Half year results for the period ended 3 July 2016

Managing through the cycle - group strategy and returns

The business is well positioned to deliver a resilient performance through the cycle as we have consistently applied a clear set of strategic principles to all areas of our operations, the most important of which has been a focus on value and the long term. We have grown the business in a controlled way, with a strong view that there is a right scale for our business. We have invested selectively in land in high-quality locations where people want to live and this is supported by a strategic land pipeline which helps to mitigate risk and create and protect value. In addition to making progress towards all of our financial objectives, we have maintained capital discipline, returning c.£720 million to shareholders by way of total dividends since 2014. We believe that our approach to proactively managing the business through the cycle differentiates Taylor Wimpey and has positioned the business to perform well through all market conditions.

We have not seen any meaningful change in trading in the last month since the EU Referendum result, and customer confidence remains generally positive across most of our geographies. However, given the wider macro uncertainty, we are naturally cautious and believe it is prudent to take some additional steps to further mitigate downside risk, while still ensuring that the business is well placed to take advantage of opportunities which may arise. This approach is helped by the strength of our landbank, which allows us to be very selective. Immediately following the EU Referendum result, we increased our required investment margin and return expectations significantly when purchasing new land and reviewed significant work in progress and infrastructure spend. One month on, we are encouraged by the stability and resilience of the market and we believe the risk is starting to reduce.    

We remain focused on the increased medium term targets announced in May 2016. Having reviewed the targets in the light of recent uncertainty, we consider that the underlying metrics remain the best measures of performance for our business, and whilst we continue to believe that these targets are stretching, at this stage we are of the view that they are appropriate management goals. These target further improvement across three key areas in the period from 2016 to 2018:

·     An average annual return on net operating assets** of 30%

·     An average operating profit* margin of c.22%

·     A total of £1.3 billion of dividends to be paid in cash to shareholders over the period

Returns to shareholders

We have been clear that our Dividend Policy, as an output of our strategy, is inherently linked to the cyclical environment in which we operate and so comprises an ordinary dividend to be paid through all stages of the cycle and a special dividend to be paid at appropriate times in the cycle. We remain confident that we can continue to be significantly cash generative. This will enable us to sustain a significant ordinary dividend to shareholders on an annual basis through all stages of the cycle, including through a 'normal downturn'.

Accordingly, from 2017, and as previously announced in May 2016, subject to shareholder approval each year, the Company will pay an ordinary dividend of approximately 5% of Group net assets and which will be at least £150 million per annum. This Ordinary Dividend Policy was, prior to its announcement in May, the subject of prudent and comprehensive stress testing against various downside scenarios, which also included a reduction of 20% in prices and a 30% reduction in volumes. This Ordinary Dividend Policy is intended to provide a minimum annual return to shareholders throughout the cycle. The Maintenance Dividend Policy has remained in place for 2016, including for the 2016 interim dividend, following which it will be replaced by the Ordinary Dividend Policy as outlined above.

The payment of ordinary dividends will also continue to be supplemented by additional significant special dividends at appropriate times in the cycle. Since commencing the payment of special dividends in 2014, we have returned c.£600 million of special dividends to shareholders, including £300.2 million paid to shareholders in July 2016. Our Special Dividend Policy will pay out to shareholders the free cash generated by the Group after land investment, all working capital, taxation and other cash requirements of the business in executing our strategy in the near term, and once the Group's ordinary dividend have been met.

In 2016, shareholders will receive total dividends (including maintenance and special dividends) of c.£356 million or 10.91 pence per share.

As previously announced and subject to shareholder approval at the 2017 Annual General Meeting, we intend to pay £300 million to shareholders in July 2017 by way of a special dividend.

Accordingly, subject to shareholder approval at the 2017 Annual General Meeting, in 2017 shareholders will receive a total dividend of £450 million (c.13.8 pence per share), comprising an ordinary dividend of £150 million (c.4.6 pence per share) and a special dividend of £300 million (c.9.2 pence per share).

The Board confirms its intention to keep the mechanics of how the Company will pay special dividends, including the merits of undertaking a share buyback at some point in the future should it become appropriate to do so, under regular review.

Operational review

Taylor Wimpey plc is a UK-focused residential developer which also has operations in Spain. Our operational review is for the UK only as the majority of metrics do not apply to our Spanish business. A short summary of the Spanish business follows. The financial analysis is presented at Group level, which includes Spain, unless otherwise indicated.

Joint ventures are excluded from the operational review and Group financial review, unless stated otherwise. For the purpose of clarity, joint ventures are separated out in the Group financial review.

Our key performance metrics

Sales, completions and pricing

The UK housing market was positive in the first six months of 2016, with strong sales rates and solid house price growth. Overall, we estimate that market led house price growth for our regional mix was c.6% in the 12 months to 3 July 2016.

Whilst there were some regional variations, we saw a generally positive market across all geographies. Approximately 7% of our outlets are located inside the M25 which continued to have strong underlying fundamentals, particularly at the mid-price points and below. The central London market, whilst stable, was characterised by a slower sales rate, particularly at the upper end of this market.

In the first half of 2016, total home completions (excluding joint ventures) increased by 3.0% to 6,019 (H1 2015: 5,842). During the first half of 2016, we delivered 1,184 affordable homes (H1 2015: 1,112), equating to 19.7% of total completions (H1 2015: 19.0%). Our net private reservation rate for the first half of the year was 0.78 homes per outlet per week (H1 2015: 0.78). Cancellation rates remained very low at 12% (H1 2015: 11%). Average selling prices on private completions increased by 7.3% to £266k (H1 2015: £248k), once again benefiting from our focus on better quality locations. Our total average selling price increased by 5.8% to £238k (H1 2015: £225k).

First time buyers accounted for 41% of total sales (H1 2015: 39%) in the first half of 2016. Investor sales continued to be at a very low level at 4% (H1 2015: 7%).

During the first half of 2016 approximately 42% of total sales used the Help to Buy scheme, and we worked with 3,005 households to take the first step to home ownership or to move up the housing ladder (H1 2015: c.40% and 2,996). Approximately 78% of sales through Help to Buy in the first half of 2016 were to first time buyers (H1 2015: 77%). In the period, c.11% of sales in the London market used Help to Buy London, which launched in February 2016.

As at 3 July 2016 our order book represented 8,683 homes (28 June 2015: 8,120 homes) and had increased in value by 16.0% to £2,156 million (28 June 2015: £1,859 million), excluding joint ventures. The increase in the order book value was driven by strong demand in the period. We believe that the order book has broadly reached maximum scale and remains a key lever, giving us options and flexibility through all market conditions.

During the first half of 2016 we opened 59 new outlets (H1 2015: 74). As at 3 July 2016 we had 287 outlets (28 June 2015: 307) located in high-quality locations.

Customers

During the first half of 2016 we achieved a customer satisfaction score of 84.9% (H1 2015: 84.5%). We are making good progress in rolling out our new customer approach across the business with a focus on three main areas: our culture, management structure and process. We are implementing a training programme across the business, equipping those employees interacting with our customers with the right skills in order to deliver a consistently great service. We have also enhanced the structure of our Customer Service teams and completed the appointment of the newly created role of Head of Customer Services within each of our 24 regional businesses.

While still at the early stages of our business-wide rollout, with more work to do, we have received good feedback from customers and employees on our new approach. Customer service will remain a key priority for Taylor Wimpey in 2016 and on an ongoing basis.

Land and planning

Our short term landbank stands at c.78k plots, equating to c.5.8 years of supply at current completion levels. We have been broadly operating on a replacement basis in the short term landbank for a number of years and have had an extremely selective and targeted approach to further land investment. We continue to believe that the land market is structurally different in this cycle, evidenced by a land market which has remained historically benign despite house price growth. This has enabled us to continue to buy high-quality land at investment operating profit* margins of around 20%, and to increase our focus on driving a higher return on capital employed. The average cost of land as a proportion of average selling price remains low at 16.3%, affording significant protection.

In the first half of 2016 we acquired 3,110 plots in the short term land market (H1 2015: 3,620 plots), focused on where we can add value and seek to maximise the returns from our investments. In the period, we achieved a 1.7% upside to acquisition margins on completions from land acquired since 2009.

The average selling price in the UK short term owned landbank in the first half of 2016 increased by 7.2% to £254k (H1 2015: £237k), driven by the quality of additions and the improvement in the housing market.

We have the largest strategic pipeline in the sector which stood at c.104k potential plots as at 3 July 2016 (28 June 2015: c.107k potential plots). During the first six months of 2016 we converted a further 5,782 plots from the strategic pipeline to the short term landbank (H1 2015: 5,666 plots). We continue to invest in new opportunities, and in the first half of the year we added a net 2.9k new potential plots to the strategic pipeline (H1 2015: 3.4k). In the period, 53% of our completions were sourced from the strategic pipeline (H1 2015: 46%). Since 2014 we have converted over 25k plots from the strategic pipeline through the planning process, enhancing our short term landbank, both in terms of quality and margin.

We believe that the changes to the planning policy over the last five years have resulted in an improved environment. However, with scarce resources within some local authorities, we believe that we have not yet seen the full benefits flow through into the planning system. The amended Housing and Planning Act was introduced in May 2016. The detail of this legislation, including around Starter Homes, remains to be seen. 

Build costs, efficiency and product

During the first half of 2016 underlying build cost per unit increased to £129.4k (H1 2015: £118.9k). In the period the improved market resulted in underlying build cost increases (excluding house type mix impact) of c.3-4% year on year (H1 2015: c.5%). This was weighted towards labour, with materials largely keeping pace with the growth of the industry. Looking forward, and as previously announced, we anticipate underlying build costs will increase by 3-4% in 2016 as the rate of inflation on labour reduces.

We have improved our UK net operating asset turn^†* to 1.25 times (H1 2015: 1.21 times), benefitting from a low land cost as a percentage of average selling price in the short term owned landbank of 16.3% (H1 2015: 16.4%), as a result of higher margin short term landbuying and increased strategic conversion. The higher proportion of strategic land conversion results in higher work in progress spend due to these sites generally requiring greater infrastructure investment. Good progress continues to be made towards our medium term target of 30% average annual return on net operating assets** as set out in May 2016.

During the first half of 2016 we launched an open design competition with the Royal Institute of British Architects (RIBA), as part of our long term initiative, Project 2020, seeking architects to develop innovative ideas to create the house typology of the future. Project 2020 aims to explore and evaluate the potential trends of future homes. The winning team will work with us to enhance and improve the existing typology, helping to build a prototype for the future that is innovative and fully reflects customer lifestyles and expectations.

Health and safety

The health and safety of individuals on our sites will always be our top priority. Our Annual Injury Incidence Rate^†** (AIIR) for reportable injuries per 100,000 employees and contractors was 108 in the first half of 2016, against a record low of 68 in the first half of 2015. Our AIIR for major injuries per 100,000 employees and contractors was 36 in the first half of 2016 (H1 2015: 12). Although our AIIR remains below industry levels, we are committed to reducing it further.

People and skills

During the first half of 2016 we directly employed, on average, 4,622 people across the UK (H1 2015: 4,177). Our rolling 12 months voluntary employee turnover rate remained low, relative to history, at 13.3% (H1 2015: 13.5%).

We continue to invest in the skills and development of our employees across the business and to ensure that Taylor Wimpey attracts and retains the best people in the industry through the cycle. In the first six months of 2016 we introduced a new flexible benefit package for all employees and a new approach to flexible working, with maternity, paternity and adoption policies significantly enhanced.

We are pleased to report that Taylor Wimpey achieved a total of 57 Quality Awards (2015: 63) in the National House-Building Council's (NHBC) Pride in the Job Awards 2016.

Earlier in 2016, our senior management team presented an update on our business strategy via a series of roadshow sessions across the country, available to all of our employees. Over 4,200 employees attended the sessions, which provided an update on our strategy, progress made and priorities for the future, particularly our commitment to discipline in all market conditions and driving continuous business improvement through a focus on customer service, our people and product.

Local communities and sustainability 

We aim to balance the long term economic stability and growth of the Company with our responsibilities to the environment, society and the economies in which we operate.

In the first half of 2016, we contributed over £147 million to the local communities in which we build across the UK via planning obligations, providing, for example, local infrastructure, affordable homes, public transport and education facilities (H1 2015: £166 million).

Spain

We completed 53 homes in the first half of 2016 (H1 2015: 66) at an average selling price of €342k (H1 2015: €284k). The total order book as at 3 July 2016 was 399 homes (28 June 2015: 308 homes).

The Spanish business delivered an operating profit* of £0.3 million for the first half of 2016 (H1 2015: £0.9 million) and an operating profit* margin of 2.0% (H1 2015: 6.4%), impacted by phasing of volumes in the half year. We expect to make good progress for the year as a whole, given the strength of the order book. Looking ahead, we remain cautiously optimistic, whilst conscious of the potential implications of the wider macro European economic environment.

Group financial review of operations

Income statement

Revenue increased by 9.1% to £1,457.2 million in the first half of 2016 (H1 2015: £1,335.3 million) from 6,072 completions (H1 2015: 5,908). The increase was driven by improved selling prices in the UK, up 5.8% to £238k (H1 2015: £225k), and UK volume growth of 3.0% to 6,019 completions (H1 2015: 5,842). Average selling prices on private completions increased by 7.3% to £266k (H1 2015: £248k) in the UK, with this increase being a result of both our underlying shift to better quality locations and by capturing market sales price increases.

The UK land cost per unit sold, at £40.3k, is lower than the prior year (H1 2015: £41.3k). Total UK land cost per completion as a percentage of selling prices was 16.9% (H1 2015: 18.4%).

Underlying build cost per unit in the UK increased to £129.4k (H1 2015: £118.9k), driven by marginal build cost inflation, the impact of higher infrastructure costs due to a higher proportion of strategic sites and specification improvements. Other direct costs and selling expenses per unit decreased to £6.8k (H1 2015: £8.4k), due to volume growth and efficiencies.

UK contribution per completion increased by 6.8% to £59.7k for the period (H1 2015: £55.9k), continuing to benefit from improved land mix from completions in the period and improved sales prices partially offset by build cost increases.

Gross profit before exceptional items, of £363.8 million (H1 2015: £330.2 million), increased by 10.2% and included a positive contribution of £4.4 million (H1 2015: £5.6 million). Positive contribution represents previously written down inventory allocated to a plot which has subsequently resulted in a gross profit on completion. This can be due to revenue outperformance, cost efficiencies or product mix improvements. These amounts are stated before the allocation of overheads which are excluded from the Group's net realisable value exercise.

In the first half of 2016, 4% (H1 2015: 8%) of the Group's UK completions were from sites that had been previously impaired. In Spain, 11 plots (H1 2015: 14) were completed that had previously been impaired. The Group anticipates that c.5% of UK 2016 completions will come from sites that have been previously impaired.  

During the period, completions from joint ventures were 25 (H1 2015: 53). The total order book value of joint ventures as at 3 July 2016 was £62 million (28 June 2015: £85 million), representing 126 homes (28 June 2015: 186). Our share of results of joint ventures in the period was a loss of £0.1 million (H1 2015: £1.4 million profit).

Operating profit* increased to £279.1 million (H1 2015: £255.9 million), delivering an operating profit* margin of 19.2% (H1 2015: 19.2%), with £10 million recognised as additional costs in relation to the remediation of certain legacy sites in the period (2015: nil).

Net finance costs for the period were £12.5 million (H1 2015: £17.9 million). Interest on overdraft, bank and other loans decreased by £0.7 million year on year.

Pre-exceptional profit before tax for the year from operations increased by 12.0% to £266.6 million (H1 2015: £238.0 million). The pre-exceptional tax charge was £53.3 million (H1 2015: £47.7 million) with an underlying tax rate of 20.0% (H1 2015: 20.0%) that largely reflects the statutory tax rate in the UK.

This resulted in a profit, before exceptional items, for the half year of £213.3 million (H1 2015: £190.3 million), 12.1% up on the prior year.

The review of land and work in progress net realisable values resulted in a release of £2.2 million against a previously impaired site. This has been recognised as an exceptional item in the period.

Basic earnings per share was 6.6 pence (H1 2015: 5.8 pence). The adjusted basic earnings per share^†† was 6.5 pence (H1 2015: 5.9 pence), up 10.2%.

Balance sheet

Net operating assets as at 3 July 2016 were £2,769.9 million (31 December 2015: £2,442.6 million), reflecting a net investment of £351.0 million (28 June 2015: £256.2 million) year on year in land and work in progress, funded mostly by increased profitability. Return on net operating assets** increased by 200 basis points to 25.2% (H1 2015: 23.2%), reflecting improved profitability while maintaining balance sheet discipline.

Group net operating asset turn^†* increased to 1.25 times (H1 2015: 1.20 times, FY 2015: 1.33 times).

Net assets at 3 July 2016 increased by 21.9% before dividends paid and accrued in the period and 7.2% overall year on year to £2,592.2 million (31 December 2015: £2,723.3 million, 28 June 2015: £2,417.0 million). The net asset increase from 31 December 2015 was driven by profitability in the period offset by the £38.5 million maintenance dividend paid and the accrual of the £300.0 million special dividend, paid on 15 July 2016.

As at the balance sheet date, the Group held certain land and work in progress that had been written down to net realisable value of £170.5 million (2015: £175.9 million) of which the balance in the UK was £141.8 million (31 December 2015: £151.6 million). As at 3 July 2016, the associated write-downs were £159.3 million (31 December 2015: £167.7 million) of which the balance in the UK was £109.9 million and principally related to 15 locations.

As at 3 July 2016, in the UK, 4% of our short term owned and controlled land was impaired (31 December 2015: 4%), with 79% of the short term owned and controlled landbank purchased after 2009, 63% of which was sourced through our strategic pipeline, resulting in a land cost to average selling price in the short term owned landbank of 16.3% (31 December 2015: 16.3%).

We continue to use land creditors as a way of funding land acquisitions where this makes the most commercial sense and is value-enhancing for the business. Land creditors increased to £656.3 million (31 December 2015: £629.8 million) and, combined with net cash, resulted in adjusted gearing of 19.9% (31 December 2015: 14.3%). Included within the land creditor balance is £147 million of UK land overage commitments (31 December 2015: £109 million). £339 million of Group land creditors are expected to be paid within 12 months and £183 million between one and two years from balance sheet date.

The mortgage debtor balance was £88.4 million at 3 July 2016 (31 December 2015: £94.6 million), with the decrease due to redemption receipts of £10.6 million, offset by gains (including fair value adjustment) of £2.5 million and interest income of £1.9 million.

Our net deferred tax asset relates principally to our pension deficit and reduced to £53.7 million in the period (31 December 2015: £55.7 million). £8.6 million of this asset relates to the temporary differences of our Spanish business, including brought forward trading losses.  

Pensions

Retirement benefit obligations of £181.1 million at 3 July 2016 (31 December 2015: £178.4 million) comprise a defined benefit pension liability of £179.8 million (31 December 2015: £177.1 million) and a post-retirement healthcare liability of £1.3 million (31 December 2015: £1.3 million). The deficit in the pension scheme has increased only marginally by £2.7 million, despite the significant financial market volatility as a result of the EU Referendum. The impact was mitigated by the hedging program that the pension scheme has in place. The £200 million buy-in completed at the end of 2014, coupled with c.60% liability hedging against interest rates and inflation risk exposure, reduced the volatility of the scheme liabilities over the period. The main drivers for the movement in the deficit since 31 December 2015 were contributions in the period partially offset by actuarial assumptions, most notably discount rates and inflation. In the first half of 2016 we contributed £14.1 million in pension contributions (H1 2015: £14.1 million).

The next triennial valuation of the pension scheme as at 31 December 2016 will be concluded during 2017.

Cash flow

Net cash increased to £116.7 million at 3 July 2016 from £87.6 million at 28 June 2015, despite returning £304.0 million to shareholders by way of dividends in the 12-month period to 3 July 2016. This improvement in net cash is largely as a result of strong performance in underlying trading and maintaining balance sheet discipline.

Net land spend, net of movement in land creditors, was £361.7 million (H1 2015: £307.5 million).

The sum of £1,067.4 million has been invested in work in progress in the period (H1 2015: £904.6 million). In the first half of 2016, we paid £4.1 million in interest costs (H1 2015: £5.0 million) and £38.5 million in dividends (H1 2015: £42.9 million).

In the 12 months to 3 July 2016 we converted 55.3% of operating profit* into operating cash flow*** (H1 2015 rolling 12 months: 44.9%).

Financing structure

On 28 June 2016 we completed a Private Placement of €100 million fixed at 2.02% for seven years, which will be used to hedge the investment in our Spanish business. Our committed borrowing facilities are currently £734 million with an average maturity of 3.9 years. Average net cash for the half year was £2.7 million (H1 2015: £43.9 million net debt; FY 2015: £94.8 million net debt).

It is pleasing to note that both Standard & Poor's and Fitch have reaffirmed their investment grades of BBB-, with both credit agencies rating our outlook as stable.

Dividends

The Board has declared that a 2016 interim dividend of 0.53 pence per share is to be paid on 7 October 2016 to shareholders on the register at the close of business on 26 August 2016 (H1 2015 interim dividend: 0.49 pence per share). This has been set in line with the current Maintenance Dividend Policy of 2% of net assets per annum.

This dividend will be paid as a cash dividend, and shareholders are once again being offered the opportunity to reinvest all of their dividend under the Dividend Re-Investment Plan (DRIP), details of which are available from our Registrar and on our website. Elections to join the Plan must reach the Registrar by 12 September 2016 in order to be effective for this dividend. Further details can be found on our website www.taylorwimpey.co.uk

In addition, on 15 July 2016, we returned £300.2 million to shareholders by way of a special dividend, equating to 9.20 pence per ordinary share.

We remain fully committed to the enhancements to the Dividend Policy we announced on 17 May 2016.

From 2017, subject to shareholder approval, the Company will pay an ordinary dividend of approximately 5% of Group net assets and which will be at least £150 million per annum. This is intended to provide a minimum annual return to shareholders throughout the cycle, including through a 'normal downturn'. This ordinary dividend will be paid equally as a final dividend (in May) and as an interim dividend (in November) each year.

As previously announced in May 2016, we intend to return £300 million to shareholders in July 2017, equating to c.9.20 pence per ordinary share, subject to shareholder approval at the 2017 AGM.

Future special dividends will be announced on an annual basis at the half year results and will be paid in the following July, subject to shareholder approval. The next update will therefore be at our 2017 half year results on 1 August 2017 for the 2018 special dividend.

The Board confirms its intention to keep the mechanics of how the Company will pay special dividends, including the merits of undertaking a share buyback at some point in the future should it become appropriate to do so, under regular review.

Principal risks and uncertainties

As with any business, Taylor Wimpey faces a number of risks and uncertainties in the course of its day to day operations. It is only by identifying and managing these risks and uncertainties that we are able to deliver on our strategic objectives in the short to medium term and also through the housing cycle. The key business risks and uncertainties are in line with those outlined in the 2015 Annual Report, although the impact to the Group from the UK leaving the EU has been given greater prominence and added to those risks and uncertainties listed below. The key business risks, not listed in order of importance, now include:

·     Government regulations, planning policy and political pressures - The Housing and Planning Act 2016 aims to address the disparity between demand and supply for housing in the UK, by seeking changes to the planning system and signalling potential financial considerations for some sections of our customer base. The position remains dynamic as a number of elements, particularly around the Starter Homes initiative, are still to be fully defined. As they are clarified and embedded, there could be disruption to the planning system, sales rates, site mixes and customer behaviour. We await further detail of The Neighbourhood Planning and Infrastructure Bill, when it is presented in Parliament, which aims to address delays caused by pre-commencement planning conditions, streamline the Compulsory Purchase Order process and strengthen neighbourhood planning.

·     Materials and subcontractors cost pressures - Increased housing production could reduce the availability of materials and subcontractors and put pressure on utility firms to keep up with the pace of production. This results in build programme delays and an unexpected increase in costs. 

·     Ability to attract, motivate and retain key skills - In a buoyant housebuilding market, there is a risk of increased staff turnover in certain trades and professions, often as a result of poaching by competitors. This could lead to business disruption, process failure and knowledge drain, in addition to the cost of replacement.

·     Site and customer safety - Building sites are inherently dangerous places. Unsafe practices by our employees or subcontractors can, if not managed properly, have the potential to cause death or serious injury.

·     Impact of market environment on mortgage availability and demand - Mortgage availability and affordability is a key constraint on demand in the housing market. The cost of servicing a mortgage continues to be at historic lows. However, a significant increase in the cost of mortgages may result in reduced demand for housing. 

·     Land availability and cost - The purchase of land of poor quality, at too high a price, or the incorrect timing of land purchases relative to the economic cycle could impact the Group's future profitability. 

·     UK leaving the EU - Following the UK's decision to leave the EU, we will continue to monitor the impact on the economy and on our customer base. However, it is currently too early to identify the full implications of this decision. Taylor Wimpey operates mainly within the UK and the impact of imports is relatively small. However, the loss of business and consumer confidence may impact on our sales rate and sales price.  This may be tempered to some extent by the current imbalance between demand and supply. Future decisions made by the Government and the Bank of England about interest rates, homebuyer initiatives, new legislation, stamp duty and freedom of movement is likely to create both risks and opportunities for homebuilders and their customers.   

Further detail can be found on pages 36 and 37 of the 2015 Annual Report and Accounts.

Cautionary note concerning forward looking statements

This report contains certain forward looking statements. These statements are made by the Directors in good faith based on the information available to them up to the time of their approval of this report, and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying such forward looking information.