Pete Redfern, Chief Executive, commented: “2017 was another strong year for Taylor Wimpey and we enter 2018 in a good position with positive forward momentum. We have been encouraged by early trading patterns at the start to the year and despite some wider macroeconomic uncertainty, consumer confidence remains robust and market fundamentals are solid.
We grew volumes to nearly 15,000 homes during the year and are focused on delivering much-needed homes across the UK to the highest quality and standard. Importantly, we are pleased to see that our investment in customer service has resulted in a notable improvement in our customer satisfaction scores.
Looking ahead, we are focused on making continual operational improvements across the business. We enter 2018 with a strong order book and are well positioned to make further progress against our medium term targets and in delivering long term value for shareholders”.
Good progress made on our financial targets and operational metrics in 2017
- £450.5 million total dividends paid in 2017 (2016: £355.9 million), with c.£500 million declared for 2018 (subject to shareholder approval)
- Record return on net operating assets** of 32.4% (2016: 30.7%)
- Further growth in operating profit* margin to 21.2% (2016: 20.8%)
- Completed a total of 14,842 homes, including Spain and joint ventures, up 4.6% (2016: 14,185)
- 3.5% increase in UK total average selling price to £264k (2016: £255k), excluding joint ventures
- Significant improvement in customer satisfaction metrics, with average scores in the last six months of over 90%
- Reduction in Annual Injury Incidence Rate per 100,000 employees and contractors to 152 (2016: 211)
Adjusted operating profit* in 2017 was £841.2 million and is up 10.1%, driven by improved performance in both the UK and the Spanish businesses.
Profit for the year at £555.3 million is down 5.8% with the improved underlying performance offset by the net exceptional charge of £105.0 million in relation to the leasehold provision recognised in the period.
UK current trading and outlook
We have made a good start to 2018 and are encouraged by solid levels of demand coming into the spring selling season. The fundamentals for new build housing in the UK remain good with strong customer confidence in our core geographies.
Customers continue to benefit from a competitive mortgage market and continued low interest rates. Help to Buy is a key differentiator for new build housing and remains popular with customers, enabling them to take the first step onto or move up the housing ladder. Customer demand and pricing in Central London remain stable.
The net private sales rate for the year to date (w/e 18 February 2018) remains high at 0.81, against a very strong comparator (2017 equivalent period: 0.91), and remains in line with our expectations and plans for 2018.
As at 18 February 2018, we were c.47% forward sold for private completions for 2018, with a total order book value of £1,968 million (2017 equivalent period: £1,978 million), excluding joint ventures. This order book represents 8,415 homes (2017 equivalent period: 8,573). In Central London c.52% of private completions for 2018 are forward sold, as at 18 February 2018 (2017 equivalent period: 58%). We prioritise getting outlets open efficiently and in the right way for our customers. As at 18 February 2018, we are building on 97% of our sites with implementable planning.
We expect underlying build cost increases during 2018 to be at a similar level to 2017, at around 3-4%.
Following the introduction of a number of changes to our customer service approach in early 2016, we have been particularly pleased to see a significant improvement in customer satisfaction, averaging a score of over 90% in the last six months. Ensuring that we get the product quality and service right for our customers is a key priority for us.
As previously announced, we will pay a total dividend in 2018 of c.£500 million, subject to shareholder approvals, and confirm our intention to make further material capital returns in 2019 and beyond.
Whilst we have seen no adverse impact on trading, we are conscious of the wider political and economic risks. We are confident that our well-capitalised balance sheet together with our high-quality landbank with outlets located in places where demand is high and where people want to live provides the flexibility and resilience needed to manage all types of market conditions through the cycle.