operating profit margin* to 20.9% (2021: 19.3%). We continue to be highly cash generative, ending the year with net cash* of £863.8 million, after returning £473.8 million to investors by way of dividends and share buybacks. Despite a difficult planning backdrop, we also increased our outlet numbers as planned following the accelerated landbuying of prior years. We are a resilient business and because of this continued to perform well in changing market conditions with a proactive response and a clear focus on execution, cost control and operational efficiency. Importantly, we are a business well positioned for the future. ### “TaylorWimpey delivered an ### excellent 2022 performance ### and is continuing to perform well ### in changing conditions, Proactive management of changing market ### with a proactive response conditions ### and clear focus on execution, TaylorWimpey delivered an excellent financial performance in ### a year of two distinct halves. In the first half of the year, cost control and operational trading conditions continued to be resilient despite ### efficiency.” inflationary pressures in the wider economy and rises in the Bank of England base rate. Following the mini budget of 23 September, there was a sharp and significant increase in mortgage rates, significantly reducing customer affordability During this time, it has been a clear priority that everyone was and confidence which inevitably impacted the new home treated respectfully and in line with TaylorWimpey values. sales environment and the housebuilding sector. Throughout 2022 we closely monitored the market and lead A clear strategy built on resilience indicators, and moved early to best position the business for Our purpose is to build great homes and create thriving changing market conditions and to mitigate risk through the communities. The renewed focus of the business is doing levers available to us. We further tightened all areas of this in a way that creates, enhances, and protects value operations, including work in progress control, discretionary through our high-quality landbank and efficient operations. spend and recruitment and significantly reduced landbuying, We have a clear strategy, outlined at our Investor and Analyst leaving us well placed going into more challenging markets. Update on 25 May 2022 to build a stronger and more resilient We continue to operate with tight cost discipline across the business and deliver superior returns, by focusing on four business. Given the difficult planning backdrop, we are strategic cornerstones: land, operational excellence, pleased to have delivered our planned increase in outlet sustainability and capital allocation which are discussed on numbers following the accelerated landbuying of prior years, pages 21 to 29. As the economic backdrop evolved, this focus which gives us flexibility and choices that will be of significant on driving operational excellence throughout the business value. We have aligned our build schedules to reflect the positioned us well to increase the pace of implementation, lower anticipated sales rates in the near term. Our teams are remain agile and adapt amidst changing market conditions aligned and engaged in adapting to the changing market and andmitigate risk through the levers available to us. we have trained our Sales Executives to operate in a tougher Challenging times create opportunities and magnify what we selling environment. do not have right. A good example of this is that while we are We have also had to make some difficult decisions and I extremely proud to be the top rated volume housebuilder for don’t want to shy away from those. In January 2023, as part quality and we remain a five star housebuilder, we are of our focus on maximising the efficiency of all our operations, disappointed that our customer satisfaction scores have we began a consultation on a series of proposed changes slightly reduced to 90% from 92%. I am confident that there which are expected to generate annualised savings of around is more we can do to ensure each and every customer’s £20 million, with the costs to achieve these of c.£8 million. experience is a great one and this will be an area of focus for The consultation process across the regional businesses our teams in 2023. have now either closed or are anticipated to conclude in the near future. This process has unfortunately resulted in some We are a responsible business and run our redundancies and where this has been the outcome, we business for the long term have put additional support in place for the individuals We are a leader in sustainability. We are ambitious in our concerned and the wider teams. goals, and challenging of ourselves, and our focus is on backing these ambitions up with deliverable actionable This has also resulted in changes to our business structure, plans.I’m really pleased that we have set out our target to with the closure of our Oxfordshire business and the migration become net zero by 2045, five years ahead of regulation of land and outlets to neighbouring businesses. The proposed andmore importantly have a credible plan to get there. changes will not affect our existing market coverage or ability Manyenvironmental issues for our sector are systemic. to deliver volumes from our landbank, nor our ability to deliver Achieving net zero in housebuilding will require system-level high-quality product and service to our customers. ## Our path to net zero | We are committed to act on | 2025 | 2030 | 2035 2040 2045 | | | | --- | --- | --- | --- | --- | --- | | climate change and in 2022 we | Roll out of zero | All homes zero | Net zero in our | Absolute | Net zero | | | carbon ready | carbon ready | operations | emissions | across our | developed our net zero target homes begins (Scopes 1 reduced value chain to achieve net zero emissions and 2) by 75% (Scopes 1, 2 and 3) by 2045 Read more about our path to net zero on pages 56 and 57 Taylor Wimpey plc Annual Report and Accounts 2022 11 Strategic report Chief Executive's statement continued ![img-0.jpeg](img-0.jpeg) ### What are your personal highlights on your first year as Chief Executive? I want to say thank you to all Taylor Wimpey employees on behalf of the Board. Our teams have worked incredibly hard to deliver a great set of results. We maintained strong operational focus during 2022 and delivered an excellent financial performance in line with expectations with Group operating profit of £923.4 million (2021: £828.8 million), and an operating profit margin up 16.5% to 20.9% (2021: 19.3%) as a result of light operational controls and price discipline. Pricing discipline was a core focus for the Group throughout the year, especially given the inflationary backdrop and continuing planning constraints, and we saw continued pricing strength in the second half with average selling prices on private competitors in the UK at £367.4. I am particularly pleased that we maintained our industry-leading position on quality and have delivered the planned increase in outlet numbers, following the accelerated landbuying of prior years as this gives us flexibility and choices that will be significant value. ### What are your priorities for 2023? Health and safety is always our non negotiable top priority. While our health and safety performance always compares very favourably to the industry, we are not complacent and will continue to drive further improvement. We will continue to develop and evolve our customer offering to ensure an appropriate balance between sales rate and price in all our markets, whilst also working to further improve our customer service. Given prevailing build cost inflation of 9-10%, we will continue to ensure light cost management and WIP control, aligning build to sales rates on a site-by-site basis. Our focus on building a strong order book will allow us to optimize price giving into 2024, and as a result, not all reservations taken between now and the end of September will be for completion in 2025. Having announced our net zero target backed by a detailed transition plan, we will further drop up our efforts and focus on its implementation and communication across our business. ### What is your view on the proposed planning changes? The planning environment continues to be challenging with delays and resource pressures impacting housing land supply. Proposed amendments to the National Planning Policy Framework announced by the Government in December 2022 include positive measures to support improved quality of design and placemaking. However, other changes including amendments to the approach to housing numbers locally, a relaxation of the soundness test for plan making and the removal of the need for planning authorities to maintain a five-year supply of deliverable housing sites could result in further delays and a shortfall in the supply of sites. In addition, the transitional arrangements proposed are likely to result in a meaningful hiatus in plan making which is likely to further constrain the availability of land for housing. We welcome proposed amendments to the Levelling Up and Regeneration Bill to help address Nutrient Neutrality constraints that affect more than 74 local authorities in England. We are engaging with industry, wider authorities and central and local government on the issue of Nutrient Neutrality. We have established our internal Nutrient Working Group to help our regional businesses develop effective responses to this issue. With the introduction of Biodiversity Net Gain requirements in England later this year, we have published guidance and run training sessions for our regional businesses and land teams to support them to manage the risks, costs and opportunities associated with net gain. An internal working group with representatives from strategic land, planning, sustainability and technical functions is helping to guide our approach and we are collaborating with others in the sector through the Future Homes Hub. Overall we anticipate that the planning environment will remain difficult for the foreseeable future. Our strong landbank and pipeline of sites already in planning is a key competitive advantage in this challenging planning environment. ### Why did you significantly reduce land spend in 2022? As you know, the housing market changed markedly in Q3 of 2022, and with this came increased risk. Our business is underpinned by a strong balance sheet and a high quality, well located landbank and our scale and quality has given us more choices than most. It has allowed us to be very selective with land acquisitions throughout 2022, something we expect to continue given current market conditions. 2022 approvals for new land totalled around 7,000 plots, similar to our half year position. ### Will Taylor Wimpey still open new sites? Yes, New outlets give customers more choice, whilst providing the business with the opportunity to adapt more rapidly to the market conditions in front of us. We are confident in the locational quality of our landbank. Our outlets are in areas customers want to live, which is what we and our customers see as primary locations, which gives a greater resilience. Our teams are focused on driving value from our excellent landbank by progressing planning to open outlets. changes and coordinated action by multiple parties, from suppliers to government, and at all points along the value chain. Our target was developed with the Carbon Trust in line with the requirements of the SBT Corporate Net Zero Standard and has been submitted to the SBT for independent validation. We are also working to align our transition plan with the Transition Plan Taskforce Disclosure Framework, which was released for consultation in November 2022. Our approach to climate change aims to both reduce emissions from our business and value chain and to prepare for the future impacts of climate change on our business, supply chain and customers. We take a science-based approach and aim to continually review and improve performance. We were one of the first UK homebuilders to set science-based targets across our value chain, including a target consistent with reductions required to keep warming to 1.5°C for our operational emissions and are the only volume homebuilder to hold the Carbon Trust Standard for our approach to carbon management. Despite short term pressures, we will continue to invest in what matters and what will yield value in the future. This includes opening a timber frame production facility to drive efficiency and environmental benefits, and improve process and logistics efficiencies whilst aiding security of supply. Timber frame has clear environmental benefits and is a low risk supporting approach to our net zero goal. More information can be found on page 25. ### Fire safety It is our long held view that leaseholders should not have to pay for the cost of remediation and our priority has always been to ensure that customers in Taylor Wimpey buildings have a solution to deciding remediation. We look early and proactive actions, first committing funds to remediation of ACM cladding in 2017. Having already committed £165 million to remediation work, we voluntarily signed the Government's Building Safety Pledge for Developers in April 2022, and made an additional £80 million provision, bringing our total financial commitment to £245 million. 12 Taylor Wimpey plc Annual Report and Accounts 2023 We are in final discussions with Department for Leveling Up, Housing and Communities (DLUHC) with a view to signing the Long Form Agreement which makes the principles of the Building Safety Pledge legally binding. Throughout recent industry negotiations with Government regarding the contract, we have continued to remediate affected buildings as planned and we will continue to progress our remediation schedule in line with the terms of the final contract. A total of 207 buildings are within the scope of our existing provision, around a quarter of which require only the replacement of wooden balcony beams, which are relatively inexpensive to replace. The £245 million we have provided remains our best estimate of the cost of our commitments to bring these buildings into compliance with current fire safety standards. We have a dedicated team in place to manage our remediation programme and while we are progressing this as quickly as possible our programme will take several years to complete given the availability of qualified advisors and contractors. #### **Current trading and outlook** Whilst still early in the year at the start of the Spring selling season, current trading shows some signs of improvement from the fourth quarter of 2022. The year-to-date net private sales rate (w/e 26 February 2023) is 0.62 per outlet per week (2022 equivalent period: 1.02) with the four week average running at 0.66 per outlet per week. This improved sales rate follows recent reductions in mortgage rates, early signs of stabilised customer confidence, usual seasonal trading patterns and the benefit of our focused promotional activity. The cancellations rate was 17% (2022 equivalent period: 14%). The level of down valuations remains low. While it is encouraging to see an uptick in sales and ongoing robust customer interest in our homes, as previously announced, our reservation rate is significantly lower than in recent years as affordability concerns weigh, particularly for first time buyers, and we have reflected this in our build programmes for the year. As at 26 February, our total order book excluding joint ventures was £2,154 million (2022 equivalent period: £2,899 million), comprising 8,078 homes (2022 equivalent period: 10,904 homes). Accordingly, assuming prevailing market conditions continue and given a challenging planning backdrop, we currently expect 2023 completions to be in the range of 9,000 to 10,500, broadly equivalent to a net sales rate assumption of 0.5 to 0.7, with completions more weighted to the second half, reflecting the lower sales rate since Q3 2022. Based on the quality of our order book we expect average pricing for private completions in the first half of 2023 to be at a similar level to the £265% achieved on completions in H2 2022. We remain focused on building a strong order book to optimise value as we look ahead. Looking forward, our business is well positioned with a clear strategy focused on operational excellence, delivering value from our high-quality landbank and strong financial position. While we remain highly selective in our land acquisition and focused on continued tight cost and work in progress management, we remain agile and ready to respond quickly to changing market conditions. **Jennie Daly** Chef Executive * Definitions and reconciliations of our APMs to the equivalent statutory measures are included in Note 32 of the financial statements. Please see page 85 for definitions. ## Our investment case As I set out in my first update to analysts and investors in May 2022, we are a great business. We have a high-quality landbank, backed by a strong balance sheet, and experienced management team. This strong starting position gives us the opportunity to differentiate ourselves further. Throughout 2022, we have demonstrated that we are agile and well prepared and positioned to seize opportunities that the uncertain environment may bring. Read more in relation to our key strengths and resources on page 34 ### Strong business well positioned for all market conditions Focused on operational excellence to optimise margin and deliver attractive long term returns ### Differentiated by landbank High-quality landbank with significant strategic land pipeline providing optionality throughout the cycle ### Sustainable and responsible £30t embedded throughout the business for the benefit of all our stakeholders ### Reliable shareholder returns Committed to paying an annual ordinary dividend through the cycle and returning surplus capital at the appropriate time Taylor Wimpey plc Annual Report and Accounts 2023 13 Strategic report ## Our market environment ## Operating in ## a changing ## environment ### 10 year estimated growth ### in households (England) ## c.1.6m ### 2018-2028 Source: UK Census 2021, ONS A cyclical industry 2022 began strongly for the housing market with double digit year-on-year house price growth (albeit at slightly lower levels for new builds) before conditions changed rapidly in the second half. For the remainder of 2022, and in line with the wider economy, the UK housing market weakened with month-on-month house price declines and significantly lower levels of transactions. According to Nationwide, annual house price growth was 2.8% in December 2022, after the fourth monthly decline in growth rate. On a month-on-month basis December saw a small reduction of 0.1% while November pricing was down 1.4%. At Taylor Wimpey we have managed the business with the cycle in mind, maintaining a strong balance sheet, tight operational controls and an agile approach, and we enter this changing market from a position of strength. A dynamic backdrop As a housebuilder we are exposed to the level of overall ### At TaylorWimpey we have market demand, which is influenced by affordability and sentiment. Market pricing is generally led by transactions of ### managed the business with second-hand homes which account for 80-85% of total ### the cycle in mind, maintaining housing transactions, while industry costs are a result of supply and demand for labour and materials and are ### a strong balance sheet, tight impacted by industry volumes as well as other input costs ### operational controls and an such as energy and global commodity prices. ### agile approach, and we enter Movement in house price and volume are generally met with ### this changing market from changes in our input costs, over time. Some costs such as the price at which we have bought land are more permanent, ### a position of strength. given that the land we build on today was typically purchased several years ago. Costs in relation to the build itself are generally more variable and have historically responded to prevailing market conditions, although there can be time lags. Market land prices will also generally respond over time which means there is the potential, for example in market downturns, to acquire cheaper land that will offer margin benefits in future years. 14 Taylor Wimpey plc Annual Report and Accounts 2022 Throughout this report we outline the proactive management actions England net additional dwellings (quarterly) recovered we have taken in response to the changed market to protect stakeholder in 2022 first half prior to the change in market conditions value (see pages 11 to 12 and 49). In this section, we focus on the macroeconomic and political factors that affect affordability and sentiment towards our industry: – Interest rates, mortgage rates and mortgage availability – House price growth relative to wage growth – Inflation – Employment rates – Consumer confidence – in the economy in general as well as specific to borrowing such as interest rates expectations, house price rises or declines Undersupplied market: long term demographics remain highly supportive to housebuilding Underlying our sector’s cyclicality, we continue to believe that the 0 medium to long term fundamentals of the market remain strong. 1990 2000 2010 2022 Dataon UK population growth and changing demographics continue to underpin household formations and long term demand. There is a England: completed dwellings (LHS) recognised housing shortage in the UK with new home completions UK house price development (RHS) running at significantly below the UK Government’s desired levels. Government planning amendments suggest a move away from a Source: Nationwide, Bank of England specific top-down target, but continue to suggest that 300k new homes per year are needed to fulfil UK housing demand, a level last achieved in1977 (source: Statista). According to the UK Government’s Continued growth in UK households (millions) English Housing Survey, the average age of a first time buyer in projected for next three decades England is 34 and the UK home ownership rate is 64%. Therefore, having peaked at 73% in 2007 (source: Statista), the current level ofhome ownership is below the aspirations of the Conservative Government and the Labour Opposition. House price growth: moving on from a history of boom and bust? There was strong house price growth up until the third quarter before prices plateaued as mortgage rates spiked in late September. We therefore entered 2023 with pricing marginally weaker on a month-by-month basis. Along with the UK economy, the history of the UK housing market is marked by periods of strong growth followed by corrections. The last notable correction was during the global financial crisis (GFC) 2007- 2009 that saw the worst contraction in the UK economy since the great depression of the 1920s. Prior to the financial crisis there was 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 ameaningful correction in UK housing at the start of the 1990s. These downturns followed periods of strong growth in house prices. For example, prices increased by c.59% in the five years preceding the financial crisis (up to the September 2007 peak), after which house prices fell by c.19%. In comparison, whilst still strong, house price ### growth of c.31% in the five years to December 2022, was around half New build share of UK housing 60,000 30% that of the five years preceding the GFC. ### transactions 25% Prior to the financial crisis there was a meaningful correction in UK 50,000 20% housing at the start of the 1990s. These downturns followed periods 30 ofstrong growth in house prices, including over 100% growth in house 15% ## 40,000 c.15% prices in the five years preceding the financial crisis, where house 10% 12 months to March 2022 prices fell by around 18%. In comparison, while house price growth 30,000 25 5% inthe last five years of around 34% has been strong, it is less Source: ONS pronounced than in the years preceding the 2007-2009 downturn. 0% 20,000 Aspreviously stated, house prices have declined on a month-by-month -5% 20 basis since October 2022 and the Office of Budgetary Responsibility -10% 10,000 (OBR) expects further house price weakness in 2023, coinciding with -15% high interest rates and a squeeze on overall affordability for customers. 15 -20% 10 2043 Taylor Wimpey plc Annual Report and Accounts 2022 15 Source: ONS Strategic report Our market environment continued Interest rates 4.74% for a two-year fixed rate mortgage at a 75% LTV and 4.13% and 4.19% for a five-year fixed rate mortgage at a 75% LTV. Whilst there are a number of variables which make the length or magnitude of any correction uncertain, such as wage Affordability concerns growth, employment and general inflation, the biggest direct influence is likely to be interest rates. Affordability is a combination of factors. Interest/mortgage rates are key but house price movement relative to wage growth, the general level of The Bank of England (BoE) base rate rose from 0.25% in inflation and employment levels also have an influence on affordability December 2021 to 3.5% in December 2022. As at February and sentiment. The cost and availability of alternative rental properties 2023, the rate stands at 4.0%, with the expectation of further isalso relevant. rises in 2023. Capital Economics estimates that the base rate will peak at 4.5% in 2023. Following the mini budget of 23 Rising interest rates coupled with the cost of living crisis mean that September, two and five year rates for 75% loan to value (LTV) affordability is the most stretched it has been since the GFC. While mortgages moved to well over 5%, suggesting that lenders mortgage rates have eased back from the post-23 September spike, were factoring in interest rates of greater than 4.5%. As the the cost of a mortgage as a proportion of disposable income remains market became more confident that rates will not exceed the at historically high levels. BoE guidance mortgage rates have reduced from last year’s However, interest rates are not the only factor that can help improve highs of over 6% (for a 75% LTV mortgage). As at 21 February affordability. According to Capital Economics, the interplay between 2023, Halifax and Nationwide are offering rates of 4.48% and wage growth and house prices will play a significant role in the level at which house prices can be considered affordable. For example, affordability should improve if, as widely expected, wage growth exceeds the level of house price inflation. This may not in itself protect Mortgage rates have come down from their peaks house prices but does reduce the level of house price movement 6.0 necessary to restore affordability to prior levels, at prevailing interest rates. However, while all of the factors outlined determine overall affordability, 5.0 interest rates will generally have the greatest impact. Therefore, any rate decreases will offer the greatest benefit to our sector. 4.0 Consumer service Which estimates that a 0.5% points rise in rates is likely to add around £61 per month to the average mortgage cost on 3.0 the basis of a 25-year mortgage with a £250k loan. Of course, the cost is dependent on the homeowner’s loan to value ratio with the increase 2.0 higher for a high loan to value (low deposit) mortgage and lower for those with more equity, meaning that first time buyers with lower deposits are most impacted. 1.0 Customer confidence 0.0 Up until August 2022, there was a mandatory mortgage stress test in place to ensure customers seeking a mortgage would be able to afford Jun-21 Jan-22 Apr-22 Jun-22 Jul-22 Oct-22 Jan-23 Dec-21 Feb-22 Mar-22 May-22 Aug-22 Sep-22 Nov-22 Dec-22 Feb-23 payments in the event of a 3% rise over the standard variable rate. Mortage rate for 2Yr 85% LTV Accordingly, there is good reason to believe that there should be Mortage rate for 5Yr 85% LTV relatively low levels of financial stress amongst homeowners and lower UK base rate numbers of forced sellers than in previous downturns. While many customers may continue to be able to afford to proceed atcurrent interest rates, such a substantial shift in mortgage costs in ashort period of time has undoubtedly affected sentiment and is, Household finances come under pressure but are understandably, a major factor in decision making. Uncertainty over expected to trough in 2022-23 before recovering house prices, the economic outlook, employment prospects and future interest rates are all areas of concern for consumers and will impact 8.0 upon their buying decisions. 6.0 Rising mortgage costs and the cost of living crisis mean that first time 4.0 buyers are likely to be the weakest part of the market in the short term. This not only impacts this part of our customer base but has knock-on 2.0 effects to chains, impacting the overall health of the market. 0.0 Opinion on the interest rate outlook varies and ultimately the rate isdependent on how quickly inflation reacts to BoE intervention. (%) -2.0 However, following signalling from the BoE, some economists now expect the base rate will peak at around 4.5%. In February 2023 many -4.0 lenders are offering rates of under 5% (less than 50 basis points from -6.0 the expected peak). This may suggest lenders see greater likelihood ofrates reducing than rising once they hit 4.5%. -8.0 Inflation, employment and wages outlook 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 As stated, the inflation outlook is key to determining the shape of future interest rates. The BoE is mandated to target 2% inflation, with the Year-on-year change in household disposable income % 16 Taylor Wimpey plc Annual Report and Accounts 2022 2028 Source: BoE, Threshold Mortgage Advice Source: Trajectory, OBR January 2023 rate around 10.1%, according to ONS data, clearly significantly above target. Inflation peaked in October at 11.1% (source: ONS) and, as we enter 2023, the BoE expects UK inflation to reduce sharply to end the year at 4%, citing the halving of European wholesale energy prices, an expected sharp fall in the cost of imported goods, and less demand for goods and services in the UK. Whilst, in itself, this does not improve affordability, expected wage growth would help if it outstripped either the level of general inflation or house price growth or both. As at January 2023, Capital Economics expects average UK wage growth of 5.8% in 2023. This means that even if rates remain at current levels and house prices remained flat, affordability could improve all also being equal. UK unemployment remains historically low at 3.7% as at December 2022. With around 620k fewer people in the workforce than in 2020, according to The Sunday Times, there is limited spare labour capacity which is one of the factors considered by the Government to have hampered recent growth potential and contributed to inflation. However, while the OBR expects unemployment to rise to 4.9% in Q2 2024, this remains well below the 8.5% recorded in 2011 in the wake of the GFC. High unemployment has historically led to greater stress in the housing market, with reduced buying and a higher number of forced sellers. The expectation of a less severe rise in unemployment than in previous recessions offers some comfort for the housing market. #### **Part of a larger market** As a new housebuilder we are a part of a much larger market. According to the Office of National Statistics (ONS) there were 1.4 million UK housing transactions in the 12 months to March 2022. In the same time period, the ONS estimates 200k new UK dwellings were completed, suggesting new build had a c.15% share of the total market. Given UK housing transactions are heavily weighted to second hand home sales accounting for around 85% of the total, second hand homes set pricing for the market as a whole. #### **Rental market** With low interest rates over recent years, monthly mortgage costs have generally been either cheaper or broadly comparable to the average cost of rental, despite rising house prices. This changed when rates spiked in September 2023, with renting now on average cheaper than servicing a new mortgage. However, strong growth in rental costs and limited rental accommodation mean that this could quickly change. #### **Government policy** The Government's Autumn Statement reaffirmed the commitment to stamp duty changes which are supportive, particularly for first time buyers. The planning environment continued to be difficult in 2022 (read more about land and planning on page 47). Whilst these changes are not sufficient to offset rising mortgage costs, this could be important stimulus further down the line as mortgage rates ease back and affordability improves. The Help to Buy (HTB) scheme, which supported first time buyers since 2014, closed in Scotland in 2021 and ended for reservations in England in 2022, while it will be extended in Wales until 2025. Therefore HTB will not be available for the majority of our 2023 reservations. The Government and industry have introduced schemes aimed at supporting first time buyers, and there is also the availability of high 95% LTV mortgages although there are fewer products available than a year ago. #### **Competition and Markets Authority** The Competition and Markets Authority (CMA) has confirmed that it is to launch an independent market study of housebuilding. We look forward to engaging constructively with the CMA as the study progresses. ![img-1.jpeg](img-1.jpeg) ![img-2.jpeg](img-2.jpeg) Strategic report ## Market trends, opportunities and risks Key drivers 2022 backdrop Drivers, short term opportunities andrisks Drivers, long term opportunities andrisks Interest rates and mortgage availability UK Consumer Price Index (CPI) inflation rose from 5.5% in January 2022 UK inflation remains high and the BoE raised rates a further 0.5% in February Interest rates are expected to peak and then moderate toend the year at 10.5% (having peaked at 11.1% in October) as global to4.0%, and is widely expected to continue to raise interest rates this year, gradually downwards, albeit at higher levels than they had Interest rates and mortgage availability are the main factors factors such as the war in Ukraine impacted energy prices, food prices withexpectations of a 4.5% and 4.8% peak (source: OBR, Capital Economics). beenover the previous decade. determining housing affordability and accessibility for our andgeneral inflation. customers. The Bank of England (BoE) is mandated by the Mortgages rates may have already peaked, having factored in expected The expense of monthly mortgage costs is likely to remain higher Government to maintain a 2% inflation target and altering the The 23 September mini budget preceded a spike in mortgage rates as interest rate rises with the average now well below the 2022 peak. Some than during the last decade of historically low interest rates. interest rate is its main tool in managing economic demand and themarket anticipated further rises in the BoE base rate. lenders are offering longer term mortgages to improve monthly affordability. With an ongoing supply/demand imbalance (with far fewer inflation. Mortgage rates factor in interest rates and expectations In response to persistent inflation, the BoE raised interest rates from historically Ultimately, the inflation outlook is likely to continue to be the key driver homes built than the Government guidance of 300k per year), of future interest rates, on top of which lenders add a margin low levels of 0.5% in December 2021 to 3.5% by December 2022 and the offuture interest rate policy. underlying demand for housing is likely to remain strong. (which varies according to their capacity and appetite to provide Office of Budgetary Responsibility (OBR) predicts it is likely to peak at 4.8% mortgage lending). Inflationary pressure expected to lessen with prices having already adjusted There may be a reset for the market and some shift in the type inQ3 2023, whilst Capital Economics predicts the rate will peak at 4.5%. tosubstantial hikes in energy, food and other prices last year. of product that will be affordable for some customers (smaller Links to Principal Risks As a result of BoE action on interest rates and expectations of future rises, houses and apartments for first time buyers). Outlook for affordability could improve if wage growth exceeds house price B: Mortgage availability and housing demand mortgage rates rose from c.1.4% in January to peak at c.5.9% in November growth and if mortgage rates continue to reduce. before easing back to just under 4.65% by February 2023 (Source: BoE, Material issues based on a 2-year fixed / 85% LTV mortgage). The removal of the Government’s longstanding Help to Buy scheme that Customer service and quality provided top up deposit loans for first time buyers has the potential to impact In August, with mortgage rates rising, the stress test that required certain customers. However, there are signs of growing interest in the Responsible sourcing customers to be able to withstand a 3% increase in interest rates over housebuilding industry’s Deposit Unlock scheme from major lenders. thestandard variable rate, was removed. Employment, skills and labour availability UK unemployment was 3.7% in the three months to December 2022 Considerable pressure on the public and private sector to facilitate above- A long term healthy employment outlook is important for (2021comparable: 4.0%). inflation wage increases for their employees. housing as well as the rest of the economy. The UK employment rate has implications on consumer confidence and our customers’ desire and ability to buy homes. Labour market remained tight and with pressure on both public and private Private sector is facing a fall in income as the economy contracts and tax A potential long term skills shortage could impact the industry Ahealthy employment outlook is important for general consumer sector wages. rises, and the public sector is facing difficulties given the budget deficit - attracting and retaining skilled workers to construction is key confidence in the housing market and the wider economy. andhigh debt, built up as a result of the COVID-19 pandemic. to the long term health of the industry. According to Capital Economics, UK annual wage growth was 6.1% Inprevious cycles, higher unemployment has been considered inDecember 2022 and was a large contributor to general inflation given Unemployment is predicted to rise in response to weak economic conditions. Many major housebuilders, including TaylorWimpey where acontributory factor to a weaker housing market. thatservices represent c.40% of CPI. early talent is a key focus, have strategies aimed at attracting However, the Office for National Statistics (ONS) predicts that unemployment new talent to the industry. Links to Principal Risks The Times reports a net 630k people of working age have left the UK will remaining at historically modest levels peaking at c.4.9% in the second D: Attract and retain high-calibre employees workforce since the impact of COVID-19 in 2020. quarter of 2024, compared to a high of c.8.5% in 2011 following the global financial crisis. Despite six consecutive quarterly falls, UK job vacancies remained at historically Material issues high levels at just under 1.2 million in December 2022 (source: ONS). People and skills Construction labour availability improved from 2021 and, while there were still areas of tightness, industry labour cost inflation was more moderate than materials cost inflation. Climate change Parts L&F regulations requiring 31% savings in carbon emissions (from We are making our Net Zero Transition Plan publically available in 2023 Potential competitive advantage and premium for new, more a 2013 baseline) for the homes we produce came into effect in 2022, andwill continue to work towards our science-based targets. energy-efficient homes. For example, we have already seen The Future Homes Standard (FHS) outlines new regulations with a one-year transitional period up until June 2023 for existing sites. cheaper ‘green mortgages’ making new homes comparably aimed at making new homes more energy-efficient and will come We are taking the opportunity to produce more energy-efficient homes for cheaper to buy than less energy-efficient second-hand stock. into effect in 2025 when gas central heating systems will no The Government released the Standard Assessment Procedure software, ourcustomers with our new house types and to meet new regulations. longer be allowed in new developments. into which we successfully modelled our enhanced material standards From 2025 we will be rolling out zero carbon ready homes We are piloting five new homes that will test various solutions well ahead of and technological solutions to meet new requirements. following the implementation of the Future Homes Standard, the Future Homes Standards (FHS) regulation that will require a 75% reduction Links to Principal Risks and we expect to reach 100% zero carbon ready homes on We also launched our new house types, which are designed to accommodate in carbon emissions from 2025. A: Government policies, regulations and planning orbefore 2030. the upcoming changes in regulation. An internal working group with representatives from strategic land, planning, H: Natural resources and climate change For our homes in use to become truly net zero will require Whilst continuing to progress our Environmental Strategy, we developed our sustainability and technical functions is helping to guide our approach to theUK’s energy grid to shift from its reliance on gas. Net Zero Transition Plan and submitted our science-based targets for net BNG and we are collaborating with others in the sector through the Future Material issues zero to the Science Based Targets initiative for independent assessment. Homes Hub. Future regulation will mean that rental properties will need to Sustainable homes and communities meet an average Energy Performance Certificate (EPC) C rating Given Biodiversity Net Gain (BNG) requirements in England later in 2023, by 2035, compared to the current average rating of E, which we published guidance and ran training sessions to support our teams could mean costly retrofits for private landlords. to manage the risks, costs and opportunities associated with BNG. Land and planning The land market was extremely tight in the first half of the year with Proposed amendments to the National Planning Policy Framework announced The long term backdrop is uncertain and it is unclear whether increased demand for available land driving price inflation. by the Government in December 2022 include positive measures to support resources will be allocated to enable the planning system to Land is the key component for a housebuilder so the availability improved quality of design and placemaking. function better. ofland suitable for development and the effectiveness of the The planning environment continued to be challenging with delays planning system have a major effect on the medium to long andresource pressures impacting the supply of land for housing. A relaxation of the soundness test for plan-making and the removal of the need However, current proposed changes have the potential termdevelopment of the industry and the supply of homes. for Planning Authorities to maintain a five-year supply of deliverable housing toreduce medium to long term land supply. Uncertainty over the application of Nutrient Neutrality legislation began sites could result in further delays and a shortfall in the supply of sites. toimpact planning for future sites across the industry. Following the next general election (currently scheduled for Links to Principal Risks Transitional arrangements proposed are likely to result in a meaningful hiatus in January 2025) there is potential for further changes to the A: Government policies, regulations and planning We reduced our land spend from the third quarter given the tightness in plan-making which is likely to further constrain the availability of land for housing. planning regime by whichever party forms the next Government. theland market and rising land prices, and continued to be highly selective Material issues inour landbuying in the second half as the market outlook deteriorated. Proposed amendments to the Levelling Up and Regeneration Bill could help Responsible sourcing address Nutrient Neutrality constraints that affect more than 74 local authorities The Government has changed its proposals for planning reforms, which in England. ifadopted seem likely to lead to less availability of land for planning. 18 Taylor Wimpey plc Annual Report and Accounts 2022 | Read more about | Read more about | | --- | --- | | our Principal Risks | keyissues for our | | on pages 75 to 79. | stakeholders on | pages36 to 39. Key drivers 2022 backdrop Drivers, short term opportunities andrisks Drivers, long term opportunities andrisks Interest rates and mortgage availability UK Consumer Price Index (CPI) inflation rose from 5.5% in January 2022 UK inflation remains high and the BoE raised rates a further 0.5% in February Interest rates are expected to peak and then moderate toend the year at 10.5% (having peaked at 11.1% in October) as global to4.0%, and is widely expected to continue to raise interest rates this year, gradually downwards, albeit at higher levels than they had Interest rates and mortgage availability are the main factors factors such as the war in Ukraine impacted energy prices, food prices withexpectations of a 4.5% and 4.8% peak (source: OBR, Capital Economics). beenover the previous decade. determining housing affordability and accessibility for our andgeneral inflation. customers. The Bank of England (BoE) is mandated by the Mortgages rates may have already peaked, having factored in expected The expense of monthly mortgage costs is likely to remain higher Government to maintain a 2% inflation target and altering the The 23 September mini budget preceded a spike in mortgage rates as interest rate rises with the average now well below the 2022 peak. Some than during the last decade of historically low interest rates. interest rate is its main tool in managing economic demand and themarket anticipated further rises in the BoE base rate. lenders are offering longer term mortgages to improve monthly affordability. With an ongoing supply/demand imbalance (with far fewer inflation. Mortgage rates factor in interest rates and expectations In response to persistent inflation, the BoE raised interest rates from historically Ultimately, the inflation outlook is likely to continue to be the key driver homes built than the Government guidance of 300k per year), of future interest rates, on top of which lenders add a margin low levels of 0.5% in December 2021 to 3.5% by December 2022 and the offuture interest rate policy. underlying demand for housing is likely to remain strong. (which varies according to their capacity and appetite to provide Office of Budgetary Responsibility (OBR) predicts it is likely to peak at 4.8% mortgage lending). Inflationary pressure expected to lessen with prices having already adjusted There may be a reset for the market and some shift in the type inQ3 2023, whilst Capital Economics predicts the rate will peak at 4.5%. tosubstantial hikes in energy, food and other prices last year. of product that will be affordable for some customers (smaller Links to Principal Risks As a result of BoE action on interest rates and expectations of future rises, houses and apartments for first time buyers). Outlook for affordability could improve if wage growth exceeds house price B: Mortgage availability and housing demand mortgage rates rose from c.1.4% in January to peak at c.5.9% in November growth and if mortgage rates continue to reduce. before easing back to just under 4.65% by February 2023 (Source: BoE, Material issues based on a 2-year fixed / 85% LTV mortgage). The removal of the Government’s longstanding Help to Buy scheme that Customer service and quality provided top up deposit loans for first time buyers has the potential to impact In August, with mortgage rates rising, the stress test that required certain customers. However, there are signs of growing interest in the Responsible sourcing customers to be able to withstand a 3% increase in interest rates over housebuilding industry’s Deposit Unlock scheme from major lenders. thestandard variable rate, was removed. Employment, skills and labour availability UK unemployment was 3.7% in the three months to December 2022 Considerable pressure on the public and private sector to facilitate above- A long term healthy employment outlook is important for (2021comparable: 4.0%). inflation wage increases for their employees. housing as well as the rest of the economy. The UK employment rate has implications on consumer confidence and our customers’ desire and ability to buy homes. Labour market remained tight and with pressure on both public and private Private sector is facing a fall in income as the economy contracts and tax A potential long term skills shortage could impact the industry Ahealthy employment outlook is important for general consumer sector wages. rises, and the public sector is facing difficulties given the budget deficit - attracting and retaining skilled workers to construction is key confidence in the housing market and the wider economy. andhigh debt, built up as a result of the COVID-19 pandemic. to the long term health of the industry. According to Capital Economics, UK annual wage growth was 6.1% Inprevious cycles, higher unemployment has been considered inDecember 2022 and was a large contributor to general inflation given Unemployment is predicted to rise in response to weak economic conditions. Many major housebuilders, including TaylorWimpey where acontributory factor to a weaker housing market. thatservices represent c.40% of CPI. early talent is a key focus, have strategies aimed at attracting However, the Office for National Statistics (ONS) predicts that unemployment new talent to the industry. Links to Principal Risks The Times reports a net 630k people of working age have left the UK will remaining at historically modest levels peaking at c.4.9% in the second D: Attract and retain high-calibre employees workforce since the impact of COVID-19 in 2020. quarter of 2024, compared to a high of c.8.5% in 2011 following the global financial crisis. Despite six consecutive quarterly falls, UK job vacancies remained at historically Material issues high levels at just under 1.2 million in December 2022 (source: ONS). People and skills Construction labour availability improved from 2021 and, while there were still areas of tightness, industry labour cost inflation was more moderate than materials cost inflation. Climate change Parts L&F regulations requiring 31% savings in carbon emissions (from We are making our Net Zero Transition Plan publically available in 2023 Potential competitive advantage and premium for new, more a 2013 baseline) for the homes we produce came into effect in 2022, andwill continue to work towards our science-based targets. energy-efficient homes. For example, we have already seen The Future Homes Standard (FHS) outlines new regulations with a one-year transitional period up until June 2023 for existing sites. cheaper ‘green mortgages’ making new homes comparably aimed at making new homes more energy-efficient and will come We are taking the opportunity to produce more energy-efficient homes for cheaper to buy than less energy-efficient second-hand stock. into effect in 2025 when gas central heating systems will no The Government released the Standard Assessment Procedure software, ourcustomers with our new house types and to meet new regulations. longer be allowed in new developments. into which we successfully modelled our enhanced material standards From 2025 we will be rolling out zero carbon ready homes We are piloting five new homes that will test various solutions well ahead of and technological solutions to meet new requirements. following the implementation of the Future Homes Standard, the Future Homes Standards (FHS) regulation that will require a 75% reduction Links to Principal Risks and we expect to reach 100% zero carbon ready homes on We also launched our new house types, which are designed to accommodate in carbon emissions from 2025. A: Government policies, regulations and planning orbefore 2030. the upcoming changes in regulation. An internal working group with representatives from strategic land, planning, H: Natural resources and climate change For our homes in use to become truly net zero will require Whilst continuing to progress our Environmental Strategy, we developed our sustainability and technical functions is helping to guide our approach to theUK’s energy grid to shift from its reliance on gas. Net Zero Transition Plan and submitted our science-based targets for net BNG and we are collaborating with others in the sector through the Future Material issues zero to the Science Based Targets initiative for independent assessment. Homes Hub. Future regulation will mean that rental properties will need to Sustainable homes and communities meet an average Energy Performance Certificate (EPC) C rating Given Biodiversity Net Gain (BNG) requirements in England later in 2023, by 2035, compared to the current average rating of E, which we published guidance and ran training sessions to support our teams could mean costly retrofits for private landlords. to manage the risks, costs and opportunities associated with BNG. Land and planning The land market was extremely tight in the first half of the year with Proposed amendments to the National Planning Policy Framework announced The long term backdrop is uncertain and it is unclear whether increased demand for available land driving price inflation. by the Government in December 2022 include positive measures to support resources will be allocated to enable the planning system to Land is the key component for a housebuilder so the availability improved quality of design and placemaking. function better. ofland suitable for development and the effectiveness of the The planning environment continued to be challenging with delays planning system have a major effect on the medium to long andresource pressures impacting the supply of land for housing. A relaxation of the soundness test for plan-making and the removal of the need However, current proposed changes have the potential termdevelopment of the industry and the supply of homes. for Planning Authorities to maintain a five-year supply of deliverable housing toreduce medium to long term land supply. Uncertainty over the application of Nutrient Neutrality legislation began sites could result in further delays and a shortfall in the supply of sites. toimpact planning for future sites across the industry. Following the next general election (currently scheduled for Links to Principal Risks Transitional arrangements proposed are likely to result in a meaningful hiatus in January 2025) there is potential for further changes to the A: Government policies, regulations and planning We reduced our land spend from the third quarter given the tightness in plan-making which is likely to further constrain the availability of land for housing. planning regime by whichever party forms the next Government. theland market and rising land prices, and continued to be highly selective Material issues inour landbuying in the second half as the market outlook deteriorated. Proposed amendments to the Levelling Up and Regeneration Bill could help Responsible sourcing address Nutrient Neutrality constraints that affect more than 74 local authorities The Government has changed its proposals for planning reforms, which in England. ifadopted seem likely to lead to less availability of land for planning. Taylor Wimpey plc Annual Report and Accounts 2022 19 Strategic report ## Culture and values ## Built on a strong ## culture of doing ## theright thing ### Respectful and fair ### Take responsibility ### Better tomorrow ### Be proud Read more on how the Board monitors culture on page 102 ### Key areas from our 2022 employee survey | 93% | 98% | | --- | --- | | Overall employee | Health and safety | | engagement score | score | | 95% | 90% | | --- | --- | | Diversity and | Sustainability and | | inclusion score | Governance score | 20 Taylor Wimpey plc Annual Report and Accounts 2022 ## Strategy framework ### We have a clear purpose to build great homes and create ## We are defined by ### thriving communities ## our purpose ### To deliver superior returns for shareholders through our high-quality landbank and ### enhance value through sharper operational focus ## Implemented through our strategic cornerstones Land Operational excellence Sustainability Capital allocation | An agile approach | Driving efficiency | Investing to protect | A clear and | | --- | --- | --- | --- | | to optimising value | and execution | long term value for | disciplined | | – Focused on | – Continued focus on | all stakeholders | approach | | progressing land | driving performance | – Continue to develop | – Maintain a strong | | through the planning | – Efficient business | thriving communities | balance sheet | | system and will | structure refined | with excellent | – Focus on funding | | continue to open | through change | placemaking | business needs, | | outlets | programme | – Continue to advance | including land | | – Strong landbank | – Investing in the long | environment strategy | investment and WIP | | position supports highly | term through new | with ambitious targets | – Clear and sustainable | | selective approach to | timber frame facility | in climate, nature and | ordinary dividend to | | new land acquisition | – Advanced preparation | waste | provide visibility to | | and positions us well in | for changing regulation | – Launching Net Zero | shareholders, and | | a challenging planning | and trialling technology | Transition Plan to be | keepdecision on | | environment | ahead of Future Homes | net zero by 2045, | returnof excess cash | | – Remain agile and | Standard | fiveyears ahead | under review | | closely monitor | | ofregulation | | conditions in the land market for any opportunities Read more on pages 22 to 23 Read more on pages 24 to 25 Read more on pages 26 to 27 Read more on pages 28 to 29 Taylor Wimpey plc Annual Report and Accounts 2022 21 Strategic report ## Strategic cornerstones ## Land ## An agile approach to ## optimisingvalue 22 Taylor Wimpey plc Annual Report and Accounts 2022 ## Optimising value from ## our high-quality owned ## and controlled landbank ## and strategic land pipeline Land is the key driver of value for any housebuilder, and we are ### Key highlights confident we have a high-quality landbank. We measure this by length, weight, shape, efficiency and quality. Our strategic pipeline is a competitive advantage in its own right, giving increased optionality ## and opportunities to protect value. c.6.0 Agile response to market ### landbank years We have a strong short term landbank of c.83k plots and are confident in the locational quality of our landbank in areas customers want to live, giving us a ### (2021: c.6.1) greater resilience. Importantly, it has also allowed us to be very selective with land acquisitions throughout 2022 and reduce our spend as the land market became more competitive and demand weakened. This is something we expect to continue given current market conditions. We retain the ability to be ## opportunistic if it is the right thing to do. The optionality and flexibility provided 52% by our strategic land portfolio will remain a key differentiator. ### of completions from We anticipate that the planning environment will remain difficult for the ### foreseeable future with a shortage of resources and delays in both the strategically sourced land strategic and development management areas of the planning system. ### Proposed changes to the National Planning Policy Framework announced by (2021: 50%) the Government in December 2022 are likely to lead to a reduced land supply and less homebuilding in future years. Our strong landbank and pipeline of sites already in planning is a key competitive advantage in this challenging planning environment. ## 104 Our focus is on progressing planning to open new, quality outlets and securing delivery from our mature strategic land pipeline and transferring ### new outlets opened assets to the operational business. ### (2021: 84) Our key performance indicators are linked to our four strategic cornerstones - read more on pages 30 to 33 Net land added (incl. strategic conversions) 10 8 6 4 2 0 -2 -4 20222021202020192018 (Plots k) Taylor Wimpey plc Annual Report and Accounts 2022 23 Strategic report ## Strategic cornerstones ## Operational ## excellence ## Driving efficiency and execution 24 Taylor Wimpey plc Annual Report and Accounts 2022 ## Building greater discipline Timber frame production facility ## through our business We are opening our own timber frame production facility in Peterborough, that will ## model to improve efficiency, help fulfil our goals to increase timber frame usage on our sites, improve visibility ## protect value and ensure of supply and offer operational and environmental benefits. ## TaylorWimpey is fit for We view timber frame as a low risk approach to supporting our environmental aims and ## thefuture our timber frame factory will support our work to achieve our net zero target. The facility is future-proofed to allow for both While land is ultimately the key driver of value, an efficient volume and product expansion. business model is needed to minimise risk, manage headwinds and protect value. This is particularly important in challenging This is a cost effective solution for establishing market conditions. internal control and visibility and security of supply and will improve process and logistics We are taking a future-focused approach to modernisation efficiencies. This will also slightly reduce our ofconstruction methods and build innovation including reliance on bricklaying resources and build expanding our use of timber frame, and driving standardisation timeline, with early commencement of all and efficiencies. follow-on trades. We are extremely proud to be the top rated volume housebuilder for quality but we know that there is more we can do to ensure each and every customer’s experience is consistently a great one, including forming a better understanding of our customer combined with a clear focus on increasing customer service scores. Agile response to market We have a very clear focus on operational improvement, cost management and execution and have taken a proactive response to changing market conditions. As market conditions changed at pace in the third quarter we acted quickly and decisively implementing even tighter cost scrutiny, significantly reducing land commitments, and closely controlling the release of investment in work in progress. As announced in our January 2023 trading update, we entered into consultation on a series of business changes to optimise our performance and in response to market conditions, targeting annualised savings of around £20 million, with an anticipated cost to achieve these of c.£8 million. Our key performance indicators are linked to our four strategic cornerstones - read more on pages 30 to 33 Taylor Wimpey plc Annual Report and Accounts 2022 25 Strategic report ## Strategic cornerstones ## Sustainability ## Investing to protect long term value ## for all stakeholders 26 Taylor Wimpey plc Annual Report and Accounts 2022 ## Continuing to evolve ## and embed ESG ## throughout the business ## for the benefit of all ## our stakeholders We build quality homes and design communities to enable customers to enjoy a good quality of life while protecting the environment and ensuring development brings economic growth and skilled employment. Our new homes, with energy efficiency built in, can play a critical role in helping the UK meet its decarbonisation targets, and reduce the cost of living for customers. Agile response to market Our approach to sustainability encompasses environmental, social, economic and governance aspects including our contributions to, and involvement in, local communities, our focus on customer service and build quality, our commitment to health and safety, our strong culture, as well as how we tackle our environmental footprint and enable customers to live sustainably. We set clear standards on these issues and work closely with our colleagues, subcontractors, suppliers and other partners to deliver on our commitments. Our Environment Strategy sets out how we will play our part in tackling the environmental crisis, create a greener, healthier ## Net zero future for our customers, colleagues and communities, and reduce and mitigate environmental risks to our business, with ambitious targets up to 2030. ## by 2045 Our key performance indicators are linked to our four strategic We are committed to acting on cornerstones - read more on pages 30 to 33 climate change and in 2022 we Read more about our Environment Strategy in our 2022 developed our net zero target Sustainability Supplement to reduce our climate footprint ahead of the UK’s 2050 target. The three priorities in our Environment Strategy are: The two key commitments in our strategy are to achieve: ### Climate change – Net zero emissions in our operations by 2035 (Scopes 1 and 2) Protect our planet and our future by playing our part inthe global fight to stop climate change. – Net zero emissions across our value chain by 2045 (Scopes 1, 2 and 3) Our targets are being independently ### Nature validated by the Science Based Targets initiative. More detail is included on pages Improve access to and enable enjoyment of nature forcustomers and communities by regenerating the 55 to 57. natural environment on our developments. ### Resources and waste Protect the environment and improve efficiency for our business and our customers by using fewer and more sustainable resources. Taylor Wimpey plc Annual Report and Accounts 2022 27 ## 1 3 2 Strategic report ## Strategic cornerstones ## Capital ## allocation ## A clear and disciplined approach 28 Taylor Wimpey plc Annual Report and Accounts 2022 ## A clear and disciplined ## framework balancing investment ## for future value creation with ## returning value to shareholders We have a clear and disciplined framework that balances investment ### Key highlights for future value creation with sustainable annual dividends and excess cashreturns for investors as appropriate through the cycle. Every day we make capital allocation decisions when we buy land. ## Our investment criteria is subject to a rigorous process and includes £863.8m detailed land assessment against numerous financial metrics, subject ### to sign off by senior management levels including Chief Executive. net cash* Our Dividend Policy has been set up to provide shareholders with ### (2021: £837.0m) areliable dividend and surplus cash return via special dividend orbuyback at the appropriate time in the cycle. Agile response to market ## We continue to be highly selective in the land market, given the near £725.6m term uncertainty and higher risk and are able to do so because of our ### stronglandbank. land creditors Our Ordinary Dividend Policy has been set up to operate through the cycle ### (2021: £806.4m) and is stress tested to withstand a reduction in prices of 20% and volumes of30%. Our key performance indicators are linked to our four strategic cornerstones – read more on pages 30 to 33 ## 9.40p ### total ordinary dividend ### per share ### Our capital allocation priorities (2021: 8.58p) | 1. Maintain a strong | 3. Sustainable | | --- | --- | | balance sheet | ordinary dividend | | Maintain low adjusted | Ordinary Dividend Policy | | gearing to reflect cyclical | of 7.5% of net assets or at | | nature of the industry | least £250 million annually | ### 2. Investment in land 4. Return excess cash ### and WIP to drive future Excess cash returned after ### growth funding land investment, working capital, taxation and Focus on funding business the ordinary dividend. The needs, including land method of return (share investment and WIP to drive buyback or special dividend) growth will be considered at the appropriate time * Definitions and reconciliations of our APMs to the equivalent statutory measures are included in Note 32 of the financial statements. Please see page 85 for definitions. Taylor Wimpey plc Annual Report and Accounts 2022 29 Strategic report ## Our key ## performance ## indicators ### Aligned to our strategic cornerstones, ### our key performance indicators drive ### value for all of our stakeholders. How we measure our performance - our key performance indicators The whole business is focused on our key performance indicators, and in 2022 we simplified these and aligned themto our strategic cornerstones. Our key performance indicators are focused on driving value where it matters andfor all of our stakeholders. ## Capital ## allocation The focus on our key performance indicators enables the business to be in astrong operational and financial position to create and return value to shareholders inline with our capital allocation policy. More information can be found on page29 30 Taylor Wimpey plc Annual Report and Accounts 2022 # 1. Land ## Performance in 2022 - With the benefit of a strong landbank, and on the land market became increasingly competitive throughout the year, we were able to be selective in our land-buying in the first half of 2022. We became highly selective in the second half, significantly reduced land investment as we proactively responded for changing market conditions. - Our teams have worked hard to progress land through the planning stages and we ignored a number of new outlets, ending the year with 259 outlets (2021: 25%). - Land conditions, percentage of average selling price on approvals increased slightly in the year due to geographical, mix and increased competitiveness in the land market, though it remains within a normal range in a historical context. - Our percentage of completions from strategically sourced land has remained above our target of 40% in the year. However, we expect the pace of strategic land conversions to be impacted by the current planning backdrop. ## Priorities going forward - Our strong landbank continues to be a key differentiator for us, and allows us to be highly selective in land acquisition. - Continue to utilise our strategic land pipeline to support the short term landbank. - Although we are cautious given the current market presence, we might be ability to be opportunistic if it is the right thing to do. - Our focus is on progressing planning in our short term landbank to open new, quality outlets and ensuring delivery from our mature strategic land pipeline and transferring assets to the operational business. ## KPI ### Land cost as % of average selling price on approvals ![img-3.jpeg](img-3.jpeg) **Objective:** To maintain at current levels or reduce our average land cost. **Definition:** Cost of land as a percentage of average selling price on approvals. **Why it is key to our strategy:** Maintaining a sustainable land cost percentage increases value for our shareholders. ### Landbank years ![img-4.jpeg](img-4.jpeg) **Objective:** To run an efficient landbank being mindful of the external environment such as planning environment. **Definition:** The years of land supply in our short term landbank based at current completion levels. **Why it is key to our strategy:** We seek to use our high-quality landbank more efficiently to deliver growth, both in the number and quality of homes built for a wider range of customers. ### % of completions from strategically sourced land ![img-5.jpeg](img-5.jpeg) **Objective:** We aim to source more than 40% of our completions from the strategic pipeline per annum in the medium term. **Definition:** Number of completions on land which originally did not have a residential planning permission when we acquired a commercial interest in it, expressed as a percentage of total completions. **Why it is key to our strategy:** The strategic pipeline enhances our ability to increase the contribution per legal completion because of the inherent margin uplift from strategic plots. It also allows us to take a long term view of sites. Taylor Wimpey plc Annual Report visit Accounts 2023 31 Strategic report Our key performance indicators continued ## 2. Operational excellence Performance in 2022 Priorities going forward – Health and safety is the number one priority at TaylorWimpey and we will – We continue to focus on improving health and never compromise on this commitment to our people and everyone who safety on our sites. works on or visits a TaylorWimpey site. – Continue to maintain our high CQR scores and – Our Annual Injury Incidence Rate (AIIR) remains well below both the Home improve quality further by ensuring our quality Builders Federation Home Builder Average AIIR of 239 and Health and assurance processes are embedded at every Safety Executive construction industry average AIIR of 333. We are stage of the build. pleased with our progress this year in reducing the rate, and we are – Continue to work closely with subcontractors, continuing to focus on training to continue to improve this. suppliers, industry associates and educational – We are proud that we continue to lead the volume industry in construction organisations to identify and address skill gaps quality, as measured by the NHBC. and upskill our workforce. – We continue to benefit from a talented and engaged workforce and are – Publish our Diversity Report including clear pleased to see high engagement scores from employees. goals to help accelerate measurable change and – Our Future Skills Group has been exploring the skills profile our business to drive accountability. will need over the medium to long term. – In 2022 we benchmarked our policies and practices against the Stonewall Diversity Benchmark. KPI Construction Quality Review (average score/6) Objective: To achieve an average score of four out of six across TaylorWimpey. 22 4.81 Definition: The average score, out of six, achieved during an in-depth annual review of construction quality on a site-specific basis. 21 4.67 Why it is key to our strategy: Right first time continues to be a key priority within our customer-focused approach. CQRs focus on construction quality and understanding ‘why or how’ given levels of quality 20 4.45 haveresulted. 2022 remuneration measure. Read more on page 138. Average reportable items per inspection Objective: Reduce defects found during build stages. 22 0.32 Definition: The average number of defects found per plot during NHBC inspections at key stages ofthe build. 21 0.26 Why it is key to our strategy: Reducing the number of defects per plot is crucial to ensuring wedeliver consistently high-quality homes for our customers, whilst also minimising the cost ofrectifications. 20 0.24 Health and Safety Injury Incidence Rate (per 100,000 employees and contractors) rolling 12 months* Objective: We are committed to providing a safe place in which our employees and subcontractors can 22 166 work and our customers can live. Definition: Reportable (all reportable) injury frequency rate per 100,000 employees and contractors 21 214 (AnnualInjury Incidence Rate). Why it is key to our strategy: Health and safety is our non-negotiable top priority. As well as having a 20 151 moral duty to maintain safety on site, accidents and injuries can have a detrimental impact on the business through additional costs, delays and/or reputational damage. Employee engagement (annual survey) Objective: We aim to maintain a high level of overall employee engagement. 22 93% Definition: Our employee engagement score measures a range of factors in terms of employees sense ofbelonging, how proud they are to work for TaylorWimpey along with their willingness to go the extra mile 21 91% for the business. Why it is key to our strategy: As a key part of our employee engagement strategy, the survey provides 20 anopportunity for employees to provide feedback on all aspects of working at TaylorWimpey. This leads to clear action plans at both a national and local level where improvements can continue to be made. Ensuring that the employee voice continues to be heard remains an important part of our overall engagement strategy. 32 Taylor Wimpey plc Annual Report and Accounts 2022 ## 3. Sustainability Performance in 2022 Priorities going forward – In 2022 we welcomed the introduction of the New Homes Ombudsman – Our three key areas of focus are the quality of and we aligned our processes. the service we provide both before and after – 90% of customers in the 8-week survey would recommend us to a friend, completion, the standard of finish of completed this means we met our target to maintain a five-star rating. homes and our speed at resolving customers' – Conducted customer research to understand customers’ views on settling in defects. perceptions of homebuilders, to understand what our customers want from – Disseminate and use customer research across us and customer perception of the sustainability of new homes. the business to respond to customer feedback – Developed a Net Zero Transition Plan and proud to announce that from and drive progress. 2045 TaylorWimpey will be a net zero business. – Publish our Net Zero Transition Plan in 2023. – Reduced operational carbon intensity by 51% since 2013, and by 15% – Prepare for regulation on embodied carbon since 2019, our science based target baseline year. through supply chain analysis, engagement and – Committed to net zero emissions from operations from 2035. support. – Undertook quantitative scenario analysis on business risks from the low – Reduce emissions from our own diesel use on carbon transition, and on physical risks from a changing climate. our building sites. – Linked our executive bonus scheme to emissions reduction and – Industry wide collaboration on the net zero development of our net zero strategy. transition through NHBC, Future Homes Hub and other industry bodies. KPI Customer satisfaction 8-week score ‘Would you recommend?’ Objective: We strive to achieve 90% or above in this question, which equates to a five-star rating. Definition: Percentage of customers who would recommend TaylorWimpey to a friend as 22 90% measured by the National New Homes Survey undertaken by the NHBC on behalf of the HBF eight weeks after legal completion. 21 92% Why it is key to our strategy: Identifying and serving the needs of our customers by delivering a high-quality product is key to our ambition to become a customer-focused homebuilder. 20 92% 2022 remuneration measure. Read more on page 138. Customer satisfaction 9-month score ‘Would you recommend?’ Objective: We strive to improve this score and understand the reasons behind and underlying drivers of this customer feedback. 22 78% Definition: Percentage of customers who would recommend TaylorWimpey to a friend asmeasured by the National New Homes Survey undertaken by the NHBC nine months after 21 79% legal completion. Why it is key to our strategy: We think about how customers live in the homes and places we 20 78% build for longer than the first few months after they move in. Ensuring our customer satisfaction remains high in the months following completion is important. Reduction in operational carbon emissions intensity (measured at end of year) Objective: Reduce operational carbon emissions intensity by 36% by 2025 from a 2019 baseline. 22 15% Definition: Our science-based carbon reduction target for Scopes 1 and 2 emissions intensity tracks tonnes of emissions per 100 sq metres of completed build. The target has been verified 21 13% by the Science Based Targets initiative, and the data assured by the Carbon Trust. Why it is key to our strategy: These are the emissions directly from our own business -21% 20 operations and as such are an indicator of our own performance and commitment. 2022 remuneration measure. Read more on page 138. * Definitions and reconciliations of our APMs to the equivalent statutory measures are included in Note 32 of the financial statements. Please see page 85 for definitions. Taylor Wimpey plc Annual Report and Accounts 2022 33 Strategic report ## Business model ## Built on resilience ## We are defined by …benefiting from … with flexibility ## our purpose… our key strengths to perform well ## and resources… in all market ### To build great homes – High-quality short term ## and create thriving conditions... landbank and strategic land ### communities pipeline – Clear focus on operational excellence – Top rated in build quality and five-star customer service – Talented and highly-engaged ### Our business model is local teams and an ### experienced management built on resilience team Each stage of our business model is aligned to value. – A culture of doing the right This approach ensures we instil a thing performance culture and a clear, – Data-driven decision making shared focus on operational excellence across our processes to capabilities optimise value for our stakeholders. – A clear capital allocation policy – A strong balance sheet 34 Taylor Wimpey plc Annual Report and Accounts 2022 ... creating value at every stage of the cycle... 1 Creating Making the right land investments Ensuring long term sustainability of the business through securing a quality land pipeline, located in places people want to live, with good planning prospects at the right price and at the right time in the cycle to support target margins. We take account of sustainability issues from the start of the landbuying process, including placemaking, biodiversity net gain, flood risk, infrastructure and services, sustainable transport, community wellbeing and local economic development. Read more on pages 47. 2 Enhancing Managing the planning process Progressing land through the planning system is the key way we add value to the land we acquire. Accurate budgeting, active management and optimising our benefits of scale helps to ensure our sites are set up to deliver in line with our expectations. We design and plot the right houses in an efficient manner to generate strong returns while maximising available land resources and creating attractive places to live. Read more on pages 47 and 48. 3 Protecting Managing the regulatory environment We engage extensively with local authorities and communities, before and during the lifetime of each development. We work to advance the standard of our homes in advance of upcoming regulation to ensure our homes are regulatory compliant and are sustainable for our communities. Read more on pages 51 and 52. 4 Optimising Development and procurement We work closely with our supply chain and our central logistics function, T&I Logistics, to maximise the benefits of scale. We work with suppliers to reduce energy use and waste, improve resource efficiency and increase our use of recycled materials and to adopt materials with lower embodied carbon. Read more on pages 48 and 49. 5 Realising Delivering high-quality homes and customer service We consistently manage our sites to ensure they are safe and align to our high quality standards, and focus on service execution to ensure we are delivering for our stakeholders. We have rigorous policies and procedures in place to address health and safety risks, supported by training, communication and visible leadership. Read more on pages 48 and 49. 6 Reinvesting and returning For growth at the right time in the cycle We have a clearly defined capital returns policy to provide viability of a reliable income stream to our shareholders whilst enabling us to reinvest in the long term sustainability of the business. Read more on pages 28 and 29. ...for continuous business improvement... ...and delivering though our four strategic cornerstones... | Land | Operational excellence | | --- | --- | | Sustainability | Capital allocation | Read more about our strategic cornerstones on pages 21 to 29 ...to drive value for all our stakeholders Customers: c.14.2k homes delivered (2021: c.14.3k) Employees: 5.1k directly employed on average (2021: 5.4k) Partners: 11.1k subcontractors on average (2021: 11.1k) Investors: £473.8m cash returned via dividends and share buybacks in 2022 (2021: £301.5m) Contributed: £454.6m to local communities via our planning obligations (2021: £417.7m) Taylor Wimpey plc Annual Report and Accounts 2023 35 Strategic report ## Material issues and targets ## Understanding what matters ## most to our stakeholders We conduct a regular materiality assessment to make sure we focus on the sustainability issues (environmental, social and economic) of most importance to our business and ourstakeholders. To determine materiality, we look at the impact or potential impact ofan issue on ourbusiness strategy froma performance, cost or risk United Nations Sustainable DevelopmentGoals perspective. We also consider theimpact of our business on the We support the United Nations Sustainable Development Goals issue andthe importance of the issue to our stakeholders such as (SDGs), which aim to unite governments, businesses and the third colleagues, customers, investors and communities. This is sometimes sector to end poverty, fight inequality and address climate change. known as a ‘double materiality’ approach. By delivering on our purpose, we will contribute, in particular, to We use the results of our assessment toinform our reporting delivering UNSustainable Development Goal 11: ‘making cities and anddisclosure, development of our Environment Strategy and our human settlements inclusive, safe, resilient and sustainable’. approach to ESG governance and risk management. Our Legacy, Engagement and Action for the Future (LEAF) We are in the process of updating our materiality assessment and Committee has reviewed the goals and their relevance to our willpublish the results in 2023. business. We used this analysis to inform our materiality process and in the development of our Environment Strategy. An index is included Read more about our materiality assessment methodology at on our website, showing how we can support the goals. www.taylorwimpey.co.uk/corporate/sustainability Highlights in delivering on stakeholder priorities Sustainable homes and Environment People and skills Charitable giving communities | £455m | 51% | | 97% | £1.2m | | --- | --- | --- | --- | --- | | contributed to local | reduction in our direct | | employees see all cultures | donated and fundraised | | communities via planning | CO | 2 emissions intensity | and backgrounds being | forcharities and local | | obligations | since 2013 | | respected and valued at | community causes | TaylorWimpey Land, planning and Customer service and quality Health, safety and wellbeing Responsible sourcing communityengagement | 17% | 90% | 166 | 87% | | --- | --- | --- | --- | | of our homes were built on | customer satisfaction | Annual Injury Incidence | of priority suppliers | | brownfield land | 8-week score | Rate (per 100,000 | registered with the Supply | | | | employees and | Chain Sustainability | | | | contractors) | School | 36 Taylor Wimpey plc Annual Report and Accounts 2022 Our materiality assessment methodology 1. Issue identification 2. Stakeholder research 3. Internal interviews 4. Review andresearch A long list of issues was identified We sought the views of investors, The long list of issues were grouped based on our current priorities, our local government, non-governmental We carried out internal interviews and and plotted on our materiality matrix. previous materiality assessment, organisations (NGOs), academics, research with senior leaders, This was then reviewed and refined, business strategy, our main impacts registered social landlords and functional leads, and graduates. including through meetings with our and risks, long term and market sustainable business organisations. Chief Executive andmembers of our trends, the UN Sustainable We also drew on consumer research, Group Management Team. Development Goals and other a Government policy review and external frameworks. amedia scan. Our materiality assessment The issues identified in our materiality matrix have been grouped to create a list ofnine material issues. Corresponding colours have been used to show how theissues have been grouped. External view – importance to stakeholders Material issues Internal view - impact on business strategy High Medium Medium High Sustainable homes and communities Affordability & supply of housing Fire safety Placemaking, design & community infrastructure Sustainable homes & lifestyles Customer health & wellbeing Innovation Accessible & adaptive homes Land, planning and community engagement Sustainable transport Choice of land (greenfield, brownfield) Customer service and quality Build quality Health, safety and wellbeing Environment Climate change mitigation & adaptation (inc flood risk) Biodiversity Air quality Site environmental & remediation Resource use & waste Water use efficiency Responsible sourcing Sustainable materials People and skills Access to skills Inclusion & diversity Labour relations Employee engagement Charitable giving Governance and management Ethics, culture, governance & transparency Privacy / data security Taxation & remuneration policies Taylor Wimpey plc Annual Report and Accounts 2022 37 Strategic report Material issues and targets continued We focus on the sustainability issues that aremost material for our business and theareas where we can have a positive impact through A full list of our existing and new targets can be found in our Sustainability the homes we build, how wedevelop our people and our approach Supplement 2022. tothe environment. In recognising the important link between We set targets for each of our material issuesto help focus our efforts the Company’s material issues and risk and drive progress. This includes the targets which arepart of our management, our material issues have been aligned to our Principal Risks, as set Environment Strategy. out on pages 75 to 79. During 2022 we made good progress acrossmany of our target areas, Key to material issues including those which have ongoing targets, such as for sustainable homes and communities. Achieved Not achieved In progress Sustainable homes and communities Targets Progress Status Make it easier for close to 40,000 customers to work from home and We are rolling out our new standard house types which include at least one study enable more sustainable transport choices through 36,000 EV charging area with space for a desk and easy access to broadband and electricity sockets, points and 3,000 additional bike stands by the mid 2020s to enable working from home. We increased the number of EV charging points installed in 2022. Help 20,000 customers to increase recycling at home by 2025 Our new standard house types include integrating recycling bins. We expect to collect data for this target from 2023. Make it easier for 20,000 customer households in water stressed We design our homes to be water-efficient and integrate water saving features. regions to install a water butt by 2025 We are reviewing our plotting for house types to understand the best locations for water butt installation and expect to add water butts to our customer option portal in 2023 to support more customers to save water in their gardens. Help customers engage with nature and create 20,000 more nature- We have begun trialling home welcome packs with wildflower seeds, bug hotels friendly gardens by 2025 and other nature friendly products. We distributed 2,195 in 2022. Update our Placemaking Guide and Guide to Design and Access We are reviewing our current Guide and expect to update it in 2023. Statement to reflect the latest Government guidance and best practice Update our Green Infrastructure Guide and issue new guidance on We are reviewing our current guide and awaiting further guidance on Biodiversity biodiversity net gain and layout, and using street trees in our developments Net Gain requirements before updating it. Conduct a review of our land use efficiency and develop typologies that Our new standard house types will allow us to achieve greater land use efficiency. maximise opportunities for compact development Develop our technical specification for zero carbon ready homes during We developed our technical specification for compliance with the new Parts L&F 2022 and 2023 requirements and launched plot trials for compliance with the FHS zero carbon ready homes. Land, planning and community engagement Targets Progress Status Update our policies and processes to reflect the risks and opportunities We conducted scenario analysis in 2022 and are using the results to inform our from a changing climate in 2022 Transition Plan and risk management processes. We will publish an updated Environment Policy in 2023 and further embed climate risks into our environmental management system. Establish our Engagement Academy to support land and planning We rolled-out our new Engagement Academy in early 2023 for our land and teams to utilise best practice in online and in-person community planning and technical teams. This included an online module for all land and engagement planning teams, followed by a one-day in-person training session for around 125 colleagues who are involved in setting up or attending public engagement events. Customer service and quality Targets Progress Status Achieve a CQR score of at least 4.1 in each of our regional businesses In 2022, our average score was 4.81 (2021: 4.67) compared to an industry and at least 75% of build stages to score 4 or above in all regional benchmark group average of 4.6 (2021: 4.43). businesses Resolve at least 70% of customer issues within 28 days In 2022, we achieved 58% (2021: 53%). Although we are making progress, we are still short of our target and are seeking to improve this. Resolve all complaints or have agreed an action plan within 8 weeks We achieved this for 70% of complaints in 2022 (2021: 76%). Maintain a recommend score of at least 90% in the HBF 8-week In 2022, 90% of customers in the 8-week survey would recommend us to a friend survey, which equates to a five-star rating (2021: 92%). This means we achieved our target to maintain a five-star rating. Improve our 9-month customer satisfaction survey score Our score for 2022 was 78% (2021: 79%). 38 Taylor Wimpey plc Annual Report and Accounts 2022 Health, safety and wellbeing Targets Progress Status Maintain or lower our Annual Injury Incident Rate (AIIR), compared with Our AIIR decreased to 166 in 2022 (2021: 214) and remains well below the HBF 2021 industry average of 239. Regional businesses to conduct monthly audits of Construction Design Audits have started and will continue in 2023. and Management and Environmental Management Systems and report results to the GMT Run three HSE awareness campaigns during 2022 covering traffic We ran awareness campaigns on traffic management and preventing falls from management, preventing falls from height and preventing dermatitis height. We held a toolbox talk on preventing dermatitis and produced a poster foruse on our sites. Environment Targets Progress Status Achieve our science-based carbon reduction target: reduce operational Our operational emissions intensity (Scopes 1 and 2), has decreased by 15% carbon emissions intensity by 36% by 2025; reduce carbon emissions against our 2019 baseline with absolute operational emissions falling by 26% over intensity from our supply chain and customer homes by 24% by 2030 the same period. Increase natural habitats by 10% on new sites from 2023 and include Some of our sites are already integrating a biodiversity net gain approach and this our priority wildlife enhancements from 2021 will be rolled out to all new sites in England and Wales from late 2023. We are now integrating hedgehog highways and bug hotels on new sites. We have prepared guidance on bat boxes and bird boxes for launch in 2023. Cut our waste intensity by 15% by 2025 and use more recycled We have reduced waste intensity by 12% against our 2019 baseline, on track materials. By 2022, publish a ‘Towards Zero Waste’ strategy for tomeet our target of 15% reduction by 2025. We have developed our Towards oursites Zero Waste Strategy and Action Plan and have published more details in our Sustainability Supplement. This includes a plan for capturing data on use of recycled materials. Responsible sourcing Targets Progress Status Set improvement targets in relation to embodied carbon and waste for We deepened our understanding of embodied carbon and waste impacts in our key supplier categories supply chain during 2022. We will be using what we have learnt to identify higher impact categories and suppliers and to establish improvement targets. People and skills Targets Progress Status Benchmark our policies and practices against the Stonewall Diversity We completed the benchmark and are reviewing the findings. Benchmark Extend our respectful workplace training to site management teams in We have now rolled-out our training to 13 of our regional businesses. nine more regional businesses to ensure every site provides an inclusive work environment Review and update our Paternity Policy We expect to review the policy in the near future. Charitable giving Targets Progress Status Support St Mungo’s to establish a new skills training hub The new skills training hub opened at St Mungo’s new Recovery Centre inLeicester. Review how we can increase the impact of our ‘Community Chest’ We are in the process of reviewing how we make charity donations at site level giving at our development sites toensure consistency across our developments. We do not set targets for governance and management. Read more about our approach in our Sustainability Supplement and ESGAddendum. Taylor Wimpey plc Annual Report and Accounts 2022 39 Strategic report Read more about stakeholder engagement and climate change onpage 58 to 59 ## Stakeholder engagement and priorities We believe that by engaging regularly with all of our stakeholders and responding to feedback we support the long term sustainability of our business. ## Our customers Customer engagement is vitally important for ensuring we are providing the products and services they expect; we engage with them using many different channels. How we engage – We engage directly with customers at our developments, over the phone, via our customer portal (Touchpoint), through emails, letters and meetings and through social media. – We monitor customer views through focus groups, satisfaction surveys, Trustpilot reviews and post-occupancy research. – Our website is updated with relevant information. – Our customer Hub receives all initial customer calls. Key challenges – Increasing customer satisfaction. – Aligning our processes to customer expectations. Read more about our customers in our Operational review on page 49 ## Our employees Engaging with our employees, hearing their feedback and responding to it is essential for ensuring our employees feel valued, supported and have a voice. How we engage – We engage with our employees and gather feedback through meetings, appraisals, employee surveys, our intranet site, our internal magazine and newsletter, Company-wide emails, our National Employee Forum, Local Employee Forums and National Young Persons Forum. – Our Chief Executive regularly holds open calls accessible to all employees to discuss any pertinent issues and invites questions on and in advance of the calls. – We encourage employees to share feedback and this can be sent to the Chief Executive via email, members of the Group Management Team and regional business Managing Directors. – We have a system of employee networks sponsored by senior management, to support employees and actively promote diversity. – A member of the Board is an Employee Champion. They attend National Employee Forum meetings and meet with small groups of employees in a more informal setting to gather feedback. They are responsible for championing the employee voice in the boardroom and strengthening the link between the Board and employees. – We engage with employees on the financial performance of the Company via employee emails following the release of the Company’s trading updates, full year and half year results. Key challenges – Attracting and retaining the best people in the industry. – Driving high engagement with site-based employees. Read more about our employees in our Operational review on pages 49 to 51 Read more about our diversity disclosure on page 50 40 Taylor Wimpey plc Annual Report and Accounts 2022 ### Engagement performance metrics and highlights in 2022 - In 2022, 50% of customers in the 8-week survey would recommend us to a friend (2021: 92%). This means we met our target to maintain a five-star rating. However, we are focused on improving the further, consistently across all our regional businesses. - Our 9-month satisfaction scores give us insight into how customers feel about the homes and places we build over the longer term. Our score for 2022 was 78% (2021: 79%). - We have prioritised supporting our customers during the changing market conditions and focused on understanding their needs. - We signed up to the New Homes Quality Code in November 2022 and aligned our processes to its requirements. These include enabling customers to complete a pre-completion inspection and providing a statement of any incomplete works at move-in as well as details about service charges and likely maintenance costs for their new home. ### Priorities for 2023 - Continue to learn and evolve our service offering in response to feedback from the New Homes Ombudsman. - Focus on the quality of the service we provide both before and after completion, the standard of finish of completed homes and our speed at resolving customers' settling in defects. - Continue to work on implementing our Environment Strategy and developing even more energy-efficient homes. ### Key to strategic cornerstones - Land - Operational excellence - Sustainability - Capital allocation ### Material issues - Sustainable homes and communities - Environment - Health, safety and wellbeing - Customer service and quality - Land, planning and community engagement ### Relevant KPIs - Customer satisfaction 8-week score: 'Would you recommend?' - Customer satisfaction 9-month score: 'Would you recommend?' - Construction Quality Review - Average reportable items per inspection ### Strategic cornerstones ### Engagement performance metrics and highlights in 2022 - Health and safety is our number one priority. In 2022 our ABPI for reportable injuries per 100,000 employees and contractors was 166 (2021: 214). - Continue to benefit from a talented and engaged workforce, as reflected in our 2022 employee survey with an overall employee engagement score of 93%, with a 54% response rate. - Our voluntary employee turnover rate was 17.7% (2021: 19.0%). - In the NHBC Pride in the Job Awards, achieved a total of 62 Quality Awards (2021: 73), 15 Seat of Excellence Awards (2021: 23) and three Regional Awards in 2022 (2021: three). - During 2022, our Future Skills Group has been exploring the skills profile our business will need over the medium to long term, as well as developing a demographic profile for our key trades to identify any potential gaps in the skills available to meet our strategic objectives. - As at 31 December 2022, we had a gender mix of 67% male (2021: 68%) and 33% female (2021: 32%) across the Company. Our GMT was 38% female (2021: 36%) and we also had 44% women on our Board of Directors (2021: 50%). ### Material issues - People and skills - Customer service and quality - Health, safety and wellbeing ### Relevant KPIs - Health and Safety Injury Incidence Rate - Employee engagement ### Strategic cornerstones ### Priorities for 2023 - Continue to work to improve health and safety scores even further. - Publish our Diversity Report including clear goals to help accelerate measurable change and to drive accountability. - Move from a bi-annual all employee engagement survey to an annual survey. - Continue to offer a number of engagement and communication channels including direct access to senior management. Taylor Wimpey plc Annual Report visit Accounts 2023 41 Strategic report Stakeholder engagement and priorities continued ## Our partners Homebuilding is far reaching and as a result we collaborate with a wide range of partners; each partnership is very important to us. How we engage – We engage with our subcontractors and suppliers on a wide range of matters and initiatives through meetings, workshops, working groups, engagement sessions and our membership of the Supply ChainSustainability School (SCSS). – Our engagement with our local and national charity partners is overseen by our Charity Committee. – We engage with local authorities, parish councils, Homes England, the Greater London Authority, theDepartment for Levelling Up, Housing and Communities and other public sector organisations tounderstand their priorities and share our views. We engage directly and through our membership ofindustry organisations such as the HBF and the British Property Federation. – We aim to work constructively with planning authorities to agree the details of our planning obligations for each development, including affordable housing, local infrastructure, and facilities. Key challenges – Understanding and highlighting risk across whole supply chain. Read more about our partners in our Operational review on pages 47 and 51 ## Our investors Engaging with our investors at regular intervals ensures they are well informed of our progress in the year and allows them to share any feedback. How we engage – We engage with investors throughout the year through results presentations, meetings, roadshows, conferences, telephone and video calls. – We engage via our regulatory reporting including the Annual Report and Accounts, our full year results, half year results, trading updates and our Annual General Meeting. – When possible, we conduct visits to our sites and we participate in benchmarks and disclosure initiatives. Key challenges – Ensuring investors understand our business model, strategy and key differentiators. ## Our communities We engage with both new and existing communities throughout the entire lifecycle of the development to share the positive contribution we can make. How we engage – We engage with local communities at every development, from planning and throughout construction, including through meetings, exhibitions, workshops, newsletters, information boards, social media andour website. – We collaborate with non-governmental organisations (NGOs), academia and expert organisations tolearn from their insights. – 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. – We use the results of our community engagement to help us develop planning proposals that are financially viable and meet local needs. – Our placemaking standards, training and design reviews are in place to support our teams to plan, design and deliver schemes that create successful and sustainable new communities. Key challenges – Helping communities to become established quickly. – Ensuring communities understand the positive contribution that development can bring to their area. Read more about our communities in our Operational review on pages 51 42 Taylor Wimpey plc Annual Report and Accounts 2022 Key to strategic cornerstones | | | Land | Sustainability | | --- | --- | --- | --- | | | | Operational excellence | Capital allocation | | Engagement performance metrics and highlights in 2022 | Material issues | | Relevant KPIs | | – Continued our partnership with our national charities as well as local charity partners | Governance and management | | – Health and Safety Injury | | across the UK including the Youth Adventure Trust, End Youth Homelessness, Crisis, | | | Incidence Rate | Environment CRASH and St Mungo’s. In total, during 2022, we donated and fundraised c.£1 million – Reduction in operational carbon Responsible sourcing for registered charities (2021: c.£1 million). In addition, we contributed and fundraised emissions intensity over £196k to local organisations, such as scout groups, local football teams and various Health, safety and wellbeing Strategic cornerstones | community causes (2021: £104k). | Sustainable homes | | | --- | --- | --- | | – In 2022, we developed a more accurate methodology for measuring Scope 3 Supply | andcommunities | | | Chain Emissions. | | SOL | Land, planning and community engagement Priorities for 2023 – Work with our suppliers to support our Net Zero Transition Plan. – Engaging with suppliers through the Supply Chain Sustainability School and initiatives such as the Future Homes Hub. – Continue to engage with industry, water authorities and central and local government onthe issue of Nutrient Neutrality. – Continue to engage with Government on a range of business, planning and sustainability issues. – Extend our partnership with Magic Breakfast to support schools within the areas weoperate. Engagement performance metrics and highlights in 2022 Material issues Relevant KPIs – Continued to hold ad hoc meetings with investors throughout the year. Environment – Land cost as % of average selling price on approvals – Held results presentations that were recorded and made available on our website. Customer service and quality – Landbank years – Held an Investor and Analyst Update on 25 May 2022 setting out a clear strategy to build People and skills – % of completions from a stronger and more resilient business and deliver superior returns, by focusing on four Health, safety and wellbeing strategically sourced land strategic cornerstones: land, operational excellence, sustainability and capital allocation. Sustainable homes – Customer satisfaction 8-week – Held investor roadshows which included both face-to-face meetings and virtual meetings. andcommunities score ‘Would you recommend?’ Priorities for 2023 – Customer satisfaction 9-month Governance and management score ‘Would you recommend?’ – Continue to demonstrate best in class disclosure. – Employee engagement – Conduct visits of our Future Homes Standard trial homes. – Construction Quality Review – Continue to engage regularly through investor roadshows and meetings. – Average reportable items – Continue to participate in benchmarks, including on our ESG performance. per inspection – Reduction in operational carbon emissions intensity Strategic cornerstones CSOL Engagement performance metrics and highlights in 2022 Material issues Relevant KPIs – Contributed £455 million to local communities in which we build across the UK via Governance and management – Customer satisfaction 8-week planning obligations (2021: £418 million). This funded a range of infrastructure and score ‘Would you recommend?’ Environment facilities including affordable housing, green space, community, commercial and leisure – Customer satisfaction 9-month Responsible sourcing facilities, transport infrastructure, heritage buildings and public art. We aim to install score ‘Would you recommend?’ infrastructure at an early stage of the build process to enhance our schemes and help Health, safety and wellbeing – Reduction in operational carbon thenew community become established quickly. Sustainable homes emissions intensity – We also invest in public and community transport, walkways and cycle paths. In 2022, andcommunities Strategic cornerstones 67% of our UK completions were within 500 metres of a public transport node and 90% Land, planning and community were within 1,000 metres. engagement – In early 2023 we rolled-out our Engagement Academy to give land and planning and SL technical teams the skills, knowledge and confidence to run best practice engagement processes. Priorities for 2023 – Remain focused on strong placemaking. – Continue to engage with local communities and organisations. – Continue to foster a sense of community among new residents using our Community Communications Plan. Taylor Wimpey plc Annual Report and Accounts 2022 43 Business report # Section 172 (1) statement # How the Board considered stakeholders during the year ![img-6.jpeg](img-6.jpeg) # Setting our culture, values and strategy The Board sets our strategic direction, culture and values, and these are key to how we do business 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 for all stakeholders. 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 Heads of Functions deliver updates on key activities during the year which leads 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 40 to 43 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. # Section 172 (1) Statement Our Directors are bound by their duties under the Companies Act 2006 (the Act) to promote the success of the Company for the benefit of our shareholders as a whole, having regard to our other key stakeholders. We believe that in order to progress our strategy and achieve long term sustainable success, the Board must consider all stakeholders relevant to a decision and satisfy themselves that any decision upholds our culture of 'doing the right thing'. Our values, as set out on page 20, are key to how we do business and are closely aligned to the matters the Directors must consider as part of their Section 172 duties. The Board recognises that stakeholder engagement is essential to understand what matters most to our stakeholders and the likely impact of any key decisions. We have a long history of engaging with all of our stakeholders and the Board continues to highly value the feedback that this engagement provides. Details of how we engaged with our different groups of stakeholders during 2022 and how this informed what the Board considers matters to them most can be found on pages 40 to 43. The Board receives an update from the Executive Directors at each Board meeting which details any substantial engagement since the last meeting. In addition, there are standing agenda items at each meeting to ensure that the Board receive relevant updates on all of our key stakeholders; such as the regular reports from Customer Service, HR, Investor Relations and the Divisional Chairs. The Board has an annual schedule of 'teach-in' sessions with our key Heads of Function (such as Sales and Marketing, Land and Planning, Customer Service, Investor Relations, Sustainability and Supply Chairs) where they will receive in-depth updates about each group of stakeholders. In addition, the Board regularly engages directly with our investors and employees, and further information around the direct engagement that took place in 2022 can be found on pages 103 and 104. The Board is aware that in some situations, stakeholders' interests will be conflicted and they may have to prioritise interests. The Board, led by the Chair, ensures that as 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 to the left shows how the Board approaches its decision making. On the next page, we have set our examples of key decisions made by the Board and provided further details about the decision making process. Further information on the Board's activities during 2022 can be found on pages 98 to 99 44 Taylor Wimpey plc Annual Report and Accounts 2022 | Chair succession | Net Zero Transition Plan | Share buyback programme | | --- | --- | --- | | Following Irene Dorner’s decision to step | The Board reviewed and approved our Net | The Board approved the implementation of | | down as Chair due to personal family | Zero Transition plan which will support the | a share buyback programme to return | | reasons, Robert Noel was announced as | UK’s commitment to reach net zero carbon | £150 million in excess cash to shareholders | | our next Chair in December 2022. | by 2050. | in 2022. | | Criteria considered | Criteria considered | Criteria considered | | A, B, C, D, E, F | A, B, C, D, E, F | A, B, E, F | | Relevant stakeholders | Relevant stakeholders | Relevant stakeholders | | – Customers | – Customers | – Employees | | – Employees | – Employees | – Investors | | – Investors | – Investors | | | – Communities | – Communities | | | – Partners | – Partners | | | Decision making process | Decision making process | Decision making process | | – The Chair is responsible for leading the Board | – As a business, we want to play our part in | – We are committed to our strategy of actively | | and ensuring its overall effectiveness in directing | creating a sustainable future for everyone and to | managing the housing market cycle, in particular | | the Company. | support the UK’s commitment to reach net zero | with respect to the Group’s capital structure. | | – Following Irene Dorner’s decision to step down | carbon by 2050. | – Our approach to managing capital during the | | as the Chair for personal family reasons, the | – During the year the Board received regular | housing market cycle is intended to balance the | | Nomination and Governance Committee led | updates on the work undertaken to develop | capital requirements of the business and returning | | the search for our new Chair, supported by a | our Net Zero Transition Plan (the Plan), including | excess capital to shareholders, whilst at all times | | well-reputed executive search firm in order to | information on the comprehensive engagement | maintaining balance sheet strength and flexibility. | | assess both internal and external candidates. | that had taken place with external and internal | – We continue to believe that our Dividend Policy | | – Early on in the search process our Senior | stakeholders and the modelling of the costs | should comprise an ordinary dividend to be paid | | Independent Director indicated that he wished to | and investment required to reach our targets. | throughout all stages of the housing cycle and | | be considered for the role, therefore Jitesh Gadhia | – In December 2022 the Board reviewed and | additional significant surplus cash returns to be | | led the Committee in its search. | approved the Plan, which sets out how we will | made at appropriate times in the cycle. | | – The key selection criteria included in the role | develop our strategy to decarbonise our business, | – In March 2022, the Board approved the | | profile developed by the Committee was to | including value chain, by 2045. | implementation of a share buyback programme to | | identify an individual who is a former commercial | – The Board is confident that the Plan, and the | return up to £150 million of excess cash in 2022. | | business leader with broad industrial and | challenging targets contained within it, will | – When considering whether to approve the | | customer-facing experience in a cyclical industry. | positively impact all of our stakeholder groups, | distribution, the Board took into account | | In addition, the individual would have a strong | particularly the local environment and | stakeholders’ needs and all relevant | | franchise amongst key stakeholders. | communities in which we build. | circumstances, including the capital requirements | | – Following a thorough recruitment and selection | – The Board believes that the Plan will enable | of the business to support stakeholder initiatives. | | process which considered both internal and | our customers to lead greener and more | – The Board considered that the share buyback | | external candidates, the Board was delighted to | sustainable lives. | would benefit shareholders specifically through | | announce that Rob would succeed Irene as Chair. | – Like many of our stakeholders, our employees | the opportunity for increased future dividends per | | – Rob is considered the ideal candidate to promote | want to work for a business which takes its | share on the remaining shares and will also result | | the long term success of the Company for the | environmental responsibilities seriously. | in an increase in earnings per share. | | benefit of all our stakeholders as he is well- | – Environmental factors have become increasingly | – Feedback from large shareholders was positive, | | respected by stakeholders, has a long track | more material issues for investors when making | however some smaller retail shareholders | | record in the property sector and will provide | investment decisions. | expressed the desire for future excess capital | | excellent commercial experience and continuity | | returns to be made by way of a special dividend. | – The Board recognises that our partners will be of leadership as we face a changing market required to play their part in us achieving our – The Board was also aware that many of our environment. | | target, and the target will allow time for the | employees are shareholders in the business and | | --- | --- | --- | | – Further information can be found on page 108. | business and supply chain to adapt. | would also benefit from the opportunity for future | | | – Further information can be found on pages | dividends. | | | 54 to 57. | – The Board will keep the mechanism of how | excess cash is returned to shareholders in the future under review. Our values Our values Our values Key to decision criteria Key to our values A: The likely consequences of any decision in the long term Respectful and fair B: The interests of our employees Take responsibility C: The need to foster our business relationships with suppliers, customers and others Better tomorrow D: The impact of our operations on the community and the environment Be proud E: The desirability of maintaining a reputation for high standards of business conduct F: The need to act fairly as between members Taylor Wimpey plc Annual Report and Accounts 2022 45 Business report # Operational review ![img-7.jpeg](img-7.jpeg) In a year marked by two distinct issues, Taylor Whitney demonstrated that it is a strong and agile business as we acted quickly on a relatively to stabilize supply chaining market conditions in the second half of the year and we continued to actively maintain efficiency. This section outlines our performance and key activities in relation to: - Operational performance - Customer's risk/emphasis - Sustainable building - Climate and environment Construction Quality Review average score (out of 6) 4.81 (2021: 4.67) Group operating profit margin* 20.9% (2021: 19.3%) Reduction in operational carbon emissions intensity since 2019 15% (2021: 13%) Operational performance Our Operational review focuses on the UK (unless stated otherwise) as the majority of metrics are not comparable in our Spanish business. There is a short summary of the Spanish business in the Group financial review on page 81. Joint ventures are excluded from the Operational review, unless stated otherwise. 2022 sales, completions and pricing Total Group completions (including joint ventures) were 14,154 (2021: 14,302). UK home completions (including joint ventures) were 13,773 (2021: 14,067), which included 2,920 affordable homes (2021: 2,501) equating to 21% of total completions (2021: 18%). Our net private reservation rate for 2022 was 0.68 homes per outlet per week (2021: 0.91). The cancellation rate for the full year was 18% (2021: 14%). UK average selling prices on private completions increased by 6% to £352k (2021: £352k) with the overall average selling price increasing by 4% to £313k (2021: £300k). We estimate that market-led house price growth for our regional mix was c.8% for completions in the 12 months to 31 December 2022 (2021: c.4%). During 2022, approximately 12% of total sales used the Help to Buy scheme (2021: 19%) at an average price of £318k (2021: £283k). Help to buy closed for applications in England in the period, however in Wales the scheme will be extended up to March 2025, with a new price cap of £300k from April 2023. 46 The Company's Business Report | We ended the year with an order book | Our focus is on progressing planning in our | development plan, enabling planning | | --- | --- | --- | | valued at £1,941 million (31 December 2021: | short term landbank to open new outlets | authorities to monitor progress. | | £2,550 million), excluding joint ventures, | and securing delivery from our strategic | | The planning environment continues to which represents 7,499 homes (31 land pipeline, transferring assets to the bechallenging with delays and resource December 2021: 10,009 homes). In the UK, operational business. pressures impacting housing land supply. we traded from an average of 232 outlets in Given the difficult planning backdrop, we Proposed amendments to the National 2022 (2021: 225). As guided, we increased arepleased to have delivered our planned Planning Policy Framework announced by our total number of outlets to end the year increase in outlet numbers following the the Government in December 2022 include with 259 (31 December 2021: 228). | | accelerated landbuying of prior years, which | positive measures to support improved | | --- | --- | --- | | Underlying build cost inflation in 2022 was | gives us flexibility and choices that will be of | quality of design and placemaking. | | c.8% (2021: c.4%). At the start of 2023 | significant value. We have aligned our build | | However, other changes including prevailing build cost inflation is running at schedules to reflect the lower anticipated amendments to the approach to housing around 9-10%. sales rates in the near term. Our teams are numbers locally, a relaxation of the aligned and engaged in adapting to the soundness test for plan-making and the Land changing market and we have trained our removal of the need for planning authorities Land prices have not yet moved to reflect Sales Executives to operate in a tougher to maintain a five-year supply of deliverable current market conditions. We benefit from selling environment. housing sites could result in further delays ahigh-quality land position of c.83k plots In the year, 52% of our completions were and a shortfall in the supply of sites. asat 31 December 2022 (31 December sourced from the strategic pipeline (2021: 2021: c.85k) located in quality and resilient In addition, the transitional arrangements 50%). Despite continuing delays in plan- locations and a strategic pipeline of c.144k proposed are likely to result in a meaningful making across the country, our high-quality potential plots (31 December 2021: c.145k). hiatus in plan-making which is likely to strategic land pipeline remains a key strength Therefore, we can continue to be highly further constrain the availability of land both as an important input to the short term selective in our landbuying. for housing. We welcome proposed landbank and in providing an enhanced amendments to the Levelling Up and As a result of our highly selective landbuying supply of land with greater control over the Regeneration Bill to help address Nutrient in the second half of the year, 2022 approvals planning permissions we receive. However, Neutrality constraints that affect more than were c.7k plots, in line with the half year we expect the pace of strategic land 74 local authorities in England. 2022 position as we reduced our land conversions to be impacted by the current commitments in light of market conditions. planning backdrop. We anticipate that the planning environment will remain difficult for the foreseeable future A total of 50% of our short term landbank Central and local government with a shortage of resources and delays in has been strategically sourced (2021: 49%). We engage with local authorities, parish both the strategic and development During 2022 we acquired 7,716 plots (2021: councils, Homes England, the Greater management areas of the planning system. 14,450). As at 31 December 2022, we were London Authority (GLA), the Department for Proposed changes to the National Planning building on or are due to start in the first Levelling Up, Housing and Communities Policy Framework announced by the quarter of 2023 on 98% of sites with (DLUHC) and other public sector Government in December 2022 are likely implementable planning. organisations to understand their priorities tolead to a reduced land supply and less The average cost of land as a proportion of and share our views. homebuilding in future years. Our strong average selling price within the short term landbank and pipeline of sites already in We aim to work constructively with planning owned landbank remains low at 14.0% (2021: planning is a key competitive advantage in authorities to agree the details of our 14.6%). The average selling price in the short this challenging planning environment. planning obligations for each development, term owned landbank in 2022 increased by including affordable housing, local We are engaging with industry, water 6.6% to £322k (2021: £302k). | | infrastructure, and facilities. We use the | authorities and central and local government | | --- | --- | --- | | During 2022, we added a net c.3k new | results of our community engagement to | on the issue of Nutrient Neutrality. We have | | potential plots to the strategic pipeline (2021: | help us develop planning proposals that are | established our internal Nutrient Working | | c.14k) and we converted a further c.4k plots | financially viable and meet local needs. Each | Group to help our regional businesses | | from the strategic pipeline to the short term | planning application integrates a clear | develop effective responses to this issue. | landbank (2021: c.8k plots). Taylor Wimpey plc Annual Report and Accounts 2022 47 Strategic report Operational review continued With the introduction of Biodiversity Net Gain Quality is incentivised from the top of the requirements in England later this year, we organisation with a proportion of our have published guidance and run training Executive Incentive Scheme linked to sessions for our regional businesses and customer service and build quality, and this land teams to support them to manage the is also one of our Principal Risks. We also risks, costs and opportunities associated integrate customer service and quality into with net gain. An internal working group with our all employee bonus scheme. representatives from strategic land, planning, A robust onboarding process for new sustainability and technical functions is helping to guide our approach and we are products collaborating with others in the sector Our Procurement, Technical and R&D through the Future Homes Hub. functions have been assessing the wider market place, specific technologies and Build quality suppliers, which includes gaining a detailed | Since the introduction of the measure we | understanding of potential suppliers’ | | --- | --- | | have led the volume housebuilders in build | approaches to ramping up production | | quality as measured by the NHBC CQR, | tomeet future volumes as well as | | which measures build quality at key build | understanding warranty provisions and | | stages. In 2022, we scored an average of | preventative care regimes of some of | | 4.81 (2021: 4.67) from a possible score of | themore fledgling technologies. | six, once again the highest score for a volume housebuilder. This compares with an industry TaylorWimpey Logistics (TWL) benchmark group average score of 4.6. TWL provides value added services to our regional businesses, by primarily providing We aim to improve this further by ensuring pre-kitted build packs of products when they our quality assurance processes are are needed at each build stage of production embedded at every stage of the build. We on site. invest in training and process improvements to ensure consistently high standards and This aids production, improves speed of we prevent quality issues through build and significantly reduces site traffic. inspections throughout the build process. Over the last 20 years, the TWL business has We set a quality improvement plan for any grown to become much more than an sites not reaching our quality targets and internal distribution business. In addition to work with commercial, technical and delivery of pre-kitted products to site, it production teams to implement the actions. provides services that support our regional To drive continual improvement we regularly businesses including: raise the minimum threshold at which an – Take off and scheduling services. improvement plan is required. Progress on – Strategic stock holding with annual pricing each plan is reviewed monthly by our GMT. to safeguard against fluctuating supplier performance and price volatility. – Ensuring adherence and alignment to our standardisation/stock keeping unit (SKU) reduction procurement strategy. Managing supply chain risk We have worked on improving our supplier risk process for a number of years and as a result our visibility and understanding of our supply chain has increased considerably. This encompasses risks across the whole supply chain, rather than just our first-tier suppliers. Supplier risk is measured as instability in the supply chain and can cover any number of scenarios such as, global or national shortages of products, supplier insecurity such as financial issues or supplier quality and delivery problems. Our supply chain strategy is to understand the risks at the various stages of the supply chain and put inplace accordant strategies. This work has resulted in a change to anumber of our supply chain routes toimprove material availability. We are also developing our approach to environmental and social risks in our supply chain, integrating disclosure requirements into our tender processes for key group suppliers. 48 Taylor Wimpey plc Annual Report and Accounts 2022 We estimate that in 2022, our first time ### Customers and employees We are proud that in 2022, buyers had an average joint income of ### Our customer proposition is closely tied to 62 of our Site Managers c.£66k and second time buyers of c.£89k. our purpose to build great homes and create We also estimate, average loan to value for ### won NHBC ‘Pride in the thriving communities. In a more challenging first time buyers was c.78% without Help to ### Job’ Quality Awards | market, understanding our customer is more | Buy and c.68% for second time buyers and | | --- | --- | | important than ever. | the majority of our customers were choosing | | We track customer satisfaction using the | five-year fixed mortgage products in 2022. | Home Builders Federation (HBF) 8-week and New Homes Ombudsman 9-month survey results. Consultation process We signed up to the New Homes Quality In 2022, 90% of customers in the 8-week Code in November 2022 and aligned our As announced in our January 2023 trading survey would recommend us to a friend processes to its requirements. These include update, we entered into consultation on a (2021: 92%). This means we met our target enabling customers to complete a pre- series of business changes to optimise our to maintain a five-star rating. We recognise completion inspection and providing a performance and in response to market that our score was slightly lower than last statement of any incomplete works at conditions, targeting annualised savings of year, and customer service will continue to move-in as well as details about service around £20 million, with an anticipated cost be an area of focus for our teams. charges and likely maintenance costs for to achieve these of c.£8 million. We believe that a wider range of customer their new home. The consultation process across the regional care and quality measures are necessary to businesses have now either closed or are ensure we are delivering for our customers. Health and safety anticipated to conclude in the near future. Our 9-month satisfaction scores give us insight Health and safety is the number one priority at This process has unfortunately resulted in into how customers feel about the homes and TaylorWimpey and we will never compromise some redundancies and where this has been places we build over the longer term. Our on this commitment to our people and the outcome, we have put additional support score for 2022 was 78% (2021: 79%). everyone who works on and visits a in place for the individuals concerned and the | | TaylorWimpey site. We embed a safety | wider teams. | | --- | --- | --- | | Construction Quality Review scores | culture through training, awareness and | | | (out of 6) | | This has also resulted in changes to our | visible health and safety leadership and we business structure, with the closure of our work closely with our subcontractors on this. Oxfordshire business and the migration of | Our Annual Injury Incidence Rate (AIIR) for | land and outlets to neighbouring businesses. | | --- | --- | | reportable injuries per 100,000 employees | The proposed changes will not affect our | | and contractors was 166 in 2022 (2021: | existing market coverage or ability to deliver | | 214), remaining well below both the HBF | volumes from our landbank, nor our ability to | | Home Builder Average AIIR of 239 and the | deliver high-quality product and service to | | Health and Safety Executive construction | our customers. | industry average AIIR of 333. However, we | | | | | | will continue to seek to improve this. Around | Skills | | --- | --- | --- | --- | --- | --- | --- | | 3.93 | 4.13 | 4.45 | 4.67 | 4.81 | | | | | | | | | 31% of accidents are slips, trips and falls. | Building the skills of our current and future | | 18 19 20 21 22 | | | | | Our AIIR for major injuries per 100,000 | workforce is essential to address current and | | | | | | | employees and contractors was 68 in 2022 | potential future skills gaps in our industry and | | | | | | | (2021: 73). | subcontractor base. We are working closely | with subcontractors, suppliers, peer To support further engagement on safety, companies, industry associations and in2022, we rolled-out a digital ‘safety We encourage customers to leave reviews educational organisations to identify and observation’ system which our senior leaders on Trustpilot. At the end of 2022, with 7,669 address skills gaps and upskill our workforce. and managers are using when visiting our sites reviews, we had a 4 out of 5 star rating (end to recognise good safety behaviour as well During 2022, our Future Skills Group has been of 2021: 4 out of 5) with a trust score of 3.9 as to identify areas that may need improvement. exploring the skills profile our business will out of 5 (2021: 3.9 out of 5). need over the medium to long term, as well as We have stepped up our sales training and Culture and people developing a demographic profile for our key increased our marketing spend in light of the We have a very strong culture at TaylorWimpey trades to identify any potential gaps in the skills weaker demand environment. This includes at every level of the business, with the core available to meet our strategic objectives. targeted and personalised incentives for our principle to ‘do the right thing’. We continue We offer a range of entry-level roles such as customers such as help with deposit or to benefit from a talented and engaged apprenticeships, traineeships and graduate energy bills and more normal option upgrades. workforce, as reflected in our 2022 employee programmes to encourage people into our Our Dynamics customer relationship survey with an overall employee engagement business, with these positions making up management system is fully integrated into score of over 93% (2021:91%), with a 54% c.9% of our workforce (2021: 9%). We our business, allowing us more data insights response rate. Our voluntary employee support our regional businesses to develop than ever to better support and align to the turnover rate was 17.7% (2021: 19.0%). local links with colleges, universities and needs of our customers. The improved data We are pleased to report that TaylorWimpey schools and encourage a diverse range of capture is giving us increased insight was once again recognised in the NHBC candidates to consider careers in housebuilding. allowing us to better target our marketing Pride in the Job Awards, achieving a total of We currently directly employ 675 key trades and have more informed conversations with 62 Quality Awards (2021: 72), 15 Seal of including apprentices (2021: 743). our customers. Excellence Awards (2021: 25) and three Our technical academies cover production, A typical TaylorWimpey customer will visit Regional Awards in 2022 (2021: three). sales and customer service, providing our website a number of times and is likely to During 2022, we directly employed, on structured career and skills development, visit the sales centre several times before average, 5,140 people across the UK (2021: which often enable employees to gain a reserving a property. | 5,271) and provided opportunities for on | | formal qualification. We also run online | | | --- | --- | --- | --- | | average a further 11.1k operatives (2021: | | masterclass sessions for employees to hear | | | 11.1k) on our sites. | | from internal and external experts. | | | | Taylor Wimpey plc Annual Report and Accounts 2022 | | 49 | Taylor Wimpey CQR score (average out of 6) Strategic report Operational review continued | Equality, diversity and inclusion (ED&I) | Gender pay gap | | --- | --- | | Equality, diversity and inclusion (ED&I) | In line with the Gender Pay Gap regulations, | | continues to be a focus for TaylorWimpey | we calculated our 2022 gender pay gap | | and we made tangible progress with our | based on data at the ‘snapshot date’ of 5 | | Equality, Diversity and Inclusion Strategy in | April 2022 and bonuses paid over the | | 2022. We recognise we have further to go | preceding 12 months. The calculations cover | | and in 2023 will be publishing the Company’s | all staff employed by TaylorWimpey UK Ltd | | first Diversity Report, ahead of regulation. | plus the Executive Directors employed by | TaylorWimpey plc as at 5 April 2022. Our Our aim is to create a workplace where mean gender pay gap was 2% still in favour colleagues feel championed and supported of women (5 April 2021: 6% in favour of regardless of their background and identity. women), and the median pay gap also By truly embracing our colleagues’ diverse remains small at 1% in favour of men (5 April perspectives we can deepen our 2021: 5% in favour of women). understanding of our customers and | stakeholders, enhance innovation and | As at 31 December 2022, we had a gender | | --- | --- | | creative thinking and continue to drive the | mix of 67% male (2021: 68%) and 33% female | | business forward and achieve success. | (2021: 32%) across the Company. Our GMT | was 38% female (2021: 36%) and our Board We have established support structures such of Directors was 44% female (2021: 50%). as our system of employee networks | sponsored by senior management, to | While we are nearing gender balance at | | --- | --- | | support employees and actively promote | Board and GMT level, we have more work | | diversity. We have made changes to our | to do in our regional business management | | recruitment processes and are training our | teams. Women made up 31% of these roles | | managers to be aware of issues such as | in 2022 (2021: 24%). Our pipeline is strong | | cultural bias, inclusive leadership and | with females accounting for 64% of graduate | | creating a respectful workplace. | recruits (2021: 46%) and 38% of management | trainees in 2022 (2021: 34%). However, although good progress has been made, we and the housebuilding industry, More information on the programmes and can and need to do more. We have set our road map to further improvement can be ourselves a number of stretching diversity found in our Diversity Report on our website. targets, which are focused on increasing our Employee engagement female and ethnic representation at various levels of the business, and which build on We are proud of how committed our our important early entry programmes. These employees are to the long term success of the will help accelerate measurable change and Company and we seek feedback from and drive accountability, and will be included in engagement with all employees. This includes our Diversity Report. regular email updates from the Chief Executive as well as updates from the GMT and other Our workforce is not yet reflective of the UK’s senior management. It is important that ethnic diversity with 5% of our employees management is accessible and visible so in from a Black, Asian or other minority ethnic addition to regular visits to the regional background (2021: 5%) and 2% at regional businesses we operate a National Employee business management level. Progress has Forum (NEF) and Local Employee Forums been made at entry level, with 21% of new (LEF) in our regional businesses where management trainees and 20% of our employee representatives are able to feedback graduate recruits in 2022 from a Black, Asian to and ask questions of members of the Board or other minority ethnic background. Our and other senior management directly. Equality, Diversity, and Inclusion strategy focuses on three key areas: Senior Independent Director and Chair Designate Robert Noel has acted as the – 21st Century Leadership: Ensuring that Board’s Employee Champion over the last our line managers understand their role year. Read more on pages 97, 102 and 104. and responsibility in developing a more diverse and inclusive culture. This year our Charity partnerships approach included inclusive leadership We focus on three priorities that are coaching for Managing Directors and connected to our business: aspiration and inclusive hiring training for regional education in disadvantaged areas, tackling directors and managers. homelessness and local projects that have a – Employer of Choice: Ensuring that our direct link to our regional businesses and working environment and culture, polices, developments. development and progression | opportunities support greater equality, | During 2022, we continued our partnership | | --- | --- | | diversity, and inclusivity. | with our national charities as well as local | | – Expanding our Reach: Continue to | charity partners across the UK including The | | develop broader recruitment channels and | Youth Adventure Trust, End Youth | | take positive action to expand the diversity | Homelessness, Crisis, CRASH, and St | | of candidates we attract to the Group. | Mungo’s. In total, during 2022, we donated | and fundraised c.£1 million for registered charities (2021: c.£1 million). This included supporting St Mungo’s Construction Skills 50 Taylor Wimpey plc Annual Report and Accounts 2022 Training Centres to help people recovering achieve a 31% reduction in carbon emissions from homelessness to gain new skills and compared with our previous specification. find employment in the construction industry. We are also preparing for the phase-out of | Our teams across the business also get | gas central heating systems from 2025 in | | --- | --- | | involved in local life, through activities such | England and Wales (2024 in Scotland) and, | | as organising competitions with primary | in 2023, will complete five pilot plots to | | schools, supporting local events and | Future Homes Standard (FHS) at our site in | | sponsoring local sports clubs. In addition, | Sudbury to better understand the challenges | | we contributed and fundraised over £196k | and opportunities presented by the FHS. | tolocal organisations, such as scout groups, We will continue to test and trial sustainable local football teams and various community new technologies. Our Head of Research causes (2021: £104k). and Technical Innovation coordinates our research efforts and chairs our Functional Sustainable building Interface Group that tests and trials new, Our purpose is to build great homes and innovative and alternative products. create thriving communities. We will do so sustainably, making sure those communities Investing in the long term through are themselves sustainable for the future. expansion of timber frame activities Timber frame can have a lower carbon Placemaking footprint than traditional ‘brick and block’ Good placemaking ensures our teams plan, building techniques due to the materials and design, layout and deliver schemes that use of off site manufacture (OSM) techniques. become successful and sustainable new Other potential benefits include less waste, communities, where our customers can improved transport efficiency, and more enjoy a good quality of life. airtight components. We have an internal We have clear placemaking standards based target to increase our use of timber frame. on Building for a Healthy Life and aligned We are opening our own timber frame with the National Design Guide and National production facility in Peterborough, that will Model Code. All new schemes are reviewed help fulfil our goals to increase timber frame during design development and then signed usage on our sites, improve visibility of off by our Director of Design (a qualified supply and offer operational and architect and urban designer) before they environmental benefits. can proceed to planning application to ensure consistent design quality. We view timber frame as a low risk approach to supporting our environmental aims and In 2022, we contributed £455 million to local our own timber frame factory will support our communities in which we build across the work to achieve our net zero target. The first UK via planning obligations (2021: £418 delivery from the factory is expected in late million). This funded a range of infrastructure 2023. The facility is future proofed to allow and facilities including affordable housing, for both volume and product expansion. green space, community, commercial and leisure facilities, transport infrastructure, This is a cost effective solution for heritage buildings and public art. We aim to establishing internal control and visibility and install infrastructure at an early stage of the security of supply and will improve process build process to enhance our schemes and and logistics efficiencies. This will also slightly help the new community become established reduce our reliance on bricklaying resources quickly. We also invest in public and and build timeline, with early commencement community transport, walkways and cycle of all follow-on trades. paths. In 2022, 67% of our UK completions Nature and resource efficiency were within 500 metres of a public transport node and 90% were within 1,000 metres. Integrating green spaces, nature and wildlife into our developments makes them more Opportunities in green building attractive places to live and can have a Over the next five years there will be positive impact on residents’ wellbeing significant changes to new build homes in andcustomer satisfaction. the UK reflecting the UK’s climate change Our Environment Strategy targets include targets. Our target is to reduce emissions Biodiversity Net Gain requirements and go from customer homes in use by 75% by beyond regulation to deliver priority wildlife 2030, and we are testing a range of enhancements, including hedgehog technologies and enhanced fabric standards highways, bug hotels, bird boxes and to achieve this. wildlife-friendly planting. With the phasing in of the new Part L, F and In 2022, we worked with Hedgehog Street, O regulations in England from June 2022, acampaign by the British Hedgehog Parts L&F in late summer 2022 for Wales and Preservation Society and People’s Trust for Section 6 in Scotland from October 2022, our Endangered Species to integrate hedgehog homes will have enhanced fabric standards highways across new sites. We also worked with additional features that may include with Buglife – The Invertebrate Conservation wastewater heat recovery systems, triple Trust to install bee bricks and bug hotels and glazing and PV panels. Collectively, this will ensure planting is pollinator-friendly. Taylor Wimpey plc Annual Report and Accounts 2022 51 Strategic report Operational review continued Climate and environment been submitted for validation by the Science including a project to improve the energy- Based Targets initiative and we expect to efficiency of our portakabins and trials of Sustainability goals receive this during 2023. hybrid diesel generators. Our flexible car We believe that by delivering on our purpose benefit scheme ‘MyDrive’ enables employees Our Transition Plan comprises a four-stage we can contribute to UN Sustainable to have access to a new low emission car. roadmap detailing the actions we will take to Development Goal 11: ‘making cities and achieve our overall commitment and human settlements inclusive, safe, resilient Towards Zero Waste supporting targets, incorporating both new and sustainable’. We developed our Towards Zero Waste and existing workstreams such as the Strategy in 2022, which sets out a three-year Our approach to sustainability encompasses construction of low and zero carbon homes, programme of action and capacity building in environmental, social, economic and increasing the use of low carbon relation to resource use and waste across all governance aspects including our construction materials including timber stages of development. We are working with contributions to, and involvement in, local frame, transitioning to 100% renewable our suppliers to reduce waste from communities, our focus on customer service electricity, reducing or replacing fossil fuels packaging, increase recycling and identify and build quality, our commitment to health and decarbonising our fleet. opportunities to increase use of sustainable and safety, our strong culture, as well as how Our net zero target and roadmap will enable and recycled materials. we tackle our environmental footprint and us to reduce emissions in line with the 1.5°C enable customers to live sustainably. We set ambition of the Paris Agreement. It will ESG credentials clear standards on these issues and work support the wider transition to a low carbon We participate in several global and sectoral closely with our colleagues, subcontractors, economy through the changes we are benchmarks. We are a constituent of the suppliers and other partners to deliver on our making to our homes, enabling customers to Dow Jones Sustainability Europe Index and commitments. | | reduce their emissions, and through our | are included in the S&P Sustainability | | --- | --- | --- | | Progressing our Environment Strategy | collaboration with suppliers to reduce | Yearbook 2022. We are a part of | | | embodied carbon in the homes and | FTSE4Good, have an AA rating from MSCI | Our Environment Strategy is our response to developments we build. and have received an ESG Risk Rating of the environmental crisis and the physical and Other actions in 2022 included: Low from Sustainalytics and are included in transition risks posed by climate change. It its 2023 Top-Rated ESG Companies List. sets out how we will play our part in creating – Reduced operational emissions intensity We are a member of Next Generation, the a greener, healthier future for our customers, (scope 1 and 2), by 15% against our 2019 sustainability benchmark for UK housebuilders, colleagues and communities, with ambitious baseline with absolute operational and ranked fourth in 2022. We disclose our targets up to 2030 focusing on climate emissions falling by 26% over the same performance to CDP and received the change, increasing nature on our period following scores: CDP Climate Change A- developments, cutting waste and improving – Undertook detailed scenario analysis to (2021: A-), CDP Water B (2021: B), and CDP resource efficiency. inform our Transition Plan which Forests B- for deforestation and forest risk considered our level of exposure to 15 Climate change and net zero commodities (2021: B-). We were also transition risks in a low carbon economy included on the Financial Times European We are proud to announce that from 2045 as well as modelling the physical impacts Climate Leaders list 2022. TaylorWimpey will be a net zero business. of climate change on our assets and Our approach to climate change aims to supply chain reduce emissions from our business and – Linked our executive bonus scheme to our value chain, to manage the business risk, emissions reduction target and and to prepare for the future impacts of development of our net zero strategy climate change on our business, supply Many environmental issues for our sector are chain and customers. We take a science- systemic. Achieving net zero in housebuilding based approach and aim to continually will require system-level changes and review and improve performance. coordinated action by multiple parties, from | We were one of the first UK homebuilders to | suppliers to governments, and at all points | | --- | --- | | set science-based targets across our value | along the value chain. We work with others to | | chain, including a target for our operational | tackle industry-wide challenges directly and | | emissions that is consistent with reductions | through industry organisations, including being | | required to keep warming to 1.5°C. We are | active participants in the Future Homes Hub. | the only volume homebuilder to hold the We are committed to transparent disclosure Carbon Trust Standard for our approach to of our ESG performance and report against carbon management. the recommendations of the Task Force on | In 2022 we went further to develop our short | Climate-related Financial Disclosures (TCFD). | | --- | --- | | and long term science-based targets, net | We also publish a Sustainability Supplement | | zero dates and Net Zero Transition Plan | and ESG Addendum with additional data and | | committing to reduce our climate footprint | performance information, including the | | ahead of the UK’s 2050 target. The two key | Sustainability Accounting Standards Board | | commitments in our strategy are to achieve: | (SASB) recommended disclosures for our | sector, among other standards. – Net zero emissions in our operations by | 2035 (Scopes 1 and 2) | To reduce our operational emissions we | | --- | --- | | – Net zero emissions across our value chain | purchase 100% renewable electricity for new | | by 2045 (Scopes 1, 2 and 3) (comprising | sites during construction (including | | at least a 90% reduction and neutralising | temporary building supplies), offices, show | | residual emissions) | homes, sales areas and plots before sale. | Our green electricity is REGO-backed, Our target was developed with the Carbon confirming it comes from genuine renewable Trust in line with the requirements of the energy. We are working on a range of SBTi Corporate Net Zero Standard. It has projects to reduce energy use on our sites 52 Taylor Wimpey plc Annual Report and Accounts 2022 Environment Strategy performance update Our strategic objectives Performance update | Climate change | Our operational emissions intensity (Scopes | | | --- | --- | --- | | Achieve our science-based carbon | 1 and 2), has decreased by 15% against | | | reduction target: | our 2019 baseline. In 2022, emissions | | | – Reduce operational carbon emissions | intensity was 1.37 tonnes of CO | e (Scopes | 2 | intensity by 36% by 2025 from a 2019 | 1 and 2) per 100sqm of completed homes | | --- | --- | | baseline. | (2021: 1.41). | | – Reduce Scope 3 emissions by 52.8% | The Scope 3 element of our target was | | per100sqm of completed floor area from | updated this year as part of the | | a 2019 base year (based on a reduction | development of our net zero commitment. | | of 46.2% in absolute emissions against | Ithas been submitted for validation to the | | the base year). | Science Based Targets initiative. We will | report progress against our Scope 3 target from next year. | Nature | Some of our sites are already integrating a | | --- | --- | | Increase natural habitats by 10% on new | biodiversity net gain approach and this will | | sites from 2023 and include our priority | be rolled out to all new sites in England and | | wildlife enhancements from 2021. | Wales from late 2023. We are now integrating | hedgehog highways and bug hotels or bee bricks on new sites. We have prepared guidance on bee hives, bat boxes and bird boxes for launch in 2023. Resources and waste 98% of construction waste recycled Cut our waste intensity by 15% by 2025 (2021: 97%). and use more recycled materials. We have reduced waste intensity by 12% By 2022, publish a ‘Towards Zero Waste’ against our 2019 baseline, on track to meet strategy for our sites. our target of 15% reduction by 2025. We have developed our Towards Zero Waste ## Future Homes Strategy and Action Plan and will publish more details in our Sustainability Supplement. ## Standard trial This includes a plan for capturing data on use of recycled materials. We are nearing completion on a five-plot trial at a live development site in Sudbury to test a range of technologies compliant with the Future Homes Standard. The homes feature an array of low carbon technologies, renewables, and energy storage, combined with an enhanced, highly-efficient building fabric. We have held a number of valuable workshops during the design and implementation of the FHS trial homes with suppliers, design teams, and subcontractors. We have gathered vital feedback to help us adapt more efficiently to the new regulations. During the year we will measure the performance of the new technologies tohelp inform our future approach. A visitor centre on the site will act as an educational display area, with cut-through sections of the new technologies such as mechanical ventilation heat recovery (MHVR) and air source heat pump demonstration units. * Definitions and reconciliations of our APMs to the equivalent statutory measures are included in Note 32 of the financial statements. Please see page 85 for definitions. Taylor Wimpey plc Annual Report and Accounts 2022 53 Strategic report ## Task Force on ## Climate-related ## Financial Disclosures ### Climate change is one of the most ### significant global challenges, ### threatening the future of today’s young ### people and generations to come. We ### are already seeing the physical effects ## Climate change ### of a changing climate as well as the ### impacts of the transition to a low ## risks and ### carbon economy including increased ### regulation, additional planning ## opportunities requirements and changing ### stakeholder expectations. We need to understand and address the impacts of climate change on our business in order to achieve our strategy andfulfil our purpose to build great homes and create thrivingcommunities. 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. We were one of the first UK homebuilders to set science-based targets across our value chain, including a target consistent with reductions to keep warming to 1.5ºC for our operational emissions, and we are now further strengthening our approach by committing to achieve net zero emissions by 2045, five years ahead of regulation. ### Responding to the Task Force on ### Climate-related Financial Disclosures The Task Force on Climate-related Financial Disclosures (TCFD) is a framework for companies to report climate- related risks and opportunities. The Financial Conduct Authority (FCA) requires UK premium listed companies to report against the TCFD framework in Listing Rule 9.8.6R. The framework consists of four themes – governance, risk management, strategy, and metrics and targets, and has 11 disclosure recommendations for reporting on the financial impact of climate change. We believe our disclosures in this section are consistent with ### We integrate the four recommendations and 11 recommended disclosures ### sustainability into the set out in the TCFD report “Recommendations of the Task Force on Climate-related Financial Disclosures”. We have ### way we work, to taken into account the TCFD Guidance for All Sectors and ### create a stronger the Supplemental Guidance for Non-Financial Groups in relation to the Materials and Buildings Group. We have ### business for the long summarised our approach on pages 66 and 67. ### term and generate When determining which information to include in our ### value for all our disclosures on climate change we have referred to the TCFD ### stakeholders. recommendations and guidance, and drawn on the outcomes of our regular materiality process, our risk assessment process, the climate scenario analysis we have undertaken and stakeholder feedback. We keep our disclosure under continual review and look for opportunities to improve it year-on-year to meet the needs of shareholders and other stakeholders. 54 Taylor Wimpey plc Annual Report and Accounts 2022 Our climate focus areas Operations Supply chain We are focusing on the following areas in relation to climate change, seeking Energy efficiency and Working with suppliers both to mitigate our impact on climate change and to prepare for the future carbon reductions on our and others to address impacts of climate change on our business, supply chain and customers. construction sites, fleet embodied carbon in the Wetake a science-based approach and aim to continually review and and offices, supporting a materials, services and improve performance. Many environmental issues for our sector are sustainable business products we use and systemic. Achieving net zero in housebuilding will require system-level culture and business prepare for the impact of changes and coordinated action by multiple parties, from suppliers to practices climate change on our governments, and at all points along the value chain. We work with others to supply chain tackle industry-wide challenges directly and through industry organisations. Customer homes Collaboration and Highlights for 2022 engagement Working towards zero carbon homes for Working with customers and government, industry ### Developed our net zero target and submitted it for supporting sustainable associations, investors, ### validation by the Science Based Targets initiative lifestyles peer companies and others to catalyse change in our industry ### Reduced operational emissions intensity by 15% ### against a 2019 baseline Skills Disclosure ### Undertook detailed scenario analysis exploring Building our knowledge We are committed to base and ensuring our transparent disclosure of ### transition and physical risks colleagues and trade our climate performance subcontractors have the and approach to climate ### Linked our executive bonus scheme to skills needed for the risks and opportunities, transition to a low carbon aligning with numerous ### development of our net zero strategy and economy external benchmarks and ### carbon reduction standards ### Committed to net zero During 2022, we developed our commitment to reach net zero emissions across our value chain ahead of UK regulation. Our target states that: By 2045 we will reach net zero greenhouse gas (GHG) emissions (Scopes 1, 2 and 3) across our value chain on a 2019 base year (comprising at least a 90% reduction and neutralising residual emissions). We also have the following supporting targets: – By 2025 Scopes 1 and 2 GHG emissions will be reduced by 36% 2 per 100m of completed floor area against a 2019 base year – By 2035 Scopes 1 and 2 GHG emissions will be net zero – By 2030 all our homes will be zero carbon ready (becoming true net zero on decarbonisation of the electricity grid) – By 2030 Scope 3 GHG emissions will be reduced by 52.8% 2 per100m of completed floor area from a 2019 base year (based on a reduction of 46.2% in absolute emissions) Our target was developed with the Carbon Trust in line with the requirements of the SBTi Corporate Net Zero Standard. We have submitted our target for validation by the SBTi and expect to receive this during 2023. In developing our target we have also taken into account the ‘Metrics, Targets, and Transition Plans’ guidance issued by TCFD. We have modelled the costs and investment required to reach our goals as well as our approach toneutralising residual emissions. More detail and a summary of our roadmap is included in our Net Zero Transition Plan on pages 56 and 57. Taylor Wimpey plc Annual Report and Accounts 2022 55 Strategic report ## Our path to net zero ## Stage 1 Stage 2 Stage 3 | 2019 – 2025 | | 2026 – 2030 | 2031 – 2035 | | --- | --- | --- | --- | | | – Renewable electricity for | – 100% renewable electricity | – Further site energy efficiency | | | new sites | – Integrating alternative fuels | measures | | | – Switching to EV and hybrid | to replace site diesel | – Continued decarbonisation | ## 100% | fleet vehicles | – Zero carbon ready homes | of fleet, third party fleet | | --- | --- | --- | | – Diesel efficiency measures | rolled-out | and plant | | and research alternative | – 30% timber frame | – Further decarbonisation | | fuels and technologies | – Piloting low carbon materials | of key materials and | | – 31% more carbon-efficient | and technologies | groundworks | | homes rolled out | – Priority SME supplier | – Decarbonisation plan for | | – Decarbonisation plans for key | engagement | other materials | | materials and groundworks | | – Research into carbon | capture and storage ## Science-based solutions ## target ## All homes zero ## (Scopes 1 and 2) ## carbon ready ## Science-based ## target (Scope 3) ## Absolute reductions ## 25% 46% reduction reduction ## 0% External milestones ## 203020252024 | | | Net zero ready | FHS/Net zero ready homes England | Ban on sales of petrol/diesel cars | | --- | --- | --- | --- | --- | | | | homesScotland | andWales | | | 56 | Taylor Wimpey plc Annual Report and Accounts 2022 | | | | ## Stage 4 ### 2036 – 2045 – Operating net zero building sites and offices – Fully decarbonise fleet, third party fleet, employee commuting and plant – Further decarbonisation of materials and research into alternative technologies – Homes are now net zero emissions in use due to decarbonised grid – Neutralising residual operational emissions from 2035 and up to 10% residual value chain emissions from 2045 ## All operations ## net zero ## A net ## zero ## 61% 75% ## reduction reduction business ## 204520402035 UK electricity grid 100% decarbonised Taylor Wimpey plc Annual Report and Accounts 2022 57 Strategic report Task Force on Climate-related Financial Disclosures continued # Governance ![img-8.jpeg](img-8.jpeg) # Governance for climate change Board level: Our Board of Directors is responsible for oversight of our environmental, social and governance (ESG) initiatives and this includes climate-related risks and opportunities. They receive an ESG update twice a year, which includes progress made towards climate change targets during the period. The Chair of the Legacy Engagement and Action for the Future (LEAF) Committee and our Director of Sustainability also attend the Board on at least one other occasion during the year. The Board has conducted a mapping exercise to ensure that all ESG matters are considered by the Board or one of its Committees. During 2022, the Board reviewed and approved our net zero strategy, transition plan and targets. Board ESG competencies are indicated on page 110. Executive level: Our Chief Executive has ultimate responsibility for achieving our climate targets. Sustainability (including climate change) is a standing agenda item for GMT meetings and members receive a monthly update from the Director of Sustainability. The GMT members have received briefings on climate change risks and opportunities to deepen their understanding of this topic. During 2022, members of the GMT participated in and reviewed our climate scenario analysis. In 2022, 10% of the bonus in our Executive Incentive Scheme was linked to progress on developing our Net Zero Transition Plan and achieving a reduction in carbon intensity, see page 138. An environmental measure will be included in the long term incentive plans for senior management and regional management in 2023. LEAF Committee: Ingrid Osborne, Divisional Chair for London and South East and a member of our GMT, is executive sponsor for our Environment Strategy. Ingrid chairs our LEAF Committee, which is responsible for reviewing climate strategy, risks and opportunities, it meets four times a year. LEAF members include the heads or senior leaders of our sustainability, technical, production, procurement, commercial, customer and design functions and representatives from our strategic land and regional businesses. The Director of Sustainability is responsible for monitoring climate-related issues and updating our Climate Change and Sustainability Risk and Opportunity Register. He oversees our reporting and disclosures on climate change, and the assurance of our climate data. He reports to our Group Technical Director who has responsibility for low and zero carbon homes, leads our Road to Net Zero Carbon Working Group, and reports directly to our Chief Executive. Cross-functional working groups, including our Environment Strategy Working Group and our Road to Net Zero Carbon Working Group, support effective governance of climate change. Operational level: The Managing Director in each regional business has responsibility for achieving our climate change targets at the local level. They have a nominated Sustainability Sponsor within their management team and a Sustainability Champion to assist with implementation and data collection. Each regional business had an annual energy use reduction target in 2022, and in 2023 we will set annual targets for each business up to 2025. Business Unit Management Teams receive a quarterly report on energy and resource use which enables them to compare performance against targets and other regional businesses. They are kept updated about climate-related issues and we build knowledge and expertise through training workshops, masterclasses and briefings. An environmental measure will be included in the long term incentive plans for regional management in 2023. We use a digital platform called LEADR (Land and Environment Assessment of Development Risk) for assessing and managing sustainability and technical risks associated with land during the acquisition and construction process. This draws on external environmental databases to help us manage risks associated with land including climate-related risks such as flood risk. It includes a pre-acquisition screening and risk assessment process for potential new sites. Environmental risks during construction are managed through our environmental management system including risks relating to climate change. # Stakeholder engagement Our stakeholder engagement informs our approach to climate change. During 2022, we carried out customer research to better understand the views of current and potential homebuyers in relation to climate change and environmental topics. We collaborate with suppliers through the Supply Chain Sustainability School and our procurement processes, and have worked with others in our industry on the Future Homes Delivery Plan and the Future Homes Hub. Read more about our stakeholder engagement on pages 40 to 43. We participate in CDP Climate Change and publish our submission on our website. We received a score of A- for 2022 (2021: A-). We were included on the Financial Times European Climate Leaders list 2022 and ranked seventh on climate change in the FTSE 100 in the Responsibility100 Index, an ESG ranking. 58 Taylor Winopay plc Annual Report and Accounts 2023 | We work with the Carbon Trust on many | addition, we conducted modelling with the | about through tighter planning requirements | | --- | --- | --- | | aspects of climate change. Since 2017, | Carbon Trust of our Scope 3 emission | in response to addressing the impact of | | we have held the Carbon Trust Standard for | reductions, see page 64. | climate change or through the reduced | | our overall approach to carbon management, | | availability or increased cost of materials due | We have reviewed the findings with our including our policy, strategy and verification to restrictions in the supply chain due to senior leadership and heads of functions and of our data and processes. We were the first climate change. used them to inform development of our Net volume homebuilder to achieve this. Zero Transition Plan, including the cost of Risk management investment needed to achieve our targets. The Board has overall responsibility for risk The findings have also been integrated into Strategy management and holds formal risk reviews our risk assessment process. | Climate change presents risks and | | atleast half yearly and routinely considers risk | | --- | --- | --- | | opportunities for our business including | Our analysis in 2022 builds on our preliminary | at each Board meeting as appropriate. Our | | those related to the transition to a lower | scenario analysis conducted with the Carbon | approach to risk combines a top-down and | | carbon economy and those associated with | Trust in 2020. This reviewed three scenarios: | bottom-up review. The assessment, | | the physical impacts of climate change. | orderly transition (the goals of the Paris | mitigation and monitoring of sustainability | | Sustainability is now one of our four strategic | Climate Change Agreement are met), climate | andclimate-related risks is included as part | | cornerstones, reflecting the importance of | breakdown (warming of 4ºC – 6ºC), and | of our overall risk management process – the | | climate change and other environmental | disorderly transition (the goals of the Paris | individual sustainability and climate-related | | matters to our business and stakeholders. | Climate Change Agreement are not met in | risks are considered through functional and | | | time but climate breakdown is avoided). | regional business risk registers, our Climate | We assess climate risks and opportunities Workshops looked in more detail at a Change and Sustainability Risk and using short term (to 2025), medium term (to ‘disorderly transition’ scenario and the impact Opportunity Register and on a regular basis 2030) and long term (beyond 2030) horizons, of significant regulatory change, changes to by senior management, assessing the impact looking at their potential impacts on our interactions with customers, investors and they may have on the Group’s strategy, business, strategy and financial planning. planners, and to how and what we build. looking at short, medium and in particular Our approach is informed by our materiality longer term emerging risks which may arise assessment and climate scenario analysis. Impact on financial statements as the area continues to evolve. The Climate scenario analysis Reported balance sheet, income top-down review of key and Principal Risks by our GMT considers their relative We conducted climate scenario analysis statement and cash flow significance to the business, including during 2022, commissioning WTW (formerly We include known costs associated with climate-related risks. | Willis Towers Watson) to conduct an | regulation designed to affect the impact of | | | --- | --- | --- | | assessment of climate transition risks and | climate change e.g. building regulations Part | The Group’s Principal Risk ‘Natural resources | | opportunities across short term (to 2025) | L (conservation of fuel and power) and Part F | and climate change’ (see page 79), recognises | | and medium term time (to 2030) horizons. | (ventilation) within the assessment of the | the increasing significance of the transition | | The analysis considered our level of | value of inventory charged to cost of sales. | toa low carbon economy for both our | | exposure to 15 transition risks in a low | Where a forecast site margin is affected by | operations and the world in which we live | | carbon economy where temperature rises | achange in estimated costs to complete, | and conduct business. The Principal Risk | | would be limited to 1.5ºC this century as well | theimpact is recognised across all plots | ismonitored by the Audit Committee and | | as modelling the physical impacts of climate | completed on that site in the current and | senior management, assessing its impact | | change on our assets and supply chain in | future years. | onthe Group’s strategic objectives and | | two temperature scenarios (1.5ºC and 4ºC | | ensuring appropriate mitigations are in place. | The carrying value of work in progress and warming). Impacts were estimated and land is assessed via a net realisable value Our Climate Change Register guides the likelihoods assessed and aligned to our ERM exercise and any adjustments required are climate change adaptation of our business (Enterprise Risk Management) rating criteria. made within the financial statements. practices and the homes we build. For each The process involved subject matter experts Specifically, relating to land and the possible climate-related risk and opportunity the from across our key functions as well as impact from climate change, the Group uses register identifies: risk driver, description of members of our GMT. the latest environmental reports to assess risk, potential impact, time frame, whether In relation to transition risks, the analysis the impact from flooding on the viability of the risk or opportunity is direct or indirect, showed a moderate to high level of residual the land. likelihood and magnitude of impact. This is risk exposure in the short term, levelling out astanding item on every LEAF Committee The Group does not have goodwill, or other to moderate exposure in the medium term. agenda. The Committee makes intangible assets, that would be subject to an This reflects, among other factors, the short recommendations to the GMT on how annual impairment assessment and thus the term impact from complying with the UK’s tomitigate, transfer, accept, or control impact of climate change on the future cash Future Homes Standard, as well as from climate-related risks. flows required to perform this assessment moving to lower emission technology and are not required. We determine climate risk using the securing sufficient electrical power supply. It principles of our established risk also showed minor to moderate Going concern and viability management process, outlined opportunities from the transition to a low ‘Natural resources and climate change’ is one on pages 72 to 74. carbon economy including market share of the Group’s Principal Risks, but given the gains as demand for low carbon homes time frame over which both going concern grows and potential reputational benefits and viability are considered (12 months and with employees, investors and other five years respectively) the future impact of stakeholders. In relation to physical risks, it climate change on the operating costs of the showed moderate exposure to risks relating business and its supply chain, beyond those to windstorms, flooding and drought. The costs already included within the Group’s analysis showed that the cost risk from the forecasts, are not considered material. physical impacts of climate change will be mitigated by building to the standards of the In addition, the Group’s viability assessment day and including the additional build costs considers a reduction in volumes which, within the assessment of land values. In although not explicitly linked, could come Taylor Wimpey plc Annual Report and Accounts 2022 59 Strategic report Task Force on Climate-related Financial Disclosures continued Our risks and opportunities The table below summarises the findings from our latest climate scenario analysis which focused on transition risks in the short term (up to o o 2025) and medium term (up to 2030) in a 1.5 C scenario and physical risks in the medium and long term (up to 2030 and beyond) in a 1.5 C o and a 4 C scenario. We have summarised the mitigating actions we are taking and shared the impact and likelihood for the more significant o risks and opportunities that were identified. Residual risk after mitigation relates to a 1.5 C scenario unless stated. The impact and likelihood ranges and scores are based on Enterprise Risk Management rating scales. Where we identified additional risks or opportunities that are not currently considered significant we have listed these. The table outlines our risks primarily in relation to our operations in the UK. We have also looked at risks in relation to our operations in Spain. We did not identify any material risks in relation to our Spanish operations, but will keep this under review. ### Policy and legal Description Our mitigations Residual risk after mitigation Residual risks or opportunities: R Increasingly stringent regulatory requirements (e.g. Future Homes Standard) – We engage and consult regularly with Government to understand its priorities Short term moderate risk exposure and almost certain – We have established an R&D programme and internal Road to Net Zero Carbon Working Group likelihood with the impact on the financial statements Example risks/opportunities toprepare our business for regulatory changes considered immaterial as costs associated with the known Time frame analysed: Short, medium – Risk of delays and more expensive design in order to deliver homes in accordance with the Future – We participate in Future Homes Hub to support the Future Homes Delivery Plan – a sector-wide plan regulatory changes have been included in current costs and Risk type: Transition (policy and legal) Homes Standard (FHS) toembed key environmental issues into housebuilding forecasts as appropriate. Medium term moderate risk – Potential for unexpected national policy actions to impact the value of strategic landbank – We engage with land owners to ensure that the cost of regulation/compliance with latest standards exposure, balanced likelihood with any financial impact isreflected in the assessment of land values considered within the future cost of land and, where appropriate, sales price of new homes. R Increasingly stringent local planning requirements (e.g. in relation to flooding and – We engage with planning authorities to understand and integrate their requirements, including Short term moderate risk exposure, likely with impact on the biodiversity) and potential for variation in standards between authorities participating in the development of strategic frameworks, Local Plans and Neighbourhood Plans financial statements not considered material as risk impacts – We engage with land owners to ensure that the cost of compliance with planning requirements is local areas rather than being nationwide. Medium term Example risks/opportunities reflected in the assessment of land values moderate risk exposure, balanced likelihood with any financial – Risk of delay and increased cost as local councils introduce additional local planning requirements or – We have established guidance for our regional businesses in respect of Biodiversity, flooding and other impact considered within the future cost of land. go beyond the requirements of the FHS matters to address planning requirements. – We also engage with Future Homes Hub and UK government to encourage a consistent approach R Climate change-related litigation claims brought by stakeholders – We disclose our climate change approach and performance and continually review and improve our Short term moderate risk exposure, likelihood considered rare data with impact on the financial statements considered immaterial Example risks/opportunities – We require our agencies to have a review process in place to validate green marketing claims as build to latest regulations. Medium term moderate risk – Risk of claims relating to our approach to climate change adaptation, our disclosure of climate- exposure, unlikely with impact on the financial statements related material financial risks or green marketing claims considered immaterial as we comply with the latest building regulations and any associated costs would be embedded within the future cost of land. Other residual risks or opportunities (currently not considered significant): – Enhanced emissions reporting obligations – Potential future carbon pricing – Cost of purchasing emissions offsets ### Technology Description Our mitigations Residual risk after mitigation Residual risks or opportunities: R Power supply and infrastructure – increasing focus on electricity as an energy source for – We integrate power supply and infrastructure into site planning, accounting for the shift to lower Short term major risk exposure, almost certain likelihood with homes, transport, machinery and infrastructure as the economy moves away from fossil fuels emission alternatives impact on the financial statements not considered material as – We are engaging with Government on its efforts to address insufficient power supply and develop risk considered to be localised rather than national. Time frame: Short, medium asmart network Medium term major risk exposure, balanced likelihood with Risk type: Transition (technology) Example risks/opportunities – We are trialling battery storage technology to work together with our PV panels to provide on plot impact on financial statements mitigated through assessment – Risk of delays and costs due to insufficient power in the grid to service new homes and/or energy storage solutions of future land purchases and planning requirements. construction sites and/or lack of reliable lower emission infrastructure – We are also installing an innovative community heat network at our development in Sudbury which will – Risk of increased costs and delays associated with needing to build or upgrade primary substations provide Heat and Hot water from communal Air Source Heat Pumps at a community heat hub. – We are engaging our regional teams on risks relating to power supply to develop appropriate responses at the local level R Substitution of existing technologies with lower emission alternatives (e.g. photo-voltaic – We have an ongoing R&D and supplier engagement programme to identify beneficial new technology Short term moderate risk exposure, almost certain likelihood panels, electric vehicle charging infrastructure, all-electric homes and construction and test its performance against our quality, safety, sustainability and technical standards with the impact on the financial impacts considered immaterial equipment) to comply with the Future Homes Standard and emissions reduction targets as known costs associated with the regulatory change have been included in current costs and forecasts as appropriate. Example risks/opportunities Medium term moderate risk exposure, balanced likelihood with – Risk of increased costs associated with new technologies and potential availability challenges impact on financial statements considered immaterial where – Risk that current new technology solutions quickly become outdated any cost of change in regulation included in the future cost of land or passed on through house prices. R Skills shortages impacting ability to install low carbon technologies – We are mapping the expected skills profile for our business and subcontractor base, and addressing Short term insignificant risk exposure, almost certain likelihood potential skills gaps through training, recruitment and work with subcontractors with impact on financial statements considered immaterial Example risks/opportunities based on timing of implementation of current regulations. – Risk of shortfall in supply of suitably qualified professionals Medium term minor risk exposure, almost certain likelihood with impact on financial statements dependent on extent of skills shortage. 60 Taylor Wimpey plc Annual Report and Accounts 2022 Key R - Risk O - Opportunity Short term - up to 2025 Medium term - up to 2030 Long term - beyond 2030 ### Policy and legal Description Our mitigations Residual risk after mitigation Residual risks or opportunities: R Increasingly stringent regulatory requirements (e.g. Future Homes Standard) – We engage and consult regularly with Government to understand its priorities Short term moderate risk exposure and almost certain – We have established an R&D programme and internal Road to Net Zero Carbon Working Group likelihood with the impact on the financial statements Example risks/opportunities toprepare our business for regulatory changes considered immaterial as costs associated with the known Time frame analysed: Short, medium – Risk of delays and more expensive design in order to deliver homes in accordance with the Future – We participate in Future Homes Hub to support the Future Homes Delivery Plan – a sector-wide plan regulatory changes have been included in current costs and Risk type: Transition (policy and legal) Homes Standard (FHS) toembed key environmental issues into housebuilding forecasts as appropriate. Medium term moderate risk – Potential for unexpected national policy actions to impact the value of strategic landbank – We engage with land owners to ensure that the cost of regulation/compliance with latest standards exposure, balanced likelihood with any financial impact isreflected in the assessment of land values considered within the future cost of land and, where appropriate, sales price of new homes. R Increasingly stringent local planning requirements (e.g. in relation to flooding and – We engage with planning authorities to understand and integrate their requirements, including Short term moderate risk exposure, likely with impact on the biodiversity) and potential for variation in standards between authorities participating in the development of strategic frameworks, Local Plans and Neighbourhood Plans financial statements not considered material as risk impacts – We engage with land owners to ensure that the cost of compliance with planning requirements is local areas rather than being nationwide. Medium term Example risks/opportunities reflected in the assessment of land values moderate risk exposure, balanced likelihood with any financial – Risk of delay and increased cost as local councils introduce additional local planning requirements or – We have established guidance for our regional businesses in respect of Biodiversity, flooding and other impact considered within the future cost of land. go beyond the requirements of the FHS matters to address planning requirements. – We also engage with Future Homes Hub and UK government to encourage a consistent approach R Climate change-related litigation claims brought by stakeholders – We disclose our climate change approach and performance and continually review and improve our Short term moderate risk exposure, likelihood considered rare data with impact on the financial statements considered immaterial Example risks/opportunities – We require our agencies to have a review process in place to validate green marketing claims as build to latest regulations. Medium term moderate risk – Risk of claims relating to our approach to climate change adaptation, our disclosure of climate- exposure, unlikely with impact on the financial statements related material financial risks or green marketing claims considered immaterial as we comply with the latest building regulations and any associated costs would be embedded within the future cost of land. Other residual risks or opportunities (currently not considered significant): – Enhanced emissions reporting obligations – Potential future carbon pricing – Cost of purchasing emissions offsets ### Technology Description Our mitigations Residual risk after mitigation Residual risks or opportunities: R Power supply and infrastructure – increasing focus on electricity as an energy source for – We integrate power supply and infrastructure into site planning, accounting for the shift to lower Short term major risk exposure, almost certain likelihood with homes, transport, machinery and infrastructure as the economy moves away from fossil fuels emission alternatives impact on the financial statements not considered material as – We are engaging with Government on its efforts to address insufficient power supply and develop risk considered to be localised rather than national. Time frame: Short, medium asmart network Medium term major risk exposure, balanced likelihood with Risk type: Transition (technology) Example risks/opportunities – We are trialling battery storage technology to work together with our PV panels to provide on plot impact on financial statements mitigated through assessment – Risk of delays and costs due to insufficient power in the grid to service new homes and/or energy storage solutions of future land purchases and planning requirements. construction sites and/or lack of reliable lower emission infrastructure – We are also installing an innovative community heat network at our development in Sudbury which will – Risk of increased costs and delays associated with needing to build or upgrade primary substations provide Heat and Hot water from communal Air Source Heat Pumps at a community heat hub. – We are engaging our regional teams on risks relating to power supply to develop appropriate responses at the local level R Substitution of existing technologies with lower emission alternatives (e.g. photo-voltaic – We have an ongoing R&D and supplier engagement programme to identify beneficial new technology Short term moderate risk exposure, almost certain likelihood panels, electric vehicle charging infrastructure, all-electric homes and construction and test its performance against our quality, safety, sustainability and technical standards with the impact on the financial impacts considered immaterial equipment) to comply with the Future Homes Standard and emissions reduction targets as known costs associated with the regulatory change have been included in current costs and forecasts as appropriate. Example risks/opportunities Medium term moderate risk exposure, balanced likelihood with – Risk of increased costs associated with new technologies and potential availability challenges impact on financial statements considered immaterial where – Risk that current new technology solutions quickly become outdated any cost of change in regulation included in the future cost of land or passed on through house prices. R Skills shortages impacting ability to install low carbon technologies – We are mapping the expected skills profile for our business and subcontractor base, and addressing Short term insignificant risk exposure, almost certain likelihood potential skills gaps through training, recruitment and work with subcontractors with impact on financial statements considered immaterial Example risks/opportunities based on timing of implementation of current regulations. – Risk of shortfall in supply of suitably qualified professionals Medium term minor risk exposure, almost certain likelihood with impact on financial statements dependent on extent of skills shortage. Taylor Wimpey plc Annual Report and Accounts 2022 61 Strategic report Task Force on Climate-related Financial Disclosures continued ### Market and reputation ### (stakeholder) Description Our mitigations Residual risk after mitigation Residual risks or opportunities: O Changing customer demands in relation to low carbon homes as sustainability awareness – We conduct regular research to monitor and understand changing customer attitudes to sustainability Short term minor opportunity and considered likely with grows, green mortgages evolve, and existing building stock becomes comparatively more issues including low carbon homes impact on financial statements potentially reflected in expensive to run – We engage customer service teams, sales and marketing teams and marketing agencies to ensure increased revenue which could be material, but is not possible Time frame analysed: Short, medium benefits of new low carbon homes are communicated effectively to quantify reliably. Risk type: Transition (market, reputation) Example risks/opportunities – We partner with peers through the Future Homes Hub and engage with Government to ensure Medium term major opportunity and considered balanced – Opportunity if more efficient and lower emission homes become more attractive to customers than Opportunity type: Products, markets benefits of low carbon homes are communicated with homebuyers and to support further development likelihood with impact on financial statements potentially second hand market of green mortgages reflected in increased revenue which could be material, but isnot possible to quantify reliably. R Changing customer demands in relation to low carbon homes – We will be communicating with customers and training customer service teams and sales and Short term minor risk exposure, likely with impact on financial marketing teams to ensure customers are supported to use new technologies statements expected to be immaterial based on current Example risks/opportunities – We take a 'Fabric-first' approach to home energy efficiency to minimise complexity and maintenance regulatory changes. – Risk that customers may resist installation of new low carbon technologies or be dissatisfied with for customers where possible Medium term major risk exposure, unlikely with impact their performance – We invest in research and product trials to ensure quality, performance and ease of use, e.g. our FHS on financial statements dependent on extent customer – Risk of reputational damage if low carbon homes are not delivered to customers in line with trial plots demands change which is not possible to reliably estimate. changing expectations R Increased cost of raw materials as carbon pricing and investment in low carbon plant, – We will be monitoring carbon pricing changes and engaging with suppliers on how carbon taxes Short term major exposure, balanced likelihood with impact equipment and facilities impacts the cost of materials such as steel and cement andtransition costs may affect raw material prices on financial statements potentially material on existing – We have an ongoing R&D programme into lower carbon materials and resource-efficient ways developments. Example risks/opportunities ofworking Medium term major exposure, unlikely with impact on financial – Risk of increased development costs that the business will need to absorb – We are purchasing 100% REGO-backed green electricity for all new sites, reducing carbon taxation statements dependent on ability to include costs in land onenergy consumption valuations and/or pass onto customers via house prices. R Increased investor expectations in relation to sustainability performance and disclosure – We have made sustainability (including climate change) one of four strategic cornerstones for Short term minor exposure, unlikely and medium term major thebusiness exposure, unlikely. Impact on financial statements considered Example risks/opportunities – We disclose climate strategy and ESG performance to investors through reporting, benchmarks, to be indirect through potential reputational damage from – Risk that failing to meet changing investor expectations affects revenue and investment streams meetings and investor roadshows poor performance which is not possible to quantify reliably. – We complete a regular materiality assessment to ensure we focus on priority ESG topics O Increased investor expectations in relation to sustainability performance and disclosure – We have made sustainability (including climate change) one of four strategic cornerstones for Short term minor opportunity and likelihood considered thebusiness balanced with medium term opportunity increasing to Example risks/opportunities – We disclose climate strategy and ESG performance to investors through reporting, benchmarks, moderate and no change to likelihood. Impact on financial – Opportunities to attract increased investment by differentiating on sustainability performance meetings and investor roadshows statements would be opportunity of increased revenues – We complete a regular materiality assessment to ensure we focus on priority ESG topics through enhanced reputation in the market, but this is not possible to quantify reliably. Other residual risks or opportunities (not currently considered significant): – Cost of capital impacted by sustainability performance – Risks and opportunities associated with growing interest and expectations in relation to climate change performance among employees – Risks and opportunities associated with meeting changing local authority and central Government expectations on climate change ### Physical impacts Description Our mitigations Residual risk after mitigation Residual risks or opportunities: R Changing weather patterns and an increase in the number and severity of extreme weather – We consider flood risk from the start of the landbuying process and identify potential flood risk as part We did not categorise likelihood for physical risks, the events including issues relating to heat stress, flooding, drought, wildfire, windstorm and of our site selection process. We do not buy land unless we can mitigate flood risk. We use the assessment of the impact below shows an increasing subsidence Environment Agency’s flood mapping tools and integrate sustainable drainage features on our sites exposure to physical risks as temperatures rise. Time frame analysed: Medium and long tomanage water run off and reduce flow rates Assets 1.5ºC (medium and long term) – impact from Risk type: Physical (acute and chronic) Example risks/opportunities – We monitor weather conditions and have safety procedures in place to prevent injuries or damage windstorm considered moderate. – Risk of production delays or damage to construction sites from storms, floods, wildfires and toour sites due to windstorms droughts Assets 4ºC (long term) – impact from flooding, drought – We are increasing the amount of sustainability-related data from suppliers to inform our approach – Risk of increased costs relating to adapting sites and homes to the changing climate (e.g. due andwindstorm moderate. tomitigating material supply risks toincreased subsidence risk or impact of heat and water stress) – We are updating our policies and processes to reflect climate change mitigation and adaptation of risks Supply chain 1.5ºC (medium and long term) – impact from – Risk that climate change impacts sites in the strategic land pipeline which means that the carrying and opportunities flooding and windstorm moderate. value of land may need to be written down and land costs may increase – Longer term impacts, including flooding, heat, drought, and drought related subsidence, are best Supply chain 4ºC (medium and long term) – impact from – Risk of supply chain disruption and increased costs of materials due to climate-related impacts managed through updating industry wide standards. We are working and will continue to work flooding high, windstorm and drought moderate. (e.g.flooding of supplier facilities or shortages of raw materials such as timber) collaboratively with organisations that set or influence standards Impact on financial statements to be mitigated through assessment of land viability and associated cost of land during acquisition and planning stages. Other residual risks or opportunities (not currently considered significant): – Assets 1.5ºC (medium and long term) – flooding, heat stress, drought, wildfire, subsidence – Assets 4ºC (long term) – heat stress, wildfire, subsidence – Supply chain 1.5ºC (medium and long term) – heat stress, drought, and wildfire – Supply chain 4ºC (medium and long term) – heat stress and wildfire 62 Taylor Wimpey plc Annual Report and Accounts 2022 Key R - Risk O - Opportunity Short term - up to 2025 Medium term - up to 2030 Long term - beyond 2030 ### Market and reputation ### (stakeholder) Description Our mitigations Residual risk after mitigation Residual risks or opportunities: O Changing customer demands in relation to low carbon homes as sustainability awareness – We conduct regular research to monitor and understand changing customer attitudes to sustainability Short term minor opportunity and considered likely with grows, green mortgages evolve, and existing building stock becomes comparatively more issues including low carbon homes impact on financial statements potentially reflected in expensive to run – We engage customer service teams, sales and marketing teams and marketing agencies to ensure increased revenue which could be material, but is not possible Time frame analysed: Short, medium benefits of new low carbon homes are communicated effectively to quantify reliably. Risk type: Transition (market, reputation) Example risks/opportunities – We partner with peers through the Future Homes Hub and engage with Government to ensure Medium term major opportunity and considered balanced – Opportunity if more efficient and lower emission homes become more attractive to customers than Opportunity type: Products, markets benefits of low carbon homes are communicated with homebuyers and to support further development likelihood with impact on financial statements potentially second hand market of green mortgages reflected in increased revenue which could be material, but isnot possible to quantify reliably. R Changing customer demands in relation to low carbon homes – We will be communicating with customers and training customer service teams and sales and Short term minor risk exposure, likely with impact on financial marketing teams to ensure customers are supported to use new technologies statements expected to be immaterial based on current Example risks/opportunities – We take a 'Fabric-first' approach to home energy efficiency to minimise complexity and maintenance regulatory changes. – Risk that customers may resist installation of new low carbon technologies or be dissatisfied with for customers where possible Medium term major risk exposure, unlikely with impact their performance – We invest in research and product trials to ensure quality, performance and ease of use, e.g. our FHS on financial statements dependent on extent customer – Risk of reputational damage if low carbon homes are not delivered to customers in line with trial plots demands change which is not possible to reliably estimate. changing expectations R Increased cost of raw materials as carbon pricing and investment in low carbon plant, – We will be monitoring carbon pricing changes and engaging with suppliers on how carbon taxes Short term major exposure, balanced likelihood with impact equipment and facilities impacts the cost of materials such as steel and cement andtransition costs may affect raw material prices on financial statements potentially material on existing – We have an ongoing R&D programme into lower carbon materials and resource-efficient ways developments. Example risks/opportunities ofworking Medium term major exposure, unlikely with impact on financial – Risk of increased development costs that the business will need to absorb – We are purchasing 100% REGO-backed green electricity for all new sites, reducing carbon taxation statements dependent on ability to include costs in land onenergy consumption valuations and/or pass onto customers via house prices. R Increased investor expectations in relation to sustainability performance and disclosure – We have made sustainability (including climate change) one of four strategic cornerstones for Short term minor exposure, unlikely and medium term major thebusiness exposure, unlikely. Impact on financial statements considered Example risks/opportunities – We disclose climate strategy and ESG performance to investors through reporting, benchmarks, to be indirect through potential reputational damage from – Risk that failing to meet changing investor expectations affects revenue and investment streams meetings and investor roadshows poor performance which is not possible to quantify reliably. – We complete a regular materiality assessment to ensure we focus on priority ESG topics O Increased investor expectations in relation to sustainability performance and disclosure – We have made sustainability (including climate change) one of four strategic cornerstones for Short term minor opportunity and likelihood considered thebusiness balanced with medium term opportunity increasing to Example risks/opportunities – We disclose climate strategy and ESG performance to investors through reporting, benchmarks, moderate and no change to likelihood. Impact on financial – Opportunities to attract increased investment by differentiating on sustainability performance meetings and investor roadshows statements would be opportunity of increased revenues – We complete a regular materiality assessment to ensure we focus on priority ESG topics through enhanced reputation in the market, but this is not possible to quantify reliably. Other residual risks or opportunities (not currently considered significant): – Cost of capital impacted by sustainability performance – Risks and opportunities associated with growing interest and expectations in relation to climate change performance among employees – Risks and opportunities associated with meeting changing local authority and central Government expectations on climate change ### Physical impacts Description Our mitigations Residual risk after mitigation Residual risks or opportunities: R Changing weather patterns and an increase in the number and severity of extreme weather – We consider flood risk from the start of the landbuying process and identify potential flood risk as part We did not categorise likelihood for physical risks, the events including issues relating to heat stress, flooding, drought, wildfire, windstorm and of our site selection process. We do not buy land unless we can mitigate flood risk. We use the assessment of the impact below shows an increasing subsidence Environment Agency’s flood mapping tools and integrate sustainable drainage features on our sites exposure to physical risks as temperatures rise. Time frame analysed: Medium and long tomanage water run off and reduce flow rates Assets 1.5ºC (medium and long term) – impact from Risk type: Physical (acute and chronic) Example risks/opportunities – We monitor weather conditions and have safety procedures in place to prevent injuries or damage windstorm considered moderate. – Risk of production delays or damage to construction sites from storms, floods, wildfires and toour sites due to windstorms droughts Assets 4ºC (long term) – impact from flooding, drought – We are increasing the amount of sustainability-related data from suppliers to inform our approach – Risk of increased costs relating to adapting sites and homes to the changing climate (e.g. due andwindstorm moderate. tomitigating material supply risks toincreased subsidence risk or impact of heat and water stress) – We are updating our policies and processes to reflect climate change mitigation and adaptation of risks Supply chain 1.5ºC (medium and long term) – impact from – Risk that climate change impacts sites in the strategic land pipeline which means that the carrying and opportunities flooding and windstorm moderate. value of land may need to be written down and land costs may increase – Longer term impacts, including flooding, heat, drought, and drought related subsidence, are best Supply chain 4ºC (medium and long term) – impact from – Risk of supply chain disruption and increased costs of materials due to climate-related impacts managed through updating industry wide standards. We are working and will continue to work flooding high, windstorm and drought moderate. (e.g.flooding of supplier facilities or shortages of raw materials such as timber) collaboratively with organisations that set or influence standards Impact on financial statements to be mitigated through assessment of land viability and associated cost of land during acquisition and planning stages. Other residual risks or opportunities (not currently considered significant): – Assets 1.5ºC (medium and long term) – flooding, heat stress, drought, wildfire, subsidence – Assets 4ºC (long term) – heat stress, wildfire, subsidence – Supply chain 1.5ºC (medium and long term) – heat stress, drought, and wildfire – Supply chain 4ºC (medium and long term) – heat stress and wildfire Taylor Wimpey plc Annual Report and Accounts 2022 63 Strategic report Task Force on Climate-related Financial Disclosures continued Metrics and targets the measurement requirements of the Carbon values reported in the financial statements Trust Standard and in accordance with the and included within the annual budget We have established metrics and targets principles of the WRI/WBCSD GHG Protocol. and forecasting process.We believe to enable us to manage and mitigate our this incorporates all known significant identified climate risks and ensure we In 2023 we will re-baseline our Purchased investments relating to the potential impacts capitalise on opportunities relating to the Good and Services (supply chain) 2019 of climate change. transition to a low carbon economy. This footprint using a more accurate includes our new net zero commitment. measurement methodology based on the We do not currently set an internal carbon quantities of materials purchased. We will price. Emissions data is included on pages Our Scope 1 and 2 science-based carbon use this to adjust our overall scope 3 68 and 69 and information on remuneration reduction target has been approved by the baseline and report progress against this. on page 138. Science Based Targets initiative (SBTi) who have confirmed that it is consistent with TCFD cross-sector metrics Performance in 2022 reductions required to keep warming to | 1.5°C, the most ambitious goal of the Paris | Up to 100% of our business activities and | Our operational emissions intensity (Scopes | | --- | --- | --- | | Agreement. Our main target reflects | revenues are aligned with climate-related | 1 and 2), has decreased by 15% against | | emissions intensity, which enables us to | opportunities in connection with the delivery | our2019 baseline with absolute operational | | monitor progress more effectively during | of low carbon, energy-efficient homes. Up to | emissions falling by 26% over the same | | different stages of the housing cycle than | 100% of business activities may be impacted | period. This is due to increased use of | | an absolute target. However, we also track | by transition risks in relation to changing | renewable electricity, energy efficiency | | absolute reductions. | regulatory requirements, low carbon homes | measures and a reduction in diesel use on | | | and increasing pressure on power generation | our sites. We are making progress towards | Our previous Scope 3 goal met the SBTi’s and distribution during the net zero transition. our science-based target for operational criteria for ambitious value chain reductions. emissions but need to increase the rate However, we have now updated our Scope The proportion of business activities vulnerable ofreduction. | 3 target as part of the process of establishing | to physical risks varies by impact. For example, | | | --- | --- | --- | | our net zero commitment and have | any site could be impacted by windstorms and | Our total carbon footprint (Scopes 1, 2 and | | resubmitted this to the SBTi for validation. | we estimate that around 42% of our plots are | 3) was 2.54 million tonnes in 2022 (2021: | | | built in areas of high water stress, based on the | 2.38 million tonnes). Total intensity was | Our carbon and energy use data is externally World Resources Institute’s (WRI) Water Risk 190.0 tonnes per 100 sqm of build (2021: assured by the Carbon Trust to a limited Atlas tool, Aqueduct. 190.0 tonnes per 100 sqm). We will report assurance level. In addition, our Scopes 1 progress against our net zero and Scope 3 and 2 footprint, and three selected Scope 3 The nature of our business means that our target from next year once we have categories (Purchased Goods and Services, main investment is in land. Our business completed the update to our baseline. | Fuel and Energy-related Activities and Use of | model and financial forecasts take account | | | --- | --- | --- | | Sold Products) are verified to ISO 14064-3. | of the latest regulatory requirements, | More detail on our performance is included | | | including those directly linked to reducing the | inour Sustainability Supplement. | | Our baseline | impact of climate change, to satisfy these | | regulations. Whilst we do not separately Our 2019 carbon footprint (used as our disclose the quantum of this investment it baseline) was calculated in accordance with is embedded within our build costs and land Link to TCFD risks | Our climate targets Progress | | and opportunities | | --- | --- | --- | | By 2045 we will reach net zero greenhouse | In 2023, we plan to re-baseline Scope 3 Purchased Goods and | Policy and legal | | gas emissions (Scopes 1, 2 and 3) across | Services emissions using a more accurate quantity based | Technology | | our value chain on a 2019 base year | methodology. We will then be in a position to assess value chain | Market and reputation | | (comprising at least a 90% reduction | emission reductions and will report progress next year. | Physical | andneutralising residual emissions). Operational emissions (Scope 1 and 2) | 36% reduction in operational carbon | Our operational emissions intensity (Scopes 1 and 2), has | Policy and legal | | --- | --- | --- | | emissions intensity by 2025 from a 2019 | decreased by 15% against our 2019 baseline, with absolute | Technology | | baseline (science-based target) and reach | operational emissions falling by 26% over the same period. | Market and reputation | | net zero emissions by 2035. | | Physical | | 32% reduction in operational energy | There was a 2.44% decrease in energy intensity on our UK | Policy and legal | | intensity for UK building sites by 2025. | construction sites compared to our 2019 baseline. We believe | Technology | this is due to our focus on energy efficiency. Purchase 100% REGO-backed green We purchased 100% REGO-backed renewable electricity for new Policy and legal electricity for all new sites. sites during construction, offices, show homes, sales areas and Technology plots before sale. This is around 70% of our total Group electricity Market and reputation consumption. 50% reduction in car and grey fleet We have reduced company car fleet emissions (excluding grey Policy and legal emissions by2025. fleet) by 68% since 2019. Around 55% of vehicles in our company Technology car fleet are now electric or hybrid (2021: 43%). 64 Taylor Wimpey plc Annual Report and Accounts 2022 Link to TCFD risks Our climate targets Progress and opportunities Homes in use and supply chain emissions (Scope 3) By 2030 all our homes will be zero carbon In 2023, we are starting to roll-out changes to our homes in line Policy and legal ready (becoming truly net zero on with the updates to Building Regulations Parts L and F. This will Technology decarbonisation of the electricity grid). result in an average 31% carbon reduction compared to our Market and reputation current specification. We are also piloting technologies to explore how we will move towards zero carbon ready homes from 2025. Reduce Scope 3 emissions by52.8% per We are improving our data to enable us to accurately report Policy and legal 100 sqm of completed floor area from progress on our Scope 3 target. Technology a2019 base year (based on a reduction of46.2% in absolute emissions against thebase year). This is a new target. | 21% reduction in embodied carbon per | We are improving our data to enable us to accurately report | Policy and legal | | --- | --- | --- | | home by 2030. | progress on our Scope 3 target. | Technology | | 75% reduction in emissions from customer | We are developing our measurement systems to enable us | Policy and legal | | homes in use by 2030. | to report progress against this target. | Technology | Market and reputation Adaptation and beyond our value chain | Make it easier for 40,000 customers | We are rolling-out our new standard house types which has a | Technology | | --- | --- | --- | | to work from home and enable more | design principle to include at least one study area with space for a | Market and reputation | | sustainable transport choices through | desk and easy access to broadband and electricity sockets, to | | | 36,000 EV charging points and 3,000 | enable working from home. We increased the number of EV | | | additional bike stands by the mid 2020s. | charging points installed in 2022. | | | Update our policies and processes to | We conducted scenario analysis in 2022 and are using the results | Technology | | reflect the risks and opportunities from | to inform our Net Zero Transition Plan, our TCFD disclosure and | Market and reputation | | a changing climate by 2022. | risk management processes. We will publish an updated | Physical | environment policy in 2023 and further embed climate risks into our environmental management system. Cut our waste intensity by 15% by 2025 We have reduced waste intensity by 12% against our 2019 Policy and legal and use more recycled materials. By 2022, baseline, on track to meet our target of 15% reduction by 2025. publish a Towards Zero Waste Strategy We have developed our Towards Zero Waste Strategy and Action for our sites. Plan which includes a plan for capturing data on use of recycled materials. Reduce operational mains water intensity Water intensity has reduced by 15% since 2019, exceeding our Physical by 10% from a 2019 baseline by 2025. target. This is due in part to savings from water efficiency measures and partly from a drop in the number of sites using water meters. We believe this relates to a lack of availability of smart meters arising from a global shortage of semi-conductors. Make it easier for 20,000 customer We design our homes to be water efficient and integrate water Market and reputation households in water stressed regions to saving features. We have reviewed our plotting for house types install a water butt by 2025. tounderstand the best locations for water butt installation and expect to add water butts to our customer option portal in 2023 to support more customers to save water in their gardens. ### Decarbonisation pathways for embodied carbon Embodied carbon in the goods and services we buy and materials we use to build our homes accounts for around 52% of our carbon footprint. To meet our net zero targets, it is essential to work with suppliers and the wider industry to reduce the carbon footprint of the materials we use but this can be challenging. During 2022, we undertook analysis with the Carbon Trust to review the potential for emissions reductions up to 2045, focusing on five key materials - concrete, diesel, asphalt, bricks and steel. These materials account for around 65% of emissions from purchased goods and services. We also looked at the carbon footprint of groundwork suppliers on our construction sites. The analysis considered known opportunities for reducing embodied carbon emissions as well as the impact of likely technological innovation. We explored three potential pathways looking at optimistic, conservative and moderate scenarios. The findings will help usprioritise carbon reduction opportunities and engage our supply base. Taylor Wimpey plc Annual Report and Accounts 2022 65 Strategic report Task Force on Climate-related Financial Disclosures continued Implementing the TCFD recommendations – progress to date Read more on | | TCFD recommendation Progress to date Next steps | | | pages | | --- | --- | --- | --- | --- | | Governance | Describe the board’s | We have established and disclosed responsibility | To further embed climate risks | 120 to | | | oversight of climate-related | for climate risks at Board level. Key, Principal and | into business planning and | 121 | Disclose the risks and opportunities. emerging risks, including those related to climate decision making processes. organisation’s change, are reviewed and approved twice a year governance by the Audit Committee and Board and inform around climate- strategic planning and business decision making. related risks and Read more on pages 120 to 121. opportunities. Describe management’s We have established and disclosed responsibility An environmental measure will 59 role in assessing and for climate risks at Executive, Director and be included in the long term 79 | managing climate-related | operational level, outlined on page 59. In 2022, | incentive plans for senior | | | --- | --- | --- | --- | | risks and opportunities. | 10% of the bonus in our Executive Incentive | management and regional | 138 | | | Scheme was linked to climate change, read more | management in 2023. | | on page 138. Climate change has been added as a Principal Risk within ‘Natural resources and climate change’, read more on page 79. Strategy Describe the climate- The tables on page 60 to 63 include the risks and There remains considerable 60 to 63 related risks and opportunities we have identified and reflects our uncertainty about the physical Disclose the opportunities the updated climate scenario analysis from 2022. It and transition impacts of actual and organisation has identified explores transition risks in the short and medium climate change so we will potential impacts over the short, medium, term in a 1.5ºC scenario and physical risks in the undertake regular scenario of climate-related and long term. medium and long term. analysis. risks and Describe the impact of We have used the findings of our scenario We will undertake further 59 opportunities on climate-related risks and analysis, summarised on page 59, to enhance analysis to quantify the the organisation’s opportunities on the our understanding of the impact of climate risks potential impacts of climate businesses, organisation’s businesses, on financial planning and business strategy. We change on the business, strategy, and strategy, and financial have quantified some of these potential impacts strategy and financial planning financial planning planning. and the costs of our net zero commitment to and look to increase our where such support our financial planning though we do not disclosure in this area. information is currently disclose these figures. material. | Describe the resilience of | Our scenario analysis in 2022 explored the | We are publishing our first Net | 59 | | --- | --- | --- | --- | | the organisation’s strategy, | resilience of our strategy to a 1.5ºC scenario | Zero Transition Plan outlining | | | taking into consideration | (transition risks) and 1.5ºC and 4ºC scenarios | how we will develop our | | | different climate-related | (physical risks). The findings are summarised on | strategy to decarbonise our | | | scenarios, including a 2°C | pages 59. We have previously considered the | business up to 2045. This will | | | or lower scenario. | impacts of a disorderly transition scenario. | be available on our website. | | 66 Taylor Wimpey plc Annual Report and Accounts 2022 Read more on | | TCFD recommendation Progress to date Next steps | | | pages | | --- | --- | --- | --- | --- | | Risk | Describe the organisation’s | This process is outlined in risk management on | We will continue to further | 59 | | management | processes for identifying | page 59 and in Principal Risks and uncertainties | strengthen our risk processes | | 64 to 65 and assessing climate- on page 79. We have linked our climate targets in relation to climate change. Disclose how the related risks. to the risks and opportunities as set out by 79 organisation TCFD, pages 64 and 65. The top-down review identifies, ofkey, Principal and emerging risks by our GMT assesses, and considers their relative significance to the manages business, including climate-related risks. climate-related Describe the organisation’s This process, including our Climate Risk Register Continue to further strengthen 59 risks. processes for managing is outlined in risk management on page 59 and in our risk processes in relation 64 to 65 climate-related risks. Principal Risks and uncertainties on page 79. We to climate change. have linked our climate targets to the risks and 79 opportunities as set out by TCFD on pages 64 and 65. Our planned key actions will be outlined in our Net Zero Transition Plan. Describe how processes Climate change is fully integrated into our Climate risks will continue to 74 to 78 for identifying, assessing, top-down and bottom-up risk management be monitored and evaluated, 79 | | and managing climate- | process and is a Principal Risk within ‘Natural | and we will further enhance | | | --- | --- | --- | --- | --- | | | related risks are integrated | resources and climate change’. The Principal | our approach as appropriate. | | | | into the organisation’s | Risk is monitored by the Audit Committee and | The outputs from our scenario | | | | overall risk management. | senior management, assessing its impact on the | analysis have been used to | | | | | Group’s strategic objectives and ensuring | develop our transition plan | | | | | appropriate mitigations are in place. Read more | which will inform our business | | | | | on pages 59 and 79. | strategy going forward. | | | Metrics and | Disclose the metrics used | We publish a range of performance data and | We will continue to keep our | 26 to 27 | | targets | by the organisation to | performance measures to support our | climate reporting under review | | 56 to 57 assess climate-related Environment Strategy, including our new net zero and to develop additional Disclose the risks and opportunities in commitment and supporting targets pages 26 metrics where needed to metrics and line with its strategy and and 27. We report against several of the support disclosure to investors targets used to risk management process. cross-industry, climate-related metric categories and other stakeholders. assess and recommended by TCFD. manage relevant Disclose Scope 1, Scope We disclose greenhouse gas emissions data for We are committed to 68 to 69 climate-related 2, and, if appropriate, Scopes 1, 2 and 3 on page 68 and 69. continuous improvement risks and Scope 3 greenhouse gas in our data processes and opportunities (GHG) emissions, and the data quality. where such related risks. information is material. Describe the targets used We published our net zero commitment in early We will continue to keep our 56 to 57 by the organisation to 2023 and have submitted it for approval by the climate targets under review 64 | manage climate-related | Science Based Targets initiative (SBTi). Our | and to disclose our progress | | --- | --- | --- | | risks and opportunities and | ambitious Scopes 1 and 2 science-based carbon | against them. We will review | | performance against | reduction target for 2025 has been approved by | the potential for including | | targets. | the SBTi, see page 64. We also have targets | financial metrics in future | | | relating to energy and resource-efficiency, the | reports. | carbon performance of our homes in use and embodied carbon. Taylor Wimpey plc Annual Report and Accounts 2022 67 Strategic report Task Force on Climate-related Financial Disclosures *continued* # Greenhouse gas (GHG) emissions (tonnes of CO$_{2}$e) and energy use (MWh) | | | 2018 | 2021 | 2020 | 2019 | 2019 | | --- | --- | --- | --- | --- | --- | --- | | **Scopes 1 and 2 emissions** | | | | | | | | Scope 1 GHG emissions – combustion of fuel | tonnes CO_{2}e | 15,975 | 17,464 | 16,522 | 21,018 | 20,328 | | Scope 2 GHG emissions – market-based | tonnes CO_{2}e | 2,331 | 2,272 | 1,981 | 3,563 | 4,509 | | Scope 2 GHG emissions – location-based | tonnes CO_{2}e | 4,279 | 5,406 | 5,272 | 6,172 | 6,892 | | Total Scopes 1 and 2 – market-based | tonnes CO_{2}e | 18,306 | 19,736 | 18,503 | 24,581 | 24,837 | | **Emissions per 100 sqm completed homes (Scopes 1 and 2)** | tonnes CO_{2}e/100 sqm | 1.37 | 1.41 | 1.96 | 1.62 | 1.73 | | **Total Scope 3 emissions (updated methodology)**** | tonnes CO_{2}e | 2,519,103 | 2,383,398 | – | – | – | | Purchased goods and services | tonnes CO_{2}e | 1,309,017 | 1,122,678 | – | – | – | | Waste generated in operations | tonnes CO_{2}e | 15,089 | 15,446 | – | – | – | | Business travel | tonnes CO_{2}e | 1,553 | 1,438 | – | – | – | | Fuel and energy-related activities | tonnes CO_{2}e | 4,886 | 5,802 | – | – | – | | Downstream leased assets | tonnes CO_{2}e | 6,399 | 6,592 | – | – | – | | Use of sold products | tonnes CO_{2}e | 1,044,294 | 1,106,062 | – | – | – | | Upstream transport and distribution | tonnes CO_{2}e | 34,351 | 31,044 | – | – | – | | End of life treatment of sold products | tonnes CO_{2}e | 29,166 | 29,210 | – | – | – | | Employee commuting | tonnes CO_{2}e | 74,348 | 65,125 | – | – | – | | **Emissions per 100 sqm completed homes (Scope 1, 2 and 3)** | tonnes CO_{2}e/100 sqm | 190 | 190 | – | – | – | | **Total Scope 3 emissions (previous methodology)**** | tonnes CO_{2}e | – | 2,632,421 | 1,961,431 | 3,869,583 | 2,171,973 | | **Energy use** | | | | | | | | Operational energy use (fuel and electricity consumption from sites, offices and fleet) | MWh | 92,312 | 104,870 | 96,195 | 116,207 | 111,065 | | Operational energy intensity (site and office fuel and electricity intensity – MWh/100 sqm) | MWh/100 sqm | 6.9 | 7.5 | 10.2 | 7.8 | 7.7 | Our carbon and energy use data is externally abused by the Carbon Trust to a limited assurance level. Our Scopes 1 and 2 footprint, and three selected Scope 3 categories (Purchased Goods and Services, Fuel and Energy-related Activities and Use of Sold Products) are verified to ISO 14064-3. Data is provided as tonnes of carbon dioxide equivalent (CO$_{2}$e) for all operations. Scopes 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 also disclose Scope 2 emissions calculated using the location-based method. 68 Taylor Winnipeg plc Annual Report and Accounts 2023 # **Footnotes to GHG emissions table continued** 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 nonshoulders have captured MCP-related data See our Carbon Reporting Methodology Statement at www.taylorwimpey.co.uk/corporate/budainability/our-appreach/climate-change-and-return-for-more-detail # **Scope 3 emissions** In 2022, we developed a more accurate methodology for measuring Scope 3 supply chain emissions (Purchased Goods and Services), using a combination of quantity-based data (drawing on data on the quantity of materials purchased and emissions data from environmental product declarations) as well as spend data. Our previous methodology relied on spend data only. We have also made some methodologies improvements for the Scope 3 categories of Business Travel, Use of Solid Products, Employee Commuting and Upstream Transport and Distribution. We have disclosed Scope 3 emissions for 2022 and 2021 using our updated methodologies. For transparency, we have also included data for prior years calculated using our previous methodologies. We report on nine of the 15 Scope 3 categories identified in the GHG Protocol. The remaining six categories are not material to our business. # **Energy data and energy efficiency measures** The energy consumption figure in the table is a Group figure. 98.4% of this total energy consumption is from the UK and offshore areas and 1.6% from Spain. 97.85% of total Scope 1 and Scope 2 emissions are from the UK and offshore areas and 2.15% from Spain. During the last year, we have worked to reduce energy and emissions through our purchase of green tariff electricity for our site during construction, by using our Energy Due and Don'ts Guide, setting energy use targets for each regional business, trading hybrid generators 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 choosing thermostats in show homes to ensure heating is only used when necessary. We have also successfully tested hydrotreated vegetable oil as a lower carbon alternative to diesel. This reporting meets the SECP (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 onward. ![img-9.jpeg](img-9.jpeg) ![img-10.jpeg](img-10.jpeg) ![img-11.jpeg](img-11.jpeg) Taylor Wimpey plc Annual Report and Accounts 2023 69 Strategic report ## Non-financial information statement Our Annual Report and Accounts contains a range of non-financial information. The following table summarises where this can be found in our reporting. Our policies Our impact and related Read more PrincipalRisks on pages Environmental matters Developed our Net Zero Sustainability Policy – Our commitment to balance long term growth with More information can be foundwithin: | Transition Plan and submitted | our responsibilities to the environment, society and the communities | Strategic cornerstones - Sustainability | 26 to 27 | | --- | --- | --- | --- | | our net zero targets to the | inwhich we operate | | | | | | Climate change risks and | 54 to 69 | | Science Based Targets initiative | Climate Policy – Outlines our approach to reduce greenhouse gas | | | opportunities (SBTi) for independent emissions from our operations, supply chain and homes Operational review 52 to 53 assessment Health Safety and Environmental (HSE) Policy – Outlines our ongoing Principal Risks and uncertainties 78 to 79 51% reduction in direct carbon commitment to continual improvement of our HSE performance emissions intensity since 2013 Supply Chain Policy – Sets out our commitment to work with trusted 98% of construction waste partners and ensure our homes are built using carefully sourced materials diverted from landfill and Waste and Resource Use Policy – Outlines our approach to using published our ’Towards Zero materials efficiently and minimising waste Waste’ strategy Employees | 96% 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 | Stakeholder engagement and | 40 to 41 | | 95% of employees feel that they | of the communities in which we operate | priorities | | | can be their authentic self at | Grievance and Harassment Policy – Ensures that any reports are | Operational review | 49 to 51 | | work | investigated and addressed appropriately | | | | | | Nomination and Governance | 114 | | 44% of plc Board positions held | | Committee report | | by women Principal Risks and uncertainties 76 to 77 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 | Themeasures we uphold to safeguard against modern slavery | Stakeholder engagement and | 42 to 43 | | and human trafficking for which | Supplier Code of Conduct – The principles that our suppliers, contractors | priorities | | | weoperate a zero tolerance | and business partners are required to adhere to in ensuring human rights | | | | policy | are respected and modern slavery is not taking place | | | Supply Chain Policy Social matters | Contributed £455 million to | Community Policy – Outlines our commitment to be a responsible | More information can be foundwithin: | | | --- | --- | --- | --- | | communities via our planning | homebuilder, building homes and communities that enhance the local | Stakeholder engagement | 42 to 43 | | obligations | areatomeet the needs of new and existing residents | and priorities | | | In 2022, around 21% of our | Donations Policy – Our approach to making charitable donations and | Operational review | 51 | | completions were designated | ourpolicy not to make political donations | | | | affordable | Charity and Community Support Policy – Our commitment to | | | supporting charities and local community groups in the areas we operate 70 Taylor Wimpey plc Annual Report and Accounts 2022 Our policies Our impact and related Read more PrincipalRisks on pages Anti-bribery and anti-corruption | Continue to train our employees | Anti-Corruption Policy – Our approach to combat risks of bribery, | More information canbe found within: | | | --- | --- | --- | --- | | and raise awareness of the | including the key principles employees should follow | Corporate governance – | 101 | | procedures 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 | Audit Committee Report | 120 | 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 2022 | Sustainability Policy | Business model 34 to 35 | | Strong short term landbank of | Customer Service Policy – Our approach and commitments to provide | | | c.83k plots, as at 31 December | excellent customer service | | 2022 Non-financial KPIs Achieved a recommend score of Customer Service Policy More information canbe found within: 90% in the HBF 8-week survey Health Safety and Environmental Policy Key performance indicators 30 to 33 which equates to a five-star Communications and Investor Relations Policy – Sets out our Stakeholder engagement and 40 to 43 rating | | commitment to conduct clear, open and accurate communication with | priorities | | | --- | --- | --- | --- | | Our Annual Injury Incidence Rate | allofthe Company’s stakeholder groups | | | | | | Board Activities | 98 to 99 | (AIIR) for reportable injuries per Policy embedding, due diligence and outcomes Board leadership and 102 100,000 employees and Company purpose contractors was 166 in 2022 Taylor Wimpey plc Annual Report and Accounts 2022 71 Strategic report ## Risk management ### As with any business, TaylorWimpey ### faces risks and uncertainties in the ### course of its operations. It is only ### bytimely identification, effective ### management and monitoring of these ### risks that we are able to deliver our ### strategy and strategic goals. Governance The Board has overall responsibility for risk oversight, for maintaining a robust risk management and internal control system, and for determining the Group’s appetite for exposure to the Principal Risks to the achievement of its strategy. The Audit Committee supports the Board in the management of risk and is responsible for reviewing the effectiveness of the risk management and internal control processes during the year. The Board recognises the importance of identifying and actively monitoring our strategic, reputational, financial and operational risks, and other longer term threats, trends and challenges facing the business. The Board takes a proactive approach to the management ofthese and regularly reviews both internal and external factors to identify and assess the impact on the business andin turn identify the Principal Risks that would impact delivery of the Group strategy. The Chief Executive is primarily responsible for the management of the risks, with the support of the Group Management Team (GMT) and other senior managers located in the business. In line with the 2018 UK Corporate Governance Code, the Board holds formal risk reviews, at least half yearly and routinely considers risk at each Board meeting as appropriate. The formal assessment includes a robust consideration of the Principal Risks to ensure they remain appropriate as well as a review of the key and emerging risks identified by the business, their risk profile and mitigating factors. At the Board meeting in February 2023, the Board completed its annual assessment of risks. This followed the Audit Committee’s formal assessment of risks in December 2022, which was supported by a detailed risk assessment by the GMT and its review of the effectiveness of internal controls in mitigating the risks. The diagram on page 73 illustrates the internal governance process within the Group around risk management. 72 Taylor Wimpey plc Annual Report and Accounts 2022 Identification of risks Our risk management and internal control frameworks define Our risk management the procedures to manage and mitigate risks facing the approach involves a top- business, rather than eliminate risk altogether, and can only down review of risks by provide reasonable and not absolute assurance against senior management andthe material misstatement or loss. Board, combined with Identifying risks is a continual process and risk registers are abottom-up review by each maintained throughout the Group at an individual site level, individual function and atthe regional business level and at Group-wide functional levels. The regional business and functional registers are regional business. reviewed twice a year as part of our formal risk assessment process. In determining the risk, consideration is given to both internal and external factors. The registers document both the inherent risks before consideration of any mitigations and residual risks after consideration of effective mitigations. A consolidated view of the risk environment, including potential emerging risks, is discussed, challenged and approved by the GMT and Audit Committee before being presented to the Board, ensuring all significant risks known to the Group are being actively monitored and appropriate mitigations/actions are in place to ensure each risk falls withinthe tolerance set by the Board. Risk Management Framework Board approval Audit Committee review Monitoring GMT review of key, Principal and emerging risks Communication and reporting Consolidation of key risks Functions and regional business risk identification and assessment Inputs (e.g. business change, external factors, workshops) Taylor Wimpey plc Annual Report and Accounts 2022 73 Strategic report Risk management continued Evaluation of risks Risk appetite and tolerance Specific risk areas other than A risk scoring matrix is used to ensure risks The risk appetite and tolerance levels for the the Principal Risks are evaluated on a consistent basis. Our Group are set by the Board. In setting these, The Group considers other specific risk areas matrix considers likelihood based on the Board has considered the expectations recognising the increasing complexity of the probability of occurrence and impact based of its shareholders and other stakeholders industry in which it operates, and which are on financial, reputational, customer, health and recognises the distinction between in addition to its identified Principal Risks. We and safety, employees, environmental, those risks we can actively manage, for continue to monitor and mitigate the impacts operational, legal and regulatory and IT example around our landbank and those on our supply chain and labour force and the perspectives, to help determine those risks against which the Group would need to be overall economic market impacting mortgage that are considered to be key in delivering responsive as and when they became availability and demand. our strategy. Key risks are defined as those known, for example transitional Housing and fire safety continues to remain with a residual score equal to or greater than arrangements for changes to building high on the agendas of the Government and 12 and these are reviewed and monitored by regulations. the main political parties. The sector the Board as part of our bi-annual risk Approved risk appetite and tolerance levels continues to face increasing scrutiny and assessment process. | | for each of our Principal Risks are detailed in | pressure from social media and pressure | | --- | --- | --- | | Each risk is evaluated at the inherent and | the Principal Risk tables on pages 76 to 79. | groups, together with greater oversight from | | residual levels, with consideration given to | The residual risk ratings of all our Principal | Government through a single New Homes | | the target residual risk based on our risk | Risks continue to be within their respective | Ombudsman. We endeavour to deliver both | | appetite and tolerance levels. All identified | established risk tolerance levels. | the letter and the spirit of regulations and | | risks are aligned to our Principal Risks to | | maintain this same ethos in our relationships | | help validate the continuance of such or the | Emerging risks | | with our customers. identification of potential new Principal Risks. Emerging risks are defined as those where the extent and implications are not yet fully Management of risks understood, with consideration given to the Ownership and management of the Principal, potential time frame of occurrence and key and emerging risks is assigned to velocity of impact that these could have on members of the GMT or senior management the Group. As part of our risk management as appropriate. They are responsible for process, these are identified, monitored and reviewing the operating effectiveness of the reviewed on an ongoing basis and discussed internal control systems, for considering and and agreed by the Board. implementing risk mitigation plans and for the Our emerging risks are grouped into the ongoing review and monitoring of the identified categories listed in the table below, which risk. This includes the monitoring of progress also contains some narrative description against agreed KPIs as an integral part of the against each category indicating example business process and core activities. focus areas into which the identified emerging risks fall. Emerging risks Category Example focus area Environmental/climate Unpredictable weather patterns Operational/build Adaptation of building methodologies Political/economic Geopolitical uncertainty Technological Artificial intelligence Social Customer demographics and preferences Governmental Changing Government policies 74 Taylor Wimpey plc Annual Report and Accounts 2022 ## Principal Risks Principal Risks heat map The heat map below illustrates the relative inherent and residual ## and positioning of our Principal Risks from an impact and likelihood perspective. Further information on our Principal Risks is detailed inthe Principal Risk tables on pages 76 to 79. ## uncertainties Key Inherent Residual Principal Risks overview HighLow Likelihood The table below summarises the Group’s Principal Risks and uncertainties, showing how each links to our corporate values and strategic cornerstones. Control of each of these is critical to the ongoing success of the business. As such, their management is primarily the responsibility of the Chief Executive and the GMT, together with the roles noted in the Principal Risks tables on pages 76 to 79. Seven of our existing Principal Risks have seen an increase in their inherent or inherent and residual profile, as reflected in the table below and on pages 76 to 79, primarily driven by the current uncertain economic and political environment we are operating in. The Board has finalised its assessment ofthese risks and of any changes to the residual risk profile during the year. HighLow Impact Category Our values Strategic cornerstones Risk change in year Material issues Government policies, regulations and planning Mortgage availability and housing demand Availability and costs of materials and subcontractors Attract and retain high-calibre employees Land availability Quality and reputation Health, safety and environment Natural resources and climate change Cyber security Strategic cornerstones Key to our values Key to risk change Key to material issues Land Respectful and fair Increased risk Sustainable homes andcommunities Operational excellence Take responsibility No change Land, planning and community engagement Sustainability Better tomorrow Decreased risk Customer service and quality Capital allocation Be proud Health, safety and wellbeing Environment Responsible sourcing People and skills Charitable giving Governance and management Taylor Wimpey plc Annual Report and Accounts 2022 75 Strategic report Principal Risks and uncertainties continued Principal Risk Government policies, Mortgage availability Availability and costs ofmaterials Attract and retain high-calibre employees ### regulationsand planning andhousing demand andsubcontractors Residual rating Moderate Moderate Moderate Low Residual risk change in year Risk appetite Low Low Low-moderate Moderate Link to values Link to strategic cornerstones Description The industry in which we operate is becoming increasingly A decline in the economic environment, driven by sustained growth in Increase in housing demand and production or a breakdown within the supply chain An inability to attract, develop, motivate and retain high-calibre employees, together regulated. Failure to adhere to Government regulations could interest rates, increased cost of living, low wage inflation or increasing may further strain the availability of skilled subcontractors and materials and put pressure witha failure to consider the retention and succession of key management could result impact our operational performance and our ability to meet levels of unemployment, could result in tightened mortgage availability on utility firms to keep up with the pace of installation resulting in increased costs and in a failure to deliver our strategic objectives, a loss of corporate knowledge and a loss ourstrategic objectives. and challenge mortgage affordability for our customers resulting in a construction delays. ofcompetitive advantage. direct impact on our volume targets. Changes to the planning system or planning delays could result in missed opportunities to optimise our landbank, affecting profitability and production delivery. Key mitigations – Research conducted to update technical specification of our new – Increase outlets to provide greater customer choice and flexibility – Central procurement and key supplier agreements – Production Academy and Production Manager succession development programme house type range, in preparation for changes to Building torespond quickly to changing market conditions – Supplier and subcontractor relationships – Site skills project Regulations Parts L & F and the Future Homes Standard (FHS) – Review of pricing and incentives offered – Contingency plans for critical path products – Collaboration with major organisations to jointly address skills shortage including a trial of five FHS-compliant plots – Monitor external market data (e.g. HBF and mortgage lenders) – Direct trade and apprenticeship programmes – Graduate and apprenticeship programmes – Consultation with Government agencies – Strong relationships with mainstream lenders – Key commodity risk assessment matrix – Management training – Ground Rent Review Assistance Scheme and agreement reached – Work with Financial Services industry to ensure customers receive – Regular checks on all key suppliers – Enhanced remote working procedures with CMA and majority of freeholders appropriate advice on mortgage products – Monitoring of the supply chain – Educational masterclasses – Cladding fire safety remediation and signing of the Government's – Salary benchmarking Building Safety Pledge for Developers – Engagement with national and local government – Working with HBF and other stakeholders – Member of Future Homes Hub Example key risk – New Government regulations (e.g. around planning and climate) – Interest rate increases – Material and trade shortages – Employee engagement score indicators – Delays in planning – Levels of unemployment – Material and trade price increases – Number of, and time to fill, vacancies – Sentiment towards the industry (e.g. cladding fire safety – Volume of enquiries/people visiting our developments – Level of build quality and waste produced from sites – Employee turnover levels remediation) – UK household spending/levels of disposable income – Longer build times – Loan to value metrics – Number of skilled trades Opportunities – To build enhanced collaborative networks with stakeholders and – To continue to develop strong working relationships with – To develop and implement different build methods as alternatives to conventional – To further develop in-house capability, expertise and knowledge peers, to monitor the implications of regulatory change established mainstream lenders and those wishing to increase brick and block – Lead the business in addressing pressing environmental issues, volume in the new build market including reducing our carbon footprint and targeting biodiversity Link to material Responsible sourcing Sustainable homes andcommunities Responsible sourcing People and skills issues Governance and management Responsible sourcing People and skills Charitable giving Accountability – Group Technical Director – UK Sales and Marketing Director – Supply Chain Director – Group HR Director – Director of Planning – Regional Sales and Marketing Directors – Procurement Director – Every employee managing people – Regional Managing Directors – Group Commercial Director 76 Taylor Wimpey plc Annual Report and Accounts 2022 Key to cornerstones Key to our values Key to risk change Land Respectful and fair Increased risk Operational excellence Take responsibility No change Sustainability Better tomorrow Decreased risk Capital allocation Be proud Principal Risk Government policies, Mortgage availability Availability and costs ofmaterials Attract and retain high-calibre employees ### regulationsand planning andhousing demand andsubcontractors Residual rating Moderate Moderate Moderate Low Residual risk change in year Risk appetite Low Low Low-moderate Moderate Link to values Link to strategic cornerstones Description The industry in which we operate is becoming increasingly A decline in the economic environment, driven by sustained growth in Increase in housing demand and production or a breakdown within the supply chain An inability to attract, develop, motivate and retain high-calibre employees, together regulated. Failure to adhere to Government regulations could interest rates, increased cost of living, low wage inflation or increasing may further strain the availability of skilled subcontractors and materials and put pressure witha failure to consider the retention and succession of key management could result impact our operational performance and our ability to meet levels of unemployment, could result in tightened mortgage availability on utility firms to keep up with the pace of installation resulting in increased costs and in a failure to deliver our strategic objectives, a loss of corporate knowledge and a loss ourstrategic objectives. and challenge mortgage affordability for our customers resulting in a construction delays. ofcompetitive advantage. direct impact on our volume targets. Changes to the planning system or planning delays could result in missed opportunities to optimise our landbank, affecting profitability and production delivery. Key mitigations – Research conducted to update technical specification of our new – Increase outlets to provide greater customer choice and flexibility – Central procurement and key supplier agreements – Production Academy and Production Manager succession development programme house type range, in preparation for changes to Building torespond quickly to changing market conditions – Supplier and subcontractor relationships – Site skills project Regulations Parts L & F and the Future Homes Standard (FHS) – Review of pricing and incentives offered – Contingency plans for critical path products – Collaboration with major organisations to jointly address skills shortage including a trial of five FHS-compliant plots – Monitor external market data (e.g. HBF and mortgage lenders) – Direct trade and apprenticeship programmes – Graduate and apprenticeship programmes – Consultation with Government agencies – Strong relationships with mainstream lenders – Key commodity risk assessment matrix – Management training – Ground Rent Review Assistance Scheme and agreement reached – Work with Financial Services industry to ensure customers receive – Regular checks on all key suppliers – Enhanced remote working procedures with CMA and majority of freeholders appropriate advice on mortgage products – Monitoring of the supply chain – Educational masterclasses – Cladding fire safety remediation and signing of the Government's – Salary benchmarking Building Safety Pledge for Developers – Engagement with national and local government – Working with HBF and other stakeholders – Member of Future Homes Hub Example key risk – New Government regulations (e.g. around planning and climate) – Interest rate increases – Material and trade shortages – Employee engagement score indicators – Delays in planning – Levels of unemployment – Material and trade price increases – Number of, and time to fill, vacancies – Sentiment towards the industry (e.g. cladding fire safety – Volume of enquiries/people visiting our developments – Level of build quality and waste produced from sites – Employee turnover levels remediation) – UK household spending/levels of disposable income – Longer build times – Loan to value metrics – Number of skilled trades Opportunities – To build enhanced collaborative networks with stakeholders and – To continue to develop strong working relationships with – To develop and implement different build methods as alternatives to conventional – To further develop in-house capability, expertise and knowledge peers, to monitor the implications of regulatory change established mainstream lenders and those wishing to increase brick and block – Lead the business in addressing pressing environmental issues, volume in the new build market including reducing our carbon footprint and targeting biodiversity Link to material Responsible sourcing Sustainable homes andcommunities Responsible sourcing People and skills issues Governance and management Responsible sourcing People and skills Charitable giving Accountability – Group Technical Director – UK Sales and Marketing Director – Supply Chain Director – Group HR Director – Director of Planning – Regional Sales and Marketing Directors – Procurement Director – Every employee managing people – Regional Managing Directors – Group Commercial Director Taylor Wimpey plc Annual Report and Accounts 2022 77 Strategic report Principal Risks and uncertainties continued ### Principal Risk Land availability Quality and reputation Health, safety Natural resources Cyber security ### and environment and climate change Residual rating Low Moderate Low Moderate Moderate Residual risk change in year Risk appetite Moderate Low Low Low Low-moderate Link to values Link to strategic cornerstones Description An inability to secure land at an appropriate cost, the purchase The quality of our products is key to our strategic objective of being The health and safety of all our employees, An inability to reduce our environmental footprint, The Group places increasing reliance on IT to conduct its ofland of poor quality or in the wrong location, or the incorrect acustomer-focused business and in ensuring that we do things right subcontractors, visitors and customers is of paramount thechallenges of a degraded environment including operations and the requirement to maintain the accuracy timing of land purchases in relation to the economic cycle could first time. importance. Failure to implement and monitor our theimpacts of climate change, nature loss and water and confidentiality of its information systems and the data impact future profitability. stringent health, safety and environment (HSE) scarcity on our business, supply chain scarcity due contained therein. A cyber attack leading to the If the Group fails to deliver against these standards and its wider procedures and policies across all parts of the business toenvironmental change and the increasing desire corruption, loss or theft of data could result in reputational development obligations, it could be exposed to reputational damage, could lead to accidents or site-related incidents ofour customers to live more sustainably could impact and operational damage. as well as reduced sales and increased costs. resulting in serious injury or loss of life. our reputation, ability to attract investment and obtain planning permission and the delivery of our strategic targets. Key mitigations – Critically assess opportunities – Customer-ready Home Quality Inspection (HQI) – Embedded HSE system – Net Zero Transition Plan – Complex passwords policy and multi-factor – Land quality framework – Consistent Quality Approach (CQA) – HSE training and inductions – Published Environment Strategy authentication for remote access – Engagement with national and local government – Quality Managers in the business – Mental health training and support for all employees – Adoption of Science Based Targets – Regular security patching and penetration testing – Review of land portfolio – Training on the New Homes Quality Code – Climate change governance, including – Risky logins check – Obtaining specialist environmental and legal advice – Ombudsman readiness LEAF Committee – Intrusion detection and prevention systems – Achievement of Carbon Trust Standard – Suspected phishing emails process – HBF and investor liaison – Mandated cyber training for all staff – Training and development in-house – Cyber insurance and in our supply chain – Head of Cyber Security appointed – Collection and interpretation of data to drive relevant – Cyber security KPIs actions – Blocked traffic originating from countries deemed athreat to the UK Example key risk – Movement in landbank years – Customer satisfaction scores (8-week and 9-month) – Increase in near misses and fatalities – Energy use and greenhouse gas emissions – Number of devices with critical and high open – Number of land approvals – Number of NHBC claims – Health and safety audit outcomes – Biodiversity net gain % vulnerabilities indicators – Timing of conversions from strategically sourced land – Construction Quality Review (CQR) scores – Number of reportable health and safety incidents – Construction waste generation and waste to landfill – Number of devices without latest patching in place – Average reportable items per inspection found during NHBC – Phishing test results inspections at key stages of the build – Cyber training completion statistics – Number of users with administrative privileges to critical systems Opportunities – A strong balance sheet allows us to invest when land market – To better understand the needs of our customers enabling – To lead the industry in health and safety and to reduce – Sustainable homes and developments attractive – Together with our service partners, provide a level of conditions are attractive increased transparency of our build profile the amount and level of incidents tocustomers security to reinforce our reputation as a trusted partner – To lead the industry in quality standards (our CQR score) and – A sustainable business of choice for investors reduce the number of reportable items identified through monitoring – Advantageous planning positions defects at every stage of build Link to material Land, planning and community engagement Sustainable homes andcommunities Sustainable homes andcommunities Sustainable homes andcommunities Governance and management issues Customer service and quality Health, safety and wellbeing Environment Responsible sourcing Environment Governance and management Accountability – Divisional Chairs – Customer Director – Head of Health, Safety and Environment – Director of Sustainability – IT Director – Regional Managing Directors – UK Head of Production – Regional Managing Directors – Regional Managing Directors – Regional Land and Planning Directors – Director of Design – Managing Director Group Strategic Land – UK Business, Land and Development Director 78 Taylor Wimpey plc Annual Report and Accounts 2022 Key to cornerstones Key to our values Key to risk change Land Respectful and fair Increased risk Operational excellence Take responsibility No change Sustainability Better tomorrow Decreased risk Capital allocation Be proud ### Principal Risk Land availability Quality and reputation Health, safety Natural resources Cyber security ### and environment and climate change Residual rating Low Moderate Low Moderate Moderate Residual risk change in year Risk appetite Moderate Low Low Low Low-moderate Link to values Link to strategic cornerstones Description An inability to secure land at an appropriate cost, the purchase The quality of our products is key to our strategic objective of being The health and safety of all our employees, An inability to reduce our environmental footprint, The Group places increasing reliance on IT to conduct its ofland of poor quality or in the wrong location, or the incorrect acustomer-focused business and in ensuring that we do things right subcontractors, visitors and customers is of paramount thechallenges of a degraded environment including operations and the requirement to maintain the accuracy timing of land purchases in relation to the economic cycle could first time. importance. Failure to implement and monitor our theimpacts of climate change, nature loss and water and confidentiality of its information systems and the data impact future profitability. stringent health, safety and environment (HSE) scarcity on our business, supply chain scarcity due contained therein. A cyber attack leading to the If the Group fails to deliver against these standards and its wider procedures and policies across all parts of the business toenvironmental change and the increasing desire corruption, loss or theft of data could result in reputational development obligations, it could be exposed to reputational damage, could lead to accidents or site-related incidents ofour customers to live more sustainably could impact and operational damage. as well as reduced sales and increased costs. resulting in serious injury or loss of life. our reputation, ability to attract investment and obtain planning permission and the delivery of our strategic targets. Key mitigations – Critically assess opportunities – Customer-ready Home Quality Inspection (HQI) – Embedded HSE system – Net Zero Transition Plan – Complex passwords policy and multi-factor – Land quality framework – Consistent Quality Approach (CQA) – HSE training and inductions – Published Environment Strategy authentication for remote access – Engagement with national and local government – Quality Managers in the business – Mental health training and support for all employees – Adoption of Science Based Targets – Regular security patching and penetration testing – Review of land portfolio – Training on the New Homes Quality Code – Climate change governance, including – Risky logins check – Obtaining specialist environmental and legal advice – Ombudsman readiness LEAF Committee – Intrusion detection and prevention systems – Achievement of Carbon Trust Standard – Suspected phishing emails process – HBF and investor liaison – Mandated cyber training for all staff – Training and development in-house – Cyber insurance and in our supply chain – Head of Cyber Security appointed – Collection and interpretation of data to drive relevant – Cyber security KPIs actions – Blocked traffic originating from countries deemed athreat to the UK Example key risk – Movement in landbank years – Customer satisfaction scores (8-week and 9-month) – Increase in near misses and fatalities – Energy use and greenhouse gas emissions – Number of devices with critical and high open – Number of land approvals – Number of NHBC claims – Health and safety audit outcomes – Biodiversity net gain % vulnerabilities indicators – Timing of conversions from strategically sourced land – Construction Quality Review (CQR) scores – Number of reportable health and safety incidents – Construction waste generation and waste to landfill – Number of devices without latest patching in place – Average reportable items per inspection found during NHBC – Phishing test results inspections at key stages of the build – Cyber training completion statistics – Number of users with administrative privileges to critical systems Opportunities – A strong balance sheet allows us to invest when land market – To better understand the needs of our customers enabling – To lead the industry in health and safety and to reduce – Sustainable homes and developments attractive – Together with our service partners, provide a level of conditions are attractive increased transparency of our build profile the amount and level of incidents tocustomers security to reinforce our reputation as a trusted partner – To lead the industry in quality standards (our CQR score) and – A sustainable business of choice for investors reduce the number of reportable items identified through monitoring – Advantageous planning positions defects at every stage of build Link to material Land, planning and community engagement Sustainable homes andcommunities Sustainable homes andcommunities Sustainable homes andcommunities Governance and management issues Customer service and quality Health, safety and wellbeing Environment Responsible sourcing Environment Governance and management Accountability – Divisional Chairs – Customer Director – Head of Health, Safety and Environment – Director of Sustainability – IT Director – Regional Managing Directors – UK Head of Production – Regional Managing Directors – Regional Managing Directors – Regional Land and Planning Directors – Director of Design – Managing Director Group Strategic Land – UK Business, Land and Development Director Taylor Wimpey plc Annual Report and Accounts 2022 79 Strategic report ## Group financial review # Focused on operational excellence and financial performance In 2022 we delivered an improved operating profit margin of 29.9% (2021: 18.3%) due to focus on optimising selling prices and continued strong cost control. Group Finance Director ![img-12.jpeg](img-12.jpeg) ### Value distributed during 2022 #### Contribution to local communities via planning obligations **£454.6m** (2021: £417.7m) #### Employment **£290.0m** (2021: £278.0m) #### Total cash returns to shareholders in year including share buybacks **£473.8m** (2021: £301.5m) ### Group financial review #### Income statement Group revenue was £4,419.9 million in 2022 (2021: £4,284.9 million), with Group completions, excluding JVs being 1.5% lower at 13,932 (2021: 14,144). The small volume reduction was offset by increases in average selling prices as UK average selling prices on private completions increased by 6.1% to £352.4k (2021: £332.2k), primarily due to house price inflation. The increase in total UK average selling prices was 4.3% to £312.8k (2021: £299.8k) as a result of the greater proportion of affordable housing in 2022 (21%) than the prior period (2021: 18%). Group gross profit increased to £1,132.4 million (2021: £1,027.0 million), representing a gross margin of 25.6% (2021: 24.0%). The increase in margin over the prior year was driven primarily by house price inflation, which more than offset build cost inflation in the year. Net operating expenses of £304.9 million (2021: £328.8 million) includes £80.0 million (2021: £125.0 million) of exceptional costs relating to the daddling fire safety provision, which is detailed below. Excluding these exceptional costs the net operating expenses were £224.9 million (2021: £203.8 million), which was predominantly made up of administrative costs of £220.7 million (2021: £211.0 million). The increase in administrative costs over the comparative year was driven mainly by the annual salary review and the pay benchmarking exercise undertaken in the prior year, and associated on-costs, being in place for the full year. This resulted in a profit on ordinary activities before net finance costs of £827.5 million (2021: £898.2 million), £907.5 million (2021: £823.2 million) excluding exceptional items. 80 Taylor Wampay plc Annual Report and Accounts 2022 ### “The increase in margin ### over the prior year was ### driven by our success in ### capturing house price ### inflation whilst paying During the year, completions from joint Spain ### ventures were 222 (2021: 158). As a result close attention to cost Our Spanish business primarily sells second ofthe increased joint venture completions, ### homes to European and other international control and operational ata greater average selling price and gross customers, with a small proportion of sales ### efficiency.” margin than 2021, our share of joint being primary homes for local residents. The ventures’ profits in the year was £15.9 million business had a strong year, completing 381 (2021: £5.4 million). When including this in homes (2021: 215) with average selling price the profit on ordinary activities before net reducing to €383k (2021: €417k), due to finance costs the resulting operating profit regional mix. The total order book as at million), representing 36,646 plots (31 was £923.4 million (2021: £828.6 million), 31 December 2022 increased to 448 homes December 2021: 37,425), with a further total delivering an operating profit margin of (31 December 2021: 324 homes). controlled strategic pipeline of 107,739 plots 20.9% (2021: 19.3%). The total order book Gross margin increased to 29.7% (2021: (31 December 2021: 107,809). Total potential value of joint ventures as at 31 December 24.3%), due to the increased level of revenue in the short and long term owned and 2022 decreased to £26 million (31 December completions and timing variances on the controlled landbank increased to £61 billion in 2021: £74 million), representing 56 homes recognition of sales commissions. This flowed the year (31 December 2021: £59 billion). (31 December 2021: 151). through to an operating profit* of £32.6 million In March 2021, we announced that Work in progress (WIP) (2021: £14.6 million) and an operating profit we would cover the costs to bring all Total WIP investment, excluding part margin* of 26.2% (2021: 19.0%). TaylorWimpey apartment buildings going exchange and other, increased to £1,725.9 The total plots in the landbank stood at back 20 years from 1 January 2021, million (2021: £1,548.1 million) following the 2,544 (31 December 2021: 2,779), with net irrespective of height or whether we retain opening of 104 new outlets in the UK in the operating assets* at £89.8 million (31 a legal interest, in line with EWS1 guidance. year (2021: 84) and the total number of outlets December 2021: £108.9 million). As a result of this the Group recorded an increased compared with 31 December 2021. additional £125.0 million provision to fund The average WIP per UK outlet was largely Balance sheet cladding fire safety improvement works consistent at £6.4 million (31 December 2021: Net assets at 31 December 2022 increased which was charged to exceptional items in £6.5 million). As sales rates slowed towards by £188.1 million (4.4%), to £4,502.1 million line with our policy. In April 2022, we signed the end of the year controls around new WIP (31 December 2021: £4,314.0 million), with the Government's Building Safety Pledge for releases were tightened. net operating assets* increasing by £168.9 Developers, extending this period to cover all million (4.9%) to £3,619.5 million (31 buildings constructed by TaylorWimpey Provisions and deferred tax December 2021: £3,450.6 million). Return on since 1992, as well as committing to Provisions increased to £290.3 million (31 net operating assets increased to 26.1% reimburse any funds allocated or used for December 2021: £245.1 million) due (2021: 24.7%) following the increase in TaylorWimpey buildings over 18 metres from primarily to the £80.0 million additional operating profit over the year, compared with the Building Safety Fund. An increase in the cladding fire safety provision recognised in the prior year. Group net operating asset provision was recognised in the year, with the year, partially offset by utilisation as turn* was 1.25 times (2021: 1.28). £80.0 million being recorded as an works have been carried out. In addition, exceptional charge. utilisation of the Ground Rent Review Land The net finance expense of £15.5 million Assistance Scheme (‘GRRAS’) provision has Land at 31 December 2022 increased by (2021: £24.0 million) principally includes continued as claims have been received and £42.6 million in the year to £3,428.3 million imputed interest on land acquired on deferred processed, and payments made following as the short term owned number of plots terms, bank interest and interest on the the agreement of voluntary undertakings with increased. Land creditors decreased to pension scheme, less interest received. the CMA in December 2021. £725.6 million (31 December 2021: £806.4 | Profit on ordinary activities before tax | million) as the Group was highly selective in | Our net deferred tax asset of £26.0 million | | --- | --- | --- | | increased to £827.9 million (2021: £679.6 | purchasing land across all geographies, | (31 December 2021: £26.2 million) relates to | | million). The pre-exceptional tax charge was | particularly in the second half of the year. | our pension deficit, UK provisions that are | | £201.9 million (2021: £147.9 million). This | Included within the gross land creditor | tax deductible when the expenditure is | | represents an underlying tax rate of 22.2% | balance is £43.0 million of UK land overage | incurred, and the temporary differences of | | (2021: 18.4%) which includes a £1.7 million | commitments (31 December 2021: £59.0 | our Spanish business, including brought | | credit (2021: £2.6 million credit) arising from | million). £395.0 million of the land creditors is | forward trading losses. | | the remeasurement of the Group’s UK | expected to be paid within 12 months and | | | | £330.6 million thereafter. | Pensions | deferred tax assets following the introduction of the new Residential Property Developer Tax. As a result of the 31 December 2019 triennial At 31 December 2022 the UK short term A tax credit of £17.6 million was recognised in valuation, a funding arrangement was agreed landbank comprised 82,830 plots (31 respect of the exceptional charge (2021: with the Trustee of the TaylorWimpey December 2021: 85,376), with a net book £23.8 million). This resulted in a total tax Pension Scheme (‘TWPS’) that committed value of £2.9 billion (31 December 2021: charge of £184.3 million (2021: £124.1 million), the Group to paying up to £20.0 million per £2.9 billion). Short term owned land a rate of 22.3% (2021: 18.3%). annum into an escrow account between April comprised £2.8 billion (31 December 2021: 2021 and March 2024. Following an initial As a result, profit for the year was £643.6 £2.8 billion), representing 63,088 plots (31 contribution totalling £10.0 million all further million (2021: £555.5 million). December 2021: 62,660). The controlled payments into the escrow account are short term landbank represented 19,742 Basic earnings per share was 18.1 pence subject to a quarterly funding test, effective plots (31 December 2021: 22,716). | (2021: 15.3 pence). The adjusted basic | | from 30 September 2021. Should the TWPS | | --- | --- | --- | | earnings per share* was 19.8 pence (2021: | The value of long term owned land increased | Technical Provisions funding position at any | | 18.0 pence). | to £311 million (31 December 2021: £298 | quarter end be 100% or more, payments into | Taylor Wimpey plc Annual Report and Accounts 2022 81 Strategic report Group financial review continued 2022 Group results UK Spain Group Completions including joint ventures 13,773 381 14,154 Revenue (£m) 4,295.5 124.4 4,419.9 Operating profit* (£m) 890.8 32.6 923.4 Operating profit margin* (%) 20.7 26.2 20.9 Profit before tax and exceptional items (£m) 907.9 Profit for the year (£m) 643.6 Basic earnings per share (p) 18.1 Adjusted basic earnings per share* (p) 19.8 the escrow account are suspended and the present value of the remaining committed ### Pension contributions | would only restart should the funding | payments under the 2019 triennial valuation. | | --- | --- | | subsequently fall below 98%. The funding | Retirement benefit obligations of £29.9 | | test at 30 September 2021 showed a | million at 31 December 2022 (31 December | ## £22.5m | | funding level of 103% and has remained | 2021: £37.3 million) comprise a defined | | --- | --- | --- | | | above 98% since then and therefore escrow | benefit pension liability of £29.6 million | | (2021: £31.5m) | payments were suspended on, and from, | (31December 2021: £37.0 million) and a | | | 1October 2021. | post-retirement healthcare liability of £0.3 | million (31 December 2021: £0.3 million). For the purposes of assessing the TWPS ### Taxes funding level, the liabilities are measured The Group continues to work closely with relative to the yield on government bonds. theTrustee in managing pension risks, Due to the volatility seen in financial markets including management of interest rate, ## £208.7m over the year, the value placed on the IAS inflation and longevity risks. 19liabilities (pre-IFRIC 14) has changed | (2021: £151.9m) | significantly, reducing by 32% over the | Net cash and financing position | | --- | --- | --- | | | course of the year. However, the Trustee of | Net cash* increased to £863.8 million at | | | the TWPS manages this volatility by investing | 31December 2022 from £837.0 million | | | assets in a way that’s intended to broadly | at 31 December 2021, due to the improved | | | match the movement in the value of the | operating profit* in the year, as well as the | | | liabilities. As a result, the net funding position | more selective approach to landbuying that | | | of the TWPS has remained in an IAS 19 and | reduced spend in the second half of the year | | | technical provisions surplus. | and the tight controls on WIP investment put | in place towards the end of the year as sales The Group continues to provide a rates started to slow. Average net cash* for contribution for Scheme expenses (£2.0 the year was £595.7 million (31 December million per year) and also makes 2021: £788.1 million). contributions via the Pension Funding | Partnership (£5.1 million per year). Total | Cash generated from operations increased | | --- | --- | | Scheme contributions and expenses in the | inthe year and as a result led to cash | | year were £7.1 million (2021: £17.4 million) | conversion* of 76.3% of operating profit | | with no further amounts paid into the escrow | (2021: 69.4%). | account (2021: £10.0 million). Further Net cash, combined with land creditors, payments into escrow are subject to resulted in an adjusted gearing* of (3.1)% quarter-end funding tests and would amount (31 December 2021: (0.7)%). to an additional £5.0 million being paid into | escrow each quarter if the funding test is not | At 31 December 2022 our committed | | --- | --- | | met at the respective quarter end. The most | borrowing facilities were £639 million of | | recent funding test at December 2022 | which £550 million was undrawn. The | | showed a surplus of £26 million and a | average maturity of the committed borrowing | | funding level of 101.5% and as a result no | facilities at 31 December 2022 was 1.9 years | | payment into escrow is due in the first | (31 December 2021: 2.9 years). In December | | quarter of 2023. | 2022 the Group entered into an agreement | to refinance the June 2023 €100 million At 31 December 2022, the IAS 19 valuation maturing loan notes. The new loan notes will of the Scheme was a surplus of £76.6 million be issued in June 2023, maturing June (31 December 2021: £149.9 million). Due to 2030. Including the new loan notes the the rules of the TWPS, any surplus cannot be weighted average maturity is 2.9 years. recovered by the Group and therefore a deficit has been recognised on the balance sheet under IFRIC 14. The deficit is equal to 82 Taylor Wimpey plc Annual Report and Accounts 2022 Dividends paid in year £323.8m (2021: £301.5m) Final dividend pence per share 4.78p (2021: 4.44p) 2022 share buyback £150.0m (2021: N/A) Dividends Subject to shareholder approval at the AGM scheduled for 27 April 2023 the 2022 final ordinary dividend of 4.78 pence per share will be paid on 12 May 2023 to shareholders on the register at the close of business on 31 March 2023 (2021 final dividend: 4.44 pence per share). In combination with the 2022 interim dividend of 4.62 pence per share this gives total ordinary dividends for the year of 9.40 pence per share (2021 ordinary dividend: 8.58 pence per share). In addition, the Group returned £150.0 million in capital by way of a share buyback in the year, buying back 116,942,362 ordinary shares, of which 25,000,000 have been retained in Treasury with the remainder cancelled. The dividend will be paid as a cash dividend, and shareholders have the option to reinvest all of their dividend under the Dividend Re-Investment Plan (DRIP), details of which are available on our website www.taylorwimpey.co.uk/corporate. Going concern The Directors remain of the view that the Group's financing arrangements and balance sheet strength provide both the necessary liquidity and covenant headroom to enable the Group to conduct its business for at least the next 12 months. Accordingly, the financial statements are prepared on a going concern basis, see Note 1 of the financial statements for further details of the assessment performed. * Definitions and reconciliations of our APMs to the equivalent statutory measures are included in Note 32 of the financial statements. Please see page 85 for definitions. ![img-13.jpeg](img-13.jpeg) Taylor Wimpey plc Annual Report and Accounts 2023 83 Strategic report ## Viability statement Viability disclosure 2022, the output from the annual business regulations in England and Wales and Future planning process that takes these impacts Homes and Buildings Standard). In accordance with the 2018 UK Corporate into consideration and the Group’s Governance Code, the Directors and the financing arrangements; Assessment of viability senior management team have assessed the – The wider economic environment and The Group adopts a disciplined annual prospects and financial viability of the Group mortgage market, as well as changes to business planning process involving the for a period longer than the 12 months Government policies and regulations, management teams of the UK regional required for the purpose of the ‘going including those influenced by sustainability, businesses and Spain, and the Group’s concern’ assessment. climate change and the environment, that senior management, and is built on a Time period could impact the Group’s business model; bottom-up basis. This planning process – Strategy and business model flexibility, covers a five year period comprising a The Directors have assessed the viability including build quality, customer dynamics detailed budget for the next financial year, ofthe Group over a five-year period, taking and approach to land investment. Further together with a forecast for the following four account of the Group’s current financial detail is provided on pages 21 to 35; and financial years (‘forecast’). position, current market circumstances – Principal Risks associated with the andthe potential impact of the Principal The financial planning process considers the Group’s strategy and business model andEmerging Risks facing the Group. Group’s profitability and Income Statement, including those which have the most TheDirectors have determined this as an Balance Sheet including landbank, gearing impact on our ability to remain in operation appropriate period over which to assess and debt covenants, cash flows and other and meet our liabilities as they fall due. theviability based on the following: key financial metrics over the forecast period. These financial forecasts are based on a – It is aligned with the Group’s bottom-up Principal Risks number of key assumptions, the most five-year budgeting and forecasting cycle; The Principal Risks, to which the Group are important of which include: and subject, have undergone a comprehensive – Five years represents a reasonable – Timing and volume of legal completions of review by the GMT and Board in the current estimate of the typical time between new homes sold, which includes annual year. Consideration is given to the risk purchasing land, its progression through production volumes and sales rates over likelihood based on the probability of the planning cycle, building out the the life of the individual developments; occurrence and potential impact on our development and selling homes to – Average selling prices achieved; business, together with the effectiveness of customers from it. – Build costs and cost of land acquisitions, mitigations. The full list of Principal Risks, including mitigations, can be found on pages including the impact from the updates to Five years is also a reasonable period for 76 to 79 and are referenced ‘A’ to ‘I’. Parts L&F of the building regulations in consideration given the following broader England and Wales and the Future Homes external trends: The Directors identified the Principal Risks Standard; – The cyclical nature of the market in which that have the most impact on the longer- – Working capital requirements; and the Group operates, which tends to follow term prospects and viability of the Group, – Capital repayment plan, where we have the economic cycle; and as such these have been used in the assumed the payment of the ordinary – Consideration of the impact of modelling of a severe but plausible downside dividend in line with the current policy, Government policy, planning regulations scenario, as: which is a minimum of £250 million or and the mortgage market; – Government policies, regulations and 7.5% of the Group’s net assets, – Long term supply of land, which is planning (A); throughout the period. supported by our strategic landbank; and – Mortgage availability and housing demand – Changes in technology and customer (B); Stress testing our risk resilience expectations. – Availability and costs of materials and The assessment considers sensitivity subcontractors (C); analysis on a series of realistically possible, Assessment of prospects – Quality and reputation (F); and but severe and prolonged, changes to We consider the long term prospects of the – Cyber security (I). principal assumptions. In determining these Group in light of our business model. Our we have included macro-economic and A range of sensitivity analyses for these risks strategy to deliver sustainable value is industry-wide projections as well as matters together with likely mitigating actions that achieved through delivering high-quality specific to the Group. would be adopted in response to these homes for our customers, in the locations circumstances were modelled, including a The severe but plausible downside scenario where people want to live, whilst carefully severe but plausible downside scenario in reflects the aggregated impact of managing our cost base and the Group’s which the impacts were aggregated together. sensitivities, taking account of a further balance sheet. decline in customer confidence, disposable The impact from “Natural resources and In assessing the Group’s prospects and long incomes, and mortgage availability than has climate change” (H) is not deemed to be term viability due consideration is given to: been experienced during the second half of material within the five year forecast period, – The Group’s current performance, 2022. To arrive at our stress test we have as costs associated with the regulatory including the impacts from the decline in drawn on experience gained from managing changes have been included in the modelling customer confidence and disposable the business through previous economic (e.g. updates to Parts L&F of the building income arising during the latter half of downturns and the COVID-19 pandemic. 84 Taylor Wimpey plc Annual Report and Accounts 2022 We have applied the sensitivities encountered at those times, as well as the mitigations adopted, to our 2023 expectations in order to test the resilience of our business. As a result, we have stress tested our 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. Volume (Principal Risk: A, B, C, F) – a decline in total volumes of 30% from 2022 levels, remaining at these reduced levels across 2023 to 2025 before recovering from 2026 back to 2022 levels by 2027. Price (Principal Risk: B) – a reduction to current selling prices of 20%, remaining at these levels across 2023 to 2025 before recovering from 2026 to 2022 levels by 2027. One-off costs (Principal Risk: A, F, I) – a one-off exceptional charge and cash cost of £150 million for an unanticipated event, change in Government regulations or financial penalty has been included in 2023. Within the scenario build costs are forecast to reduce across 2024 and 2025 with lower volumes reducing pressure on the availability of materials and resources and land cost remaining broadly 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 and Buildings 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 this scenario were to occur, we also have a range of additional options to maintain our financial strength, including: a more severe reduction in land spend and work in progress, the sale of assets, reducing the dividend, and or raising debt. At 31 December 2022, the Group had a cash balance of £952 million and access to £550 million from a fully undrawn revolving credit facility, which is expected to be replaced during the forecast period, together totalling £1,932 million. The combination of both of these is sufficient to absorb the financial impact of each of the risks modelled in the stress and sensitivity analysis, individually and in aggregate. #### Confirmation of viability Based on the results of this analysis, the Directors have a reasonable expectation 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 of APMs - 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 margin is defined as operating profit divided by revenue. - Return on net operating assets (RONOA) is defined as rolling 12-months' operating profit divided by the average of the opening and closing net operating assets of the 12-month period, which is defined as net assets less net cash, excluding net taxation balances and accrued dividends. - 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. - Adjusted basic earnings per share represents earnings attributed to the shareholders of the Parent, excluding exceptional items and tax on exceptional items, divided by the weighted average number of shares in issue during the period. - Net operating asset turn is defined as 12-months' rolling total revenue divided by the average of opening and closing net operating assets of the 12-month period. - The Annual Injury Incidence Rate (AIR) is defined as the number of incidents per 100,000 employees and contractors, calculated on a rolling 12 month basis, where the number of employees and contractors is calculated using a monthly average over the same period. - Net cash is defined as total cash less total borrowings. - Cash conversion is defined as operating cash flow divided by operating profit or loss on a rolling 12-month basis, with operating cash flow defined as cash generated by operations (which is before income taxes paid, interest paid and payments related to exceptional charges). - Adjusted gearing is defined as adjusted net debt divided by net assets. Adjusted net debt is defined as net cash less land creditors. A reconciliation of alternative performance measures to statutory measures is disclosed in note 32 of the financial statements. #### Approval of the Strategic report This Strategic report on pages 2 to 85 was approved by the Board of Directors and signed on its behalf by Jennie Daly Chief Executive Taylor Wimpey plc Annual Report and Accounts 2023 85 Directors’ report ## Governance at aglance We firmly believe that good corporate governance is essential to enable us to deliver our purpose for all of our stakeholders and remains a top priority forthe Board. The Company is committed to the principles of the 2018 UK Corporate Governance Code (the Code), published by the Financial Reporting Council (the FRC), which sets out standards of good practice for listed companies such as Taylor Wimpey. ## Highlights ### Board meeting attendance Board independence Board ethnic diversity 1 | 96% | 78% | | --- | --- | | Read more on page 91 | Read more on pages 88 to 90 | | Employee engagement | Gender pay gap (mean) | ### sessions 8 White Person of colour ## 17 -2% Read more on page 105 Read more in our Diversity Report on our website Read more on page 114 ### Non Executive Director ### tenure ### 0-2 years ### 3-4 years ### 5-9 years Read more on pages 88 to 90 86 Taylor Wimpey plc Annual Report and Accounts 2022 Board Evaluation key actions 2018 UK Corporate Governance Code More information about the 2021 and 2022 Board Evaluations can be found compliance on page 112. For the year ended 31 December 2022, the Company complied with: Actions taken in 2022 Actions for 2023 – All the provisions of the 2018 UK Corporate Governance Code (the Code) except for: A thorough handover and Additional reporting induction process for Jennie – Provision 32 (Remuneration Committee composition) onsuccession and Daly was undertaken, as outlined from the date of the 2022 Annual General Meeting, development plans on page 109 inrespect of which the Company will shortly announce changes to the composition of the Committee to ensure compliance with the Code. More information can be The role of the Board’s found on pages 125 and 148. Employee Champion was Increased engagement – Provision 38 (executive director pension contributions) expanded and additional with members of the which the Company complies with from 1 January 2023. engagement sessions were held. Group Management Team More information can be found on page 125. More information can be found and Heads of Functions on page 104 – The Financial Conduct Authority’s Disclosure and Transparency Rules sub chapters 7.1-7.2 and Listing Amending agenda Rules 9.8.6R, 9.8.7R and 9.8.7AR. The Directors have visited a layoutsto gain a better – The BEIS Directors’ Remuneration Reporting Regulations number of sites during 2022, as understanding of ESG and Narrative Reporting Regulations. outlined on page 100 priorities The Board has reviewed the Annual Report and Accounts 2022 and, after receiving advice from the Audit Committee, has concluded that taken as a whole it is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position, performance, business model and strategy. More information can be found on page 123. How the Company complies with the Code 1. Board leadership and Company purpose Page ### Gender diversity for senior Boardpositions | A: | Board of Directors | 88 | | --- | --- | --- | | B: | Purpose, values, strategy and culture | 100 | | C: | Resource and control framework | 96 | | D: | Stakeholder engagement | 94 | ### Chair and Chief Executive E: Workforce policies and practices 101 2. Division of responsibilities F: Role of the Chair 97 ### Senior Independent Director G: Division of responsibilities 97 ### and Group FinanceDirector | | H: | Role of the Non Executive Directors | 97 | | --- | --- | --- | --- | | | I: | Board policies, processes, information, time | 100 | | Read more on page 88 | | andresources | | 3. Composition, succession and evaluation | | J: | Appointments to the Board | 111 | | --- | --- | --- | --- | | Board gender diversity | K: | Board skills, experience and knowledge | 110 | | | L: | Board Evaluation | 112 | 4. Audit, risk and internal control M: Independence and effectiveness of internal 119 ### 4 female andexternal auditors N: Fair, balanced and understandable 123 assessment O: Risk and internal control 120 ### 5 male 5. Remuneration P: Alignment to purpose, values and long 127 termsuccess Read more on page 114 Q: Remuneration policy 128 R: Independent judgement and discretion 132 Taylor Wimpey plc Annual Report and Accounts 2022 87 Directors’ report ## Board of Directors Executive DirectorsSenior Independent DirectorChair | | 1 | | 2 | | | --- | --- | --- | --- | --- | | 1. Irene Dorner | | 2. Robert Noel | | 3. Jennie Daly | | Chair | | Senior Independent Director and | | Chief Executive | | Date of appointment | | Chair Designate | | Date of appointment | | December 2019 | | Date of appointment | | April 2018 | | Board tenure | | October 2019 | | Board tenure | | 3 years | | Board tenure | | 4 years | | Skills and attributes which support strategy | | 3 years | | Skills and attributes which support strategy | | and long term success | | Skills and attributes which support strategy | | and long term success | | – Engaging and inclusive leadership style with | | and long term success | | – Exceptional leadership and a razor-sharp | | significant experience of chairing boards | | – A former commercial business leader with | | focus on operations and strategy execution | | ofboth public and private companies | | a long track record in the property sector | | – Broad knowledge of the housebuilding and | | – Strong communicator and ability to | | and operating in a cyclical environment | | land and planning sectors | | manage and develop stakeholder relations | | – Experience of chairing a FTSE 250 | | – Proactive approach to stakeholders and | | – Extensive experience of operating in highly | | company | | their key priorities with extensive customer | | regulated industries | | – Ability to challenge whilst working collegially | | and people-focused skills | | Career and experience | | and developing strong relationships | | Career and experience | | Irene has held a number of senior positions | | amongst key stakeholder groups | | Before becoming Chief Executive, Jennie | | at HSBC including CEO of HSBC Malaysia, | | Career and experience | | had been Group Operations Director since | | CEO and President of HSBC in the United | | Rob was Chief Executive of Land Securities | | 2018. Jennie joined the Company from | | States, Group Managing Director of HSBC | | Group PLC from 2012 to 2020 and was | | Redrow plc in 2014 as UK Planning Director, | | Holdings and member of the Group | | previously Property Director at Great Portland | | becoming UK Land Director in 2015. | | Management Board. Irene was Chairman of | | Estates plc and a director of Nelson Bakewell, | | Jennie’s previous roles include Managing | | Virgin Money (UK) plc for seven months prior | | the property services group. He is a former | | Director of Harrow Estates Plc and strategic | | to its acquisition in 2018 and was also a Non | | President of The British Property Federation. | | land oversight at Westbury plc. | Executive Director of AXA SA and Rolls- External appointments External appointments Royce Holdings plc. – Chairman of Hammerson plc – Member of the Board of the Home External appointments – Trustee of the Natural History Museum Builders Federation – Chairman of Control Risks Limited – Non Executive Director of GMS – Non Executive Director of New Homes – Trustee of the South East Asia Rainforest Estates Limited Quality Board Limited Research Partnership – Honorary Fellow of St. Anne’s College, Oxford – Chair of the Trustees for the Hampstead Theatre During the year Pete Redfern, Gwyn Burr and Angela Knight were also Directors. They stood down as Directors on 26 April 2022. Their biographies can be found on pages 74 and 75 of the Annual Report and Accounts 2021. 1. Irene will step down as Chair following the conclusion of the 2023 Annual General Meeting (AGM) and will become a non-independent Non Executive Director and stand down as a member of the Remuneration Committee. 2. Rob will become Chair following the conclusion of the 2023 AGM. He will stand down as a member of the Audit Committee and the Board’s Employee Champion. 88 Taylor Wimpey plc Annual Report and Accounts 2022 Committees ### Audit Committee ### Nomination and Governance Committee ### Remuneration Committee ### Chair of Committee Executive Directors Independent Non Executive Directors | 4. Chris Carney | 5. Mark Castle | 6. Lord Jitesh Gadhia | | --- | --- | --- | | Group Finance Director | Independent Non Executive Director | Independent Non Executive Director | | Date of appointment | Date of appointment | Date of appointment | | April 2018 | June 2022 | March 2021 | | Board tenure | Board tenure | Board tenure | | 4 years | Less than 1 year | 2 years | | Skills and attributes which support strategy | Skills and attributes which support strategy | Skills and attributes which support strategy | | and long term success | and long term success | and long term success | | – A wealth of experience in the | – Extensive operational insight and | – Extensive involvement in public affairs | | housebuilding industry | knowledge of the construction sector, | andcorporate governance, following his | | – Extensive knowledge of the Company’s | withparticular focus on supply chain, | executive career in finance | | operational affairs, including treasury, | production and innovation | Career and experience | | pensions, information technology and tax | Career and experience | Jitesh has over 20 years’ executive | | matters | Mark was Chief Operating Officer of Mace | experience, principally in banking and private | | – In-depth insight into the Company’s risk | Finance Ltd and previously held executive | equity, having held senior roles at Blackstone, | | environment | roles at Structuretone Inc and Wates Group | Barclays Capital and ABN AMRO. He | | Career and experience | Ltd. In addition, Mark was Chair of Build UK | previously supported the Letwin Review of | | Chris is a Chartered Accountant and has | from 2017 to 2019. | the build out rate of residential homes, and | | worked in private practice with Deloitte and | | was a Non Executive Director at UK Financial | External appointments in-house for Associated British Foods plc. Investments Limited, Senior Independent – Non Executive Director at Mace Finance Ltd Since joining in 2006, he has successively Director of Calisen plc and a Member of the – Non Executive Director at Eleco plc held the roles of Group Financial Controller, Board of UK Government Investments – Non Executive Chairman of Triangle Group Finance Director of TaylorWimpey UK, Limited. Jitesh has extensive remuneration Managing Director of the Company’s South committee experience, including across Thames regional business, and Divisional public and private companies. Chair for the London and South East External appointments Division. – Member of the House of Lords since 2016 External appointments – Non Executive Director of the Court of – None Directors of the Bank of England – Non Executive Director of Compare The Market Limited – Non-Executive Director of Rolls-Royce Holdings plc – Director of Accord Healthcare Limited – Chair and Trustee of the British Asian Trust – Non Executive Director of Bard Topco Limited Taylor Wimpey plc Annual Report and Accounts 2022 89 Directors’ report Board of Directors continued Independent Non Executive Directors | 7. Scilla Grimble | 8. Clodagh Moriarty | 9. Humphrey Singer | | --- | --- | --- | | Independent Non Executive Director | Independent Non Executive Director | Independent Non Executive Director | | Date of appointment | Date of appointment | Date of appointment | | March 2021 | June 2022 | December 2015 | | Board tenure | Board tenure | Board tenure | | 2 years | Less than 1 year | 7 years | | Skills and attributes which support strategy | Skills and attributes which support strategy | Skills and attributes which support strategy | | and long term success | and long term success | and long term success | | – Valuable knowledge and executive | – Strategic, digital and customer-focused | – Wealth of executive finance experience | | experience in corporate finance, property | executive experience with a focus on | and acumen with a focus on both digital | | and retail | delivering an enhanced customer experience | solutions and customer service | | Career and experience | Career and experience | Career and experience | | Scilla has significant finance, risk and | Clodagh started her career at Bain & | Humphrey was previously Chief Finance | | technology-related experience in customer | Company, Inc and since then, she has held | Officer of Marks and Spencer Group plc, | | facing environments, having been Chief | a range of positions at J Sainsbury PLC, | Group Finance Director of Dixons Retail plc | | Financial Officer at Moneysupermarket.com | including Head of Strategy and Chief | and also held senior finance-related roles | | Group plc and held senior roles at UBS, | Digital Officer. | within Dixons and Coca Cola Enterprises. | Tesco plc and Marks and Spencer Group plc. | | External appointments | External appointments | | --- | --- | --- | | External appointments | – Currently Retail and Digital Director | – Chief Financial Officer at Belron Group | | – Chief Financial Officer at Deliveroo plc | at J Sainsbury PLC and on 5 March 2023 | | her role at J Sainsbury PLC will change toChief Retail and Technology Officer 90 Taylor Wimpey plc Annual Report and Accounts 2022 Committees ### Audit Committee ### Nomination and Governance Committee ### Remuneration Committee ### Chair of Committee Company Secretary Board attendance during 2022 Attendance (a) Irene Dorner (Chair) (b) Jennie Daly Chris Carney (a) Robert Noel (c) Mark Castle Lord Jitesh Gadhia Scilla Grimble (c) Clodagh Moriarty Humphrey Singer Ishaq Kayani (b)(d) Pete Redfern Group General Counsel and Company Secretary (d) Gwyn Burr Date of appointment February 2023 (d) Angela Knight Skills and attributes which support strategy and long term success (a) Irene Dorner (Chair) and Robert Noel did not attend a meeting on 15 December 2022. The – Deep knowledge of the operational principal business of the meeting was to discuss the Chair succession process. andlegal framework of the Company (b) Jennie Daly and Pete Redfern did not attend a meeting on 3 February 2022. The principal business of the meeting was to discuss the Chief Executive succession process. andthe industry (c) Appointed as a Non Executive Director on 1 June 2022. (d) Stood down from the Board on 26 April 2022. Career and experience Ishaq, a solicitor, joined the business in 2009 There was full attendance at all meetings, except Robert Noel and Clodagh as the Group’s Dispute Resolution Solicitor Moriarty who were not available for one and two meetings respectively. Prior and, over the last 14 years, took on additional to both meetings, the Non Executive Directors’ views on the meeting agenda responsibilities including legal and regulatory items were sought and subsequently shared with the other Board members compliance, commercial legal matters and during the meeting. Following the meeting both were briefed on the business legal operations, leading to his appointment of the meeting and any decisions that were taken. as UK Legal Director in 2021, and as Interim General Counsel in 2022. Ishaq was previously Upcoming Board changes a partner at one of the country’s leading Ahead of the 2023 AGM, an announcement will be made confirming who will housebuilder law firms. succeed Rob Noel as Senior Independent Director and Employee Champion, and the required changes to the membership of the Remuneration External appointments Committee when Irene Dorner stands down. – None Taylor Wimpey plc Annual Report and Accounts 2022 91 Directors’ report ## Group Management Team ## Our strong and experienced ## management team The strength and depth of our management team positions us well for changing market conditions. With acombined total of over 150 years' experience at TaylorWimpey and longer in the housebuilding and construction sector, our Group Management Team has extensive experience of managing across a wide range of market conditions. Jennie Daly Chief Executive Jennie was appointed Chief Executive in early 2022, having been with the business for eight years and with over 30 years’ experience in land, planning and housing. Previous roles within TaylorWimpey have included Land and Planning Director, Group Operations Director and Divisional Chair. As head of the GMT, Jennie's responsibilities include key strategic and operational decisions, sustainability, customer service and health and safety. Chris Carney Group Finance Director Since joining in 2006, Chris has held a number of roles in the Company, including Group Financial Controller, Managing Director and Divisional Chair. AsGroup Finance Director, Chris’s role covers all areas of finance, including tax, treasury and managing the Group’s defined benefit pension scheme, as well as overall responsibility for our commercial and information technology functions. Anne Billson-Ross Group Human Resources Director Anne joined TaylorWimpey in 2014 and has over 30 years’ experience within Human Resources. Anne has responsibility for all areas of human resources, including recruitment, reward and benefits, talent, succession, wellbeing, performance and employee engagement. Anne also oversees the implementation of the Company’s Diversity, Equality and Inclusion strategy. Ishaq Kayani Group General Counsel and Company Secretary In February 2023, Ishaq was appointed as Group General Counsel and Company Secretary. In this role, Ishaq oversees legal compliance, regulatory obligations and manages the Company’s Legal and Secretariat departments. Ishaq joined the business in 2009 as the Group’s Dispute Resolution Solicitor, having spent 12 years with a leading UK law firm, and was appointed as UK Legal Director in 2021. 92 Taylor Wimpey plc Annual Report and Accounts 2022 Ingrid Osborne Divisional Chair, London and South East Ingrid has been with the business for 22 years, having joined on a Graduate Management Trainee programme, and was previously Managing Director for our Central London business. As a Divisional Chair Ingrid oversees our North Thames, South East, South Thames, London and West London regional businesses. Ingrid has been the executive sponsor for our environment strategy and is Chair of the LEAF Committee; a cross functional group which reviews and discusses climate policy, risks and opportunities. Ingrid is also the Sponsor of the Working Parents Network at TaylorWimpey. Nigel Holland Divisional Chair, Central, South West and Spain Nigel has been with the business for nearly 30 years, with a background in sales and marketing. In his role as Divisional Chair, Nigel oversees our East Anglia, South Midlands, Bristol, Southern Counties and Exeter regional businesses as well as our Spanish business. Nigel is also the Chair of our Equality, Diversity and Inclusion Committee. Shaun White Divisional Chair, Midlands and Wales Shaun joined the Company over 20 years ago and has held a number of roles in the business including Finance Director, Land and Planning Director and Managing Director. As a Divisional Chair Shaun oversees our Midlands, North Midlands, West Midlands, East Midlands and South Wales regional businesses. Ian Drummond Divisional Chair, Scotland, North East and North Yorkshire Ian joined the business as Land Director in 2013, and has also held the roles of Managing Director and Divisional Managing Director. As Divisional Chair, Ian oversees our East Scotland, West Scotland, North East and North Yorkshire regional businesses. Lee Bishop Group Managing Director Strategic Land and Interim Divisional Chair, North West and Yorkshire Since joining the business over 35 years ago, Lee has held a number of positions, including Managing Director and Divisional Managing Director. Leenow oversees our divisional North and South Strategic Land teams andis currently overseeing our Manchester, North West and Yorkshire regional businesses on an interim basis. Taylor Wimpey plc Annual Report and Accounts 2022 93 Directors’ report Board of directors Chair’s introduction Our strong governance approach supports ### Dear Shareholder the Board in ensuring that decisions are ## Resilience | I am pleased to present the Corporate | made in the right way and I am pleased to | | --- | --- | | Governance Report for 2022, which sets out | report that this approach has enabled the | | the key areas considered by the Board and | Board to make agile and robust decisions | ## built on its Committees during the year. during the year. Further information on our governance approach can be found on As outlined in my Chair’s statement on pages 96 and 97. ## strong pages 6 to 9, despite challenging market conditions, we made good progress against Stakeholder engagement our strategy and delivered a strong financial ## governance As a Board, we keep the interests of our performance in 2022. In February 2022 we | | announced that Jennie Daly would succeed | stakeholders at the heart of our decision | | --- | --- | --- | | | Pete Redfern as Chief Executive at the | making. We believe that in order to progress | | | conclusion of the 2022 Annual General | our strategy and achieve long term | | | Meeting (AGM). Jennie started her tenure | sustainable success, the Board must | | | asChief Executive by hosting an event for | consider all stakeholders relevant to a | | 44% | | decision and satisfy themselves that any | institutional investors and analysts to set out | | the Board’s strategic focus for TaylorWimpey, | decision upholds our culture. Further | | --- | --- | --- | | Board gender diversity | an overview of our business priorities and | information on how we, as a Board, have | | | confirming our financial targets. During the | fulfilled our duties to our stakeholders under | | | year, as a Board we regularly reviewed | s.172(1) of the Companies Act 2006 can be | | | progress against each strategic cornerstone | found on pages 44 and 45. Details of how | | | whilst also considering the changing market | we engaged with our different groups of | ## 96% environment. stakeholders during 2022 can be found onpages 40 to 43. ### Of employees are proud to Resilience built on strong During the year we continued our ### work for the Company | governance | longstanding practice of engaging with our | | --- | --- | | The way in which we run our business is of | shareholders in a proactive matter. I held 16 | | paramount importance to us and is what | meetings with key investors to discuss a | | enables TaylorWimpey to successfully | variety of key themes, such as ESG, | | deliver on our purpose to build great homes | succession and governance matters. | and create thriving communities. Our long | term success is dependent on having strong | Robert Noel succeeded Gwyn Burr as | | --- | --- | | governance standards in place to underpin | Employee Champion in April 2022 and he | | all of our activities. | has further developed the role to ensure that | employee views are taken into account by | At the heart of good governance is culture. | the Board when making decisions that could | | --- | --- | | Our values ensure TaylorWimpey has a | affect them. In addition, the Non Executive | | strong culture of doing the right thing. As a | Directors visited 10 regional businesses and | | Board, we build on this ethos and ensure we | 9 sites across the country and I know they all | | have effective systems and processes in place | thoroughly enjoyed their interactions with | | to actively manage risks arising from both our | employees during these visits and it was a | | operations and the wider macroeconomic | great opportunity for them to see our culture | | environment, and we strive for continuous | in action. Further information on shareholder | | improvement in our business practices. | and employee engagement during the year | can be found on pages 103 to 105. 94 Taylor Wimpey plc Annual Report and Accounts 2022 I have thoroughly enjoyed the stakeholder Board composition to the membership of the Remuneration engagement that has taken place during my Committee once I stand down from 2022 has been a period of transition for the tenure as Chair, and I would like to thank all the Committee. Board. As already mentioned, Jennie those I have engaged with. succeeded Pete as Chief Executive following the conclusion of the 2022 AGM. Annual General Meeting Focused on ESG This year’s AGM will take place in person at Following Gwyn Burr and Angela Knight Our ESG initiatives were a constant feature the Crowne Plaza Hotel in Gerrards Cross on stepping down in April 2022, we were on the Board and its Committees’ agendas Thursday 27 April 2023 at 10:30am. I hope pleased to welcome Mark Castle and throughout the year. As initiatives continue to you will be able to attend and we look Clodagh Moriarty as new Non Executive be developed, the Board will ensure that they forward to meeting shareholders, hearing Directors. Mark has significant operational remain aligned to our purpose of ensuring your views and answering any questions that experience in all aspects of the construction that we play our part in creating long term you may have. We are pleased to provide an sector and Clodagh has 20 years of varied sustainable value for our stakeholders. electronic facility for shareholders who are customer-focused experience across retail, unable to attend the AGM in person, so they During the year, the Board received regular strategy, digital transformation and may follow remotely and submit questions to updates on the work undertaken to develop e-commerce. Further information on the the Board on the business of the meeting our Net Zero Transition Plan. Following recruitment and induction process for Mark should they wish to do so. More details of approval by the Board in December 2022, and Clodagh can be found on page 108. the AGM and the business to be considered, we have now submitted our net zero targets are set out on pages 209 to 219. It was announced in December 2022 that I to the Science Based Targets initiative for would be stepping down as Chair for independent assessment. Further information personal family reasons at the conclusion of Conclusion and outlook on our Net Zero Transition Plan and how we the 2023 AGM on 27 April 2023. I am Finally, I would like to take this opportunity to plan to support the UK’s commitment to delighted that the Nomination and thank all of my Board colleagues, the Group reach net zero carbon by 2050 can be found Governance Committee, led by Lord Jitesh Management Team and all of our employees on pages 56 and 57. | | Gadhia, announced that Rob Noel would | across the business, for their dedication, | | --- | --- | --- | | Equality, diversity and inclusion remains a key | succeed me as Chair. Rob is a well- | loyalty and hard work which has underpinned | | priority for the Board. The Nomination and | respected Board member and his familiarity | our success and helped to make my tenure | | Governance Committee received regular | with TaylorWimpey and his long track record | as Chair so enjoyable. I look forward to | | updates during the year on progress made | in the property sector will serve him and | supporting Rob as he succeeds me as Chair. | | towards our Equality, Diversity and Inclusion | TaylorWimpey well in the role. I and the | | | Strategy. The Committee oversaw the | other Board members are all looking forward | | | development of our aspirational targets and | to working with and supporting him in his | | | the establishment of structures to support us | new role. Ahead of the 2023 AGM, an | | | in becoming a more diverse and inclusive | announcement will be made confirming | | | | who will succeed Rob Noel as Senior | Irene Dorner | employer, where everyone is welcome. Independent Director and Employee Chair Further details on progress made in 2022 and plans for 2023 can be found on page 114. Champion and the required changes What will you bring to the role? What do you see as the key priorities forthe Board in 2023? I have spent over 35 years in the property sector, and 21 as a Director on FTSE listed Boards including eight The sector is in a more challenging market years as the CEO of Land Securities Group PLC. I have environment compared to recent years. The Board’s first hand experience of the cyclical nature of the industry priority is to support the Group Management Team and also have extensive commercial experience. to deliver against our strategy to create long term Having joined the Board as an independent Non sustainable value; and manage all of the aspects within Executive Director in October 2019 and subsequently our control to protect stakeholder interests. becoming the Senior Independent Director in April We remain focused on efficient operations; excellent 2020, and Employee Champion in 2022, my familiarity customer service; inclusion; and realising our and knowledge of the Company will ensure a smooth environmental targets and aspirational diversity transition as we face a changing market environment. and inclusion targets. What do you consider the key strengths The business is well positioned for the current market of the business to be? conditions and the Board is fully focused on looking forward, confident in the medium to long term outlook. TaylorWimpey is an excellent business with a strong record of good long term decision making and good governance. This has continued with Irene’s excellent stewardship over the last three years supported by ## Q&A with having the correct balance of skills, experience and knowledge on the Board. ## Robert Noel, The culture is consistent throughout the business and I have seen this first hand in my role of Employee ## Chair Designate Champion over the last year. Our strong culture and purpose will be key as we navigate current conditions. Robert Noel will succeed Irene Dorner The business also has the benefit of a very | as Chair following the conclusion of | experienced management team in place who have | | --- | --- | | the 2023 AGM. Rob answers some | each operated in a full range of market conditions | | questions about becoming the next | before. Importantly, this is a key strength not only as | | Chair of TaylorWimpey plc. | you navigate changing times but also as you emerge. | Taylor Wimpey plc Annual Report and Accounts 2022 95 Directors’ report ## Governance structure The Company’s clear and effective governance structure is a key foundation of our strong corporate governance. Our governance structure ensures that the Board and its Committees, the Group Management Team (GMT) and Senior Management are able to make decisions effectively. ### Shareholders Our shareholders are the ultimate owners of the Company and play an important role in the governance structure. More information about engagement with our shareholders can be found on page 103. ### The Board The Board is collectively responsible for promoting the long term sustainable success of the Company and generating value for all stakeholders. More information about the Board’s responsibilities can be found in the Matters Reserved for the Board document which is available on our website. ### The Board’s Committees Audit Committee: Nomination and Remuneration Governance Committee: Committee: The objective of the Audit Committee is to The objective of the Nomination and The objective of the Remuneration Committee assist the Board in fulfilling its corporate GovernanceCommittee is to ensure that there is to establish and maintain formal and governance responsibilities relating to the shallbe a formal,rigorous and transparent transparent procedures for developing Group’s financial reporting, risk, and internal procedure for theappointment of new ourpolicy on executive remuneration; to set, control framework and any other matters Directors tothe Board, itsCommittees and monitor and report on the remuneration referred to it by the Board. other Senior Management in the Company; to packages of individual Directors and Senior keep the Board’s corporate governance Management; and to review wider workforce arrangements under review; and toensure that remuneration and other policies in accordance both the Company and the Board operate in a with the Code. manner consistent with corporate governance best practice. Read more onpage 115 Read more onpage 106 Read more onpage 124 Supporting Committees ### GMT – Disclosure Committee The Company’s Executive Committee, the GMT, is responsible for the day-to-day management of the – Treasury Committee Company’s key strategic and operational activities. The GMT is led by the Chief Executive and is – Group Operations Committee comprised of the Group Finance Director, Group HR Director, Group General Counsel and Company – IT Steering Committee Secretary, Group Managing Director Strategic Land and the Divisional Chairs. – Land Strategy Committee The Company has established a number of additional supporting committees, including: – Legacy, Engagement and Action for the Future (LEAF) Committee 96 Taylor Wimpey plc Annual Report and Accounts 2022 ## Role of the Board In line with the Code, the Company’s Division of Responsibilities document was reviewed in 2022 and signed by Irene Dorner, Jennie Daly and Robert Noel in their roles as Chair, Chief Executive and Senior Independent Director respectively. The Division of Responsibilities document is available on our website. In addition, the roles of the Board members have been defined in more detail, as set out below. Non Executive Directors Chair Senior Independent Director Independent Non and Chair Designate Executive Directors Irene Dorner Robert Noel Mark Castle, Lord Jitesh Gadhia, ScillaGrimble, – Lead and ensure the effectiveness of the Board in – Act as a sounding board for directing the Company theChair Clodagh Moriarty and – Chair Board and Nomination and Governance Committee – Act as an intermediary for the other Humphrey Singer meetings, set meeting agendas and ensure Directors Directors, when necessary – Provide constructive challenge receive accurate, timely and clear information – Be available to shareholders who to the Executive Directors – Promote high standards of corporate governance wish to discuss matters which – Provide strategic guidance to – Build a well-balanced and highly effective Board with cannot be resolved through the the Company aculture of openness and debate to encourage usual channels – Offer specialist advice constructive challenge – Chair Board meetings in the – Serve on the Board’s – Facilitate and promote constructive relations between absence of the Chair Committees Board members and the effective contribution of all – Lead the Board’s evaluation of – Scrutinise and hold to account NonExecutive Directors theChair’s performance the performance of the – Lead the annual review of the Board’s effectiveness – Lead the Nomination and Executive Directors against – Engage with the Company’s stakeholders and maintain Governance Committee in the agreed performance objectives an appropriate balance between the interests of all search for a new Chair, if – Devote sufficient time to the stakeholders appropriate Company to meet their – Demonstrate objective judgement responsibilities Executive Directors Chief Executive Group Finance Director Jennie Daly Chris Carney – Ensure effective leadership and day-to-day running of the Company – Manage the Company’s finances, including – Lead the GMT and oversee key functions any treasury and tax matters – Develop and implement the Company’s strategy, strategic plan and related – Lead the finance, tax, treasury, IT, internal annual budget audit and pensions functions – Review the organisational structure, including development and succession planning – Oversee the Company’s risk profile, – Manage the Group’s risk profile and establish effective internal controls in conjunction with the GMT – Agree the Company’s annual budget proposal, prior to formal agreement with – Agree the Company’s annual budget the Board proposal, prior to formal agreement – Ensure the Chair and Board are advised and updated regarding any key matters with the Chief Executive and the Board – Maintain relationships with stakeholders and advise the Board accordingly – Overall responsibility for sustainability Group General Counsel and Company Secretary Employee Champion Ishaq Kayani Robert Noel – Provide advice and support to the Board, its Committees and – Champion the ‘employee voice’ in the boardroom and individual Directors on matters of corporate governance, ensure employee views are taken into account by the compliance and legal matters Board, particularly when decisions are being made that – Ensure that the Board has the policies, processes, information, could affect employees time and resources it needs in order to function effectively and – Strengthen the link between the Board and employees efficiently – Regularly gather the views of employees through a variety – Support the Chair to set meeting agendas and ensure Directors of formal and informal channels and identify any areas receive accurate, timely and clear information ofconcern – Be responsible for all legal and compliance matters relating to – Liaise with Senior Management on a regular basis theCompany onmatters of employee engagement and culture – Oversee the Company’s Legal and Secretariat functions – Oversee Senior Management’s feedback to employees onsteps taken to address concerns Taylor Wimpey plc Annual Report and Accounts 2022 97 Directors’ report ## Board activities Board activities ### Strategy During 2022, the Board held 11 formal meetings, one of which was a business update call and two of which were additional meetings convened by the Chair. The Board considers that the usual eight meetings per year remains appropriate and there are processes in place to convene additional Board meetings when considered necessary. During 2022, the Chair convened additional meetings to approve the appointment of Jennie Daly as Chief Executive and Rob Noel as Chair. Matters approved and considered at Board meetings during 2022 Links to strategic cornerstones The Chair, Chief Executive and Company Secretary meet in advance of each CSOL Board meeting to discuss and agree the agenda for the next meeting, as well as discuss progress made on actions arising from the previous meeting. Board meeting agendas are derived from the Board’s annual plan which is approved at the end of each year and sets out the topics expected to be ### Operations discussed during the following year. Following the Chair, Chief Executive and Company Secretary’s discussion, any additional topics are added to the relevant Board meeting agendas. During 2022, the Board considered a number of topics regularly, in line with its annual plan. These included: – Health, safety and environment reports – Chief Executive reports – Group Finance Director reports – Reports from each Board Committee following Committee meetings – Governance and legal matters – Employee engagement feedback Links to strategic cornerstones In addition to the regular topics discussed, the Board also considered and approved the matters set out opposite. SOL ### Finance Links to strategic cornerstones COL ### Governance Key to our strategic cornerstones Land Operational excellence Sustainability Capital allocation Links to strategic cornerstones Read more about our stakeholders in the strategic report on pages 40 to 43 CSO For more information on our strategic cornerstones, see pages 21 to 33 Read more within our Section 172 statement on pages 44 and 45 98 Taylor Wimpey plc Annual Report and Accounts 2022 ### Strategy Read more Read more Matters approved Matters considered Stakeholders considered | – Net Zero Transition Plan | 56 | – Investor feedback on results | | – Customers | | --- | --- | --- | --- | --- | | | | announcements and investor events | | – Employees | | | | – Managing market changes | 7 | – Investors | | | | – Regular review of the Company’s | 21 | – Communities | | | | strategic dashboard | | – Partners | | | | – Cost reduction, efficiency and | 11 | | proposed business changes – The Company’s strategic 21 cornerstones – Updates on ESG initiatives 11 ### Operations Read more Read more Matters approved Matters considered Stakeholders considered | – Land acquisitions | 23 | – Impact of the issue of Nutrient | 12 | – Customers | | --- | --- | --- | --- | --- | | – Fire safety and cladding | 12 | Neutrality | | – Employees | | updates, including the | | – Timber frame production facility | 12 | – Communities | | Building Safety Pledge | | – Efficiency and excellence in build and | 25 | – Partners | operations – Employee survey results and 40 resulting action plan | – Update on engagement with the CMA | 76 | | --- | --- | | – IT update | 40 | | – Customer service update | 40 | | – Supply chain update | 42 | | – HR update | 40 | | – Sales and marketing update | 40 | ### Finance Read more Read more Matters approved Matters considered Stakeholders considered | – Results announcements and | 6 | – Reviewed the treasury policies | – Investors | | --- | --- | --- | --- | | trading statements | | overseen by the Treasury Committee | – Employees | | – Share buyback programme | 45 | – Reviewed the risk management | | 120 | – Dividend payments to | 7 | update | | --- | --- | --- | | shareholders | | – Financial position of the pension fund | | – The Company’s Principal | 72 | and funding objectives | and emerging risks, including risk appetite – The annual budget Read more Read more ### Governance Matters approved Matters considered Stakeholders considered | – Appointment of the | 108 | – Annual sign off of governance | 100 | – Customers | | --- | --- | --- | --- | --- | | Company’s new Chief | | framework documents | | – Employees | | Executive and Chair | | – Whistleblowing updates | 101 | – Investors | | – Board and Committee | 111 | – Conflicts register | 101 | – Communities | | appointments | | | | – Partners | – Gender Pay Gap Report 2022 – Modern Slavery Statement 2022 – Board Diversity Policy 114 – Board Evaluation action plan 113 – Board annual agenda plan Taylor Wimpey plc Annual Report and Accounts 2022 99 Directors’ report ## Board leadership ## and Company ## purpose An effective Board The Board’s role is to create sustainable long term success for the mutual benefit of all of our stakeholders. The Board does this by providing strategic and entrepreneurial leadership within a framework of strong governance and effective controls to deliver our strategy, whilst ensuring that the strategy and objectives remain aligned to our purpose and values. The governance framework for the Board is clearly documented in the TaylorWimpey plc Articles of Association, Division of Responsibilities, Schedule of Matters Reserved for the Board and Terms of Reference for each Committee, which are all available on our website. A summary of the Division ofResponsibilities can be found on page 97. To allow these responsibilities tobe discharged effectively, the Chair and Chief Executive maintain regular dialogue outside the boardroom, toensure an effective and ongoing flow of information. During 2022 the Board remained focused on delivering long term sustainable value to our stakeholders, and the main activities undertaken by the Board are set out on page 98. The Board held 11 formal meetings during the year. There was full attendance at all meetings, except Rob Noel and Clodagh Moriarty who were not available for one and two meetings respectively. The individuals’ views on the matters to be discussed at the meeting were sought and shared with the other Board members during the meeting itself. Additional Board meetings were held to consider the topics of Chair succession and Chief Executive succession. Details of the attendance of each Director at Board and Committee meetings are set out on pages 91, 106, 115 and 124. The Directors receive information at least one week before ### We are integrating meetings take place to allow sufficient time for a detailed ### sustainability into the review. In between Board meetings, the Non Executive Directors have access to Senior Management at all times. ### way we work, to In addition, Non Executive Directors are encouraged to ### create a stronger visit regional businesses and sites. During 2022, the Non ### business for the long Executive Directors completed 10 regional business visits and 9 site visits. In 2023 each Non Executive Director is requested ### term and generate to visit at least one regional business or site per quarter. ### value for all our ### stakeholders. 100 Taylor Wimpey plc Annual Report and Accounts 2022 Operational and strategic directorships on appointment to the Board. In all cases, it was agreed that there was no oversight evidence of a conflict. The GMT is our leadership team responsible for executing our strategy and the day-to- Whistleblowing day management of the Company’s The Board maintains overall responsibility for operations. The GMT is a vastly experienced the Company’s Whistleblowing Policy (the team that has operated in challenging market Policy). The Policy is well communicated to conditions with over 150 years of service at employees both in regional businesses and TaylorWimpey, and an average of c.19 years on site. It provides a clear procedure for per team member and even longer employees to report concerns either to their experience in the industry. The GMT is led by line manager or through a third party the Chief Executive, and its members are set whistleblowing hotline. out on pages 92 and 93. All whistleblowing cases are investigated by At each meeting, the Board receives updates the Head of Internal Audit, Group HR from each GMT member and certain Heads Director and / or the Group General Counsel of Function to provide updates on key and Company Secretary depending on the stakeholder groups, performance in the nature of the concern, and (where period and employee matters. appropriate) the Head of HSE. ESG The Board conducts regular reviews of The Board receives half-yearly whistleblowing actual results and future projections with ESG has always been an important part updates which set out any whistleblowing comparisons against budget and prior year of working for TaylorWimpey and how we issues raised during the period and interim performance. do business, and the Board is responsible updates on significant matters. The updates for overseeing our ESG initiatives. During There is a framework of delegated authority provided are anonymous and summarise the 2022, the importance we place on ESG approved by the Board, within which result of any investigation. was formalised with the addition of the individual responsibilities of senior executives The Board is satisfied that the Policy and its strategic cornerstone of ‘sustainability’ of Group companies are identified and can administration remain effective. with specific key performance indicators. be monitored. The Board receives at least two ESG The Board also receive regular reports and Anti-bribery and anti-corruption updates per year and regular updates minutes from the Company’s Treasury The Company has written policies on its onprogress against key topics, such as Committee which is chaired by the Group zero-tolerance approach to bribery and diversity and inclusion, the environment Finance Director. corruption. The risks associated with bribery and stakeholder matters. and corruption are mitigated by training for Policies and procedures The implementation of ESG initiatives senior managers and by issuing an annual across the Group is led by the Chief Conflicts of Interest reminder, which includes the current versions Executive and the GMT. Social and of the policies, to all regional businesses and Directors are required to notify the Group governance aspects of ESG are key departments. This annual exercise General Counsel and Company Secretary considered ‘business as usual’ and this is requires written confirmation of continuing ofany potential or actual conflicts of interest evident in our key performance indicators compliance and a completed copy of the and these will be reported to the Board for and stakeholder interactions. relevant gifts and hospitality register; and a approval. The Nomination and Governance requirement to review training videos on Committee, on behalf of the Board, is anti-corruption, anti-money laundering and responsible for monitoring the content of the competition law. Conflicts of Interest Register annually. During 2022 a number of external appointments were considered by the Board, including Jitesh Gadhia’s appointment as Non Executive Director at the Bank of England, Scilla Grimble’s role at Deliveroo plc and Mark Castle and Clodagh Moriarty’s existing Taylor Wimpey plc Annual Report and Accounts 2022 101 Directors’ report Board leadership and Company purpose continued ## Culture: Do the right thing The Board recognises the importance of a healthy culture and considers the Company’s ### How the Board monitors culture culture of ‘doing the right thing’ as a key strength of the business. The Board is ### The Board reviewed a number of cultural responsible for defining and setting the ### indicators throughout 2022, including those set Company’s culture from the top, and the Board ### and GMT as a whole are responsible for leading out below. by example. The Board’s number one priority will remain health and safety for everyone who works on or visits a TaylorWimpey site. ### Purpose ### To build great homes and ### create thriving communities ### Values Respectful and fair ### 166 7 Take responsibility Annual Injury Incidence Rate per Employee Champion 100,000 employees and engagement sessions contractors Better tomorrow Read more on page 49 Read more on page 104 ### 5% 33% Be proud Black, Asian or other minority Female employees ethnic employees | | Read more on page 114 | Read more on page 114 | | --- | --- | --- | | After considering the Company’s cultural | 10 | 9 | | indicators throughout 2022, there have been | Non Executive Director visits | Non Executive Director visits | anumber of actions taken to further support to regional businesses to sites and monitor the Company’s culture, including: Read more on page 100 Read more on page 100 – The Board members have additional regional business and site visits scheduled in 2023. ### 93% 18% – The Board and GMT will continue to consider employee feedback resulting from the Employee engagement score Voluntary employee turnover: employee engagement methods as set out Read more on page 41 Read more on page 41 onpage 104 and surveys, and will monitor actions taken as a result. ### 96% 98% The Board will continue to consider a wide of employees are proud of employees agreed that range of cultural indicators throughout 2023 to work for TaylorWimpey TaylorWimpey takes health and andwill take action as considered appropriate safety in the workplace seriously throughout the year. | Read more on page 70 | Read more on page 49 | | --- | --- | | 97% | 95% | | of employees agreed that we | of employees agree that | | are committed to supporting | TaylorWimpey offers | | charities doing important work | opportunities for employees | | around issues connected to our | of all backgrounds to progress | business and the surrounding communities Read more on page 50 Read more on page 50 102 Taylor Wimpey plc Annual Report and Accounts 2022 ## Shareholder and employee engagement with the Board Shareholder engagement Annual General Meeting (AGM) The Board actively seeks and encourages engagement with We look forward to engaging with our retail shareholders at the investors, including its major institutional shareholders and AGM, and we were particularly pleased to hold our first in person shareholder representative bodies. During 2022, the Company has since the 2019 AGM, in April 2022. continued to engage with shareholders in a proactive manner. Further details on the 2023 AGM can be found in the Notice of The charts below set out the number of meetings held with Meeting on page 209. For the 2023 AGM, we are pleased to provide shareholders by the Chair, Executive Directors and our Investor an audiocast facility for shareholders who are unable to attend the Relations team. These meetings include one-to-one meetings, group AGM in person, so they may follow remotely and submit questions to and conference meetings. the Board on the business of the meeting should they wish to do so. Shareholders are also invited to submit questions via email in advance Number of shareholder meetings in 2022 of the AGM, which will be answered during the meeting itself. 16 | 28 | Percentage of share register met in 2022 | | | | | --- | --- | --- | --- | --- | | | | Chair | 33.2% | | | | Executive Directors | | | 40.5% | | 3 | Executive Directors | | | | 2.5% and GMT 45 Investor Relations 8.2% Chair Executive Directors Executive Directors and GMT Investor and analyst update Jennie Daly and Chris Carney held an investor and analyst update in May 2022 to outline our clear strategy to build a stronger and more resilient business and deliver superior returns, by focusing on our four strategic cornerstones. This event was attended by a number of institutional investors and covering analysts and was made available online shortly after the meeting. Following the meeting, positive feedback was received for the clarity of the strategy and messaging. Chair meetings Irene Dorner held 16 meetings with key institutional shareholders representing c.33% of our issued share capital. Investor relations programme We operate a structured investor relations programme, based around formal announcements and publications of the full year and half year results. The Board is kept regularly apprised of the investor relations programme and receives a detailed report at each meeting. Our corporate brokers also attend Board meetings as required to give their perspective on institutional shareholder sentiment. Remuneration consultation During 2022 as part of the Remuneration Committee’s review of the Directors’ Remuneration Policy (the ‘Policy’), Jitesh Gadhia, in his capacity of Chair of the Remuneration Committee, wrote to 26 institutional shareholders representing c.60% of our issued share capital. Whilst the Committee considers that the proposed amendments to the Policy are minor to bring the Policy in line with market practice, the Remuneration Committee sought feedback on the changes. Taylor Wimpey plc Annual Report and Accounts 2022 103 Investor Relations Directors’ report Board leadership and Company purpose continued ## Employee engagement National Employee Forum and Local Employee Forums The National Employee Forum (NEF) members represent all parts of thebusiness. The NEF is chaired by a regional managing director and theEmployee Champion attends each meeting. Each regional business also has its own Local Employee Forum (LEF) andis comprised of members from each function and department or arepresentative for groupings of smaller departments. Each LEF is responsible for communicating feedback from the NEF to their regional business and to feed any areas of concern up to the NEF. Informal engagement sessions The Employee Champion meets with small groups of junior to mid-level employees to gather feedback directly from employees outside of the NEFin an informal setting and without Senior Management being present, to further encourage openness. Engagement in practice plc Board The Board recognises the importance of engaging with the workforce and has therefore adopted two of the methods set out in Provision 5 of the Code; a designated Non Executive Director and a formal workforce advisory panel. The diagram opposite shows how both these methods feed into boardroom discussions. Employee Champion The Employee Champion is responsible for championing the ‘employee voice’ in the boardroom and strengthening the link Employee Champion between the Board and employees. The Board’s Employee Champion, currently Rob Noel, regularly engages with the workforce to gather their views through a variety of formal and informal channels (as set out National in the diagram opposite). As part of this engagement, Rob Employee identifies any areas of concern and feeds this back to the Forum Board to consider. Informal The next page provides four matters raised by employees engagement during employee engagement sessions, actions taken in session response to those concerns and the outcome. Local Employee Forum 104 Taylor Wimpey plc Annual Report and Accounts 2022 | Uniform upgrades | | Informal engagement sessions | | | --- | --- | --- | --- | | When January 2022 | | When January 2022 | | | Matter | Suitability of design and availability of our PPE | Matter | Additional lines of communication between the | | raised | and uniforms for site-based employees | raised | Board and employees would be beneficial to ensure | regular two-way flows of information | Action | Following engagement and feedback from several | | | | --- | --- | --- | --- | | taken | working groups a full review of work wear and PPE | Action | The Employee Champion held three additional | | | was completed and a new supplier was sourced | taken | informal engagement sessions with junior to | | | and agreed | | mid-level employees outside the NEF | | Impact/ | A new range of uniforms, which meets the needs of | Impact/ | The additional sessions led to more immediate | | Outcome | employees, will be rolled out during 2023 | Outcome | and less formal connections with good quality | conversations | InHouse improvements | | Expenses | | | --- | --- | --- | --- | | When January 2022 | | When July 2022 | | | Matter | The Company’s intranet, InHouse, was difficult to | Matter | Difficulty in accessing and using the online system | | raised | navigate as the search function was not user-friendly | raised | to claim back out of pocket expenses | | Action | Additional training was made available to enable | Action | Additional training was made available to ensure the | | taken | content owners to keep the information up to date | taken | system is accessible | and the search function was changed to deliver Impact/ The additional training was rolled out in September results by date rather than relevance | | | Outcome | 2022 which has improved the accessibility of the | | --- | --- | --- | --- | | Impact/ | User experience has improved following the training | | system. In addition, the external online system | | Outcome | and enhanced search functionality. Ongoing | | provider has reduced their response time to queries | | | improvements are being considered to further | | to further support employees | improve InHouse Engagement activities throughout the year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Board meeting Employee Champion update to the Board Employee Champion engagement with employees Chair and Non Executive Director site and regional business visits Teams live events Employee survey Taylor Wimpey plc Annual Report and Accounts 2022 105 Directors’ report ## Nomination and Governance ## Committee report Key activities of the Nomination and Governance Committee in 2022 Oversaw the recruitment process for the appointment of Robert Noel as the Company’s new Chair Oversaw an effective induction programme for Jennie Daly as the newly appointed Chief Executive Facilitated a formal, rigorous and transparent Committee members Meeting recruitment process for the appointment and induction attendance of two new Non Executive Directors (a) 1. Irene Dorner (Chair) Reviewed the Group Management Team, Heads of (a) 2. Robert Noel Functions and wider workforce talent and succession 3. Lord Jitesh Gadhia plans 4. Scilla Grimble Reviewed and recommended the approval of the 5. Humphrey Singer Company’s diversity and inclusion activities, progress (b)(c) and targets 6. Clodagh Moriarty (b) 7. Mark Castle (d) 8. Angela Knight (d) 9. Gwyn Burr (a) Irene Dorner and Robert Noel were not in attendance at meetings involving the recruitment and appointment process for the Chair. ### As at 31 December 2022: (b) Appointed to the Committee on 1 June 2022. (c) Clodagh Moriarty was unavailable for one meeting. (d) Stood down from the Committee on 26 April 2022. Committee meetings were also attended, by invitation, by the Chief ### Percentage of plc Percentage of Executive, Group Finance Director, Group HR Director, Group General ### Board positions GMT positions Counsel and Company Secretary, members of the Company Secretariat team, Head of Talent, Head of HR, and Head of Production. ### held by women held by women Dear Shareholder As Chair, I am pleased to present the 2022 report of the ## 44% 38% Nomination and Governance Committee (the Committee) onbehalf of the Board. Board changes ### Percentage of Following the appointment of Jennie Daly as Chief Executive ### Leadership Team in April 2022, the focus of the Committee through the year has been to ensure a smooth induction and transition for ### positions held by Jennie into her new role. Since Jennie was already an (a) ### women Executive Director and member of the Group Management Team, her knowledge and grasp of the business was clear and her induction therefore focused on her role as Chief ## 21% Executive and the outlook for the business. The outgoing Chief Executive, Pete Redfern, was supportive (a) The definition of our and played a key role in the handover process for which we Leadership Team is our GMT are very grateful. and their direct reports. 106 Taylor Wimpey plc Annual Report and Accounts 2022 In April 2022, Gwyn Burr and Angela Knight Corporate governance Equality, diversity and inclusion stepped down from their roles as Non Our responsibilities as a Committee include Our focus on equality, diversity and inclusion Executive Directors. We thank both Gwyn oversight of the Company’s corporate continues at all levels across the business. and Angela for their contribution to the Board governance practices and we have During 2022, we were kept apprised of a and the Committee during their tenure. | | continued to develop our processes to | number of developments in this area, | | --- | --- | --- | | We welcomed Mark Castle and Clodagh | ensure corporate governance best practice | including updating all employee e-learning | | Moriarty as Non Executive Directors to the | is complied with at all levels of the organisation. | modules, becoming a ‘Level 1 Disability | | Board in 2022. Mark’s significant operational | More information about our activities in this | Confident’ employer and the development | | experience in all aspects of the construction | area can be found on page 110. | ofour aspirational diversity targets. | sector and Clodagh’s varied customer- Embedding good corporate governance In addition, the development of the focused experience across retail, strategy, throughout the Company will remain an Company’s first Diversity Report has been digital transformation and e-commerce have important area of focus for the Committee awelcome addition to our reporting in this been valued additions to our Board. Both throughout 2023. area. The Diversity Report outlines our Mark and Clodagh have brought with them aspirational targets and our plans to achieve key skills and experience gathered Board Evaluation these. A summary can be found on page throughout their careers. | | I am pleased to report that our annual Board | 114 and the Diversity Report can be found | | --- | --- | --- | | As a Committee, we have overseen the | Evaluation concluded that the Board | on our website. | | recruitment and induction processes for | continues to be effective; all Directors | | Whilst we are very pleased with our progress, Jennie, Mark and Clodagh in 2022. More continue to make valuable contributions we recognise that our Company is not yet as information about these processes can be based on experience and knowledge and the diverse as we would like and we will continue found on page 108. Non Executive Directors provide constructive to aspire to be reflective of the communities challenge at Board and Committee meetings. In December 2022, it was announced that I in which we operate. Creating a diverse The 2022 Board Evaluation was internally would be stepping down from my role as Company is our first goal but the ultimate aim facilitated by myself with the assistance of Chair of the Board at the conclusion of the must be to create an inclusive environment the Company Secretariat team and plans are 2023 Annual General Meeting (AGM). A where everyone can thrive and contribute. underway for the 2023 externally facilitated thorough succession process was led by Board Evaluation which shall be reported on More information about our future focus on Jitesh Gadhia with the assistance of an in the Annual Report and Accounts 2023. equality, diversity and inclusion can be found independent search firm. I am delighted that on page 114 and also in our Diversity Report Robert Noel, the Company’s current Senior More information about the outcomes of the which can be found on our website. Independent Director, will become the 2021 Board Evaluation and the 2022 Board Company’s Chair. The Committee carefully Evaluation can be found on page 112. considered Rob’s experience, skills and time available for this role and concluded that his skills were well suited to the role and he has Irene Dorner sufficient time to devote to the Company. I Chair of the Nomination am also very pleased to be remaining on the and Governance Committee Board as a Non Executive Director following the conclusion of the 2023 AGM. More 1 March 2023 information about the Chair succession process can be found on page 108. Taylor Wimpey plc Annual Report and Accounts 2022 107 Directors' report Nomination and Governance Committee report*continued* ## Chair succession and recruitment In December 2022, it was announced that Irene Dorner will be stepping down from her role as Chair of the Board, for personal family reasons, at the conclusion of the 2023 AGM on Thursday 27 April 2023. Irene will stay on the Board as a Non Executive Director following the conclusion of the AGM. The Nomination and Governance Committee, led by Jitesh Gadhia, undertook the search and recruitment process for Irene's successor, as the Company's Senior Independent Director (who would usually lead a Chair search) had indicated his interest in being considered for the role early in the process. The Committee appointed Spencer Stuart to assist with the search process. Spencer Stuart confirmed that they had no other connection to the Company or any Director other than as appointed by the Company to assist with executive and non executive search and appointment processes. A role profile was developed to ensure that the appointment was based on merit and objective criteria to identify the best candidate for the role. A small working hub was formed at the outset consisting of the Remuneration Committee Chair, Chief Executive, Audit Committee Chair and the Group HR Director. The working hub was responsible for the day-to-day oversight of the recruitment process to ensure progress was being made against the agreed plan. Spencer Stuart conducted an internal and external market-scanning exercise and produced a diverse long list of candidates for consideration against the role profile developed by the Committee. Following consideration of the long list of potential candidates against the role profile, the Committee produced a shortlist of preferred candidates to proceed to interview. The Committee agreed an interview approach, whereby each candidate met with all Executive and Non Executive Directors. Following each interview, feedback was provided to the working hub, and was discussed by the Committee at its meetings during the process. A final meeting was held in December 2022 for the Committee to discuss its views and agree a recommendation to the Board. Following approval by the Board, on 16 December 2022 it was announced that Rob Noel, the Company's current Senior Independent Director, would be appointed as the Company's new Chair from the conclusion of the AGM on 27 April 2023. The Committee and Board recognised Rob's long track record in the property sector, ability to operate in a cyclical environment, ability to challenge whilst working collegially and developing strong relationships among key stakeholder groups as key strengths suited to the role. The Committee also considered Rob's experience of chairing a FTSE 250 company as a strength. Following careful consideration, the Committee concluded that Rob would have sufficient time to devote to the Company alongside his other external appointments. More information about Rob, his experience and previous roles can be found on page 88. Irene and Rob will work closely together on a thorough handover ahead of Rob's formal appointment to the role. More information on Rob's induction process will be reported in the Company's Annual Report and Accounts 2023. ## Non Executive Director appointments and induction process In 2022, after Gwyn Burr and Angela Knight informed the Board of their intention to step down and following the Committee's review of the Board's composition, balance and skills, a formal and rigorous search and recruitment process was undertaken to appoint two new Non Executive Directors to the Board. The Committee developed a role profile for these appointments and Spencer Stuart was appointed to assist with the search and recruitment process. Spencer Stuart confirmed they had no other connection to the Company or any Director other than as appointed by the Company to assist with executive and non executive search and appointment processes. After following the same steps as outlined in the Chair succession and recruitment process above, the Committee recommended the appointment of Mark Castle and Clodagh Moriarty as Non Executive Directors. Mark's significant operational experience in all aspects of the construction sector and Clodagh's varied customer-focused experience across retail, strategy, digital transformation and e-commerce were identified as key strengths and important additions to the Board's skills. Following their appointment, Mark and Clodagh undertook an in-depth induction process which included reviewing a comprehensive pack of documents setting out key information about the Company and the Board, broker reports on the Company and housebuilding sector, and information on directors' duties. Following their appointment, Mark and Clodagh met with a number of key internal individuals, including the Chair, Executive Directors, Non Executive Directors, members of the GMT and Heads of Functions. In addition, meetings with the Company's solicitors, brokers, external Auditors and advisers were arranged. Mark and Clodagh also visited a number of regional businesses and sites during 2022, including our Logistics business. ![img-14.jpeg](img-14.jpeg) ![img-15.jpeg](img-15.jpeg) ![img-16.jpeg](img-16.jpeg) 108 Taylor Winnipeg plc Annual Report and Accounts 2023 ## Chief Executive ## induction process ## and Q&A Following the announcement of the appointment of Jennie Daly as the Company’s Chief Executive in February 2022, an extensive handover process was completed ahead of Jennie’s formal appointment in April 2022. As the former Group Operations Director and an existing member of the Company’s GMT, Jennie’s extensive knowledge of the Company meant that the handover and induction process was not focused on the Company itself and more on her new role as Chief Executive and outlook for the business. This enabled Jennie to be well positioned upon formal appointment as the Company’s Chief Executive. During the handover period, Jennie and Pete Redfern, the Company’s former Chief Executive, engaged with or visited every regional business across the country. In addition, since her appointment, Jennie has visited eight regional businesses and held six Teams live Q&A events to further engage with our employees. More information about Jennie’s engagement with employees can be found on page 40. A Q&A with Jennie is set out below, focusing on the handover process and her first year in the role. How would you describe the handover process from Pete to you as Chief Executive? The handover process between Pete and myself was a really valuable experience. My focus during this period was on developing and embedding my outlook for the business and engaging with as many of our employees as possible. I believe TaylorWimpey has a very special culture of which we are all proud and it is important to ensure we continue to keep our people and business partners motivated and engaged. How would you describe your first year as Chief Executive? 2022 was a challenging year with two distinct halves. However, with challenge comes the opportunity to renew our focus on our purpose and focus on our strategy to build a stronger and more resilient business and deliver superior returns. Taylor Wimpey plc Annual Report and Accounts 2022 109 Directors’ report Nomination and Governance Committee report continued Committee purpose and Upon appointment as Chair, Rob Noel will Board balance and skills beconsidered independent in accordance responsibilities During 2022, following a number of Board with the Code. The Committee considers The main objectives of the Committee are changes, the Committee considered the thebalance of independent and non- to ensure that there are formal, rigorous and structure, size,and diversity of the Board, as independent Directors appropriate and will transparent procedures for theappointment well as the skills, knowledge and experience keep this under review. of new Directors to the Board, its Committees of each Board member. and other senior positions in the Company; The Directors are required to notify the The Committee concluded that the balance, to keep the Board’s corporate governance Company of any changes to their external as at 31December 2022, of the Chair, two arrangementsunder review; and to ensure commitments in order that these roles can Executive Directors and six Non Executive that both the Company and the Board be considered in relation to the potential for Directors remains appropriate. This balance operate in a manner consistent with a conflict of interest to arise. These external will be kept under review during 2023. In corporate governance best practice. roles are considered by the Committee and addition, the skills of each member of the during 2022 it has been concluded that no More information about the Committee’s Board, as set out below, along with the conflicts of interest have arisen. In addition, purpose and responsibilities can be found balance of Executive and Non Executive the Committee also considers that each inthe Committee’s Terms of Reference Directors is considered to be appropriate Director is able to allocate sufficient time which are available on our website. to provide constructive challenge as well as tothe Company effectively. This not only guidance and support in order to continue Governance included Board and Committee meeting to deliver the Company’s strategy. attendance, but also preparation time, site During 2022, the Committee oversaw a visits and other additional time commitments number of governance matters, including: 1 required during the year. – Approved the 2022 Notice of Annual Accordingly, at the 2023 AGM each Director, General Meeting. irrespective of their appointment date, will be – Confirmed compliance with the 2 submitted for election or re-election, as Committee’s Terms of Reference. appropriate. More information can be found – Reviewed the corporate governance on page 210. framework and reported to the Board thatit remains appropriate. Governance framework documents – Recommended to the Board the annual 6 The below governance-related documents approval of the Directors’ Conflicts of can be found on our website. Non Executive Directors Interest Register. Executive Directors | – Approved and oversaw the 2022 Board | – Articles of Association. | Chair | | --- | --- | --- | | Evaluation process. | – Matters Reserved for the Board. | | | – Approved the Committee’s annual plan | – Division of Responsibilities document. | | | for2023. | – Terms of Reference for the Board | | Board skills – Recommended to the Board the renewal Committees. of a Non Executive Director’s three-year – Board mandated policies. Operational appointment term. Each Director is required to seek election or Financial re-election, as appropriate, at each year’s AGM. As part of this election and re-election Property process, the Committee has assessed each Non Executive Director’s independence and Construction is satisfied that they remain independent in nature and there were no circumstances identified that are likely to impair, or could ESG impair their independence. In addition, the Committee is satisfied that the Chair was Customer independent in accordance with the Code, service when she became Chair of the Board. Upon Strategy stepping down from the role of Chair, Irene Dorner will be considered a non-independent Risk Non Executive Director. IT Economics Public sector 0 25 50 75 100 % of the Board 110 Taylor Wimpey plc Annual Report and Accounts 2022 # Board appointments The Committee ensures that all Board appointments are subject to formal, rigorous and transparent procedures, are based on merit and objective criteria and promote diversity of gender, social and ethnic background, and cognitive and personal strengths. There were a number of appointments to the Board during 2022, including: - On 26 April 2022, Jennie Daly was appointed as the Company's Chief Executive. - On 1 June 2022, Mark Castle and Clodagh Moriarty were appointed as Non Executive Directors. - On 16 December 2022, it was announced that Irene Dorner would be stepping down and Rob Noel would become Chair of the Board at the conclusion of the 2023 AGM. More information about the appointments made to the Board during 2022 can be found on page 108. # Succession planning During 2022, the Committee considered the succession planning for both the GMT and Heads of Functions, as well as wider workforce planning for certain roles including regional managing directors. The Committee has visibility of a range of employees who have been identified as potential succession candidates for such roles in the short, medium and long term. The Committee reviews the development programmes for these individuals to ensure they continue to develop in line with the succession plan. The appointment of Ishaq Kayani as the Company's new Group General Counsel and Company Secretary is an example of our succession plans in action. Ishaq started at Taylor Wimpey as the Group's Dispute Resolution Solicitor and progressed to Legal Director and Interim General Counsel in 2022. More information about Ishaq's career to date can be found on page 91. In addition, the Committee oversees wider workforce succession planning and one area considered in 2022 was the production skills shortage action plan. The Committee considered the factors contributing to the skills shortage across the sector and recognised the requirement for further action planning in this area. The Committee discussed the action plan, including the need for collaboration across the sector and supporting the supply chain. Equality, diversity and inclusion considerations, as defined in the Company's Equality, Diversity and Inclusion Policy, are embedded throughout the succession planning process. This applies throughout all levels of the business and during 2022, an inclusive leadership coaching programme was piloted to explore the attributes, mindset and skills required of an inclusive leader. In addition, an inclusion workshop was delivered which focused on attracting, selecting and retaining diverse teams. These considerations throughout the business ensure that we attract and retain a diverse workforce which feeds into our long term succession plans. The Committee is supported in this by the Group Talent Management Board and Divisional Talent Management Boards which regularly review succession plans and related development requirements across roles within the Company. One aspect of a senior individual's development plan is for those below Board level to be given the opportunity to attend Board meetings to present on specialist topics, project work and divisional performance. This process not only provides valuable exposure to the Board but it is also valuable for the Board and Committee to assess the strength and depth of the succession plans in place. During 2022, a number of individuals were invited to present to the Board on topics including customer service, supply chain, HR, production, HSE, IT, sustainability and technical. # Contingency planning During 2022, the Committee reviewed the Company's contingency cover to ensure that the Company can respond to the unforeseen unavailability of any member of the Board, GMT or other senior roles without impacting the current and long term performance of the Company. Following this review, the Committee was confident that all key roles have an appropriate contingency plan in place. # Non Executive Director tenure The Committee is conscious that the Code does not consider a Non Executive Director to be independent after they have served on the Board for nine years from the date of their first appointment and is therefore mindful of the tenure of each Non Executive Director. This table shows the tenure of each of our Non Executive Directors against the nine year period. Read more on page 98 Irene Dorner Robert Noel Mark Castle Jitesh Gadhia Scilla Grimble Clodagh Moriarty Humphrey Singer Tenure Maximum tenure as per the Code ![img-17.jpeg](img-17.jpeg) Taylor Wimpey plc Annual Report visit Accounts 2023 111 Directors’ report Nomination and Governance Committee report continued Board Evaluation The Board undertakes a formal and rigorous evaluation of the performance of the Board, its Committees, the Chair and individual Directors onan annual basis. This process follows a three year cycle, with the 2022 Board Evaluation being internally facilitated and the next externally facilitated evaluation due to be undertaken in 2023. | Year 1 - External | Year 2 - Internal | Year 3 - Internal | | --- | --- | --- | | Externally facilitated | Internal evaluation | Internal evaluation | | Board evaluation | facilitated by the Chair | facilitated by the Chair | | | and Company | and Company | | | Secretariat team | Secretariat team | ### Stage 1 May 2022 The Chair’s proposal on how they plan to facilitate the annual Board Evaluation for 2022 was reviewed and approved by the Nomination and Governance Committee. | Stage 2 | Stage 3 | Stage 4 | | --- | --- | --- | | August 2022 | September 2022 | September 2022 | | Each Director completed an online | Responses to the questionnaire were collated | The Non Executive Directors met without the | | questionnaire focusing on Board leadership, | and shared with the Chair on a non-attributable | Chair to review the Chair’s performance based | | composition and succession, strategy, culture | basis. Any comments specifically relating to the | on the non-attributable feedback. | | and purpose, the Board’s Committees, | Chair were shared with the Senior Independent | | | stakeholder engagement and Board support. In | Director. | | addition, five members of Senior Management who regularly interact with the Board were also invited to provide feedback. | Stage 5 | Stage 6 | Stage 7 | | --- | --- | --- | | September 2022 | October 2022 | December 2022 | | Each Director was invited to have an optional | Specific feedback was shared on an individual | The Board approved an action plan which will | | one-to-one discussion to provide more detailed | basis and the overall outcome and feedback | be implemented during 2023. The action plan | | feedback. | was shared and discussed by the Board at its | addresses the key comments made during the | | | October meeting. | evaluation process. | 112 Taylor Wimpey plc Annual Report and Accounts 2022 The overall conclusion of the Board Evaluation was positive on all aspects of Board effectiveness, and confirmed that there continues to be effective challenge and support at Board meetings. Some areas for improvement were identified and an action plan was agreed to address these areas. | 2022 recommendations | Actions planned for 2023 | | --- | --- | | Increase exposure to members of Senior Management. | Additional opportunities for engagement with the GMT and Heads of Functions will be arranged in 2023. | | Increase reporting on succession and development plans. | Annual agenda plans for 2023 include increased reporting and feedback on succession and development plans for the Board, GMT and all employees. | | Ensure progress against ESG initiatives are clear. | Agendas for Board and Committee meetings have been reorganised to ensure ESG initiatives are clearly highlighted and understood. | In addition, the Committee ensured that the following actions were taken during 2022, following on from the 2021 Board Evaluation. Progress against the below actions was reviewed during the year as part of the overall Board Evaluation process. | 2021 recommendations | Actions taken during 2022 | | --- | --- | | Completion of a rigorous and thorough recruitment process to appoint the next Chief Executive and prepare a comprehensive induction programme. | Jennie Daly was announced as the Company's Chief Executive from the conclusion of the 2022 AGM on 26 April 2022. A thorough induction and handover process was undertaken, as detailed on page 109. | | Review the role of the Board's Employee Champion and consider ways to further strengthen engagement with employees. | The role of the Board's Employee Champion was reviewed and during 2022, additional engagement sessions were scheduled outside of the Employee Forum schedule to encourage further two-way communication. More information can be found on page 104. | | Further develop the Board's oversight of the Company's ESG priorities and determine ways to measure ESG progress consistently. | During 2022, the Board increased its oversight of the Company's ESG priorities and approved the Company's Net Zero Transition Plan. More information can be found on page 56. | | Arrange additional regional business and site visits for Board members. | The Directors have visited 9 sites throughout 2022, both on a group and individual basis. In 2023, each Non Executive Director is requested to visit at least one regional business or site per quarter. More information can be found on page 100. | Taylor Wimpey plc Annual Report and Accounts 2023 113 Directors' report Nomination and Governance Committee report continued # **Board diversity** Board diversity is supported by the Board Diversity Policy which specifically applies to the Board and its Committees and supports the Company's wider approach to diversity. Diversity is considered in its broadest sense, including but not limited to, sex, gender reassignment, ethnicity, religion or belief, disability, sexual orientation, age, pregnancy and maternity, marital status, educational and professional background. This Policy was reviewed and approved by the Board during 2022 and is available on our website. The Committee and Board recognise the benefits that diversity brings and the importance of having a balance of perspectives, insights and challenge to ensure good decision making, oversight and support throughout the Company. The Committee and Board fully support the FTSE Women Leaders Review target of 40% female representation on the Board and the Leadership Team by the end of 2025. The definition of Leadership Team includes our Group Management Team and their direct reports. Whilst we are pleased to report that we have exceeded this target in relation to our Board membership, we recognise that further progress needs to be made in relation to female representation in our GMT and Leadership Team. The Committee is also pleased to note that, as at 31 December 2022, both our Chair and Chief Executive are women, which exceeds the target set to be achieved by 2025. This target will be considered when making any Board changes in the future. The Committee and the Board also fully support the Parker Review's 'Beyond One by 21' recommendation and is pleased to confirm compliance with this recommendation as at 31 December 2022. Diversity, in its broadest sense, remains a key consideration during recruitment and will continue to be referenced in all recruitment processes. The Committee is pleased to report early compliance with the FCA's new diversity disclosure requirements, as set out in the table below. At Taylor Wimpey 'executive management' is defined as the GMT. The figures in the table are stated as at 31 December 2022 and have been calculated based on diversity data provided upon employment. # **FCA Diversity Disclosure Table** | Gender diversity | Number of Board members | Percentage of the Board | Number of senior positions on the Board | Number in executive management | Percentage of executive management | Number of employees | Percentage of employees | | --- | --- | --- | --- | --- | --- | --- | --- | | Men | 5 | 55.60% | 2 | 5 | 62.50% | 3,455 | 67.01% | | Women | 4 | 44.40% | 2 | 3 | 37.50% | 1,701 | 32.99% | | Other categories | - | - | - | - | - | - | - | | Not disclosed/prefer not to disclose | - | - | - | - | - | - | - | | Ethnic diversity | Number of Board members | Percentage of the Board | Number of senior positions on the Board | Number in executive management | Percentage of executive management | Number of employees | Percentage of employees | | --- | --- | --- | --- | --- | --- | --- | --- | | White British or other White | 8 | 88.90% | 4 | 8 | 100% | 4,467 | 86.64% | | Mixed/multiple Ethnic Groups | - | - | - | - | - | 62 | 1.20% | | Asian/Asian British | 1 | 11.10% | - | - | - | 109 | 2.11% | | Black/African/Caribbean/Black British | - | - | - | - | - | 79 | 1.53% | | Other ethnic group including Arab | - | - | - | - | - | 29 | 0.56% | | Not specified/prefer not to say | - | - | - | - | - | 410 | 7.95% | # **Employee diversity** Employee diversity, in its broadest sense, remains a key priority for the Committee, and across the Company as a whole. In 2022, the Committee oversaw the progress and development of a number of activities in this area, including the embedding of the revised Equality, Diversity and Inclusion Policy introduced in 2021, the publication of our Diversity Report and the development of a number of aspirational diversity metrics to be achieved by the end of 2030. The Company's Equality, Diversity and Inclusion Policy is based on three key areas of focus: - 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. - Employer of choice: Ensure that our working environment, policies, procedures and development and progression opportunities support greater diversity and inclusion. - Expanding our reach: Develop broader recruitment channels and take positive action to expand the diversity of candidates attracted to the Company, including designing development programmes to attract and support new employees. Detailed information about the Company's employee diversity policies, practices and progress in this area can be found on page 50 of this Annual Report and Accounts 2022 and in our Diversity Report which can be found on our website. # **2030 aspirational diversity targets** | **Female representation in regional business leadership roles** | **50%** | | --- | --- | | **Ethnic representation in regional business leadership roles** | **12.5%** | | **Female representation in graduate early entry talent** | **50%** | | **Ethnic representation in graduate early entry talent** | **25%** | | **Female representation in early entry talent** | **50%** | | **Ethnic representation in early entry talent** | **25%** | 114 Taylor Wimpey plc Annual Report and Accounts 2022 # Audit Committee report ![img-18.jpeg](img-18.jpeg) Key activities and areas of focus for the Audit Committee in 2022 Continued to oversee measures to ensure the Company's IT operating environment remained robust, supported the Company in a year of planned changes and oversaw measures to ensure it remained protected against cyber and other threats Gained assurance on required changes to key processes and controls, particularly in relation to the New Homes Ombudsman and the Future Homes Standard Oversaw preparations for expected changes in law and regulation affecting financial governance Oversaw the transition to the new Head of Internal Audit 2023 key areas of focus To gain assurance that management action on, and investment in, cyber security, and the programme to digitise our production procedures will further strengthen our overall control environment. To monitor the Group's readiness for the adoption of any financial governance and ongoing corporate reporting changes resulting from any regulatory requirements instigated by the Department for Business, Energy & Industrial Strategy (BEIS) or the Financial Reporting Council (FRC) To gain assurance that key business controls, in particular segregation of duties and delegation of authority, remain effective following any business restructure Committee members Meeting attendance | 1. Humphrey Singer (Chair) | ● ● ● | | --- | --- | | 2. Robert Noel^{(a)} | ● ● ● | | 3. Sollis Grimble | ● ● ● | | 4. Mark Castle^{(b)} | ● ● | | 5. Angela Knight^{(c)} | ● | (a) Will step down from the Committee on 27 April 2023 when he becomes Chair of the Board. (b) Appointed to the Committee on 1 June 2022. (c) Stood down from the Committee on 26 April 2022. Committee meetings were also attended, by invitation, by the Chair, Chief Executive, Group Finance Director, other Non Executive Directors, a Group Management Team (GMT) member, Group General Counsel and Company Secretary, other members of the Company Secretariat team, Group Financial Controller, Head of Internal Audit, Senior Internal Audit Manager, Head of Tax, Head of Group Reporting, Head of Risk, Group IT Director, and the external Auditors. All members of the Committee are independent Non Executive Directors as required by the 2018 UK Corporate Governance Code (the Code). The Board has determined that Humphrey Singer, Chair of the Committee, has recent and relevant financial experience as required by the Code. More information can be found on page 118. Dear Shareholder On behalf of the Board, I am pleased to present the 2022 report of the Audit Committee (the Committee). The Committee fulfils its responsibilities through the activities undertaken throughout the year, as detailed on pages 117 to 118. Taylor Wimpey plc Annual Report and Accounts 2023 115 Directors’ report Audit Committee report continued Committee changes updating of the Committee; and an disclosures, and those were taken into independent review of readiness by the account in the preparation of this Annual Our work has been further enhanced by the Internal Audit team. Report and Accounts 2022. appointment on 1 June 2022 of Mark Castle, | Non Executive Director. Mark brings | More information on the Committee’s | The new Head of Internal Audit is Paul | | --- | --- | --- | | significant operational experience, as | activities during 2022 in this area can be | Skinnider, a Chartered Internal Auditor with | | described in more detail on page 118, which | found on page 121. | more than 15 years’ audit and risk | | has added to our skill set; assists us in our | | experience. Paul joined us in 2020 from | | assessment of operational risk; and has | Preparing for planned financial | | Lloyds Banking Group where he was interim | generally further enhanced the quality of our | governance changes | Head of Audit and prior to that held | | --- | --- | --- | | work on behalf of shareholders. | A significant area of focus during 2022 was | progressively senior internal audit roles with | | | on the governance development referred to | Heineken and Oxford University Press. He is | Angela Knight stepped down from the in last year’s Annual Report and Accounts, an active member of the Chartered Institute Committee on 26 April 2022, when she namely, the Government’s consultation, by of Internal Auditors as a committee member stepped down from her role as a Non BEIS, entitled ‘Restoring Trust in Audit and for the profession in Scotland. Executive Director. During her time on the Corporate Governance’. The consultation Committee, since November 2016, Angela’s Paul’s predecessor, Anne Wilson, retired on proposed a number of reforms and new broad experience of financial services and 30 November 2022 after 20 years as Head processes designed to improve banking, and her extensive non executive of Internal Audit, and leaves the function in communications and engagement between director experience, contributed to the excellent health and with effective working Boards, their Audit Committees and effective challenge to Management and the relationships around the business, which has shareholders. More details are now known of internal and external Auditors, and enhanced facilitated its dual aims of effectively auditing the legislative and Code changes which the our work on shareholders’ behalf. I should performance, financial outcomes, and Government and the regulators plan to like to take this opportunity to thank Angela governance, whilst also encouraging and introduce, and further details of these, and for her contribution to our work during her sharing best practice between regional the Company’s plans and preparations to period of service. businesses. I wish to thank Anne for her comply with them, are set out on page 120. sterling efforts on behalf of the Group and Robert Noel will succeed Irene Dorner as We will continue to ensure that all applicable our shareholders during her period of Chair of the Board at the conclusion of the laws and regulations are complied with, and service; to wish her well in retirement; and to AGM on 27 April 2023 and will step down we remain confident that the business wish Paul well in his new position. from the Committee in compliance with the continues to operate in a controlled and Code. At that time, the Committee and the well-managed way. Continuing compliance Board will consider the composition of the Committee in relation to its annual plan and Throughout the year we met the FRC More information on the Committee’s areas of focus, and assess whether an guidance on Audit Committees which was activities during 2022 in this area can be additional appointee is necessary. incorporated into the Code. The aim of the found on page 120. guidance is to further improve good Our interim review of progress concluded Key areas of focus during 2022 governance around the Committee’s that all of those key areas of focus were competence; induction for new members; The Committee’s key areas of focus during satisfactorily addressed or progressed during audit rotation; independent assessment of 2022 were addressed as set out below: 2022. areas of judgement; and sufficiency of IT operating environment resourcing; all with the aim of ensuring that it Audit oversight is able to perform its primary function of We oversaw, and received regular updates We continue to hold individual meetings with protecting shareholders’ interests in relation on, progress and plans to maintain and the external Auditors and with the Head of to the Company’s financial reporting and enhance the resilience of the Company’s IT Internal Audit, independent of the Executive internal control. systems. This included enhancements to Directors, to discuss matters within our remit cyber defences and appropriate assurance More information about how we complied and any issues arising from the external and that system and process enhancements with the guidance can be found on pages internal audits. were performed within an overarching 117 to 123. continuation of robustness and resilience. The audit of the 2022 financial results has been improved and enhanced by lessons More information and detail on the learned, both by the external Auditors and Committee’s activities during 2022 in this the Company, following our detailed annual area, can be found on page 121. evaluation of the external audit process and Humphrey Singer the outcome of the external audit of the Key processes and controls Chair of the Audit Committee Annual Report and Accounts 2021. We oversaw, and received updates on, the development and introduction of key During the year, the Company received a 1 March 2023 | processes to enable the Company to comply | letter from the FRC’s Corporate Reporting | | --- | --- | | with the New Homes Quality Code (NHQC) | Review Team following a review of the | | and the New Homes Ombudsman Service. | Company’s Annual Report and Accounts | | This included a process whereby the Internal | 2021. Whilst acknowledging the limitations | | Audit team will monitor ongoing compliance. | inherent in the scope of their review, we were | pleased to learn that the FRC did not raise Readiness for Parts L and F of the Future any questions or queries for the Company. Homes Standard was an area of focus for Some observations were made which the the Audit Committee in 2022. This included a FRC believed could enhance existing Change Review Panel which fed into the 116 Taylor Wimpey plc Annual Report and Accounts 2022 Committee activities during 2022 The February 2023 meeting concluded the Committee’s activities with regard to the Group’s 2022 reporting cycle which have accordingly been included in the table below. March August December February Topic Activity / review 2022 2022 2022 2023 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 Auditors’ report on the statement Reviewed Accounting Issues and Accounting Standards in preparation for year end reporting Reviewed the proposed TCFD reporting External audit Recommended to the Board the re-appointment of PwC as external Auditors Reviewed PwC’s plan for the scope of the audit of the Annual Report and Accounts 2022, including key audit risks and regional checks conducted around the business, and the progress of the audit to date Disclosed relevant audit information to the external Auditors and the required evidence in support of it Conducted a review of the effectiveness of the year end external audit process and reporting outcome for 2021, including PwC’s performance, and oversaw certain improvements and enhancements flowing from the review’s outcome Reviewed and approved the external Auditors Non-Audit Services Policy Internal control Reviewed the fraud risk assessment incident and response report and 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 Reviewed the viability model Reviewed the Group assurance map and proposals for its further development Monitored the developing BEIS recommendations and the preparations by the Company to comply with its expected new requirements in terms of legislation and amendments to the Code Taylor Wimpey plc Annual Report and Accounts 2022 117 Directors’ report Audit Committee report continued | | | March | August | December | | February | | | --- | --- | --- | --- | --- | --- | --- | --- | | Topic Activity / review | | 2022 | 2022 | | 2022 | | 2023 | | Committee | Reviewed the Committee’s performance against its Terms of Reference | | | | | | | | governance | and 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 Internal Audit Received activity reports from Internal Audit Agreed Internal Audit’s programme of work for the next year Reviewed progress against Internal Audit’s priorities and work plan for the year Received confirmation that all of the agreed actions flowing from the prior year’s External Quality Assessment report had been implemented Considered and approved the proposed appointment of the new Head of Internal Audit, including confirmation of his independence and objectivity Data and Received an update on the Group’s data and systems security, systems technology, cyber resilience and further protective measures in relation to security key business systems Compliance Received an update on legal and regulatory compliance requirements across the Group and confirmation that these continued to be met In carrying out these activities, the Committee relies 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 The Committee’s Terms of Reference can be Rob Noel has considerable experience of found on our website. theproperty sector and wide commercial The Committee met individually and privately experience as Chair of Hammerson plc with the Head of Internal Audit and with Committee competence andpreviously as Chief Executive of Land representatives from the external Auditors A key requirement of the FRC’s guidance on Securities Group PLC. during appropriate Committee meetings in 2022, in order to discuss any matters which Audit Committees is that each Committee When he steps down from the Committee either may wish to raise in confidence. member should have sufficient knowledge, upon appointment as Chair of the Board at training and expertise to contribute effectively the conclusion of the 2023 AGM, the The Committee has noted a shareholder to the Committee’s deliberations. Committee and the Board will consider the advisory body’s guidance as to the number of Humphrey Singer, the Committee Chair, has composition of the Committee in relation to Audit Committee meetings considered to be been a member of the Audit Committee its annual plan and areas of focus, and appropriate for FTSE 100 companies such as since December 2015 and its Chair since assess whether an additional appointee ours. This was considered in relation to the February 2018. He has extensive experience isnecessary. Committee’s annual plan for 2023 and we currently believe that three meetings per year of the financial reporting requirements of Scilla Grimble has over 16 years’ executive remains appropriate and sufficient to FTSE 100 companies; of financial reporting experience in corporate finance; is currently effectively discharge the Committee’s preparation and compliance for public the Chief Financial Officer at Deliveroo plc; responsibilities. There are processes in place companies, and of dealing with internal and and brings significant financial and risk- for the Committee to meet on additional external auditors, from his current role as related experience. occasions when necessary, as it did during Chief Financial Officer of Belron Group and Mark Castle, who was appointed to the 2020 in connection with the effective oversight from previous roles with Marks and Spencer Committee on 1 June 2022, has significant of the tender of the external Auditors. Group plc and Dixons Carphone plc. This operational experience in all aspects of the depth of experience has given Humphrey construction sector as Chief Operating Committee purpose insight into key areas of shareholder concern Officer of Mace Finance Ltd and previously and independent experience of robustly and responsibilities from executive roles at Structuretone Inc challenging and holding Management, and The main objective of the Committee is to andWates Group Ltd. This assists the the external and internal auditors, to account. assist the Board in fulfilling its corporate Committee in its assessment of operational governance responsibilities relating to the The Committee Chair is assisted on the risk; and has generally further enhanced the Group’s financial reporting, risk, and internal Committee by the knowledge and experience quality of the Committee’s work on behalf control framework, and any other matters of three other Non Executive Directors: ofshareholders. referred to it by the Board. 118 Taylor Wimpey plc Annual Report and Accounts 2022 The Committee is confident that its members audit process. The Committee also Appointment of the external Auditors for collectively have the necessary competence considered the nature and extent of the non-audit services relevant for the housebuilding sector and that non-audit work performed by PwC during The Committee has a formal policy, reviewed the composition, balance, and expertise of the the year. In addition, the Committee on a regular basis, as to whether the Committee can give shareholders confidence considered whether PwC had appropriately Company’s external Auditors should be that the financial, reporting, risk, and control challenged Management estimates and employed to provide services other than processes of the Group are subjected to the judgements. The Auditors’ report (starting on audit services. In line with the Code, the appropriate level of independent, robust and page 152) details the key matters that were Committee has regard to the relevant ethical challenging oversight. considered as part of the year end audit. This guidance regarding the provision of non- includes details of the procedures performed As described in the Nomination and audit services by PwC. by PwC to assess the estimates and Governance Committee Report on pages judgements made by Management. A review of the policy has been undertaken 108 and 109, there is a formal process of and it was confirmed that the policy is in induction for new Directors which includes In particular the Committee noted during the accordance with the Revised Ethical specific reference to supporting competence course of the audit that the external Auditors Standard 2019 (the Standard) issued in in relevant Committee areas through challenged Management’s judgements and December 2019 by the Financial Reporting exposure to the appropriate areas of the assertions on the following matters: Council (FRC), which limits the non-audit Group’s operations and performance. Mark – Margin recognition and site forecasting. services which the external Auditors may Castle’s induction included meetings with the – Cladding fire safety provision. provide to the Company. external Auditors; the Head of Internal Audit; – Defined benefit pension valuation. the Group Finance Director; the Group In all circumstances where it is proposed to Financial Controller; the IT Director; and In relation to each of these judgements the engage the external Auditors to perform appropriate external bodies such as the external Auditors confirmed that the non-audit work in accordance with this Company’s brokers in relation to financial approach adopted by Management in policy, this is subject to the approval of the reporting. The same thorough induction accounting for these in the financial Audit Committee after it has properly process, suitably tailored as appropriate to statements was appropriate. assessed potential threats to the the appointee’s experience and expertise, independence of the external Auditors and The Committee considered the responses to will be undertaken by any new Non Executive the safeguards applied in the Standard. all these areas of assessment, and Directors appointed to the Committee. The Board, acting on guidance from the concluded that the audit process continues to be effective; that the quality and Committee following its review of the Committee evaluation | | sufficiency of the resources provided by | continuing effectiveness of this policy, is | | --- | --- | --- | | The Board Evaluation for 2022, which is | PwC’s engagement team remains | satisfied that it meets the Standard, and will | | described more fully on pages 112 and 113, | appropriate; that PwC remains independent; | be conducive to the maintenance of good | | included an appraisal of the performance of | and that there continues to be effective and | governance, best practice and auditor | | the Audit Committee and individually of its | independent reporting lines available to the | independence and objectivity. | | Chair and other members. | external Auditors direct to the Committee | | PwC undertook non-audit services in the and its Chair. | The outcome of the appraisal was that the | | form of assurance work carried out in | | --- | --- | --- | | Committee was considered to continue to | The Committee also assessed | connection with the announcement of the | | operate effectively; with the necessary level | Management’s proposals for incorporating | Company’s 2022 half year results. This | | of expertise; with no specific actions arising | into the Annual Report and Accounts | non-audit service is of direct benefit to | | requiring further improvement; and is chaired | consideration of material climate-related | shareholders. PwC also made available | | effectively and in a way that ensures a good | matters, and whether these had been | access to its subscription service providing | | level of debate and positive challenge. | considered by the external Auditors as part | online technical resources such as factual | | | of their audit. More details appear on pages | updates and changes to applicable law, | | External Auditors | 54 to 69 and 156. | regulation, and accounting and auditing | standards, at a notional value of £2,000. Re-appointment Based upon its assessment, as set out above, the Committee recommended to the The Committee recognises and supports the PwC was appointed as the external Auditors Board, which in turn is recommending to importance of the independence of auditors. at the 2021 AGM and concluded its first shareholders in Resolution 12 at the 2023 It reviewed PwC’s performance of non-audit audit with the publication of the Company’s AGM (on page 210), that PwC should services during 2022 and is satisfied that it Annual Report and Accounts 2021. The continue as external Auditors to the did not, and will not going forward, impair the Audit Partner is Sonia Copeland. Company. independence of the external Auditors. As a The Committee considers that the result, the value of non-audit services work The Company will of course keep the matter relationship with PwC is well established and by PwC was £0.1 million in 2022 (2021: £0.1 under regular review, taking into account the is satisfied with the effectiveness of the million) which represents approximately 10% annual performance review to be conducted overall external audit process. PwC’s of the audit fee as set out in Note 6 to the by the Committee in 2023. | performance has been kept under regular | | Accounts on page 173. | | --- | --- | --- | | review by the Committee and reported to the | The recommendation of PwC was free from | | | Board as appropriate. | influence by a third party and no contractual | | term of the kind mentioned in Article 16(6) of A full evaluation of PwC’s performance in the Audit Regulation has been imposed on relation to the audit of the full year results for the Company whereby there would be a 2021 was performed. This included a restriction on the choice to certain categories questionnaire being distributed to the Board or lists of audit firms in the Company’s and key stakeholders in the audit process to selection of its external auditors. evaluate the effectiveness of the external Taylor Wimpey plc Annual Report and Accounts 2022 119 Directors’ report Audit Committee report continued Internal Audit The Group belongs to and participates in Risk management and industry-wide forums and other initiatives Internal Audit’s primary role is to support the internal control aimed at combatting fraud within the Board and the Group Management Team The Group has an established ongoing housebuilding and construction industry. | (GMT) to protect the assets, reputation and | | process of risk management, which is | | --- | --- | --- | | sustainability of the Group. The function is | The Internal Audit function also reviews | detailed further on pages 72 to 79. The | | led by the Head of Internal Audit who directly | proposed related-party transactions, | Committee monitors the Group’s risk | | reports to the Chair of the Audit Committee, | including employees’ house purchases from | management and internal control systems, | | with a secondary reporting line to the Group | the Group, to provide assurance that the | including their effectiveness, on behalf of the | | Finance Director, and has regular direct | formal policy and proper procedures are | Board and provides advice to the Board in | | contact with the Chair of the Board, the Chief | followed. | connection with the Board’s own risk review. | Executive and other Executive Directors, as The Internal Audit and Company Secretariat The Committee’s objectives in relation to required. The reporting line to the Chair of teams work together to consider any longer risk are: the Audit Committee protects the function’s term revisions to the governance processes independence. – To ensure the Group’s risk profile remains and working environment. The learnings and within its agreed risk appetite and The most recent independent evaluation of improvements from this activity are tolerance levels and is adequately Internal Audit’s independence and continuously considered as part of the monitored and reviewed as appropriate to performance was carried out during 2021, as ongoing control and risk processes and this reflect external and internal changes. described in the Annual Report and activity will continue through 2023. – To give early consideration to the Accounts 2021, and found that Internal Audit During the year, the Committee assessed Government’s proposals in relation to a continues to operate effectively, with no and confirmed the continuing independence new regime for the strengthening of areas of non-conformance with and objectivity of Anne Wilson, prior to her internal controls requirements over recommended practice as set out in the retirement as the Head of Internal Audit, in financial, operational and compliance International Professional Practice compliance with the Internal Audit Code controls. Framework. Continuous improvement of Practice, due to her having then been in – To continue to develop the Group’s risk initiatives agreed at that time, have been post for over seven years. processes in light of evolving best practice. implemented, to ensure the Internal Audit – To consider emerging risks that could function continues to meet both current best Preparation for planned financial impact on the Group’s longer term practice and the evolving needs of the governance changes strategy. Group. A key legislative and regulatory change To achieve these objectives, the Committee Internal Audit reviews the effectiveness and proposed by the Government will result from undertook the following during 2022: efficiency of the systems of internal control in the measures proposed by BEIS arising from place to safeguard the assets; to quantify, – Detailed risk reviews were conducted its consultation into restoring trust in audit price, transfer, avoid or mitigate risks; and to twice during the year, at the Committee’s and corporate governance. monitor the activities of the Group in August (half year) and December (full year) accomplishing established objectives. Preparations continue for the expected meetings and covered both the systems changes in financial governance resulting used and the reported risks. The Internal Audit plan, and the individual from this consultation. – Regular updates were received on the audits conducted in line with the audit plan, continuing review of relevant historical and are driven primarily by the Group’s strategy A draft Audit and Assurance Policy has been current developments and actions taken and its key risks. Following each review, an prepared and was discussed at the by the Group to comply with the Internal Audit report is provided to both the Committee’s December 2022 meeting. Government guidance on fire safety. This Management responsible for the area A Group assurance approach has been included assessing and advising the reviewed and the GMT. These reports outline developed, as described on page 122 and Board, following the decision to sign up to Internal Audit’s opinion of the management its proposed reporting approach has been the Government’s Building Safety Pledge control framework in place together with considered by the Committee. for Developers, on the continuing actions proposed or made, as appropriate, The process for addressing these new appropriateness and sufficiency of the where improvements are recommended. The requirements will be re-assessed in light of associated provision, and reviewing Chief Executive, the GMT and Senior any changes to them, or the timeline for their updates on usage and the balance of the Management consider the reports on a introduction; reviewed to assess their provision during the year. regular basis and are responsible for appropriateness; and any changes managed – Updates were received on key IT risks, ensuring that improvements are made as through the established project governance. including the resilience of the Group’s agreed. A database of audit systems to cyber attack and action taken recommendations and improvement These actions have been monitored by the to maintain security of systems and data. initiatives is maintained. Follow-up and Committee during 2022 and will continue to – Advised the Board in its assessment of escalation processes ensure that such be monitored into 2023, when we expect to emerging risks, including potential velocity improvements are implemented and fully be able to report in greater detail as to their and impact on the Group’s longer term embedded in a timely manner. Summaries of scope and impact on the Company, its strategy, further details of which can be all Internal Audit reviews and other key assurance processes, and its future financial found on page 74. activity and resulting reports are also reporting. provided to the Audit Committee for review and discussion. 120 Taylor Wimpey plc Annual Report and Accounts 2022 Detailed risk reviews were conducted twice At its meeting in February 2023, the Board, Key processes and controls during the year, at which the Board, with having conducted its own review and after Another key area of focus for the Committee advice from the Committee, considered the reviewing more detailed assessments from during 2022 was gaining assurance on outputs from a bottom-up and top-down the Audit Committee, remained satisfied that required changes to key processes and review of risk in all areas of the business. the system of internal control continued to be controls that might have been affected by This included taking account of ESG effective in identifying, assessing, and known legislative changes impacting the considerations, and climate change, over ranking the various risks facing the Group; industry through 2022 and into 2023, in various time horizons. These assessments and in monitoring and reporting progress in particular the New Homes Ombudsman use an established methodology and include mitigating their potential impact on the Service and the Future Homes Standard. regularly reviewing the effectiveness of the Group. Group’s system of internal control in Key processes to enable the Company to The Board also approved the statement of providing a responsible assessment and comply with the NHQC and the New Homes the Principal Risks and uncertainties set out mitigation of risks. Ombudsman Service, were successfully on pages 75 to 79 of this Annual Report and introduced across the business. These The Committee also oversaw the further Accounts. included mandatory training for employees embedding of improvements identified in last and subcontractors; updating procedures year’s Audit Committee report in the area of IT operating environment and systems to reflect the NHQC risk. These related to the processes for Cyber resilience requirements; and automation of the identifying, assessing, monitoring, reporting, processes. and managing the residual elements of risk, A Principal Risk area identified by the Board the enhanced reporting of action plans, and is the potential vulnerability of the Group’s IT Internal Audit will monitor performance of, target risk for the identified key risks. systems to the various forms of cyber attack and compliance with, NHQC mandatory and a key area of focus for the Committee requirements. Action to mitigate the effect of each risk is during 2022 was continuing to ensure that led by the Chief Executive in conjunction with Readiness for Parts L and F of the Future the IT operating environment remained the relevant member of the GMT. Homes Standard was an area of focus for robust, supporting the business needs in a the Audit Committee in 2022. To gain During the year, Internal Audit concluded a year of planned changes to core systems assurance over our readiness, a Change review of the risk management process and and also that key systems were protected Review Panel was established, chaired by a identified enhancements which will be against cyber and other threats. member of the GMT and supported by implemented during 2023 to further The Head of Internal Audit attends the IT relevant Heads of Functions and subject strengthen and embed the process across Steering Committee meetings; and Internal matter experts. The Panel worked in the Group. Audit is represented on key project drivers, conjunction with the Group’s established Those systems cannot eliminate risks but including the upgrade of the financial governance forums around change projects rather seek to manage both the likelihood of consolidation system and the bank payment - its remit was to determine whether the their occurrence and the extent of their system. change was appropriately understood, risk impact and can only provide reasonable and assessed and managed appropriately. The The main enterprise resource planning not absolute assurance against material Panel Chair attended the August 2022 system, COINs, was upgraded during 2022 misstatement or loss. Committee meeting and shared their and both hardware and software observations and next steps. Internal Audit The Principal Risks facing the Company and improvements were completed. has included in their work plan a thematic the Group, as assessed by the Board, are There is continued focus on cyber threats review of our readiness, which included set out on pages 75 to 79 together with and system resilience generally, including the testing key processes and controls around information on the mitigations for each risk. successful testing by an independent third site layouts, build routes and budgeting. The The Committee also oversees the actions party and implementation of further conclusion from Internal Audit’s work was being taken to monitor IT initiatives which improvements derived therefrom. that the changes and impact were well aim to either directly protect against and understood by regional businesses’ Read more about cyber risks and our reduce the risk of cyber-related attacks and management teams and that appropriate response and mitigation processes on page fraud; support and enhance the current IT assessments and plans were in place and 79. | environment including data protection; or | costed. There will be continued focus from | | --- | --- | | that are crucial in their contribution to key | the Committee on the implementation of | | business initiatives aiming to enhance the | these changes during 2023. | experience of customers, suppliers and/or employees. Taylor Wimpey plc Annual Report and Accounts 2022 121 Directors’ report Audit Committee report continued ### Group assurance approach The overall structure of the Group’s internal controls and assurance processes are as set out below: – Primary source of the Group’s system of internal control for business operations ### Operating Framework – Gives wider assurance over the financial and non-financial information produced around the Group – 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 online for all employees, with controls to ensure compliance or appropriate pre-approval of any variation – Includes clear levels of delegated authority, responsibility and accountability – Relating to the operation of the main functions of the Group ### Detailed process manuals – Support the Operating Framework at a more granular level of detail GMT Internal Audit – Consider and, if appropriate, approve matters requiring – Independently assess appropriateness of, prior approval under the Operating Framework and compliance with, the Operating Framework – Monitor adherence to the Operating Framework and detailed manuals and detailed manuals Group assurance map A Group assurance map has been developed to provide a summary of the three lines of assurance to the GMT, the Audit Committee and Board. Assurance is mapped against our recognised key risks and it is based on a comprehensive and shared view as discussed with appointed risk owners together with Heads of Function and others who have key oversight responsibilities. This then enables the GMT, the Audit Committee and the Board to identify and confirm their assurance needs and any actions required to fulfil those needs. | Going concern | Viability statement | | --- | --- | | The Group has prepared forecasts, including | The viability statement is designed to be a | | various sensitivities, taking into account the | longer term view of the sustainability of the | | Principal Risks and uncertainties identified on | Group’s strategy and business model and | | pages 75 to 79. Having considered these | related resourcing, in light of projected wider | | forecasts, the Directors remain of the view | economic and market developments. The | | that the Group’s financing arrangements and | Committee considered whether there should | | capital structure provide both the necessary | be any change to the five-year period chosen | | facilities and covenant headroom to enable | for the statement but remained of the opinion | | the Group to conduct its business for at least | that this continued to be appropriate, taking | | the next 12 months. The Committee | into account the balance sheet strength and | | reviewed the forecasts and the Directors’ | confirmation from the Executive Directors | | expectations based thereon and agreed that | that this period continues to broadly align to | | they were reasonable. Accordingly, the | the development cycle for new land. The | | consolidated financial statements have been | Committee also reviewed the Executive | | prepared on a going concern basis. | Directors’ expectations; the criteria upon | which they were based; and the sensitivities Read more about our Principal Risks on applied, including how these linked to the pages 75 to 79. Principal Risks faced by the business; and agreed that they were reasonable. The statement appears on pages 84 to 85 together with details of the processes, assumptions and testing which underpin it. 122 Taylor Wimpey plc Annual Report and Accounts 2022 Annual Report and Accounts 2022 Margin recognition and site forecasting ### The cost allocation framework used across Recommendation Fair, balanced and understandable the Group controls the way in which the ### A key requirement of our financial statements to the Board inventory is costed and allocated across is that they are fair, balanced and each development. It also ensures that any The outcome of the above processes, understandable, and that they include the costs incurred in excess of the original together with the views presented by information necessary for shareholders to budget are recognised appropriately as the PwC, was that the Committee assess the Group’s position, performance, site progresses. recommended, and in turn the Board business model and strategy. confirmed, that the Annual Report and The Committee reviewed reports and The Committee monitors the integrity of the Accounts 2022, taken as a whole, is fair, recommendations from the GMT in relation Group’s reporting process and financial balanced and understandable, and to areas of the business recognising cost management, and reviews in detail the work provides the necessary information for excesses, and also reviewed the work of the external Auditors and any significant shareholders to assess the Company’s undertaken by PwC which included testing financial judgements and estimates made by position, performance, business model of the Group-wide controls to monitor cost Management. and strategy. allocation. The Committee gave careful consideration to the judgements and More detail on how the Board and the It considers the output from the above and assumptions involved, challenging Audit Committee have addressed the reviews the full year and half year financial Management where appropriate. assessment, control and mitigation of risk, statements before proposing them to the Board for consideration. and the oversight of the internal and Following these reviews, together with external audit functions, appear in this enquiries of the GMT and the external The review of the Company’s Annual Report Audit Committee report. Auditors, the Committee concluded that and Accounts took the form of a detailed there continued to be appropriate systems assessment of the collaborative process of ### Statement of compliance and internal controls in place, which ensured drafting them, which involves the Company’s that consistent principles were applied, the The Company has complied throughout Investor Relations; Company Secretariat; and treatment and presentation on the income the reporting year with the provisions of Finance functions, with guidance and input statement of the costs incurred by the The Statutory Audit Services for Large from other relevant functions and external business were appropriate, and that the Companies Market Investigation advisers. It ensured that there is a clear and external Auditors agreed with the (Mandatory Use of Competitive Tender unified link between this Annual Report and conclusions reached. Processes and Audit Committee Accounts and the Company’s other external reporting, and between the three main Responsibilities) Order 2014. Defined benefit pension valuations sections of the Annual Report and Accounts. The Committee reviewed the funding position In particular, the Committee: of the TaylorWimpey Pension Scheme and discussed and agreed the market-based – Reviewed all material matters. assumptions used to establish the net – Ensured that it correctly reflected the pension deficit recognised on the balance Group’s performance in the reporting year. sheet at 31 December 2022. – Ensured that it presented a consistent message throughout. Cladding fire safety provision – Ensured that it correctly reflected the The Committee reviewed and challenged Group’s business model. Senior Management’s assessment of the – Ensured that it correctly described the costs to comply with the obligations of the Group’s strategy. Pledge (entered into on 5 April 2022) – Considered whether it presented the whereby the Company is pledging to bring information in a clear and concise manner, allTaylorWimpey apartment buildings built illustrated by appropriate KPIs, to facilitate since 1992 into line with EWS1guidance, shareholders’ access to relevant asdescribed in more detail on page 81. information. TheCommittee also reviewed updates on Significant items the progress of the rectification of buildings identified with Aluminium Composite Material The following items are those that the Audit cladding, together with utilisation and Committee has considered in discharging its estimates of the remaining provision. The duties and in considering the financial Committee was satisfied that the provision reporting of the Group: represented Management’s best estimate of the expected remediation costs. Taylor Wimpey plc Annual Report and Accounts 2022 123 Directors' report # Remuneration Committee report ![img-19.jpeg](img-19.jpeg) ## Key activities of the Remuneration Committee in 2022 Reviewed the Directors' Remuneration Policy, agreed minor amendments and engaged with major shareholders Approved the remuneration arrangements for Janine Daly on appointment as Chief Executive Reviewed base salary levels for Senior Management Approved the fee for Robert Noel on becoming Chair of the Board Considered wider workforce remuneration arrangements in light of the cost of living crisis Ensured a smooth succession and induction process for the Committee Chair ### Committee members #### 1. Lord Jitesh Gadhia (Chair) 2. Irene Domar 3. Robert Noel$^{a}$ 4. Gwyn Burr$^{b}$ 5. Angela Knight$^{c}$ (a) Robert Noel did not attend one meeting as it was convened to agree his fee on becoming Chair. (b) Board down from the Committee on 26 April 2022. ### Meeting attendance ★★★★★ ★★★★★ ★★★★★ ★★ ★★ ### Dear Shareholder As Chair of the Remuneration Committee (the Committee), I am pleased to present our 2022 Directors' Remuneration Report on behalf of the Board. ### Directors' Remuneration Policy Review Following a thorough review of the current Directors' Remuneration Policy (the Policy) and how it operated within the current three year policy period, the Committee agreed that the Policy has successfully accommodated the significant changes that have taken place to the business and its leadership during its period. The Committee considers that the current remuneration levels are appropriately positioned and therefore do not propose any material amendments to the Policy, other than two minor amendments to align with market practice. These changes are to accelerate the reduction in the Group Finance Director's pension contribution to the same percentage rate as the wider workforce from 1 January 2023, instead of 1 April 2024, and to increase the level of threshold vesting for the long term Performance Share Plan (PSP) awards from 20% to 25%. As a Committee, we consider that these changes are appropriate and further details on the rationale can be found on page 128. In line with the 2018 UK Corporate Governance Code (the Code) we consulted with shareholders and employees on our proposed changes to the Policy. I wrote to all shareholders owning 1% or more of our shares, representing c.60% of our ownership, to provide an overview of the proposed minor amendments. Feedback received from shareholders was positive and constructive, and we thank them for their continued support. We will seek shareholder support for the new Policy at our Annual General Meeting (AGM) on 27 April 2023. Further details on the Resolution can be found in our Notice of Meeting on page 210. ### Wider workforce remuneration We continue to review the remuneration arrangements for the wider workforce and take these into account when considering remuneration arrangements for the Executive Directors and Senior Management. We again reviewed the performance measures in the various annual bonus schemes available across the business and we are confident that they drive behaviours that are consistent with our purpose, values, culture and strategy. The Committee reviewed the approach taken in respect of wider workforce remuneration in light of the widely reported cost of living challenges. The Board closely monitored the impact of rising inflation and the predicted increase in fuel bills over the winter months for our employees. As a result, the Board approved a timely cost of living payment of up to £1,000 for our lower paid employees. The Committee has also approved a tiered approach to the salary review process for 2023, ensuring that lower paid employees receive a higher percentage. The salary increases approved by the Committee range from 6% to 3%, and the Executive Directors and Senior Management will all receive 3%. We are confident that the variable incentive arrangements available for the wider workforce are aligned to Senior Management, including the Executive Directors. For more information on our approach to wider workforce remuneration, see pages 145 to 147. ### Executive Director remuneration decisions and outcomes #### Variable incentive schemes Under the 2022 annual bonus, Executive Incentive Scheme (EIS), the Company performed strongly against each of the financial performance measures. Performance against the customer service metric fell slightly below the stretching target that was set, although we retained our five-star status and we made good progress against our ESG strategy. Overall the outcome achieved was 76% of maximum. 124 Taylor Winopay plc Annual Report and Accounts 2023 The PSP awarded in 2020, measuring targets and performance against them will Stakeholder engagement performance in the 2020 to 2022 period, will beprovided next year in the usual way. As previously mentioned, the Committee vest at 32.3% of maximum, with the Company consulted our major shareholders during the PSP having delivered resilient performance in the Policy review process. Irene Dorner, in her circumstances, despite the impact of The PSP will operate in accordance with the capacity as Chair of the Board, continued to COVID-19 on financial performance in 2020 Policy as set out on pages 128 to 134. It is engage with shareholders during 2022 and and the changing market environment in the expected that Executive Directors will be shared any remuneration related matters with second half of 2022. granted awards to the value of 200% of salary. the Committee for consideration. Rob Noel, | No discretion was used or deemed to be | As part of the review of the Policy, the | in his capacity as Employee Champion, | | --- | --- | --- | | required by the Committee under either the | Committee has considered the mix of the | engaged with the workforce throughout the | | EIS or PSP. The Committee has also | different performance measures and their link | year and brought this perspective into the | | determined that the PSP Award value on | to strategy. Following careful consideration, as | Committee discussions. | | vesting was not inflated by windfall gains, as | noted above, the Committee has concluded | | | the Awards were made in early March 2020 | that an element of the PSP should be based | Closing remarks | | using a share price of 204.3 pence per share, | on an ESG measure for the first time and, for | On behalf of the Committee, I would like | | which was prior to the share price (and stock | the 2023 Award this should be based on a | to thank shareholders for their constructive | | market generally) being impacted by the | reduction in our Scope 1 and 2 emissions | engagement on remuneration matters | | COVID-19 pandemic. The Committee did not | linked to our net zero carbon strategy. | throughout the past year and look forward | | adjust performance targets during 2022. | | to continuing our dialogue during 2023, | As noted above in relation to the EIS, due to especially in the context of implementing Further details on both outcomes can be uncertain market conditions, at the time of the new Policy being presented for approval found on pages 138 and 139. writing, the precise weightings of the at the AGM. measures and final target ranges for the Incoming Chief Executive salary 2023 PSP Award have also not been | As disclosed in the 2021 Directors’ | finalised by the Committee. We anticipate | | | --- | --- | --- | | Remuneration Report, in February 2022 the | that these will be determined soon, allowing | | | Committee considered the appropriate | the Awards to be granted and there will be | Lord Jitesh Gadhia | | remuneration package for Jennie Daly when | full details contained within the RNS | Chair of the Remuneration Committee | | she became Chief Executive. The package | announcement when the Awards are granted | | | approved was in line with the Policy and | and again in next year’s report. | 1 March 2023 | provides a salary of £750,000, a 10% Chair and Non Executive Director pension allowance, and annual bonus and PSP opportunities of up to 150% and 200% The Committee considered the appropriate of salary respectively. fee for Robert Noel on becoming Chair. It was agreed that Rob would receive a fee of ### Looking ahead to 2023 £335,000 per annum from appointment at Introduction the conclusion of the forthcoming AGM. Salary and pension This Report has been prepared by theCommittee on behalf of the Board. As noted above, the salaries for the New All-Employee Share Plans The 2022 Remuneration Report includes Executive Directors will be increased by 3% Our Save As You Earn option scheme and disclosures which reflect in full the with effect from 1 April 2023. This is in line our Share Incentive Plan, both of which are Regulations (as defined below) on with the Senior Management population. all-employee share plans with modest remuneration reporting, divided into TheGroup Finance Director’s pension has individual participation limits, are reaching the threesections: reduced to 10% of salary from 1 January end of their ten year life and, accordingly, 2023 (instead of 1 April 2024 as previously – The annual statement from the new scheme rules are being proposed for agreed). I am grateful to Chris Carney for his Remuneration Committee Chair. shareholder approval at the 2023 AGM. constructive co-operation in accelerating this – Remuneration Policy: this sets out Executive Directors may participate in both previously agreed position. Both Executive thenew Remuneration Policy (the schemes, alongside all eligible employees. | Directors will therefore have a pension | | 2023Policy) that will be proposed | | --- | --- | --- | | allowance at the same percentage rate as | Committee changes | toshareholders at the 2023 AGM, | | the wider workforce. | | describing the framework within which | Following the changes to the composition of the Board announced after the Company’s the Company remunerates its Directors. EIS 2022 AGM, when Gwyn Burr and Angela If approved by shareholders, the 2023 Executive Directors will be able to earn up to Policy will apply for a period of three Knight stepped down as Non Executive 150% of salary under the 2023 EIS. The EIS years from the date of the 2023 AGM Directors, there was a period of transition performance measures for 2023 also remain or until a revised Policy is approved by during which the composition of the Board broadly in line with 2022, albeit with the ESG shareholders. and its Committees was reviewed by the based measure now moving from the EIS to – Annual Report on Remuneration: this Nomination and Governance Committee. the PSP. The measures are set out on page sets out how the current Policy was During that period, the Remuneration 141 together with the strategic rationale. We applied during 2022 and how the 2023 Committee’s three members included the consider carefully the target ranges each Policy will be operated during 2023. Chair. As the Code does not count the Chair year, ensuring an appropriate balance as one of the required three independent The Policy and these remuneration between achievability and stretch. Due to Non Executive Director members of the reports have been prepared in uncertain market conditions, at the time of Remuneration Committee, arrangements are accordance with the relevant provision writing, the precise weightings and final in hand to add additional members to the ofthe Companies Act 2006 and on the target ranges have not been finalised by the Committee. We will announce the required basis prescribed in the Large and Committee, although we have agreed that Committee membership changes, to align Medium-sized Companies and Groups the percentage based on financial measures with the Code requirements for three (Accounts and Reports) Regulations should be increased from 60% to 70% of the independent Non Executive Directors, ahead (Amendment) 2008 (the Regulations). overall bonus opportunity. However, detailed of the AGM. Where required, data has been audited retrospective disclosure of the weightings, byPwC and this is indicated. Taylor Wimpey plc Annual Report and Accounts 2022 125 Directors’ report Remuneration Committee report continued ## Remuneration at a glance Our remuneration strategy Our remuneration strategy is centred around three core objectives: ### Attraction Engagement Retention Attracting talent to Incentivising, Remaining agile our Company through motivating, and toemployee needs a competitive recognising success and market changes compensation package ### Overview of key elements included in the Directors’ Remuneration Policy Fixed pay Remuneration element Implementation in 2022Element timeline (years) 1 2 3 4 5 Base salary Recruit and reward executives of a Base suitable calibre for the role and duties salary ## required. 3% salary increase for the Executive Pensions Directors effective 1 April 2022 Executive Director pension contributions are in line with the wider workforce. Benefits Competitive package to assist with recruitment and retention. Variable pay 1 2 3 4 5 2022 EIS Outcome Executive Incentive Scheme 10% (EIS) 27% Two One third deferred Rewards the achievement of stretching thirds into shares for financial performance targets and other cash three years Operating profit Operating profit objectives that support the Company’s margin annual and strategic goals. Cash conversion Build quality Customer service Maximum: 150% of salary Environmental Deferral: One third deferred into shares 14% for three years 15% 1 2 3 4 5 2020 PSP Award Outcome Performance Share Plan (PSP) Assists with retention, incentivisation 10.8% 11.9% Performance period Holding period and motivation to achieve long term post vesting sustainable returns for shareholders. Maximum: 200% of salary TSR v peer group Performance period: Three years RONOA Cash conversion Holding period: Two year holding Customer service period post vesting 9.6% 126 Taylor Wimpey plc Annual Report and Accounts 2022 ## 1 2 3 10% ### Proposed application of the Policy in 2023 Link to strategic Link to Measure Rationale cornerstone Link to KPI stakeholder EIS Operating profit Maximise aggregate profit ### • O Operating profit Optimise sales prices and improve cost discipline ### • margin O Cash conversion Maximise the generation of cashflow from profits ### • C Build quality Deliver high quality homes with the need for less ### • • remediation S O Customer service Maintain customer trust and endorse Company ### • • (8-week) reputation S TSR v peer group Align the rewards received byexecutives withthe ### PSP • returns receivedby shareholders S C Operating profit Optimise sales prices and improve cost discipline ### • margin O RONOA Maintain focus on driving increased capital efficiency ### • C Customer service Maintain customer trust and endorse Company ### • • (9-month) reputation S Carbon emissions Support the Company’s strategy on carbon emissions ### • • reduction reductions across our operations S For more information, please refer to our strategic cornerstones and Key Performance Indicators on pages 21 to 33 Proposed changes to the Key wider workforce highlights in 2022: Directors’ Remuneration Policy ## c.90% 58% Minor amendments proposed to the existing Directors’ Remuneration of employees received a cost of of employees are either Policy: living payment of up to £1,000 shareholders or participate – Group Finance Director’s pension in an all-employee share plan contribution to be aligned to the wider workforce from 1 January 2023 – PSP threshold vesting to increase ## 3% 4.6% from 20% to 25% in line with market practice salary increase awarded effective 1 increase in average salary below Further information on the rationale April 2022 the GMT for these changes can be found on page 128. For further information on wider workforce remuneration see page 145 Taylor Wimpey plc Annual Report and Accounts 2022 127 Directors’ report Remuneration Committee report continued ## Remuneration Policy Report The current 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 the current Policy will expire at the 2023 AGM when we will be required to seek binding shareholder approval for a new Policy (the 2023 Policy). If approved by shareholders, the 2023 Policy will apply from the date of the 2023 AGM or until a revised Policy is approved by shareholders if sooner. The 2023 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 Senior Management to deliver it, and this will in turn drive value for our shareholders whilst having due regard to our other stakeholders. The 2023 Policy is set out in this report and is also available to view on the Company’s website. When the Committee designed the 2023 Policy and its operation, it has considered the factors in Provision 40 of the Code. Full details onhow clarity, simplicity, risk, predictability, proportionality and alignment to culture are addressed can be found on page 135. Policy review Following a thorough review of the current Policy, the Committee concluded that it had operated well and, in particular, had successfully accommodated the significant changes that have taken place to the business and its leadership during its three year term. Current remuneration levels are appropriately positioned and, structurally, the Policy aligns with market practice, the Code requirements and investor guidelines. Accordingly, two minor amendments are proposed under the 2023 Policy, which are set out in the table at the bottom of this page. No Director or other executive is involved in any decisions about his or her own remuneration. Conflicts of interest are managed carefully and a register is maintained by the Company Secretary in accordance with the Company’s Conflicts Policy. The Committee also ensures that external advice is independent. 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: – Performance measures for the EIS and PSP aligned with Key Performance Indicators, the Company’s strategic objectives and measures ofsustainable performance. – Deferral into shares of a percentage of the EIS. – A two year retention period for vested PSP Awards. – Share ownership guidelines which require executives to build up holdings of TaylorWimpey shares, either directly or by retaining vested PSP Awards and deferred EIS amounts. – A post-employment shareholding requirement. – Robust clawback and malus provisions. The above requirements ensure that a significant percentage of the overall remuneration package of our Executive Directors and Senior Management is subject to performance and delivered in shares which must be held long term. 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 Executive Directors and Senior Management adequately balance reward and risk. In line with best practice, the Committee structures the incentives for Executive Directors and Senior Management in a way that ensures they will not raise ESG risks by inadvertently motivating irresponsible behaviour. More generally, the Committee under its Terms of Reference may, where it considers appropriate, take ESG matters into account when considering the overall remuneration structure and as part of its overall discretion. The proposed changes and rationale are set out below. Other minor drafting changes have also been made to provide more clarity on the operation of the 2023 Policy. Policy element Proposed change Rationale Outcome Group Finance The Group Finance Director’s In light of the deadline set by the Investment Association of 31 With effect from 1 January 2023, Director’s pension pension contribution to align December 2022 (that was set after our current Policy had been theCompany will be compliant with contribution with the wider workforce by approved) Chris Carney volunteered to accelerate the time frame Provision 38 of the Code. | | 1January 2023 instead of | for his pension reduction so that it would reduce to 10% of salary, | | | --- | --- | --- | --- | | | 1April 2024. | by 1 January 2023. | | | Threshold vesting | Proposed threshold vesting of | We have reviewed the overall competitiveness of the package | Threshold performance vesting level | | level for PSP | PSP Awards to increase from | aswell as market practice on the structure of long term incentive | for PSP awards to be 25% of the total | | | 20% to 25%. | plans, where all housebuilders’ long term incentive plans and the | Award. | vast majority of the FTSE begin vesting at a 25% threshold level. We propose to increase the level of threshold vesting from 20% to25% of the award. We have a track record of setting stretching target ranges and will continue to do so. 128 Taylor Wimpey plc Annual Report and Accounts 2022 Illustration of the Remuneration Policy for 2023 The charts below illustrate the level and mix of remuneration based on the Policy depending on the achievement of below target,target andmaximum performance for the Executive Directors in 2023. | Target | | Jennie Daly | | | | | Chris Carney | | --- | --- | --- | --- | --- | --- | --- | --- | | (£'000) | | Chief Executive | | | | Group Finance Director | | | 5,000 | £869 £1,834 | | £3,573 | £4,345 | £584 £1,234 £2,403 £2,923 | | | 4,000 44% 3,000 2,000 43% 32% 21% 1,000 32% 32% 18% 32% 100% 47% 24% 50%100% 25% 0 Below Target Maximum Maximum Maximum Below Target Maximum target (with share target (with share price growth) price growth) Fixed pay EIS PSP 50% share price growth on PSP 1. Salary is £772,500 and £519,841 for Jennie Daly and Chris Carney, respectively, as at 1 April 2023. 2. Benefits are £19,313, and £11,933 for Jennie Daly and Chris Carney, respectively, being the 2022 value. 3. Pension is 10% for Jennie Daly and Chris Carney. 4. For the EIS the target and maximum award is 75% and 150% of base salary, respectively. 5. For the PSP the target (assumed for these purposes to be at threshold performance) and maximum are 40% and 200% of base salary, respectively. 6. An indication of the maximum remuneration receivable assumes a share price appreciation of 50% during the period in which the award is subject to underpins. The basis of the calculation of the share price appreciation is that the share price embedded in the calculation for the ‘maximum’ bar chart is assumed to increase by 50% across the performance period. Taylor Wimpey plc Annual Report and Accounts 2022 129 Directors’ report Remuneration Committee report continued Purpose and link to Performance Element strategy Operation Maximum targets Salary To recruit and reward Salaries are normally reviewed annually to ensure The maximum annual salary increase will Company and Executive Directors of a that they remain positioned appropriately. There is not normally exceed the average increase individual suitable calibre for the no automatic entitlement to an increase each year. which applies across the wider workforce. performance are role and duties required. factors considered Salary level and increases take into account the However, larger increases may be awarded when reviewing following: in certain circumstances including but not salaries. limited to: – The performance, role, and responsibility of each individual Executive Director. – Increase in scope or responsibilities of – The economic climate, general market conditions the role. and the performance of the Company. – To apply salary progression for a newly / – The level of pay awards across the rest of the recently appointed Executive Director. business. – Where the Director’s salary has fallen – Salary levels in comparably-sized companies and below the market positioning. other major housebuilders. Chair The Chair and Non Fees consist of a single consolidated fee for the Aggregate annual limit of £1 million N/A Executive Directors’ fees Chair, an annual fee for the other Non Executive imposed by the Company’s Articles of of the Board should be structured in Directors and additional fees for roles such as the Association. and Non line with recognised best Chair of the Audit Committee, Chair of the Executive practice and be sufficient Remuneration Committee, Senior Independent Director fees to attract and retain high Director and Employee Champion. calibre non executives. Set by reference to the responsibilities undertaken by the non executive, taking into account that each Non Executive Director is expected to be a member of the Nomination and Governance Committee and / or the Audit Committee and / or the 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, employee benefits or pension arrangements. Any reasonable expenses incurred in carrying out duties will be fully reimbursed including any personal taxation associated with such expenses. Other Provides a competitive Benefits normally include, but not limited to: There is no formal maximum. The level of a N/A package of benefits to benefit provided will be aligned to the wider benefits, – Company-provided car or a cash allowance; assist with recruitment workforce but may vary depending on including – Healthcare; and and retention of high seniority. Benefits are provided based on benefits-in- calibre Executive – Life assurance. market rates. kind Directors. Benefits offered to the wider workforce may also be For home purchases, the price discount is offered to Executive Directors. calculated at the plot release price less the | Other market competitive benefits may also be | average discount to third party buyers for | | --- | --- | | offered by the Committee should it deem it | that house type on that development, less a | | appropriate to secure the appointment of a new | further 5% employee discount. No more | | Executive Director or retain an Executive Director | than one home per annum can be acquired | | (including legacy benefits) and to ensure that the | at a discount under the scheme; and no | | benefits package for existing Executive Directors | more than three homes can be acquired in | | remains competitive in the market. | a five-year period. The maximum discount | over a five-year period is £100,000. A 5% discount on the price of a new home acquired from the Group. Executive Rewards the EIS awards are normally determined by the The maximum EIS opportunity for Executive The EIS measures achievement of Committee after the year end, based on annual Directors is 150% of salary. Target is 75% are based on a Incentive stretching financial performance against targets set at the beginning of of salary. scorecard of Scheme (EIS) performance targets and each year. designated key If an entry level of performance is achieved | other objectives that | | | annual financial, | | --- | --- | --- | --- | | | One-third (net) of any EIS is payable in shares which | up to 10% of maximum is payable under | | | support the Company’s | | | operational and | | | are held in trust for three years. | each metric. | | | annual and strategic | | | environmental, | | goals. | The Committee has the ability to adjust the amount | | social, or | | | of a bonus if the formulaic outcome is not | | governance | Compulsory deferral in considered reflective of individual or business measures. shares further aligns the performance or the broader shareholder experience. interests of Executive Directors with A malus and clawback mechanism applies to all shareholders. participants. The discovery period for the event that would give rise to the clawback is three years from the date of payment. 130 Taylor Wimpey plc Annual Report and Accounts 2022 | | Purpose and link to | | | Performance | | --- | --- | --- | --- | --- | | Element | strategy Operation Maximum | | | targets | | Performance | Annual grants of | Executive Directors can receive PSP Awards, | The maximum award is normally over | The performance | | | share-based long term | granted annually. | shares with a face value of 200% of salary. | conditions are | Share Plan | | incentives assist with | | In exceptional circumstances this can be | aligned to the long | | --- | --- | --- | --- | --- | | (PSP) | | Performance is normally measured over three | | | | | retention, incentivisation | | increased up to 300% of salary. | term business | financial years. and motivation of strategy. Awards vest at 25% for threshold Executive Directors to The value of dividends or other distributions will performance. The Committee achieve long term accrue during the performance and holding periods may vary the sustainable returns for and will be received with any shares that vest. Value measures that are shareholders. A post of accrued dividends will normally be accrued and included in the vesting holding period paid in shares. plan and the helps align the interests The Committee has the ability to adjust the awards if weightings of Executive Directors the formulaic outcome is not considered reflective of between the with those of the individual or business performance or the broader measures from Company’s shareholder experience. year to year. shareholders. A malus and clawback mechanism applies to all participants. 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 Company contributions to any pension N/A provide competitive of the following arrangements: scheme, or any amount paid as a cash retirement benefits. allowance, in respect of current Executive – Personal Choice Plan; or Directors or a new Executive Director will – as a cash allowance. 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 share plans encouraged to become months’ service can participate. years, with a maximum monthly saving. shareholders through Options can be exercised during the six the operation of months following the end of the contract. all-employee share plans SIP: Employees can elect to contribute an such as the HMRC amount per month or by one or more lump tax-advantaged sums per tax year. Sharesave plan and a Share Incentive Plan The maximum saving or contribution level (SIP). for the Sharesave and SIP are approved by the Remuneration Committee and the Board within the limits prescribed by legislation or Government from time to time. Shareholding Encourages greater Executive Directors are expected to achieve and Executive Directors: 200% of salary. N/A levels of shareholding maintain a holding of the Company’s shares at least guidelines and aligns employees’ equal to 200% of salary and until this level is interests with those of achieved, are required to retain no less than 50% of shareholders. the value of any vested EIS, deferred bonus shares 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. Taylor Wimpey plc Annual Report and Accounts 2022 131 Directors’ report Remuneration Committee report continued 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. How the EIS and PSP measures and targets are chosen The performance measures selected for the EIS and PSP are set each year 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 consults with major shareholders where any significant changes are proposed. 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 and target performance levels. The proposed measures for the 2023 EIS and PSP are set out on page 141. Committee discretion The Committee recognises that the exercise of discretion must be undertaken in a careful and considered 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 discretions set out in this Report and that the maximum levels available under any relevant plans would not be exceeded. There would be full disclosure in the following Directors’ Remuneration Report and major shareholders 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. This includes the ability to apply malus, clawback, and responsible discretion to override formulaic outcomes to ensure they are aligned to performance and broader stakeholder experience. 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 2022, when we consulted with major shareholders representing c.60% of our issued share capital in relation to the 2023 Policy. 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 145 to 147. Many of our employees can elect to take their bonus payments in shares (and benefit from a 20% uplift) rather than in cash, further enhancing the link and alignment between shareholder value and employee reward throughout the Company, which both the Board and the Committee consider important. How our employees’ voice is taken into account There are clear links between the Executive Directors, Senior Management and wider workforce remuneration arrangements. Aspart of the Policy review, the Head of Reward and Pensions attended a meeting of the Company’s National Employee Forum (the NEF) to provide an update to members on how the Committee has reviewed the Policy. Rob Noel in his capacity as Employee Champion also attended this meeting and was able to feed back to the Committee on the views of the NEF members. Overall feedback from the NEF was positive and they confirmed that they understood the links between the different levels of remuneration in the business. Many employees are also shareholders in the Company and have the opportunity to vote on remuneration related resolutions at the Company’s AGMs. 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 88 and 89. 132 Taylor Wimpey plc Annual Report and Accounts 2022 ## Remuneration Policy on recruitment or promotion | Component | Policy and operation | | --- | --- | | **Remuneration** | **Base salary** 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** Benefits will be provided in accordance with the Policy 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. **Pension** Pension contributions will be provided in accordance with the Policy. **EIS and PSP** EIS and PSP may be offered in accordance with the Policy and will be subject to the maximum levels described in the Policy table on pages 130 and 131. 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. | | **Buy-out Awards** | In the case of an external hire, the Company may choose to buy-out any incentive pay or benefit arrangements which would be forfeited on leasing the previous employee. This will only occur where the Company feels that it is a necessary requirement to sell the recruitment. The replacement value would be provided for, taking into account the form (cash or shares), timing and expected value (i.e. likelihood of meeting any existing performance criteria) of the remuneration being forfeited. Replacement share awards, if used, will be granted using the Company's existing share plans wherever and to the extent possible, although in exceptional circumstances awards may also be granted outside of these plans if necessary and permitted under the Listing Rules. To ensure alignment from the outset with shareholders, equity and interchain provisions may also apply where appropriate and the Committee may require new Executive Directors to acquire Company shares up to a pre-agreed level. Shareholders will be informed of any buy-out payments and awards at the time of appointment. | | **Internal promotion** | In the case of an internal hire including a promotion, the Company will honour any commitments entered into prior to their appointment to the Board even where it is not consistent with the Policy prevailing at the time such commitment is fulfilled. | ## Service contracts and letters of appointment The tables below set out the dates of each of the Executive Directors' service contracts and the dates of the Non Executive Directors' letters of appointment. Directors are required to retire at each AGM and seek re-election by shareholders. Service contracts for each Executive Director and letters of appointments for each Non Executive Director are available for inspection at the Company's registered office during normal business hours and at the AGM. | Executive Director | Date of appointment | Uninsured here (months) | | --- | --- | --- | | Jennie Daly^{(a)} | 26 April 2022 | 12 | | Chris Carney | 20 April 2018 | 12 | | **Non Executive Director** | **Date of appointment** | **Notice period by Company and Director (months)** | | Irene Dorner | 1 December 2019 | 6 | | Robert Noel | 1 October 2019 | 6 | | Mark Castle | 1 June 2022 | 6 | | Jitesh Gadhia | 1 March 2021 | 6 | | Scilla Gamble | 1 March 2021 | 6 | | Clodagh Morarty | 1 June 2022 | 6 | | Humphrey Singer | 9 December 2015 | 6 | (a) Jennie Daly signed a new service contract when she was appointed as Chief Executive that superseded her original service agreement dated 20 April 2018. Taylor Wimpey plc Annual Report and Accounts 2023 133 Directors’ report Remuneration Committee report continued Directors’ contracts and policy on payments for loss of office Component Policy and operation Unexpired term The unexpired term of Executive Director contracts is 12 months. Jennie Daly and Chris Carney are proposed for re-election at the 2023 AGM. Chris and Jennie will have at that date an unexpired service contract of 12 months. Notice period Executive Directors have contracts of employment providing for a maximum of 12 months notice period either way, consistent with Provision 39 of the Code. Provisions in the The payment of a base salary. contract An expensed company car or a cash allowance, life assurance, and private medical insurance. Employer’s contribution to a pension. A notice period by either side of 12 months. A provision requiring a Director to mitigate losses on termination. Participation in the EIS annual bonus scheme. Participation in a long term incentive plan. Termination The Company has the right to terminate contracts by making a payment in lieu of notice. Any such payment will typically reflect the individual’s salary, benefits in kind, and pension entitlements. The Company will be mindful, on termination of an Executive Director’s employment, of the need to mitigate costs and phase payments, which cease when the individual obtains an alternative role. There are no change of control provisions that apply in relation to the service contract of any Executive Director. Executive Incentive Other than in certain ‘good leaver’ circumstances (which could include redundancy, ill-health, or retirement), Scheme (EIS) nopayment would usually be due under the EIS unless the individual remains employed at the payment date. Any payment to a good leaver under the EIS would be based on an assessment of their and the Company’s performance over the applicable period and pro-rated for the proportion of the EIS year worked. Performance Share The rules of the PSP provide that, other than in certain good leaver circumstances, awards lapse on cessation Plan (PSP) of employment. Where an individual is a good leaver, the Committee’s normal policy is for the award to vest at the normal time following the application of performance targets, and a pro-rata reduction to take account of the proportion of the applicable performance period outstanding post the cessation. The Committee also has discretion for both early vesting and reducing the impact of pro-rating. In doing so, it will take account of the reason for the departure and the performance of the individual through to the time of departure. Exit payments In situations where an Executive Director is dismissed, the Committee reserves the right to make additional exit payments where such payments are made in good faith: – In the discharge of an existing legal obligation (or by way of damages for breach of such an obligation). – By way of settlement or compromise of any claim arising in connection with the termination of a Director’s office or employment. – To contribute towards the individual’s legal fees and fees for outplacement services. Legacy arrangements Any commitment which is consistent with the approved Remuneration Policy in force at the time that the commitment was made, or made to a current Director prior to appointment, and not in connection therewith, will be honoured, even where it is not consistent with the policy prevailing at the time such commitment is fulfilled. There are no legacy commitments in place for the Directors. Non Executive The terms of engagement of the Chair of the Board and the Non Executive Directors are regulated by letters Directors ofappointment over a term of three years, which are reviewed annually. Both the Company and the Directors (including the Chair) 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. 134 Taylor Wimpey plc Annual Report and Accounts 2022 ## Annual Report on Remuneration This section sets out how the current Policy was applied for the year ended 31 December 2022. The Annual Report on Remuneration, including the Chair’s annual statement on pages 124 and 125, will be put to an advisory shareholder vote at the AGM on 27 April 2023. Details of the resolution are set out in the Notice of Meeting on page 211. During the year, the Policy (as approved by shareholders at the 2020 AGM), operated as intended in terms of Company performance and quantum and the Committee has not used discretion during the year. Complying with the UK Corporate Governance Code in 2022 Clarity Remuneration arrangements should be We have operated a consistent approach to Directors remuneration over transparent and promote effective many years and our disclosures in the Directors’ Remuneration Reports are engagement with shareholders and the set out in a transparent manner. workforce. We also adopt a proactive approach to engaging with shareholders and the wider workforce, and further details on the mechanisms used can be found on page 132. Simplicity Remuneration structures should avoid Executive Director remuneration arrangements have been designed to be as complexity and their rationale and simple as possible. The table on page 127 shows the different elements of operation should be easy to understand. Executive Director remuneration and how the performance measures are linked to our strategic cornerstones, KPIs and stakeholders. Risk Remuneration arrangements should Risk is mitigated through careful plan design, including long term performance ensure reputational and other risks from measurement, deferral, shareholding requirements (including post cessation excessive rewards, and behavioural risks of employment requirements), discretion and clawback mechanisms. that can arise from target-based plans, The Committee also carefully considers the performance measures and are identified and mitigated. targets for the incentive plans to ensure that they do not encourage the Executive Directors to take reputational or behavioural risks. Predictability The range of possible values of rewards We look carefully at the range of likely performance outcomes when setting to individual Directors and any other performance target ranges and use discretion where necessary. limits or discretions should be identified and explained at the time of approving the policy. Proportionality The link between individual awards, the Incentive plans are determined based on a proportion of base salary so there delivery of strategy and the long term is a sensible balance between fixed pay and performance-linked elements. performance of the Company should be Performance conditions are aligned to the business strategy and shareholder clear. Outcomes should not reward poor experience. performance. There are provisions to override the formula-driven outcome of incentive arrangements, as well as deferral and clawback mechanisms to ensure that poor performance is not rewarded. Alignment Incentive arrangements should drive Our overall reward framework embeds our purposes and values. Decisions to culture behaviours consistent with Company on executive pay need to be taken in the context of the wider stakeholder purpose, values andstrategy. experience. Taylor Wimpey plc Annual Report and Accounts 2022 135 Directors' report Remuneration Committee report continued # Total remuneration received (£'000) (audited) The chart below compares the 2022 single figure total remuneration for each of the Executive Directors with the equivalent figure for 2021. ![img-20.jpeg](img-20.jpeg) (a) The 2022 figure for Pete Redfern is for the time spent as a Director. # Single total figure of remuneration for Executive Directors (audited) The table below sets out the single total figure of remuneration received by each Executive Director for their service and performance in 2022 and 2021. | £'000 | Jennie Daly^{(a)} | | Chris Carney | | Pete Redfern^{(b)} | | | --- | --- | --- | --- | --- | --- | --- | | | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | | Base salary | 642 | 406 | 501 | 467 | 287 | 887 | | Benefits^{(c)} | 19 | 42 | 12 | 20 | 14 | 47 | | Pension^{(d)} | 71 | 67 | 73 | 77 | 51 | 170 | | Total fixed pay | 732 | 515 | 596 | 564 | 352 | 1,104 | | ES^{(e)} | 730 | 561 | 575 | 668 | 339 | 1,270 | | PSP^{(f)} | 140 | 157 | 154 | 169 | 298 | 336 | | Total variable pay | 870 | 738 | 729 | 837 | 637 | 1,606 | | Total pay | 1,602 | 1,253 | 1,315 | 1,401 | 989 | 2,710 | (a) Jennie Daly - Jennie became Chief Executive on 26 April 2022 and her 2022 EIS payment has been pro-rated to time as Group Operations Director and Chief Executive. (b) Pete Redfern - Pete stopped down as Chief Executive and as a Director of the Company on 26 April 2022. The 2022 figures are for the period of time spent as a Director, with the exception of the PSP, which is the total value of his 2020 PSP Award. (c) Benefits - corresponds to the value of taxable benefits in respect of the year ended 31 December 2022, as set out in the table on page 157. (d) Pension - For Jennie Daly and Chris Carney these figures represent pension contributions up to the amount permissible under HMRC rules and cash allowances beyond that level. For Pete Redfern these figures represent the cash allowance payable. (e) EIS - The 2022 EIS outcome was 76% and further details can be found on page 138. The 2021 EIS outcome was 95%. For both years, one third of the Executive Directors' bonus is deferred into shares for three years. These shares will not be subject to any further performance or non-performance measures. (f) PSP - The outcomes of the 2019 and 2020 PSP Awards included in the 2021 and 2022 columns can be found on page 139. Both figures include the value of dividends accrued during the performance period and are payable in shares. There is a compulsory two-year holding period for any vested PSP shares and the dividend shares will also be subject to the holding period. The 2021 figure has been restated to reflect the share price on the date the Award vested. The 2022 figure has been calculated using a share price of $6.28 perox as this was the average share price for the dealing dept in the last three months of the financial year. 136 Taylor Winpay plc Annual Report and Accounts 2023 # Salaries in 2022 (audited) Jennie Daly's base salary was increased from £408,000 to £750,000 per annum on appointment to Chief Executive on 26 April 2022. The Committee also awarded Chris Carney a 3% increase, with effect from 1 April 2022, which was in line with general workforce increases. As Pete Redfern was serving his notice period, he did not receive a salary increase in 2022. Benefits (audited) | £000 | Jennie Daly | Chris Carney | Pete Redfern | | --- | --- | --- | --- | | Benefits | £00 | £00 | £00 | | Car | 11 | 2 | 8 | | Healthcare | 3 | 5 | 4 | | Life assurance | 3 | 3 | 1 | | All-employee share schemee^{(a)} | 2 | 2 | 1 | | Total | 19 | 12 | 14 | (a) These figures represent the value of matching shares under the Share Incentive Plan. The Executive Directors did not exercise any Shareease options during the year. # Directors' pension entitlements (audited) With effect from 1 January 2023, the Executive Directors' pension contributions will be 10%, which is the same available to the majority of the workforce (10%) and as such, the Company will be compliant with Provision 28 of the Code from 1 January 2023. The value of Company pension contributions in 2022 for Jennie Daly and Chris Carney was: | Director | 2022 (b) | 2021 (c) | | --- | --- | --- | | Jennie Daly | 3,974 | 4,029 | | Chris Carney | 3,994 | 4,003 | Jennie and Chris also received pension allowances of £67,407 (2021: £62,930) and £68,606 (2021: £72,828) respectively in lieu of Company pension contributions over the Tapered Annual Allowance limited introduced in April 2018. Pete Redfern received a cash allowance of £51,141 (2021: £169,666) in lieu of Company pension contributions until he stepped down from the Board on 26 April 2022. He also received a cash allowance of £85,786 for the period 27 April 2022 to 8 December 2022 inclusive. Pete Redfern was 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^{(a)} | Increase in accrued pension from | | | | --- | --- | --- | --- | --- | | | | Accrued pension as at 31/12/2021 (b) | 31/12/2021 to 28/04/2022 (c) | Accrued pension as at 28/04/2022^{(b)(c)} | | Pete Redfern | 62 | 16,436 | 156 | 16,562 | (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. (c) Pete Redfern's accrued pension on leaving Company employment on 8 December 2022 was £16,917, a further increase in pension of £555 per annum. Taylor Wimpey plc Annual Report and Accounts 2023 137 Directors' report Remuneration Committee report continued # **Executive Incentive Scheme (EIS) in 2022 (audited)** The outcome of the 2022 EIS is 76% of the maximum and detailed disclosure of the targets and performance against them is set out below. Overall financial performance was strong against a challenging backdrop in the second half of the year. Despite falling just short of the challenging customer service entry level, we are pleased to have maintained our 5-star builder status again which demonstrates a high level of customer service. During the year, the Committee did not exercise any discretion to adjust any formula driven remuneration outturns in relation to the EIS. The chart below shows the performance against the 2022 EIS measures. | Performance measure | Weighting | Summary of targets | | | Result | Payout (%) | | --- | --- | --- | --- | --- | --- | --- | | | | Entry (10%) | Target (50%) | Stretch (100%) | | | | Operating profit | 35% | £860m | £905m | £940m | £923.4m | 27% | | Operating profit margin | 15% | 19.5% | 20.2% | 21.0% | 20.9% | 14% | | Cash conversion | 10% | 130% | 140% | 150% | 149.7% | 10% | | Build quality | 15% | 4.50 | 4.58 | 4.60 | 4.81 | 15% | | Customer service^{(a)} | 15% | 90.50% | 91.00% | 92.00% | 90.1% | 0% | | Environmental | | | | | | | | Carbon intensity targets^{(b)} | 5% | 1.52 | 1.49 | 1.43 | 1.37 | 5% | | The Board to approve the Net Zero Transition Plan and for it to be submitted to SBTi | 5% | The Board approved the Net Zero Transition Plan and it was submitted to SBTi in December 2022^{(c)} | | | | 5% | | **Total** | **100%** | | | | | **76%** | (a) Percentage of customers who would recommend Taylor Wimpey to a friend from the independently measured NHBC 8-week survey. (b) The carbon intensity targets were independently verified by The Carbon Trust. (c) The Board strongly supported the Net Zero Transition Plan submitted by Management. See pages 56 and 57 for further information on our Net Zero Transition Plan. One third of the Executive Directors' EIS 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. 138 Taylor Wimpey plc Annual Report and Accounts 2022 Performance Share Plan (PSP) in 2022 (audited) 2020 PSP Award outcome The PSP awarded in 2020, measuring performance in the 2020 to 2022 period, will vest at 32.3%. Performance was impacted by COVID-19 in 2020 and the changing market environment in the second half of 2022. The Committee has carefully considered whether the vesting outcome is inflated by windfall gains caused by the COVID-19 pandemic. The Committee has determined that the outcome was not inflated by windfall gains as the Awards were made in early March 2020 using a share price of 204.3 pence per share, which was prior to the share price being impacted by the COVID-19 pandemic. The chart below shows the performance against the 2020 PSP Award measures. Threshold Maximum Performance measure Weighting (20% vesting) (100% vesting) Result % of maximum (a) TSR v peer group 40% Median Upper quartile TW: -36.6% 11.9% Median: -37.0% RONOA 20% 26% 33% 22.9% 0% (b) (2020 - 2022) Cash conversion 20% 70% 80% 73.5% 9.6% (b) (2020 - 2022) Customer service 20% 83% 87% 84.7% 10.8% (c) (2020 - 2022) Total 100% 32.3% (a) The peer group is comprised of Barratt Developments, Bellway, Berkeley Homes, Countryside Partnerships (formerly Countryside Properties), Crest Nicholson, Persimmon, Redrow and Vistry Group. Countryside Partnerships was acquired by Vistry Group in November 2022. For the purpose of assessing the TSR performance of Countryside Partnerships, its performance has been tracked forward using the performance of Vistry Group (the acquirer) from the date trading in the shares was suspended (11 November 2022). (b) The target ranges for the RONOA and cash conversion measures, which are based on the average annual performance over the three-year performance period, were set before the significant equity raise in 2020. The FY2020 and FY2021 outturns were adjusted to neutralise the impact of the equity raise in 2020 and a further adjustment was made to the FY2022 RONOA and cash conversion outturns to neutralise the impact of the Company’s increased WIP due to the additional land acquired. These adjustments ensure that the targets were equally challenging after the overall impact of the equity raise as they were before, in the view of the Committee (and confirmed by the Audit Committee). (c) The customer service measure was based on five key questions from the independently measured NHBC 8-week survey. PSP Awards included in the 2021 and 2022 single total figure of remuneration table The table below sets out the number of shares each Executive Director received after the vesting of the 2019 and 2020 PSP Awards. | | | | | | | | | | | Number of | | | | | Value | | Value of | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | Value of | | End of | | | | | dividend | | | attributable to | | proportion of | | | | | Number of | | award at | performance | | Proportion of | | Number of | equivalent | | Total number | | share price | | PSP (single | | | Name | shares granted | | grant (£'000) | | | period | award vesting | shares vesting | | | shares | | of shares Vesting date | | increase | figure)(£'000) | | Jennie Daly 391,581 800 31/12/2022 32.3% 126,480 16,395 142,875 02/03/2023 – 140 2022 (a) Chris Carney 429,368 877 31/12/2022 32.3% 138,685 17,977 156,662 02/03/2023 – 154 (c) Pete Redfern 855,762 1,748 31/12/2022 32.3% 268,733 34,838 303,571 02/03/2023 – 298 Jennie Daly 442,355 800 31/12/2021 22.1% 97,760 15,544 113,304 03/03/2022 – 157 2021 (b) Chris Carney 475,532 860 31/12/2021 22.1% 105,092 16,709 121,801 03/03/2022 – 169 Pete Redfern 947,769 1,714 31/12/2021 22.1% 209,456 33,306 242,762 03/03/2022 – 336 (a) The 2020 PSP Award is included in the 2022 single total remuneration figure. The performance against each of the performance measures is noted in the table above. A share price of 98.28 pence was used to calculate the value of the Award vesting on 2 March 2023 as this was the average share price for the dealing days in the last three months of the financial year. This figure will be recalculated in the Annual Report and Accounts 2023 to reflect the share price on the date the Award vests. Dividend equivalents will be paid in shares. (b) The 2019 PSP Award is included in the 2021 single total remuneration figure. The overall performance of the Award can be seen on page 108 of the Annual Report and Accounts 2021. The closing share price on the date the Award vested (138.55 pence) has been used to recalculate the Award. Dividend equivalents were paid in shares. (c) Pete Redfern’s 2020 PSP Award was pro-rated to the date he left the business on 8 December 2022. Taylor Wimpey plc Annual Report and Accounts 2022 139 Directors' report Remuneration Committee report *continued* # **PSP Awards granted during 2022** The tables below set out the PSP Awards granted during the year and the performance measures for the Award. The Committee consider that they provide a good overall balance in assessing our longer term performance against the business strategy. The targets were reviewed to reflect current market conditions and business forecasts for the Group. | Executive Director | Award type | % of salary | Grant date | Face value of award at maximum reading | Number of shares granted | End of performance period | | --- | --- | --- | --- | --- | --- | --- | | Jennie Daly^{(a)} | Nil-cost option | 200 | 26/04/2022 | £1,500,000 | 1,141,552 | 31/12/2024 | | Chris Carney^{(b)} | Nil-cost option | 200 | 10/03/2022 | £980,000 | 749,713 | 31/12/2024 | (a) The share price (131.40 pence) used to calculate the number of shares awarded to Jennie was based on the average closing share price over the three business days prior to grant (21, 22 and 25 April 2022). (b) The share price (150.72 pence) used to calculate the number of shares awarded to Chris was based on the average closing share price over the three business days prior to grant (7, 8 and 9 March 2022). | Performance measure | Weighting | Threshold (20%) | Maximum (100%) | | --- | --- | --- | --- | | TSR v peer group^{(c)} | 40% | Median | Upper quartile | | Operating profit margin (2022-2024)^{(d)} | 20% | 19% | 21% | | RONDA (2022-2024) | 20% | 23% | 25% | | Customer service (2022-2024)^{(e)} | 20% | 78% | 81% | (a) The peer group comprises Barratt Developments, Batway, Berkeley Homes, Countryside Partnerships (formerly Countryside Properties), Crest Nicholson, Persimmon, Redrow and Vistry Group. Countryside Partnerships was acquired by Vistry Group in November 2022. For the purpose of assessing the TSR performance of Countryside Partnerships, its performance has been tracked forward using the performance of Vistry Group (the acquiree) from the date trading in the shares was suspended (11 November 2022). (b) The metrics for the 2021 PSP Awards are the same as for the 2021 PSP Awards. It is noted that page 116 of the Annual Report and Accounts 2021 had a typographic error which stated cash conversion as a metric for the 2021 PSP Awards rather than operating profit margin. (c) 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 is measured on a different basis to the 2022 EIS customer service measure. # **Payments for loss of office and payments to former Directors (audited)** As disclosed in the 2021 Annual Report and Accounts, Pete Redfern stepped down from the Board on 26 April 2022 and remained available to the business until his notice period ended on 8 December 2022. The terms of his remuneration on leaving were in line with his contractual entitlements and the shareholder approved Policy. The amounts disclosed in the single total figure of remuneration table on page 136 relate to the period up until Pete stood down on 26 April 2022, with the exception of the PSP, which is the total value of his 2020 PSP Award. Pete Redfern continued to receive salary, benefits and pension in accordance with his contractual entitlement from 26 April 2022 when he stepped down from the Board until he left the business on 8 December 2022, which totalled 5562,614. Pete had 18,863 sharesave options which lapsed on him leaving the business. The Committee determined that Pete would be treated as a 'good leaver' in respect of the EIS and PSP. Pete received a bonus for 2022 performance pro-rated to the time he was actively employed in the business up to 26 April 2022 and subject to the achievement of the performance measures. One third of any amount paid will be deferred in shares for three years. This is included within the single total figure of remuneration table. Pete's outstanding 2020 and 2021 PSP Awards will be pro-rated to the date he left the business and will be subject to the performance measures over the relevant three-year period. He will be required to retain any shares that vest for the two-year holding period. The details of the 2020 Award are set out on page 139. In addition, Pete is required to retain 1,735,561 shares for two years post employment, which has been calculated with reference to the share price and Pete's annual salary on his last day of employment. Clawback and malus provisions will continue to apply post cessation of employment. 140 Taylor Wimpey plc Annual Report and Accounts 2022 # Approach to remuneration in 2023 ## 2023 salary review The Committee has approved a tiered approach to the Group salary review process for 2023, ensuring that lower paid employees receive a higher percentage. The salary increases approved by the Committee range from 6% to 3%, and the Executive Directors and Senior Management will all receive 3%. | Executive Director | As at 1 April 2022* | As at 1 April 2023 | % Change | | --- | --- | --- | --- | | Jennie Daly | £750,000 | £772,500 | 3% | | Chris Carney | £504,700 | £519,841 | 3% | pp. As at 28 April 2022 for Jennie Daly on becoming Chief Executive. ## 2023 EIS Directors will be able to earn up to 150% of salary under the 2023 EIS. The EIS performance measures for 2023 also remain broadly in line with 2022, albeit with the ESG based measure now moving from the EIS to the PSP. The measures are set out below together with the strategic rationale. We carefully consider the target ranges each year, ensuring an appropriate balance between achievability and stretch. Due to uncertain market conditions, at the time of writing, the precise weightings and final target ranges have not been finalised by the Committee, although we have agreed that the percentage based on financial measures should be increased from 60% to 70% of the overall bonus opportunity. However, detailed retrospective disclosure of the weightings, targets and performance against them will be provided next year in the usual way. | Performance measure | Indicator | | --- | --- | | Operating profit | Maximise aggregate profit | | Operating profit margin | Optimise sales prices and improving cost discipline | | Cash conversion | Maximise the generation of cashflow from profits | | Build quality | Deliver high quality homes with the need for less remediation | | Customer service (8-week) | Maintain customer trust and endorse Company reputation | ## 2023 PSP Approach The 2023 PSP awards will operate in accordance with the Policy as set out on pages 128 to 134. It is expected that Directors will be granted awards to the value of 200% of salary. As part of the review of the policy the Committee has considered the mix of the different performance measures and their link to strategy. Following careful consideration, the Committee has concluded that an element of the PSP should be based on an ESG measure for the first time and, for the 2023-25 award this should be based on a reduction to our Scope 1 and 2 targets linked to our zero carbon strategy. As noted above in relation to the EIS, due to uncertain market conditions, at the time of writing, the precise weightings of the measures and final target ranges for the PSP awards have not been finalised by the Committee. We anticipate that these will be finalised soon, allowing the awards to be granted and there will be full details contained within the RNS announcement and again in next year's report. | Performance measure | Indicator | | --- | --- | | TSR v peer group (2023-2025) | Align the rewards received by executives with the returns received by shareholders | | Operating profit margin (2023-2025) | Optimise sales prices and improving cost discipline | | RONDA (2023-2025) | Maintain focus on driving increased capital efficiency | | Customer service (9-month) (2023-2025) | Maintain customer trust and endorse Company reputation | | Carbon emissions reduction | Support the Board strategy on carbon emissions reductions across our operations | Customer Service continues to be an extremely important area of focus for the Company and we are comfortable that this should be incorporated in both the EIS and PSP. The customer service element of the EIS will continue to be based on the one key question in the shorter term NHBC 8-week survey focusing on the customers' service before and moving in experience. The customer service element of the PSP will continue to be based on the one key question in the longer term NHBC 9-month survey focusing on the customers' experience of living longer term in one of our developments. In this way we will be capturing different aspects of our customer service performance, measured over different timeframes and measuring different customer experiences and there is no doubling up of reward for the same performance. An operating profit margin measure will also operate in both the EIS and PSP for FY23. As there continues to be uncertainty in relation to the housing market, we believe that this is a critical measure at both an operational level for the EIS and for the longer term for the PSP (where margin will be assessed as an aggregate across the full three-year period). This will ensure that our priority remains delivering our sustained profitability with an unremitting focus on long term decisions with cost and process discipline to drive shareholder returns over the medium term. Taylor Wimpey plc Annual Report and Accounts 2023 141 Directors’ report Remuneration Committee report 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 / available in: | Maximum | potential | | re-investment | | Exercised / | | | Maximum | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | potential | awarded | | shares added | | released | | Lapsed | potential | | | | shares as at | during the | | during the | | during the | | during the | shares as at | | | | 01/01/2022 | | year | | year | | year | year | 31/12/2022 | (a) | 2023 2024 2025 2026 2027 | Jennie Daly (b) Deferred shares (EIS) 180,278 – 7,366 88,974 – 98,670 98,670 – – – – (c) PSP 1,293,662 1,141,552 – 97,760 344,595 1,992,859 391,581 459,726 1,141,552 – – (d) Sharesave plan 21,091 36,057 – – 21,091 36,057 – – – – 36,057 Total 1,495,031 1,177,609 7,366 186,734 365,686 2,127,586 490,251 459,726 1,141,552 – 36,057 Chris Carney (b) Deferred shares (EIS) 226,970 – 8,076 126,855 – 108,191 108,191 – – – – (c) PSP 1,408,300 749,713 – 105,092 370,440 1,682,481 429,368 503,400 749,713 – – (d) Sharesave plan 19,976 36,057 – – 10,545 45,488 9,431 – – – 36,057 Total 1,655,246 785,770 8,076 231,947 380,985 1,836,160 546,990 503,400 749,713 – 36,057 Pete Redfern (b) Deferred shares (EIS) 465,787 – – 266,251 – 199,536 199,536 – – – – (c) PSP 2,808,218 – – 209,456 1,124,888 1,473,874 831,991 641,883 – – – Sharesave plan 18,863 – – – – 18,863 18,863 – – – – Total 3,292,868 – – 475,707 1,124,888 1,692,273 1,050,390 641,883 – – – (a) All outstanding awards are options. The Directors do not hold any vested but unexercised share options, with the exception of Chris Carney who holds 9,431 vested but unexercised Sharesave options. Pete Redfern stood down as Chief Executive and a Director on 26 April 2022. Pete’s interests in the Company’s share schemes is as at the date he stood down from the Board on 26 April 2022. (b) The Executive Directors exercised an EIS deferred share award on 25 March 2022 when the share price was 132.77 pence. These shares were awarded on 25 March 2019 using a share price of 174.50 pence to calculate the number of shares awarded. (c) The Executive Directors exercised their 2019 PSP Award on 3 March 2022 when the share price was 145.51 pence. These shares were awarded on 5 March 2019 using a share price of 180.85 pence to calculate the Award. As noted on page 139, Pete Redfern’s outstanding PSP Awards have been pro-rated to the date he left the business. For transparency, these lapses are shown in the ‘lapsed during the year’ column. (d) Jennie Daly and Chris Carney cancelled Sharesave options over 21,091 and 10,545 respectively. Jennie and Chris were granted 36,057 Sharesave options each on 3October 2022 at an option price of 83.20 pence, which offered a 20% discount to the share price at the start of the invitation window. The face value of these options on the date of grant for Jennie and Chris was £32,603 each. Vesting of the deferred shares and Sharesave 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 30 December 2022 was 101.65 pence and the range during the year was 85.08 pence to 178.00 pence. Single total figure of remuneration for the Chair and Non Executive Directors (audited) Total fees (£'000) 2022 2021 | Irene Dorner | | | 335 | 328 | | | --- | --- | --- | --- | --- | --- | | | (a) | | 89 | | | | Robert Noel | | | | 80 | | | | (b) | | 38 | | | | Mark Castle | | | | | – | | | (c)(d) | | 77 | | | | Jitesh Gadhia | | | | 53 | | | | (c) | | 65 | | | | Scilla Grimble | | | | 53 | | | | | (b) | 38 | | | | Clodagh Moriarty | | | | | – | | Humphrey Singer | | | 83 | 80 | | | | (e) | | 30 | | | | Gwyn Burr | | | | 90 | | | | (e) | | 21 | | | | Angela Knight | | | | 63 | | (a) Rob became the Employee Champion with effect from 26 April 2022 and therefore received the additional Employee Champion fee for the remainder of the year. (b) Mark Castle and Clodagh Moriarty both joined the Board on 1 June 2022. (c) Scilla Grimble and Jitesh Gadhia both joined the Board on 1 March 2021. (d) Jitesh Gadhia became Chair of the Remuneration Committee with effect from 26 April 2022 and therefore received the additional Remuneration Committee Chair fee for the remainder of the year. (e) Gwyn Burr and Angela Knight stepped down from the Board and as Non Executive Directors on 26 April 2022. 142 Taylor Wimpey plc Annual Report and Accounts 2022 Chair and Non Executive Director fees Role Chair of the Board £335,000 Independent Non Executive Director £65,000 Senior Independent Director £17,500 Audit / Remuneration Committee Chair £17,500 Employee Champion £10,000 Statement of Directors’ shareholdings and share interests (audited) In line with the Policy, Executive Directors’ shareholding requirement is to hold 200% of their base salary. Further details on how this element of the Policy is operated can be found on page 131. In addition, 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. The Chair and the Non Executive Directors are also encouraged to hold shares in the Company in order to align their interests with those ofshareholders. Beneficially owned Outstanding interests in share schemes Share interests | | | | | | | | | Value of shares (including EIS | | | expressed as a % of | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | EIS deferred shares | | | | deferred shares on a net basis) | | | | shareholding | | Director at 01/01/2022 | (a) | at 31/12/2022 | (a)(b) | | (gross) | PSP | (c) Sharesave | | as at 31/12/2022 | (d) | | requirement | Irene Dorner 125,440 164,952 – – – – – (e) Jennie Daly 212,446 423,374 98,670 1,992,859 36,057 £482,013 32% (e)(f) Chris Carney 400,351 625,770 108,191 1,682,481 45,488 £692,733 69% Robert Noel 46,674 84,100 – – – – – Mark Castle – 41,678 – – – – – Jitesh Gadhia 100,000 100,000 – – – – – Scilla Grimble 15,000 15,000 – – – – – Clodagh Moriarty – 25,025 – – – – – Humphrey Singer 31,896 31,896 – – – – – Pete Redfern 2,396,991 2,827,094 199,536 1,860,449 18,863 £3,772,188 212% Gwyn Burr 17,241 17,241 – – – – – Angela Knight 16,896 16,896 – – – – – (a) Or date appointed or stood down from the Board. (b) Shares owned outright includes the net-of-tax shares received by the Executive Directors in March 2022 following the one third deferral of the EIS paid in respect of 2021 performance. (c) Vesting is subject to the achievement of performance conditions. (d) This has been calculated on the basis of beneficially owned shares and the net amount of EIS share awards. The share price on 30 December 2022 (101.65 pence) has been used to calculate Jennie Daly and Chris Carney’s share interest expressed as a percentage of salary as at 31 December 2022. The share price on 26 April 2022 (128.75 pence) has been used to calculate Pete Redfern’s share interest expressed as a percentage of salary when he stood down from the Board. (e) A proportion of shares are held by a connected person. (f) 9,431 of Chris Carney’s Sharesave options are vested but unexercised. The only changes to the Directors’ interests as set out above during the period between 31 December 2022 and 1 March 2023 were the regular monthly purchases of shares and 1:1 matching by the Company under the Share Incentive Plan by Jennie Daly and Chris Carney who both acquired 524 shares each. Taylor Wimpey plc Annual Report and Accounts 2022 143 Desertment report Remuneration Committee report continued # Historic TSR performance and Chief Executive historic remuneration The graph below shows Taylor Wimpey's total shareholder return (TSR) performance against the performance of the FTSE 350 and the average of the Housebuilders Index. These benchmarks have been chosen as Taylor Wimpey is a constituent of both. The graph also shows the Chief Executive's single total figure of remuneration over the same ten-year period. Total shareholder return ![img-21.jpeg](img-21.jpeg) | Single total figure (£'000) | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Jennie Daly | - | - | - | - | - | - | - | - | - | 1,175(a) | | Pete Redfern | 6,724 | 6,250 | 6,888 | 4,072 | 3,697 | 3,272 | 3,247 | 1,120 | 2,726 | 925(b) | | Annual bonus (% of maximum) | | | | | | | | | | | | Jennie Daly | - | - | - | - | - | - | - | - | - | 76 | | Pete Redfern | 90 | 90 | 78 | 80 | 66 | 96 | 50.6 | - | 95 | 76 | | P&P (% of maximum) | | | | | | | | | | | | Jennie Daly | - | - | - | - | - | - | - | - | - | 32.3 | | Pete Redfern | 85 | 94 | 100 | 81 | 78 | 50 | 62.8 | 6.6 | 22.1 | 32.3 | (a) Relates to the period Jennie Daly was Chief Executive from 26 April 2022. (b) Relates to the period Pete Redfern was Chief Executive from 1 January 2022 to 26 April 2022. 144 Taylor Wimpey plc Annual Report and Accounts 2023 ## Wider workforce remuneration The Committee regularly monitors and reviews the Company-wide remuneration arrangements to ensure the Executive Directors’ remuneration is aligned to incentives and rewards across the Company. During 2022, the Committee reviewed by employee level, the different elements of pay and benefits across the Company. 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. A summary of the remuneration arrangements across the workforce can be found below. In addition, when considering the performance measures for variable incentive schemes, the Committee ensures that there is a clear link between the performance measures in the various variable incentive schemes. Executive Directors, GMTandsenior Wider managers workforce Increases commensurate with wider Salary Increases approved by the Committee workforce increases All employees eligible for a bonus. All employees eligible for a bonus. Bonus Performance measures aligned with strategy Performance measures aligned with strategy | Executive Directors and GMT members defer | | Many employees can elect to take their bonus | | --- | --- | --- | | one third of any annual bonus paid for three | | payment in shares (and benefit from a 20% | | years | Deferred shares | | uplift) and are required to retain the shares for one year Eligible to participate in a long term incentive Share based incentive Eligible for SIP and Sharesave plan, SIP and Sharesave schemes 10% pension contribution 10% pension contribution Pension All employees receive private medical All employees receive private medical Private healthcare healthcare healthcare Taylor Wimpey plc Annual Report and Accounts 2022 145 Directors' report Remuneration Committee report continued # **Response to the cost of living crisis** The Committee has been particularly mindful of the impact of the cost of living crisis on our employees. The Committee welcomed and supported the Board's decision to award a one off cost of living payment of up to £1,000 for lower paid employees. During 2022, the average salary for monthly paid employees increased by 4.6% following the 2022 salary increase of 3% and also targeted benchmarking exercises for key functions. In recognition of the high levels of inflation that have created the cost of living crisis impacting lower paid employees most, the Committee has approved a tiered approach to the 2023 salary review, to ensure that those that are impacted most receive higher levels of support. The salary increases approved by the Committee range from 6% to 3% and the Executive Directors and Senior Management will all receive 3%. # **CEO Pay Ratio** | Year | Method | CEO single figure^{(a)} | | Lower quartile | Median | Upper quartile | | --- | --- | --- | --- | --- | --- | --- | | 2022^{(b)} | Option B | £2,100,044 | Ratio | 62:1 | 41:1 | 26:1 | | | | | Salary | £28,840 | £37,400 | £58,450 | | | | | Total pay and benefits | £34,130 | £51,838 | £81,411 | | 2021 | Option B | £2,764,290 | Ratio | 87:1 | 60:1 | 40:1 | | 2020 | Option B | £1,120,451 | Ratio | 39:1 | 26:1 | 20:1 | | 2019 | Option B | £3,023,654 | Ratio | 93:1 | 73:1 | 48:1 | | 2018 | Option B | £3,151,748 | Ratio | 103:1 | 77:1 | 41:1 | (a) The previous CEO single figures in this table have not been restated to reflect the share price on the date the relevant PSP Award vested. We have chosen to do this for transparency purposes so that we are comparing the ratios disclosed in previous reports. (b) The three representative employees were determined on 31 December 2022. Under Option B, using the hourly rate from our 2022 gender pay gap data, three employees have been identified as the best equivalents of our lower quartile, median and upper quartile. Option B provides a clear methodology involving fewer adjustments to calculate full-time equivalent earnings and is likely to produce more robust reporting year on year. The Committee has reviewed the results of the calculations and is satisfied that they continue to be representative of the respective quartiles. Total pay and benefit figures, not including temporary allowances, paid during the financial year ending 31 December 2022, have been calculated for the employee at each quartile and for employees either side of the identified employees, to ensure that the employees selected are a reasonable representative based on their full year's remuneration. Due to a reduction in the CEO single figure for 2022, all three ratios have reduced. The reduction in the CEO single figure was predominately a result of the appointment of our new CEO, Jennie Daly in April 2022, with the new CEO being appointed on a lower salary than her predecessor. The single figure was pro-rated in accordance to the time spent in the CEO role by both individuals. The single figure has been further affected in 2022 by a lower annual bonus payment (78% outcome in 2022 versus 95% in 2021) resulting in lower total CEO remuneration than the previous year. During 2022, the Company employed fewer apprentices compared to the previous year. As apprentices are paid lower rates of pay, this has impacted the lower quartile range, which has seen the total remuneration figure for our lower quartile representative being higher in comparison to 2021. During 2022, our lower paid employees received a temporary cost of living payment of up to £1,000. This has not been reflected in the pay ratio figures although it was an additional enhancement to employee pay during 2022. 146 Taylor Wimpey plc Annual Report and Accounts 2023 ### Gender pay gap As part of its review of wider workforce remuneration, the Committee also considers our gender pay gap. The nature of our industry means many of the high headcount roles (Sales and Production) are heavily male or female weighted which can impact our pay gap results if there are changes to these populations. Our mean pay gap is -2%, which means that the mean pay is 2% higher for females than males. This is largely down to higher commission payments and the re-balancing of remuneration for sales teams, resulting in more guaranteed pay. Whilst still in favour of females, the gap is slightly smaller than last year (-6%) due to salary alignment activities in the production teams, resulting in a higher average increase of the male hourly rate. Our median pay gap is 1% higher for males than females. The gap has moved in favour of males this year due to a 36% reduction in apprentices compared to last year's snapshot pay data. Apprentices sit within the lower pay quartile and are predominantly male. Reducing the number of people in these roles, increases the median pay for males. -2% Gender pay gap (mean) (2021: -6%) 1% Gender pay gap (median) (2021: -5%) Further information can be found in our Diversity Report which is available on our website. ### 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 current Director and the average Taylor Wimpey employee in respect of 2020, 2021 and 2022. | | Salary / fee^{a} | | | Benefits | | | Annual bonus scheme^{b} | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2020 | 2021 | 2022 | 2021 | 2020 | 2021 | 2022 | 2021 | 2022 | | Average pay of a Taylor Wimpey employee^{c} | 4% | 6% | - | 3% | 3% | - | (10)% | 163% | (46)% | | Jennie Daly^{c} | 58% | 13% | (10)% | (55)% | 12% | (6)% | 26% | n/a | n/a | | Chris Carney^{c} | 7% | 18% | (10)% | (40)% | (11)% | (55)% | (14)% | n/a | n/a | | Irene Dorner^{d} | 2% | 32% | n/a | - | - | - | - | - | - | | Robert Noel^{d} | 11% | 23% | n/a | - | - | - | - | - | - | | Mark Castle^{d} | n/a | n/a | n/a | - | - | - | - | - | - | | Jitesh Gadha^{d} | n/a | n/a | n/a | - | - | - | - | - | - | | Sofia Grimble^{d} | n/a | n/a | n/a | - | - | - | - | - | - | | Cledagh Moriarty^{d} | n/a | n/a | n/a | - | - | - | - | - | - | | Humphrey Singer | 4% | 14% | (10)% | - | - | - | - | - | - | (a) In light of the COVID-19 pandemic the Executive and Non Executive Directors took a voluntary 30% reduction in base salary and fees from 1 April 2020 to 31 July 2020. The Executive Directors' 2020 annual bonus ($50) was also cancelled. (b) Taylor Wimpey plc does not have any employees and these figures are in relation to Taylor Wimpey UK Limited employees. (c) Jennie Daly was appointed as Chief Executive with effect from 26 April 2022 and Chris Carney received a salary increase on 1 July 2021. (d) Irene Dorner was appointed in December 2019 and received a fee increase on 1 July 2021. (e) Robert Noel was appointed in October 2019, appointed as the Company's Senior Independent Director on 20 April 2020 and Employee Champion on 26 April 2022. (f) Mark Castle and Cledagh Moriarty were appointed to the Board on 1 June 2022. (g) Jitesh Gadha and Sofia Grimble were appointed to the Board on 1 March 2021. Jitesh was appointed Chair of the Remuneration Committee on 26 April 2022. ### Relative importance of spend on pay Change in Company performance relative to change in remuneration (audited) | | 2020 | 2021 | Change (%) | | --- | --- | --- | --- | | Operating profit^{a} | £923.4m | £828.6m | 11 | | Distributions to shareholders | | | | | Aggregate dividends paid during the year | £323.8m | £301.5m | 7 | | Share buyback | £150.0m | - | n/a | | Employee pay in aggregate^{a} | £306.4m | £292.1m | 5 | | Employee pay average per employee^{a} | £58,327 | £54,517 | 7 | (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 173. Taylor Wimpey plc Annual Report and Accounts 2023 147 Directors’ report ## The Remuneration Committee The Remuneration Committee members in 2022 There were six Committee meetings during 2022 and all Committee members attended the meetings they were eligible to attend. We will announce the required Committee membership changes, in accordance with the Code requirements for three independent Non Executive Directors, ahead of the AGM. Name Title Jitesh Gadhia Committee Chair and Independent Non Executive Director Irene Dorner Chair of the Board Robert Noel Independent Non Executive Director (a) Gwyn Burr Independent Non Executive Director (and former Committee Chair) (b) Angela Knight Independent Non Executive Director (a) Gwyn Burr was the Committee Chair until she stood down from the Board and the Remuneration Committee on 26 April 2022. (b) Angela Knight stood down from the Board and the Remuneration Committee on 26 April 2022. Internal attendees consisted of the Chief Executive, Group HR Director, Head of Reward and members of the Company Secretariat team. These attendees provided important information to the Committee and were not involved in any decisions relating to their own remuneration. Main activities during 2022 Over the course of the year since the last Annual Report and Accounts, the Committee’s work has been focused on: – Directors’ Remuneration Policy review and associated consultation with shareholders ahead of tabling the revised Policy for shareholder approval at the 2023 AGM. – 2022 EIS and 2020 PSP outcomes. – 2023 EIS and 2023 PSP performance measures, targets and weightings. – 2023 salary review for the Executive Directors, Senior Management and wider workforce. – External benchmarking of Executive Directors and Senior Management remuneration arrangements. – Alignment of Executive Directors and Senior Management remuneration with the wider workforce. – Wider workforce remuneration activities including the impact of the cost of living crisis and widespread benchmarking of roles. Committee’s performance The Committee reviewed its Terms of Reference in 2022 and evaluated its own performance against them. Following this review, the Committee confirmed that the Terms of Reference remain appropriate. As part of the 2022 internally facilitated Board Evaluation it was concluded that the Committee was fulfilling its terms of reference effectively and the Committee Chair was effective. Advice to the Committee in 2022 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 2022 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. 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 has considered the advice provided by Korn Ferry during the year, and is comfortable that the advice has been objective and independent. The fees paid to the Committee’s advisers in 2022 were: Korn Ferry £139,689 (including VAT) on a time and materials basis (2021: £83,370); and Slaughter and May £nil (2021: £10,000). Shareholding voting The table below sets out the voting by shareholders on the Directors Remuneration resolutions. Resolution For Against Total votes cast Withheld | Directors' Remuneration Report for 2021 | 2,089,719,647 | | 139,842,628 | | | --- | --- | --- | --- | --- | | (2022 AGM) | | (93.73%) | | (6.27%) 2,229,562,275 6,595,990 | | | 2,001,641,568 | | 27,319,532 | | | Directors' Remuneration Policy (2020 AGM) | | (98.65%) | | (1.35%) 2,028,961,100 583,978 | Lord Jitesh Gadhia Chair of the Remuneration Committee 1 March 2023 148 Taylor Wimpey plc Annual Report and Accounts 2022 ## Statutory, regulatory and other information Introduction This section contains the remaining matters on which the Directors are required to report each year which are not included 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 set out below: Matter Page(s) in this Annual Report Strategic report, specifically: 2 to 85 – Likely future developments in the business of the Company 2 to 85 – Carbon footprint reporting 54 to 69 – Greenhouse gas emissions reporting 68 – Stakeholder engagement 40 to 45 – A description of the Company’s employee engagement practices 40 and 104 – A statement of the Company’s engagement with employees in relation to financial and economic factors that affect the performance of the Company 40 – Charitable donations 39 and 42 – Research and development activities 2 to 85 – Viability statement 84 2018 UK Corporate Governance Code compliance statement 87 Directors 88 to 91 A description of how the Board assesses and monitors culture 102 Retirement and re-election of Directors 110 Remuneration Committee report 124 to 148 Profit before taxation and profit after taxation 160 Changes in asset values 162 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 181 to 183 Subsidiaries and associated undertakings, including branches outside the UK 203 to 207 Directors’ dividend recommendation 210 Web communications with shareholders 219 Registrar 220 Specific disclosures required under Listing Rule 9.8.4 as appropriate to the Company Details of the Company’s long term incentive schemes 124 to 148 Shareholder waiver of future dividends 150 | Qualifying third party indemnity | Audit and Auditors | Annual General Meeting | | --- | --- | --- | | In accordance with Section 234 of the | Each Director has, at the date of approval of | The Annual General Meeting (AGM) will be | | Companies Act 2006 and following advice | this Annual Report and Accounts, formally | held at 10:30am on 27 April 2023 in the | | from Slaughter and May, the Company has | confirmed that: | Gerrards Suite at the Crowne Plaza Gerrards | | granted an indemnity in favour of its Directors | | Cross, Oxford Road, Beaconsfield, HP9 2XE. | – To the best of their knowledge there is no and Officers and those of its Group relevant audit information of which the Formal notice of the AGM is set out on pages companies, including the Trustee Directors Company’s external Auditors are unaware; 209 to 219 and on the Company’s website. of its Pension Trustee Company, for this and financial year and at the date of this report. Capital structure – They have taken all the steps they ought to The indemnity is against the financial have taken to make themselves aware of Details of the Company’s issued share exposure that they may incur in the course of any relevant audit information and to capital, together with information on their professional duties as Directors and establish that the Company’s external movements in the Company’s issued share Officers of the Company and/or its Auditors are aware of that information. capital during the year, are shown in Note 23 subsidiaries/affiliates. on pages 189 and 190. This confirmation is given and should be | interpreted in accordance with the provisions | The Company has two classes of shares: | | --- | --- | | of Section 418 of the Companies Act 2006. | Ordinary Shares of 1 pence, each of which | | Read more on page 151. | carries the right to one vote at general | meetings of the Company and other such rights and obligations as are set out in the Company’s Articles of Association; and Deferred Shares, which carry no voting rights. Taylor Wimpey plc Annual Report and Accounts 2022 149 Directors’ report The powers of the Company’s Directors No person has any special rights of control Agreements inrelation to issuing or buying back the over the Company’s share capital and all The Company’s borrowing and bank facilities Company’s shares are limited to those issued shares are fully paid. contain the usual change of control approved at the AGM. provisions which could potentially lead to Dividend In 2022, the Company returned £150 million prepayment and cancellation by the other The 2021 final ordinary dividend of 4.44 excess capital to shareholders through the party upon a change of control of the pence per share was paid to shareholders on implementation of a share buyback Company. There are no other significant 13 May 2022 and the 2022 interim ordinary programme. The buyback commenced on contracts or agreements which take effect, dividend of 4.62 pence per share was paid to 3March and concluded on 24 June 2022. alter or terminate upon a change of control shareholders on 18 November 2022. Intotal, the Company repurchased ofthe Company. 116,942,362 Ordinary Shares of 1 pence Subject to shareholder approval at the 2023 Modern Slavery Act | each at an average price of 128.27 pence | AGM, the 2022 final ordinary dividend of | | | --- | --- | --- | | per share. Of these shares, 25 million have | 4.78 pence per share will be paid on 12 May | The Company welcomes the aims and | | been retained as Treasury shares and the | 2023 to shareholders on the register at the | objectives of the Modern Slavery Act 2015 | | remaining 91.9 million shares have been | close of business on 31 March 2023. More | (MSA) and continues to take its | | cancelled. The Board intends to use the | information can be found on pages 83 and | responsibilities under the MSA with the | | retained Treasury shares for future | 210. The Company will be operating a | seriousness it deserves and requires. The | | obligations of the Company in respect of its | Dividend Re-Investment Plan (DRIP) for | Company will shortly be publishing its | | employee share schemes. | shareholders in the United Kingdom and | seventh statement under the MSA which will | | | more information can be found on page 220. | be available on the Company’s website. | The Company currently holds 25 million shares in Treasury. The right to receive any dividend has been Employee share ownership waived in part by the Trustees of the The Company has no current intention The Company promotes employee share Company’s ESOT over that Trust’s combined ofexercising its authority to make market ownership as widely as possible across the holding of 5,944,779 shares, as at 27 purchases of its own shares but will Company. The Company has two all- February 2023. More information about the nevertheless be seeking the usual renewal employee share plans, the Save As You Earn ESOT can be found in Note 10 on page 200. ofthis authority at the AGM, and the Board share option plan and the Share Incentive will continue to keep the position under Plan, which are offered to all UK-based Important events since the year end regular review. employees once they have worked for the There have been no important events Company for three months. The rules of the There are no specific restrictions on the size affecting the Company or any of its subsidiary Company’s two all-employee share plans are of a holding, the exercise of voting rights, or undertakings since 31 December 2022. due for renewal at the 2023 AGM. More the transfer of shares, which are governed by information can be found on page 211. the Company’s Articles of Association and Political donations prevailing legislation. The Directors are not The Company also offers employees who do The Company has a policy of not making aware of any agreement or agreements not participate in the Executive Incentive donations to political parties; has not made between holders of the Company’s shares Scheme (cash bonus scheme) the any during 2022; and does not intend to that may result in restrictions on the transfer opportunity to exchange their cash bonus for going forward. More information can be of securities or voting rights. shares in the Company, including a 20% found on page 215. enhancement to the value of their bonus. The Employee Share Ownership Trust The scheme has operated since 2012 and in (ESOT), which holds shares on trust for 2022 resulted in 614,176 shares (2021: employees under the Company’s various 233,335) being acquired by 218 employees share schemes, generally abstains from (2021: 225). voting at shareholder general meetings in respect of shares held by them. Substantial interests The persons set out in the table below have notified the Company pursuant to Rule 5.1 of the Disclosure Guidance and Transparency Rules of their interests in the ordinary share capital of the Company. As at 27 February 2023, no change in these holdings had been notified nor, according to the Registrar 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 143. As at 31 December 2022 As at 27 February 2023 Percentage of issued voting share Percentage of issued voting share Number of shares held (millions) capital Number of shares held (millions) capital BlackRock Inc 421.6 11.94% 421.6 11.94% The Capital Group Companies, Inc 164.7 4.66% 164.7 4.66% Legal & General Group Plc 98.5 2.79% 98.5 2.79% Standard Life Investments Limited 96.4 2.73% 96.4 2.73% 150 Taylor Wimpey plc Annual Report and Accounts 2022 | The percentage of our employees who hold | The Directors are responsible for | | --- | --- | | shares in the Company, either through the | safeguarding the assets of the Group and | | all-employee share plans, the bonus | Company and hence for taking reasonable | | exchange scheme, or any other method | steps for the prevention and detection of | | is58% (2021: 61%). | fraud and other irregularities. | The Directors are also responsible for Employment of people with disabilities keeping adequate accounting records that The Company is committed to ensuring that are sufficient to show and explain the people with disabilities are treated fairly, Group’s and Company’s transactions and supported and encouraged to apply for disclose with reasonable accuracy at any employment and to process and receive time the financial position of the Group and training once employed. Working with key Company and enable them to ensure that partners, we hope to increase permanent and the financial statements and the Directors’ secondment opportunities for people with Remuneration Report comply with the disabilities. In addition, every reasonable effort Companies Act 2006. is made for people with disabilities to be retained in the employment of the Company The Directors are responsible for the by investigating reasonable adjustments to maintenance and integrity of the Company’s the role, workplace or equipment. website. Legislation in the United Kingdom governing the preparation and dissemination Statement of Directors’ responsibilities of financial statements may differ from in respect of the financial statements legislation in other jurisdictions. The Directors are responsible for preparing Directors’ confirmations the Annual Report and Accounts and the Each of the Directors, whose names and financial statements in accordance with functions are listed in the Board of Directors applicable law and regulation. biographies, on pages 88 to 90, confirms Company law requires the Directors to that, to the best of their knowledge: prepare financial statements for each – The Group financial statements, which financial year. Under that law the Directors have been prepared in accordance with have prepared the Group financial UK-adopted international accounting statements in accordance with UK-adopted standards, give a true and fair view of the international accounting standards and the assets, liabilities, financial position and Company financial statements in accordance profit of the Group. with United Kingdom Generally Accepted – The Company financial statements, which Accounting Practice (United Kingdom have been prepared in accordance with Accounting Standards, comprising FRS 101 United Kingdom Accounting Standards, Reduced Disclosure Framework, and comprising FRS 101, give a true and fair applicable law). view of the assets, liabilities and financial Under company law, Directors must not position of the Company. approve the financial statements unless they – The Strategic report includes a fair review are satisfied that they give a true and fair of the development and performance of view of the state of affairs of the Group and the business and the position of the Group Company and of the profit or loss of the and Company, together with a description Group for that period. In preparing the of the Principal Risks and uncertainties financial statements, the Directors are that it faces. required to: This Directors’ report and responsibility – Select suitable accounting policies and statement was approved by the Board of then apply them consistently. Directors on 1 March 2023 and is signed on – State whether applicable UK-adopted its behalf by: international accounting standards have been followed for the Group financial statements and United Kingdom Accounting Standards, comprising FRS 101 have been followed for the Company financial statements, subject to any Ishaq Kayani material departures disclosed and Group General Counsel and Company explained in the financial statements. Secretary – Make judgements and accounting estimates that are reasonable and prudent. 1 March 2023 – Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue in business. Taylor Wimpey plc Annual Report and Accounts 2022 151 Financial statements ## Independent auditors’ report to the members of Taylor ## Wimpey plc ### Report on the audit of the financial statements Our audit approach Context Opinion Taylor Wimpey is a listed housebuilder, predominantly operating in In our opinion: the UK, also with a presence in Spain. The Group focuses on the sale of private dwellings, which comprised 88% of total revenue in – Taylor Wimpey plc’s Group financial statements and Company 2022, with the majority of the remaining revenue generated through financial statements (the “financial statements”) give a true and delivery of partnership housing contracts. The Group’s consolidated fair view of the state of the Group’s and of the Company’s affairs financial statements are primarily an aggregation of the 23 UK Business as at 31 December 2022 and of the Group’s profit and the Units, which represented the regional UK housebuilding businesses Group’s cash flows for the year then ended; encompassed in Taylor Wimpey UK Limited, consolidated with the – the Group financial statements have been properly prepared in Group’s Spanish operations, Taylor Wimpey de España S.A.U., accordance with UK-adopted international accounting standards the Company and the share of the Group’s interests in joint ventures. as applied in accordance with the provisions of the Companies For the purposes of our audit, we considered Taylor Wimpey UK Limited, Act 2006; Taylor Wimpey de España S.A.U., the Company and consolidation – the Company financial statements have been properly prepared adjustments to be separate components. We performed process in accordance with United Kingdom Generally Accepted walkthroughs to understand and evaluate the key financial processes Accounting Practice (United Kingdom Accounting Standards, and controls across the Group and, in accordance with International including FRS 101 “Reduced Disclosure Framework”, and Standard on Review Engagements (UK and Ireland) 2410, a review of applicable law); and the half year financial information. Following this work, we performed – the financial statements have been prepared in accordance with a significant amount of early audit procedures in advance of the year- the requirements of the Companies Act 2006. end, covering each of the Business Units and the Group functions. The objective of this audit work was: We have audited the financial statements, included within the Annual Report and Accounts (the “Annual Report”), which comprise: the – to perform initial testing in relation to the design and operating Consolidated and Company balance sheets as at 31 December 2022; effectiveness of the controls we planned to place reliance on; the Consolidated income statement, the Consolidated statement of – to ensure that we had a clear plan as to what work needed to be comprehensive income, the Consolidated cash flow statement and done when and where at year-end; the Consolidated and Company statement of changes in equity for – to perform initial substantive testing, particularly where larger the year then ended; and the notes to the financial statements, samples were required or where there had been one off which include a description of the significant accounting policies. transactions; and Our opinion is consistent with our reporting to the Audit Committee. – to enable early consideration of the key sources of estimation uncertainty before the year-end. Basis for opinion As we undertook each phase of the audit, we regularly reconsidered We conducted our audit in accordance with International Standards our risk assessment to reflect the audit findings, including our on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities assessment of the Group’s control environment and the impact on under ISAs (UK) are further described in the Auditors’ responsibilities our planned audit approach. In terms of risk assessment: for the audit of the financial statements section of our report. We – given the nature of the Group’s operations and the methodology believe that the audit evidence we have obtained is sufficient and for recognising margin on units sold, we considered margin appropriate to provide a basis for our opinion. recognition and site forecasting to be the most significant area and Independence therefore have included this as a key audit matter; and We remained independent of the Group in accordance with the – we considered current Government legislation and ethical requirements that are relevant to our audit of the financial announcements, particularly in relation to cladding fire safety, statements in the UK, which includes the FRC’s Ethical Standard, and hence also included a key audit matter in relation to this. 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 to the financial statements, we have provided no non-audit services to the Company or its controlled undertakings in the period under audit. 152 Taylor Wimpey plc Annual Report and Accounts 2022 152 Taylor Wimpey plc Annual Report and Accounts 2022 Overview Materiality – Overall Group materiality: £45.3m (2021: £40.0m) based on 5% of Audit scope pro fit before tax and exceptional items. – Our Group audit included full scope audits of Taylor Wimpey UK | Limited | | (which included the Group’s 23 UK Business Units), | Taylor | | – Overall Company materiality: £40.7m (2021: £36.0m) based on | | | | | | 1% | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Wimpey plc (the “Company”) and the consolidation, including | | | | | of net assets but capped at 90% of overall Group materiality. | | | | | | | | consolid | | ation adjustments. Taken together, the above procedures | | | – Perfo | | rmance materiality: £33.8m (2021: £30.0m) (Group) an | | | d | | | included operations covering 97% of revenue, 95% of profit befo | | | | re | £30.5m | | | (2021: £27.0m) (Compa | ny). | | | | t ax, 95% of profit before tax and exceptional items and 92% of | | | | | | | | | | | | | | | | | | The | scope of our audit | | | | | | | net | assets. | | | | | | | | | | | As part of designing our audit, we determined materiality and – We also performed a desktop review over Taylor Wimpey de assessed the risks of material misstatement in the financial España S.A.U., as well as audit procedures over specifi ed statements. balances and transactions across a number of the Group’s Key audit matters joint ventures. Key audit matters are those matters that, in the auditors’ professional Key audit matters judgement, were of most significance in the audit of the financial – Margin recognition and site forecasting (Group) statements of the current period and include the most significant – Cladding fire safety provision (Group) assessed risks of material misstatement (whether or not due to fraud) – Valuation of investments in Group undertakings and amounts due identified by the auditors, including those which had the greatest from Group undertakings (Company) 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. The key audit matters below are consistent with last year. Taylor Wimpey plc Annual Report and Accounts 2022 153 Taylor Wimpey plc Annual Report and Accounts 2022153 Financial statements Independent auditors' report continued | Key audit matter | How our audit addressed the key audit matter | | --- | --- | | **Margin recognition and site forecasting (Group)** Refer to page 123 (Audit Committee report) and page 170 (Critical accounting judgements and key sources of estimation uncertainty) in the Group's financial statements. As at 31 December 2022 the Group's inventory balance is £5,169.6 million (31 December 2021: £4,945.7 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 land, infrastructure 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 longer 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. | 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 2022, through comparison to historical forecasts from 2021, 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 uncontracted 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 and uncontracted inflation; - To ensure accuracy 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 accounting system correctly recalculates the margin following each cost or sales price amendment made by management; and - We tested that the accounting system appropriately allocates 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. | 154 Taylor Winpey plc Annual Report and Accounts 2022 # **Key audit matter** # **How our audit addressed the key audit matter** # **Cladding fire safety provision (Group)** Refer to page 123 (Audit Committee report) and page 170 (Critical accounting judgements and key sources of estimation uncertainty) in the Group's financial statements. 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 in the 2021 financial statements on the grounds that the announcement created a constructive obligation. In April 2022, the Group signed up to the Government's Building Safety Pledge for Developers ("the Pledge"), which extended the period covered to 30 years and committed the Group to reimbursing Government for any funds allocated to buildings it built from the Building Safety Fund ("BSF"), with no further applications permitted. Consequently, the Group announced that the additional cost associated with the Pledge, over and above that already recorded from the previous constructive obligation, was £80.0m, bringing the total amount provided for cladding fire safety remediation to £240m. The Government published the final version of the Self-Remediation Terms and Deed of Bilateral Contract on 30 January 2023, which, once signed, will legally codify the obligations made under the Pledge. 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 and the cost of remediation works for each relevant building 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 as a significant audit risk. In addressing the risk that the provision was valued incorrectly as at the year-end date, 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 'Provisions, Contingent Liabilities and Contingent Assets' 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 information provided by the Government as well as publicly available information on Taylor Wimpey constructed buildings; - We also tested the completeness of the provision by testing a sample of properties included on the Land Registry database stating that they were built by Taylor Wimpey or Taylor Wimpey acquired companies to validate that they have been correctly included or excluded in management's list of properties; - 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 as well as to understand why the expected remediated costs have or have not moved year on year. Examples of audit evidence included BSF amounts communicated by the Government, internal or external QS assessments, as well as actual tenders and costs incurred; - We assessed the technical capabilities and expertise of the Group's employees and external consultants involved in assessing the expected work and costs; - We assessed the ability of management to forecast remediation costs accurately by comparing original internal estimates to subsequent tendered, contracted or completed works; - We read recent government guidelines and announcements, including the Self-Remediation Terms and Deed of Bilateral Contract, and discussed them with management to confirm that their assumptions and interpretations were appropriate; and - We reviewed the disclosures included in the financial statements, including those on estimation uncertainty required by IAS 1 'Presentation of financial statements' and those required by IAS 37 'Provisions, contingent liabilities and contingent assets'. Overall, we found that, based on the audit evidence that we obtained, management's assessment of the quantum 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. Taylor Wimpey plc Annual Report and Accounts 2023 155 Financial statements Independent auditors’ report continued Ke y audit matter How our audit addressed the key audit matter aluation of investments in Group undertakings and amounts due from Group undertakings (Company) Refer to page 199 (Investments in Group undertakings and Trade udit procedures included, but were not limited to, the following: and other receivables notes) in the Company financial statements. – We audited the subsidiary share subscription and net settlement he carrying value of the investments in Group undertakings and exercise in respect of intercompany balances that were undertaken amounts due from Group undertakings in the Company accounts in the year with no exceptions noted; are £4,500.6m (2021: £2,446.2m) and £572.4m (£2,848.7m) – We audited and validated management’s impairment assessment respectively. The year on year movements are primarily attributable to: which had identified an impairment of £113.3m; – the Company’s increased investment in its subsidiari es; – We assessed the remaining net assets and future cash flows of th e und erlying investments to confirm that they were in excess of the – net settlement of intercompany balances between the Company | | | | | car | rying value of the Company’s investment in Group undertaking | | s | | --- | --- | --- | --- | --- | --- | --- | --- | | and | its subsidiaries; | and | | | | | | | | | | | and | thus no further impairment was required; | and | | | – a | £113.3m impairment of the Company’s investment | | in | | | | | – We verified that the aggregate net current assets of subsidiary a subsid iary. undert akings were sufficient to support the intercompany he key estimate is whether the carrying values of the investments receivables and whether, in accordance with IFRS 9, an expected and intercompany receivables are supported by the net asset credit loss was required. position and/or forecast future cash flows of the underlying Group We have no issues to report in respect of this work. 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. 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 2022 consolidated financial statements are primarily an aggregation of the 23 UK Business Units, which represented 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 operated under a common control environment, underpinned by the Group’s Operating Framework. The Group engagement team’s 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 homogeneous population for further testing purposes. In addition, we performed detailed audit work over the consolidation journals, a desktop review of Taylor Wimpey de España S.A.U., and specific financial statement line items within the Group’s joint ventures. Our work covered 97% of revenue, 95% of profit before tax, 95% of profit before tax and exceptional items and 92% of net assets. We performed specific audit testing over the exceptional item, relating specifically to an increase in 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. The impact of climate risk on our audit As part of our audit we made enquiries of management to understand the process adopted to assess the extent of the potential impact of climate risk on the Group’s financial statements and to support the disclosures made in the section headed ‘Impact on financial statements’ on page 59. The Group has announced its net zero target and submitted it for verification by the Science Based Targets initiative. It has also developed the Net Zero Transition Plan to achieve this target and aligned its executive bonus scheme accordingly. This future commitment does not directly impact the financial statements at the balance sheet date, as management had not publicly announced the transition plan at that date. 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 recent climate related regulations, such as Part L & F of the Building Regulations. Our procedures did not identify any material impact in the context of our audit of the financial statements as a whole, or our key audit matters for the year ended 31 December 2022. We also considered the consistency of the disclosures in relation to climate change (including the disclosures in the Task Force on Climate-related Financial Disclosures (TCFD) section) within the Annual Report with the financial statements and our knowledge obtained from our audit. 156 Taylor Wimpey plc Annual Report and Accounts 2022 V T T A 156 Taylor Wimpey plc Annual Report and Accounts 2022 ## 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** | £45.3m (2021: £40.0m) | £40.7m (2021: £36.0m) | | **How we determined it** | Based on 5% of profit before tax and exceptional items. | 1% of net assets but 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. | 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 £30.7 million to £40.7 million. 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% (2021: 75%) of overall materiality, amounting to £33.8m (2021: £30.0m) for the Group financial statements and £30.6m (2021: £27.0m) 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 £2.3m (Group audit) (2021: £2.0m) and £2.0m (Company audit) (2021: £2.0m) 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 agreed that the model demonstrated sufficient liquidity and headroom during the going concern forecast period; - We tested the key assumptions used in the model, including comparison to third party market information where appropriate, reviewing the fixed term borrowings refinancing agreement 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 accuracy 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. Taylor Whipple plc Annual Report and Accounts 2020 157 Financial statements Independent auditors’ report continued – The Directors’ statement in the financial statements about whethe r Reporting on other information they considered it appropriate to adopt the going concern basis of The other information comprises all of the information in the Annual acc ounting in preparing them, and their identification of any Report other than the financial statements and our auditors’ report materi al uncertainties to the Group’s and Company’s ability to thereon. The Directors are responsible for the other information. continue to do so over a period of at least twelve months from the Our opinion on the financial statements does not cover the other dat e of approval of the financial statements; information and, accordingly, we do not express an audit opinion or, – The Directors’ explanation as to their assessment of the Group' s except to the extent otherwise explicitly stated in this report, any and Company’s prospects, the period this assessment covers and form of assurance thereon. why the period is appropriate; and In connection with our audit of the financial statements, our – The Directors’ statement as to whether they have a reasonable responsibility is to read the other information and, in doing so, expectation that the Company will be able to continue in op eration consider whether the other information is materially inconsistent and meet its liabilities as they fall due over the period of its with the financial statements or our knowledge obtained in the audit, assessment, including any related disclosures drawing attention to or otherwise appears to be materially misstated. If we identify an any necessary qualifications or assump tions. apparent material inconsistency or material misstatement, we are Our review of the Directors’ statement regarding the longer-term required to perform procedures to conclude whether there is a viability of the Group and Company was substantially less in scope material misstatement of the financial statements or a material than an audit and only consisted of making inquiries and considering misstatement of the other information. If, based on the work we have the Directors’ process supporting their statement; checking that the performed, we conclude that there is a material misstatement of this statement is in alignment with the relevant provisions of the UK other information, we are required to report that fact. We have Corporate Governance Code; and considering whether the nothing to report based on these responsibilities. statement is consistent with the financial statements and our With respect to the Strategic report and Directors' report, we also knowledge and understanding of the Group and Company and their considered whether the disclosures required by the UK Companies environment obtained in the course of the audit. Act 2006 have been included. In addition, based on the work undertaken as part of our audit, we Based on our work undertaken in the course of the audit, the have concluded that each of the following elements of the corporate Companies Act 2006 requires us also to report certain opinions and governance statement is materially consistent with the financial matters as described below. statements and our knowledge obtained during the audit: Strategic report and Directors’ report – The Directors’ statement that they consider the Annual Report, In our opinion, based on the work undertaken in the course of the taken as a whole, is fair, balanced and understandable, and audit, the information given in the Strategic report and Directors' provides the information necessary for the members to assess the report for the year ended 31 December 2022 is consistent with the G roup’s and Company's position, performance, business model financial statements and has been prepared in accordance with and strategy; applicable legal requirements. – The section of the Annual Report that describes the review of eff ectiveness of risk management and internal control systems; In light of the knowledge and understanding of the Group and and Company and their environment obtained in the course of the audit, – The section of the Annual Report describing the work of the we did not identify any material misstatements in the Strategic report Audit Committee. and Directors' report. We have nothing to report in respect of our responsibility to report Directors’ Remuneration when the Directors’ statement relating to the Company’s compliance In our opinion, the part of the Remuneration Committee report to be with the Code does not properly disclose a departure from a relevant audited has been properly prepared in accordance with the provision of the Code specified under the Listing Rules for review by Companies Act 2006. the auditors. 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 compliance with the provisions of the UK Corporate Governance As explained more fully in the Statement of Directors' responsibilities Code specified for our review. Our additional responsibilities with in respect of the financial statements, the Directors are responsible respect to the corporate governance statement as other information for the preparation of the financial statements in accordance with the are described in the Reporting on other information section of applicable framework and for being satisfied that they give a true and this report. fair view. The Directors are also responsible for such internal control 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 statements and our knowledge obtained during the audit, and we In preparing the financial statements, the Directors are responsible have nothing material to add or draw attention to in relation to: for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going – The Directors’ confirmation that they have carried out a ro bust 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 prin cipal cease operations, or have no realistic alternative but to do so. risks, what procedures are in place to identify emerging risks and an explanation of how these are being managed or mitigate d; 158 Taylor Wimpey plc Annual Report and Accounts 2022 158 Taylor Wimpey plc Annual Report and Accounts 2022 # Auditors' responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Im regularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below. Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and regulations related to building regulations, including fire and building safety legislation, health and safety legislation, law and pension legislation, environmental regulation and employment law, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the financial statements such as the Listing Rules and the Companies Act 2006. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to artificial inflation of reported results via the posting of fraudulent journals, primarily as part of the consolidation process at Group, and bias in the assumptions underpinning significant provisions. Audit procedures performed by the engagement team included: - discussions with the Group Management Team, Business Unit Management, Internal Audit and the Audit Committee; - review of internal audit reports and consideration of known or suspected instances of non-compliance with laws and regulation and fraud; - 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. The period of total uninterrupted engagement is 2 years, covering the years ended 31 December 2021 to 31 December 2022. # 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 1 March 2023 Taylor Winkpey plc Annual Report and Accounts 2023 159 Financial statements ## Consolidated income statement for the year to 31 December 2022 | | | Before | | | | | | Before | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | exceptional | | | Exceptional | | | exceptional | | Exceptional | | | | | | items | | | items | Total | | items | | items | Total | | | | | 2022 | | 2022 | 2022 | | 2021 | | 2021 | 2021 | | Note | | | £m | | £m | £m | | £m | | £m | £m | Continuing operations Revenue 4 4,419.9 – 4,419.9 4,284.9 – 4,284.9 Cost of sales (3,287.5) – (3,287.5) (3,257.9) – (3,257.9) Gross profit 1,132.4 – 1,132.4 1,027.0 – 1,027.0 Net operating expenses 6 (224.9) (80.0) (304.9) (203.8) (125.0) (328.8) Profit on ordinary activities before net finance costs 907.5 (80.0) 827.5 823.2 (125.0) 698.2 Finance income 8 8.6 – 8.6 2.4 – 2.4 Finance costs 8 (24.1) – (24.1) (26.4) – (26.4) Share of results of joint ventures 13 15.9 – 15.9 5.4 – 5.4 Profit before taxation 907.9 (80.0) 827.9 804.6 (125.0) 679.6 axation (charge)/credit 9 (201.9) 17.6 (184.3) (147.9) 23.8 (124.1) Profit for the year 706.0 (62.4) 643.6 656.7 (101.2) 555.5 Note 2022 2021 Basic earnings per share 10 18.1p 15.3p Diluted earnings per share 10 18.0p 15.2p djusted basic earnings per share 10 19.8p 18.0p djusted diluted earnings per share 10 19.7p 18.0p All of the profit for the year is attributable to the equity holders of the Parent Company. 160 Taylor Wimpey plc Annual Report and Accounts 2022 T A A 160 Taylor Wimpey plc Annual Report and Accounts 2022 ## Consolidated statement of comprehensive income for the year to 31 December 2022 ## Consolidated income statement for the year to 31 December 2022 2022 2021 Note £m £m Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of foreign operations 25 6.6 (6.9) | | | Before | | | | | | Before | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | exceptional | | | Exceptional | | | exceptional | | Exceptional | | | Movement in fair value of hedging instruments 25 (3.5) 4.8 | | | | items | | | items | Total | | items | | items | Total | | | | | | 2022 | | 2022 | 2022 | | 2021 | | 2021 | 2021 | Items that will not be reclassified subsequently to profit or loss: | | Note | | | £m | | £m | £m | | £m | | £m | £m | | ctuarial gain on defined benefit pension schemes 21 3.2 37.9 Continuing operations a credit/(charge) on items taken directly to other comprehensive income 14 0.7 (5.4) Revenue 4 4,419.9 – 4,419.9 4,284.9 – 4,284.9 Other comprehensive income for the year 7.0 30.4 Cost of sales (3,287.5) – (3,287.5) (3,257.9) – (3,257.9) Profit for the year 643.6 555.5 Gross profit 1,132.4 – 1,132.4 1,027.0 – 1,027.0 Total comprehensive income for the year 650.6 585.9 Net operating expenses 6 (224.9) (80.0) (304.9) (203.8) (125.0) (328.8) Profit on ordinary activities before net finance costs 907.5 (80.0) 827.5 823.2 (125.0) 698.2 All of the comprehensive income for the year is attributable to the equity holders of the Parent Company. Finance income 8 8.6 – 8.6 2.4 – 2.4 Finance costs 8 (24.1) – (24.1) (26.4) – (26.4) Share of results of joint ventures 13 15.9 – 15.9 5.4 – 5.4 Profit before taxation 907.9 (80.0) 827.9 804.6 (125.0) 679.6 axation (charge)/credit 9 (201.9) 17.6 (184.3) (147.9) 23.8 (124.1) Profit for the year 706.0 (62.4) 643.6 656.7 (101.2) 555.5 Note 2022 2021 Basic earnings per share 10 18.1p 15.3p Diluted earnings per share 10 18.0p 15.2p djusted basic earnings per share 10 19.8p 18.0p djusted diluted earnings per share 10 19.7p 18.0p All of the profit for the year is attributable to the equity holders of the Parent Company. | | | Taylor Wimpey plc Annual Report and Accounts 2022 | | 161 | | --- | --- | --- | --- | --- | | T A A | A T x | | | | | 160 Taylor Wimpey plc Annual Report and Accounts 2022 | | | Taylor Wimpey plc Annual Report and Accounts 2022161 | | Financial statements # Consolidated balance sheet at 31 December 2022 | | Note | 2022 Q3 | 2021 Q4 | | --- | --- | --- | --- | | **Non-current assets** | | | | | Intangible assets | 11 | 4.2 | 6.8 | | Property, plant and equipment | 12 | 17.3 | 21.7 | | Right-of-use assets | 19 | 26.3 | 26.5 | | Interests in joint ventures | 13 | 74.0 | 85.4 | | Trade and other receivables | 16 | 12.2 | 27.5 | | Other financial assets | 21 | 10.0 | 10.0 | | Deferred tax assets | 14 | 26.0 | 26.2 | | | | **170.0** | **203.9** | | **Current assets** | | | | | Inventories | 15 | 5,169.6 | 4,945.7 | | Trade and other receivables | 16 | 191.2 | 168.2 | | Tax receivables | | – | 1.0 | | Cash and cash equivalents | 16 | 952.3 | 921.0 | | | | **6,313.1** | **6,035.9** | | **Total assets** | | **6,483.1** | **6,239.8** | | **Current liabilities** | | | | | Trade and other payables | 18 | (1,130.8) | (901.9) | | Lease liabilities | 19 | (7.3) | (7.0) | | Bank and other loans | 17 | (88.5) | – | | Tax payables | | (7.2) | (0.8) | | Provisions | 22 | (106.7) | (125.4) | | | | **(1,340.5)** | **(1,035.1)** | | **Net current assets** | | **4,972.6** | **5,000.8** | | **Non-current liabilities** | | | | | Trade and other payables | 18 | (407.3) | (629.3) | | Lease liabilities | 19 | (19.7) | (20.4) | | Bank and other loans | 17 | – | (84.0) | | Retirement benefit obligations | 21 | (29.9) | (37.3) | | Provisions | 22 | (183.6) | (119.7) | | | | **(640.5)** | **(890.7)** | | **Total liabilities** | | **(1,981.0)** | **(1,925.8)** | | **Net assets** | | **4,502.1** | **4,314.0** | | **Equity** | | | | | Share capital | 23 | 291.3 | 292.2 | | Share premium | 24 | 777.9 | 777.5 | | Own shares | 26 | (43.1) | (14.6) | | Other reserves | 25 | 545.6 | 541.6 | | Retained earnings | | 2,930.4 | 2,717.3 | | **Total equity** | | **4,502.1** | **4,314.0** | The financial statements of Taylor Wimpey plc (registered number: 206805) were approved by the Board of Directors and authorised for issue on 1 March 2023. They were signed on its behalf by: J Daly Director C Carney Director 162 Taylor Wimpey plc Annual Report and Accounts 2022 ## Consolidated statement of changes in equity for the year to 31 December 2022 ## Consolidated balance sheet at 31 December 2022 Share Share Own Other Retained capital premium shares reserves earnings Total Note £m £m £m £m £m £m otal equity at 1 January 2021 292.2 773.1 (11.5) 543.7 2,419.3 4,016.8 2022 2021 Other comprehensive (expense)/income for the year – – – (2.1) 32.5 30.4 Note £m £m Profit for the year – – – – 555.5 555.5 Non-current assets Total comprehensive (expense)/income for the year – – – (2.1) 588.0 585.9 Intangible assets 11 4.2 6.6 New share capital subscribed – 4.4 – – – 4.4 Property, plant and equipment 12 17.3 21.7 Own shares acquired – – (4.2) – – (4.2) Right-of-use assets 19 26.3 26.5 Utilisation of own shares – – 1.1 – – 1.1 Interests in joint ventures 13 74.0 85.4 Cash cost of satisfying share options – – – – (1.9) (1.9) rade and other receivables 16 12.2 27.5 Share-based payment credit 29 – – – – 13.2 13.2 Other financial assets 21 10.0 10.0 ax credit on items taken directly to statement Deferred tax assets 14 26.0 26.2 of changes in equity 14 – – – – 0.2 0.2 170.0 203.9 Dividends approved and paid 31 – – – – (301.5) (301.5) Current assets otal equity at 31 December 2021 292.2 777.5 (14.6) 541.6 2,717.3 4,314.0 Inventories 15 5,169.6 4,945.7 Other comprehensive income for the year – – – 3.1 3.9 7.0 rade and other receivables 16 191.2 168.2 Profit for the year – – – – 643.6 643.6 ax receivables – 1.0 Total comprehensive income for the year – – – 3.1 647.5 650.6 Cash and cash equivalents 16 952.3 921.0 New share capital subscribed – 0.4 – – – 0.4 6,313.1 6,035.9 Own shares acquired and cancelled 23 (0.9) – (33.8) 0.9 (117.5) (151.3) Total assets 6,483.1 6,239.8 Utilisation of own shares – – 5.3 – – 5.3 Current liabilities Cash cost of satisfying share options – – – – (5.5) (5.5) rade and other payables 18 (1,130.8) (901.9) Share-based payment credit 29 – – – – 14.0 14.0 Lease liabilities 19 (7.3) (7.0) ax charge on items taken directly to statement | Bank and other loans 17 (88.5) – | of changes in equity | 14 – – – – (1.6) (1.6) | | --- | --- | --- | | ax payables (7.2) (0.8) | Dividends approved and paid 31 – – – – (323.8) (323.8) | | | Provisions 22 (106.7) (125.4) | Total equity at 31 December 2022 291.3 777.9 (43.1) 545.6 2,930.4 4,502.1 | | (1,340.5) (1,035.1) Net current assets 4,972.6 5,000.8 Non-current liabilities rade and other payables 18 (407.3) (629.3) Lease liabilities 19 (19.7) (20.4) Bank and other loans 17 – (84.0) Retirement benefit obligations 21 (29.9) (37.3) Provisions 22 (183.6) (119.7) (640.5) (890.7) Total liabilities (1,981.0) (1,925.8) Net assets 4,502.1 4,314.0 Equity Share capital 23 291.3 292.2 Share premium 24 777.9 777.5 Own shares 26 (43.1) (14.6) Other reserves 25 545.6 541.6 Retained earnings 2,930.4 2,717.3 Total equity 4,502.1 4,314.0 The financial statements of Taylor Wimpey plc (registered number: 296805) were approved by the Board of Directors and authorised for issue on 1 March 2023. They were signed on its behalf by: | J Daly | C Carney | | | | --- | --- | --- | --- | | Director | Director | | | | | | Taylor Wimpey plc Annual Report and Accounts 2022 | 163 | T T T T T T T T T T 162 Taylor Wimpey plc Annual Report and Accounts 2022 Taylor Wimpey plc Annual Report and Accounts 2022163 Financial statements ## Consolidated cash flow statement for the year to 31 December 2022 | | Note | 2022 Qtr | 2021 Qtr | | --- | --- | --- | --- | | **Profit on ordinary activities before net finance costs** | | **627.5** | **698.2** | | Adjustments for: | | | | | Depreciation and amortisation | | 14.5 | 15.6 | | Pension contributions in excess of charge to the income statement | | (4.8) | (15.2) | | Share-based payment charge | | 14.0 | 13.2 | | Loss on disposal of property, plant and equipment | | 0.3 | – | | Increase in provisions excluding exceptional payments | | 90.9 | 130.0 | | **Operating cash flows before movements in working capital** | | **942.4** | **841.8** | | Increase in inventories | | (280.4) | (293.2) | | (Increase)/decrease in receivables | | (9.9) | 32.1 | | Increase/(decrease) in payables | | 52.9 | (6.0) | | **Cash generated from operations** | | **705.0** | **574.7** | | Payments related to exceptional charges | | (45.9) | (15.1) | | Income taxes paid | | (176.9) | (123.0) | | Interest paid | | (4.7) | (4.7) | | **Net cash generated from operating activities** | | **477.5** | **431.9** | | **Investing activities** | | | | | Interest received | 8 | 6.9 | 2.1 | | Dividends received from joint ventures | | 3.1 | 8.1 | | Proceeds on disposal of property, plant and equipment | | 1.5 | – | | Purchase of property, plant and equipment | 12 | (1.7) | (2.5) | | Purchase of software | 11 | (0.4) | (2.1) | | Investment in pension scheme escrow | | – | (10.0) | | Amounts repaid by/(invested in) joint ventures | | 24.2 | (5.9) | | **Net cash generated from/(used in) investing activities** | | **33.6** | **(10.3)** | | **Financing activities** | | | | | Lease capital repayments | 19 | (7.6) | (6.9) | | Proceeds from the issue of own shares | | – | – | | Cash received on exercise of share options | | 0.3 | 3.6 | | Purchase of own shares | | (151.3) | (4.2) | | Repayment of borrowings | | – | (12.7) | | Dividends paid | 31 | (323.8) | (301.5) | | **Net cash used in financing activities** | | **(482.4)** | **(321.7)** | | **Net increase in cash and cash equivalents** | | **28.7** | **99.9** | | **Cash and cash equivalents at beginning of year** | | **921.0** | **823.0** | | Effect of foreign exchange rate changes | | 2.6 | (1.9) | | **Cash and cash equivalents at end of year** | 27 | **952.3** | **921.0** | 164 Taylor Wimpsey plc Annual Report and Accounts 2022 # 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 The Group has adopted and applied the following standards and amendments in the year, which are relevant to its operations, none of which had a material impact on the financial statements. - IFRS 3 'Business Combinations' (amendments) – references to the Conceptual Framework - IAS 37 'Provisions, Contingent Liabilities and Contingent Assets' (amendment) – cost of fulfilling a contract - IAS 16 'Property, Plant and Equipment' (amendment) – proceeds before intended use - Annual improvement in IFRS Standards 2018-2023 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: - 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 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 prepared assess the performance of the Group over a five year period. 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 sensitivities, taking account of a further decline in customer confidence, disposable incomes, and mortgage availability than has been experienced during the second half of 2022. 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, as costs associated with the regulatory changes have been included in the modelling (e.g. updates to Parts L&F of the building regulations in England and Wales and Future Homes and Buildings Standard). - Volume – a decline in total volumes of 30% from 2022, 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 - One-off costs – a one-off exceptional charge and cash cost of £150 million for an unanticipated event, change in Government regulations or financial penalty has been included in 2023 Within the scenario build costs are forecast to reduce with lower volumes reducing pressure on the availability of materials and resources and land cost remaining broadly 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 and Buildings 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 field and reducing our overhead base to reflect the lower volumes. If this scenario were to occur, we also have a range of additional options to maintain our financial strength, including: a more severe reduction in land spend and work in progress, the sale of assets, reducing the dividend, and or raising debt. At 31 December 2022, the Group had a cash balance of £952 million and access to £500 million from a fully undrawn revolving credit facility, which is expected to be replaced during the forecast period, together totalling £1,502 million. The combination of both of these is sufficient to absorb the financial impact of each of the risks modelled in the stress and sensitivity analysis, individually and in aggregate. 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 UK-adopted international accounting standards as applied in conformity with the provisions of the Companies Act 2006. ### 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 power over the investee; - governs the financial and operating policies of 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 Winkpey plc Annual Report and Accounts 2023 165 Financial statements | Notes to the consolidated financial statements | | | | | continued | | --- | --- | --- | --- | --- | --- | | 1. Significant accounting policies c | o | n t i n | u e | d | | | | c o | n t i n | u e | d | | 166 Taylor Wimpey plc Annual Report and Accounts 2022 On acquisition, the assets and liabilities and contingent liabilities of a subsidiary are measured at their fair value at the date of acquisition. Any excess of the cost of acquisition over the fair value of the identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair value of the identifiable net assets acquired (i.e. discount on acquisition) is credited to the income statement in the period of acquisition. The interest of non-controlling shareholders is stated at the non-controlling interest’s proportion of the fair value of the assets and liabilities recognised. Subsequently, all comprehensive income is attributed to the owners and the non- controlling interests. The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where a subsidiary is disposed of which constituted a major line of business, it is disclosed as a discontinued operation. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group. All intra-Group transactions, balances, income and expenses are eliminated on consolidation. Joint ventures Undertakings are deemed to be a joint venture when the Group has joint control of the rights and assets of the undertaking via either voting rights or a formal agreement which includes that unanimous consent is required for strategic, financial and operating decisions. Joint ventures are consolidated under the equity accounting method. Loans to joint ventures form part of the Group’s net investment and are assessed for recoverability on a periodic basis. On transfer of land and/or work in progress to joint ventures, the Group recognises only its share of any profits or losses. Joint operations arise where the Group has joint control of an operation but has rights to only its own assets and obligations related to the operation. These assets and obligations, and the Group’s share of revenues and costs, are included in the Group’s results. Joint ventures and joint operations are entered into to develop specific sites. Each arrangement is site or project specific and once the development or project is complete the arrangement is wound down. Segmental reporting The Group operates in 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. In addition, there are central operations covering the corporate functions and Strategic Land. The Group aggregates the UK operations into a single reporting segment on the basis that they share similar economic characteristics. 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 Group has the following reporting segments: – United Kingdom – Spain Revenue Revenue is recognised when the performance obligation associated with the sale is completed. The transaction price comprises the fair value of the consideration received or receivable, net of value added tax, rebates and discounts and after eliminating sales within the Group. Revenue and profit are recognised as follows: a. Housing and land sales Revenue is recognised in the income statement when control is transferred to the customer. This is deemed to be when title of the property passes to the customer on legal completion and the performance obligation associated with the sale is completed. Revenue in respect of the sale of residential properties, whether under the Government’s Help to Buy scheme or not, is recognised at the fair value of the consideration received or receivable on legal completion. b. Long term contracts Revenue arising on contracts which give the customer control over properties as they are constructed, and for which the Group has a right to payments for work performed, is recognised over time. Revenue and costs are recognised over time with reference to the stage of completion of the contract activity at the balance sheet date where the outcome of a long term contract can be estimated reliably. This is normally measured by surveys of work performed to date. Variations in contract work, claims and incentive payments are included to the extent that it is highly probable that they will result in revenue and they are capable of being reliably measured. When land is transferred at the start of a long term contract, revenue is not recognised until control has been transferred to the customer which includes legal title being passed to them. Where the outcome of a long term contract cannot be estimated reliably, contract revenue where recoverability is probable is recognised to the extent of contract costs incurred. The costs associated with fulfilling a contract are recognised as expenses in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately. c. Part exchange In certain instances, property may be accepted in part consideration for a sale of a residential property. The fair value is established by independent surveyors, reduced for costs to sell. Proceeds generated from the subsequent sale of part exchange properties are recorded as other income and the cost as other expenses. The original sale is recorded in the normal way, with the fair value of the exchanged property replacing cash receipts. d. Cash incentives The transaction price may include cash incentives. These are considered to be a discount from the purchase price offered to the acquirer and are therefore accounted for as a reduction to revenue. Cost of sales The Group determines the value of inventory charged to cost of sales based on the total budgeted current cost of developing the site. Once the total expected costs of development are established, they are allocated to individual plots to achieve a consistent margin for the site. To the extent that additional costs or savings are identified, including experienced inflation, as the site progresses, these are recognised over the remaining plots unless they are specific to a particular plot, in which case they are recognised in the income statement at the point of sale. 166 Taylor Wimpey plc Annual Report and Accounts 2022 Notes to the consolidated financial statements continued 1. Significant accounting policies c o n t i n u e d 1. Significant accounting policies ccoonnttiinnuueedd Revenue c o n t i n u e d 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 identifiable value of the consideration received or receivable, net of value added net assets acquired is recognised as goodwill. Any deficiency of the tax, rebates and discounts and after eliminating sales within the cost of acquisition below the fair value of the identifiable net assets Group. Revenue and profit are recognised as follows: acquired (i.e. discount on acquisition) is credited to the income a. Housing and land sales statement in the period of acquisition. The interest of non-controlling Revenue is recognised in the income statement when control is shareholders is stated at the non-controlling interest’s proportion of transferred to the customer. This is deemed to be when title of the the fair value of the assets and liabilities recognised. Subsequently, property passes to the customer on legal completion and the all comprehensive income is attributed to the owners and the non- performance obligation associated with the sale is completed. controlling interests. Revenue in respect of the sale of residential properties, whether The results of subsidiaries acquired or disposed of during the year under the Government’s Help to Buy scheme or not, is recognised are included in the consolidated income statement from the effective at the fair value of the consideration received or receivable on date of acquisition or up to the effective date of disposal, as legal completion. appropriate. Where a subsidiary is disposed of which constituted a b. Long term contracts 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 has This is normally measured by surveys of work performed to date. 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 in consent is required for strategic, financial and operating decisions. revenue and they are capable of being reliably measured. When land Joint ventures are consolidated under the equity accounting method. 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 are assessed for recoverability on a periodic basis. On transfer of includes legal title being passed to them. land and/or work in progress to joint ventures, the Group recognises Where the outcome of a long term contract cannot be estimated only its share of any profits or losses. Joint operations arise where reliably, contract revenue where recoverability is probable is the Group has joint control of an operation but has rights to only its Foreign currencies recognised to the extent of contract costs incurred. The costs own assets and obligations related to the operation. These assets The individual financial statements of each Group company are associated with fulfilling a contract are recognised as expenses in and obligations, and the Group’s share of revenues and costs, are presented in the currency of the primary economic environment in the period in which they are incurred. When it is probable that total included in the Group’s results. which it operates (its functional currency). Transactions in currencies contract costs will exceed total contract revenue, the expected loss other than the functional currency are recorded at the rates of exchange Joint ventures and joint operations are entered into to develop is recognised as an expense immediately. prevailing on the dates of the transactions. At each balance sheet specific sites. Each arrangement is site or project specific and c. Part exchange date, monetary assets and liabilities that are denominated in foreign once the development or project is complete the arrangement is In certain instances, property may be accepted in part consideration currencies other than the functional currency are retranslated at the wound down. for a sale of a residential property. The fair value is established by rates prevailing at the balance sheet date. Segmental reporting independent surveyors, reduced for costs to sell. Proceeds generated Non-monetary assets and liabilities carried at fair value that are The Group operates in the United Kingdom and Spain. The United from the subsequent sale of part exchange properties are recorded denominated in foreign currencies are translated at the rates prevailing Kingdom is split into five geographical operating segments, each as other income and the cost as other expenses. The original sale is at the date when the fair value was determined. Gains and losses managed by a Divisional Chair who sits on the Group Management recorded in the normal way, with the fair value of the exchanged arising on retranslation are included in the net profit or loss for Team. In addition, there are central operations covering the property replacing cash receipts. the period. corporate functions and Strategic Land. d. Cash incentives On consolidation, the assets and liabilities of the Group’s overseas The Group aggregates the UK operations into a single reporting The transaction price may include cash incentives. These are operation are translated at exchange rates prevailing at the balance segment on the basis that they share similar economic considered to be a discount from the purchase price offered to the sheet date. Income and expense items are translated at an characteristics. In addition each Division builds and delivers acquirer and are therefore accounted for as a reduction to revenue. appropriate average rate for the year. Exchange differences arising residential homes, uses consistent methods of construction, sells Cost of sales are recognised within other comprehensive income and transferred homes to both private customers and local housing associations, The Group determines the value of inventory charged to cost of sales to the Group’s translation reserve. Such translation differences are follows a single UK sales process and operating framework, is based on the total budgeted current cost of developing the site. recognised as income or expenses in the income statement in the subject to the same macro-economic factors including mortgage Once the total expected costs of development are established, they period in which the operation is disposed of. availability and has the same cost of capital arising from the are allocated to individual plots to achieve a consistent margin for the The Group uses foreign currency borrowings to hedge its net utilisation of central banking and debt facilities. site. To the extent that additional costs or savings are identified, investment exposure to certain overseas subsidiaries. As a result, the Group has the following reporting segments: including experienced inflation, as the site progresses, these are recognised over the remaining plots unless they are specific to a – United Kingdom particular plot, in which case they are recognised in the income – Spain statement at the point of sale. Taylor Wimpey plc Annual Report and Accounts 2022 167 Positive contribution Positive contribution represents the net amount of previous impairments allocated to inventory on a plot that has subsequently resulted in a gross profit on completion. This is due to the combination of selling prices and costs, or product mix improvements exceeding market assumptions in the previous net realisable value (NRV) exercise. These amounts are stated before the allocation of overheads, which are excluded from the Group’s NRV exercise. Exceptional items Exceptional items are defined as items of income or expenditure which, in the opinion of the Directors, are material or unusual in nature or of such significance that they require separate disclosure on the face of the income statement in accordance with IAS 1 ‘Presentation of Financial Statements’. Should these items be reversed, disclosure of this would also be as exceptional items. Finance income Interest income on bank deposits is recognised on an accruals basis. Also included in interest receivable are interest and interest- related payments the Group receives on other receivables. Finance costs Borrowing costs are recognised on an effective interest rate basis and are payable on the Group’s borrowings and lease liabilities. Also included are the amortisation of fees associated with the arrangement of the financing. Finance charges, including premiums payable on settlement or redemption, and direct issue costs, are accounted for on an accruals basis in the income statement using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. Capitalised finance costs are held in other receivables and amortised over the period of the facility. Leases The Group as a lessee The Group assesses at inception whether a contract is, or contains, a lease. A lease exists if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Group assessment includes whether: – the contract involves the use of an identified asset; – the Group has the right to obtain substantially all of the economi c ben efits from the use of the asset throughout the contr act period; and – the Group has the right to direct the use of the asset. At the commencement of a lease, the Group recognises a right-of- use asset along with a corresponding lease liability. The lease liability is initially measured at the present value of the remaining lease payments, discounted using the Group’s incremental borrowing rate. The lease term comprises the non- cancellable period of the contract, together with periods covered by an option to extend the lease where the Group is reasonably certain to exercise that option based on operational needs and contractual terms. Subsequently, the lease liability is measured at amortised cost by increasing the carrying amount to reflect interest on the lease liability and reducing it by the lease payments made. The lease liability is remeasured when the Group changes its assessment of whether it will exercise an extension or termination option. Right-of-use assets are initially measured at cost, comprising the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date, estimated asset retirement obligations, lease incentives received and initial direct costs. Subsequently, right-of-use assets are measured at cost, less any accumulated depreciation and any accumulated impairment losses, and are adjusted for certain remeasurements of the lease liability. Depreciation is calculated on a straight-line basis over the length of the lease. The Group has elected to apply exemptions for short term leases and leases for which the underlying asset is of low value. For these leases, payments are charged to the income statement on a straight-line basis over the term of the relevant lease. Right-of-use assets are presented within non-current assets on the face of the balance sheet, and lease liabilities are shown separately on the balance sheet in current liabilities and non-current liabilities depending on the length of the lease term. Intangible assets Brands Internally generated brands are not capitalised. Acquired brands are capitalised. Brands are stated at cost, less accumulated amortisation and any accumulated impairment losses. Brands are amortised over their estimated useful life on a straight-line basis. Software Costs that are directly associated with the acquisition or production of identifiable and unique software controlled by the Group, and that generate economic benefits beyond one year, are recognised as intangible assets. Software development costs recognised as assets are amortised on a straight-line basis over three to five years from the time of implementation and are stated at cost less accumulated amortisation and any accumulated impairment losses. 166 Taylor Wimpey plc Annual Report and Accounts 2022 Taylor Wimpey plc Annual Report and Accounts 2022167 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. Fair value gains and losses on financial assets measured at FVTPL are recognised in the income statement and presented within net c o n t i n u e d operating expenses. The Group currently has no financial assets measured at FVOCI. Financial instruments Financial assets Financial assets are initially recognised at fair value and subsequently classified into one of the following measurement categories: – Measured at amortised cost – Measured at fair value through profit or loss (FVTPL) – Measured at fair value through other comprehensive income (FVOCI) The classification of financial assets depends on the Group’s business model for managing the asset and the contractual terms of the cash flows. Assets that are held for the collection of contractual cash flows that represent solely payments of principal and interest are measured at amortised cost, with any interest income recognised in the income statement using the effective interest rate method. 168 Taylor Wimpey plc Annual Report and Accounts 2022 Property, plant and equipment Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and any accumulated impairment losses. Freehold land is not depreciated. Buildings are depreciated over 50 years. Plant and equipment is stated at cost less depreciation. Depreciation is charged to expense the cost or valuation of assets over their estimated useful lives. Other assets are depreciated using the straight-line method, on the following bases: – Plant and equipment: 20-33% per annum – Leasehold improvements: over the term of the lease The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sale proceeds, less any selling expenses, and the carrying amount of the asset. This difference is recognised in the income statement. Impairment of tangible and intangible assets At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, using a pre-tax discount rate that reflects current market assessments and the risks specific to the asset. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately in the income statement. Where an impairment loss subsequently reverses, due to a change in circumstances or in the estimates used to determine the asset’s recoverable amount, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, so long as it does not exceed the original carrying value prior to the impairment being recognised. A reversal of an impairment loss is recognised as income immediately in the income statement. Trade and other receivables Trade and other receivables are measured at amortised cost, less any loss allowance. Shared equity loans Shared equity loans were provided to certain customers to facilitate a house purchase. The contractual cash flows on shared equity loans are linked to a national house price index. Under IFRS 9, financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest. Accordingly, shared equity loans are classified as FVTPL with fair value gains and losses arising on the remeasurement of the loan presented in the income statement within net operating expenses. Cash and cash equivalents Cash and cash equivalents comprise cash held by the Group and short term bank deposits with an original maturity of three months or less from inception and are subject to insignificant risk of changes in value. Financial liabilities Financial liabilities are initially recognised at fair value and subsequently classified into one of the following measurement categories: – Measured at amortised cost – Measured at fair value through profit or loss (FVTPL) Non-derivative financial liabilities are measured at FVTPL when they are considered held for trading or designated as such on initial recognition. The Group has no non-derivative financial liabilities measured at FVTPL. Borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred and subsequently measured at amortised cost. Trade and other payables Trade and other payables are measured at amortised cost. When the acquisition of land has deferred payment terms a land creditor is recognised. Payables are discounted to present value when repayment is due more than one year after initial recognition or the impact is material. Customer deposits Customer deposits, measured at amortised cost, are recorded as a liability on receipt and released to the income statement as revenue upon legal completion. Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued by the Parent Company are recorded as the proceeds are received, net of direct issue costs. 168 Taylor Wimpey plc Annual Report and Accounts 2022 Notes to the consolidated financial statements continued 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 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 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 difference remeasurement of the loan presented in the income statement within 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 they flows are discounted to their present value, using a pre-tax discount 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 Borrowings are initially recognised at fair value, net of transaction of 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 the acquisition of land has deferred payment terms a land creditor change in circumstances or in the estimates used to determine is recognised. Payables are discounted to present value when the asset’s recoverable amount, the carrying amount of the asset repayment is due more than one year after initial recognition or or cash-generating unit is increased to the revised estimate of its the impact is material. recoverable amount, so long as it does not exceed the original carrying value prior to the impairment being recognised. A reversal Customer deposits of an impairment loss is recognised as income immediately in the Customer deposits, measured at amortised cost, are recorded as a income statement. liability on receipt and released to the income statement as revenue upon legal completion. Financial instruments Equity instruments Financial assets An equity instrument is any contract that evidences a residual Financial assets are initially recognised at fair value and subsequently interest in the assets of the Group after deducting all of its liabilities. classified into one of the following measurement categories: Equity instruments issued by the Parent Company are recorded as – Measured at amortised cost the proceeds are received, net of direct issue costs. – Measured at fair value through profit or loss (FVTPL) – Measured at fair value through other comprehensive income (FVOCI) The classification of financial assets depends on the Group’s business model for managing the asset and the contractual terms of the cash flows. Assets that are held for the collection of contractual cash flows that represent solely payments of principal and interest are measured at amortised cost, with any interest income recognised in the income statement using the effective interest rate method. Taylor Wimpey plc Annual Report and Accounts 2022 169 1. Significant accounting policies c o n t i n u e d Derivative financial instruments and hedge accounting The Group uses foreign currency borrowings and derivatives to hedge its net investment exposure to movements in exchange rates on translation of certain individual financial statements denominated in foreign currencies other than Sterling which is the functional currency of the Parent Company. Derivative financial instruments are measured at fair value. Changes in the fair value of derivative financial instruments that are designated and effective as hedges of net investments in foreign operations are recognised directly in other comprehensive income and the ineffective portion, if any, is recognised immediately in the income statement. For an effective hedge of an exposure to changes in fair value, the hedged item is adjusted for changes in fair value attributable to the risk being hedged with the corresponding entry in the consolidated income statement. Gains or losses from remeasuring the derivative, or for non-derivatives the foreign currency component of its carrying amount, are also recognised in the income statement. Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the income statement as they arise. Hedge accounting is discontinued if the hedged item is sold or no longer qualifies for hedge accounting at which point any cumulative gain or loss on the hedging instrument accumulated in other comprehensive income is transferred to the income statement for the period. Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that the Group will be required to settle that obligation. Provisions are measured at the Directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date and are discounted to present value where the effect is material. Inventories Inventories are initially stated at cost and held at the lower of this initial amount and net realisable value. Costs comprise direct materials and, where applicable, direct labour and those overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. Land is recognised in inventory when the significant risks and rewards of ownership have been transferred to the Group. Non-refundable land option payments are initially recognised in inventory. They are reviewed regularly and written off to the income statement when it is probable that the option will not be exercised. Taxation The tax charge represents the sum of the tax currently payable and deferred tax. Current tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years, and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are also recognised for taxable temporary differences arising on investments in subsidiaries and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is measured on a non-discounted basis using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is charged or credited to the income statement, except when it relates to items charged or credited directly to other comprehensive income or equity, in which case the deferred tax is also dealt with in other comprehensive income or equity. Share-based payments The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will vest after adjusting for the effect of non- market vesting conditions. Employee benefits For defined benefit plans a finance charge is determined on the net defined benefit pension liability. The operating and financing costs of such plans are recognised separately in the income statement; service costs are spread systematically over the service period of employees, past service costs are recognised as an expense at the earlier of when the plan is amended or curtailment occurs, at the same time as which the entity will recognise related restructuring costs or termination benefits. Certain liability management costs and financing costs are recognised in the periods in which they arise. Actuarial gains and losses are recognised immediately in the statement of comprehensive income. The retirement benefit obligation recognised in the consolidated statement of financial position represents either the net deficit position of the scheme or, should the scheme be in an IAS 19 accounting surplus, the IFRIC 14 liability equal to the present value of future committed cash contributions. Payments to defined contribution schemes are charged as an expense as they fall due. 168 Taylor Wimpey plc Annual Report and Accounts 2022 Taylor Wimpey plc Annual Report and Accounts 2022169 Financial statements Notes to the consolidated financial statements continued 2. Critical accounting judgements and key sources 3. General information of estimation uncertainty Preparation of the financial statements requires management to make significant judgements and estimates. Management has Companies Act and is registered in England and Wales. considered whether there are any such sources of estimation or The Company’s registered office is Taylor Wimpey plc, Gate House, accounting judgements in forming the financial statements and Turnpike Road, High Wycombe, Buckinghamshire, HP12 3NR. The highlight the following areas. In identifying these areas, management nature of the Group’s operations and its principal activities are set have considered the size of the associated balance and the potential out in the Strategic Report on pages 2 to 85. likelihood of changes due to macro-economic factors. Critical accounting judgements Management has not made any individual critical accounting judgements that are material to the Group. Key sources of estimation uncertainty Key sources of estimation uncertainty are those which present a significant risk of potential material misstatement to carrying amounts of assets or liabilities within the next financial year. Employee benefits The value of the defined benefit plan liabilities is determined by using various assumptions, including discount rate, future rates of inflation, growth, yields, returns on investments and mortality rates. As actual changes in these values may differ from those assumed, this is a key source of estimation uncertainty within the financial statements. Changes in these assumptions over time and differences to the actual outcome will be reflected in the statement of comprehensive 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, and make estimates relating to future sales prices and 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 2021 the Group announced an additional £125.0 million provision to fund cladding fire safety improvements. In 2022 the Group signed up to the Government’s Building Safety Pledge for Developers and recognised an additional provision of £80.0 million. The Group estimates the provision based on the number of buildings that may require works under EWS1 requirements and the costs to carry out the identified works. 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. 170 Taylor Wimpey plc Annual Report and Accounts 2022 Taylor Wimpey plc is a public company limited by shares, incorporated and domiciled in the United Kingdom under the These financial statements are presented in pounds Sterling as the currency of the primary economic environment in which the Group operates. 170 Taylor Wimpey plc Annual Report and Accounts 2022 #### 4. Revenue An analysis of the Group's continuing revenue is as follows: | | 2022 £m | 2021 £m | | --- | --- | --- | | Private sales | 3,596.1 | 3,896.3 | | Partnership housing | 476.4 | 363.1 | | Land & other | 57.4 | 31.5 | | | **4,419.9** | **4,284.9** | 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. | | 2022 £m | 2021 £m | | --- | --- | --- | | Recognised at a point in time | 3,983.1 | 3,939.2 | | Recognised over time | 436.8 | 345.7 | | | **4,419.9** | **4,284.9** | At 31 December 2022, the aggregate amount of the transaction price allocated to unsatisfied performance obligations on construction contracts was D877.6 million (2021: £594.3 million), of which approximately half is expected to be recognised as revenue during 2023. #### 5. Operating segments The Group operates in two countries, the United Kingdom and Spain, and has two reportable segments of those countries. 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: | | 2022 | | | 2021 | | | | --- | --- | --- | --- | --- | --- | --- | | | UK £m | Spain £m | Total £m | UK £m | Spain £m | Total £m | | **Revenue** | | | | | | | | External sales | **4,295.5** | **124.4** | **4,419.9** | 4,208.1 | 76.8 | 4,284.9 | | **Result** | | | | | | | | Profit before joint ventures, finance costs and exceptional items | **874.9** | **32.6** | **907.5** | 808.6 | 14.6 | 823.2 | | Share of results of joint ventures | **15.9** | **-** | **15.9** | 5.4 | - | 5.4 | | Operating profit (Note 32) | **890.8** | **32.6** | **923.4** | 814.0 | 14.6 | 828.6 | | Exceptional items (Note 6) | **(80.0)** | **-** | **(80.0)** | (125.0) | - | (125.0) | | Profit before net finance costs | **810.8** | **32.6** | **843.4** | 689.0 | 14.6 | 703.6 | | Net finance costs | | | **(15.5)** | | | (24.0) | | Profit before taxation | | | **827.9** | | | 679.6 | | Taxation charge | | | **(184.3)** | | | (124.1) | | **Profit for the year** | | | **643.6** | | | **555.5** | Taylor Whipple plc Annual Report and Accounts 2023 171 Financial statements Notes to the consolidated financial statements continued # 5. Operating segments continued | | 2022 | | | 2021 | | | | --- | --- | --- | --- | --- | --- | --- | | | UK £m | Spain £m | Total £m | UK £m | Spain £m | Total £m | | **Assets and liabilities** | | | | | | | | Segment operating assets | 5,222.9 | 207.9 | 5,430.8 | 5,013.6 | 192.6 | 5,206.2 | | Joint ventures | 74.0 | – | 74.0 | 85.4 | – | 85.4 | | Segment operating liabilities | (1,767.2) | (118.1) | (1,880.3) | (1,757.3) | (83.7) | (1,841.0) | | Net operating assets | 3,529.7 | 89.8 | 3,619.5 | 3,341.7 | 108.9 | 3,450.6 | | Net current taxation | | | (7.2) | | | 0.2 | | Net deferred taxation (Note 14) | | | 26.0 | | | 26.2 | | Net cash (Note 27) | | | 863.8 | | | 837.0 | | **Net assets** | | | **4,502.1** | | | **4,314.0** | | | 2022 | | | 2021 | | | | --- | --- | --- | --- | --- | --- | --- | | | UK £m | Spain £m | Total £m | UK £m | Spain £m | Total £m | | **Other information** | | | | | | | | Property, plant and equipment additions | 1.6 | 0.1 | 1.7 | 2.4 | 0.1 | 2.5 | | Right-of-use asset additions | 7.1 | 0.1 | 7.2 | 6.1 | 0.6 | 6.7 | | Software additions | 0.4 | – | 0.4 | 2.1 | – | 2.1 | | Property, plant and equipment depreciation | (4.2) | (0.1) | (4.3) | (4.6) | (0.1) | (4.7) | | Right-of-use asset depreciation | (7.2) | (0.2) | (7.4) | (7.1) | (0.2) | (7.3) | | Amortisation of intangible assets | (2.8) | – | (2.8) | (3.6) | – | (3.6) | # 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): | | 2022 £m | 2021 £m | | --- | --- | --- | | Administration expenses | 220.7 | 211.0 | | Other expenses | 70.1 | 100.3 | | Other income | (65.9) | (107.5) | | Exceptional items | 80.0 | 125.0 | | Net operating expenses | 304.9 | 328.8 | The majority of the other income and other expenses shown above relates to the income and associated costs arising on the sale of part exchange properties. These are shown gross with the comparatives updated to be disclosed on the same basis (grossing up each by £87.2 million for 2021). Also included in other income and other expenses are profit/loss on the sale of property, plant and equipment, the revaluation of certain shared equity mortgage receivables and abortive land acquisition costs. During 2022 a positive contribution of £1.4 million was recognised (2021: £4.1 million). | Exceptional items | 2022 £m | 2021 £m | | --- | --- | --- | | Provision in relation to cladding fire safety | 80.0 | 125.0 | | Exceptional items | 80.0 | 125.0 | # Cladding fire safety 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 2021 the Group announced an additional £125.0 million provision to fund cladding fire safety improvements and, in line with Group policy, recognised it as an exceptional item. In April 2022 the Group signed up to the Government's Building Safety Pledge for Developers, extending the period covered to all buildings constructed by the Group since 1992, as well as committing to reimburse any funds allocated or used for Taylor Wimpey buildings over 18 metres from the Building Safety Fund. In the year to 31 December 2022 the Group recognised an increase in the provision of £80.0 million, as an exceptional expense. 172 Taylor Wimpey plc Annual Report and Accounts 2022 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: | | | | | | | 2022 | 2021 | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | £m | £m | | 5. | Operating segments ccoonnttiinnuueedd | c o | n | t i n | u e d | | | Cost of inventories recognised as an expense in cost of sales 3,155.7 3,135.0 2022 2021 UK Spain Total UK Spain Total Property, plant and equipment depreciation (Note 12) 4.3 4.7 £m £m £m £m £m £m Right-of-use asset depreciation (Note 19) 7.4 7.3 ssets and liabilities mortisation of intangible assets (Note 11) 2.8 3.6 Segment operating assets 5,222.9 207.9 5,430.8 5,013.6 192.6 5,206.2 Joint ventures 74.0 – 74.0 85.4 – 85.4 Segment operating liabilities (1,767.2) (118.1) (1,885.3) (1,757.3) (83.7) (1,841.0) Net operating assets 3,529.7 89.8 3,619.5 3,341.7 108.9 3,450.6 Net current taxation (7.2) 0.2 Net deferred taxation (Note 14) 26.0 26.2 Net cash (Note 27) 863.8 837.0 Net assets 4,502.1 4,314.0 2022 2021 UK Spain Total UK Spain Total £m £m £m £m £m £m Other information Property, plant and equipment additions 1.6 0.1 1.7 2.4 0.1 2.5 Right-of-use asset additions 7.1 0.1 7.2 6.1 0.6 6.7 Software additions 0.4 – 0.4 2.1 – 2.1 Property, plant and equipment depreciation (4.2) (0.1) (4.3) (4.6) (0.1) (4.7) Right-of-use asset depreciation (7.2) (0.2) (7.4) (7.1) (0.2) (7.3) mortisation of intangible assets (2.8) – (2.8) (3.6) – (3.6) 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): 2022 2021 £m £m dministration expenses 220.7 211.0 Other expenses 70.1 100.3 Other income (65.9) (107.5) Exceptional items 80.0 125.0 Net operating expenses 304.9 328.8 The majority of the other income and other expenses shown above relates to the income and associated costs arising on the sale of part exchange properties. These are shown gross with the comparatives updated to be disclosed on the same basis (grossing up each by £87.2 million for 2021). Also included in other income and other expenses are profit/loss on the sale of property, plant and equipment, the revaluation of certain shared equity mortgage receivables and abortive land acquisition costs. During 2022 a positive contribution of £1.4 million was recognised (2021: £4.1 million). 2022 2021 Exceptional items: £m £m Provision in relation to cladding fire safety 80.0 125.0 Exceptional items 80.0 125.0 Cladding fire safety 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 2021 the Group announced an additional £125.0 million provision to fund cladding fire safety improvements and, in line with Group policy, recognised it as an exceptional item. In April 2022 the Group signed up to the Government’s Building Safety Pledge for Developers, extending the period covered to all buildings constructed by the Group since 1992, as well as committing to reimburse any funds allocated or used for Taylor Wimpey buildings over 18 metres from the Building Safety Fund. In the year to 31 December 2022 the Group recognised an increase in the provision of £80.0 million, as an exceptional expense. | | | | Taylor Wimpey plc Annual Report and Accounts 2022 | | 173 | | --- | --- | --- | --- | --- | --- | | A A A | | A T T T T The remuneration paid to the Group’s external auditors, is as follows: 2022 £m 2021 £m Fees payable for the audit of the Company’s annual accounts and consolidated financial statements 0.2 0.2 Fees payable to the Company’s auditors and its associates for other services to the Group: he audit of the Company’s subsidiaries pursuant to legislation 0.8 0.6 otal audit fees 1.0 0.8 Other assurance services 0.1 0.1 otal non-audit fees 0.1 0.1 otal fees 1.1 0.9 Non-audit services in 2022 and 2021 predominantly relate to work undertaken as a result of PricewaterhouseCoopers LLP’s role as auditors, or work resulting from knowledge and experience gained as part of the role. In 2022 and 2021 the fees relating to other assurance services primarily related to the review of the interim statements and also included £2,000 for a subscription service providing factual updates and changes to applicable law, regulation or accounting and auditing standards. 7. Staff costs 2022 Number 2021 Number Monthly average number employed United Kingdom 5,140 5,271 Spain 96 87 5,236 5,358 2022 £m 2021 £m Remuneration Wages and salaries 290.0 278.0 Redundancy costs 0.4 0.4 Social security costs 31.8 28.9 Other pension costs 15.4 14.1 337.6 321.4 The information relating to Director and Senior Management remuneration required by the Companies Act 2006 and the Listing Rules of the Financial Conduct Authority is contained in Note 30 and pages 124 to 148 in the Directors’ Remuneration Report. | | | | | 172 | Taylor Wimpey plc Annual Report and Accounts 2022 | | | Taylor Wimpey plc Annual Report and Accounts 2022173 | | Financial statements Notes to the consolidated financial statements continued | | 174 | | Taylor Wimpey plc Annual Report and Accounts 2022 | | --- | --- | --- | --- | | A A A A T T 8. Finance income and finance costs Finance income 2022 £m 2021 £m Interest receivable 8.6 2.4 8.6 2.4 Finance costs 2022 £m 2021 £m Interest on bank and other loans (4.8) (5.0) Foreign exchange loss – (0.8) (4.8) (5.8) Unwinding of discount on land creditors and other items (18.3) (19.2) Interest on lease liabilities (Note 19) (0.4) (0.4) Net interest on pension liability (Note 21) (0.6) (1.0) (24.1) (26.4) 9. Taxation charge Tax (charged)/credited in the income statement is analysed as follows: 2022 £m 2021 £m Current tax: UK: Current year (179.3) (122.0) djustment in respect of prior years 0.5 2.3 Overseas: Current year (5.4) (2.5) djustment in respect of prior years (0.5) (0.1) (184.7) (122.3) Deferred tax: UK: Current year 0.4 (2.7) djustment in respect of prior years (0.1) (0.3) Overseas: Current year (1.7) 1.2 djustment in respect of prior years 1.8 – 0.4 (1.8) (184.3) (124.1) Corporation tax is calculated at 22.0% (2021: 19.0%) of the estimated assessable profit for the year in the UK. This includes corporation tax at the rate of 19.0% for the year and the new 4.0% residential property developer tax (RPDT) on profits arising from residential property development activities. RPDT was enacted during the year with effect from 1 April 2022. Taxation outside the UK is calculated at the rates prevailing in the respective jurisdictions. The tax charge for the year includes an exceptional credit of £17.6 million (2021: £23.8 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: 2022 £m 2021 £m Profit before tax 827.9 679.6 ax at the UK corporation tax rate of 22.0% (2021: 19.0%) (182.1) (129.1) Net over provision in respect of prior years 1.7 1.9 Net impact of items that are not taxable or deductible (5.6) 2.6 Recognition of deferred tax asset relating to Spanish business 1.0 2.2 Other rate impacting adjustments 0.7 (1.7) ax charge for the yea (184.3) (124.1) | | r | | | | 174 | | Taylor Wimpey plc Annual Report and Accounts 2022 | Notes to the consolidated financial statements continued 10. Earnings per share 2022 2021 Basic earnings per share 18.1p 15.3p | 8. | Finance income and finance costs | | | Diluted earnings per share 18.0p 15.2p | | --- | --- | --- | --- | --- | | | | 2022 | 2021 | djusted basic earnings per share 19.8p 18.0p | | Finance income | | £m | £m | | djusted diluted earnings per share 19.7p 18.0p Interest receivable 8.6 2.4 8.6 2.4 Weighted average number of shares for basic earnings per share – million 3,564.8 3,639.3 Weighted average number of shares for diluted earnings per share – million 3,576.5 3,649.0 | | 2022 | 2021 | | | --- | --- | --- | --- | | Finance costs | £m | £m | | | Interest on bank and other loans (4.8) (5.0) | | | Adjusted basic and adjusted diluted earnings per share, which exclude the impact of exceptional items and any associated net tax amounts, | are presented to provide a measure of the underlying performance of the Group. A reconciliation of earnings attributable to equity Foreign exchange loss – (0.8) shareholders used for basic and diluted earnings per share to that used for adjusted earnings per share is shown below. (4.8) (5.8) 2022 2021 Unwinding of discount on land creditors and other items (18.3) (19.2) £m £m Interest on lease liabilities (Note 19) (0.4) (0.4) Earnings for basic and diluted earnings per share 643.6 555.5 Net interest on pension liability (Note 21) (0.6) (1.0) djust for exceptional items (Note 6) 80.0 125.0 (24.1) (26.4) djust for tax on exceptional items (17.6) (23.8) Earnings for adjusted basic and adjusted diluted earnings per share 706.0 656.7 9. Taxation charge Tax (charged)/credited in the income statement is analysed as follows: | | | 2022 | 2021 | | --- | --- | --- | --- | | 2022 | 2021 | Million | Million | | £m | £m | | | Weighted average number of shares for basic earnings per share 3,564.8 3,639.3 Current tax: Dilution from share options 11.7 9.7 UK: Current year (179.3) (122.0) Weighted average number of shares for diluted earnings per share 3,576.5 3,649.0 djustment in respect of prior years 0.5 2.3 Overseas: Current year (5.4) (2.5) djustment in respect of prior years (0.5) (0.1) (184.7) (122.3) Deferred tax: UK: Current year 0.4 (2.7) djustment in respect of prior years (0.1) (0.3) Overseas: Current year (1.7) 1.2 djustment in respect of prior years 1.8 – 0.4 (1.8) (184.3) (124.1) Corporation tax is calculated at 22.0% (2021: 19.0%) of the estimated assessable profit for the year in the UK. This includes corporation tax at the rate of 19.0% for the year and the new 4.0% residential property developer tax (RPDT) on profits arising from residential property development activities. RPDT was enacted during the year with effect from 1 April 2022. Taxation outside the UK is calculated at the rates prevailing in the respective jurisdictions. The tax charge for the year includes an exceptional credit of £17.6 million (2021: £23.8 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: 2022 2021 £m £m Profit before tax 827.9 679.6 ax at the UK corporation tax rate of 22.0% (2021: 19.0%) (182.1) (129.1) Net over provision in respect of prior years 1.7 1.9 Net impact of items that are not taxable or deductible (5.6) 2.6 Recognition of deferred tax asset relating to Spanish business 1.0 2.2 Other rate impacting adjustments 0.7 (1.7) ax charge for the yea (184.3) (124.1) | | | | | | Taylor Wimpey plc Annual Report and Accounts 2022 | | 175 | | --- | --- | --- | --- | --- | --- | --- | --- | | T T | | r | A A A A | A A A A A A A A A A A A A A A 11. Intangible assets Brands £m Software £m Total £m Cost t 1 January 2021 140.2 22.1 162.3 dditions – 2.1 2.1 Disposals – (0.9) (0.9) t 31 December 2021 140.2 23.3 163.5 dditions – 0.4 0.4 t 31 December 2022 140.2 23.7 163.9 ccumulated amortisation t 1 January 2021 (140.2) (14.0) (154.2) Charge for the year – (3.6) (3.6) Disposals – 0.9 0.9 t 31 December 2021 (140.2) (16.7) (156.9) Charge for the year – (2.8) (2.8) t 31 December 2022 (140.2) (19.5) (159.7) Carrying amount t 31 December 2022 – 4.2 4.2 t 31 December 2021 – 6.6 6.6 The amortisation of software is recognised within administration expenses in the income statement. | | | | | 174 | Taylor Wimpey plc Annual Report and Accounts 2022 | | | | | Taylor Wimpey plc Annual Report and Accounts 2022175 | | Financial statements Notes to the consolidated financial statements continued | | 176 | Taylor Wimpey plc Annual Report and Accounts 2022 | | --- | --- | --- | | A A A A A T A A A A A A 12. Property, plant and equipment Freehold land and buildings £m Plant, equipment and leasehold improvements £m Total £m Cost t 1 January 2021 16.5 28.1 44.6 dditions – 2.5 2.5 Disposals – (0.7) (0.7) Exchange movements – (0.1) (0.1) t 31 December 2021 16.5 29.8 46.3 dditions – 1.7 1.7 Disposals (2.2) – (2.2) Exchange movements – 0.1 0.1 t 31 December 2022 14.3 31.6 45.9 ccumulated depreciation t 1 January 2021 (3.2) (17.4) (20.6) Charge for the year (0.9) (3.8) (4.7) Disposals – 0.7 0.7 Exchange movements – – – t 31 December 2021 (4.1) (20.5) (24.6) Charge for the year (0.5) (3.8) (4.3) Disposals 0.4 – 0.4 Exchange movements – (0.1) (0.1) t 31 December 2022 (4.2) (24.4) (28.6) Carrying amount t 31 December 2022 10.1 7.2 17.3 t 31 December 2021 12.4 9.3 21.7 13. Interests in joint ventures 2022 £m 2021 £m Share of net assets 43.5 24.4 Loans to joint ventures 30.5 61.0 otal interests in joint ventures 74.0 85.4 Loans to joint ventures includes £(8.5) million (2021: £(6.3) million) relating to the Group’s share of losses recognised under the equity method in excess of the investment in ordinary shares. The Group has five material (2021: five) joint ventures whose principal activity is residential housebuilding or development. The Group considers a joint venture to be material when it is financially or strategically important to the Group. The particulars of the material joint ventures for 2022 are as follows: Joint venture Country of incorporation Interest in the issued ordinary share capital* Greenwich Millennium Village Limited United Kingdom 50% Chobham Manor Limited Liability Partnership United Kingdom 50% Winstanley and York Road Regeneration LLP United Kingdom 50% Whitehill & Bordon Development Company Phase 1a Limited United Kingdom 50% Whitehill & Bordon Regeneration Company Limited United Kingdom 50% * Interests held by subsidiary undertakings. Further information on the particulars of joint ventures can be found on page 204. | | | | | 176 | Taylor Wimpey plc Annual Report and Accounts 2022 | Notes to the consolidated financial statements continued 13. Interests in joint ventures c o n t i n u e d The following two tables show summary financial information for the material joint ventures and in total for the immaterial joint ventures. Unless specifically indicated, this information represents 100% of the joint venture before intercompany eliminations. | 12. Property, plant and equipment | | | | | | | | c | o n | t i n | u e d | | | | | | | | | Whitehill & | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | Bordon | Whitehill & | | | | | | | | | | | | Plant, | | | | | | | Greenwich | | | | | | Winstanley | | Development | | | Bordon | | | | | | | | | | equipment | | | | | | | | Millennium | | | Chobham | | and York Road | | | Company | | Regeneration | | | Immaterial | | | | | Freehold land | | and leasehold | | | | | | | | | | Village | | | Manor | Regeneration | | | Phase 1a | | Company | | Joint Ventures | | | Total | | | and buildings | | improvements | | | Total | | | | | | | | 2022 | | 2022 | | | 2022 | | 2022 | | 2022 | | | 2022 | 2022 | | | | £m | | | £m | £m | | | | | | | | £m | | £m | | | £m | | £m | | £m | | | £m | £m | | Cost | | | | | | | Non-current assets – – 4.4 0.5 41.0 0.6 46.5 | | | | | | | | | | | | | | | | | | | | | | t 1 January 2021 16.5 28.1 44.6 | | | | | | | Current assets excluding cash 54.8 7.8 70.9 8.6 6.5 21.4 170.0 | | | | | | | | | | | | | | | | | | | | | | dditions – 2.5 2.5 | | | | | | | Cash and cash equivalents 21.3 21.5 8.1 2.3 0.6 2.2 56.0 | | | | | | | | | | | | | | | | | | | | | | Disposals – (0.7) (0.7) | | | | | | | Current financial liabilities (13.3) (1.4) (5.3) (0.6) (10.7) (10.0) (41.3) | | | | | | | | | | | | | | | | | | | | | | Exchange movements – (0.1) (0.1) | | | | | | | Current other liabilities – – – (1.2) (0.2) – (1.4) | | | | | | | | | | | | | | | | | | | | | | t 31 December 2021 16.5 29.8 46.3 | | | | | | | Non-current financial liabilities* (8.2) (0.4) (95.1) (6.5) (33.8) (15.6) (159.6) | | | | | | | | | | | | | | | | | | | | | | dditions – 1.7 1.7 | | | | | | | Net assets/(liabilities) (100%) 54.6 27.5 (17.0) 3.1 3.4 (1.4) 70.2 | | | | | | | | | | | | | | | | | | | | | | Disposals (2.2) – (2.2) | | | | | | | Group share of net assets/(liabilities) 27.3 13.8 (8.5) 1.6 1.7 (0.9) 35.0 | | | | | | | | | | | | | | | | | | | | | | Exchange movements – 0.1 0.1 | | | | | | | Loans to joint ventures – – 37.4 – 0.1 1.5 39.0 | | | | | | | | | | | | | | | | | | | | | | t 31 December 2022 14.3 31.6 45.9 | | | | | | | Total interests in joint ventures 27.3 13.8 28.9 1.6 1.8 0.6 74.0 | | | | | | | | | | | | | | | | | | | | | Revenue 78.6 103.5 17.7 25.4 24.5 – 249.7 ccumulated depreciation Interest expense (0.4) – (5.0) (0.3) (0.2) (1.1) (7.0) t 1 January 2021 (3.2) (17.4) (20.6) Income tax (expense)/credit (3.3) – – (1.2) (0.2) 0.3 (4.4) Charge for the year (0.9) (3.8) (4.7) Profit/(loss) for the year 13.9 17.3 (4.4) 5.2 0.7 (0.9) 31.8 Disposals – 0.7 0.7 Group share of profit/(loss) for the year 7.0 8.6 (2.2) 2.6 0.4 (0.5) 15.9 Exchange movements – – – * Non-current financial liabilities include amounts owed to joint venture partners. t 31 December 2021 (4.1) (20.5) (24.6) Charge for the year (0.5) (3.8) (4.3) Whitehill & Bordon Whitehill & Disposals 0.4 – 0.4 | | Greenwich | | | | Winstanley and | | | Development | | | | Bordon | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Exchange movements – (0.1) (0.1) | Millennium | | Chobham | | | York Road | | | Company | | Regeneration | | | | Immaterial | | | | | | Village | | Manor | Regeneration | | | | Phase 1a | | | Company | | Joint Ventures | | | Total | | t 31 December 2022 (4.2) (24.4) (28.6) | | 2021 | | 2021 | | | 2021 | | | 2021 | | | 2021 | | | 2021 | 2021 | | | | £m | | £m | | | £m | | | £m | | | £m | | | £m | £m | Non-current assets – – – – 32.8 0.5 33.3 Carrying amount Current assets excluding cash 46.5 73.0 61.3 8.1 8.7 25.1 222.7 t 31 December 2022 10.1 7.2 17.3 Cash and cash equivalents 22.4 37.1 2.6 1.2 2.1 2.0 67.4 t 31 December 2021 12.4 9.3 21.7 Current financial liabilities (6.4) (43.6) (3.1) (5.4) (6.6) (18.5) (83.6) Current other liabilities (2.4) – – (0.8) (0.2) – (3.4) 13. Interests in joint ventures Non-current financial liabilities* (27.8) (56.3) (73.4) (0.3) (34.2) (8.4) (200.4) 2022 2021 Net assets/(liabilities) (100%) 32.3 10.2 (12.6) 2.8 2.6 0.7 36.0 £m £m Group share of net assets/(liabilities) 16.2 5.1 (6.3) 1.4 1.3 0.4 18.1 Share of net assets 43.5 24.4 Loans to joint ventures 7.5 27.4 31.4 – 0.1 0.9 67.3 Loans to joint ventures 30.5 61.0 Total interests in joint ventures 23.7 32.5 25.1 1.4 1.4 1.3 85.4 otal interests in joint ventures 74.0 85.4 Revenue 39.9 66.0 11.2 27.7 26.0 29.0 199.8 Loans to joint ventures includes £(8.5) million (2021: £(6.3) million) relating to the Group’s share of losses recognised under the equity method Interest (expense)/income (0.5) – (3.7) (0.6) 0.9 (0.5) (4.4) in excess of the investment in ordinary shares. Income tax expense (1.7) – – (0.8) (0.2) (0.2) (2.9) Profit/(loss) for the year 7.2 4.6 (4.6) 3.2 0.6 (0.2) 10.8 The Group has five material (2021: five) joint ventures whose principal activity is residential housebuilding or development. The Group Group share of profit/(loss) for the year 3.6 2.3 (2.3) 1.6 0.3 (0.1) 5.4 considers a joint venture to be material when it is financially or strategically important to the Group. The particulars of the material joint ventures for 2022 are as follows: * Non-current financial liabilities include amounts owed to joint venture partners. Interest in the issued During the current and prior year, no entity charged depreciation or amortisation. No entity had discontinued operations or items of other Joint venture Country of incorporation ordinary share capital* comprehensive income. Greenwich Millennium Village Limited United Kingdom 50% Chobham Manor Limited Liability Partnership United Kingdom 50% Winstanley and York Road Regeneration LLP United Kingdom 50% Whitehill & Bordon Development Company Phase 1a Limited United Kingdom 50% Whitehill & Bordon Regeneration Company Limited United Kingdom 50% * Interests held by subsidiary undertakings. Further information on the particulars of joint ventures can be found on page 204. Taylor Wimpey plc Annual Report and Accounts 2022 177 A A A A A A A A A A T A 176 Taylor Wimpey plc Annual Report and Accounts 2022 Taylor Wimpey plc Annual Report and Accounts 2022177 Financial statements Notes to the consolidated financial statements continued # 14. Deferred tax | | Where based payment in % | Capital decreases in % | Income in % | Reference to other companies in % | Other temporary differences in % | Total in % | | --- | --- | --- | --- | --- | --- | --- | | At 1 January 2021 | 2.9 | 2.0 | 5.9 | 16.9 | 6.0 | 33.7 | | Credit (change) 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) | | At 31 December 2021 | 3.9 | 2.4 | 6.7 | 8.8 | 4.4 | 26.2 | | (Change)/credit to income | (1.7) | 0.4 | 1.0 | (0.9) | 1.6 | 0.4 | | Credit to other comprehensive income | - | - | - | 0.7 | - | 0.7 | | Charge to statement of changes in equity | (1.6) | - | - | - | - | (1.6) | | Foreign exchange | - | - | 0.3 | - | - | 0.3 | | At 31 December 2022 | 0.6 | 2.8 | 8.0 | 8.6 | 6.0 | 26.0 | 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 25% and 29% (2021: between 19% and 25%), depending on when the asset will unwind. The net deferred tax balance is analysed into assets and liabilities as follows: | | 2020 £m | 2021 £m | | --- | --- | --- | | Deferred tax assets | 27.4 | 27.6 | | Deferred tax liabilities | (1.4) | (1.4) | | | 26.0 | 26.2 | The new 4% residential property developer tax (RPDT) was enacted during the year effective from 1 April 2022 and the measurement of the Group's UK net deferred tax asset at 31 December 2022 reflects this change. From 1 April 2023, the UK Corporation Tax rate is legislated to increase to 25%. This increase in rate had been enacted before 31 December 2021 so has also been reflected in the measurement of the Group's UK deferred tax asset in both years. The Group has not recognised temporary differences relating to tax losses carried forward and other temporary differences amounting to £2.4 million (2021: £1.9 million) in the UK and £23.8 million (2021: £27.4 million) in Spain. The UK temporary differences have not been recognised as they are predominantly non-trading in nature and insufficient certainty exists as to their future utilisation. The temporary differences in Spain have not been recognised due to uncertainty of sufficient taxable profits in the future against which to utilise these amounts. At the balance sheet date, the Group has unused UK capital losses of £269.5 million (2021: £269.5 million). No deferred tax asset has been recognised in respect of the capital losses at 31 December 2022 (2021: £nil) because the Group does not believe that it is probable that these capital losses will be utilised in the foreseeable future. # 15. Inventories | | 2020 £m | 2021 £m | | --- | --- | --- | | Land | 3,428.3 | 3,385.7 | | Development and construction costs | 1,725.9 | 1,548.1 | | Part exchange and other | 15.4 | 11.9 | | | 5,169.6 | 4,945.7 | The markets in our core geographies, which are the primary drivers of our business, continue to trade positively. At 31 December 2022, the Group completed a net realisable value assessment of inventory, considering each site individually and based on estimates of sales price, costs to complete and costs to sell. At 31 December 2022 the provision held in the United Kingdom was £16.0 million (2021: £19.3 million) and £35.5 million in Spain (2021: £35.5 million). The table below details the movements on the inventory provision recorded in the year. | | 2020 £m | 2021 £m | | --- | --- | --- | | 1 January | 54.8 | 64.4 | | Net utilised | (5.1) | (7.0) | | Foreign exchange | 1.8 | (2.6) | | 31 December | 51.5 | 54.8 | 178 Taylor Wimpey plc Annual Report and Accounts 2022 Notes to the consolidated financial statements continued | 14. | Deferred tax | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | Retirement | | | | Other | | | | | Share-based | | | Capital | | | | | benefit | | temporary | | | | | | payments | | allowances | | | Losses | | obligations | | | differences | | Total | | | | | £m | | | £m | | £m | | | £m | | £m | £m | t 1 January 2021 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 (Charge)/credit to income (1.7) 0.4 1.0 (0.9) 1.6 0.4 Credit to other comprehensive income – – – 0.7 – 0.7 Charge to statement of changes in equity (1.6) – – – – (1.6) Foreign exchange – – 0.3 – – 0.3 t 31 December 2022 0.6 2.8 8.0 8.6 6.0 26.0 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 25% and 29% (2021: between 19% and 25%), depending on when the asset will unwind. The net deferred tax balance is analysed into assets and liabilities as follows: 2022 2021 £m £m Deferred tax assets 27.4 27.6 Deferred tax liabilities (1.4) (1.4) 26.0 26.2 The new 4% residential property developer tax (RPDT) was enacted during the year effective from 1 April 2022 and the measurement of the Group’s UK net deferred tax asset at 31 December 2022 reflects this change. From 1 April 2023, the UK Corporation Tax rate is legislated to increase to 25%. This increase in rate had been enacted before 31 December 2021 so has also been reflected in the measurement of the Group’s UK deferred tax asset in both years. The Group has not recognised temporary differences relating to tax losses carried forward and other temporary differences amounting to £2.4 million (2021: £1.9 million) in the UK and £23.8 million (2021: £27.4 million) in Spain. The UK temporary differences have not been recognised as they are predominantly non-trading in nature and insufficient certainty exists as to their future utilisation. The temporary differences in Spain have not been recognised due to uncertainty of sufficient taxable profits in the future against which to utilise these amounts. At the balance sheet date, the Group has unused UK capital losses of £269.5 million (2021: £269.5 million). No deferred tax asset has been recognised in respect of the capital losses at 31 December 2022 (2021: £nil) because the Group does not believe that it is probable that these capital losses will be utilised in the foreseeable future. 15. Inventories 2022 2021 £m £m Land 3,428.3 3,385.7 Development and construction costs 1,725.9 1,548.1 Part exchange and other 15.4 11.9 5,169.6 4,945.7 The markets in our core geographies, which are the primary drivers of our business, continue to trade positively. At 31 December 2022, the Group completed a net realisable value assessment of inventory, considering each site individually and based on estimates of sales price, costs to complete and costs to sell. At 31 December 2022 the provision held in the United Kingdom was £16.0 million (2021: £19.3 million) and £35.5 million in Spain (2021: £35.5 million). The table below details the movements on the inventory provision recorded in the year. 2022 2021 £m £m 1 January 54.8 64.4 Net utilised (5.1) (7.0) Foreign exchange 1.8 (2.6) 31 December 51.5 54.8 | | | | | | Taylor Wimpey plc Annual Report and Accounts 2022 | | 179 | | --- | --- | --- | --- | --- | --- | --- | --- | | A A A | | T A A T T A 16. Other financial assets Trade and other receivables Current Non-current 2022 £m 2021 £m 2022 £m 2021 £m rade receivables 136.8 105.7 9.6 15.8 Other receivables 54.4 62.5 2.6 11.7 191.2 168.2 12.2 27.5 Included within trade receivables are mortgage receivables of £10.2 million (2021: £17.9 million), including shared equity loans. Shared equity loans were provided to certain customers to facilitate their house purchase and are measured at fair value through profit or loss. Included within trade receivables is £34.5 million (2021: £1.7 million) of contract assets arising on construction contracts. Cash and cash equivalents 2022 £m 2021 £m Cash and cash equivalents 952.3 921.0 £10.7 million (2021: £0.6 million) of cash and cash equivalents held in Spain from customer deposits can only be used for development expenditure on the sites to which the deposits relate. Further information on financial assets can be found in Note 20. 17. Bank and other loans 2022 £m 2021 £m €100.0 million 2.02% Senior Loan Notes 2023 88.5 84.0 88.5 84.0 2022 £m 2021 £m mounts due for settlement within one yea 88.5 – mount due for settlement after one yea – 84.0 otal borrowings 88.5 84.0 Further information on loan facilities can be found in Note 20. 18. Trade and other payables Current Non-current 2022 £m 2021 £m 2022 £m 2021 £m rade payables 376.4 274.3 17.1 19.3 Land creditors 395.0 314.2 330.6 492.2 Social security and other taxes 9.6 8.8 – – Customer deposits 89.7 82.4 10.4 20.9 ccruals 230.8 189.6 – 41.6 Deferred income 23.7 25.3 39.2 44.0 Other payables 5.6 7.3 10.0 11.3 1,130.8 901.9 407.3 629.3 Revenue recognised in the current year that was included in the customer deposit balance brought forward at the beginning of the period was £82.4 million (2021: £82.8 million). Other payables include £11.1 million (2021: £13.9 million) of repayable grants. Land creditors are denominated as follows: 2022 £m 2021 £m Sterling 696.1 782.1 Euros 29.5 24.3 725.6 806.4 Land creditors of £493.0 million (2021: £523.1 million) are secured against land acquired for development. Further information on financial liabilities can be found in Note 20. | r | r | | | | | 178 | Taylor Wimpey plc Annual Report and Accounts 2022 | | | | | Taylor Wimpey plc Annual Report and Accounts 2022179 | | Financial statements Notes to the consolidated financial statements continued | | | 180 | Taylor Wimpey plc Annual Report and Accounts 2022 | | --- | --- | --- | --- | | A A A A A A T T A 19. Leases The Group as a lessee The Group’s leases consist primarily of office premises and equipment. Right-of-use assets: Office premises £m Equipment £m Total £m t 1 January 2022 17.6 8.9 26.5 t 31 December 2022 17.0 9.3 26.3 dditions during the year 2.6 4.6 7.2 Lease liabilities: 2022 £m 2021 £m t 1 Januar 27.4 28.0 dditions 7.2 6.7 Disposals – (0.3) Interest charge 0.4 0.4 Payments (8.0) (7.3) Foreign exchange – (0.1) t 31 Decembe 27.0 27.4 Current 7.3 7.0 Non-current 19.7 20.4 otal 27.0 27.4 mounts recognised in the income statemen : 2022 £m 2021 £m Depreciation charged on right-of-use office premises 3.2 3.1 Depreciation charged on right-of-use equipment 4.2 4.2 Interest on lease liabilities 0.4 0.4 otal 7.8 7.7 | y | r | t | | | | 180 | Taylor Wimpey plc Annual Report and Accounts 2022 | Notes to the consolidated financial statements continued 19. Leases The Group as a lessee The Group’s leases consist primarily of office premises and equipment. Office premises Equipment Total Right-of-use assets: £m £m £m t 1 January 2022 17.6 8.9 26.5 t 31 December 2022 17.0 9.3 26.3 dditions during the year 2.6 4.6 7.2 | | 2022 | 2021 | | --- | --- | --- | | Lease liabilities: | £m | £m | | t 1 Januar | 27.4 28.0 | | dditions 7.2 6.7 Disposals – (0.3) Interest charge 0.4 0.4 Payments (8.0) (7.3) Foreign exchange – (0.1) t 31 Decembe 27.0 27.4 Current 7.3 7.0 Non-current 19.7 20.4 otal 27.0 27.4 2022 2021 mounts recognised in the income statemen : £m £m Depreciation charged on right-of-use office premises 3.2 3.1 Depreciation charged on right-of-use equipment 4.2 4.2 Interest on lease liabilities 0.4 0.4 otal 7.8 7.7 | | | | | | Taylor Wimpey plc Annual Report and Accounts 2022 | | 181 | | --- | --- | --- | --- | --- | --- | --- | --- | | A A A A A A T T A | y | r | t | T T 20. Financial instruments and fair value disclosures Capital management The Group’s policy is to maintain a strong balance sheet and to have an appropriate funding structure. Shareholders’ equity and term debt are used to finance non-current assets and the medium to long term inventories. Revolving credit facilities are used to finance net current assets, including development and construction costs. The Group’s financing facilities contain the usual financial covenants including minimum interest cover and maximum gearing. The Group met these requirements throughout the year and up to the date of the approval of the financial statements. The Ordinary Dividend Policy is to return c.7.5% of net assets to shareholders annually, which will be at least £250 million per annum, in two equal instalments. Financial assets and financial liabilities Categories of financial assets and financial liabilities are as follows: Carrying value Fair value Financial assets Fair value hierarchy 31 December 2022 £m 31 December 2021 £m 31 December 2022 £m 31 December 2021 £m Cash and cash equivalents a 952.3 921.0 952.3 921.0 Land receivables a 16.3 18.7 16.3 18.7 Other financial assets a 10.0 10.0 10.0 10.0 rade and other receivables a 136.4 105.0 136.4 105.0 Mortgage receivables b 10.2 17.9 10.2 17.9 1,125.2 1,072.6 1,125.2 1,072.6 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. b. Mortgage receivables relate to sales incentives, including shared equity loans and are measured at fair value through profit or loss. The fair value is established based on a publicly available national house price index, being significant other observable inputs (level 2). Land receivables and trade and other receivables are included in the balance sheet as trade and other receivables for current and non-current amounts. Current and non-current trade and other receivables, as disclosed in Note 16, include £40.5 million (2021: £54.1 million) of non- financial assets. Carrying value Fair value Financial liabilities Fair value hierarchy 31 December 2022 £m 31 December 2021 £m 31 December 2022 £m 31 December 2021 £m Bank and other loans a 88.5 84.0 87.2 84.8 Land creditors b 725.6 806.4 725.6 806.4 rade and other payables b 639.9 543.3 639.9 543.3 Lease liabilities b 27.0 27.4 27.0 27.4 1,481.0 1,461.1 1,479.7 1,461.9 a. The fair value of the €100 million fixed rate loan notes has been determined by reference to external interest rates and the Directors’ assessment of the margin for credit risk (level 2). b. The Directors consider the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the consolidated financial statements to approximate their fair value. Current and non-current trade and other payables, as disclosed in Note 18, include £172.6 million (2021: £181.5 million) of non-financial liabilities. The Group has designated the carrying value of €79.0 million of foreign currency borrowings (2021: €79.0 million) as a net investment hedge, equating to £69.9 million (2021: £66.4 million). The Group has no financial instruments with fair values that are determined by reference to significant unobservable inputs (level 3), nor have there been any transfers of assets or liabilities between levels of the fair value hierarchy. There are no non-recurring fair value measurements. | | | | | 180 | | Taylor Wimpey plc Annual Report and Accounts 2022 | | | | Taylor Wimpey plc Annual Report and Accounts 2022181 | | 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 | | | | c o | n t i | n u | e d | 182 Taylor Wimpey plc Annual Report and Accounts 2022 Forward contracts have been entered into to offset the foreign exchange movements on intra-Group loans to buy/(sell) against Sterling: €30.5 million (2021: €9.5 million), equivalent to £27.0 million (2021: £8.0 million). The fair value of the forward contracts is not material as they were entered into on or near 31 December in each year and mature less than one month later, hence the value of the derivative is negligible. 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 ma nagement Th e 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 swap s such that the sensitivity to potential changes in variable rates is within acceptable levels. Group policy does not allow the use of derivatives to sp eculate against changes to future interest rates and they are only used to manage exposure to volatility. Interest rate hedging using d erivatives 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 1.00% (2021: 0.25%) change represents a reasonably possible change in interest rates over the next financial year. The table assumes all other variables remain constant in accordance with IFRS 7. Income sensitivity 2022 £m Equity sensitivity 2022 £m Income sensitivity 2021 £m Equity sensitivity 2021 £m 1.00% (2021: 0.25%) increase in interest rates 9.5 9.5 2.3 2.3 Income sensitivity 2022 £m Equity sensitivity 2022 £m Income sensitivity 2021 £m Equity sensitivity 2021 £m 1.00% (2021: 0.25%) decrease in interest rates (9.5) (9.5) (2.3) (2.3) (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 (2021: €79.0 million) held at the balance sheet date as a net investment hedge of part of the Group’s investment in Euro denominated assets, equating to £69.9 million (2021: £66.4 million). The change in the carrying value of £3.5 million (2021: £4.8 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% (2021: 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. 182 Taylor Wimpey plc Annual Report and Accounts 2022 Notes to the consolidated financial statements continued 20. Financial instruments and fair value disclosures c o n t i n u e d 20. Financial instruments and fair value disclosures ccoonn ttiinnuueedd 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: €30.5 million (2021: €9.5 million), equivalent to £27.0 million (2021: £8.0 million). The fair value of the forward contracts is not material as they were entered into on or near 31 December in each year and mature less than one month later, hence the value of the derivative is negligible. 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 1.00% (2021: 0.25%) change represents a reasonably possible change in interest rates over the next financial year. The table assumes all other variables remain constant in accordance with IFRS 7. | Income | | | Equity | Income | | Equity | | --- | --- | --- | --- | --- | --- | --- | | sensitivity | | sensitivity | | sensitivity | | sensitivity | | | 2022 | | 2022 | 2021 | | 2021 | | | £m | | £m | | £m | £m | 1.00% (2021: 0.25%) increase in interest rates 9.5 9.5 2.3 2.3 | Income | | | Equity | Income | | Equity | | --- | --- | --- | --- | --- | --- | --- | | sensitivity | | sensitivity | | sensitivity | | sensitivity | | | 2022 | | 2022 | 2021 | | 2021 | | | £m | | £m | | £m | £m | 1.00% (2021: 0.25%) decrease in interest rates (9.5) (9.5) (2.3) (2.3) (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 (2021: €79.0 million) held at the balance sheet date as a net investment hedge of part of the Group’s investment in Euro denominated assets, equating to £69.9 million (2021: £66.4 million). The change in the carrying value of £3.5 million (2021: £4.8 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% (2021: 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. Taylor Wimpey plc Annual Report and Accounts 2022 183 Income sensitivity 2022 £m Equity sensitivity 2022 £m Income sensitivity 2021 £m Equity sensitivity 2021 £m Euro weakens against Sterling (0.9) 5.5 (0.9) 5.1 Euro strengthens against Sterling 1.0 (6.8) 1.1 (6.2) Credit risk Credit risk is the risk of financial loss where counterparties are not able to meet their obligations. Group policy is that surplus cash, when not used to repay borrowings, is placed on deposit with the Group’s main relationship banks and with other banks or money market funds based on a minimum credit rating and maximum exposure. There is no significant concentration of risk to any single counterparty. Land receivables arise from sales of surplus land on deferred terms. If the credit risk is not acceptable, then the deferred payment must have adequate security, either by an appropriate guarantee or a charge over the land. The fair value of any land held as security is considered by management to be sufficient in relation to the carrying amount of the receivable to which it relates. Trade and other receivables comprise mainly amounts receivable from various housing associations, other housebuilders and amounts in relation to Help to Buy. Management considers that the credit quality of the various receivables is good in respect of the amounts outstanding and therefore credit risk is considered to be low. There is no significant concentration of risk. Mortgage receivables, including shared equity loans, are in connection with various historical sales promotion schemes and are measured at fair value through profit or loss. The mortgages are secured by a second charge over the property with a low level of experienced credit losses due to non-payment. The carrying amount of financial assets, as detailed above, represents the Group’s maximum exposure to credit risk at the reporting date assuming that any security held has no value. Liquidity risk Liquidity risk is the risk that the Group does not have sufficient financial resources available to meet its obligations as they fall due. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows, matching the expected cash flow timings of financial assets and liabilities with the use of cash and cash equivalents, borrowings, overdrafts and committed revolving credit facilities with a minimum of 12 months to maturity. Future borrowing requirements are forecast on a monthly basis and funding headroom is maintained above forecast peak requirements to meet unforeseen events. At 31 December 2022, the Group’s borrowings and facilities had a range of maturities with an average life of 1.9 years (2021: 2.9 years). In addition to €100.0 million fixed term borrowings maturing June 2023, the Group has access to a committed revolving credit facility, expiring February 2025, and cash balances. In December 2022 the Group entered into an agreement to refinance the maturing €100.0 million fixed term borrowings commencing 27 June 2023 at a coupon of 5.08% maturing 27 June 2030. The borrowings and facilities contain financial covenants based on minimum tangible net worth, maximum gearing and minimum interest cover. At the balance sheet date, the total unused committed amount was £550.0 million (2021: £550.0 million) and cash and cash equivalents were £952.3 million (2021: £921.0 million). The maturity profile of the anticipated future cash flows including interest, using the latest applicable relevant rate, based on the earliest date on which the Group can be required to pay financial liabilities on an undiscounted basis, is as follows: Bank and other loans £m Land creditors £m Trade and other payables £m Lease liabilities £m Total £m On demand – – – – – Within one year 89.4 401.5 612.8 7.7 1,111.4 More than one year and less than two years – 216.6 14.8 7.0 238.4 More than two years and less than five years – 100.6 9.1 11.0 120.7 More than five years – 31.0 3.2 2.6 36.8 31 December 2022 89.4 749.7 639.9 28.3 1,507.3 Bank and other loans £m Land creditors £m Trade and other payables £m Lease liabilities £m Total £m On demand – – – – – Within one year 1.7 320.8 471.0 7.4 800.9 More than one year and less than two years 84.9 312.2 48.4 6.3 451.8 More than two years and less than five years – 181.5 15.8 12.1 209.4 More than five years – 23.3 8.1 2.6 34.0 31 December 2021 86.6 837.8 543.3 28.4 1,496.1 182 Taylor Wimpey plc Annual Report and Accounts 2022 Taylor Wimpey plc Annual Report and Accounts 2022183 Financial statements Notes to the consolidated financial statements continued ## 21. Retirement benefit obligations Total retirement benefit obligations of £29.9 million (2021: £37.3 million) comprise a defined benefit pension liability of £29.8 million (2021: £37.0 million) and a post-retirement healthcare liability of £3.3 million (2021: £0.3 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 Wobwe. 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 People's Partnership, 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 £15.4 million in the year (2021: £14.1 million), which is included in the income statement charge. ### Defined benefit pension scheme 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. 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 £38.0 million. In March 2021, a new funding arrangement was agreed with the TWPS Trustee that committed 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 and be 100% or more and would restart only if the funding level subsequently falls below 98%. The funding test at 30 September 2021 showed a funding level of 103% and it has remained above 98% since then and therefore escrow payments were suspended on, and from, 1 October 2021. 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. 184 Taylor Wimpey plc Annual Report and Accounts 2022 ## 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 2022 was £10.0 million (31 December 2021: £10.0 million). 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 2022 was £76.6 million (2021: £149.9 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, the Group recognised an adjustment to the underlying surplus in the TWPS on an IAS 19 accounting basis of £106.2 million (2021: £186.9 million), resulting in an IFRIC 14 deficit of £29.6 million (2021: £37.0 million), which represented the present value of future contributions under the funding plan. 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 2022 there was £75.2 million of property and £39.8 million of cash held within the structure (2021: £81.8 million of property and £31.0 million of cash). The terms of the Funding Partnership are such that, should the TWPS be in a Technical Provisions deficit at 31 December 2026, 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% (2021: 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 weighted average duration of the defined benefit obligation at the end of the year is approximately 12 years (2021: 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 mortality assumption is based on 102% of S3PVA tables, CMI_2021 improvements with a 1.25% long term trend rate, a smoothing factor of 7, an initial addition parameter of 0.25% and a w2020 and w2021 parameter of 10%. The mortality assumption used in 2021 was 106% 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%. | Accounting valuation assumptions | 2020 | 2021 | | --- | --- | --- | | At 31 December: | | | | Discount rate for scheme liabilities | 4.95% | 1.85% | | General pay inflation | n/a | n/a | | Deferred pension increases | 2.30% | 2.50% | | Pension increases* | 2.10%-3.65% | 2.15%-3.70% | * 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 | | | --- | --- | --- | --- | --- | | | Male | Female | Male | Female | | Member currently aged 65 | 87 | 89 | 86 | 89 | | Member currently aged 45 | 88 | 91 | 88 | 90 | Taylor Whippy plc Annual Report and Accounts 2022 185 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 0.5% p.a. | Increase by £89m | 5.3 | | Rate of inflation^{a} | Increase by 0.5% p.a. | Increase by £51m | 3.0 | | Life expectancy | Members live 1 year longer | Increase by £65m | 3.9 | $^{a}$ 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 2022 Fair value of scheme assets of the TWPS | Level 1 £m | Level 2 £m | Level 3 £m | Total £m | Percentage of total scheme assets | | --- | --- | --- | --- | --- | --- | | Equity^{a} | - | 38.3 | - | 38.3 | 2.3% | | Diversified growth funds^{b} | - | 139.3 | - | 139.3 | 8.5% | | Hedge funds^{c} | - | - | 220.3 | 220.3 | 13.4% | | Property | 0.1 | - | 2.3 | 2.4 | 0.1% | | Multi-asset credit | 32.5 | 152.1 | - | 184.6 | 11.2% | | Direct lending | 0.1 | - | 142.5 | 142.6 | 8.7% | | Fixed income | 6.0 | 172.2 | - | 178.2 | 10.8% | | Liability driven investment^{d} | 165.0 | 428.8 | - | 593.8 | 36.1% | | Insurance policies in respect of certain members | - | - | 142.0 | 142.0 | 8.6% | | Cash | 4.8 | - | - | 4.8 | 0.3% | | | 208.5 | 930.7 | 507.1 | 1,646.3 | 100.0% | | 31 December 2021 Fair value of scheme assets of the TWPS | Level 1 £m | Level 2 £m | Level 3 £m | Total £m | 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% | (a) This amount relates to Volatility Controlled Equities (VCE). This fund has 2.5 - 6x leverage exposure, with a target of 4x. The leverage at 31 December 2022 was 5.2x (31 December 2021: 2.6x). (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 2022 was 0.2x and 0.5x respectively (31 December 2021: 1.0x and -0.2x). (c) The leverage on the fund at 31 December 2022 was 0.7x (31 December 2021: 0.8x). (d) The bespoke Liability Driven Investment (LDI) fund is designed to protect the Scheme against movements in interest rates and inflation. The overall leverage on the LDI fund at 31 December 2022 was approximately 3.7x (31 December 2021: 3.1x). 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. 186 Taylor Wimpey plc Annual Report and Accounts 2022 ## 21. Retirement benefit obligations continued The table below details the movements in the TWPS pension liability and assets recorded through the income statement and other comprehensive income. | | 2020 | | | 2021 | | | | --- | --- | --- | --- | --- | --- | --- | | | Present value of shareholding (in €) | Fair value of scheme assets (in €) | Asset liability, including capital loss (in €) | Present value of obligation (in €) | Fair value of scheme assets (in €) | Asset liability, including capital loss (in €) | | **At 1 January** | **(2,482.3)** | **2,448.3** | **(37.0)** | **(2,493.4)** | **2,404.3** | **(89.1)** | | Administration expenses | – | (2.3) | (2.3) | – | (2.2) | (2.2) | | Interest (expense)/income | (44.9) | 44.3 | (0.6) | (31.7) | 30.7 | (1.0) | | **Total amount recognised in income statement** | **(44.9)** | **42.0** | **(2.9)** | **(31.7)** | **28.5** | **(3.2)** | | Remeasurement (loss)/gain on scheme assets | – | (746.1) | (746.1) | – | 102.9 | 102.9 | | Change in demographic assumptions | (20.0) | – | (20.0) | 29.3 | – | 29.3 | | Change in financial assumptions | 758.8 | – | 758.8 | 131.6 | – | 131.6 | | Experience loss | (73.6) | – | (73.6) | (39.0) | – | (39.0) | | Adjustment to liabilities for IFRIC 14 | 84.1 | – | 84.1 | (186.9) | – | (186.9) | | **Total remeasurements in other comprehensive income** | **749.3** | **(746.1)** | **3.2** | **(65.0)** | **102.9** | **37.9** | | Employer contributions | – | 7.1 | 7.1 | – | 17.4 | 17.4 | | Employee contributions | – | – | – | – | – | – | | Benefit payments | 102.0 | (102.0) | – | 107.8 | (107.8) | – | | **At 31 December** | **(1,675.9)** | **1,646.3** | **(29.6)** | **(2,482.3)** | **2,445.3** | **(37.0)** | | Accounting valuation | 2020 | 2021 | | --- | --- | --- | | Fair value of scheme assets | 1,646.3 | 2,448.3 | | Present value of scheme obligations | (1,569.7) | (2,295.4) | | **Surplus in scheme** | **76.6** | **149.9** | | IFRIC 14 limitation on recognition of surplus | (106.2) | (186.9) | | **Deficit after IFRIC 14 adjustment** | **(29.6)** | **(37.0)** | ### 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. 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 2025 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 6.0%. In response to the significant increases in bond yields over 2022, and in particular the volatile markets at the start of Q3, the Trustee decided to sell some of the TWPS' liquid assets in order to ensure sufficient collateral in support of the liability-hedging programme. This has led to short-term changes in the overall investment strategy which is reflected in the asset allocation at the end of the reporting period. The Company and Trustee are in ongoing discussions around how to rebalance the portfolio to meet the agreed expected return and risk budgets. | Taylor Whipple plc Annual Report and Accounts 2020 187 Financial statements Notes to the consolidated financial statements continued 21. Retirement benefit obligations c o n t i n u e d Risk Description Changes in Falling bond yields tend to increase the funding and accounting liabilities. However, the investment in bond and liabilit - bond yields matching derivatives offers a significant degree of matching, i.e. the movement in assets arising from changes in bond yields c o n t i n u e d substantially matches the movement in the funding or accounting liabilities. In this way, the exposure to movements in bond yields is reduced. Investing in o maintain appropriate diversification of investments within the TWPS assets and to take advantage of overseas investment foreign returns, a proportion of the underlying investment portfolio is invested overseas. To balance the risk of investing in foreign currency 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. sset/liability In order to manage the TWPS’ economic exposure to interest rates and inflation rates, a liability-hedging programme has mismatch been put in place. Derivatives are used to hedge changes in the TWPS’ assets from changes in its liabilities, substantially reducing asset/liability mismatch risk. However, it is only possible to target matching of the assets with the liabilities assessed on one measure. Due to its relevance in driving Company contributions, the current policy is to assess the matching against the TWPS’ long term funding basis. This can lead to a slight mis-match between the assets and the liabilities assessed on the Company’s accounting basis, in particular if there is a change in corporate bond yield spreads. Liquidity he TWPS requires sufficient liquidity to meet benefit payments, and to ensure sufficient collateral to support the liability- hedging programme. Market volatility in Q3/Q4 2022 required use of TWPS’ liquid assets to ensure sufficient collateral was maintained. Although the existing processes ensured sufficient liquidity throughout the volatility, these processes have been updated to provide further liquidity, and now include holding sufficient assets within the liability-hedging programme to cover the impact of a further 4.0% increase in yields. The manager of the liability-hedging programme also has direct access to further liquid assets to an overall buffer in excess of a 6.0% increase in yields, which is significantly in excess of the increase seen during the recent market turmoil. cross the portfolio, the TWPS has liquid assets which could be sold at short notice if required. In particular, 50% are managed in either segregated accounts or daily/weekly dealt pooled funds and can be realised within a few business days under normal market conditions, and 3% are invested in pooled funds with monthly redemption dates. Of the remaining assets, 30% could be redeemed within approximately six to nine months of notification in normal market conditions, and the rest are made up of illiquid assets including insurance policies, real estate and illiquid debt (which include commercial real estate debt and direct lending bonds). Life he majority of the TWPS obligations are to provide a pension fo the life of the member on retirement, so increases in life expectancy 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 longevity risk from the TWPS by significantly reducing the longevity risk in relation to a large proportion of the liabilities. Climate risk he 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. 188 Taylor Wimpey plc Annual Report and Accounts 2022 A T T A T T r y 188 Taylor Wimpey plc Annual Report and Accounts 2022 ## 22. Provisions | | Closing for June 2021 | Leaseful 2021 | New 2021 | Total 2021 | | --- | --- | --- | --- | --- | | At 1 January 2021 | 28.8 | 59.6 | 42.3 | 138.5 | | 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 | | Additions | 80.0 | - | 23.9 | 103.9 | | Utilisation | (15.8) | (30.1) | (7.6) | (53.5) | | Released | - | - | (5.4) | (5.4) | | Foreign exchange | - | - | 0.2 | 0.2 | | **At 31 December 2022** | **208.7** | **23.5** | **58.1** | **290.3** | | | 2021 2022 | 2021 2022 | | --- | --- | --- | | Current | 106.7 | 125.4 | | Non-current | 183.6 | 119.7 | | **31 December** | **290.3** | **245.1** | 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 2021 the Group announced an additional £125.0 million provision to fund cladding fire safety improvements and in 2022 recognised a further £80.0 million (see Note 6). It is expected that around a fifth 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 include 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 | | 2021 2022 | 2021 2022 | | --- | --- | --- | | Authorised | | | | 22,200,819,176 (2021: 22,200,819,176) ordinary shares of 1p each | 222.0 | 222.0 | | 1,158,299,201 (2021: 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 | Total | | --- | --- | --- | --- | | Issued and fully paid: | | | | | 31 December 2021 | 3,648,591,179 | 1,065,566,274 | 292.2 | | Shares issued in year | 336,286 | - | - | | Shares cancelled in year | (91,942,362) | - | (0.9) | | **31 December 2022** | **3,556,985,103** | **1,065,566,274** | **291.3** | Taylor Whipple plc Annual Report and Accounts 2022 189 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 0.3 million (2021: 3.2 million) ordinary shares to satisfy option exercises; and purchased 116,942,362 of its own ordinary shares, of which 25,000,000 were transferred to be held in treasury and the remainder cancelled. The average share price of the purchased shares was 128.27 pence for a total cost, including expenses, of £151.3 million. 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 | | 2020 £m | 2021 £m | | --- | --- | --- | | A1 1 January | 777.5 | 773.1 | | Shares issued in year | 0.4 | 4.4 | | A1 31 December | 777.9 | 777.5 | ### 25. Other reserves | | Capital redemption reserve £m | Translation reserve £m | Other £m | Total other reserves £m | | --- | --- | --- | --- | --- | | Balance at 1 January 2021 | 31.5 | 6.2 | 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 | | Exchange differences on translation of foreign operations | - | 6.6 | - | 6.6 | | Movement in fair value of hedging instruments | - | (3.5) | - | (3.5) | | Shares repurchased and cancelled in year | 0.9 | - | - | 0.9 | | Balance at 31 December 2022 | 32.4 | 9.2 | 504.0 | 545.6 | ### Capital redemption reserve The capital redemption reserve arose on a 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 reserves £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. 190 Taylor Wimpey plc Annual Report and Accounts 2022 Notes to the consolidated financial statements continued 23. Share capital ccoonn ttiinnuueedd 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 0.3 million (2021: 3.2 million) ordinary shares to satisfy option exercises; and purchased 116,942,362 of its own ordinary shares, of which 25,000,000 were transferred to be held in treasury and the remainder cancelled. The average share price of the purchased shares was 128.27 pence for a total cost, including expenses, of £151.3 million. 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 | | | 2022 | 2021 | | --- | --- | --- | --- | | | | £m | £m | | t 1 Januar | 777.5 773.1 | | | Shares issued in year 0.4 4.4 t 31 Decembe 777.9 777.5 25. Other reserves Capital redemption Translation Total other reserve reserve Other reserves £m £m £m £m Balance at 1 January 2021 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 Exchange differences on translation of foreign operations – 6.6 – 6.6 Movement in fair value of hedging instruments – (3.5) – (3.5) Shares repurchased and cancelled in year 0.9 – – 0.9 Balance at 31 December 2022 32.4 9.2 504.0 545.6 Capital redemption reserve The capital redemption reserve arose on a 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 reserves £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. Taylor Wimpey plc Annual Report and Accounts 2022 191 A A y r 26. Own shares £m Balance at 1 January 2021 11.5 Shares acquired 4.2 Disposed of on exercise of options (1.1) Balance at 31 December 2021 14.6 Shares acquired 33.8 Disposed of on exercise of options (5.3) Balance at 31 December 2022 43.1 The own shares reserve represents the cost of shares in Taylor Wimpey plc purchased in the market, those held as treasury shares and those held by the Taylor Wimpey Employee Share Ownership Trusts to satisfy options and conditional share awards under the Group’s share plans. Million shares 2022 2021 Ordinary shares held in trust and treasury for bonus, option and performance award plans 30.9 9.1 During the year, Taylor Wimpey plc purchased none of its own shares to be held in the ESOTs (2021: £4.2 million) and purchased £33.8 million of its own shares to be held in treasury (2021: none). The market value of the shares held in the ESOT and treasury at 31 December 2022 was £31.4 million (2021: £16.0 million) and their nominal value was £0.4 million (2021: £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 and those held in treasury are used to meet the valid exercise of options and/or vesting of conditional awards and/or award of shares under the Executive Incentive Scheme, Bonus Deferral Plan, Performance Share Plan, Savings-Related Share Option Scheme and the matching award of shares under the Share Incentive Plan. The ESOTs’ entire holding of shares and those held in treasury at 31 December 2022 were covered by outstanding options and conditional awards over shares at that date. 27. Notes to the cash flow statement Cash and cash equivalents comprise cash at bank and other short term highly liquid investments with an original maturity of three months or less. Movement in net cash Cash and cash equivalents £m Bank and other loans £m Total net cash £m Balance at 1 January 2021 823.0 (103.6) 719.4 Net cash flow 99.9 12.7 112.6 Foreign exchange (1.9) 6.9 5.0 Balance at 31 December 2021 921.0 (84.0) 837.0 Net cash flow 28.7 – 28.7 Foreign exchange 2.6 (4.5) (1.9) Balance at 31 December 2022 952.3 (88.5) 863.8 For movements in lease liabilities in the year see Note 19. Inventory working capital movements in the cashflow statement include the related movements in land debtors and land creditors. 28. Contingent liabilities and capital commitments The Group in the normal course of business has given guarantees and entered into counter-indemnities in respect of bonds relating to the Group’s own contracts and has given guarantees in respect of the Group’s share of certain contractual obligations of joint ventures. The possibility of any outflow in settlement for these is considered to be remote. The Group has entered into counter-indemnities in the normal course of business in respect of performance bonds. Provision is made for the Directors’ best estimate of all known legal claims and all legal actions in progress. The Group takes legal advice as to the likelihood of success of claims and actions and no provision is made where the Directors consider, based on that advice, that the action is unlikely to succeed. The Group has no significant capital commitments at 31 December 2022 (2021: none). 190 Taylor Wimpey plc Annual Report and Accounts 2022 Taylor Wimpey plc Annual Report and Accounts 2022191 Financial statements Notes to the consolidated financial statements continued ## 29. Share-based payments Equity-settled share option plan Details of equity-settled share-based payment arrangements are set out in the Directors' Remuneration Report on pages 124 to 148. The tables below show the movements in the schemes in the year as well as their weighted average exercise price (WAEP). | Sharecare (MMB) | 2020 | | 2021 | | | --- | --- | --- | --- | --- | | | Options | WAEP (in €) | Options | WAEP (in €) | | Outstanding at the beginning of the year | 24,020,334 | 1.11 | 28,381,982 | 1.10 | | Granted during the year | 15,785,250 | 0.83 | 3,544,980 | 1.42 | | Forfeited during the year | (9,591,033) | 1.11 | (4,732,096) | 1.10 | | Exercised during the year | (805,811) | 1.30 | (3,174,532) | 1.39 | | Outstanding at the end of the year | 29,408,740 | 0.95 | 24,020,334 | 1.11 | | Exercisable at the end of the year | 2,245,075 | 1.24 | 1,189,180 | 1.31 | The remaining Sharecare options outstanding at 31 December 2022 had a range of exercise prices from £0.83 to £1.59 (2021: £0.97 to £1.59) and a weighted average remaining contractual life of 3.03 years (2021: 2.89 years). | Share Incentive Plan (SIP) | 2020 | | 2021 | | | --- | --- | --- | --- | --- | | | Options | WAEP (in €) | Options | WAEP (in €) | | Outstanding at the beginning of the year | 6,496,507 | - | 6,722,389 | - | | Granted during the year | 2,012,970 | - | 1,440,388 | - | | Forfeited during the year | (713,665) | - | (811,540) | - | | Exercised during the year | (507,114) | - | (854,730) | - | | Outstanding at the end of the year | 7,288,698 | - | 6,496,507 | - | | Exercisable at the end of the year | 3,288,991 | - | 2,891,221 | - | 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 and these awards do not expire. | Performance Share Plan (PSP) | 2020 | | 2021 | | | --- | --- | --- | --- | --- | | | Options | WAEP (in €) | Options | WAEP (in €) | | Outstanding at the beginning of the year | 15,731,848 | - | 20,116,944 | - | | Granted during the year | 1,891,265 | - | 1,967,813 | - | | Forfeited during the year | (5,700,993) | - | (5,995,692) | - | | Exercised during the year | (1,378,843) | - | (357,217) | - | | Outstanding at the end of the year | 10,543,277 | - | 15,731,848 | - | | Exercisable at the end of the year | - | - | - | - | The conditional awards outstanding at 31 December 2022 had a weighted average remaining contractual life of 1.24 years (2021: 1.35 years). The average share price at the date of exercise across all options exercised during the period was £1.32 (2021: £1.88). 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-based with increasing confidence | | Share benefit with increasing confidence | | | --- | --- | --- | --- | --- | | | 2020 | 2021 | 2020 | 2021 | | Model | Binomial | Binomial | Monte Carlo | Monte Carlo | | Weighted average share price | £0.93 | £1.61 | £1.30 | £1.79 | | Weighted average exercise price | £0.77 | £1.07 | Nil | Nil | | Expected volatility | 41% | 41% | 42% | 41% | | Expected life | 3/5 years | 3/5 years | 3 years | 3 years | | Risk-free rate | 4.2% | 0.5% | 1.46% | 0.1% | | Expected dividend yield | 4.24% | 4.36% | 0.0% | 0.0% | | Weighted average fair value of options granted in year | £0.34 | £0.73 | £0.72 | £0.95 | 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 £14.1 million in the year (2021: £13.3 million), which was composed of £14.0 million in relation to equity settled schemes and £0.1 million in relation to cash settled elements (2021: £13.2 million and £0.1 million). 192 Taylor Wimpey plc Annual Report and Accounts 2022 ### 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 £17.2 million (2021: £22.9 million) and purchases totalled £5.4 million (2021: £24.2 million). Interest received from joint ventures was £1.8 million (2021: £1.7 million). At 31 December 2022 receivables from joint ventures were £40.5 million (31 December 2021: £59.0 million) and payables were £0.9 million (31 December 2021: £0.7 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 92 to 93. The remuneration information for the Executive Directors is set out in the Remuneration Report on page 136. The aggregate compensation for the other members of the GMT is as follows: | | 2021 £m | 2020 £m | | --- | --- | --- | | Short term employee benefits | 4.2 | 4.6 | | Post-employment benefits | 0.3 | 0.3 | | Total (excluding share-based payments charge) | 4.5 | 4.9 | In addition to the amounts above, a share-based payment charge of £2.1 million (2021: £1.7 million) related to share options held by members of the GMT. ### 31. Dividends | | 2021 £m | 2020 £m | | --- | --- | --- | | **Proposed** | | | | Interim dividend 2022: 4.82p (2021: 4.14p) per ordinary share of 1p each | 162.9 | 150.8 | | Final dividend 2022: 4.78p (2021: 4.44p) per ordinary share of 1p each | 169.0 | 162.0 | | | 331.9 | 312.8 | | Amounts recognised as distributions to equity holders | | | | **Paid** | | | | Final dividend 2021: 4.44p (2020: 4.14p) per ordinary share of 1p each | 160.9 | 150.7 | | Interim dividend 2022: 4.82p (2021: 4.14p) per ordinary share of 1p each | 162.9 | 150.8 | | | 323.8 | 301.5 | The Directors recommend a final dividend for the year ended 31 December 2022 of 4.78 pence per share (2021: 4.44 pence per share) subject to shareholder approval at the Annual General Meeting, with an equivalent final dividend charge of c.£169.0 million based on the number of shares in issue at the end of the year (2021: £160.9 million). The final dividend will be paid on 12 May 2023 to all shareholders registered at the close of business on 31 March 2023. In accordance with IAS 10 'Events after the Reporting Period', the proposed final dividend has not been accrued as a liability at 31 December 2022. Taylor Whipple plc Annual Report and Accounts 2023 193 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 UK-adopted international accounting standards. 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 statutory 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. 2022 2021 Profit on ordinary activities before net finance costs (£m) 827.5 698.2 djusted for: Share of results of joint ventures (£m) (Note 13) 15.9 5.4 Exceptional items (£m) (Note 6) 80.0 125.0 Operating profit (£m) 923.4 828.6 Revenue (£m) (Note 4) 4,419.9 4,284.9 Operating profit margin 20.9% 19.3% 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. 2022 2021 2020 Basic net assets (£m) 4,502.1 4,314.0 4,016.8 djusted for: Cash (£m) (Note 16) (952.3) (921.0) (823.0) Borrowings (£m) (Note 17) 88.5 84.0 103.6 Net taxation (£m) (18.8) (26.4) (32.6) Accrued dividends (£m) – – – Net operating assets (£m) 3,619.5 3,450.6 3,264.8 verage basic net assets (£m) 4,408.1 4,165.4 verage net operating assets (£m) 3,535.1 3,357.7 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. 2022 2021 Operating profit (£m) 923.4 828.6 verage net operating assets (£m) 3,535.1 3,357.7 Return on net operating assets 26.1% 24.7% 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. 2022 2021 Basic net assets (£m) 4,502.1 4,314.0 djusted for: Intangible assets (£m) (Note 11) (4.2) (6.6) Tangible net assets (£m) 4,497.9 4,307.4 Ordinary shares in issue (millions) 3,557.0 3,648.6 Tangible net assets per share (pence) 126.5 118.1 | | 194 | Taylor Wimpey plc Annual Report and Accounts 2022 | | --- | --- | --- | | A A A A A A | | | | | 194 | Taylor Wimpey plc Annual Report and Accounts 2022 | 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 underlying earnings capacity of the Group. Note 10 shows a reconciliation from basic and diluted earnings per share to adjusted basic The Group uses a number of alternative performance measures (APMs) which are not defined within UK-adopted international accounting and diluted earnings per share. standards. 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 statutory 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 this to be a good indicator of how efficiently the Group is utilising its assets to generate value for shareholders. 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. 2022 2021 Operating profit and operating profit margin Revenue (£m) (Note 4) 4,419.9 4,284.9 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) 3,535.1 3,357.7 as profit on ordinary activities before net finance costs, exceptional items and tax, after share of results of joint ventures. The Directors Net operating asset turn 1.25 1.28 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. Net cash 2022 2021 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) 827.5 698.2 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) 15.9 5.4 This is defined as cash generated from operations, which excludes payments relating to exceptional charges, divided by operating 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 into cash. Exceptional items (£m) (Note 6) 80.0 125.0 | Operating profit (£m) 923.4 828.6 | | 2022 2021 | | --- | --- | --- | | Revenue (£m) (Note 4) 4,419.9 4,284.9 | Cash generated from operations (£m) 705.0 574.7 | | | Operating profit margin 20.9% 19.3% | Operating profit (£m) 923.4 828.6 | | Cash conversion 76.3% 69.4% Net operating assets Net operating assets is defined as basic net assets less net cash, excluding net taxation balances and accrued dividends. Average net Adjusted gearing | operating assets is the average of the opening and closing net operating assets of the 12-month period. With return on net operating assets, | | This is defined as adjusted net debt divided by basic net assets. The Directors consider this to be a more representative measure of the | | | --- | --- | --- | --- | | the Directors consider this to be an important measure of the underlying operating efficiency and performance of the Group. | | Group’s gearing levels. Adjusted net debt is defined as net cash less land creditors. | | | | 2022 2021 2020 | | 2022 2021 | | Basic net assets (£m) 4,502.1 4,314.0 4,016.8 | | Cash (£m) (Note 16) 952.3 921.0 | | | djusted for: | | Loans (£m) (Note 17) (88.5) (84.0) | | | Cash (£m) (Note 16) (952.3) (921.0) (823.0) | | Net cash (£m) 863.8 837.0 | | | Borrowings (£m) (Note 17) 88.5 84.0 103.6 | | Land creditors (£m) (Note 18) (725.6) (806.4) | | | Net taxation (£m) (18.8) (26.4) (32.6) | | djusted net debt (£m) 138.2 30.6 | | | Accrued dividends (£m) – –– | | Basic net assets (£m) 4,502.1 4,314.0 | | | Net operating assets (£m) 3,619.5 3,450.6 3,264.8 | | djusted gearing (3.1)% (0.7)% | | verage basic net assets (£m) 4,408.1 4,165.4 verage net operating assets (£m) 3,535.1 3,357.7 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. 2022 2021 Operating profit (£m) 923.4 828.6 verage net operating assets (£m) 3,535.1 3,357.7 Return on net operating assets 26.1% 24.7% 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. 2022 2021 Basic net assets (£m) 4,502.1 4,314.0 djusted for: Intangible assets (£m) (Note 11) (4.2) (6.6) Tangible net assets (£m) 4,497.9 4,307.4 Ordinary shares in issue (millions) 3,557.0 3,648.6 Tangible net assets per share (pence) 126.5 118.1 | | | | Taylor Wimpey plc Annual Report and Accounts 2022 | | 195 | | --- | --- | --- | --- | --- | --- | | A A A A A A | | A A A 33. Post balance sheet events There were no material subsequent events affecting the Group after 31 December 2022. | | | | | 194 | Taylor Wimpey plc Annual Report and Accounts 2022 | | | Taylor Wimpey plc Annual Report and Accounts 2022195 | | Financial statements # Company balance sheet at 31 December 2022 | | Note | 2021 CAGR | 2020 CAGR | | --- | --- | --- | --- | | **Non-current assets** | | | | | Investments in Group undertakings | 4 | 4,500.6 | 2,446.2 | | Trade and other receivables | 5 | 63.4 | 2,243.0 | | | | **4,564.0** | **4,659.2** | | **Current assets** | | | | | Trade and other receivables | 5 | 512.9 | 609.2 | | Cash and cash equivalents | | 868.3 | 877.1 | | | | **1,381.2** | **1,486.3** | | **Current liabilities** | | | | | Trade and other payables | 6 | (766.5) | (1,439.3) | | Bank and other loans | 7 | (86.5) | – | | | | **(855.0)** | **(1,439.3)** | | **Net current assets** | | **526.2** | **47.0** | | **Total assets less current liabilities** | | **5,090.2** | **4,736.2** | | **Non-current liabilities** | | | | | Trade and other payables | 6 | – | (0.6) | | Bank and other loans | 7 | – | (84.0) | | Provisions | | (1.0) | (1.0) | | **Net assets** | | **5,089.2** | **4,650.6** | | **Equity** | | | | | Share capital | 8 | 291.3 | 292.2 | | Share premium | 9 | 777.9 | 777.5 | | Own shares | 10 | (43.1) | (14.6) | | Other reserves | 11 | 536.0 | 535.1 | | Retained earnings | 12 | 3,527.1 | 3,080.4 | | **Total equity** | | **5,089.2** | **4,650.6** | As permitted by Section 406 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 £897.6 million (2021: £519.3 million). The financial statements were approved by the Board of Directors and authorised for issue on 1 March 2023. They were signed on its behalf by: J Daly Director C Carney Director 196 Taylor Wimpey plc Annual Report and Accounts 2022 ## Company statement of changes in equity for the year to 31 December 2022 | | 1975 | Share capital (%) | Share premium (%) | Own shares (%) | Other (except 1) (%) | Dividend (except 1) (%) | Total (%) | | --- | --- | --- | --- | --- | --- | --- | --- | | Total equity at 1 January 2021 | | 292.2 | 773.1 | (11.5) | 535.1 | 2,830.0 | 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 | 15 | - | - | - | - | (301.5) | (301.5) | | Total equity at 31 December 2021 | | 292.2 | 777.5 | (14.6) | 535.1 | 3,060.4 | 4,650.6 | | Profit for the year | | - | - | - | - | 897.6 | 897.6 | | **Total comprehensive income for the year** | | - | - | - | - | 897.6 | 897.6 | | New share capital subscribed | | - | 0.4 | - | - | - | 0.4 | | Own shares acquired and cancelled | 8 | (0.9) | - | (33.8) | 0.9 | (117.5) | (151.3) | | Utilisation of own shares | | - | - | 5.3 | - | - | 5.3 | | Cash cost of satisfying share options | | - | - | - | - | (3.6) | (3.6) | | Capital contribution on share-based payments | | - | - | - | - | 14.0 | 14.0 | | Dividends approved and paid | 15 | - | - | - | - | (323.8) | (323.8) | | **Total equity at 31 December 2022** | | **291.3** | **777.9** | **(43.1)** | **536.0** | **3,527.1** | **5,089.2** | Taylor Whipple plc Annual Report and Accounts 2022 197 Financial statements ## Notes to the Company financial statements for the year to 31 December 2022 Current tax 1. Significant accounting policies The tax currently payable is based on taxable profit for the year. The following accounting policies have been used consistently, unless Taxable profit differs from profit before tax because it excludes items otherwise stated, in dealing with items which are considered material. of income or expense that are taxable or deductible in other years Basis of preparation and it further excludes items that are never taxable or deductible. The Company meets the definition of a qualifying entity under The Company’s liability for current tax is calculated using tax rates that Financial Reporting Standard 101 (FRS 101) issued by the Financial have been enacted or substantively enacted by the balance sheet date. Reporting Council. Accordingly, these financial statements were prepared in accordance with FRS 101 ‘Reduced Disclosure Any liability or credit in respect of group relief in lieu of current tax is Framework’ as issued by the Financial Reporting Council as applied also calculated using corporation tax rates that have been enacted in conformity with the provisions of the Companies Act 2006 or substantively enacted by the balance sheet date unless a different and under the historical cost convention except as otherwise rate (including a nil rate) has been agreed within the Group. stated below. Foreign currencies As permitted by FRS 101, the Company has taken advantage of the Transactions denominated in foreign currencies are recorded in disclosure exemptions available under that standard in relation to Sterling at actual rates as of the date of the transaction. Monetary share-based payments, financial instruments, capital management, assets and liabilities denominated in foreign currencies at the year presentation of comparative information in respect of certain assets, end are reported at the rates of exchange prevailing at the year end. presentation of a cash flow statement, standards not yet effective, Any gain or loss arising from a change in exchange rates after the impairment of assets and related party transactions. date of the transaction is included as an exchange gain or loss in The principal accounting policies adopted are set out below. profit and loss. Going concern Trade and other receivables The Group, which the Company heads, has prepared forecasts, Trade and other receivables are measured at amortised cost, less any including certain sensitivities, taking into account the Principal Risks loss allowance based on expected credit losses. The measurement of identified on pages 75 to 79. Having considered these forecasts, the expected credit losses is based on the probability of default and the Directors remain of the view that the Group’s financing arrangements magnitude of the loss if there is a default. The assessment of and capital structure provide both the necessary facilities and covenant probability of default is based on historical data adjusted for any headroom to enable the Group to conduct its business for at least the known factors that would influence the future amount to be received next 12 months. Accordingly, the Company financial statements have in relation to the receivable. been prepared on a going concern basis. Trade and other payables Critical accounting judgements and key sources of Trade and other payables are measured at amortised cost. estimation uncertainty Borrowings Management has not made any individual accounting judgements Borrowings are initially recognised at fair value, net of transaction that are material to the Company and does not consider there to be costs incurred and subsequently measured at amortised cost. any key sources of estimation uncertainty. Share-based payments Investments in Group undertakings The Company issues equity-settled share-based payments to certain Investments are included in the balance sheet at cost less any employees of its subsidiaries. Equity-settled share-based payments provision for impairment. The Company assesses investments for are measured at fair value at the grant date. The fair value is expensed impairment whenever events or changes in circumstances indicate on a straight-line basis over the vesting period, based on the estimate that the carrying value of an investment may not be recoverable. If any of shares that will vest. The cost of equity-settled share-based such indication of impairment exists, the Company makes an estimate payments granted to employees of subsidiary companies is borne by of the recoverable amount of the investment. If the recoverable amount the employing company, without recharge. As such the Company’s is less than the value of the investment, the investment is considered investment in the subsidiary is increased by an equivalent amount. to be impaired and is written down to its recoverable amount. An impairment loss is expensed immediately. Where an impairment loss Own shares subsequently reverses, due to a change in circumstances or in the The cost of the Company’s investment in its own shares, which comprise estimates used to determine the asset’s recoverable amount, the shares held in treasury by the Company and shares held by employee carrying amount of the investment is increased to the revised benefit trusts for the purpose of funding certain of the Company’s estimate of its recoverable amount, so long as it does not exceed the share option plans, is shown as a reduction in shareholders’ equity. original carrying value prior to the impairment being recognised. Dividends paid The Company values its investments in subsidiary holding Dividends are charged to the Company’s retained earnings reserve companies based on a comparison between the net assets in the period of payment in respect of an interim dividend, and in the recoverable by the subsidiary company and the investment held. period in which shareholders’ approval is obtained in respect of the Where the net assets are lower than the investment an impairment is Company’s final dividend. recorded. For trading subsidiaries, the investment carrying value in the Company is assessed against the net present value of the cash flows of the subsidiary. Taxation The tax charge represents the sum of the tax currently payable and deferred tax. 198 Taylor Wimpey plc Annual Report and Accounts 2022 198 Taylor Wimpey plc Annual Report and Accounts 2022 ## 2. Particulars of employees | | 2021 Budget | 2021 Number | | --- | --- | --- | | Directors | 2 | 3 | The Executive Directors received all of their remuneration, as disclosed in the Annual Report on Remuneration on pages 124 to 145, from Taylor Wimpey UK Limited. This remuneration is reflective of the Directors' service to the Company and all its subsidiaries. ## 3. Auditors' remuneration | | 2021 Qtr | 2021 Qtr | | --- | --- | --- | | 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 | | 2021 Qtr | | --- | --- | | **Cost** | | | At 1 January 2022 | 5,257.5 | | Additions | 2,153.7 | | Capital contribution relating to share-based payments | 14.0 | | **At 31 December 2022** | **7,425.2** | | **Provision for impairment** | | | At 1 January 2022 | (2,811.3) | | Charge for the year | (113.3) | | **At 31 December 2022** | **(2,824.6)** | ### Carrying amount | **At 31 December 2022** | **4,500.6** | | --- | --- | | At 31 December 2021 | 2,446.2 | All investments are unlisted and information about all subsidiaries is listed on pages 203 to 207. During the year the Company increased its investment in Group undertakings, with a corresponding decrease in the amounts due from those Group undertakings. ## 5. Trade and other receivables | | 2021 Budget | | 2021 Number | | | --- | --- | --- | --- | --- | | | 2021 Qtr | 2021 Qtr | 2021 Qtr | 2021 Qtr | | Due from Group undertakings | 510.1 | 607.8 | 62.3 | 2,249.9 | | Other receivables | 2.8 | 1.4 | 1.1 | 2.1 | | | 512.9 | 609.2 | 63.4 | 2,243.0 | Amounts due from Group undertakings are unsecured, repayable on demand and are predominantly interest bearing. ## 6. Trade and other payables | | 2021 Budget | | 2021 Number | | | --- | --- | --- | --- | --- | | | 2021 Qtr | 2021 Qtr | 2021 Qtr | 2021 Qtr | | Due to Group undertakings | 762.6 | 1,436.2 | - | - | | Other payables | 3.2 | 1.4 | - | 0.6 | | Corporation tax creditor | 0.7 | 1.7 | - | - | | | 766.5 | 1,439.3 | - | 0.6 | Amounts due to Group undertakings are unsecured, repayable on demand and are predominantly interest bearing. Taylor Wimpey plc Annual Report and Accounts 2022 199 Financial statements Notes to the Company financial statements continued 7. Bank and other loans 2022 2021 £m £m €100.0 million 2.02% Senior Loan Notes 88.5 84.0 hese loans are repayable as follows: mounts due for settlement within one yea 88.5 – mounts due for settlement after one yea – 84.0 8. Share capital 2022 2021 £m £m uthorised: 22,200,819,176 (2021: 22,200,819,176) ordinary shares of 1p each 222.0 222.0 1,158,299,201 (2021: 1,158,299,201) deferred ordinary shares of 24p each 278.0 278.0 500.0 500.0 Number of Number of deferred ordinary shares ordinary shares £m Issued and fully paid: 31 December 2021 3,648,591,179 1,065,566,274 292.2 Shares issued in year 336,286 – – Shares cancelled in year (91,942,362) – (0.9) 31 December 2022 3,556,985,103 1,065,566,274 291.3 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. During the year, the Company issued 0.3 million (2021: 3.2 million) ordinary shares to satisfy option exercises; and purchased 116,942,362 of its own ordinary shares, of which 25,000,000 were transferred to be held in treasury and the remainder cancelled. The average share price of the purchased shares was 128.27 pence for a total cost, including expenses, of £151.3 million. 9. Share premium | | | 2022 | 2021 | | --- | --- | --- | --- | | | | £m | £m | | t 1 Januar | 777.5 773.1 | | | Shares issued in year 0.4 4.4 t 31 Decembe 777.9 777.5 10. Own shares 2022 2021 £m £m Own shares 43.1 14.6 These comprise ordinary shares of the Company: Number Number Ordinary shares held in trust and treasury for bonus, option and performance award plans 30.9m 9.1m | | | 200 | Taylor Wimpey plc Annual Report and Accounts 2022 | | | --- | --- | --- | --- | --- | | T A A A A A | y | r | | r r | | | | 200 | Taylor Wimpey plc Annual Report and Accounts 2022 | | Notes to the Company financial statements continued 10. Own shares c o n t i n u e d During the year, Taylor Wimpey plc purchased none of its own shares to be held in the ESOTs (2021: £4.2 million) and purchased £33.8 million of its own shares to be held in treasury (2021: none). The market value of the shares held in the ESOT and treasury at 31 December 2022 was £31.4 million (2021: £16.0 million) and their nominal value was £0.4 million (2021: £0.1 million). Dividends on these shares have been waived 7. Bank and other loans c o n t i n u e d except for a nominal aggregate amount in pence. 2022 2021 £m £m ESOTs are used to hold the Company’s shares which have been acquired on the market. These shares and those held in treasury are used €100.0 million 2.02% Senior Loan Notes 88.5 84.0 to meet the valid exercise of options and/or vesting of conditional awards and/or award of shares under the Executive Incentive Scheme, Bonus Deferral Plan, Performance Share Plan, Savings-Related Share Option Scheme and the matching award of shares under the Share hese loans are repayable as follows: Incentive Plan. mounts due for settlement within one yea 88.5 – The ESOTs’ entire holding of shares and those held in treasury at 31 December 2022 were covered by outstanding options and conditional mounts due for settlement after one yea – 84.0 awards over shares at that date. 8. Share capital 11. Other reserves | 2022 | 2021 | | | | --- | --- | --- | --- | | | | 2022 | 2021 | | £m | £m | | | | | | £m | £m | uthorised: t 1 Januar 535.1 535.1 22,200,819,176 (2021: 22,200,819,176) ordinary shares of 1p each 222.0 222.0 Shares repurchased and cancelled in year 0.9 – 1,158,299,201 (2021: 1,158,299,201) deferred ordinary shares of 24p each 278.0 278.0 t 31 Decembe 536.0 535.1 500.0 500.0 £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 Number of Number of deferred of the Companies Act 2006. Other reserves also includes £32.4 million (2021: £31.5 million) in respect of the redemption of the Company’s ordinary shares ordinary shares £m shares, which is non distributable. Issued and fully paid: 31 December 2021 3,648,591,179 1,065,566,274 292.2 12. Retained earnings Shares issued in year 336,286 – – Retained earnings of £3,527.1 million (2021: £3,060.4 million) includes profit for the year and dividends received from subsidiaries of £1,010.5 million (2021: £500.0 million). Included in retained earnings is £923.7 million (2021: £895.2 million) which is not distributable. Shares cancelled in year (91,942,362) – (0.9) 31 December 2022 3,556,985,103 1,065,566,274 291.3 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 The Company has two classes of shares: granted by the Company to employees of subsidiaries, and that remain outstanding at the year end over the Company’s shares, are set out – 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 in Note 29 of the Group financial statements. The Company did not recognise any expense related to equity-settled share-based payment as are set out in the Company’s Articles of Association. transactions in the current or preceding year. – Deferred ordinary shares of 24p, which carry no voting rights and no entitlement to any dividend. The deferred ordinary shares were issued 14. Contingent liabilities as part of a capital reorganisation in 2009 and have not subsequently changed. The Company has, in the normal course of business, given guarantees and entered into counter-indemnities in respect of bonds relating to During the year, the Company issued 0.3 million (2021: 3.2 million) ordinary shares to satisfy option exercises; and purchased 116,942,362 of the Group’s own contracts. The possibility of any outflow in settlement for these is considered to be remote. its own ordinary shares, of which 25,000,000 were transferred to be held in treasury and the remainder cancelled. The average share price of 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 the purchased shares was 128.27 pence for a total cost, including expenses, of £151.3 million. likelihood of success of claims and actions and no provision is made where the Directors consider, based on that advice, that the action is | 9. Share premium | | | unlikely to succeed. | | --- | --- | --- | --- | | | 2022 | 2021 | The Company has in issue a guarantee in respect of the Taylor Wimpey Pension Scheme (TWPS), which had an underlying IAS 19 surplus | | | £m | £m | | of £76.6 million at 31 December 2022 (2021: £149.9 million). This guarantee commits the Company to ensuring that the participating t 1 Januar 777.5 773.1 subsidiary meets its obligations under any schedule of contributions agreed with the TWPS Trustee from time to time. Following the 2019 Shares issued in year 0.4 4.4 valuation, Taylor Wimpey UK Limited is required to contribute up to £20.0 million per annum into an escrow account between April 2021 t 31 Decembe 777.9 777.5 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 | 10. Own shares | | | 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 | | --- | --- | --- | --- | | | 2022 | 2021 | scheme expenses is due. | | | £m | £m | | Own shares 43.1 14.6 These comprise ordinary shares of the Company: Number Number Ordinary shares held in trust and treasury for bonus, option and performance award plans 30.9m 9.1m Taylor Wimpey plc Annual Report and Accounts 2022 201 T A A A A A y r r r A A y r 200 Taylor Wimpey plc Annual Report and Accounts 2022 Taylor Wimpey plc Annual Report and Accounts 2022201 Financial statements Notes to the Company financial statements *continued* # **15. Dividend** | | 2022 £m | 2021 £m | | --- | --- | --- | | **Proposed** | | | | Interim dividend 2022: 4.62p (2021: 4.14p) per ordinary share of 1p each | **162.9** | 150.8 | | Final dividend 2022: 4.78p (2021: 4.44p) per ordinary share of 1p each | **169.0** | 162.0 | | | **331.9** | 312.8 | | Amounts recognised as distributions to equity holders | | | | **Paid** | | | | Final dividend 2021: 4.44p (2020: 4.14p) per ordinary share of 1p each | **160.9** | 150.7 | | Interim dividend 2022: 4.62p (2021: 4.14p) per ordinary share of 1p each | **162.9** | 150.8 | | | **323.8** | 301.5 | The Directors recommend a final dividend for the year ended 31 December 2022 of 4.78 pence per share (2021: 4.44 pence per share) subject to shareholder approval at the Annual General Meeting, with an equivalent final dividend charge of c.£169.0 million based on the number of shares in issue at the end of the year (2021: £160.9 million). The final dividend will be paid on 12 May 2023 to all shareholders registered at the close of business on 31 March 2023. In accordance with IAS 10 'Events after the Reporting Period', the proposed final dividend has not been accrued as a liability at 31 December 2022. 202 Taylor Wimpey plc Annual Report and Accounts 2022 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 Commercial Properties | | --- | --- | --- | --- | --- | --- | --- | --- | | 15. | Dividend | | | | | | | | | | | | Admiral Homes (Eastern) Limited | Hassall Homes (Southern) Limited | Limited | | | | | 2022 | 2021 | | | | | | | | £m | £m | Admiral Homes Limited | Hassall Homes (Wessex) Limited | Taylor Wimpey Developments Limited | | | Proposed | | | | Ashton Park Limited | Haverhilll Developments Limited | Taylor Wimpey Garage Nominees No 1 | | Limited Interim dividend 2022: 4.62p (2021: 4.14p) per ordinary share of 1p each 162.9 150.8 BGS (Pentian Green) Holdings Limited J.R. Young (Assemblies) Limited Taylor Wimpey Garage Nominees No 2 Final dividend 2022: 4.78p (2021: 4.44p) per ordinary share of 1p each 169.0 162.0 Bryad Developments Limited Jim 1 Limited Limited 331.9 312.8 Bryant Country Homes Limited Jim 3 Limited Taylor Wimpey Holdings Limited Bryant Group Services Limited Jim 4 Limited mounts recognised as distributions to equity holders Taylor Wimpey International Limited Bryant Homes Central Limited Jim 5 Limited Paid Taylor Wimpey Property Company Limited | | | Bryant Homes East Midlands Limited | L. & A. Freeman | | | Limited | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Final dividend 2021: 4.44p (2020: 4.14p) per ordinary share of 1p each 160.9 150.7 | | | | | | | | Taylor Wimpey Property Management | | | | Bryant Homes Limited | Laing Homes Limited | | | | | | | Interim dividend 2022: 4.62p (2021: 4.14p) per ordinary share of 1p each 162.9 150.8 | | | | | | | | Limited | | | | Bryant Homes North East Limited | Laing | Land | Limited | | | | | | 323.8 301.5 | | | | | | | Taylor Wimpey SH Capital Limited | | | | Bryant Homes Northern Limited | Land | Trust Developments | | | Limited | | Taylor Wimpey UK Limited | | Bryant Homes South West Limited | Limeb | rook Manor | LLP | | | --- | --- | --- | --- | --- | --- | | The Directors recommend a final dividend for the year ended 31 December 2022 of 4.78 pence per share (2021: 4.44 pence per share) | | | | | Thameswey Homes Limited | | | Bryant Homes Southern Limited | MCA | Developments | Limited | | | subject to shareholder approval at the Annual General Meeting, with an equivalent final dividend charge of c.£169.0 million based on the | | | | | The Garden Village Partnership Limited | | number of shares in issue at the end of the year (2021: £160.9 million). The final dividend will be paid on 12 May 2023 to all shareholders | Bryant Properties Limited | M CA East Limited | | | | The Wilson Connolly Employee Benefit registered at the close of business on 31 March 2023. Candlemakers (TW) Limited MCA Holdings Limited Trust Limited | | Clipper Investments Limited | MCA Land Limited | | | --- | --- | --- | --- | | In accordance with IAS 10 ‘Events after the Reporting Period’, the proposed final dividend has not been accrued as a liability at | | | Thomas Lowe and Sons, Limited | | 31 December 2022. | Compine Developments (Wootton) Limited | MCA Leicester Limited | | Thomas Lowe Homes Limited Dormant Nominees One Limited MCA London Limited TW NCA Limited Dormant Nominees Two Limited MCA Northumbria Limited TW Springboard Limited Farrods Water Engineers Limited MCA Partnership Housing Limited Twyman Regent Limited Flyover House Limited MCA South West Limited Valley Park Developments Limited George Wimpey Limited MCA West Midlands Limited Whelmar (Chester) Limited George Wimpey Bristol Limited MCA Yorkshire Limited Whelmar (Lancashire) Limited George Wimpey City Limited McLean Homes Limited Whelmar (North Wales) Limited George Wimpey City 2 Limited McLean Homes Bristol & West Li mited Whelmar Developments Limited George Wimpey East Anglia Limited McLean Homes Southern Limited Wilcon Homes Anglia Limited George Wimpey East London Limited McLean TW Estates Limited Wilcon Homes Eastern Limited George Wimpey East Midlands Limited M cLean TW (Chester) Limited Wilcon Homes Midlands Limited George Wimpey Manchester Limited McLean TW (Northern) Limited Wilcon Homes Northern Limited George Wimpey Midland Limited McLean TW (Southern) Limited Wilcon Homes Southern Limited George Wimpey North East Limited McLean TW (Yorkshire) Limited Wilcon Homes Western Limited George Wimpey North London Limited McLean TW Group Limited Wilcon Lifestyle Homes Limited George Wimpey North Midlands Limited McLean TW Holdings Limited Wilfrid Homes Limited George Wimpey North West Limited McLean TW Limited Wilson Connolly Holdings Limited George Wimpey North Yorkshire Limited McLean TW No. 2 Limited Wilson Connolly Investments Limited George Wimpey South East Limited Melbourne Investments Limited Wilson Connolly Limited George Wimpey South Midlands Limited Pangb ourne Developments Limited Wilson Connolly Properties Limited George Wimpey South West Limited P restoplan Limited Wilson Connolly Quest Limited George Wimpey South Yorkshire Limited River Farm Developments Limited Wimgrove Developments Limited George Wimpey Southern Counties Limited South Bristol (Ashton Park) Limited Wimgrove Property Trading Limited George Wimpey West London Limited Sp inks & Denning Limited Wimpey Construction Developments Limited George Wimpey West Midlands Limited S t. Katharine By The Tower Limited Wimpey Construction Overseas Limited George Wimpey West Yorkshire Limited St. Katharine Haven Limited Wimpey Corporate Services Limited Globe Road Limited Stone Pit Restoration Limite d Wimpey Dormant Investments Limited Grand Union Vision Limited Stone pit Limite d Wimpey Geotech Limited Groveside Homes Limited Tawnywood Developments Limited Wimpey Group Services Limited Hamme Construction Limited Taylor Wimpey 2007 Limited Wimpey Gulf Holdings Limited Hanger Lane Holdings Limited Taylor Wimpey Capital Developments Wimpey Overseas Holdings Limited Hassall Homes (Cheshire) Limited Limited Taylor Wimpey plc Annual Report and Accounts 2022 203 A 202 Taylor Wimpey plc Annual Report and Accounts 2022 Taylor Wimpey plc Annual Report and Accounts 2022203 Financial statements Particulars of subsidiaries, associates and joint ventures continued The entities listed below, with the Group’s ownership share, 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% | | Falcon Wharf Limited 50% | Whitehill & Bordon Regeneration Company Limited 50% | | GWNW City Developments Limited 50% | Wimpey Laing Overseas Limited 50% | | Paycause Limited 66.67% | Wimpey Laing Limited 50% | | aylor Wimpey Pension Trustees Limited 99% | Winstanley & York Road Regeneration LLP 50% | The entities listed below, with the Group’s ownership share, 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% 190 Elgin Avenue, George Town, KY1-9008, Cayman Islands | | 204 | Taylor Wimpey plc Annual Report and Accounts 2022 | | --- | --- | --- | | T T T T T A T V T | | | | | 204 | Taylor Wimpey plc Annual Report and Accounts 2022 | 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. The Group holds all of the issued share capital of each entity, where relevant, unless otherwise shown. Company Name Reference Company Name Reference The entities listed below, with the Group’s ownership share, are companies incorporated in the United Kingdom and the registered office is Gate House, Turnpike Road, High Wycombe, Buckinghamshire, HP12 3NR. bbotsford Park (No.3) Residents Association Limited 8 Franklin Park (Stevenage) Residents Management Company 16 Limited Company Name % Owned Company Name % Owned lbion Lock (Sandbach) Management Company Limited 13 Glasdir Management Company Limited 1 cademy Central LLP 62% riumphdeal Limited 50% lyn Meadows Management Company Limited 13 Great Hall Park Residents Association Limited 1 Bordon Developments Holdings Limited 50% umpine Limited 50% psham Grange (Topsham) Management Company Limited 4 Greenfields Park (EA) Management Company Limited 5 Chobham Manor LLP 50% Whitehill & Bordon Development Company BV Limited 50% Barker Butts Lane Management Company Limited 1 Gresley Meadow Management Company Limited 17 Chobham Manor Property Management Limited 50% Whitehill & Bordon Development Company Phase 1a 50% Barry Waterfront Residents Management Company Limited 4 Handley Chase (Sleaford) Residents Management Company 14 Falcon Wharf Limited 50% Whitehill & Bordon Regeneration Company Limited 50% Limited | GWNW City Developments Limited 50% | Wimpey Laing Overseas Limited 50% | | | | | | --- | --- | --- | --- | --- | --- | | | | Battersea Exchange Management Company Limited 1 | | Handley Gardens (Lancaster Avenue) Block Management | 3 | | Paycause Limited 66.67% | Wimpey Laing Limited 50% | | | Company Limited | | | aylor Wimpey Pension Trustees Limited 99% | Winstanley & York Road Regeneration LLP 50% | | 1 | | | | | | Biggleswade Management Company Limited* | 2 Handley Gardens Management CIC 6 | | | Billington Grove (SM) Management Company Limited 3 Hanwell Fields 3B Management Company Limited 1 The entities listed below, with the Group’s ownership share, are companies incorporated in the United Kingdom and the registered office is Brantham Residential Estate Management Company Limited 1 Hastings Manor (Hugglescote) Residents Management Company 7 Unit C, Ground Floor, Cirrus Glasgow Airport Business Park, Marchburn Drive, Abbotsinch, Paisley, PA3 2SJ. Limited | Company Name % Owned Company Name % Owned | | | | Harebell Meadows and Hartburn Grange Residents Management | | | --- | --- | --- | --- | --- | --- | | | | Broadleaf Park (Rownhams) Management Company Limited 4 | | | 18 | | Bryant Homes Scotland Limited 100% | aylor Wimpey (General Partner) Limited 100% | | | Company Limited | | | George Wimpey East Scotland Limited 100% | aylor Wimpey (Initial LP) Limited 100% | Broadway Fields Residents Management Company Limited 1 Hay Common Management Company Limited 4 | | | | | George Wimpey West Scotland Limited 100% | aylor Wimpey Scottish Limited Partnership 100% | Broughton Gate (Milton Keynes) Management Company | 3 | Haybridge (Wells) Management Company Limited 4 | | Limited London and Clydeside Estates Limited 100% Whatco England Limited 100% Brunswick Dock (Liverpool) Management Company Limited* 26 Hayes Green Management Company Limited 3 London and Clydeside Holdings Limited 100% Wilcon Homes Scotland Limited 100% Buckingham Park (Weedon Hill) Management Company 3 Heritage Park Gravesend Residents Association (No.1) Limited 1 Strada Developments Limited 50% Limited Buckton Fields (Northampton) Apartment Management 14 Heritage Park Gravesend Residents Association (No.2) Limited 1 Other entities incorporated in the United Kingdom, unless otherwise stated, and the Group’s ownership share are shown below. Company Company Name % Owned Registered Office Buckton Fields (Northampton) Estate Management Company 14 Heritage Park Gravesend Residents Association (No.3) Limited 1 Bishops Park Limited 50% 11 Tower View, Kings Hill, West Malling, ME19 4UY Limited Bishop’s Stortford North Consortium Limited 33.14% Bath House, 6-8 Bath Street, Bristol, BS1 6HL 2 Capital Court Property Management Limited* 10 Heritage Park Gravesend Residents Association (No.4) Limited 1 Bromley Park (Holdings) Limited 50% Kent House, 14-17 Market Place, London, W1W 8AJ Cliddesdon Reach Management Company Limited 1 Heritage Park Gravesend Residents Association (No.5) Limited 1 Bromley Park Limited Clover House (Cranbrook) Management Company Limited 4 Hethersett Residents Management Company Limited 8 Countryside 27 Limited 50% Countryside House, The Drive, Great Warley, Brentwood, CM13 3AT Coatham Vale and Berrymead Gardens Residents 19 Humberstone Residents Estate Management Company Limited 7 Emersons Green Urban Village Limited 54.44% 250 Aztec West, Almondsbury, Bristol, BS32 4TR Management Company Limited Gallagher Bathgate Limited 50% Gallagher House, Gallagher Business Park, Warwick, CV34 6AF Coed Issa Management Company Limited 8 Hunters Meadow Residents Association Limited 3 | Greenwich Millennium Village Limited 50% | Countryside House, The Drive, Great Warley, Brentwood, CM13 3AT | Concept (EA) Management Company Limited 3 Jasmine Park (Whirley) Management Company Limited 1 | | | | --- | --- | --- | --- | --- | | Haydon Development Company Limited 19.27% | 6 Drakes Meadow, Penny Lane, Swindon, SN3 3LL | Coopers Grange (Bishop Stortford) Residents Management | 8 | K Reach (EA) Management Company Limited 3 | | Morrison Land Development Inc 100% | 9366, 49 St NW, Edmonton, AB T6B 2L7, Canada | Company Ltd | | | Coppice Place Management Company Limited 3 Kentmere Place Residents Association Limited 1 | Newcastle Great Park (Estates) Limited | 50% | 3rd Floor Citygate, St. James’ Boulevard, | | | | | --- | --- | --- | --- | --- | --- | | | | Newcastle upon Tyne, NE1 4JE | Coronation Square Residents Management Company Limited 12 Kesgrave K Management Company Limited 1 | | | | North Swindon Development Company Limited 28.35% | | 6 Drakes Meadow, Penny Lane, Swindon, SN3 3LL | Cotswold View Residents Association Limited 1 | Kingsbourne (Nantwich) Community Management Company | 8 | Limited Padyear Limited 50% Hanson House, 14 Castle Hill, Maidenhead, SL6 4JJ Crookham Park (Church Crookham) Management Company 27 Kingsley Grange (Wickford) Residents Association Limited 8 Quedgeley Urban Village Limited 50% 250 Aztec West, Almondsbury, Bristol, BS32 4TR 4 Limited* St George Little Britain (No.1) Limited 50% Berkeley House, 19 Portsmouth Road, Cobham, KT11 1JG Denne Road Management Company Limited 1 Leawood (Management) Company Limited* 1 St George Little Britain (No.2) Limited Diglis Water Estate Management Company Limited 1 Lion Mills (EA) Management Company Limited 3 | aylor Wimpey de España S.A.U. 100% | C/Aragón 223-223 A, 07008 Palma de Mallorca, Spain | | | | | --- | --- | --- | --- | --- | | | | Dunton Green Management Company (No.1) Limited 1 | Longshore and Shoreview Residents Management Company | 19 | | aylor Woodrow (Gibraltar) Limited 100% | 17 Bayside Road, Gibraltar | | | | Limited Weaver Developments (Woodfield Plantation) Limited 50% Quay Point, Lakeside Boulevard, Doncaster, DN4 5PL Dunton Green Management Company (No.2) Limited 1 Macintosh Mills Car Park (Management) Limited 1 Wisley Property Investments Limited 100% 190 Elgin Avenue, George Town, KY1-9008, Cayman Islands Earls Court Farm Worcester Residents Management Company 15 Maidenfields Estate Residents Management Company Limited 20 Limited Edlogan Wharf Community Interest Company 1 Manor Court (Prescot) Management Company Limited 1 Elgar Place Management Company Limited 1 Manor Park Sprowston Residents Management Company 8 Limited Emberton Grange Management Company London 1 Mayfield Gardens Management Company Limited 3 Taylor Wimpey plc Annual Report and Accounts 2022 205 T T T A T T T T V A A A A 204 Taylor Wimpey plc Annual Report and Accounts 2022 Taylor Wimpey plc Annual Report and Accounts 2022205 Financial statements Particulars of subsidiaries, associates and joint ventures continued Company Name Reference Company Name Reference Melton Manor (Melton Mowbray) Residents Company Limited 7 Sherford 1A Parcel 5 Management Company Limited 12 Millers Brow Management Company Limited 1 Sherford 1B Parcel EFGJ Management Company Limited 12 Monmore Grange Management Company Limited 1 Sherford Estate Management Company Limited 12 Mountbatten Mews (Honiton) Management Company Limited 4 Southgate Maisonettes (27 and 28) Limited 1 Netherton Grange Residents Management Company Limited 3 Speakman Gardens Residents Association Limited 1 Newbridge Gardens Management Company (No 1) Limited 5 St Crispin Area H Management Company Limited 1 Newbridge Gardens Management Company (No 2) Limited 5 St Dunstans Apartment Management Company Limited* 1 3 Newcastle Great Park (Estates) Limited* 21 Stanbury View (Parklands) Management Company Limited 17 4 Newcastle Great Park Management Company Limited* 21 Stonebrooke Gardens Management Company Limited 23 3 NGP Management Company (Cell A) Limited* 21 Stortford Fields Estate Management Company Limited 11 3 NGP Management Company (Cell D) Limited* 21 Stour Valley Management Phase 1 Limited 29 3 NGP Management Company (Cell E) Limited* 21 Summer Downs Residents Management Company Limited 1 3 NGP Management Company (Cell F) Limited* 21 Sunderland House (Handley Gardens) Resident Management 3 Company Limited 3 NGP Management Company Residential (Cell G) Limited* 21 Telford Millennium Management Company Limited 1 3 NGP Management Company (Commercial) Limited* 21 Tent 1 Management Company Limited 13 3 NGP Management Company (Town Centre) Limited* 21 Thamesview (Plots 425 to 560) Residents Association Limited 1 Nightingale Park Residents Association Limited 8 The Asps Residents Management Company Limited 18 North Wharf Gardens Management Company Limited 1 The Avenue Number 4 Management Company Limited 1 Nunnery Fields (Management) Limited 5 The Avenue Number 5 Management Company Limited 1 Nunnery Fields (Management No.1) Limited 5 The Beaumont Park Management Company Limited* 1 Oak Park (Cheddar) Management Company Limited 3 The Breme Park (Bromsgrove) Management Company Limited 1 Oaklands Residents Management Company Limited 20 The Burleigh Rise Management Company Limited* 1 Orchard Grove (Comeytrowe) Management Company Limited 4 The Coach Houses (Northampton) Residents Association Limited 1 Orsett Village Residents Association Limited 8 The Copse (Mawsley) Management Company Limited 7 Pages Priory Phase Two (Leighton Buzzard) Management 3 The Grange at Newton Management Company Limited 3 Company Limited Palace View Apartments Management Company Limited 1 The Grange Number One Desborough Management Company 1 Limited Parc Nedd Residents Association Limited 1 The Highgate (Durham) Management Company Limited* 1 Park Farm (South East) Management Company Limited 22 The Junction Flat Management Company Limited* 1 Parklands (Woburn Two) Management Company Limited 3 The Laurels (Kirby Cross) Management Company Limited 1 Parsons Chain Residents Management Company Limited 17 The Merriemont Management Company Limited* 1 Pathfinder Place (Melksham) Management Company Limited 4 The Middlefield Springs Management Company Limited 1 Peartree Village Management Limited 9 The Orchard (Hadham) Residents Management Company 8 Limited Plas Brymbo Landscaping Management Company Limited 1 The Orchard (Willow Street) Management Company Limited 1 Plas Brymbo Management Company Limited 1 The Orchard Grove (Playground) Management Company 1 Limited* Poppyfields (Benwick) Residents Association Limited 1 The Pennington Wharf Community Management Company 8 Limited Postmark Residents Management Company Limited 1 The Ruxley Towers Management Company Limited* 1 Q.Hill (EA2) Management Company Limited 8 The Seasons Residents Association Limited 1 Queen Eleanor's Heights Residents Association Limited 1 The Silverdale 9 Flats Management Company Limited 1 Redhill Gardens Residents Management Company Limited 1 The Silverdale 9 Houses Management Company Limited 1 3 Redhill Park Limited* 28 The Spinney Residents Management Company Limited* 1 Regency Place (Shiplake) Management Company Limited 1 The Swan Gardens Management Company Limited* 1 Romans Gate (Old Stratford) Residents Association Limited 1 The Weekley Wood Management Company Limited* 1 Saxon Park Management Company Limited 1 The Wharf Lane (Solihull) No.1 Management Company Limited 1 Sherford 1A Parcel 4 Management Company Limited 12 The Whinmoor (Leeds) Management Company Limited 11 206 Taylor Wimpey plc Annual Report and Accounts 2022 206 Taylor Wimpey plc Annual Report and Accounts 2022 Particulars of subsidiaries, associates and joint ventures continued Company Name Reference Company Name Reference The Willowfields Management Company Limited* 1 Willow Lake (Bletchley Two) Management Company Limited 3 The Woodlands At Shevington Management Company Limited 13 Willowcroft (SM) Management Company Limited 7 Company Name Reference Company Name Reference The Woodway Gate Management Company No.1 Limited 1 Windermere Grange Residents Management Company Limited 17 Melton Manor (Melton Mowbray) Residents Company Limited 7 Sherford 1A Parcel 5 Management Company Limited 12 ision at Meanwood Residents Management Company Limited 18 Winnington Village Community Management Company Limited 13 Millers Brow Management Company Limited 1 Sherford 1B Parcel EFGJ Management Company Limited 12 Webheath (Redditch) Management Company Limited 12 Wool Gardens (Crewkerne) Management Company Limited 4 Monmore Grange Management Company Limited 1 Sherford Estate Management Company Limited 12 Westbridge Park (Auckley) Management Company Limited 13 Woodside Vale (Leeds) Residents Management Company 18 Limited Mountbatten Mews (Honiton) Management Company Limited 4 Southgate Maisonettes (27 and 28) Limited 1 Whalley Road (Barrow) Management Company Limited 8 Wootton Meadows Residents Association Limited 1 Netherton Grange Residents Management Company Limited 3 Speakman Gardens Residents Association Limited 1 White House Farm (Emersons Green) Management Company 4 Wrexham Road Garden Village Management Company Limited 8 Newbridge Gardens Management Company (No 1) Limited 5 St Crispin Area H Management Company Limited 1 Limited Newbridge Gardens Management Company (No 2) Limited 5 St Dunstans Apartment Management Company Limited* 1 Whitehouse Farm Apartments (Emersons Green) Management 24 Wyrley View Residents Management Company Limited 25 3 Newcastle Great Park (Estates) Limited* 21 Stanbury View (Parklands) Management Company Limited 17 Company Limited 4 Newcastle Great Park Management Company Limited* 21 Stonebrooke Gardens Management Company Limited 23 Willow Lake (Bletchley One) Management Company Limited 3 3 | NGP Management Company (Cell A) Limited* | 21 Stortford Fields Estate Management Company Limited 11 | | | --- | --- | --- | | | 3 | * Private Limited Company | | NGP Management Company (Cell D) Limited* | 21 Stour Valley Management Phase 1 Limited 29 | 1 | 60% Ownership 3 2 NGP Management Company (Cell E) Limited* 21 Summer Downs Residents Management Company Limited 1 17.2% Ownership 3 3 50% Ownership NGP Management Company (Cell F) Limited* 21 Sunderland House (Handley Gardens) Resident Management 3 4 Group representatives on Board only Company Limited 3 | NGP Management Company Residential (Cell G) Limited* | | 21 Telford Millennium Management Company Limited 1 | | | | | | --- | --- | --- | --- | --- | --- | --- | | | 3 | | Reference Registered Address Reference Registered Address | | | | | NGP Management Company (Commercial) Limited* | 21 Tent 1 Management Company Limited 13 | | | | | | | | 3 | | 1 | Gate House, Turnpike Road, High Wycombe, | 16 | Imperial Place, Building 2, Maxwell Road, Borehamwood, | | NGP Management Company (Town Centre) Limited* | 21 Thamesview (Plots 425 to 560) Residents Association Limited 1 | | | | | | | | | | | Buckinghamshire, HP12 3NR | | WD6 1JN | Nightingale Park Residents Association Limited 8 The Asps Residents Management Company Limited 18 2 Newton House, 2 Sark Drive, Newton Leys, Milton Keynes, 17 Second Floor, Fore 2, Fore Business Park, Solihull, North Wharf Gardens Management Company Limited 1 The Avenue Number 4 Management Company Limited 1 MK3 5SD B90 4SS Nunnery Fields (Management) Limited 5 The Avenue Number 5 Management Company Limited 1 3 Queensway House, 11 Queensway, New Milton, 18 Unit 7, Portal Business Park, Easton Lane, Tarporley, Nunnery Fields (Management No.1) Limited 5 The Beaumont Park Management Company Limited* 1 BH25 5NR Cheshire, CW6 9DL Oak Park (Cheddar) Management Company Limited 3 The Breme Park (Bromsgrove) Management Company Limited 1 4 Fisher House, 84 Fisherton Street, Salisbury, SP2 7QY 19 Cheviot House, Beaminster Way, Newcastle upon Tyne, NE3 Oaklands Residents Management Company Limited 20 The Burleigh Rise Management Company Limited* 1 2ER Orchard Grove (Comeytrowe) Management Company Limited 4 The Coach Houses (Northampton) Residents Association Limited 1 5 94 Park Lane, Croydon, CR0 1JB 20 antage Point, 23 Mark Road, Hemel Hempstead, HP2 7DN Orsett Village Residents Association Limited 8 The Copse (Mawsley) Management Company Limited 7 6 1 London Road, Brentwood, Essex, CM14 4QP 21 3rd Floor, Citygate, St. James' Boulevard, Newcastle upon Pages Priory Phase Two (Leighton Buzzard) Management 3 The Grange at Newton Management Company Limited 3 Tyne, NE1 4JE Company Limited 7 2 Hills Road, Cambridge, CB2 1JP 22 Foundation House, Coach & Horses Passage, Tunbridge Palace View Apartments Management Company Limited 1 The Grange Number One Desborough Management Company 1 Wells, TN2 5NP Limited 8 RMG House, Essex Road, Hoddesdon, EN11 0DR 23 Boulton House, 17-21 Chorlton Street, Manchester, Parc Nedd Residents Association Limited 1 The Highgate (Durham) Management Company Limited* 1 M1 3HY Park Farm (South East) Management Company Limited 22 The Junction Flat Management Company Limited* 1 | | | | 9 | Countryside House, The Drive Great Warley, Brentwood, | 24 | 730 Waterside Drive, Aztec West, Almondsbury, Bristol, BS32 | | --- | --- | --- | --- | --- | --- | --- | | Parklands (Woburn Two) Management Company Limited 3 The Laurels (Kirby Cross) Management Company Limited 1 | | | | Essex, CM13 3AT | | 4SD | | Parsons Chain Residents Management Company Limited 17 The Merriemont Management Company Limited* 1 | | | 10 | 4 Capital Court, Bitten Road, Sowton Industrial Estate, Exeter, | 25 137 Newhall Street, Birmingham, B3 1SF | | | Pathfinder Place (Melksham) Management Company Limited 4 The Middlefield Springs Management Company Limited 1 | | | | EX2 7FW | | | | Peartree Village Management Limited 9 | The Orchard (Hadham) Residents Management Company | 8 | 11 | Gateway House, 10 Coopers Way, Southend-On-Sea, SS2 | 26 | 384a Deansgate, Manchester, Greater Manchester, | | | Limited | | | 5TE | | M3 4LA | | Plas Brymbo Landscaping Management Company Limited 1 The Orchard (Willow Street) Management Company Limited 1 | | | 12 | Whittington Hall, Whittington Road, Worcester, | 27 | ictoria House, 178-180 Fleet Road, Fleet, GU51 4DA | Worcestershire, WR5 2ZX | Plas Brymbo Management Company Limited 1 | The Orchard Grove (Playground) Management Company | 1 | | | | | | --- | --- | --- | --- | --- | --- | --- | | | Limited* | | 13 | Chiltern House, 72-74 King Edward Street, Macclesfield, | 28 | 5 Market Yard Mews, 194-204 Bermondsey Street, London, | | | | | | Cheshire, SK10 1AT | | SE1 3TQ | | Poppyfields (Benwick) Residents Association Limited 1 | The Pennington Wharf Community Management Company | 8 | | | | | | | Limited | | 14 | Unit 2, The Osiers Business Park, Laversall Way, Leicester, | 29 | 2nd Floor, 154-155 Great Charles Street, Queensway, | | | | | | LE19 1DX | | Birmingham, B3 3LP | Postmark Residents Management Company Limited 1 The Ruxley Towers Management Company Limited* 1 15 Redrow House, St Davids Park, Ewloe, Flintshire, CH5 3RX Q.Hill (EA2) Management Company Limited 8 The Seasons Residents Association Limited 1 Queen Eleanor's Heights Residents Association Limited 1 The Silverdale 9 Flats Management Company Limited 1 Redhill Gardens Residents Management Company Limited 1 The Silverdale 9 Houses Management Company Limited 1 3 Redhill Park Limited* 28 The Spinney Residents Management Company Limited* 1 Regency Place (Shiplake) Management Company Limited 1 The Swan Gardens Management Company Limited* 1 Romans Gate (Old Stratford) Residents Association Limited 1 The Weekley Wood Management Company Limited* 1 Saxon Park Management Company Limited 1 The Wharf Lane (Solihull) No.1 Management Company Limited 1 Sherford 1A Parcel 4 Management Company Limited 12 The Whinmoor (Leeds) Management Company Limited 11 Taylor Wimpey plc Annual Report and Accounts 2022 207 V V V 206 Taylor Wimpey plc Annual Report and Accounts 2022 Taylor Wimpey plc Annual Report and Accounts 2022207 Financial statements # Five year review (unaudited) | | 2008 £m | 2007 £m | 2006 £m | 2005 £m | 2004 £m | | --- | --- | --- | --- | --- | --- | | Revenue | 4,419.9 | 4,284.9 | 2,790.2 | 4,341.3 | 4,082.0 | | Profit on ordinary activities before net finance costs and tax | 827.5 | 698.2 | 282.4 | 858.8 | 828.8 | | Adjust for: Share of results of joint ventures | 15.9 | 5.4 | 7.9 | 8.0 | 5.3 | | Adjust for: Exceptional items | 80.0 | 125.0 | 10.0 | (14.3) | 46.1 | | Operating profit | 923.4 | 828.6 | 300.3 | 850.5 | 880.2 | | Net finance costs | (15.5) | (24.0) | (25.9) | (28.9) | (23.4) | | Profit for the financial year before taxation and exceptional items | 907.9 | 804.6 | 274.4 | 821.6 | 856.8 | | Exceptional items | (80.0) | (125.0) | (10.0) | 14.3 | (46.1) | | Taxation charge including taxation on exceptional items | (184.3) | (124.1) | (47.4) | (162.0) | (154.1) | | Profit for the financial year | 643.6 | 555.5 | 217.0 | 673.9 | 656.6 | | Balance sheet | | | | | | | Intangible assets | 4.2 | 6.6 | 8.1 | 7.0 | 3.2 | | Property, plant and equipment | 17.3 | 21.7 | 24.0 | 25.6 | 21.6 | | Right-of-use assets | 26.3 | 26.5 | 27.5 | 27.4 | 27.1 | | Interests in joint ventures | 74.0 | 85.4 | 82.2 | 55.3 | 48.3 | | Other financial assets | 10.0 | 10.0 | - | - | - | | Non-current trade and other receivables | 12.2 | 27.5 | 26.3 | 43.7 | 55.7 | | Non-current assets (excluding tax) | 144.0 | 177.7 | 168.1 | 159.0 | 155.9 | | Inventories | 5,169.6 | 4,945.7 | 4,534.7 | 4,198.0 | 4,168.2 | | Other current assets (excluding tax and cash) | 191.2 | 168.2 | 189.1 | 161.0 | 134.7 | | Trade and other payables excluding land creditors | (735.8) | (587.7) | (571.4) | (634.9) | (684.8) | | Land creditors | (395.0) | (314.2) | (347.9) | (339.9) | (359.5) | | Lease liabilities | (7.3) | (7.0) | (6.4) | (7.6) | (8.2) | | Provisions | (106.7) | (125.4) | (70.6) | (72.7) | (76.9) | | Net current assets (excluding tax and net cash) | 4,116.0 | 4,079.6 | 3,727.5 | 3,301.9 | 3,193.5 | | Trade and other payables excluding land creditors | (76.7) | (137.1) | (131.8) | (110.4) | (112.2) | | Land creditors | (330.6) | (492.2) | (328.0) | (389.3) | (379.1) | | Retirement benefit obligations | (29.9) | (37.3) | (89.5) | (85.0) | (133.6) | | Lease liabilities | (19.7) | (20.4) | (21.6) | (20.3) | (19.2) | | Provisions | (183.6) | (119.7) | (59.9) | (55.7) | (93.4) | | Non-current liabilities (excluding debt) | (640.5) | (806.7) | (630.8) | (660.7) | (737.5) | | Cash and cash equivalents | 952.3 | 921.0 | 823.0 | 630.4 | 734.2 | | Bank and other loans | (88.5) | (84.0) | (103.8) | (84.7) | (90.1) | | Taxation balances | 18.8 | 26.4 | 32.6 | (38.1) | (29.2) | | Basic net assets | 4,502.1 | 4,314.0 | 4,016.8 | 3,307.8 | 3,226.8 | | Statistics | | | | | | | Basic earnings per share | 18.1p | 15.3p | 6.3p | 20.6p | 20.1p | | Adjusted basic earnings per share | 19.8p | 18.0p | 6.5p | 20.3p | 21.3p | | Tangible net assets per share | 126.5p | 118.1p | 110.0p | 100.5p | 98.3p | | Dividends paid (pence per share) | 9.06 | 8.28 | - | 18.34 | 15.28 | | Number of ordinary shares in issue at the year end (millions) | 3,557.0 | 3,648.6 | 3,645.4 | 3,283.1 | 3,278.1 | | UK short term landbank (plots) | 82,830 | 85,376 | 77,435 | 75,612 | 75,995 | | UK average selling price (£000) | 313 | 300 | 288 | 269 | 264 | | UK completions (homes including JVs) | 13,773 | 14,087 | 9,609 | 15,119 | 14,933 | 208 Taylor Winney plc Annual Report and Accounts 2008 # 2023 Annual General Meeting ## Dear Shareholder ### Annual General Meeting (AGM) The 2023 AGM of Taylor Wimpey plc (the Company) will be held in the Gerrards Suite at the Crowne Plaza Gerrards Cross, Oxford Road, Beaconsfield, HP9 2XE on Thursday 27 April 2023 at 10:30am. ### Attending the AGM If you wish to attend and vote at the AGM in person, please bring with you the 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. Directions to the venue can be found on the reverse of your notice of availability. Light refreshments comprising tea, coffee and pastries will be available from 9:30am and after the end of the AGM. We will not permit behaviour that may interfere with anyone's security, safety, comfort or the good order of the meeting. Anyone who does not comply may be removed from the meeting. ### Audiocast This year we are pleased to provide an electronic facility for shareholders who are unable to attend the AGM in person, to follow the AGM remotely and submit questions to the Board on the business of the meeting, should they wish to do so. This can be accessed through the AGM section of our website at www.taylorwimpey.co.uk/2023AGM and following the link to the audiocast on the day of the AGM. You will then be prompted to enter your 11-digit 'Investor Code' (IVC), including any leading zeros, and 'PIN'. Your PIN is the last four digits of your IVC. This will authenticate you as a shareholder. More information on how to join the AGM can be found on page 212. Please note that shareholders joining the audiocast will not be able to vote in real time via the audiocast platform. To ensure your vote is counted, you are encouraged to appoint the Chair of the AGM as your proxy as early as possible. Further information on how to submit your proxy can be found in the 'how to vote' section below. ### How to vote If you would like to vote on the resolutions in this Notice of Meeting but cannot attend the AGM in person, or prefer to register your vote in advance, please register your proxy vote online at www.agmattraces.com. In order for your proxy vote to count, our Registrar must receive your proxy vote no later than 10:30am on Tuesday 25 April 2023. If you would like a proxy form, please contact our Registrar on +44 (0)371 664 0300 and they will send one in the mail for you to complete and return. 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. If you are a CREST member, register your vote through the CREST system by completing and transmitting a CREST proxy instruction as described in the procedural notes on pages 218 and 219. If you are an institutional investor you may also be able to appoint a proxy electronically via the Proxymity platform, a process which has been agreed by the Company and approved by the Registrar. For further information regarding Proxymity, please go to www.proxymity.io. ### 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 Tuesday 25 April 2023. 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. Should shareholders have further questions on the answers given to a question at the AGM, they may submit follow-up questions by email to CoSec@Taylorwimpey.com. ### 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, Ishaq Kayani Group General Counsel and Company Secretary Taylor Wimpey plc Annual Report and Accounts 2023 209 Shareholder information Notice of Annual General Meeting # Notice of Annual General Meeting Notice is hereby given of the eighty eighth Annual General Meeting (the AGM) of the Company to be held on Thursday 27 April 2023 at 10:35am in the Gerrards Suite at the Crowne Plaza Gerrards Cross, Oxford Road, Beaconsfield, HP9 2XE for the purposes set out below. # Ordinary business # Ordinary resolutions: 1. To receive the Directors' Report, Strategic Report, Directors' Remuneration Report, Independent Auditors' Report and Financial Statements for the year ended 31 December 2022. 2. To declare due and payable on 12 May 2023 a final dividend of 4.78 pence per ordinary share of the Company for the year ended 31 December 2022 to shareholders on the register at close of business on 31 March 2023. 3. To re-elect as a Director, Irene Dorner. 4. To re-elect as a Director, Robert Noel. 5. To re-elect as a Director, Jennie Daly. 6. To re-elect as a Director, Chris Carney. 7. To re-elect as a Director, Humphrey Singer. 8. To re-elect as a Director, Lord Jitesh Gadhia. 9. To re-elect as a Director, Solla Gamble. 10. To elect as a Director, Mark Castle. 11. To elect as a Director, Clodagh Moriarty. 12. 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. 13. Subject to the passing of resolution 12, to authorise the Audit Committee to determine the remuneration of the external Auditors on behalf of the Board. 14. 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 £11,773,283 (such amount to be reduced by any allotments or grants made under paragraph b below, in excess of £11,773,283); and b. comprising equity securities (as defined in the Companies Act 2006) up to a nominal amount of £23,596,587 (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, as permitted by the rights of those securities; and, in both cases, 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 26 July 2024) 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: 15. That if resolution 14 is passed, the Board be authorised 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 14, 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; b. in the case of the authority granted under paragraph a of resolution 14 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 £3,531,986; and c. to the allotment of equity securities or sale of treasury shares (otherwise than under paragraph a or paragraph b above) up to a nominal amount equal to 20% of any allotment of equity securities or sale of treasury shares from time to time under paragraph b above, such authority to be used only for the purposes of making a follow-on offer which the Board of the Company determines to be of a kind contemplated by paragraph 3 of Section 28 of the Statement of Principles on Disapplying Pre-Erection Rights most recently published by the Pre-Erection Group prior to the date of this notice. 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 26 July 2024) 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. 16. That if resolution 14 is passed, the Board be authorised in addition to any power granted under resolution 15 to allot equity securities (as defined in the Companies Act 2006) for cash under the authority granted under paragraph a of resolution 14 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 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. 210 Taylor Wimpey plc Annual Report and Accounts 2023 apply to any such allotment or sale, such authority to be: a. limited to the allotment of equity securities or sale of treasury shares up to a nominal amount of £3,531,985, such authority to be used only for the purposes of financing (or refinancing, if the authority is to be used within 12 months after the original transaction) a transaction which the Board determines to be either an acquisition or a specified capital investment of a kind contemplated by the Statement of Principles on Disapplying Pre-Empction Rights most recently published by the Pre-Empction Group prior to the date of this Notice; and b. limited to the allotment of equity securities or sale of treasury shares (otherwise than under paragraph a above) up to a nominal amount equal to 20% of any allotment of equity securities or sale of treasury shares from time to time under paragraph a above, such authority to be used only for the purposes of making a follow-on offer which the Board determines to be of a kind contemplated by paragraph 3 of Section 2B of the Statement of Principles on Disapplying Pre-Empction Rights most recently published by the Pre-Empction Group prior to the date of this notice. Such authority to apply until the end of the next Annual General Meeting of the Company (or, if earlier, until the close of business on 26 July 2024) 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 authority had not expired. 17. 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(e) 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 353,198,510; 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 current 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 26 October 2024 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: 18. That the Directors' Remuneration Report for the year ended 31 December 2022, as set out on pages 124, 125 and 126 to 148 of the Annual Report and Accounts for the financial year ended 31 December 2022, be approved in accordance with Section 439 of the Companies Act 2006. 19. That the Directors' Remuneration Policy, the full text of which is set out on pages 128 to 134 of the Annual Report and Accounts for the financial year ended 31 December 2022, be approved in accordance with Section 439A of the Companies Act 2006, to take effect from the date of this Annual General Meeting. 20. That in accordance with Sections 366 and 367 of the Companies Act 2006, the Company and all companies which are its subsidiaries when this resolution is passed are authorised to: a. make political donations to political parties and/or independent election candidates not exceeding £250,000 in aggregate; b. make political donations to political organisations other than political parties not exceeding £250,000 in aggregate; and 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. 21. That the Taylor Wimpey Sharesave Plan 2023 (the Sharesave) summarised in Appendix A to this Notice and the rules of which are produced to this meeting and for the purposes of identification initialed by the Chair, be approved and the Board be authorised to do all such acts and things necessary or desirable to establish the Sharesave; and that the Board be authorised to adopt further plans based on the Sharesave but modified to take account of local tax, exchange control or securities laws in overseas territories, provided that any cash or shares made available under such further plans are treated as counting against any limits on individual or overall participation in the Sharesave. 22. That the rules of the Taylor Wimpey Share Incentive Plan (the SIP) in its amended form summarised in Appendix B to this Notice and which are produced to this meeting and for the purposes of identification initialed by the Chair, be approved and the Board be authorised to do all such acts and things necessary or desirable to implement the SIP in its amended form; and that the Board be authorised to adopt further plans based on the SIP but modified to take account of local tax, exchange control or securities laws in overseas territories, provided that any cash or shares made available under such further plans are treated as counting against any limits on individual or overall participation in the SIP. ### Special resolution: 23. 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 Ishaq Kayani Group General Counsel and Company Secretary Taylor Wimpey plc Gale House Tumpke Road High Wycombe Buckinghamshire HP12 3NH Registered in England and Wales No. 296805 1 March 2023 Taylor Wimpey plc Annual Report and Accounts 2023 211 Shareholder information Notice of Annual General Meeting continued ## Explanatory notes to the resolutions The notes on the following pages explain the proposed resolutions. Resolutions 1 to 14 and 18 to 22 are proposed as ordinary resolutions. This means that for each of those resolutions to be passed, more than half of the votes cast must be in favour of the resolution. Resolutions 15 to 17 and 23 are proposed as special resolutions. This means that for each of those resolutions to be passed, at least three quarters of the votes cast must be in favour of the resolution. Notwithstanding this, the Board is mindful of the Investment Association's Public Register which identifies any listed company that has received 20% or more votes against a resolution put to shareholders. If such circumstance arose, the Board would adhere to the requirements under the 2018 UK Corporate Governance Code (the Code). Voting on the resolutions at the AGM will be by way of a poll, rather than on a show of hands. This is a more transparent method of voting as shareholder votes are counted according to the number of shares held and this will ensure an exact and definitive result. ### 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 2022 and the reports of the Directors, namely the Strategic report, Directors' Report, Directors' Remuneration Report, and Auditors' 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 4.78 pence per ordinary share in respect of the year ended 31 December 2022. If approved at the AGM, the dividend will be paid on 12 May 2023 to shareholders who are on the Register of Members at the close of business on 31 March 2023. Dividend Re-Investment Plan Subject to shareholders approving the dividend as set out in resolution 2 at the Annual General Meeting scheduled for 27 April 2023, 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 2022 (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. ## How to join the audiocast We are pleased to be able to provide an electronic facility for shareholders unable to attend the AGM in person to follow the AGM remotely and submit questions to the Board on the business of the meeting, should they wish to do so. This can be accessed through the AGM section of our website at www.taylorwimpey.co.uk/2023AGM and following the link to the audiocast on the day of the AGM. Once you have followed the link, you will then be prompted to enter your unique 11 digit 'Investor Code' (I/C), including any leading zeros, and 'PIN'. Your PIN is the last 4 digits of your I/C. This will authenticate you as a shareholder. Your I/C can be found on your share certificate, or Signal Shares users (www.signalshares.com) will find this under 'Manage your account' when logged in to the Signal Shares portal. You can also obtain this by contacting Link Group, our Registrar, by calling +44 (0) 371 277 1020. Lines are open from 9:00am to 5:30pm Monday to Friday, calls are charged at the standard geographic rate and will vary by provider. Calls outside the UK will be charged at the applicable international rate. Access to the audiocast will be available 30 minutes before the start of the AGM, although you will not be able to submit questions until the meeting is declared open. If you wish to appoint someone to join the audiocast on your behalf, please contact Link Group on +44 (0) 371 277 1020 in order to obtain their I/C and PIN. It is suggested that you do this as soon as possible and at least 48 hours (excluding non-business days) before the meeting. If your shares are held within a nominee and you wish to attend the AGM via the audiocast, you will need to contact your nominee as soon as possible. Your nominee will need to have completed a corporate letter of representation and presented this to Link Group, our Registrar, no later than 72 hours before the start of the meeting in order that they can obtain your unique I/C and PIN to enable you to attend the audiocast. ### Audiocast The electronic meeting will be broadcast in audio format with presentation slides. Once logged in, and at the commencement of the meeting, you will be able to listen to the proceedings of the meeting on your device, as well as being able to see the slides of the meeting (which will include the resolutions to be put forward to the meeting); these slides will progress automatically as the meeting progresses. ### Questions Shareholders listening to the AGM via the audiocast will be invited to ask questions by the Chair. Shareholders may submit a question via the Q&A box which is found on the bottom right hand side of the player. Once you have typed your question please click the 'Submit' button. Shareholders are also welcome to submit questions in advance of the meeting by email to CoSec@taylorwimpey.com. Please provide any advance questions by 10:30am on Tuesday 25 April 2023. A full transcript of the questions asked at the AGM and the answers provided will be made available on the Company's website as soon as practicable following the conclusion of the AGM. ### Requirements An active internet connection is required at all times in order to allow you to join the meeting, submit questions and listen to the audiocast. It is your responsibility to ensure you remain connected for the duration of the meeting. 212 Taylor Wimpey plc Annual Report and Accounts 2023 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 2022 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 Wallington Street, Leeds, LS1 4DL, email: shares@linkgroup.co.uk or call +44 (0)371 664 0381. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The Registrar is open between 9:00am and 5:30pm, Monday to Friday excluding public holidays in England and Wales. # Resolutions 3-11: Election and re-election of Directors In accordance with the Code, which states that all directors should be subject to annual election by shareholders, the Board has resolved that all Directors of the Company will retire and, being eligible, offer themselves for election or re-election, as appropriate, by shareholders at the Annual General Meeting. 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 124 to 148 of the Annual Report and Accounts. Full biographical information concerning each Director can be found on pages 88 to 90. The following summary information is given in support of the Board's proposal for each Director standing for election or re-election: # Irene Dorner - offers himself for re-election Irene was appointed as a Non Executive Director and Chair Designate on 1 December 2019 and formally assumed the position of Chair on 26 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. As explained in more details on pages 8, 95 and 107, Irene will step down as Chair, of both the Board and the Nomination and Governance Committee, and from membership of the Remuneration Committee, at the conclusion of the Annual General Meeting. She will thereafter continue to serve on the Board as a non-independent Non Executive Director in accordance with the Code provisions in such circumstances. # Robert Noel - offers himself for re-election Robert has been a Non Executive Director since 1 October 2019; the Company's Senior Independent Director since 21 April 2020; and was appointed as the Board's Employee Champion on 26 April 2022. The Board is satisfied that he is independent in character and judgement in applying his expertise at meetings of the Board and of the Audit, Nomination and Governance, and Remuneration Committees, and that he will be able to allocate sufficient time to the Company to discharge his responsibilities effectively. Rob has experience as a Chair and as a Chief Executive of listed companies, and has particularly deep property expertise which assists the Board in assessing large-scale land opportunities. As explained in more detail on pages 9, 95 and 108, Rob will succeed Irene Dorner as Chair at the conclusion of the 2023 Annual General Meeting. At that time, he will also assume the Chair of the Nomination and Governance Committee; and will, in accordance with the Code, step down from the Audit Committee. # Jennie Daly - offers himself for re-election Jennie was appointed Chief Executive following the conclusion of the 2022 Annual General Meeting, having previously been the Group Operations Director since 20 April 2018. # Chris Carney - offers himself for re-election Chris has been the Group Finance Director since 20 April 2018. # 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 Chaire) 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 Gadha - 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 (of which he was appointed Chair on 26 April 2022) 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. He has extensive remuneration committee experience and serves as Chair of the Remuneration Committees of both Compare The Market Limited and Rolls-Royce Holdings plc. # Solla Grimble - offers herself for re-election Solla 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. Solla has significant financial, risk, technology and property experience. # Mark Castle - offers himself for election Mark was appointed as a Non Executive Director on 1 June 2022. 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. Mark brings significant operational experience in all aspects of the construction sector, including as Chief Operating Officer of Mace Finance Ltd until 2021. # Clodagh Moriarty - offers herself for election Clodagh was appointed as a Non Executive Director on 1 June 2022. The Board is satisfied that she is independent in character and judgement in applying her expertise at meetings of the Board and the Nomination and Governance Committee, and that she will be able to allocate sufficient time to the Company to discharge her responsibilities effectively. Clodagh has 20 years of varied customer-focused experience across retail, strategy, digital transformation and e-commerce. 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 112 and 113, 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 12: 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 2023 Annual General Meeting until the conclusion of the next general meeting at which accounts are laid before shareholders. The Board recommends the re-appointment of PwC as the Company's external Auditors. Taylor Wimpey plc Annual Report and Accounts 2023 213 Shareholder information Notice of Annual General Meeting continued Resolution 13: Authorisation of the Audit Committee to agree on behalf of the Board the remuneration of the General 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 2022 are given in Note 6 on page 173 of the Annual Report. Resolution 14: Authority to allot shares The Directors wish to renew the existing authority to allot unissued shares in the Company, which was granted at the Company's last Annual General Meeting held on 26 April 2022 and which is due to expire at the conclusion of this Annual General Meeting. Accordingly, paragraph a of resolution 14 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 £11,773,265 (representing 1,177,328,367 ordinary shares). This amount represents approximately one third of the issued ordinary share capital of the Company as at 27 February 2023, 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 14 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 £23,546,567 (representing 2,354,656,734 ordinary shares), as reduced by the nominal amount of any shares issued under paragraph a of resolution 14. This amount (before any reduction) represents approximately two thirds of the issued ordinary share capital of the Company as at 27 February 2023, the latest practicable date prior to publication of this Notice of Meeting. The Company holds 25 million shares in treasury, as described more fully on pages 149 and 150. The authorities sought under paragraphs a and b of resolution 14 will expire at the earlier of 26 July 2024 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 three quarters of the votes cast to be in favour. Resolutions 15 and 16: Authority to dis-apply pre-emption rights Resolutions 15 and 16 would give the Directors the power to allot ordinary shares (or sell any ordinary shares which the Company holds in treasury) for cash (other than pursuant to an employee share scheme) without first offering them to existing shareholders pro rata to their existing shareholdings, as permitted by the Articles and as described below. The Company follows the principles set out by The Pre-Emption Group and has taken the opportunity to increase the proportion of issued capital (excluding treasury shares) which may be allotted on the basis contemplated by resolutions 15 and 16, in each case as permitted in the Statement of Principles on Disapplying Pre-Emption Rights most recently published by the Pre-Emption Group prior to the date of this notice (the Pre-emption Principles). The power set out in resolution 15 seeks to renew the Directors' power to allot shares or grant rights to subscribe for, or convert securities into, shares or sell treasury shares where they propose to do so for cash (other than pursuant to an employee share scheme) otherwise than to existing shareholders pro rata to their holdings (i.e. non pre-emptively), as permitted by the Articles. The power will be limited to: a. the allotment of shares for cash in connection with a rights issue, to allow the Directors to make appropriate exclusions and other arrangements to resolve legal or practical problems which, for example, might arise in relation to overseas shareholders; b. the allotment of shares and treasury shares for cash up to an aggregate nominal value of £3,531,985 being approximately 10 percent of the issued ordinary share capital (excluding treasury shares) at 27 February 2023, the latest practicable date prior to publication of this Notice of Meeting; and c. the allotment of shares and treasury shares for cash up to an aggregate nominal value of £706,397, being approximately 2 percent of the issued ordinary share capital (excluding treasury shares) at 27 February 2023, the latest practicable date prior to publication of this Notice of Meeting, for the purposes of making a follow-on offer which the Board determines to be of a kind contemplated by paragraph 3 of Section 2B of the Pre-emption Principles. Resolution 16 is a special resolution which seeks to give the Directors power to make non-pre-emptive issues of ordinary shares in connection with acquisitions and other capital investments as contemplated by the Pre-emption Principles. This power is intended to give the Directors flexibility in managing the Company's capital resources and is in addition to that proposed by resolution 15. It would be limited to allotments or sales of shares and treasury shares for cash up to: (i) an aggregate nominal value of £3,531,985, being approximately 10 percent of the issued ordinary share capital (excluding treasury shares) at 27 February 2023, the latest practicable date prior to publication of this Notice of Meeting; and (ii) an aggregate nominal value of £706,397, being approximately 2 percent of the issued ordinary share capital (excluding treasury shares) at 27 February 2023, the latest practicable date prior to publication of this Notice of Meeting, for the purposes of making a follow-on offer which the Board determines to be of a kind contemplated by paragraph 3 of Section 2B of the Pre-emption Principles. If given, these authorities will expire at the conclusion of the Annual General Meeting in 2024 or at the close of business on 26 July 2024, whichever is the earlier (unless previously renewed, varied or revoked by the Company in a general meeting). The Board will continue to seek to renew these authorities at each Annual General Meeting in accordance with best practice. Resolution 17: Authority to make market purchases of shares This resolution authorises the Company to make market purchases of its own ordinary shares as permitted by the Act. 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 27 February 2023. The minimum price (exclusive of expenses) which may be paid for an ordinary share is 1 pence per ordinary share. The maximum price to be paid on any exercise of the authority would not exceed the highest of: (i) 100% of the average of the middle market quotations for the Company's ordinary shares for the five business days immediately preceding the date of the purchase; and (ii) the higher of the price of the last independent trade and the highest current independent bid on the trading venues where the purchase is carried out. Shares purchased pursuant to these authorities could be held as treasury shares, which the Company can re-issue quickly and cost-effectively, providing the Company with additional flexibility in the management of its capital base. The total number of shares held 214 Taylor Wimpsey plc Annual Report and Accounts 2023 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 27 February 2023, the Company holds 25 million shares in treasury. This is a standard resolution, sought by the majority of public listed companies at Annual General Meetings. As advised in last year's Annual Report and Accounts, the Board utilised the power during 2022 to return excess capital to its shareholders of £100 million through buying back 116.9 million shares, of which 25 million are being held in treasury and the remaining 91.0 million have been cancelled. That share buyback is expected to benefit shareholders through the opportunity for increased future dividends per share on the remaining shares. The Board currently intends that the shares held in treasury will be used for future obligations of the Company in respect of its employee share schemes, and are currently being used to meet the exercise of Shareeave options, as described in more detail in Note 26 on page 191. The Directors have no present intention of exercising this authority other than for the reasons stated above, but will keep the matter under review, and would do so only after careful consideration, taking into account market conditions, the cash reserves of the Company, the Company's share price, appropriate gearing levels, other investment opportunities and the overall financial position of the Company. The authority will be exercised only if the Board believe that to do so would result in an increase in earnings per share and would be likely to promote the success of the Company for the benefit of its shareholders as a whole. The total number of options and conditional share awards to subscribe for ordinary shares outstanding as at the close of business on 27 February 2023 was 29,666,405, representing approximately 0.8% of the issued ordinary share capital of the Company as at that date and approximately 0.9% 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 26 October 2024 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 in favour. Resolution 18 and 19: Approval of the Directors' Remuneration Report and the Remuneration Policy The Remuneration Committee of the Board (the Committee) is seeking shareholders' approval of the Directors' Remuneration Report and the new Directors' Remuneration Policy (the Directors' Remuneration Policy) in resolutions 18 and 19, which will each 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 current Directors' Remuneration Policy, which was approved by shareholders at the Company's 2020 Annual General Meeting when it was proposed for its latest three-yearly vote; and the proposed Directors' Remuneration Policy, which is proposed under Resolution 19 for approval for three years from the date of the Annual General Meeting). This vote on the Directors' Remuneration Report is an advisory one only. The shareholders are separately asked to approve the Directors' Remuneration Policy which is set out on pages 128 to 134 of the Annual Report and Accounts 2022. It is intended that this will take effect immediately after the Annual General Meeting and will replace the existing policy that was approved by shareholders in 2020 which is due to expire at the 2023 Annual General Meeting. It is anticipated that the Directors' Remuneration Policy will be in force for three years. ### Resolution 20: Authority to make political donations In order to comply with its obligations under the Companies Act 2006 and to avoid any inadvertent infringement of that Act, the Board wishes to renew its existing authority for a general level of political donation and/or expenditure. Resolution 20 seeks to renew the existing authority for the Company to make political donations and incur political expenditure. The Companies Act 2006 requires this authority to be divided into three heads (as set out in resolution 20) with a separate amount specified as permitted for each. An amount not exceeding £250,000 for each head of the authority has been proposed. In accordance with the Companies Act 2006, resolution 20 extends approval to all of the Company's subsidiaries. This authority will expire at the conclusion of the next Annual General Meeting of the Company unless renewal is sought at that meeting. The Company and the Group do not make any donations to political parties or organisations and do not intend to going forward, but do support certain industry-wide bodies such as the Home Builders Federation in the UK. Whilst the Board does not regard this as political in nature, in certain circumstances such support together with donations made for charitable or similar purposes could possibly be treated as a donation to a political organisation under the relevant provisions of the Companies Act 2006. For example, a donation to a humanitarian charity which may also operate as a political lobby, sponsorship, subscriptions, paid leave to employees fulfilling public duties and payments to industry representative bodies could constitute a donation to a political organisation within the current definitions in the Companies Act 2006. Details of the Company's and the Group's charitable donations appear on page 50 and 51 of the Annual Report and Accounts 2022. ### Resolution 21: Taylor Wimpey Savings-Related Share Option Plan The Taylor Wimpey Savings-Related Share Option Plan (the Sharesave) was last adopted by shareholders at the Company's Annual General Meeting in 2013, for a period not exceeding 10 years. The Company is now seeking approval to replace the Rules with new and updated Rules reflecting current legislation and best practice including to extend the term for its operation by a further 10 years. The existing Sharesave, which is approved by HM Revenue & Customs (HMRC), is open to all UK employees with three months' service and offers the benefits set out on page 131 of this Annual Report and Accounts. The Company first offered Sharesave in 1982 and it has proved extremely popular with employees. Around 45 percent of our UK employees currently participate in Sharesave, which encourages employees to take an interest in the Company's share price performance, and helps to align their interests with those of shareholders. Shareholder approval is being sought to extend the life of the Sharesave until 26 April 2023 (being 10 years from the date of the 2023 AGM) to enable the Company to continue to operate the Sharesave. The Remuneration Committee has also taken the opportunity to update the Sharesave Rules, taking into account modern practice. Resolution 21 seeks approval for the new Rules of the Sharesave. A summary of the proposed new Rules is set out in Appendix A on pages 216 and 217 and a copy of the new Sharesave Rules will be available for inspection by shareholders on the National Storage Mechanism (accessible at www.data.fca.org.uk/#/term/nationalstoragemechanism) from the date of publication of this Notice of Meeting and at the place of the Annual General Meeting from 15 minutes prior to its commencement until its conclusion. ### Resolution 22: Taylor Wimpey Share Incentive Plan The Taylor Wimpey Share Incentive Plan (the SIP) was last adopted by shareholders at the Company's AGM in 2013, for a period not exceeding 10 years. The Company is now seeking approval to amend the SIP Rules to reflect current legislation and best practice. Taylor Wimpey plc Annual Report and Accounts 2023 215 Shareholder information Notice of Annual General Meeting continued including to extend the term for its operation by a further 10 years. Monthly savings by an employee under all savings contracts linked to options granted under any tax-advantaged savings-related share The existing SIP, which is approved by HM Revenue & Customs option plan may not exceed the statutory maximum, which is (HMRC), is open to all UK employees with three months’ service and currently set at £500 per month. The Board may set a lower limit in offers the benefits set out on page 131 of this Annual Report. The relation to any particular grant. At the end of the three-year or Company first offered a SIP in 2004 and it has proved extremely five-year savings contract, employees may either withdraw their popular with employees. Around 40 percent of our UK employees savings on a tax-free basis or use their savings to acquire ordinary currently participate in the SIP, which encourages employees to take fully paid shares in the Company (“Shares”). an interest in the Company’s share price performance, and helps to align their interests with those of shareholders. Exercise price Shareholder approval is also being sought to extend the life of the The proceeds of the savings contract can be used to exercise an SIP until 26 April 2033 (being 10 years from the date of the 2023 option to acquire Shares at an exercise price per Share set when AGM) to enable the Company to continue to operate the SIP. The employees were invited to participate in the Sharesave. The exercise Remuneration Committee has also taken the opportunity to update price may not be manifestly less than 80 percent (or such other the Rules of the SIP in some respects, taking into account current percentage as may be permitted by the relevant legislation) of the legislation and best practice. market value of a Share at the date of invitation. Resolution 22 seeks approval for the new Rules of the SIP. The exercise price will normally be set using prices taken from a period of 42 days beginning on: (a) the first dealing day after the A summary of the proposed new Rules of the SIP is set out in announcement of the Company’s results for any period; (b) the day Appendix B on page 217 and a copy of the SIP Rules will be on which an announcement is made of an amendment to the available for inspection by shareholders on the National Storage Sharesave legislation or such legislation comes into force; (c) the day Mechanism (accessible at www.data.fca.org.uk/#/nsm/ on which a new HMRC-approved savings contract is announced; or nationalstoragemechanism) from the date of publication of this Notice (d) to the extent that share dealing restrictions apply in any of the and at the place of the Annual General Meeting from 15 minutes prior preceding three periods, the dealing day on which such dealing to its commencement until its conclusion. restrictions are lifted, unless the Board determines that exceptional ### Special resolution circumstances exist which justify the issue of invitations under the Sharesave at another time. Special resolutions require at least a 75% majority of votes cast to be cast in favour. Overall limit Resolution 23: Notice of general meetings The Sharesave may operate over new issue Shares, treasury Shares or Shares purchased in the market. The rules of the Sharesave The Companies (Shareholders’ Rights) Regulations 2009 have provide that the number of Shares which may be issued to satisfy increased the notice period required for general meetings of the options or awards granted under the Sharesave and any other Company to 21 clear days unless shareholders agree to a shorter employee share plan adopted by the Company in any ten-year rolling notice period, which cannot be less than 14 clear days. At the last period may not exceed 10 percent of the issued ordinary share Annual General Meeting, a resolution was passed approving the capital of the Company from time to time. Company’s ability to call general meetings (other than Annual General Meetings, which will continue to be held on at least 21 clear days’ Shares transferred out of treasury will count towards this limit for so notice) on not less than 14 clear days’ notice. As this approval will long as this is required under institutional shareholder guidelines. expire at the conclusion of this Annual General Meeting, resolution 23 However, options over, and awards of, Shares which are relinquished proposes its renewal. The shorter notice period of 14 clear days or lapse will be disregarded for the purposes of this limit. would not be used as a matter of routine for any general meeting, but Exercise of options only where the flexibility is merited by the business of a particular meeting and is thought to be to the advantage of shareholders as a Ordinarily, an option may be exercised within six months of the date whole. The renewed approval will be effective until the Company’s that the savings contract matures. Options not exercised by the end next Annual General Meeting, when it is intended that a similar of this period will lapse. However, special provisions apply upon resolution will be proposed. cessation of employment and in the case of certain corporate events. Note that in order to be able to call a general meeting on less than 21 Cessation of employment clear days’ notice, the Company must make available electronic Options will normally lapse immediately upon a participant ceasing to voting to all shareholders in respect of that meeting. be employed by, or hold office with, the Group. However, if a participant ceases to hold office or employment because of injury, Appendix A disability, redundancy, retirement or the sale of the individual’s Summary of the proposed new Rules of The TaylorWimpey plc employing company or business out of the Group, their option will Sharesave Plan 2023 (the “Sharesave”): not lapse and may be exercised early for a period of up to six months after the participant’s cessation of office or employment. If a Eligibility participant dies, their option may be exercised for 12 months after Each time that the Board decides to issue an invitation to employees their death by their personal representatives. to participate in the Sharesave, all UK resident tax-paying employees and full time directors of the Company and its subsidiaries (the Corporate events “Group”) participating in the Sharesave must be offered the opportunity In the event of certain types of corporate event involving a change of to participate. Other employees of the Group may be permitted to control or winding-up of the Company, any outstanding options may participate at the Board’s discretion. If the Board so determines in line be exercised early. Alternatively, participants may agree with the with the relevant legislation governing the Sharesave, employees who acquiring company to exchange their options for equivalent options are invited to participate must have completed a minimum qualifying over shares in a different company. If the change of control is an period of employment before they can participate (which currently can internal reorganisation of the Group and participants are offered be up to 5 years before the grant date). equivalent options over shares in a different company, their options will not become exercisable and, if not so exchanged, will lapse. Savings contract Under the Sharesave, eligible employees may enter into a linked Adjustments savings contract to make savings over a three or five-year period. In the event of a variation of the Company’s share capital, the Board 216 216 Taylor Wimpey plc Annual Report and Accounts 2022 may adjust the number or description of Shares subject to options subsidiaries participating in the SIP must be offered the opportunity and/or the exercise price applicable to options in such manner as it to participate. Other employees of the Company and its subsidiaries considers appropriate. may be permitted to participate at the Board’s discretion. Employees who are invited to participate must have completed a minimum Rights attached to Shares qualifying period of employment (as determined by the Board in line Options granted under the Sharesave will not confer shareholder with the relevant legislation) before they can participate. rights on a participant (including an entitlement to vote or to receive Free Shares dividends) until that participant has exercised their option and received the underlying Shares. Any Shares issued will rank equally There will be a holding period of between three and five years (or with other Shares then in issue (except for rights arising by reference such other period as may be permitted by the relevant legislation to a record date prior to their issue). from time to time) during which the participant cannot withdraw the Free Shares from the SIP Trust unless the participant ceases to be Amendments employed by the Group. The precise duration of this holding period The Board may, at any time, amend the Sharesave rules in any will be determined by the Board each time Free Shares are awarded. respect. The prior approval of the Company’s shareholders must be The Board, in its discretion, may provide that the Free Shares will be obtained for any amendment which is made to the advantage of forfeited if the participant ceases to be employed by the Group other eligible employees and/or participants and relates to the provisions than because of death, injury, disability, redundancy, retirement or relating to eligibility, individual or overall limits on Shares under the the sale of the individual’s employing company or business out of the Sharesave, the basis for determining the entitlement to, and the Group (each a “SIP Good Leaver Reason”). terms of, Shares provided under the Sharesave, the adjustments that Partnership Shares may be made in the event of any variation in the share capital of the Company and/or the rule relating to such prior approval. There are, The Board may allow an employee to use pre-tax salary to buy however, exceptions to this requirement to obtain shareholder Partnership Shares at their then market value. Once acquired, approval for any minor amendments to benefit the administration of Partnership Shares may be withdrawn from the SIP by the participant the Sharesave, to take account of the provisions of any relevant at any time. legislation, or to obtain or maintain favourable tax, exchange control Matching Shares or regulatory treatment for any participant or member of the Group. An amendment which would be to the material disadvantage of The Board may, in its discretion, offer free Matching Shares to an participants in respect of subsisting rights under the Sharesave will employee who has purchased Partnership Shares. There is a holding only take effect with the approval of a majority of the participants who period of between three and five years (or such other period as may respond to an invitation to indicate their approval. be permitted by the relevant legislation from time to time) during which the participant cannot withdraw the Matching Shares from the Non-transferability SIP Trust, unless the participant ceases to be employed by the Options are not transferable other than to the participant’s personal Group. The precise duration of this holding period will be determined representatives in the event of the participant’s death. by the Board each time Matching Shares are awarded. The Board, in its discretion, may provide that the Matching Shares will be forfeited if Benefits not pensionable the participant ceases to be employed by the Group other than for a Any benefits received under the Sharesave are not pensionable. SIP Good Leaver Reason or if the related Partnership Shares are withdrawn from the SIP. Termination Reinvestment of dividends No options may be granted under the Sharesave more than ten years after the date it is approved by the Company’s shareholders. The Board may allow or require a participant to reinvest the whole or part of any dividends paid on ordinary shares held in the SIP on Appendix B their behalf. Dividend Shares must be held in the SIP Trust for no less than three years, unless the participant ceases to be employed Summary of the proposed new Rules of The TaylorWimpey plc by the Group. Share Incentive Plan (the “SIP”): Corporate events Grant of SIP awards In the event of a general offer being made to shareholders (or a Under the SIP, eligible employees may be: (a) awarded free ordinary similar takeover event taking place), participants will be able to direct shares up to a value of £3,600 (“Free Shares”) each year; (b) offered the trustee of the SIP Trust as to how to act in relation to their the opportunity to buy ordinary shares up to a maximum value of the ordinary shares held in the SIP. In the event of an internal lesser of £1,800 and 10% of the employee’s pre-tax salary each year reorganisation, any ordinary shares held by participants may be (“Partnership Shares”); (c) given up to 2 free ordinary shares replaced by equivalent shares in a new holding company. (“Matching Shares”) for each Partnership Share bought; and/or (d) allowed or required to purchase ordinary shares using dividends Variation of capital received on ordinary shares held in the SIP (“Dividend Shares”). The Board may increase these limits in the future should the relevant Ordinary shares acquired on a variation of the share capital of the legislation change the maximum levels of participation referred to Company will usually be treated in the same way as the ordinary above. shares originally acquired or awarded under the SIP in respect of which the rights were conferred and as if they were acquired or SIP Trust awarded at the same time. The SIP operates through a UK resident trust (the “SIP Trust”). The Rights attaching to ordinary shares trustee(s) of the SIP Trust purchases or subscribes for ordinary shares that are awarded to or purchased on behalf of participants in Any ordinary shares issued to the trustee of the SIP Trust will rank the SIP. A participant will be the beneficial owner of any ordinary equally with other ordinary shares then in issue (except for rights shares held on their behalf by the trustee(s) of the SIP Trust. arising by reference to a record time or date prior to the time or date of issue). In the event of a rights issue, participants will be able to Eligibility direct the trustee(s) of the SIP Trust as to how to act in respect of the ordinary shares held in the SIP on their behalf. Each time that the Board decides to make an award under the SIP, all UK resident tax-paying employees of the Company and its Taylor Wimpey plc Annual Report and Accounts 2022 217 Shareholder information Notice of Annual General Meeting continued # Overall limits The SIP may operate over new issue ordinary shares, treasury shares or ordinary shares purchased in the market. The rules of the SIP provide that the number of ordinary shares which may be issued to satisfy awards granted in any ten-year rolling period under the SIP and any other employee share plan adopted by the Company may not exceed 10% of the issued ordinary share capital of the Company from time to time. # Amendments The Board may, at any time, amend the provisions of the SIP in any respect. The prior approval of the Company's shareholders must be obtained in the case of any amendment which is made to the advantage of eligible employees and/or participants and relates to the provisions relating to eligibility, individual or overall limits, the basis for determining the entitlement to, and the terms of, awards, the adjustments that may be made in the event of any variation to the share capital of the Company and/or the rule relating to such prior approval. There are, however, exceptions to this requirement to obtain shareholder approval for any minor amendments to benefit the administration of the SIP, to take account of the provisions of any legislation, or to obtain or maintain favourable tax, exchange control or regulatory treatment for any participant or member of the Group. # Non-transferability Awards (other than where indicated otherwise above) are not transferable other than to the participant's personal representatives in the event of their death. # Benefits not pensionable Benefits received under the SIP are not pensionable. # Termination No awards may be granted under the SIP more than ten years after the date it is approved by the Company's shareholders. # Procedural notes 1. To be entitled to attend and vote at the Annual General Meeting (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 6:30pm on Tuesday 25 April 2023 (or, in the event of any adjournment, on the date which is two working days before the time of the adjourned meeting). 2. As at 27 February 2023 (being the latest practicable date prior to the publication of this Notice of Meeting) the Company's issued share capital consisted of 3,556,985,103 ordinary shares, carrying one vote each. The Company holds 25,060,000 shares in treasury. Therefore, the total voting rights in the Company as at 27 February 2023 were 3,531,985,103. 3. A shareholder entitled to attend and vote at the Annual General Meeting may appoint a proxy or proxies to exercise all or any of their rights at the Annual General Meeting. 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, Central Square, 29 Wellington Street, Leeds, LS1 4DL, or, if you want to use an envelope the address to use is FREEPORT PKS, Central Square, 29 Wellington Street, Leeds, LS1 4DL or, electronically via the internet at www.algisaltheras.com or, if you are a member of CREST, via the service provided by Euroclear UK & International Limited at the electronic address provided in note 9, in each case no later than 10:30am on Tuesday 25 April 2023. 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 shareholder@unianellilinkgroup.co.uk, or by telephone on +44 (0) 371 884 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 of Meeting 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 Annual General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, they may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights. Such persons should direct any communications and enquiries to the registered holder of the shares by whom they were nominated and not to the Company or its Registrar. 7. The statement of the rights of shareholders in relation to the appointment of proxies in notes 3 and 4 above does not apply to Nominated Persons. The rights described in these notes can only be exercised by shareholders of the Company. 8. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so by using the procedures described in the CREST Manual. CREST personal members or other CREST sponsored members, and those CREST members who have appointed a service provider(s), should refer to 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 & International Limited's specifications, and must contain the information required for such instruction, as described in the CREST Manual (available via www.euroclear.com). The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer's agent (ID RA10) by 10:30am on Tuesday 25 April 2023. For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp applied to the message by the CREST Application Host) from which the issuer's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means. 10. The Company may treat as invalid a CREST Proxy instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001. If you are an institutional investor you may also be able to appoint a proxy electronically via the Proximity platform, a process which has been agreed by the Company and approved by the Registrar. For further information regarding Proximity, please go to www.proximity.io. Your proxy must be lodged by 10:30am on Tuesday 25 April 2023 in order to be considered valid or, if the meeting is adjourned, by the time which is 48 hours before the time of the adjourned meeting. Before you can appoint a proxy via this process you will need to have agreed to Proximity's associated terms and conditions. It is important that you read these carefully as you will be bound by them and they will govern the electronic appointment of your proxy. An electronic proxy appointment via the Proximity platform may be revoked completely by sending an authenticated message via the platform instructing the removal of your proxy vote. 11. Any corporation which is a member can appoint one or more 218 Taylor Wimpsey plc Annual Report and Accounts 2023 corporate representatives who may exercise on its behalf all of its powers as a member provided that, if two or more representatives purport to vote in respect of the same shares: (i) if they purport to exercise the power in the same way as each other, the power is treated as exercised in that way; and (ii) in other cases, the power is treated as not exercised. 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 Auditors' Report and the conduct of the audit) that are to be laid before the Annual General Meeting; or - Any circumstances 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 Annual General Meeting 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 Annual General Meeting relating to the business of the Annual General Meeting. The Company must cause to be answered any such question relating to the business being dealt with at the Annual General Meeting 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 Annual General Meeting 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 shareholdersequities@linkgroup.co.uk, or by telephone on +44 (0) 371 664 0200 (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 5.00pm. Monday to Friday excluding public holidays in England and Wales). 15. A copy of this Notice, and other information required by Section 311A of the Companies Act 2006, can be found at www.taylorwimpey.co.uk/corporate. 16. Voting on all resolutions at this year's Annual General Meeting will be conducted by way of a poll. The results of the poll will be announced via a Regulatory Information Service and made available at www.taylorwimpey.co.uk/corporate as soon as practicable after the Annual General Meeting. 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 Annual General Meeting. 18. The documents listed below are available for inspection at an agreed time at the Company's registered office. If you wish to inspect these documents, email Collier@taylorwimpey.com during normal business hours (excluding Saturdays, Sundays and public holidays). Copies of these documents will also be available before and during the Annual General Meeting. - Copies of the Executive Directors' service contracts. - Copies of the letters of appointment of the Chair of the Board and the Non Executive Directors. - A copy of the full Annual Report and Accounts of the Company for the year ended 31 December 2022, including the Directors' Remuneration Report and Directors' Remuneration Policy referred to in resolution 19. This document is also available on our corporate website. - Rules of the proposed new Taylor Wimpey Savings-Related Share Option Plan. - Rules of the Taylor Wimpey Share Incentive Plan, amended as proposed. Since shareholders will be able to follow the Annual General Meeting remotely via an audicoast, these documents will be made available on the electronic facility for the duration of the meeting. The documents will also be available to view on the Annual General Meeting section of our website at www.taylorwimpey.co.uk/2023ADM. 19. Personal data provided by shareholders at or in relation to the Annual General Meeting (including names, contact details, votes and Investor Codes), will be processed in line with the Company's privacy policy which is available at www.taylorwimpey.co.uk/privacy-policy. 20. Under sections 338 and 338A of the Companies Act 2006, shareholders meeting the threshold requirements in those sections have the right to require the Company: i. to give, to shareholders of the Company entitled to receive notice of the Annual General Meeting, notice of a resolution which may properly be moved and is intended to be moved at that meeting, and/or ii. to include in the business to be dealt with at that meeting any matter (other than a proposed resolution) which may be properly included in the business. A resolution may properly be moved or a matter may properly be included in the business unless: a. (in the case of a resolution only) it would, if passed, be ineffective (whether by reason of inconsistency with any enactment or the Company's constitution or otherwise). b. it is defamatory of any person, or c. it is frivolous or vexatious. Such a request may be in hard copy form or in electronic form, must identify the resolution of which notice is to be given or the matter to be included in the business, must be authenticated by the person or persons making it, must have been received by the Company no later than 15 March 2023, being the date six clear weeks before the Annual General Meeting, or if later, the time at which Notice of the Annual General Meeting is given and (in the case of a matter to be included in the business only) must be accompanied by a statement setting out the grounds for the request. ### 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: - Enables the Company to reduce printing and postage costs. - Allows faster access to information and enables shareholders to access documents on the day they are published on the Company's website. - Reduces the amount of resources consumed, such as paper, and lessens the impact of printing and mailing activities on the environment. Taylor Wimpey plc Annual Report and Accounts 2007 219 Shareholder information Shareholder facilities The Company provides hard copy documentation to those shareholders who have requested this and is, of course, happy to provide hard copies to any shareholders upon request. The Company's website is www.taylorwimpey.co.uk and shareholder documentation made available electronically is generally accessible at www.taylorwimpey.co.uk/corporate. # Electronic communications The Company also encourages shareholders to elect to receive notification of the availability of Company documentation by means of an email. Shareholders can sign up for this facility by registering on our website at www.taylorwimpey.co.uk/corporate/investors/shareholder-centre. # Online facilities for shareholders You can access our Annual Report and Accounts, half year and full year statements, and copies of recent shareholder communications online via our website. You can manage your shareholding in Taylor Wimpey plc 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 plc 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 any special dividends) unless or until revoked. # CREST The Company offers shareholders who hold their Taylor Wimpey plc 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 2022 final dividend) and any special dividends, are available at www.signalshares.com or on request from the Registrar, Link Group, 10th Floor, Central Square, 20 Wellington Street, Leeds, LS1 4DL, email: shares@linkgroup.co.uk, tel: +44 (0)21 854 0281. 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 shares and CREST Taylor Wimpey plc shares can be held in CREST accounts, which do not require share certificates. This may make it quicker and easier for some shareholders to settle stock market transactions. Shareholders who deal infrequently may, however, prefer to continue to hold their shares in certificated form and this facility will remain available for the time being, pending the likely general introduction of dematerialised shareholdings in due course. # Taylor Wimpey share price Our share price is available on our website. # Gifting shares to charity If you have a small holding of Taylor Wimpey plc shares, you may wish to consider gifting them to charity. You can do so through 'ShareGift', which is administered by a registered charity, the Orr Mackintosh Foundation Limited. Shares gifted are re-registered in the name of the charity, combined with other donated shares and then sold through stockbrokers who charge no commission. The proceeds are distributed to a wide range of recognised charities. For further details, please contact Link Group or approach ShareGift directly at www.sharegift.org or telephone them on +44 (0)20 7590 3737. # Unsolicited approaches to shareholders and 'Bailer Room' scams 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 plc 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 freephone number from the UK and lines are open Monday to Friday, 8:00am to 6:00pm and Saturday 9:00am to 1:00pm. # Annual General Meeting 10:30am on 27 April 2023 at The Gerrards Suite at the Crowne Plaza Gerrards Cross, Oxford Road, Beaconsfield, HP9 2XE. Proxy instructions must be received by 10:30am on Tuesday 25 April 2023. # Group General Counsel and Company Secretary Ishao Kayari Gate House Tumpike Road High Wycombe Buckinghamshire HP12 3NR Tel: +44 (0)1494 558323 220 Taylor Wimpey plc Annual Report and Accounts 2023 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 Piz www.blacksunpic.com Printed by Park Communications on FSC® certified paper. Carbon neutral Designing ClimatePartner.com/TONE-ZNS-003 SGS SGS Group SGS Group SGS Group SGS Group SGS Group SGS Group SGS Group SGS Group SGS Group SGS Group SGS Group SGS Group SGS Group SGS Group SGS Group SGS Group SGS Group SGS Group SGS Group SGS Group SGS Group SGS Group SGS Group SGS Group SGS Group SGS Group ![img-22.jpeg](img-22.jpeg) # 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: shareholderenquiries@limgroup.co.uk Tel: +44 (0)371 664 0500 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 # Brokers Ologroup Global Markets Limited Bank of America # Principal operating addresses # UK Taylor Wimpey plc Gate House Tumpke Road High Wycombe Buckinghamshire HP12 3NR Tel: +44 (0)1494 558323 Website: www.taylorwimpey.co.uk Registered in England and Wales number 298885 Details of all our operating locations are available on our website www.taylorwimpey.co.uk Taylor Wimpey UK Limited Gate House Tumpke Road High Wycombe Buckinghamshire HP12 3NR Tel: +44 (0)1494 558323 # Spain Taylor Wimpey de España S.A.U Collegón 223-223A 07006 Palma de Mallorca Mallorca - Spain Tel: +34 971 706570 www.taylorwimpey.co.uk