Taylor Wimpey Regulatory News (TW.)

26 February 2014

Taylor Wimpey plc

Results for the year ended 31 December 2013

Delivering quality returns through the cycle

Highlights

Significant improvement against all of our key financial objectives:

· Group operating profit* margin increased 240 basis points to 13.6% (2012: 11.2%**)

· Group return on net operating assets*** increased 350 basis points to 16.8% (2012: 13.3%**)

· Tangible net asset value per share† increased 13.2% to 69.6p (2012: 61.5p)

· Cash return to shareholders:

o Initial c.£250 million: £50 million in 2014 and £200 million in 2015

o Strategy expected to lead to further significant annual payments from 2016

· Final maintenance dividend proposed 0.47p (2012: 0.43p), giving total for year of 0.69p (2012: 0.62p)

Strong UK operational performance

· 39.1% increase in operating profit* to £312.8 million (2012: £224.8 million**)

· Completed 11,696 homes at an average selling price of £191k (2012: 10,886 homes at £181k)

· 31.4% increase in total order book value to £1,246 million at 31 December 2013 (2012: £948 million)

· Reaching the optimal landbank size for our business with c.9.2k plots converted from the strategic land pipeline

· Invested £227.0 million in local communities (2012: £180.8 million)

· 33% fall in the accident rate on site

Pete Redfern, Chief Executive, commented:

"In a housing market showing significant recovery for the first time in five years, we have strongly improved our operating performance, increasing operating profits by 39%. Most importantly, we have continued to make significant investment for the future, adding to our short term landbank and strategic land pipeline and increasing the level of training and development of staff, at all levels, from site trades to office technical roles. This strong platform and our clear operating and financial strategy leave the Group well positioned to continue to make further progress in the years ahead."

Group Financial Summary

* Operating profit is defined as profit on ordinary activities from continuing operations before finance costs and exceptional items, after share of results of joint ventures.

** 2012 has been restated following the adoption of IAS19 'Employee Benefits' (amended 2011), with changes in the presentation of certain costs relating to the defined benefit schemes.

*** Return on net operating assets is defined as operating profit divided by the average of the opening and closing net operating assets, which is defined as capital employed plus intangibles less tax balances.

† Tangible net assets per share is defined as net assets excluding goodwill and intangible assets divided by the number of shares in issue at the period end.

†† Group asset turn is total revenue divided by the average of opening and closing net operating assets.

[ends]

A presentation to analysts will be made at 9.00am on 26 February 2014. To register for the webcast please go to our website www.taylorwimpey.co.uk. A playback facility will be available on our website from 12pm on 26 February 2014.

For further information please contact:

Taylor Wimpey plc Tel: +44 (0) 7826 874461

Pete Redfern, Chief Executive

Ryan Mangold, Group Finance Director

Debbie Sempie, Investor Relations

RLM Finsbury Tel: +44 (0) 20 7251 3801

Faeth Birch

Sarah Heald

Notes to editors:

Taylor Wimpey plc is a UK-focused residential developer which also has operations in Spain. Our vision is to become the UK's leading residential developer for creating value and delivering quality.

For further information, please visit the Group's website:

www.taylorwimpey.co.uk

Group overview of continuing operations

2013 was a year of significant improvement, where both the quality of our land investments and the underlying improvement in the housing market contributed to an improvement across all of our key performance metrics.

Group revenue in 2013increased by £276.5 million to £2,295.5 million (2012: £2,019.0 million) from Group completions of 11,814 (2012: 11,042), including joint ventures. The gross profit in the year has increased by 26.1% to £449.3 million (2012: £356.3 million). Thegross profit for the year includes £45.4 million (2012: £85.1 million) of positive contribution, on completions from sites with previously impaired inventory. Group operating profit* increased significantly by £86.8 million, or 38.4%, to £312.9 million (2012: £226.1 million**) resulting in a Group operating margin* of 13.6% (2012: 11.2%**). Net operating assets grew by 15.7% percent and as at 31 December 2013 stood at £1,999.6 million (2012: £1,727.9 million). Group asset turn†† increased to 1.23 times in 2013 (2012: 1.19 times**), with both faster sales rates and our focus on capital efficiency contributing to the positive performance and offsetting the impact of a lower pension liability. These improvements resulted in Group return on net operating assets*** increasing substantially by 350 basis points to 16.8% (2012: 13.3%**).

We have continued to strengthen our balance sheet and to reduce debt and we end the year with a net cash position of £5.4 million, driven by both operational improvement and the timing of land payments (31 December 2012: £59.0 million net debt).

On 31 December 2013, at the first call date, we redeemed and cancelled the £250 million 10.375% Senior Notes due 2015, of which £149.4 million remained outstanding. This is the final step in achieving an efficient but appropriate debt structure for our business going forward and this will reduce our interest costs in 2014 by up to £15 million. As a result of the redemption, our £100 million term loan has been extended to mature in 2020 with amortisation beginning in 2017.

Land creditors stood at £349.0 million at 31 December 2013 (31 December 2012: £375.0 million), with adjusted gearing, including land creditors, at 15.3% (2012: 21.8%). When we consider our appropriate capital and debt structure, we view land creditors as a useful tool for financing large sites, but we are disciplined and consider this liability together with debt in the context of overall balance sheet strength. Total net land spend including land creditors was £574.7 million (2012: £433.8 million).

Strategy and capital allocation

We are operating today in a significantly improved housing market. The business is starting to earn a healthy level of returns as the investments we have made from 2009 onwards are starting to deliver. We have the right organisational structure in place for the long term with 24 regional businesses across the country, including a growing London presence, all of which are in areas in which people want to live and which are supported by strong economic fundamentals. Whilst short term conditions have improved, our strategy remains unchanged and our focus is clearly set on the long term health and sustainability of the business.

Our views on managing the cycle have not changed. Housebuilding is a cyclical industry, and whilst sensible measures from Government, interest rate setters and regulators can help to reduce the scale of that cyclicality, we do not believe it can be removed completely. Therefore, whilst we remain focused on delivering strong returns and growth over the short term, we are also mindful of mid and long term risk. This means that we need to take a more active approach to managing the cycle than has been historically undertaken in the business, or the sector. We can be a very cash generative business and how we can best use that cash to achieve the optimum balance of delivering the best quality of returns whilst managing risk to protect the business is key.

We have seen a progressive return to normal land market conditions quarter by quarter, however, they have not yet returned to the levels of competition that we have seen in the past. This has facilitated a prolonged period of strong acquisition margins compared to the range we have seen historically. During 2013 we continued to see a significant number of attractive opportunities in theland market and we were able to use our expertise to capitalise on the current reduced level of competition to invest in land that will deliver strong financial returns in the future. We added 18,770 plots to the short term consented landbank in 2013 through the acquisition of 9,560 plots in the land market and the conversion of 9,210 plots from the strategic pipeline. This is a very strong level of additions, and takes our short term consented landbank into the range of between 70,000 and 75,000 plots, which we see as a good steady state to deliver our optimum sustainable business size.

We are still seeing attractive new opportunities in the land market today and will continue to invest in high quality opportunities, however we do expect that over the next few years the consented land market will naturally continue to tighten and therefore we do not expect to reinvest all of the cash we generate. In addition, we will continue to focus on achieving planning consents from our strategic land pipeline. By their nature, strategic pipeline sites are long term and we are in continual dialogue with local authorities across the UK to try and bring these sites forward for development. Over the next few years, we expect the strategic pipeline to provide an average of about 6,000 consented plots a year, and completions from these sites to be in excess of the 30% target that we have set.

The combination of our existing short term landbank and the strategic pipeline gives us the confidence that we can grow to our optimum scale, despite the limits of the UK planning environment, allowing us to focus on driving value both through the conversion of the strategic pipeline and our work to bring forward development on our controlled sites and newly acquired sites. This will, of course, still require funding. However, as we move from a phase where we have been significantly growing our overall land positions to a more neutral replacement phase, the funding requirement will decrease and this, together with our increasing profitability as delivery from post-2009 sites grows, means we will be generating significant cash surplus to our funding requirements on an annual basis from the second half of 2014 onwards.

We have always been clear that our dividend policy, whether maintenance or special returns, is an inherent part of our strategy. Our maintenance dividend policy remains unchanged at between 1% and 2% of net assets, and this will continue to be paid in May and September of each year. As set out above, we have now reached the point where the strategy is creating surplus cash and we will therefore pay a special dividend of c.£50 million in 2014 and £200 million in 2015, the latter subject to shareholder approval. These payments will be made in July of each year, in line with our working capital requirements.

We see significant cash returns as a feature of the current stage of the cycle and anticipate making further significant cash returns annually to shareholders from 2016.

We do not believe that it is in our shareholders' interest to use significant debt in order to generate cash returns but we also do not believe that zero debt or a positive cash position is a necessary or efficient way to deliver value from the business. We remain comfortable with the guidance previously given of a maximum of 30-40% of gearing (including land creditors) throughout the cycle.

Current trading and outlook

We have continued to build on our excellent order book position, which stood at £1,491 million, excluding year to date completions, as at 23 February 2014 (24 February 2013: £1,076 million). We are around 55% forward sold for 2014 completions, giving us good visibility and security of performance for the year ahead.

In the first two months of 2014, we have seen the increased interest levels convert to reservations, with both the North and South divisions of our business following similar trends. We are confident that we will continue to perform well in the favourable short term environment and that the disciplined processes we have in place will allow us to capture any additional market value and grow operating margin by at least an additional 200-300 basis points in 2014.

UK Housing

UK financial and operational performance

We have performed at the upper end of our expectations in 2013 and continued to grow our business in the right way. Revenue has increased by 14.3% to £2,271.4 million (2012: £1,987.0 million), primarily driven by an improved mix and quality of location. Operating profit* increased by 39.1% to £312.8 million(2012: £224.8 million**). This value focus resulted in an increase in operating margin to 13.8% forthe full year (2012: 11.3%**), including absorbing the impact of approximately 60 basis points from impairment releases at the half year stage.

Net operating assets in the UK were £1,954.6 million (2012: £1,667.2 million) with a strong increase in our return on net operating assets*** for the year to 17.3% (2012: 13.7%**).

UK operational environment

From the beginning of 2013, we saw an improvement in customer sentiment and an increase in sales rates as customers, already feeling more confident, were able to gain access to a healthier mortgage market, helped through Funding for Lending and a more willing and competitive banking system.

Underscoring the importance of housebuilding to the UK economy, the Government implemented Help to Buy from the beginning of the second quarter, the most significant programme to date, effectively replacing the FirstBuy programme and having a quick and direct impact on the affordability of mortgages. Following the implementation of Help to Buy, we saw a significant step up in both interest levels and sales rates. In 2013, the total value of mortgage approvals for home purchases was £113,170 million (2012: £90,953 million) according to the Bank of England data, with property transactions 15.0% higher at 1,071,220 (2012: 931,790).

According to the Home Builders Federation (HBF), planning approvals increased in the UK by 34% to 185,266 in the year to September 2013 (2012: 138,441). This remains significantly less than the number of homes needed on an annual basis, highlighting the fact that planning remains the fundamental constraint on the size of the industry and our business.

UK national house prices increased to £174k (2012: £163k) during 2013, according to the Nationwide House Price Index, and led in the early part by the South East and Midlands, but with most regions in the UK increasing by the end of the year.

Sales, completions and pricing

During 2013, we completed 11,696 homes (2012: 10,886 homes), 9,423 of which were private homes (2012: 8,842), 2,124 of which were affordable (2012: 1,946) and 149 joint venture completions (2012: 98). We completed 828 homes in the London market (inside the M25) and this level will continue to naturally grow as we steadily grow this business. During 2013 we were selling from an average of 315 outlets (2012: 311). Our net private reservation rate for the full year was 0.62 homes per outlet per week (2012: 0.58), with cancellation rates very low at 13.3% (2012: 15.2%).

Ouraverage selling price on private completions increased by6.6% to £210k (2012: £197k). This increase is primarily the result of our strategic underlying shift to better quality locations. During the second half of the year, we also saw market sales price increases in line with the general level of inflation after several years of a declining or flat market.Our overall average selling price on completions increased to £191k (2012: £181k). The average selling price of affordable completions was slightly lower than last year at £110k(2012: £112k).

We achieved an increase of 31.4% in the forward order book value, ending the year at £1,246 million (31 December 2012: £948 million), and an increaseof 11.1% in volume, ending the year at 6,627 homes (31 December 2012: 5,966 homes). Private average selling price in the order book increased by 19.7% to £243k (31 December 2012: £203k), again primarily the result ofbetter quality locations, and reflecting the increase in general selling price inflation. We are pleased to report further improvement in the margin on sales in the order book, with the growth driven by the strength of the private order book. Our Central London regional business unit has started to impact the order book due to the forward selling nature of the business and as at 31 December 2013 represented 11.7% of the total order book value at an average selling price of £746k.

During 2013, we worked with 2,928 households to use Help to Buy to get onto the property ladder with 19.6% of completions in the period from this scheme, with sales of 29% in the period. During 2013, FirstBuy, NewBuy and MI New Home were also in effect and we supported 139 (2012: 1,203) customers to purchase homes using FirstBuy and 1,208 customers (2012: 546 homes) using NewBuy and MI New Home in 2013.

We entered 2014 with 314 active outlets (31 December 2012: 327) and a strong set of selling locations. We remain focused on turning our strategic pipeline into consented sites and those sites with planning into developments, with a focus on getting it right and progressing sites through planning as efficiently as possible.

Land and planning

The value we create for our shareholders, communities and customers all starts with land and it is the area we add most value through planning, allowing us to generate the best quality returns.

We buy land where people want to live, and where we believe we have a realistic chance of securing planning permission for homes that people would choose to live in. Success for us is always at a local level. Our 24 regional businesses are located across the country in most key markets. Our completions and landbuying are approximately weighted 60% to the South and 40% to the North, and are always judged against strict evaluation criteria, which includes margin, return on capital, market demand and a site-specific risk assessment. We have a strong presence in the South East and London, with 17 active sites in the London market (within the M25) and a further nine sites in central London (the inner London boroughs) which we are progressing through planning.

The land market remained relatively benign in 2013. During the year we continued to see a number ofattractive opportunities in theland market as we secured these at margins far higher than historically achieved. Total land spend, including land creditors, was £566 million (2012: £427 million). During 2013 we added 18,770 plots to the short term landbank of which 49% were converted from the strategic pipeline.

However, against the backdrop of the planning constrained environment, these opportunities are not limitless and, particularly during the last quarter of the year, we have seen tightening in some local markets. Whilst this is not currently impacting the margins at which we are able to secure land, we anticipate that during 2014 and 2015 the number of value creating opportunities will naturally reduce. We will continue to invest in the land market in a disciplined way but we will also continue to add to our landbank through the promotion and conversion of our strategic pipeline. The strength of our land position reinforces our ability to maintain a disciplined approach to new land investment, investing only where we see value.

As at 31 December 2013, our short term owned and controlled landbank comprised 70,628 plots across our 24 regional businesses, including joint ventures (31 December 2012: 65,409). Our short term landbank comprises 50% of land sourced from the strategic pipeline (31 December 2012: 43%). 29% of our 2013 completions (2012: 24%) were sourced from the strategic pipeline and we expect this percentage to increase to over 30% from 2014, underpinning our confidence in continuing margin progression.

The strength of ourstrategic pipeline,which stands at 109,974 potential plots (2012: 98,659 potential plots) reflects the investment that we have made over the last four and a half  years, both in maintaining a strong strategic land team, and adding new sites. Our success here reduces overall business risk and allows us to focus on getting the quality of our delivery right. We remain focused on taking strategic pipeline sites through the planning system, achieving an 83% success rate in our planning appeals in 2013.

We actively review every site, both new and old, through our value improvement meetings which are held quarterly and are tracked centrally. This allows us to benchmark our success and identify opportunities for further improvement, ranging from replanning of sites to redesign and selective enhancements to our specification. We are committed to not only delivering what we set out to do but to delivering more and instilling a discipline of capturing inflation. During 2013, we achieved 1.7% (2012: 1.5%) increase in achieved contribution margin on completions on land we had acquired post-2009.

We will undertake land sales where we believe the price achieved delivers value andthe land does not fit our strategy or is surplus to our requirements in a particular local market. Revenue from land sales totalled £28.5 million in 2013 (2012: £16.2 million) with a gross profit of £6.1 million (2012: £3.5million**). Due to the nature of large strategic pipeline sites, we believe that this level will probably grow, however, we still see our primary route to market is through delivering homes through our regional network.

Our approach to engaging with communities and partnerships

We do much more than build homes. We are first and foremost a local business and an important contributor to the local communities in which we build and to the sustainability of those communities and areas. During 2013 we invested £227.0 million in the local communities via Section 106 and Section 75 planning obligations (2012: £180.8 million), including infrastructure, education, public transport and affordable housing. Since 2010 we have invested over £630 million. We also sponsor local sports teams, events and clubs within our communities while providing the housing that is needed.

Despite this, we know that local communities do not always welcome housing developments in their area and so we seek to engage, consult and work in partnership with communities and all interested stakeholders both before we submit a planning application and during the life cycle of the site. In this way we can listen to their concerns and incorporate these within our plans, where possible. During 2013, we organised 188 days of community events and exhibitions and 371 community meetings. Following the release of the National Planning Policy Framework and theenactment of the Localism Act, we have changed our business significantly toembrace the principle of community engagement. We have built a robust and consistent framework to be applied throughout our business, together with a suite of tools to support this approach, and require our regional business units to undertake tailored, development-specific community engagement on all sites. Launched at the end of 2013, our new Taylor Wimpey website provides map references and web pages for our proposed developments in the UK.

We strive to be the residential developer that everyone wants to deal with and through our creative approach to the planning system, focus on localism, and efforts to become the preferred partner, we believe we are becoming the landbuyer of choice. In January 2014, we were delighted to have received detailed planning permission for the first phase of Chobham Manor, the first neighbourhood to be built on the Olympic Park, in partnership with London and Quadrant (L&Q).

In March 2013, the Homes and Communities Agency (HCA) confirmed our place on the four regions (North, Midlands, South East and South West) of the second Delivery Partner Panel (DPP2), which is a framework panel of prequalified housing developers chosen for their ability to meet a range of criteria. We are also a member of the Greater London Authority's (GLA) London Development Panel.

Build costs and efficiency

Against a backdrop of the improving market conditions in 2013, we started to see some increases in costs in certain key trades and materials, and a shortage of supply in some areas, particularly in the first half of the year. As the market has adjusted, these short term pressures have eased, and we do not see material and labour supply as a major constraint. With improving industry volumes and pricing, we do expect some underlying cost increases in some areas following a number of years of falling or static costs. However, our scale affords us the benefit of strong purchasing power and we achieve significant cost savings across our regional businesses through national agreements with a number of suppliers. Over 90% of the material spend in 2013 was sourced by central procurement, with prices on national deals staying broadly flat. This not only results in lower costs per item but, increasingly as we look forward, security of supply. Therefore, with our scale and processes, we do not believe that these changes will materially impact performance.

In 2013, we completed the migration of all of our business units to a COINS based Enterprise Resource Planning (ERP) system. This new IT system is expected to deliver significant savings through the retirement of a number of legacy systems, as well as support our focus on value improvement through improved management information, reporting and analysis. Importantly this will allow us to benchmark and challenge ourselves, and make better business decisions.

Quality product range

We build homes that people want to live in. We are proud of the homes we build and the communities we create. Our focus is on providing high-quality, well-designed, sustainable homes and communities that meet the needs and aspirations of local residents.

Our mix of homes is informed by the local area and we also continue to offer a wide range of homes from apartments to five bedroom houses, with prices ranging from under £100k to over £3 million.

In 2013, the proportion of apartments in our private completions was 20%(2012: 24%). Strategically we look to maintain this level at between 20% and 25% of our business. The average square footage of our private completions also increased slightly to 1,038 square feet (2012: 1,013square feet).

We are committed to delivering high-quality homes for all ofour customers and we endeavour to continue to improve on this. We were particularly pleased to win 68 National House-Building Council (NHBC) Pride in theJob Quality Awards (2012: 66), representing 22% of our active sites, 17 Seals of Excellence Awards (2012: 16), a further five (2012: two) Regional Awards and one Supreme Award (2012: none). These awards are based on build quality and sitemanagement excellence.

During 2013, we have continued toimplement and improve our house type portfolio. These homes aredesigned to be high quality, extremely energy efficient and straightforward, cost effective and safe to build. They are also extremely flexible with different internal layouts and exteriors that can be varied to complement local landscapes and streetscapes. The housetypes are designed to meet specific space standards and comply with Secured by Design principles, the nationwide initiative intended to reduce crime through home and scheme design. They are also capable of achieving 'LifetimeHomes' standards of accessibility and adaptability for changing lifestyles, where appropriate. We continually review, assess and gain feedback from our customers and partners and this enabled us to further improve our house type portfolio in 2013. As at January 2014, these house types were plotted on approximately 226 sites (January 2013: 150) across the UK which is c.72% of current outlets. This will continue to have a positive impact on build efficiencies, and costs, mitigating build cost inflation.

Health and safety

Health and safety (HSE) at Taylor Wimpey is the non-negotiable top priority. We will not compromise in ensuring that everyone leaves our sites safe and well. We have a formal, comprehensive and fully integrated health, safety and environmental management program in place across ourbusiness. We have reduced accidents on sites by 30%, recording 31 RIDDOR injuries (Reporting of Injuries, Diseases and Dangerous Occurrences Regulations) against 44 in 2012. Our Annual Injury Incidence Rate (AIIR) for all reportable injuries decreased by 33% to 207 per 100,000 employees and contractors (2012: 311). There was one HSE Prohibition Notice (2012: one) issued on one UK site for inadequate traffic management and we took appropriate measures immediately to improve the traffic management on site.

In 2013, we provided an average of 4.7 days per person of formal HSE training to our site operational staff (2012: 3.9). We also believe we should play our part in educating our site teams, subcontractors and the wider community about how to staysafe on site. During 2013, we visited 31 schools to explain to local children the dangers of playing on building sites and continued our site safety supervisor training for groundworker supervisors.

Our customers

We have a strong and sustainable customer base, with over 90% owner occupiers, and first time buyers accounted for 38% of our sales (2012: 32%). We continue to offer a wide range of products to assist first time buyers. Our prices are set locally and we use targeted customer incentives, on a site by site basis, knowing that our customers' circumstances vary.

We understand that each home we build is aspirational to the customer who purchases it, regardless of price, and we want our processes and quality to reflect this. It is critical that as our business grows, we continue to concentrate on maintaining a high level of customer service. During 2013, we achieved 90% on the externally measured customer service scale (2012: 92.5%) and were awarded the maximum HBF five star rating in March 2013, reflecting our commitment to our customers. Nine out of 10 of our customers said they were satisfied with thequality of their new home and would recommend Taylor Wimpey to a friend. However, we were disappointed that our customer service score has slipped. To address this, in 2013 we started a wide scale review of our customer service in all regional business units. Increasing customer satisfaction will be a clear priority for us in 2014.

Buying a home is a significant financial and emotional investment for our customers. In everything we do, we try to make the homebuying process as easy as possible and make our existing and prospective customer information as comprehensive, transparent, straightforward and accessible. Our customers' communication preferences havechanged over the last few years resulting in a greater use of the internet and mobile devices. We work to harness technology to make it easier for our customers and to allow us tocommunicate more effectively. In 2013, 19,772 appointments were made on our online booking system (2012: 16,196). Our new website contains a customer service dedicated section with useful information for both existing and new homeowners, including details of our Customer Charter and Customer Journey, and is developed to work across a range of devices, including desktop, tablet and mobile.

We have also improved the IT equipment available to our sales teams on site, delivering a better customer experience and increasing efficiency in our communication and other business processes such as reporting. We are looking to extend this to production teams on site over the next 18 months.

Our people

Our employees make a vital contribution to the continued success, growth and profitability of our business and particularly in the last two years we have seen the advantages of improving our approach and the need to continue to do so. We aim to attract and retain the best people from both within the industry and from outside, by having a culture that people identify with, where they can realise their full potential through achieving both success and satisfaction in their work.

We provided employment for 3,900 people in the UK in 2013 (2012: 3,683) and work for an average of 11,380 operatives on our UK sites (2012: 10,750).

In autumn 2013, Chief Executive Pete Redfern and senior management presented an update on our business strategy at a series of roadshow sessions available to all our staff across the 24 regional businesses and on site. Over 3,200 of our employees attended the sessions, which provided an update on progress made against the objectives set in 2011 and priorities for the next couple of years. The sessions covered key employee issues such as diversity andemployee development and skills.

Diversity continued to be a key area of focus for us in 2013. We believe that embracing diversity will enable us to succeed through a workforce that is inclusive, creative and innovative. Following a review of the diversity of our employees and mapping this against the diversity of the communities in which we operate, we have engaged with employees on this subject and introduced new recruitment practices to help us build an increasingly diverse workforce.

We firmly believe it is important that our employees should have the opportunity to acquire their own personal stake in the business through share ownership. We were delighted that the most recent Sharesave Plan saw a 12% increase in take up with 1,184 employees participating. Currently 1,992 employees participate in one or both of our all-employee share plans, representing 53% of eligible employees.

We believe strongly in the opportunity for internal succession and believe that internal candidates make valuable business leaders because they understand ourculture and approach. During 2013, we delivered an average of 2.7 days of training per monthly salaried employee including health and safety training (2012: 2.5 days). Our employee turnover rate for 2013 remained broadly similar at 7.5% (2012: 7.1%).

In early 2012, we launched the Taylor Wimpey Sales Academy, a modular accreditation programme which aims to develop themost competent andknowledgeable sales and marketing teams in the industry. Around 500 sales staff are taking part and over 290 have now completed their training. Following the success of our Sales Academy, we now plan to follow the same broad outline for a Production Academy and Technical Academy in 2014 and 2015 respectively.

We introduced a new site management apprenticeship scheme in 2013 to tackle a skills shortage in our industry and ensure that we continue to have expert site managers in years to come. We recruited six apprentices under this scheme in 2013 and aim to attract around 100 new site management apprentices by the end of 2015. We will continue with our trade apprenticeship scheme and recruited 49 apprentices under this scheme in 2013 (2012: 34) and 23 management trainees (2012: 13) and aim to recruit a greater number in 2014.

Throughout the downturn, we maintained our graduate programme, believing firmly in the importance of investing for the future. Our graduate programme has run for 11 years with an exceptionally low employee turnover rate of 3% amongst graduates, with many graduates achieving success within the business at director level. Recruitment website TheJobCrowd named Taylor Wimpey in the top 100 companies for graduates to work for and listed us amongst the top 10 employers within the property and housebuilding category. We recruited a total of 11 graduates in 2013 (2012: seven).

In 2013 we continued our partnership with Buckinghamshire University Technical College (BUTC) which opened in September 2013. As the lead sponsor for this Government-funded college specialising in construction and IT studies for 14-19 year olds, we are working with BUTC to shape the construction course curriculum and provide valuable work experience. We are also supporting the college in other ways from teaching and donating materials to mentoring students and providing our industry expertise.

Spain Housing

Whilst the wider macro-economic uncertainty has considerably improved, customer confidence still remains subdued on the whole and in certain locations continues to be extremely challenging with mortgage availability remaining restricted. Against this backdrop, we completed 118 homes (2012: 156) at an average selling price of £194k (2012: £197k). The reduction in homes completed was primarily the result of a lower order book at the start of the year and resulted in lower revenues for the period of £24.1 million (2012: £32.0 million). Despite these lower volumes, we achieved an operating profit* of £0.1 million (2012: £1.3 million), once again a testament to the strength of the operating team we have in Spain.

The total order book stands at 195 homes (31 December 2012: 53 homes), which is primarily related to the new sites and we anticipate these sites will contribute positively to our 2014 performance. Our total landbank in Spain stands at 1,615 plots (2012: 1,815).

We are extremely pleased to report that in 2013, 100% of our customers in Spain said they would recommend us to friends and family (2012: 100%).

During 2013, we had no reportable injuries on site (2012: three) and as such our annual injury incidence rate (AIIR) in Spain per 100,000 employees and subcontractors in Spain was 0 for 2013 (2012: 915).

Conditions continue to be generally challenging in Spain. We anticipate that average selling prices will naturally increase in 2014, with increased completions from our newly acquired sites, which are performing very well due to their quality locations.

Group financial review of continuing operations

We have delivered a significant improvement in profit before exceptional items and tax, which has increased by 47.6% to £268.4 million (2012: £181.8 million**) driven by improved underlying operating performance and lower net debt finance costs.

Group revenue in 2013 increased by £276.5 million to £2,295.5 million (2012: £2,019.0 million) from Group completions of 11,814 (2012: 11,042), including joint ventures, against a backdrop ofan improving housing market in the UK. Gross profit of £449.3 million (2012: £356.3 million) is up by 26.1%and reflects our strategy of maximising the value achieved fromeach home completion via cost improvements through re-plans and cost reduction initiatives and driven by selling from better quality locations. The gross profit for the year includes £45.4million (2012: £85.1 million) of positive contribution on completions from sites previously impaired. The positive contribution isthe estimation difference between the realised value on completions compared to the value assumed in thenet realisable value review in the previous reporting period. These amounts are stated before the allocation of overheads that areexcluded from the Group's net realisable value exercise. As at 31 December 2013, 32% (2012: 46%) of the Group's completions in the UK were from sites that had been previously impaired. As at 31 December 2013, 12% (2012: 26%) of our short term UK owned and controlled land was impaired (excluding JVs). In Spain, 95 plots (2012: 120) were sold that had previously been impaired.

In the UK, contribution percompletion increased to £38.8k(2012: £33.9k) benefitting from sales in better quality locations from newly acquired sites and build cost efficiencies. Total build cost per unit increased to £105k (2012: £101k), mainly as a result of the average unit size increasing 2.7% to 1,002 square feet (2012: 976 square feet).

Group operating profit* increased by £86.8 million, or 38.4%, to £312.9 million (2012: £226.1 million**) and Group operating margin* rose to 13.6% (2012: 11.2%**) as a result of the improved trading performance, with a 200 basis points increase in gross margins from 17.6% to 19.6%. The approximate impact to the 2013 gross margins following the net realisable value release of £34.1 million at the 2013 half year was 60 basis points, with the underlying gross margin increasing 260 basis points from 2012 to 2013.

The Group's administration expenses, excluding other income and expenses, have increased by £9.6 million to £151.7 million due mainly to certain one-off costs related to share based awards as a result of the significant improvement in share price and vesting; implementation of the integrated ERP system completed in 2013; and pensions costs relating to the legacy pension scheme merger and related asset backed funding structure. We remain on track to deliver the target of £20 million of overhead savings by 2014 relative to 2010.

Group asset turn†† increased to1.23 times in 2013 (2012: 1.19 times**), benefitting from our investment in higher quality locations and resulted in an increase in the Group return on net operating assets*** of 350 basis points to 16.8% (2012: 13.3%**).

Ouryear end adjusted gearing, including land creditors, stood at 15.3% (31 December 2012: 21.8%) and is comfortably below our indicative maximum working range of 30% to 40%for this point in thecycle.

Net finance costs

Pre-exceptional finance costs totalled £44.5 million (2012: £44.3 million**), net of £0.9 million ofinterest receivable (2012: £1.2 million).

Interest on borrowings was £27.9 million (2012: £31.7 million) with the reduction in interest reflecting the lower average net debt level of the Group during 2013 of £169.3 million (2012:

£228.3 million) and the full year benefit of increased net debt efficiency, following the repurchase of £15.2 million of 10.375% Senior Notes during 2012.

Other items included infinance costs are a net pension interest charge of £9.7 million (2012:

£9.4 million**), which is higher due to the impact of higher discount rates, and a total imputed interest charge for land creditors and other payables of £7.8 million (2012: £4.4 million**) due to higher average land creditors than 2012.

Exceptional items

In the first half of 2013, the Group saw a sustained improvement in the UK housing market and the wider economy, with increased mortgage availability, lower interest rates together with enhanced customer confidence following the launch of the Government's Help to Buy scheme in April 2013. At the 2013 half year, the Group completed the net realisable value assessment of inventory and with the improved market conditions, and increased profitability on a number of our previously impaired sites, the Group recorded a net reversal of £34.1 million of inventory write-downs in the UK. The UK housing market continued the positive trend into the second half, in particular the fourth quarter following the Government's announcement of accelerating the Help to Buy phase two mortgage guarantee scheme, adding further confidence to consumers and the housing market more widely. This has resulted in the Group recording a further net reversal of £28.2 million of inventory write-downs in the second half in the UK that consists of a reversal of previous write-downs of £41.9 million and additional write-downs to the lower of cost and net realisable value of £13.7 million.

The Spanish market remains challenging, particularly on the long dated legacy sites and following a strategic review this has resulted in a write-down of £16.7 million. The impact on the Group for the year is a net reversal of previous write-downs totalling £45.6 million that have been reported as an exceptional gain.

The Group repurchased all of the remaining 10.375% Senior Loan Notes due 2015 at a premium of£7.8 million that has been recognised as an exceptional charge in 2013.

Discontinued operations

Further progress has been made during the year relating to the ongoing commitments for the disposal of the North American business in 2011 and £31.3 million of the provision has been released with £11.8 million retained on the balance sheet (2012: £58.4 million). This provision release has been presented as a discontinued operation.

Tax

The Group incurred a pre-exceptional taxcharge of £53.7 million (2012: £35.2 million**) which equates to an underlying taxrate of 20.0% (2012: 19.4%). This differed from the average statutory tax rate for the year of 23.25%, mainly due to the recognition ofadditional deferred tax assets of £18.8 million (2012: £16.5 million) relating to previously unrecognised losses in the UK,following another year of profitability and utilisation of brought forward unrecognised losses of £6.6 million (2012: £11.7 million), partially offset by a deferred tax asset write-off of £21.8 million (2012: £21.1 million), following the reduction in the statutory rate to 20% during 2013.

Earnings per share

The adjusted basic earnings per share increased by 46% to 6.7p (2012: 4.6p**). The basic earnings per share is 8.5p (2012: 7.2p*).

Balance sheet and cash flow

Net assets at 31 December 2013 increased by £262 million in the year to £2.3 billion (31

December 2012: £2.0billion) which equates to a tangible net asset value per share of

69.6p(31 December 2012: 61.5p), driven by profit in the year, reduction in the pension deficit and provisions, offset partially by £20.8 million of dividend payments and £15.1 million of share purchases in the period. Adjusted gearing (including land creditors) at the year end is 15.3% (31 December 2012: 21.8%).

Net land held on the balance sheet was £2,180.1 million as at 31 December 2013 (31 December 2012: £2,051.0 million), a net investment increase of 6.3%. In the UK, 62% of land on the balance sheet was acquired post 2009. The average selling price in the owned landbank was £196k (2012: £184k), with land cost as a percentage of average selling price at 18.4% (2012: 19.0%).

The work in progress(WIP) spend is tightly controlled with an average of £2.3 million gross WIP per outlet (31 December 2012: £2.2 million), resulting in an improved WIP turnover ratio of 3.1 times (31 December 2012: 2.8 times).

As at 31 December 2013, the Group had mortgage debtors of £107.5 million (31 December 2012: £91.4 million), the majority of which relate to shared equity that has been fair valued in the period with a gain of £5.5 million (2012: nil), following the improvement in the housing market, in particular in the second half of the year.

As 31 December 2013, the Group held inventory that had been written down to net realisable value of £490.1 million of which the balance in the UK was £459.9 million (31 December 2012: £784.4 million). As at 31 December 2013, the associated NRV write-downs were £265.1 million (2012: £396.1 million) of which £206.8 million related to the UK (31 December 2012: £351.5 million).

Land creditors were £349.0 million at 31 December 2013 (31 December 2012: £375.0 million). Theuse of land creditors remains a useful tool for financing land purchases, however we continue to use them selectively due to our very low marginal cost of borrowings.

In total, the Group has recognised deferred tax assets of £246.6 million (31 December 2012:

£319.6 million) of which £195.7 million (31 December 2012: £248.0 million) relate to losses and £36.4 million (31 December 2012: £56.2 million) relate to deferred tax on retirement obligations.

The Group hasunrecognised potential deferred tax assets as at 31 December 2013 in the UK of £3.5 million (31 December 2012: £34.1 million) and £31.2 million in other jurisdictions (31 December 2012: £28.1million).

Year end net debt levels reduced from £59.0 million in 2012 to £5.4 million net cash in 2013. This reduction in netdebt is a result of the Group generating a cash inflow from operating activities of £98.1 million in 2013 (2012: cash inflow of £78.4 million) due to improved underlying operating results and working capital efficiency. Totalland spend including land creditors was £574.7 million (2012: £433.8 million), £48.1 million (2012: £52.4 million) was paid to our pension funds in the year and £35.2 million (2012: £33.3 million) was paid in finance costs.

Dividend

A key element of our strategy is the ongoing management of the Group's capital structure, operating base and level of land investment to maximise performance across the housing market cycle. We are committed to our strategy ofactively managing the business through the housing market cycle, and this approach includesmanaging the Group's capital. This active strategy is intendedto balance thecapital requirements of the business and return surplus cash to shareholders, whilst at all times maintaining balance sheetstrength and land investment flexibility.

Our dividend is an inherent part of our strategy and will be in the form of both regular maintenance dividend payments through the cycle and additional returns where appropriate. Our maintenance dividend policy of between 1% and 2% of net assets remains unchanged. This results in a final proposed dividend of 0.47 pence per share (2012: 0.43 pence per share). Combined with the interim dividend of 0.22 per share, this gives a 2013 total dividend of 0.69 pence per share (2012: 0.62 pence per share). The final maintenance dividend will be paid on 21 May 2014 subject to shareholder approval at the 2014 Annual General Meeting. These dividends are declared at the half year results and the full year results in an approximate one-third / two-thirds split respectively.

We have performed strongly in 2013 both from a trading perspective and in the land market and this coupled with the improvement in profitability forecast as a result of the improved quality of the landbank, and the capital requirements for the short term has led the Board to recommend a special dividend with c.£50 million payable (1.54 pence per share) on 3 July 2014 to shareholders on the register on 6 June 2014 and £200 million (c.6.16 pence per share) in July 2015, the latter subject to shareholder approval. As we have set out above, we see significant cash returns as a feature of the current stage of the cycle and, subject to any material change in the land or housing market or, most fundamentally, the planning environment, cash returns will continue to form a significant proportion of our total return to shareholders on an annual basis going forward.

Treasury management and funding

The Group operates within policies and procedures approved by the Board. TheGroup currently has two sources of committed debt funding: a £550 million syndicatedrevolving credit facility maturing in August 2018 and a £100 million term loan maturingNovember 2020. The £149.4 million in respect of the 10.375% Senior Notes due 2015 was repaid and cancelled on 31 December 2013, thereby satisfying the condition to the extension of the term loan originally due to mature in 2015. The average maturity across these sources of borrowings has increased to 4.7 years.