Interim Results

Taylor Woodrow PLC 4 September 2001 Embargoed: 0700 hours: 4 September 2001 TAYLOR WOODROW plc INTERIM RESULTS SUMMARY (Half year ended June 30, 2001 Unaudited) Taylor Woodrow announces record half year profits. Highlights * Bryant Group successfully integrated - £15 million of synergies secure * Turnover up to a record £977.2 million - up 33 per cent * Group operating profit up 38 per cent to £108.7 million. * Profit, before tax, exceptional items and goodwill up 48 per cent to a record £108.8 million. * International housing operating profits up 57 per cent to £83.7 million. * Bryant Homes profits up by 240 per cent: operating margin increased to 14.7 per cent * Refocused construction business returns an operating profit of £5.6 million * Interim dividend up 10 per cent to 2.0 pence per share. Taylor Woodrow plc, the housing, property and construction group, today (4 September 2001) announced a 48 per cent increase in half year pre tax profits, before goodwill and exceptionals, to a record £108.8 million (2000: £73.3 million), boosted by its £632 million takeover of the Bryant Group in March this year. Group operating profits, after one-off costs of £7.5 million related to the integration of Bryant, rose 38 per cent to £108.7 million (2000: £78.8 million) on Group turnover of £977.2 million, an increase of 33 per cent. Return on capital employed, after exceptionals and before goodwill, increased to 17.2 per cent (2000: 16.2 per cent). The Board has declared an interim dividend of 2.0 pence per share, up 10 per cent on the interim figure last year. The Group's international housing businesses, predominantly focused in the UK and North America, recorded a 57 per cent increase in operating profit to a record £83.7 million (2000: £53.4 million). World-wide, Taylor Woodrow sold 5,362 homes and lots (2000: 2,872) and its housing operations now account for 73 per cent of Group operating profit. The enlarged Bryant Homes, the UK's fourth largest house builder, posted operating profits (pre-exceptional items and goodwill) up 240 per cent to £50.6 million (2000: £14.9 million) on housing sale completions of 2,121, up 184 per cent (2000: 748). Average UK selling prices from Bryant rose during the period to £152,000 up 14 per cent (2000: £132,800). Operating profits from Taylor Woodrow's North American business grew 21 per cent over last year's comparable period to £41.0 million (2000: £33.8 million). Operating profits in the USA increased to £28.8 million (2000: £24.1 million) and average selling prices increased to £499,000 (2000: £377,800), a rise of 32 per cent. Taylor Woodrow's Monarch subsidiary in Canada achieved housing turnover of £50.7 million, up 20 per cent on 2000, with an average selling price of £133,100 (2000: £111,600). Operating profit was £7.3 million (2000: £5.8 million). The Group's housing operation in Spain reported operating profits of £3.1 million on turnover of £12.2 million, an increase of 182 per cent. Taylor Woodrow announced in July it had sold the majority of its Australian assets to Stockland Corporation for A$85 million, as part of its strategy to focus on the UK and North American markets. The Group's property arm made operating profits of £23.7 million (2000: £23.7 million) for the half year on increased turnover of £82.4 million (2000: £61.3 million). Taylor Woodrow is committed to reducing its investment property portfolio and confirmed sales proceeds of £63.9 million in the first half. The construction and engineering operation turned around a £0.6 million operating loss into a £5.6 million profit, providing a 2.9 per cent margin, reflecting the changes and repositioning of the past 18 months to provide business to business solutions for key clients such as Tesco, Shell, BT Cellnet, BAA and Railtrack. Commenting on the results, the Group's chairman, Dr Robert Hawley, said: ' Following the acquisition of Bryant, we are now the fourth largest UK house builder and the country's most profitable housing and property group. 'Taylor Woodrow has a unique complement of in-house skills within its residential, commercial development, construction and engineering divisions, as well as a comprehensive national network of offices. This enables the Group to capitalise on strategic market opportunities, particularly in the increasingly important urban regeneration of mixed use and brownfield developments'. The Group's chief executive, Keith Egerton, said: 'Taylor Woodrow is growing from strength to strength. We have delivered another strong set of business and financial results for the first half of this year and our achievements reflect the increasing quality of our products and our broad range of skills.' On current trading and future prospects, Mr Egerton said that UK housing demand remains buoyant, with mortgage rates at the lowest for 40 years. 'In the UK, forward sales for Bryant are buoyant, currently running some 15 per cent higher than at this time last year. The summer months have been unusually busy with a good level of sales during August. 'We are seeing a softening of consumer interest in the USA, particularly at the luxury end of the market in California, but other regions of our North American operations and lower priced products, as well as strong land development performance, means we are meeting our expectations there. 'We are a soundly-based, focused business, with clear strengths. We anticipate continued progress for the remainder of the year, he said. Ends The interim dividend will be paid on Thursday 1 November 2001 to shareholders whose names appear on the register of members at the close of business on Friday 14 September 2001. 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 ordinary shareholders with the Interim Report which will be posted on 28 September 2001. Copies will also be available for members of the public at the Company's registered office at Venture House, 42-54 London Road, Staines, Middlesex, TW18 4HF. Note to Editors Attached is: * Full Interim Statement * Summary consolidated Profit and Loss Account for the six months to 30 June 2001 * Summary consolidated Balance Sheet at 30 June 2001 * Summary consolidated Cash Flow Statement for six months to 30 June 2001 * Notes on the Interim Accounts. For further information, please contact: Analysts: Adrian Auer: Group Finance Director Taylor Woodrow plc Tel: 01784 428794 (4 September, ABN AMRO 020 7678 8000) Media Enquiries: Tony McGarahan: Group director, corporate relations Taylor Woodrow plc Tel: 01784 428767 (4 September, ABN AMRO 020 7678 8000) Mobile: 07796 276342 Miranda Bellord: Group PR manager Taylor Woodrow plc Tel: 01784 428678 (4 September, ABN AMRO 020 7678 8000) Mobile: 07946 722381 Scott Fulton: Financial Dynamics Tel: 0207 831 3113 Mobile: 07788 144993 Photographs: Photographs have been sent by ISDN to picture desks. They are labelled Woodrow 1,2,3 and 4. The photographs show Dr Robert Hawley, Group Chairman, and Keith Egerton, Group Chief Executive, at TW's award-winning Greenwich Millennium Village, where the latest phase of apartments was completed last week. The scheme also provides for 260 affordable homes out of the total of 1,400, recognising our responsibility to the wider society in which we operate. For any queries regarding photographs, please contact: Robin Mayes: 07831 186 283 Beth Wood: 01784 428 732 GROUP FINANCIAL SUMMARY Six months to 30th June (unaudited) 2001 2000 - Group turnover £977.2m £736.4m - Group operating profit £108.7m £78.8m - Profit before taxation (before goodwill and £108.8m £73.3m exceptional items)* - Profit before taxation £103.8m £89.4m - Adjusted basic earnings per share (before goodwill 14.3p 12.1p and exceptional items)* - Basic earnings per share 13.8p 16.4p - Dividend per share 2.0p 1.82p 30 June 31 December 2001 2000 (unaudited) - Net debt £393.6m £43.9m - Net gearing 28.9% 4.9% - Shareholders' funds per share 234.7p 231.8p *exceptional items includes profit on disposal of investments of £6.8 million (2000 interim: £16.1 million) and exceptional administrative expenses of £7.5 million (2000 interim: nil) FULL TEXT OF TAYLOR WOODROW'S INTERIM STATEMENT CHAIRMAN'S STATEMENT 'GROWING FROM STRENGTH TO STRENGTH. SETTING NEW RECORDS.' Taylor Woodrow has delivered another set of strong financial results in the first half of this year. Record profits were boosted by the £632 million acquisition in March of the Bryant Group and improved contributions from existing operations. The initial integration of the Bryant operations has been completed and we are making excellent progress in developing our enlarged UK Housing business into a more customer focused operation under the Bryant brand. RECORD RESULTS AND INCREASED DIVIDEND Group turnover increased by 33 per cent to £977.2 million (2000: £736.4 million). Operating profit rose to £108.7 million (2000: £78.8 million) up 38 per cent, with the Group's operating margin rising to 11.1 per cent (2000: 10.7 per cent). Profit before tax, before goodwill and exceptionals, rose 48 per cent to a record £108.8 million (2000: £73.3 million). Adjusted earnings per share increased by 18 per cent to 14.3 pence (2000: 12.1 pence). Annualised return on capital employed before goodwill increased to 17.2 per cent (2000:16.2 per cent). The Board has declared an interim dividend of 2.0 pence (2000: 1.82 pence), an increase of 10 per cent. This dividend will be paid on 1 November to shareholders on the register at close of business on 14 September 2001. At 30 June 2001, total shareholders' funds were £1,362.4 million (December 2000: £887.7 million), equivalent to 234.7 pence per share. Net debt was £393.6 million (2000: £43.9 million). At the half year, net gearing was 28.9 per cent (2000: 4.9 per cent) as a result of increased funding to support the Bryant acquisition. PEOPLE Lady Robin Innes Ker, a former non executive director of Bryant Group plc, joined the Board in July. A former City analyst, her skills and experience will add a fresh dimension to our thinking. Denis Mac Daid, previously managing director of our construction business, joined the Board following his appointment as chief executive of Bryant Homes. He succeeded Paul Phipps, who resigned after nine years with the Group. I thank Paul for his valuable contribution during that period. I also thank all employees for their support and commitment in delivering such an excellent business performance in the first half of 2001. UNIQUE EXPERIENCE & EXPERTISE Taylor Woodrow is changing radically as we seek to maximise returns in the markets we serve. Our progress and achievements reflect the increasing quality of our products made possible by the skills of our people working together. Following the acquisition of Bryant, we are now the fourth largest UK house builder and the country's most profitable housing and property group. Taylor Woodrow has a unique complement of in-house skills within its residential, commercial development, construction and engineering divisions, as well as a comprehensive national network of offices. This enables the Group to capitalise on strategic market opportunities, particularly in the increasingly important urban regeneration of mixed use and brownfield developments. We are dedicated to being at the forefront of our industry and delivering maximum value to our shareholders and customers. Dr Robert Hawley CBE 4th September 2001 CHIEF EXECUTIVE'S REVIEW RESIDENTIAL Operating profit from the Group's worldwide residential operations increased by 57 per cent to £83.7 million (2000: £53.4 million) on turnover of £673.2 million (2000: £398.9 million). UK HOUSING Turnover from the enlarged Bryant Homes rose 210 per cent to £343.5 million (2000: £110.8 million) leading to operating profit of £50.6 million, a 240 per cent increase on last year (2000: £14.9 million). Operating margin was 14.7 per cent (2000: 13.4 per cent) an increase of 10 per cent. During the period 2,121 home sales were completed (2000: 748 homes). In common with our competitors, we were not helped by the extraordinarily wet weather and inefficient local government planning regime. An average selling price of £152,000 (2000: £132,800) was achieved, a 14 per cent increase. The enlarged Bryant Homes is now made up of a national spread of 12 regional operations producing approximately 6,000 units per year. Bryant has proved to be an excellent purchase. The first phase of integration has been very successful and the £15 million of synergies estimated at the time of acquisition are secure. As we move forward with the enlarged business, we anticipate that there will be further synergy opportunities. Our reasons for acquiring Bryant were not about scale of operation, or simply merging the two operations in order to achieve immediate cost savings. Our aim with the enlarged Bryant Homes is to build on the strengths of management, our market position and land bank, creating one culture, one brand and one business focused on delivering what the customer wants - excellent products and services. We have moved at a considered pace, aware of the impact of change on staff and customer service, and I am delighted with the progress. Bryant has an exceptionally strong strategic land portfolio, comprising approximately 10,236 gross acres. Major schemes include Stevenage, Southall and Swindon, which are currently being progressed through the planning system. At the half year, the Group owned or controlled land in the UK with the benefit of planning permission for 17,690 homes (December 2000: 6,226) with owned plots averaging a cost of £36,100 (December 2000: £29,300) representing about 22 per cent of projected selling prices. By any standards, this is a strong position and equates to more than three years output at current production levels. The average selling price of properties in our Central London housing business rose by 9 per cent to £578,500 on last year. All remaining units at City Quay and Drury Lane are sold and only four units remain at Montevetro. THE INTEGRATED DEVELOPER A key strategic aim of the Group is to develop ever-closer working relationships between the unique complement of our in-house skills. The expertise of our construction, engineering and development teams in securing and managing complex urban projects will be one of the key drivers of future growth for Taylor Woodrow. Taylor Woodrow is ideally placed to capitalise on the opportunities presented by the Government's policy of promoting brownfield and urban regeneration schemes in the UK. For example, sales of apartments in Fanum House, the former AA building in Cardiff - in partnership with our construction arm - are going well and, in York, work is progressing on a complex, seven storey development of 114 apartments, another Bryant Homes/Taylor Woodrow Construction joint venture. In Leeds, we purchased the Thistle Hotel site and Bryant Homes and our Property Division are working together to develop a residential and commercial scheme. REGENERATING OUR URBAN COMMUNITIES We have significant expertise in developing technically complex urban regeneration projects in partnership with joint venture partners. In June, in joint arrangement with Hutchison Whampoa, we submitted planning proposals to develop the Lots Road power station site into a 1.5 million sq. ft. mixed use residential complex. Also with Hutchison Whampoa, we acquired an adjacent 2.2 acre parcel of land at Chelsea Harbour from P&O. Together, this 11 acre site has a projected total capital value of £500 million. A joint arrangement between Taylor Woodrow, the Bank of Scotland and Kilmartin Property Group acquired the 20 acre Edinburgh Royal Infirmary site from Lothian University NHS Trust. Architects, Foster and Partners, have been appointed as master planner to create a vibrant mixed use scheme including residential, retail, hotel, leisure and offices. The latest phase of the award-winning Greenwich Millennium Village, our joint arrangement with Countryside Properties, incorporating 100 units, is scheduled for completion in September 2001. The forward sales position is very encouraging. The scheme also provides for 260 affordable homes out of the total of 1,400, recognising our responsibility to the wider society in which we operate. Together with Ask Property Developments, we have submitted a planning application to develop a £83 million mixed use scheme, including 426 residential units, covering two key parts of the Southern Gateway Regeneration Area of Manchester. In March, we purchased a 0.8 acre site, called Bombay Wharf, on the bank of the River Thames at Rotherhithe and we are developing a £25 million scheme of 77 residential apartments and business units. NORTH AMERICA In the first half of the year, Taylor Woodrow's operations in North America remained resilient to a weakening economy in the USA. A softening in the high value end of the market in California was balanced by land development activities in Florida and Texas. This mix of land development and house building activity provides Taylor Woodrow with greater flexibility to respond to local market conditions. Profits from our North American business grew 21 per cent over last year's comparable period to £41.0 million (2000: £33.8 million) In the US we achieved 361 home completions, a fall of 24 per cent on the previous year, but average selling prices increased to £499,000, a 32 per cent rise from £377,800 for the same period last year. Lot sales, in Florida and Texas increased by over 400 per cent to £50.4 million, at an average selling price of £30,400. Operating profits for our American business in Florida, Texas and California were £28.8 million (2000: £24.1 million) a rise of 20 per cent. This is the result of a 23 per cent increase in turnover, up from £195.0 million in June 2000 to £240.0 million at the half year. Our activities in Canada, which operate under the Monarch brand, enjoyed a very good half year. The housing market was robust with sustained demand for homes and high rise apartments in and around Toronto. Monarch's total turnover (including property development and investment) for the half year was up 48 per cent to £76.6 million (2000: £51.7 million). Operating profit was £12.2 million (2000: £9.7 million) We achieved 353 house completions with an average selling price of £133,100 (2000: £111,600). New low rise completions were 13 per cent higher than the previous year, with strong reservations for new high rise projects. The launch of Waterview, our prestigious high rise development of apartments overlooking Lake Ontario, has been a great success resulting in 140 pre-sales since opening in April representing 42 per cent of phase one. SPAIN Our housing operation in Spain, focused around Mallorca, Menorca and the Costa del Sol, continued to be buoyant. Strong interest is being shown from local and North European purchasers, particularly from the UK. At the half year, completions were 94, up 34 per cent compared to the same period last year (2000: 70). Half year profits were £3.1 million with operating margins at 25.4 per cent (2000: 16.4 per cent). Return on capital employed rose to 30.2 per cent (2000: 15.0 per cent). This marks the third consecutive year of strong growth from our Spanish operation with profits over 400 per cent greater than the equivalent period three years ago. The acquisition of an additional 100 acres of land adjacent to our development at Los Arqueros will enable us to build another 400 homes and an additional nine holes of golf, resulting in a total development of 1400 dwellings and 27 holes of golf. AUSTRALIA In July, as part of our programme to dispose of non-core assets, we sold the majority of our Australian assets to Stockland Corporation for A$85 million. This disposal will allow TW to increase the focus on our core housing operations in the UK and North American markets. The joint venture development at Harrington Park, Sydney, was excluded from the sale. PROPERTY DEVELOPMENT AND INVESTMENT The property division made an operating profit of £23.7 million for the half year (2000: £23.7 million). Turnover was £82.4 million (2000: £61.3 million). Total value of trading sales in the first half of the year was £58.5 million. We also experienced excellent occupier demand for developments at Cadogan Square, Glasgow (Stakis Plc), Christie Fields, Manchester (Astra Zeneca), Delta Business Park, Swindon (QA Group) and in Eastcheap, London (Chase De Vere and HM Government). We continue to implement our strategy of reducing our investment property portfolio in the UK and Canada having completed sales for total proceeds of £63.9 million. The value of the portfolio at the half year is reduced to £285.5 million. In the UK property market, notably the Thames Valley, we have witnessed some deterioration resulting from the economic slowdown in America and fading demand in the technology sector, but our exposure to this market is limited. CONSTRUCTION Reflecting the benefit of the extensive changes and repositioning achieved by our Construction operation over the last 18 months, the division has delivered an operating profit of £5.6 million, a significant improvement on the £0.6 million loss returned for the same period last year. Turnover increased to £221.6 million, an 8 per cent rise. Interest income and the sale of our stake in the A19 PFI project increased profit before tax from £5.6 million to £14.8 million. Underlying operating margins, pre-restructuring costs, have improved to 2.9 per cent (2000: 2.1 per cent). Orders received in the first half amounted to £185 million (2000: £194 million) with total orders standing at £602 million (2000: £644 million). We are also in a preferred sole negotiating position on a further £425 million of potential orders. Construction's strategy of providing business to business solutions to create and maintain capital assets has delivered significant work for key clients including Tesco, Railtrack, Shell, BT Cellnet, Whitbread and BAA. Having smoothly integrated Bryant's construction arm into its operation, Construction is working on a number of projects for Taylor Woodrow's other divisions. This will form an increasingly important part of its revenue stream in the coming years as the Group's activities become even more closely integrated. Facilities Management is a key growth area and here again emphasis is being placed on blue chip customers, where we can provide solutions and technical expertise driven by business improvement for the customer. OUTLOOK In the UK, housing demand remains strong. With mortgage rates at their lowest for 40 years, housing affordability - the key to the consumer purchasing decision - remains very healthy. The unfortunate constraints in the local government planning system delaying the start of developments reinforced the shortage of supply and the upward pressure on values. We are well positioned in this regard following the Bryant purchase due to our high level of consented schemes which was a key reason for the purchase. The UK housing market is well placed for a continuing period of steady growth although we expect a more stable climate of house price inflation in coming years. Forward sales for Bryant Homes are strong, currently running some 15 per cent higher than at this time last year. The summer months have been unusually busy with a good level of sales in August. We have an excellent supply of sites and plots with planning permission and a strong strategic land bank and we can deliver significant growth in completions in the second half and next year. In the US the future economic conditions remain uncertain and we are seeing a softening of consumer interest at the luxury end of the homes market particularly in locations exposed to the IT industry, such as California. We have therefore increased our focus on medium priced products. Other regions and market segments in North America are meeting expectations. The strong economic conditions in Canada and demand for Monarch's developments, particularly high-rise projects, remain encouraging. In the UK property market institutional investors are at present relatively inactive. Overseas investors and private buyers continue to show interest, as evidenced by recent large commercial deals in London. We expect only modest rental growth in the near term. The strong performance of Construction following its restructuring will be enhanced further as a result of its tighter focus on its key markets such as PFI, Facilities Management and consultancy, where future growth is targeted. Taylor Woodrow's experience and skills in major mixed use development position us uniquely to meet the Government's emphasis on urban regeneration and the challenges of the planning environment. We are a soundly-based, refocused business with a number of key strengths which together differentiates us clearly from our competitors. Our aim is to become the most respected creator of living and working environments. We anticipate continued progress for the remainder of the year. Keith Egerton 4th September 2001. SUMMARY CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE SIX MONTHS TO 30 JUNE 2001 Six months to Year to 30 June 31 December (unaudited) 2001 2000 2000 Notes £m £m £m Turnover: Group and share of joint ventures 983.7 745.6 1,557.9 Less share of joint ventures' turnover (6.5) ( 9.2) (18.2) Existing operations 664.7 1,457.1 Acquisitions - - Continuing operations 664.7 1,457.1 Discontinued operations 71.7 82.6 8 Group turnover 977.2 736.4 1,539.7 1 ==== ===== ===== Existing operations 81.4 76.5 163.5 Acquisitions before goodwill amortisation - - Acquisitions - goodwill amortisation - - Acquisitions Continuing operations 76.5 163.5 Discontinued operations 8 Group operating profit 108.7 78.8 165.7 1 Share of operating profit in joint ventures 2.1 3.2 5.5 Profit on disposal of discontinued operations - - 31.7 8 Profit on disposal of investments and 9.3 17.1 18.6 3 properties Profit on ordinary activities before interest 120.1 99.1 221.5 Net interest payable (16.3) (9.7) (20.0) 4 Profit on ordinary activities before taxation 103.8 89.4 201.5 Tax on profit on ordinary activities (34.8) (22.4) (54.4) 5 Profit on ordinary activities after taxation 69.0 67.0 147.1 Minority equity interests (1.2) (5.1) (7.3) Profit for the financial period 67.8 61.9 139.8 Dividends (11.6) (6.9) (31.7) Profit retained 56.2 55.0 108.1 ==== ==== ===== Basic earnings per share 13.8p 16.4p 37.0p 6 ==== ==== ===== Diluted earnings per share 13.7p 16.3p 36.8p 6 ==== ==== ===== Dividends per ordinary share 2.0p 1.82p 6.12p ==== ==== ===== CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE SIX MONTHS TO 30 JUNE 2001 Six months to Year to 31 30 June (unaudited) December 2001 2000 2000 £m £m £m Profit for the financial period 67.8 61.9 139.8 Unrealised surplus on revaluation of properties - - 18.6 Tax on realised revaluation surplus (1.4) - - Currency translation differences on foreign currency net investments 13.8 12.9 13.4 Total recognised gains and losses relating to the period 80.2 74.8 171.8 ==== ==== ==== SUMMARY CONSOLIDATED BALANCE SHEET AT 30 JUNE 2001 30 June 30 June 31 December 2001 2000 2000 (unaudited)(unaudited) £m £m £m £m Fixed assets Intangible assets - goodwill 250.3 - - Investment properties 285.5 371.3 346.7 Other tangible assets 91.9 84.8 75.7 Investments Joint ventures Share of gross assets (30 June 2000: £59.7m; 31 December 2000: £58.3m) 36.4 Share of gross liabilities (30 June 2000: £57.9m; 31 December 2000 : £57.1m) (36.1) 0.3 1.8 1.2 628.0 457.9 423.6 Current assets Stocks 1,573.4 874.1 880.1 Debtors 198.1 151.4 131.6 Current asset investments 5.5 5.9 7.2 Cash at bank and in hand 104.4 138.4 204.4 1,881.4 1,169.8 1,223.3 Creditors: amounts falling due within one year (615.1) (492.1) (498.2) ______ ____ _____ Net current assets 1,266.3 677.7 725.1 Total assets less current liabilities 1,894.3 1,135.6 1,148.7 Non-current creditors and provisions (529.2) (321.6) (257.9) _____ _____ _____ 1,365.1 814.0 890.8 ===== ===== ==== Represented by: Capital and reserves - equity Called up ordinary share capital 145.1 95.4 95.8 Capital redemption reserve 14.2 14.2 14.2 Share premium account 590.3 232.6 233.7 Revaluation reserve 151.8 136.8 142.5 Profit and loss account 461.0 333.5 401.5 _____ _____ _____ Shareholders' funds 1,362.4 812.5 887.7 Minority interests in equity of subsidiary undertakings 2.7 1.5 3.1 _____ _____ _____ 1,365.1 814.0 890.8 ===== ===== ==== SUMMARY CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS TO 30 JUNE 2001 Six months to Year to 30 June 31 December (unaudited) 2001 2000 2000 Notes £m £m £m Group operating profit 108.7 78.8 165.7 Depreciation 9.5 4.0 9.5 Decrease/(increase) in stocks 2.4 (62.4) (84.3) Increase in debtors (38.4) (3.5) (8.6) (Decrease)/increase in creditors (31.7) (19.0) 32.3 Exchange adjustments (2.7) (0.7) (1.0) ______ _______ Continuing operating activities Discontinued operating activities 8 Net cash inflow/(outflow) from operating 47.8 (2.8) 113.6 activities Dividends from joint ventures 1.0 0.3 1.2 Returns on investments and servicing of (20.3) (7.3) (15.9) finance Taxation (38.0) (17.2) (48.8) Capital expenditure and financial investment 63.6 41.9 71.6 Acquisitions and disposals (280.3) (94.0) (30.2) 7&8 Equity dividends paid - - (21.2) ______ _______ _______ Net cash (outflow)/inflow before financing (226.2) (79.1) 70.3 Issue of ordinary share capital by Taylor 1.8 0.7 2.3 Woodrow plc Debt of acquired subsidiary undertaking (116.5) - - (excluding bank overdrafts) Exchange/other non-cash changes in net debt (8.8) (4.9) (3.9) ______ _______ _______ Movement in net debt (349.7) (83.3) 68.7 ===== ===== ===== MOVEMENT IN NET DEBT £m £m £m (Decrease)/increase in cash in the period (35.0) (13.1) 46.3 Cash (inflow)/outflow from (increase)/decrease (117.5) (62.4) 13.9 in debt Cash (inflow)/outflow from (decrease)/increase (71.9) (2.9) 12.4 in liquid resources (Increase)/decrease in net debt resulting from (224.4) (78.4) 72.6 cash flows Debt of acquired subsidiary undertaking (116.5) - - (excluding bank overdrafts) Exchange/other non-cash changes in the period (8.8) (4.9) (3.9) ______ _______ _______ (Increase)/decrease in net debt in the period (349.7) (83.3) 68.7 Net debt at the beginning of the period (43.9) (112.6) (112.6) ______ _______ _______ Net debt at the end of the period (393.6) (195.9) (43.9) ===== ===== ===== NOTES ON THE INTERIM ACCOUNTS 1. SEGMENTAL ANALYSIS Group turnover Group (by origin) operating profit Capital employed Six months to 30 June Six months to 30 June 30 June 31 Dec 2001 2000 2001 2000 2001 2000 By activity £m £m £m £m £m £m Housing 673.2 398.9 83.7 53.4 1,173.9 573.9 Property development and investment 82.4 61.3 23.7 23.7 404.8 428.0 Construction 221.6 204.5 5.6 (0.6) (70.3) (67.2) Continuing operations 977.2 664.7 113.0 76.5 1,508.4 934.7 Discontinued operations Greenham Trading - 71.7 - 2.3 - - _____ _____ _____ _____ ______ _____ 977.2 736.4 113.0 78.8 1,508.4 934.7 ==== ==== Goodwill amortisation/ goodwill - housing (4.3) - 250.3 - 108.7 78.8 1,758.7 934.7 ==== ==== ===== ==== By market United States of America 240.0 195.0 28.8 24.1 256.6 234.7 Canada 76.6 51.7 12.2 9.7 131.8 176.3 Rest of the world 73.9 71.8 12.3 3.0 37.3 35.0 Total overseas 390.5 318.5 53.3 36.8 425.7 446.0 United Kingdom 586.7 417.9 59.7 42.0 1,082.7 488.7 _____ _____ _____ _____ ______ _____ 977.2 736.4 113.0 78.8 1,508.4 934.7 ==== ==== Goodwill amortisation/goodwill - United Kingdom (4.3) - 250.3 - 108.7 78.8 1,758.7 934.7 ==== ==== Net debt (393.6) (43.9) Minority interests (2.7) (3.1) ______ _____ Shareholders' funds 1,362.4 887.7 ===== ===== Operating profit in the United Kingdom for the six months to 30 June 2001 is stated after deduction of exceptional administrative expenses of £7.5m (£6.7m in respect of the integration of Bryant and Taywood Homes housing operations and £0.8m in respect of the integration of Taylor Woodrow and Bryant construction operations). Operating profit/(loss) for construction excludes its share of the construction joint ventures and interest. Profit before taxation for construction for the six months to 30 June 2001 would be £8.0m (2000 interim: £2.3m) including these items. NOTES ON THE INTERIM ACCOUNTS continued 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 2000. In accordance with our stated accounting policy, investment and fixed asset properties have not been valued since 31 December 2000. Investment properties will next be valued at 31 December 2001. The interim accounts were approved by the board of directors on 4 September 2001. These accounts do not constitute statutory accounts. Comparative figures for the year to 31 December 2000 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 2000 annual accounts have been delivered to the Registrar of Companies. 3. PROFIT ON DISPOSAL OF INVESTMENTS AND PROPERTIES Six months to 30 June Year to 31 December 2001 2000 2000 £m £m £m Profit on disposal of investments (including 6.8 16.1 16.2 Greenham Construction Materials Ltd in 2000) Profit on disposal of properties 2.5 1.0 2.4 9.3 17.1 18.6 === === === 4. NET INTEREST PAYABLE Net interest payable includes the Group's share of joint venture interest payable of £2.1m (2000 interim: £2.4m; 2000 full year: £4.4m). 5. TAX ON PROFIT ON ORDINARY ACTIVITIES Six months to 30 June Year to 31 December 2001 2000 2000 £m £m £m United Kingdom 17.0 7.2 19.2 Overseas 17.8 15.2 35.1 Joint ventures - - 0.1 34.8 22.4 54.4 === === === The effective overall tax rate is 33.5% (2000 interim: 25.1%; 2000 full year: 27.0%). The tax charges in 2000 were below standard tax rates mainly due to the utilisation of tax losses. NOTES ON THE INTERIM ACCOUNTS continued 6. EARNINGS PER SHARE Year to 31 Six months to 30 June December 2001 2000 2000 £m £m £m Earnings per share has been calculated by dividing: Profit for the financial period 67.8 61.9 139.8 ==== ==== ==== by the weighted average number of shares for basic earnings per share 492.5m 377.4m 377.6m weighted average of dilutive options 2.3m 1.8m 1.0m weighted average of dilutive awards under the Group Executive Bonus Plan 0.9m 1.1m 1.2m for diluted earnings per share 495.7m 380.3m 379.8m ===== ===== ===== 7. ACQUISITIONS Bryant Group plc On 2 March 2001, the Group declared its offer for Bryant Group plc unconditional. The company offered 0.72 shares and 80 pence in cash for each share issued and to be issued in Bryant Group plc. The consideration of £632.0m comprised the issue of 196.3m ordinary shares of 25 pence each in the company, the issue of £5.4m of loan notes and £222.3m in cash, including the expenses of the acquisition. The provisional fair value to the Group of the net assets acquired was £377.4m, giving rise to provisional goodwill of £254.6m which is being amortised over twenty years. Net cash outflows in respect of the acquisition comprised: £m Cash consideration 222.3 Bank overdrafts acquired 58.0 280.3 ==== Monarch Development Corporation On 22 May 2000, the Group acquired the 45% of the Monarch Development Corporation Group held by other shareholders for £94.4m (C$213.3m) which was equivalent to the fair value of the minority interest acquired. 8. DISPOSAL OF GREENHAM TRADING Following the disposal of Greenham Trading on 28 July 2000, this business segment was shown as discontinued. The profit on sale was £31.7m, after deducting related goodwill previously written off to retained profit and loss account of £1.4m. The profit on the sale had no effect on the amounts charged to the profit and loss account for taxation and minority interests. Net cash outflows in respect of the acquisition comprised: £m Cash consideration net of sale expenses 67.3 Cash at bank and in hand sold (4.1) Bank overdrafts sold 1.0 64.2 ==== INDEPENDENT REVIEW REPORT TO TAYLOR WOODROW plc Introduction We have been instructed by the company to review the financial information for the six months ended 30 June 2001 which comprises the summary consolidated profit and loss account, the consolidated statement of total recognised gains and losses, the summary consolidated balance sheet, the summary consolidated cash flow statement and related notes 1 to 8. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of Group management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2001. Deloitte & Touche Chartered Accountants Hill House 1 Little New Street London EC4A 3TR 4 September 2001

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