Interim Results
TAYLOR WOODROW PLC
7 September 1999
TAYLOR WOODROW plc INTERIM STATEMENT
for the six months ended 30 June 1999 (unaudited)
'Strong underlying performance with star contribution from USA housing
operations'
- pre-tax profits up 6% to £51 million
- worldwide housing profits up 14% to £28.5 million
- US housing profits up 58% to £19 million
- property profits up 8% to £13 million
- interim dividend up 10% to 1.65p
30 June 1999 30 June 1998
(unaudited) (unaudited)
Group turnover £684.1 million £668.4 million
Group operating profit £60.5 million £53.5 million
Profit before tax £51.0 million £48.0 million
Basic earnings per share 8.4 p 8.3 p
Interim dividend per share 1.65 p 1.5 p
30 June 1999 31 December 1998
(unaudited)
Net debt £195.3 million £141.7 million
Net gearing 27.0 % 20.7 %
Shareholders' funds per
share 179.3 p 169.7 p
Commenting on the results, chief executive Keith Egerton said: 'Our
excellent first half results reveal a strong underlying performance.
Pre-tax profits at £51 million, are 6% ahead of the equivalent period
last year, despite, as foreseen, a swing in profitability from our Central
London residential operations due to the timing of completions. Core
profit generating activities, housing and property, provided over 80% of
the Group's pre-tax profits.
'Housing remains the key driver behind the Group's improvement, as
profits increased 14% to £28.5 million, accounting for nearly 56% of the
total. The star was clearly our USA housing operations where profits have
increased by 58% to £19 million.
'Profits from property operations, our other key earnings generator, made
good progress, moving ahead 8% to £13 million benefiting from the
expansion of its higher return development portfolio'
Turning to the outlook for the Group Keith Egerton said, 'As we go forward
we are in good shape, with greater direction being brought to bear on our
businesses. We are exerting more short-term control whilst at the same
time making sure that we also take a longer term strategic view.
'We are looking forward to the remainder of 1999 and beyond with optimism,
as the housing and property markets in which we operate continue to be
fundamentally sound.
'We have a strong housing order book at the end of June, particularly for
the Central London and Toronto apartment businesses which should generate
good profits in the second half of the year. All our housing activities
are achieving volume improvements and Taywood Homes is having particular
success in improving its operating margins.
'Our significant investment in the UK property development business is
bearing fruit with activity in Canada also gaining pace. Construction is
increasing its concentration on its core strengths, and work to return
Greenham Trading to profit growth is underway.
'As one of the UK's leading housing and property groups, with a substantial
overseas spread, we are upbeat as to our future prospects. Our aim will be
to ensure that key performance indicators for these businesses, including
margins and return on capital employed, are improved further.
'With a well balanced portfolio of housing and property projects in the
pipeline we are in good shape to meet the objective of improving returns
to our shareholders.'
SHAREHOLDER INFORMATION
The interim dividend will be paid on Monday 1 November 1999 to
shareholders whose names appear on the register of members on the close of
business Friday 17 September 1999.
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. Details will be sent to
shareholders with the interim statement, which is expected to be mailed on
7 September, 1999.
Copies of the interim statement and the Dividend Re-investment Plan
literature will be available from the company's registered office,
4 Dunraven Street, London W1Y 3FG with effect from 7 September, 1999.
Media enquiries: Press Office 0181 575 4188
Tom MacQuillan Office: 0171 629 1201
Mobile: 0836 598522
Grandfield -
Charles Cook/Michael Henman 0171 417 4170
Analyst enquiries:
David Green (Finance Director)- after 14.00 0171 629 1201
REVIEW OF OPERATIONS
Housing 1999 1998
Profit before tax £28.5 million £25 million
The star was the USA where housing profits have increased 58% to
£19 million. Florida has turned in an excellent performance benefiting from
its well-timed land investments by its strong management team. Good
progress has also been made in developing sites in California where this
business is experiencing a very strong market.
In the UK, Taywood Homes is doing well, with operating margins improving
from 9.1% to 11%. We have a strong order book at the end of June, with
reservations and exchanges running over 30% ahead of the same time last
year.
As part of the strategy to double the size of Taywood Homes by 2004 the
Group announced, in May, the opening of a new region which has the
potential to be as large as the other operating divisions. Based in Upper
Heyford, Oxfordshire, its first completions are expected in the middle of
next year. Lifestyle, the quality retirement business, which is exploiting
a gap that it identified in the marketplace, has also just recorded its
first completions, and the prospects for this business, with its capacity for
high returns, are good.
In Canada the new home markets in Ontario have continued to strengthen.
Monarch, with an increased order book and over 350 high-rise condominium
completions scheduled for the second half, will benefit from this in the
remainder of the year.
Sales in the Central London residential division have exceeded expectations
with only 5 apartments out of 209 remaining to be sold at The City Quay and
27 units out of 103 still to be either exchanged or reserved at Montevetro.
At Drury Lane, where construction activity has just started, the 51-unit
development is over 60% pre-sold. At all sites units are selling faster
and for higher values than was originally projected.
However due to the timing of completions in Central London there was an
adverse swing in profitability of £6.8 million in this area. It is
anticipated that the Group will convert sales of around 100 units from The
City Quay and Montevetro into completions in the second half of the year.
Whilst the Group continues to seek new sites for future developments it is
cautious not to overpay in what is increasingly becoming a very
competitive land market in London.
Property 1999 1998
Profit before tax £13.0 million £12.0 million
Profits from property operations, the other core earnings generator,
continued to make good progress, moving ahead 8% to £13 million. As
indicated at the AGM in June, property markets this year are firmer, with
all sectors improving.
With this buoyancy, the Group is now reaping the benefit of the expansion
of its higher return property development portfolio. Profits have
increased 14% from this activity. During the first six months of the year
four development sales were completed in the UK with a further five
planned for the second half.
The Group is continuing to work this part of its property activity hard
with 28 development schemes ongoing. These include a major new 250,000
sq. ft. office scheme south of Manchester and a 107,000 sq. ft. shopping
centre in Waterlooville, in Hampshire on which work has just started.
Monarch's property operation is also making strides to actively work its
portfolio. Three disposals of non-core investment properties in the first
half of the year have released £6 million of cash for re-investment in its
higher-return housing and property development activities, a trend which
is expected to continue. It has also just announced that it is to build a
40,000 sq.ft. head-office building for Brewers Retail at its 21-acre,
Airport Corporate Centre office development, in Mississuaga with
construction starting later in this quarter.
Construction 1999 1998
Profit before tax £3.1 million £3.1 million
In Construction, profits were steady at £3.1 million. In May the decision
was taken to refocus this business. As part of this process it was
announced that the workforce would reduce by around 250 through the course
of this year and that some peripheral activities would either be closed or
sold off. The strategy for construction is to become more risk averse and
it continues to reduce its exposure to projects in the UK and overseas
which do not meet this objective.
The order book at 30 June was £770 million. Whilst slightly lower than
at the end of 1998, the quality of the order book has improved with work
where the risk profile is more in line with the Group's strategy. Of note
is the contribution that negotiated contracts and fee-based work make, now
accounting for around 75% of the workload. The Engineering division, with
its broad experience, continues to play a strong role in adding value to
the Group's construction activities.
Construction will continue to have an important role to play for the
Group, particularly working closely with key clients and the housing and
property divisions. Future profit growth is expected to be constrained by
the selective approach adopted towards the work that is undertaken.
Greenham Trading 1999 1998
Profit before tax £3.4 million £4.2 million
Because of a reduction in major infrastructure and public works spending
and intense competition in the market place Greenham Trading has had a
harder first half than last year but it has still been able to return a
reasonable profit of £3.4 million.
In March the Group indicated that it would undertake a review of this
business to consider its options for developing it in the future,
including increasing growth for the long term. The review has been
concluded and management action has been identified to retain and return
this business to its profit growth trend, including making the
distribution network more efficient and improving the stock turnover
position in our branches.
DETAILED FINANCIAL INFORMATION FOLLOWS
TAYLOR WOODROW plc
SUMMARY CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE SIX MONTHS TO 30 JUNE 1999
Six months to Year to
30 June (unaudited) 31 December
1999 1998 1998
Notes £m £m £m
Turnover: Group and share of joint
ventures 691.8 674.4 1,408.0
Less share of joint ventures'
turnover (7.7) (6.0) (7.5)
----- ----- -------
Group turnover 1 684.1 668.4 1,400.5
===== ===== =======
Group operating profit 60.5 53.5 110.2
Share of operating profit/(loss)in
joint ventures 0.8 (0.5) 0.7
----- ----- -------
Profit on ordinary activities before
interest 61.3 53.0 110.9
Net interest payable 3 (10.3) (5.0) (10.6)
----- ----- -------
Profit on ordinary activities before
taxation 1 51.0 48.0 100.3
Tax on profit on ordinary activities 4 (14.0) (12.5) (26.6)
----- ----- -------
Profit on ordinary activities after
taxation 37.0 35.5 73.7
Minority equity interests (3.1) (2.4) (5.5)
----- ----- -------
Profit for the financial period 33.9 33.1 68.2
Dividends (6.6) (6.0) (20.5)
----- ----- -------
Profit retained 27.3 27.1 47.7
===== ===== =======
Basic earnings per share 5 8.4p 8.3p 17.1p
==== ==== ====
Diluted earnings per share 5 8.3p 8.2p 16.9p
==== ==== ====
Dividends per ordinary share 1.65p 1.5p 5.1p
==== ==== ====
CONSOLIDATED STATEMENT OF TOTAL
RECOGNISED GAINS AND LOSSES
FOR THE SIX MONTHS TO 30 JUNE 1999
£m £m £m
Profit for the financial period 33.9 33.1 68.2
Unrealised surplus on revaluation of
properties - - 21.1
Tax on realised revaluation surplus (0.9) - -
Currency translation differences on
foreign currency net investments 15.1 (5.6) (6.2)
---- ---- ----
Total recognised gains and losses
relating to the period 48.1 27.5 83.1
==== ==== ====
SUMMARY CONSOLIDATED BALANCE SHEET
AT 30 JUNE 1999
30 June 31 December
1999 1998
(unaudited)
£m £m £m
Fixed assets
Investment properties 399.7 397.1
Other tangible assets 103.7 103.9
Investments
Joint ventures
Share of gross assets
(31 December 1998 - £59.3m) 64.9
Share of gross liabilities
(31 December 1998 - £55.8m) (61.5) 3.4 3.5
---- ------- -----
506.8 504.5
------- -----
Current assets
Stocks 786.2 665.4
Debtors 192.5 187.6
Current asset investments 3.7 4.4
Cash at bank and in hand 80.4 81.2
------- -----
1,062.8 938.6
Creditors: amounts falling due within
one year (511.5) (476.8)
------- -----
Net current assets 551.3 461.8
------- -----
Total assets less current liabilities 1,058.1 966.3
Non-current creditors and provisions (256.8) (213.1)
------- -----
801.3 753.2
======= =====
Represented by:
Capital and reserves - equity
Called up ordinary share capital 101.0 100.7
Capital redemption reserve 8.4 8.4
Share premium account 232.2 231.3
Revaluation reserve 102.5 94.4
Profit and loss account 280.5 248.9
----- -----
Shareholders' funds 724.6 683.7
Minority interests in equity of subsidiary
undertakings 76.7 69.5
----- -----
801.3 753.2
===== =====
SUMMARY CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS TO 30 JUNE 1999
Six months to Year to
30 June (unaudited) 31 Dec
1999 1998 1998
£m £m £m
Group operating profit 60.5 53.5 110.2
Depreciation 7.0 8.6 13.1
Increase in stocks (96.8) (80.6) (164.7)
(Increase)/decrease in debtors (3.7) (23.1) 8.2
Increase/(decrease) in creditors 9.5 - (18.9)
Exchange adjustments 1.2 1.3 4.9
---- ---- -----
Net cash outflow from operating
activities (22.3) (40.3) (47.2)
Returns on investments and servicing of finance (9.0) (4.9) (9.7)
Taxation (14.2) (10.2) (23.4)
Capital expenditure and financial investment (1.4) (8.7) (17.0)
Equity dividends paid - - (18.9)
---- ---- -----
Net cash outflow before financing (46.9) (64.1) (116.2)
Issue of ordinary share capital by
Taylor Woodrow plc less contributions
to team member share trust (0.6) 1.7 7.8
Exchange/non-cash changes in net debt (6.1) (0.2) 3.5
---- ---- -----
Movement in net debt (53.6) (62.6) (104.9)
==== ==== =====
MOVEMENT IN NET DEBT £m £m £m
Decrease in cash in the period (5.4) (25.7) (32.9)
Cash flow from increase in debt (44.6) (11.8) (32.6)
Increase/(decrease) in liquid resources 2.5 (24.9) (42.9)
----- ---- -----
Increase in net debt resulting from cash flows (47.5) (62.4) (108.4)
Exchange/non-cash changes in net debt (6.1) (0.2) 3.5
----- ---- -----
Increase in net debt in the period (53.6) (62.6) (104.9)
Net debt at beginning of the period (141.7) (36.8) (36.8)
----- ---- -----
Net debt at end of the period (195.3) (99.4) (141.7)
===== ==== =====
NOTES ON THE INTERIM ACCOUNTS
1. SEGMENTAL ANALYSIS
Group turnover Profit before
(by origin) taxation
Six months to Six months to Net assets
30 June 30 June 30 June 31 Dec
1999 1998 1999 1998 1999 1998
as restated as restated
By activity £m £m £m £m £m £m
Housing 265.3 229.4 28.5 25.0 404.0 372.7
Property development
and investment 53.0 50.4 13.0 12.0 321.9 324.2
Construction 284.6 309.1 3.1 3.1 29.2 14.6
Greenham Trading 70.8 70.4 3.4 4.2 35.2 38.4
Other 10.4 9.1 3.0 3.7 63.2 46.2
----- ----- ---- ---- ----- -----
684.1 668.4 51.0 48.0 853.5 796.1
===== ===== ==== ==== ===== =====
By market
Canada 36.0 32.2 3.9 4.5 100.4 90.4
United States of
America 136.1 100.2 21.8 13.1 192.1 171.1
Rest of the world 81.5 76.7 7.7 4.3 63.4 50.1
----- ----- ---- ---- ----- -----
Total overseas 253.6 209.1 33.4 21.9 355.9 311.6
United Kingdom 430.5 459.3 17.6 26.1 497.6 484.5
----- ----- ---- ---- ----- -----
684.1 668.4 51.0 48.0 853.5 796.1
===== ===== ==== ====
Taxation on profits creditors (including deferred taxation) (31.1) (28.4)
Dividend creditors (21.1) (14.5)
Minority interests (76.7) (69.5)
----- -----
Shareholders' funds 724.6 683.7
===== =====
The segmental analysis was changed in the 1998 full year
accounts to include Australia within Rest of the world.
The effect for the six months to 30 June 1999 is to increase
Rest of the world turnover by £14.6m (1998 - £5.1m) and
profit before taxation by £2.2m (1998 - £0.4m). Comparative
figures for the six months to 30 June 1998 have been
restated accordingly.
2. BASIS OF PREPARATION OF THE INTERIM ACCOUNTS
The interim accounts have been prepared on a basis
which is consistent with the accounting policies
adopted for the year to 31 December 1998.
In accordance with our stated accounting policy,
investment and fixed asset properties have not been
valued since 31 December 1998 and 31 December 1997
respectively. Investment properties will next be
valued at 31 December 1999.
The interim accounts, which have been neither audited
nor reviewed, were approved by the board of directors
on 7 September 1999.
These accounts do not constitute statutory accounts.
Comparative figures for the year to 31 December 1998
have been extracted from the latest published accounts
on which the report of the auditors was unqualified
and did not contain a statement made under section 237
(2) or section 237 (3) of the Companies Act 1985. The
1998 annual accounts have been delivered to the
Registrar of Companies.
3. NET INTEREST PAYABLE
Net interest payable includes the Group's share of joint
venture net interest payable of net £1.0m (1998 interim -
£nil; 1998 full year - £0.3m) which is stated after
capitalising joint venture interest of £1.3m (1998
interim - £1.4m; 1998 full year - £2.8m).
4. TAX ON PROFIT ON ORDINARY ACTIVITIES
Year to
Six months to 30 June 31 December
1999 1998 1998
£m £m £m
United Kingdom 2.5 4.3 9.7
Overseas 11.3 8.0 16.2
Joint ventures 0.2 0.2 0.7
---- ---- ----
14.0 12.5 26.6
==== ==== ====
The effective overall tax rate is 27.5% (1998 interim -
26%; 1998 full year - 26.5%). The tax charges are below
standard tax rates mainly due to the utilisation
of tax losses.
5. EARNINGS PER SHARE
Year to
Six months to 30 June 31 December
1999 1998 1998
£m £m £m
Earnings per share has been
calculated by dividing:
Profit for the financial
period 33.9 33.1 68.2
===== ===== =====
by the
weighted average number of shares
for basic earnings per share 401.2m 398.0m 397.9m
weighted average of dilutive
options 3.8m 6.3m 4.3m
weighted average of dilutive
awards under the Group Executive
Bonus Plan 1.0m 0.8m 0.8m
----- ----- -----
for diluted earnings per share 406.0m 405.1m 403.0m
===== ===== =====
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