Final Results
Taylor Woodrow PLC
20 February 2007
TAYLOR WOODROW plc PRELIMINARY RESULTS STATEMENT
(for the year ended 31 December 2006)
Highlights
• Group revenues £3.68bn (2005: £3.56bn)
• Housing profit from operations* £469m (2005: £456m) after providing £21m
for land write-downs and option cost write-offs in North America
• Profit before tax £406m (2005: £411m)
• Basic earnings per share 50.5 pence (2005: 50.6 pence)
• Full year dividend 14.75 pence (2005: 13.4 pence)
• Net gearing 18.6 per cent (2005: 23.7 per cent)
• Equity shareholders' funds per share 364.7 pence (2005: 338.4 pence)
* Profit from operations and operating margins are before joint ventures'
interest and tax (see Note 1). The Group's share of joint venture revenue is
used in the margin calculation (see Note 1).
Norman Askew, Chairman of Taylor Woodrow, said today:
'We have delivered a robust performance in 2006 and the increase in the full
year dividend of 10 per cent maintains our progressive dividend policy. I look
forward to working with Ian Smith, our new Chief Executive, to achieve further
success for Taylor Woodrow.'
Ian Smith, Chief Executive of Taylor Woodrow, commented:
'My initial review of Taylor Woodrow's operations has confirmed my impression of
a business with strong potential for growth in the medium term.
The UK has delivered in line with expectations in 2006. We have a number of
initiatives in place to improve our performance and this will be our UK
management team's key focus.
In North America, we have achieved an excellent performance in 2006 as a result
of the strategy of maximising forward sales during 2005. We continue to be
confident in the prospects for the business in the medium-term, but expect to
see significant reductions in both operating margin and return on capital
employed during 2007.'
-ends-
A presentation to analysts will be made at 10.00 hrs on 20 February 2007. This
presentation will be broadcast live on taylorwoodrow.com.
For further information please contact
Taylor Woodrow
Jonathan Drake (Investor Relations) 07816 517 039 / 0121 600 8394
Ian Morris (Media Enquiries) 07816 518 767 / 0121 600 8520
Bell Pottinger
Ben Woodford / Dan de Belder 020 7861 3232
Taylor Woodrow operates a portfolio of housing businesses in selected markets in
the UK, North America, Spain and Gibraltar, which account for 98 per cent of our
operating profits. In addition to building new homes, we also have expertise in
mixed-use development and construction, which help to support our development of
sustainable new communities.
Group performance scorecard
2006 2005
Operating Margin* % 13.0 13.5
Return on Average Capital Employed % 23.0 24.6
Gearing % 18.6 23.7
Home Completions 13,165 12,516
Order book £m 2,235 2,025
Landbank plots 68,662 75,160
Results
Consolidated revenue for the year to 31 December 2006 was up 3 per cent at
£3,572.1m (2005: £3,476.9m). Profit before tax was £405.6m (2005: £411.0m).
At 31 December 2006, total equity before minority interests was £2,103.5m (2005:
£1,928.4m). Net debt was £391.3m (2005: £456.9m). Net gearing was 18.6 per cent
(2005: 23.7 per cent).
Basic earnings per share was 50.5 pence (2005: 50.6 pence). Equity shareholders'
funds per share increased by 7.8 per cent to 364.7 pence.
Group housing
2006 2005
Revenue, including 3,128.4 2,864.9
joint ventures £m
Profit from operations* £m 469.2 456.0
Operating margin* % 15.0 15.9
Ending capital employed £m 2,241.2 2,138.2
ROACE % 21.4 22.9
Home completions 13,165 12,516
Home average selling price £'000 207 204
Lot completions 6,413 4,495
Order book £m 1,070 1,318
Landbank plots 68,662 75,160
Group housing has had a good year, with our North American business reporting
another year of record profits. Revenue increased to £3,128.4m (2005:
£2,864.9m), reflecting an increase in both home and lot completions. Profits
from operations were higher than last year, at £469.2m, as the increase in
completions outweighed the reduction in overall Group housing operating margin.
53 per cent of 2006 Group housing profit from operations* came from overseas
operations (2005: 49 per cent). This reflects our decision to increase
investment into those markets over the last few years.
The Group housing landbank (owned and controlled) was reduced to 68,662 plots
(2005: 75,160), as a result of our more cautious approach to land buying in
North America. The Group housing order book stood at £1,070m (2005: £1,318m),
with a decrease in North America offsetting increases in the UK and Spain.
UK housing
2006 2005
Revenue, including 1,842.0 1,647.4
joint ventures £m
Profit from 221.5 233.4
operations* £m
Operating margin* % 12.0 14.2
Ending capital employed £m 1,574.4 1,585.1
ROACE % 14.0 15.2
Home completions 8,294 8,178
Home average selling price £'000s 193 185
Lot completions 3,695 1,748
Active sites (average) 207 204
Order book £m 534 411
Landbank plots 34,827 34,985
Strategic landbank potential plots 79,000 80,000
Customer satisfaction % 78 75
2006 saw a return to more stable market conditions in the UK. There was,
however, considerable regional variation in the strength of markets. London and
the South-East were particularly strong while the Midlands and North remained
subdued. Overall visitor levels per site per week were up 12 per cent on 2005
and we also saw an increase in the reservation rate to 0.83 homes per site per
week (2005: 0.81). Cancellation rates have also improved, with the 2006 level of
17 per cent being broadly in line with the long-run industry average (2005: 20
per cent).
We have increased our average number of active sites in 2006 to 207 (2005: 204).
Home completions for the year were up 1 per cent to 8,294 (2005: 8,178) and we
entered 2007 with an order book up by 30 per cent to £534m (2005: £411m).
Average selling prices were higher at £193k (2005: £185k). An increase in the
underlying price per square foot offset the slight reduction in average square
footage of our homes from 960 sq ft to 952 sq ft. The latter was a result of an
increase in the proportion of social housing completions to 15 per cent (2005:
13 per cent) and the proportion of apartment completions to 45 per cent (2005:
40 per cent).
UK Housing revenue increased by 11.8 per cent, driven by the increases in home
completions and average selling prices. Operating margins* were lower at 12.0
per cent (2005: 14.2 per cent). Results in 2005 benefited from a higher level of
land profits, primarily due to the disposal of the Quartermile project in
Edinburgh. Revenue from land sales in 2006 was £194.6m (2005: £134.4m) and
yielded lower profits and margins than in 2005, due to an increased proportion
of recently-acquired land in the mix. This is a result of our strategy of
acquiring large sites and selling on those parcels of land that we do not
require for our homebuilding business. Return on average capital employed for
the year was 14.0 per cent (2005: 15.2 per cent).
Our operating margin has declined in 2006, and consequently growth in margin is
the long-term key focus of our UK management. We are preparing a number of new
measures to extract greater value from our sites. These will complement our
ongoing activity to better manage cost:
•Increasing the proportion of our homes that are built using our core
range, which provides customers with the choice that they need, whilst also
enabling us to achieve lower build costs;
•Further developing our 'right first time' approach to reduce maintenance
costs and increase customer satisfaction;
•Increasing build process efficiency.
We will be providing an update on our progress with these initiatives when we
announce our Interim Results on 31 July 2007.
Our Supply Chain team works to deliver value throughout the build process. Their
skills were recognised by the Chartered Institute of Purchasing and Supply when
Taylor Woodrow's Supplier Management Solution won the award for 'Best Use of
Technology' in 2006.
We continue to make good progress with our strategic landbank, which represents
land that does not currently have planning consent. Having identified a site
with strategic potential we will typically agree a purchase option arrangement
with the landowner and then work together to promote the land through the
planning process. Such options generally provide us with the ability to purchase
the land at a discount to market value when suitable planning consents are
obtained. Sites brought through from the strategic landbank typically generate
higher margins than those bought in the open market with a planning consent in
place. During 2006, 22 per cent of our home completions were strategically
sourced (2005: 19 per cent) and we aim to increase this to 25 per cent of our
completions by 2008. At the end of 2006 we had 79,000 potential plots within our
strategic landbank (2005: 80,000) and 39 per cent of the land in our landbank
originally came from strategic sources (2005: 41 per cent).
The quality of the landbank is critical to delivering growth in future years. As
well as the strength of the strategic land outlined above, we have maintained
our investment in the UK landbank during 2006. As a result, our year end
landbank stood at 34,827 plots owned or controlled, broadly in line with the
position a year ago. This represents 4.2 years of supply.
We are committed to developing communities where people want to live, rather
than just building a collection of houses. For example, The Green Building at
Macintosh Village in Manchester won the Civic Trust Sustainability Award for its
urban design and use of materials.
Customer satisfaction is a key priority and our efforts in this area are
reflected in the improvements to our customer satisfaction score. In 2006, the
score for our UK Housing business rose to 78 per cent (2005: 75 per cent).
North America housing
2006 2005
Revenue, including 1,194.3 1,141.8
joint ventures £m
Profit from 221.3 199.6
operations* £m
Operating margin* % 18.5 17.5
Ending capital employed £m 577.2 495.6
ROACE % 41.3 49.2
Home completions 4,492 3,932
Home average selling price £'000s 233 248
Lot completions 2,640 2,735
Active sites (average) 108 85
Order book US$m 854 1,421
Landbank plots 31,353 37,910
Customer satisfaction % 87 86
Our North American business has delivered another excellent year of profit
growth, with profit from operations* increasing by 11 per cent to £221.3m (2005:
£199.6m). This reflects the success of our strategy of maximising forward sales
in the buoyant market conditions of 2005 in order to mitigate the anticipated
impact of market weakness in Arizona, California and Florida during 2006.
Home completions increased by 14 per cent to 4,492 (2005: 3,932) with lot
completions slighter lower at 2,640 (2005: 2,735). Despite the challenging
market conditions, our operating margin increased to 18.5 per cent, as the
reservations in our order book at the start of the year were converted into
completions. Return on average capital employed has reduced from the wholly
exceptional levels achieved last year, but still represents a very strong
result.
We entered 2006 with a record order book of US$1,421m as a result of our focus
on pre-selling. Our order book of US$854m at the end of 2006 reflected the
weaker market conditions experienced during the year.
We have been more cautious in the land market in 2006, as land prices adjusted
downwards to reflect the market conditions. Much of our land is acquired under
option initially and only bought outright once planning consents are in place.
We carefully review the terms of each option as it becomes exercisable and,
where terms are no longer attractive due to changes in market conditions, we
approach the land vendor to renegotiate. In many instances we have managed to
improve terms, but there have also been cases where we have allowed options to
lapse. We have undertaken a full review of our year-end land positions which, in
conjunction with deposits on options not taken up, has resulted in a pre-tax
land write-off of US$40m.
While we have continued to buy land through our existing portfolio of options,
we have been very selective in replacing options during 2006. As a result, our
landbank at the year end stood at 31,353 plots (2005: 37,910 plots). This
represents 4.4 years of supply and allows us to continue to be selective in our
land purchasing in 2007.
While short-term market prospects are difficult, commentators are united in the
belief that a recovery will occur. There is very significant potential for
Taylor Woodrow in North America in the medium-term. Our home completions in
North America are just over a half of our completions in the UK for 2006, but
the Florida market alone is larger than the entire UK market.
Our business in Arizona, which is focused on the Phoenix market, has been
tremendously successful since it was acquired in 2002. Having originally been
centred on entry-level homes, the business has been diversifying into the
mid-market and during 2006 launched a new product range, targeting growing
families and executive buyers. We completed 1,245 homes in Arizona in 2006
(2005: 1,009) at an average selling price of US$287k (2005: US$209k). The
business is also a highly successful land developer, buying larger tracts of
land, identifying the plots that best suit our product and selling on the
remaining plots to other builders. During the year we completed the sale of
1,171 lots (2005: 1,076). Whilst the market in Arizona cooled during 2006, the
long-term fundamentals of population growth, job growth and relative
affordability remain in place.
In California we operate in two key markets. In the North, our business is
focused on the lower end of the mid-market in the San Francisco Bay area. In
Southern California we build in selected sub-markets from Riverside and San
Bernardino Counties southwards to San Diego and eastwards towards Palm Springs.
Californian markets in general weakened significantly during 2006, primarily due
to interest rate rises and affordability issues. However, our focus on the
mid-market and providing high-quality homes allows us to offer an attractive
proposition to our customers. During the year we completed the sale of 540 homes
(2005: 721 homes) at an average selling price of US$812k (2005: US$835k). We
also achieved 156 lot completions (2005: 378).
We operate from three divisions in Florida. Our Central Florida division covers
the areas around St Petersburg, Tampa, Bradenton and Sarasota. In South-East
Florida we operate in the Palm Beach area, whilst in South-West Florida we are
focused on the markets between Fort Myers and Naples. We offer a wide range,
from middle market to luxury homes and condominiums, targeted to move-up
families, retirees, and second home purchasers. The Florida market has also
experienced more difficult conditions following a number of years of very strong
house price appreciation. Home completions in 2006 were 835 (2005: 752) at an
average selling price of US$653k (2005: US$727k). Our land development business
in Florida is primarily centred around our large-scale developments, where we
sell lots to other homebuilders. In 2006 we completed the sale of 499 lots
(2005: 219 lots).
Our operations in Texas are active in both Austin and Houston. These markets did
not experience the price growth of other US regions in recent years and are
proving more stable while other markets weaken. They offer good levels of
affordability, particularly in comparison to the Western United States. We have
a strong reputation in Texas as a high-quality community developer, which
enables us to target the 'move-up' market. We offer our customers a range of
innovative home designs that deliver 'affordable luxury'. Home completions
increased to 280 (2005: 190) with average sales prices up 5 per cent to US$447k
(2005: US$424k). We also have a strong land development business in Texas,
centred on our community at Steiner Ranch in Austin. We completed on 306 lots in
2006 (2005: 353).
In Ontario, Canada, the group trades under the Monarch brand which benefits from
a long-standing reputation for quality and value. Operating in the Greater
Toronto Area and in Ottawa in Eastern Ontario, Monarch builds low-rise,
mid-market family homes and high-rise condominiums as well as affordable, urban
townhomes. The Ontario market has not seen significant house price inflation
over recent years and retains a good level of affordability. In addition, the
market was assisted by the reduction in the level of Canadian Goods and Services
Tax during the year. Completions in 2006 were 1,592 homes (2005: 1,260). The
average sales price was Can$322k (2005: Can$326k). We also sell lots in Canada
and completed 508 during 2006 (2005: 709).
The continuing success of our business in North America is a result of our focus
on high-quality developments, professional finishes, and exceptional customer
service. In October 2006, Taylor Woodrow received the honour of being the first
homebuilder ever to be inducted into the Builder Magazine Hall of Fame for
Design Excellence. This prestigious award recognises outstanding contributions
to residential design.
Our North America divisions are consistently recognised by customers and
industry peers, winning some of the most sought-after awards in the business. In
particular, our Arizona division received five awards at the 2006 'The
Nationals' Awards, recognising Taylor Woodrow's contribution to innovation in
home design, marketing and sales.
Spain and Gibraltar housing
2006 2005
Revenue, including 92.1 75.7
joint ventures £m
Profit from 26.4 23.0
operations* £m
Operating margin* % 28.7 30.4
Ending capital employed £m 89.6 57.5
ROACE % 35.9 45.7
Home completions 379 406
Home average selling price £'000s 205 169
Lot completions 78 12
Active sites (average) 28 22
Order book £m 100 81
Landbank plots 2,482 2,265
Customer satisfaction % 62 73
Our business in Spain trades under the Taylor Woodrow brand and is primarily
focused on developing sites in popular holiday destinations. Where we identify
appropriate opportunities, we also build homes designed to meet the requirements
of the local population.
In Gibraltar, Taylor Woodrow serves the luxury market through apartment
developments, selling off-plan well in advance of the start of construction.
After a strong performance in 2005, we saw our markets in the Costa Blanca and
Costa del Sol slowing during 2006. However, the market in Mallorca continues to
be good as a result of the limited supply to meet the demand for new properties
on the island, which has become a sought-after destination.
We sold a total of 379 homes in 2006 (2005: 406) at an average selling price of
£205k (2005: £169k). This increase in average selling price reflects a change in
the mix of completions, with a higher proportion of completions in 2006 coming
from our developments in Mallorca. We also took the opportunity during the year
to rebalance the land portfolio by selling some of our holdings in the Malaga
area.
Operating margins and returns on capital have remained strong, albeit below the
exceptional levels achieved in recent years.
The order book increased 23 per cent to £100m (2005: £81m) and our year-end
landbank stood at 2,482 plots, up 10 per cent (2005: 2,265).
The disappointing reduction in our customer satisfaction score results
predominantly from difficulties in obtaining habitation certificates, as high
levels of development activity put pressure on local town halls.
Construction
Our Construction business has developed an excellent reputation within its
chosen markets focusing on repeat work for blue chip clients, facilities
management, infrastructure and government projects. This excellence has once
again been recognised with a number of industry awards in 2006, including being
named Building Magazine's 'Major Contractor of the Year' and winner of the
overall 'Constructing Excellence' award. Profit from operations* was £8.1m
(2005: £8.8m) and our increased order book of £1,165m at the year end (2005:
£707m) provides us with a solid platform for 2007.
During the year we have undertaken projects ranging from the redevelopment of
the ticket hall at Kings Cross Underground Station in London to the design and
build of the new National Assembly for Wales in Cardiff. We have recently
commenced work on the St Helens and Knowsley Hospitals PFI Scheme and are also
preferred bidder on the Sheffield 'Building Schools for the Future' programme.
We achieved a customer satisfaction score of 87 per cent in 2006 (2005: 91 per
cent).
Pensions
At 31 December 2006, the gross IAS19 deficit was £206m (2005: £220m). Net of
deferred tax, the deficit was £144m (2005: £154m).
The company has now completed discussions with the trustees of the main defined
benefit pension scheme in the UK on the means of mitigating this deficit. As we
announced at our Interim Results, the company has agreed to increase its past
service deficit funding payments from £4.8m per annum to £20m per annum for a
period of 10 years. This increase impacts on cashflow, but profit from
operations will not be affected. Also in line with our previous announcement,
the fund was closed to future accrual for existing members on 1 December 2006.
Equity shareholders' funds
At the end of 2006, shareholders' funds were £2,103.5m, up from £1,928.4m at the
end of 2005. Equity shareholders' funds per ordinary share rose to 364.7 pence
at the end of 2006. This represents an increase of 7.8 per cent from the
previous year-end.
Shareholders' returns
Basic earnings per share stood at 50.5 pence (2005: 50.6 pence). The proposed
final dividend of 9.75 pence produces a total return of 14.75 pence per ordinary
share, an increase of 10 per cent over last year. This level of dividend is
consistent with the Board's policy of paying progressive dividends through the
business cycle.
The dividend is covered 3.4 times by earnings.
Cash flow and net debt
Operating cashflows before movements in working capital were £460.9m (2005:
£461.1m). Inventories increased by £347.5m which was partly funded by an
increase in creditors of £174.4m. Of this latter increase, £131.1m is
represented by an increase in land creditors. Cash generated by operations was
£223.3m (2005: £359.7m). Income taxes and interest payments totalled £166.3m
(2005: £229.5m), resulting in net cash from operating activities of £57.0m
(2005: £130.2m).
Net debt at the year-end stood at £391.3m (2005: £456.9m) equivalent to net
gearing of 18.6 per cent (2005: 23.7 per cent). Interest on borrowings, net of
interest receivable was £55.0m (2005: £54.4m). Average net debt for the year was
£837.8m (2005: £823.4m). At the year-end Taylor Woodrow had undrawn committed
revolving credit facilities totalling £629.5m.
Taxation
The effective tax rate in 2006 was 28.4 per cent (2005: 30.3 per cent).
Prospects for 2007
Our geographic portfolio of businesses continues to provide us with alternative
investment and growth options.
The UK Housing market remains good. Underlying fundamentals are strong due to
the continuing significant undersupply of new housing. Whilst Government is
committed to introducing policies that will increase the availability of land
for development, we have not yet seen any increase in supply. Despite strong
price appreciation during 2006, there were wide regional variations and customer
confidence could be damaged in some of the weaker markets if further interest
rate rises materialise in 2007. We anticipate an increase in the number of home
completions during 2007 and will continue to focus on improving our operating
margins.
In North America, although the markets in Arizona, California and parts of
Florida remain challenging and difficult to predict, current market conditions
in Texas and Ontario are healthy. We continue to be confident in the prospects
for the business in the medium-term, but expect to see significant reductions in
both operating margin and return on capital employed during 2007. The priority
for our North American management is to minimise the impact of the market
downturn in the short-term, whilst taking the opportunity to position the
business for accelerated growth in the future.
The market in Spain remains attractive on a medium-term view, although any
weakness in the UK market in the short-term could reduce demand for property in
Spain from British buyers. With an in-depth knowledge of the markets in which we
operate, we are well-placed to benefit from any land acquisition opportunities
that market conditions might present.
Shareholder Information
The company's 2007 Annual General Meeting will be held at 2pm on Wednesday 2 May
2007 in the Oasis Suite at the Crowne Plaza Hotel, Pendigo Way, National
Exhibition Centre, Birmingham, B40 1PS.
Subject to confirmation at the Annual General Meeting, the 2006 final dividend
of 9.75 pence per share will be paid on Monday 2 July 2007 to shareholders on
the register of members at the close of business on Friday 25 May 2007.
Shareholders are again being offered the opportunity to re-invest some or all of
their dividend under the Dividend Re-Investment Plan, details of which will be
contained in the 2007 AGM circular to shareholders, which will be posted to
ordinary shareholders with the 2006 Annual Report and Accounts on Monday 19
March 2007.
Copies of the Report and Accounts 2006 will also be available from that date on
the Company's website taylorwoodrow.com and from the registered office at 2
Princes Way, Solihull, West Midlands, B91 3ES.
The latest date for receipt of the Dividend Re-Investment Plan mandate forms for
the 2006 final dividend is Friday 1 June, 2007. The latest date for receipt of
notices of withdrawal from the Plan for the 2006 final dividend is Friday 15
June, 2007.
Consolidated Income Statement for the year to 31 December 2006
Note 2006 2005
£m £m
Continuing operations
Revenue: Group and share of joint ventures 1 3,679.0 3,556.4
Less share of joint ventures (106.9) (79.5)
-------- --------
Consolidated revenue 1 3,572.1 3,476.9
Cost of sales (2,933.4) (2,831.7)
-------- --------
Gross profit 638.7 645.2
Profit on disposal of properties and investments 9.1 10.2
Administrative expenses (200.1) (195.4)
Share of results of joint ventures 22.1 15.0
-------- --------
Profit from operations 1 469.8 475.0
Interest receivable 9.1 8.3
Finance costs 2 (73.3) (72.3)
-------- --------
Profit before tax 405.6 411.0
Tax 3 (115.0) (124.5)
-------- --------
Profit for the year 290.6 286.5
-------- --------
Attributable to:
Equity holders of the parent 289.5 285.7
Minority interest 1.1 0.8
-------- --------
290.6 286.5
-------- --------
Earnings per share
From continuing operations
Basic 5 50.5p 50.6p
-------- --------
Diluted 5 50.1p 49.8p
-------- --------
Consolidated Statement of Recognised Income and Expense for the year to
31 December 2006
2006 2005
£m £m
-------- --------
Net exchange differences on translation of foreign (49.0) 36.4
operations
Actuarial losses on defined benefit pension schemes (1.6) (73.3)
Tax on actuarial losses taken directly to equity 0.5 22.0
Net surplus on revaluation 1.0 -
-------- --------
Net expense recognised directly in equity (49.1) (14.9)
Profit for the year 290.6 286.5
-------- --------
Total recognised income for the year 241.5 271.6
-------- --------
Attributable to:
Equity holders of parent 240.4 270.8
Minority interests 1.1 0.8
-------- --------
241.5 271.6
-------- --------
Reconciliation of movements in consolidated equity for the year
to 31 December 2006
Note 2006 2005
£m £m
-------- --------
Total recognised income for the year 241.5 271.6
Dividends on equity shares 4 (79.7) (71.3)
New share capital subscribed 3.8 9.8
Proceeds from sale of own shares 15.0 7.3
Purchase of own shares (6.1) -
Increase in share-based payment tax reserve 4.2 1.2
Credit to equity relating to own shares - 1.3
Share-based payment credit 6.1 5.9
Cash cost of satisfying share options (8.0) -
Increase (decrease) in other reserve (0.6) 0.6
Decrease in minority interests - (0.9)
-------- --------
Net increase in equity 176.2 225.5
Opening equity 1,929.3 1,703.8
-------- --------
Closing equity 2,105.5 1,929.3
-------- --------
Consolidated Balance Sheet at 31 December 2006
2006 2005
£m £m
-------- ---------
Non-current assets
Goodwill 363.1 363.9
Property and plant 25.5 24.4
Interests in joint ventures 56.2 92.1
Trade and other receivables 56.0 37.2
Deferred tax assets 95.4 101.2
--------- ---------
596.2 618.8
--------- ---------
Current assets
Inventories 2,946.5 2,699.6
Trade and other receivables 294.9 278.3
Tax receivables 19.7 3.6
Cash and cash equivalents 236.5 197.3
--------- ---------
3,497.6 3,178.8
--------- ---------
--------- ---------
Total assets 4,093.8 3,797.6
--------- ---------
Current liabilities
Trade and other payables (926.0) (822.1)
Tax payables (74.1) (61.6)
Debenture loans (2.5) (6.5)
Bank loans and overdrafts (12.3) (9.0)
--------- ---------
(1,014.9) 899.2)
--------- ---------
--------- ---------
Net current assets 2,482.7 2,279.6
--------- ---------
Non-current liabilities
Trade payables (123.1) (76.2)
Debenture loans (610.6) (638.0)
Bank loans (2.4) (0.7)
Retirement benefit obligation (208.6) (222.5)
Deferred tax liabilities (0.8) (0.9)
Long-term provisions (27.9) (30.8)
--------- ---------
(973.4) (969.1)
--------- ---------
--------- ---------
Total liabilities (1,988.3) (1,868.3)
--------- ---------
--------- ---------
Net assets 2,105.5 1,929.3
--------- ---------
Equity
Share capital 148.5 148.0
Share premium account 758.8 756.2
Revaluation reserve 1.5 0.5
Own shares (45.0) (53.9)
Share-based payment tax reserve 8.2 4.0
Capital redemption reserve 31.5 31.5
Other reserve 4.8 5.4
Translation reserve (19.1) 29.9
Retained earnings 1,214.3 1,006.8
--------- ---------
Equity attributable to equity holders of the parent 2,103.5 1,928.4
Minority interests 2.0 0.9
--------- ---------
Total equity 2,105.5 1,929.3
--------- ---------
Consolidated Cash Flow Statement for the year to 31 December 2006
Note 2006 2005
£m £m
-------- --------
Net cash from operating activities 6 57.0 130.2
Investing activities
Interest received 9.1 8.3
Dividends received from joint ventures 22.6 3.0
Proceeds on disposal of properties,
plant and investments, including joint ventures 48.0 13.9
Purchases of properties, plant and investments (6.7) (6.3)
Amounts invested in joint ventures (9.2) (22.8)
Amounts repaid by joint ventures 5.3 27.2
-------- --------
Net cash from investing activities 69.1 23.3
-------- --------
Financing activities
Equity dividends paid (79.7) (71.3)
Dividends paid by subsidiaries to minority shareholders (0.1) (0.9)
Issue of ordinary share capital 3.3 9.8
Proceeds from sale of own shares 15.9 7.3
Purchase of own shares (12.4) -
New debenture loans raised - 1.8
New bank loans raised 608.7 410.2
Repayment of debenture loans (4.3) (18.5)
Repayment of bank loans (600.9) (416.2)
Decrease in bank overdrafts (2.7) (2.3)
-------- --------
Net cash used in financing activities (72.2) (80.1)
-------- --------
Net increase/(decrease) in cash and cash
equivalents 53.9 73.4
Cash and cash equivalents at beginning of year 197.3 114.9
Effect of foreign exchange rate changes (14.7) 9.0
-------- --------
Cash and cash equivalents at end of year 236.5 197.3
-------- --------
Notes to the Consolidated Financial Statements for year to 31 December 2006
1. Business and geographical segments
Business segments
For management purposes, the Group is currently organised into four operating
divisions - Housing - United Kingdom, Housing - North America, Housing - Spain
and Gibraltar, and Construction. From 2006, the Property sector is no longer
separately reported. These divisions are the basis on which the Group reports
its primary segment information.
Segment information about these businesses is presented below.
Housing Housing
United Housing Spain and
Kingdom North America Gibraltar Total Housing Construction Consolidated
2006 £m £m £m £m £m £m
------- -------- ------- -------- ------- -------
Revenue:
External sales 1,759.2 1,170.2 92.1 3,021.5 550.6 3,572.1
Inter-segment sales 4.1 4.1 60.8 64.9
Eliminations (4.1) (4.1) (60.8) (64.9)
------- -------- ------- -------- ------- -------
Total revenue 1,759.2 1,170.2 92.1 3,021.5 550.6 3,572.1
Share of joint
ventures' revenue 82.8 24.1 - 106.9 - 106.9
------- -------- ------- -------- ------- -------
Group and
share of joint
ventures 1,842.0 1,194.3 92.1 3,128.4 550.6 3,679.0
------- -------- ------- -------- ------- -------
Result:
Profit before
joint ventures 206.8 206.4 26.4 439.6 8.1 447.7
Share of joint
ventures' profit* 14.7 14.9 - 29.6 - 29.6
------- -------- ------- -------- ------- -------
Profit* 221.5 221.3 26.4 469.2 8.1 477.3
Share of joint
ventures'
interest and tax (6.1) (1.4) - (7.5) - (7.5)
------- -------- ------- -------- ------- -------
Profit from operations 215.4 219.9 26.4 461.7 8.1 469.8
Finance costs, net (64.2)
------- -------- ------- -------- ------- -------
Profit before tax 405.6
Tax (115.0)
------- -------- ------- -------- ------- -------
Profit for the year 290.6
------- -------- ------- -------- ------- -------
*Profit is profit from operations before joint ventures' interest and tax.
Other information:
Property and plant
additions 2.5 1.7 0.3 4.5 2.2 6.7
Depreciation - plant 1.1 1.1 0.1 2.3 5.4 7.7
------- -------- -------- -------- -------- --------
1. Business and geographical segments continued
Housing Housing
United Housing Spain and
Kingdom North America Gibraltar Total Housing Construction Consolidated
2006 £m £m £m £m £m £m
------- -------- ------- -------- ------- -------
Assets:
Segment assets 2,310.5 868.7 173.7 3,352.9 100.7 3,453.6
Share of joint
ventures' assets 53.3 54.1 - 107.4 3.3 110.7
Eliminations (35.4) (34.7) - (70.1) - (70.1)
------- -------- -------- -------- -------- --------
2,328.4 888.1 173.7 3,390.2 104.0 3,494.2
------- -------- -------- -------- --------
Goodwill 363.1
Cash and cash
equivalents 236.5
------- -------- -------- -------- -------- --------
Consolidated total
assets 4,093.8
------- -------- -------- -------- -------- --------
Liabilities:
Segment liabilities (754.0) (310.9) (84.1) (1,149.0) (211.5) (1,360.5)
Share of joint
ventures' liabilities (35.4) (34.7) - (70.1) - (70.1)
Eliminations 35.4 34.7 - 70.1 - 70.1
------- -------- -------- -------- -------- --------
(754.0) (310.9) (84.1) (1,149.0) (211.5) (1,360.5)
------- -------- -------- -------- --------
Gross debt (627.8)
------- -------- -------- -------- -------- --------
Consolidated total
liabilities (1,988.3)
------- -------- -------- -------- -------- --------
Capital employed** 1,574.4 577.2 89.6 2,241.2 (107.5) 2,133.7
------- -------- -------- -------- --------
Goodwill 363.1
Net debt (391.3)
------- -------- -------- -------- -------- --------
Net assets 2,105.5
------- -------- -------- -------- -------- --------
**The Group is unable to allocate the defined benefit pension scheme assets and
liabilities on an actuarial basis by entity. However, for the purposes of the
segmental analysis above the Group has allocated the deficit on the basis of
members in the plan. This allocation is performed solely for the purposes of
providing a more meaningful segmental analysis and is not an appropriate
apportionment in accordance with IAS 19.
Housing Housing Housing
United North Spain and
Kingdom America Gibraltar Total Housing Property Construction Consolidated
2005 £m £m £m £m £m £m £m
------- -------- -------- -------- -------- -------- --------
Revenue:
External sales 1,607.9 1,102.1 75.7 2,785.7 192.0 499.2 3,476.9
Inter-segment sales 4.8 - - 4.8 - 71.1 75.9
Eliminations (4.8) - - (4.8) - (71.1) (75.9)
------- ------- ------- ------- ------- ------- -------
Total revenue 1,607.9 1,102.1 75.7 2,785.7 192.0 499.2 3,476.9
Share of joint
ventures' revenue 39.5 39.7 - 79.2 - 0.3 79.5
------- ------- ------- ------- ------- ------- -------
Group and share of
joint ventures 1,647.4 1,141.8 75.7 2,864.9 192.0 499.5 3,556.4
------- ------- ------- ------- ------- ------- -------
1. Business and geographical segments continued
Housing Housing Housing
United North Spain and
Kingdom America Gibraltar Total Housing Property Construction Consolidated
2005 £m £m £m £m £m £m £m
------- -------- -------- -------- -------- -------- --------
Result:
Profit before joint
ventures 227.4 185.6 23.0 436.0 15.7 8.3 460.0
Share of joint
ventures' profit* 6.0 14.0 - 20.0 - 0.5 20.5
------- ------- ------- ------- ------- ------- -------
Profit* 233.4 199.6 23.0 456.0 15.7 8.8 480.5
Share of joint
ventures' interest
and tax (5.4) (0.1) - (5.5) - - (5.5)
------- ------- ------- ------- ------- ------- -------
Profit from operations 228.0 199.5 23.0 450.5 15.7 8.8 475.0
Finance costs, net (64.0)
------- ------- ------- ------- ------- ------- -------
Profit before tax 411.0
Tax (124.5)
------- ------- ------- ------- ------- ------- -------
Profit for the year 286.5
------- ------- ------- ------- ------- ------- -------
Other information:
Property and
plant additions 0.9 1.4 0.1 2.4 - 3.8 6.2
Depreciation - plant 1.1 0.8 0.2 2.1 - 3.7 5.8
------- ------- ------- ------- ------- ------- -------
Assets:
Segment assets 2,160.2 746.9 121.5 3,028.6 25.2 152.6 3,206.4
Share of joint
ventures' assets 133.7 55.9 - 189.6 - - 189.6
Eliminations (133.5) (26.1) - (159.6) - - (159.6)
------- ------- ------- ------- ------- ------- -------
2,160.4 776.7 121.5 3,058.6 25.2 152.6 3,236.4
------- ------- ------- ------- ------- -------
Goodwill 363.9
Cash and cash
equivalents 197.3
------- ------- ------- ------- ------- -------
Consolidated
total assets 3,797.6
------- ------- ------- ------- ------- ------- -------
Liabilities:
Segment liabilities (575.3) (281.1) (64.0) (920.4) (17.4) (276.3) (1,214.1)
Share of joint
ventures' liabilities (133.5) (26.1) - (159.6) - - (159.6)
Eliminations 133.5 26.1 - 159.6 - - 159.6
------- ------- ------- ------- ------- ------- -------
(575.3) (281.1) (64.0) (920.4) (17.4) (276.3) (1,214.1)
------- ------- ------- ------- ------- -------
Gross debt (654.2)
------- ------- ------- ------- ------- -------
Consolidated
total liabilities (1,868.3)
------- ------- ------- ------- ------- ------- -------
Capital employed** 1,585.1 495.6 57.5 2,138.2 7.8 (123.7) 2,022.3
------- ------- ------- ------- ------- -------
Goodwill 363.9
Net debt (456.9)
------- ------- ------- ------- ------- ------- -------
Net assets 1,929.3
------- ------- ------- ------- ------- ------- -------
1. Business and geographical segments continued
Geographical segments
The Group's operations are located primarily in the United Kingdom and North
America. The Group's housing divisions are already segmented geographically
above. The construction division is primarily located in the United Kingdom.
The following table provides an analysis of the Group's sales by geographical
market, irrespective of the origin of the goods/services:
Sales revenue by
geographical market
2006 2005
£m £m
-------- --------
United Kingdom 2,243.6 2,248.4
North America 1,170.1 1,102.1
Rest of the world 158.4 126.4
-------- --------
3,572.1 3,476.9
-------- --------
The following is an analysis of the carrying amount of segment assets, and
additions to property and plant, analysed by the geographical area in which the
assets are located:
Carrying amount of Additions to property
segment assets and plant
2006 2005 2006 2005
£m £m £m £m
-------- -------- -------- --------
United Kingdom 2,854.9 2,725.5 2.6 1.2
North America 1,012.3 902.2 1.7 1.4
Rest of the world 226.6 169.9 2.4 3.6
-------- -------- -------- --------
4,093.8 3,797.6 6.7 6.2
-------- -------- -------- --------
2. Finance costs
2006 2005
£m £m
-------- --------
Interest on bank overdrafts and loans 22.9 20.6
Interest on debenture loans 41.2 42.1
-------- --------
64.1 62.7
Amortisation of discount on land creditors 6.5 5.4
Notional interest on pension liability 2.7 4.2
-------- --------
73.3 72.3
-------- --------
3. Tax
2006 2005
£m £m
-------- --------
Current tax:
UK corporation tax: Current year 58.8 111.8
Prior year (9.9) (9.7)
Relief for foreign tax (8.3) (63.0)
Foreign tax: Current year 80.4 82.3
Prior year (8.3) 14.2
-------- --------
112.7 135.6
-------- --------
Deferred tax:
UK: Current year (3.0) 9.0
Prior year (0.2) 1.2
Foreign: Current year (4.8) (7.3)
Prior year 10.3 (14.0)
-------- --------
2.3 (11.1)
-------- --------
115.0 124.5
-------- --------
Corporation tax is calculated at 30 per cent (2005: 30 per cent) of the
estimated assessable profit for the year in the UK.
Taxation for other jurisdictions is calculated at the rates prevailing in the
respective jurisdictions.
Deferred tax recognised in the Group statement of recognised income and expense
is due to actuarial gains on post-retirement liability.
4. Dividends
2006 2005
£m £m
-------- --------
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 December 2005 of 8.9p 51.0 45.5
(2004: 8.1p) per share.
Interim dividend for the year ended 31 December 2006 of 5.0p
(2005: 4.5p) per share. 28.7 25.8
-------- --------
79.7 71.3
-------- --------
Proposed final dividend for the year ended 31 December 2006 of 57.6 51.0
9.75p (2005: 8.9p) per share. -------- --------
The proposed final dividend is subject to approval by shareholders at the Annual
General Meeting and has not been included as a liability in these financial
statements.
5. Earnings per share
From continuing operations
2006 2005
Basic 50.5p 50.6p
-------- --------
Diluted 50.1p 49.8p
-------- --------
The calculation of the basic and diluted earnings per share is based on the
following data:
Earnings: 2006 2005
£m £m
-------- --------
Earnings for basic earnings per share and diluted
earnings per share 289.5 285.7
-------- --------
Weighted average number of shares: 2006 2005
m m
-------- --------
For basic earnings per share 572.9 564.6
Weighted average of dilutive options 5.0 7.8
Weighted average of dilutive awards under bonus plans 0.5 1.1
-------- --------
For diluted earnings per share 578.4 573.5
-------- --------
6. Notes to the cash flow statement
2006 2005
£m £m
-------- --------
Profit from operations 469.8 475.0
Adjustments for:
Depreciation of plant 7.7 5.8
Share-based payment charge 6.1 5.9
Gain on disposal of property and plant (9.1) (10.2)
Share of joint ventures' operating profit (22.1) (15.0)
Increase/(decrease) in provisions 8.5 (0.4)
-------- --------
Operating cash flows before movements in working capital 460.9 461.1
Increase in inventories (347.5) (204.9)
Increase in receivables (37.2) (9.1)
Increase in payables 174.4 112.6
Pension contributions (27.3) -
-------- --------
Cash generated by operations 223.3 359.7
Income taxes paid (95.2) (153.7)
Interest paid (71.1) (75.8)
-------- --------
Net cash from operating activities 57.0 130.2
-------- --------
Cash and cash equivalents (which are presented as a single class of assets on
the face of the balance sheet) comprise cash at bank and other short-term highly
liquid investments with an original maturity of three months or less.
6. Notes to the cash flow statement continued
2006 2005
£m £m
-------- --------
Net debt
Cash and cash equivalents 236.5 197.3
Bank overdrafts and bank loans (14.7) (9.7)
Debenture loans (613.1) (644.5)
-------- --------
Net debt (391.3) (456.9)
-------- --------
7. Statutory Accounts
The Report and Accounts were approved by the Board of Directors on 19 February
2007. This announcement does not constitute the company's statutory accounts for
the years ended 31 December 2006 or 2005 but is derived from those accounts.
Statutory accounts for 2005 have been delivered to the Registrar of Companies
and those for 2006 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.
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 22nd November 2024
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