Final Results - Year Ended 31 December 1999
Taylor Woodrow PLC
15 March 2000
TAYLOR WOODROW plc PRELIMINARY STATEMENT
for the year ended 31 December 1999
'Excellent performance with star contribution from housing operations'
- pre-tax profits up 25% to £125.0 million
- worldwide housing profits up 39% to £78.1 million
- UK housing profits increase 58% to £30 million
- final dividend up 6% to 3.8p
- Greenham Trading to be disposed of
1999 1998
Group turnover £1,504 million £1,401 million
Group operating profit £139.3 million £110.2 million
Profit before tax £125.0 million £100.3 million
Earnings per share 21.3p 17.1p
Proposed final dividend per share 3.8p 3.6p
Shareholders' funds per share 196.8p 169.7p
Commenting on the results, chief executive Keith Egerton said: 'These are
a powerful set of results and demonstrate the strength of the group.
'Housebuilding and property, our core businesses accounting for 87% of
total profit, enjoyed a very good year. Demand for our Taywood Homes
housing in the UK, our luxury houses and lots in the United States and
high rise condominiums in Canada was particularly robust.
'We also achieved excellent sales on our principal residential properties
in Central London: The City Quay, Montevetro and Drury Lane.
'Profit from our property business rose 33% to £30.4 million. Key drivers
behind this growth were increased property trading development activity
and our success in letting faster and at higher rents.
'The year has started very well, with all our principal businesses
experiencing healthy trading conditions. We anticipate this favourable
environment continuing through the year. Even if a downturn were to occur,
we are very well placed. Our balance sheet is in excellent shape - net
gearing is 15.0% - and the international spread of our businesses
provides further protection'.
The Company will seek shareholder approval at its annual general meeting
in May to renew its existing authority to acquire up to 10% of its shares.
The Company has recently completed a strategic review and Keith Egerton
commented on its outcome:
'We undertook this review to identify how best to realise the value in
Taylor Woodrow. We concluded:
- Our core activities - worldwide housing and property - will continue
their very profitable growth.
- Our construction business has a strong future as a focused provider of
value added construction support.
- We will establish a leadership position in the growing market for mixed
use developments, which unite our property, housing and construction
expertise.
- We will dispose of non-core activities.
Expanding on these points Keith Egerton said; 'In the UK Taywood Homes is
on target to double its volume, with improving returns. In the United
States we will grow our luxury home and community development offerings in
affluent areas. We are growing our successful businesses in Canada, Spain
and Australia.
'We are streamlining our North American operations into one management
structure.
'Our property business will continue to be a significant contributor to
Group profitability. Its growth will increasingly derive from development
activity, particularly in the UK.
'Our construction business has a profitable role to play but in a much
reduced, more focused form. It is quitting low return / high risk
activities. These include foundation engineering, pre-cast and most other
civil engineering. It is concentrating on partnering with selected
clients, PFI work and facilities management. High among its partners will
be our housing and property businesses as they seek to exploit
opportunities in mixed use and brownfield regeneration. Few other
companies can provide the full range of expertise required to develop such
sites.
'The Board has instructed our bankers to sell our successful Greenham
Trading business, which is no longer a core activity. We are in
discussions with the management concerning an MBO. It is recognised that
our first priority and responsibility is to act in the interests of our
shareholders to achieve a fair and proper price.
'We are changing our culture. In the new Taylor Woodrow we are bringing
our corporate and operational headquarters together into one office. We
will be a leader in our sector for harnessing web-based technology to
maximise our operating efficiencies and client service.
'We are in very good shape. This gives us an excellent base on which to
drive the new Taylor Woodrow forward. We are ambitious. We have a clear
focus of where we want to go, the growth markets we wish to be in and the
manner and style of our getting there.'
REVIEW OF OPERATIONS
Housing 1999 1998
Profit before tax £78.1 million £56.3 million
In the UK Taywood Homes produced an outstanding performance as profits
jumped 69% to £25.4 million and operating margins rose from 10% to 13%.
Completions also moved ahead to 1,658 from 1,491 with the business
remaining on target to double its volume, with improving returns.
Lifestyle, the provider of quality retirement homes, secured its first 30
completions in the second half of the year and now has a solid portfolio
of projects to take forward. Prospects for this business are good.
The central London residential market continued to be buoyant. Central
London profits increased to £4.3 million as we completed 90 sales at The
City Quay in St. Katharines and the sales of the first 31 units at
Montevetro, the Group's flagship development in Battersea. Drury Lane, the
51-unit development in Covent Garden, has also performed very well, with
90% either reserved or exchanged before construction is complete.
US housing enjoyed a very good year with profits ahead 27% to £33 million.
Florida and California both turned in excellent performances as they
continued their strategy of targeting upscale markets with their luxury
houses and amenitised communities. First completions were achieved in
Northern California in the second half of the year, underlining the strong
market conditions there.
In Canada, profits moved ahead to £8 million from £7 million as the focus
on high rise condominium development continued, with 278 completions
compared with 36 in 1998. Five schemes were under development during 1999
and since the start of the year two more have been added. Completions in
the single family homes division were steady.
Australia produced improved results to £5 million. During the year it
purchased the 50% stake in North Whitfords Estates Pty. Ltd. it did not
already own. Margins were improved in a strong market which especially
helped our Harrington Park site near Sydney.
Spain also turned in a strong performance with profit of £2 million. This
business benefited from higher volumes and the first significant profits
from our successful mainland site at Los Arqueros.
Property 1999 1998
Profit before tax £30.4 million £22.9 million
Strong market conditions and the expansion into higher return property
development enabled profits from property operations to forge ahead to
£30.4 million, a rise of 33%.
During the year ten development sales were made, enabling the business to
increase profits from this area by 113%. A further 20 schemes are underway
across the UK and this business is set to continue to grow profits in this
area.
Taking advantage of strong institutional demand, the business sold £57
million of investment properties, which had reduced potential for further
capital growth. This included its interest in the Treaty Centre in
Hounslow. The strong market was confirmed in the year end valuation of the
UK investment portfolio where a 9% uplift in values was achieved from year
end 1998.
Monarch also took positive steps to actively work its portfolio. It
disposed of three investment properties in the first half of the year.
Construction 1999 1998
Profit before tax £5.1 million £6.1 million
In a year of transition turnover and profits were lower at £512 million
and £5.1 million respectively. The strategy for construction has been for
some time to concentrate on lower risk work and to seek an improvement in
margins. This resulted in lower turnover in 1999 but with a satisfactory
increase in the underlying margin from 1% to 1.9%.
The order book is of high quality and improvements are expected from PFI
and the growing facilities management business.
Greenham Trading 1999 1998
Profit before tax £6.9 million £8.7 million
Greenham Trading's profits in 1999 were lower at £6.9 million. This was
the result of static turnover as the business suffered from price
deflation and a lack of major public works in the UK. The deflation in
prices masked a reasonable increase in volume.
A number of major new contracts were secured during the year including a
£3-£4 million hygiene contact from Her Majesty's Prison Service.
SHAREHOLDER INFORMATION
If approved at the annual general meeting on 12 May 2000 the final
dividend will be paid on 3 July 2000 to shareholders whose names appear on
the register of members at the close of business on 31 March 2000.
The company offers a Dividend Re-investment Plan, which provides
shareholders with a facility to use their cash dividends to purchase
Taylor Woodrow plc shares in the market. Full details of the facility will
be sent to shareholders with the annual report, which is expected to be
mailed on 27 March 2000.
Copies of the annual report will be available from the company's
registered office, 4 Dunraven Street, London W1Y 3FG with effect from 27
March 2000.
Media enquiries:
Nicholas Jones Office 020 7629 1201
Mobile 07879 433119
Marc Popiolek, Gavin Anderson 020 7496 1467
Analyst enquiries:
David Green (Finance Director) - after 14.00 - 020 7629 1201
DETAILED FINANCIAL INFORMATION FOLLOWS
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 December 1999
1999 1998
£m £m £m notes
------------------------------------ ----- ------- -------
CONTINUING OPERATIONS
Turnover: Group and share of joint
ventures 1,522.0 1,408.0
Less: share of joint ventures'
turnover (18.0) (7.5)
------- -------
Group turnover 1,504.0 1,400.5 1
Cost of sales (1,210.1) (1,157.0)
------- -------
Gross profit 293.9 243.5
Distribution costs (50.4) (39.9)
Administrative expenses (104.2) (93.4)
------- -------
Group operating profit 139.3 110.2
Share of operating profit in joint
ventures 1.9 0.7
Profit on disposal of properties 3.6 -
------- -------
Profit on ordinary activities
before interest 144.8 110.9
Interest receivable 5.2 10.2
Interest payable:
Group (1998 : £20.5m) (23.1)
Joint ventures (1998 : £0.3m) (1.9)
----- (25.0) (20.8)
------- -------
Profit on ordinary activities before
taxation 125.0 100.3 1
Tax on profit on ordinary activities (34.4) (26.6) 2
------- -------
Profit on ordinary activities after
taxation 90.6 73.7
Minority equity interests (6.0) (5.5)
------- -------
Profit for the financial year 84.6 68.2
Dividends paid and proposed (20.9) (20.5) 3
------- -------
Profit retained 63.7 47.7
==================================== ======= =======
Basic earnings per share 21.3p 17.1p 4
======= =======
Diluted earnings per share 21.1p 16.9p 4
======= =======
==================================================================
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 31 December 1999
1999 1998
£m £m
----------------------------------------- ---- ----
Profit for the financial year 84.6 68.2
Unrealised surplus on revaluation of properties 25.9 21.1
Tax on realised revaluation surplus (0.9) -
----- ----
109.6 89.3
Currency translation differences on foreign
currency net investments 11.7 (6.2)
----- ----
Total recognised gains and losses relating to
the year 121.3 83.1
===== ====
==================================================================
CONSOLIDATED BALANCE SHEET
at 31 December 1999
1999 1998
£m £m £m notes
----------------------------------- ---- ----- -----
Fixed assets
Tangible assets
Investment properties 378.5 397.1
Other 101.6 103.9
Investments
Joint ventures
Share of gross assets
(1998 : £59.3m) 65.1
Share of gross liabilities
(1998 : £55.8m) (61.4)
---- 3.7 3.5
------- -----
483.8 504.5
------- -----
Current assets
Stocks 781.3 665.4
Debtors 153.2 187.6
Current asset investments 5.7 4.4
Cash at bank and in hand 138.6 81.2
------- -----
1,078.8 938.6
Creditors: amounts falling due within
one year (482.8) (476.8)
------- -----
Net current assets 596.0 461.8
------- -----
Total assets less current liabilities 1,079.8 966.3
Creditors: amounts falling due after
one year (235.6) (202.0)
Provisions for liabilities and charges (14.4) (11.1)
------- -----
829.8 753.2
======= =====
Represented by:
Capital and reserves - equity
Called up ordinary share capital 95.3 100.7
Capital redemption reserve 14.2 8.4
Share premium account 232.2 231.3
Revaluation reserve 125.0 94.4
Profit and loss account 283.6 248.9
------- -----
Shareholders' funds 750.3 683.7
Minority interests in equity of
subsidiary undertakings 79.5 69.5
------- -----
829.8 753.2
========================================= ======= =====
Net debt £112.6m £141.7m 5
Net gearing 15.0% 20.7%
Shareholders' funds per share 196.8p 169.7p
======= =====
==================================================================
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 1999
1999 1998
-------------- --------------
£m £m £m £m notes
------------------------------ ---- ---- ---- ----
Operating activities
Cash flow from operating
activities 92.5 (47.2) 5
Dividends from joint ventures 0.6 0.3
Returns on investments and
servicing of finance
Interest received 5.2 10.4
Interest paid (22.5) (19.7)
Dividends paid by subsidiary
undertakings to minority
shareholders (0.9) (0.7)
Net cash outflow from returns
on investments and
servicing of finance ---- (18.2) ---- (10.0)
Taxation
UK Corporation tax paid (4.6) (6.7)
Overseas tax paid (22.2) (16.7)
Tax paid ---- (26.8) ---- (23.4)
Capital expenditure and
financial investment
Purchase of fixed assets and
properties (20.7) (34.8)
Sale of fixed assets and
properties 62.5 17.8
Net cash inflow/(outflow)
from capital expenditure
and financial investment ---- 41.8 ---- (17.0)
Equity dividends paid (21.1) (18.9)
---- ----
Net cash inflow/(outflow)
before use for liquid
resources and financing 68.8 (116.2)
Management of liquid resources
Cash (placed on)/withdrawn from
short-term deposit (47.8) 45.9
Purchase of current asset
investments (1.3) (3.0)
Net cash (outflow)/inflow from
management of liquid
resources ---- (49.1) ---- 42.9 5
Financing
Issue of ordinary share capital
by Taylor Woodrow plc less
contributions to team member
share trust (0.4) 7.8
Repurchase of ordinary share
capital (33.4) -
Debt due within one year:
new loans 42.7 5.7
repayment of loans (52.1) (8.7)
Debt due after one year:
new loans 105.2 51.0
repayment of loans (63.3) (15.4)
Net cash (outflow)/inflow
from financing ---- (1.3) ---- 40.4
---- ----
Increase/(decrease) in cash
in the year 18.4 (32.9) 5
==== ====
NOTES ON THE ACCOUNTS
1 SEGMENTAL ANALYSIS Profit
Turnover before Net
by origin taxation Assets
---------------- ------------- ------------
1999 1998 1999 1998 1999 1998
as
re-
stated
£m £m £m £m £m £m
------- ------- ----- ---- ----- -----
By activity
Housing 706.9 540.4 78.1 56.3 439.8 348.6
Property development
and investment 122.4 87.7 30.4 22.9 322.1 299.9
Construction 511.5 613.5 5.1 6.1 23.7 7.4
Greenham Trading 141.6 139.8 6.9 8.7 31.1 29.6
Other 21.6 19.1 4.5 6.3 13.1 67.7
------- ------- ----- ----- ----- -----
1,504.0 1,400.5 125.0 100.3 829.8 753.2
======= ======= ===== ===== ===== =====
By market
United States of
America 327.1 250.8 35.2 27.7 195.8 167.6
Canada 95.1 68.1 11.3 10.2 105.0 90.4
Rest of the world 169.0 175.2 11.4 8.3 53.5 42.4
------- ------- ----- ---- ----- -----
Total overseas 591.2 494.1 57.9 46.2 354.3 300.4
United Kingdom 912.8 906.4 67.1 54.1 475.5 452.8
------- ------- ----- ----- ----- -----
1,504.0 1,400.5 125.0 100.3 829.8 753.2
======= ======= ===== =====
Minority interests (79.5) (69.5)
----- -----
Shareholders' funds 750.3 683.7
===== =====
Turnover by origin represents sales to third parties and is not materially
different from turnover to third parties by destination.
Net assets are now stated in line with a widely-accepted industry practice
after deduction of taxation on profits creditors (including deferred
taxation) of £36.3m (1998 : £28.4m) and proposed dividends of £14.3m
(1998 : £14.5m). Segmental net assets also now reflect proposed dividends
between segments. Comparative figures for 1998 have been restated
accordingly. These changes have resulted in increases/(decreases) in
activity and market segments net assets as follows:
Housing (33.7) (24.1)
Property development and investment (24.7) (24.3)
Construction (4.6) (7.2)
Greenham Trading (6.1) (8.8)
Other 18.5 21.5
---- ----
(50.6) (42.9)
==== ====
United States of America (2.2) (3.5)
Canada (2.9) -
Rest of the world (11.0) (7.7)
United Kingdom (34.5) (31.7)
---- ----
(50.6) (42.9)
==== ====
==========================================================================
2 TAX ON PROFIT ON ORDINARY ACTIVITIES 1999 1998
£m £m
---- ----
United Kingdom tax
Corporation tax 11.6 15.9
Relief for overseas tax (0.7) (6.2)
Overseas tax
Current 24.3 16.4
Deferred (0.9) (0.2)
Joint ventures 0.1 0.7
---- ----
34.4 26.6
==== ====
The tax charges are below standard rates mainly due to the utilisation
of tax losses.
==========================================================================
3 ORDINARY DIVIDENDS ON EQUITY SHARES 1999 1998
£m £m
---- ----
Interim of 1.65p per share (1998 : 1.5p) 6.6 6.0
Proposed final of 3.8p per share (1998 : 3.6p) 14.3 14.5
---- ----
20.9 20.5
==== ====
==========================================================================
1999 1998
4 EARNINGS PER SHARE £m £m
----- -----
Earnings per share has been calculated by dividing:
Profit for the financial year 84.6 68.2
===== =====
by the weighted average number of shares
for basic earnings per share 396.7m 397.9m
weighted average of dilutive options 3.0m 4.3m
weighted average of dilutive
awards under the Group Executive Bonus Plan 1.1m 0.8m
----- -----
for diluted earnings per share 400.8m 403.0m
===== =====
==========================================================================
5 CONSOLIDATED CASH FLOW STATEMENT
Reconciliation of operating profit
to net cash flow from operating activities 1999 1998
£m £m
----- -----
Operating profit 139.3 110.2
Depreciation 13.8 13.1
Increase in stocks (93.9) (164.7)
Decrease in debtors 32.3 8.2
Decrease in creditors (0.3) (18.9)
Exchange adjustments 1.3 4.9
----- -----
Net cash inflow/(outflow)from operating activities 92.5 (47.2)
===== =====
Reconciliation of net cash flow to movement in net debt
Increase/(decrease) in cash in the year 18.4 (32.9)
Cash inflow from increase in debt (32.5) (32.6)
Cash outflow/(inflow) from increase/(decrease) in
liquid resources 49.1 (42.9)
----- -----
Change in net debt resulting from cash flows 35.0 (108.4)
Amortisation of discount on issue of 9.5% first
mortgage debenture stock 2014 and expenses of
issue for the year (0.3) (0.3)
Exchange movement (5.6) 3.8
----- -----
Movement in net debt in the year 29.1 (104.9)
Net debt at 1 January (141.7) (36.8)
----- -----
Net debt at 31 December (112.6) (141.7)
===== =====
Analysis of net debt
At At
1 January Cash Non-cash Exchange 31 December
1999 flow changes movement 1999
£m £m £m £m £m
--------- ---- -------- -------- -----------
Cash at bank
and in hand 81.2 55.6 - 1.8 138.6
less
Deposits due
after one day (39.3) (47.8) - (0.9) (88.0)
Overdrafts on
demand (17.2) 10.6 - (0.1) (6.7)
-----
18.4
Debt due after one
year
Debenture loans (173.8) (8.8) 7.9 (5.5) (180.2)
Bank loans (16.3) (33.1) 1.8 (1.0) (48.6)
Debt due within
one year
Debenture loans (15.4) 11.6 (8.2) (0.6) (12.6)
Bank loans and
overdrafts (21.8) 8.4 (1.8) (0.3) (15.5)
add back
Overdrafts on
demand 17.2 (10.6) - 0.1 6.7
-----
(32.5)
Liquid resources
Deposits due
after one day 39.3 47.8 - 0.9 88.0
Current asset
investments 4.4 1.3 - - 5.7
-----
49.1
----- ----- ---- ---- -----
Total (141.7) 35.0 (0.3) (5.6) (112.6)
===== ===== ==== ==== =====
==========================================================================
6 GENERAL
The preliminary accounts have been prepared on a basis which is
consistent with the accounting policies adopted for the year to 31
December 1998.
The preliminary accounts were approved by the board of directors on
15 March 2000.
These accounts do not constitute the company's statutory accounts for
the years ended 31 December 1999 or 1998 but are derived from those
accounts. Statutory accounts for 1998 have been delivered to the
Registrar of Companies and those for 1999 will be delivered following
the company's annual general meeting. The auditors have reported on
these accounts; their reports were unqualified and did not contain a
statement under section 237 (2) or (3) of the Companies Act 1985.
=========================================================================
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