Interim Results
Taylor Woodrow PLC
03 August 2004
TAYLOR WOODROW plc INTERIM RESULTS STATEMENT
(for the six months to 30 June 2004)
Highlights
• Housing operating profit, before exceptional items and goodwill
amortisation, up 46% at £194.9 million (2003: £133.1 million) *
• Profit before tax, exceptional items and goodwill amortisation up 43% at
£193.7million (2003: £135.0 million) **
• Profit before tax up 31% at £168.7 million (2003: £128.3 million)
• Adjusted earnings per share up 44% to 21.6 pence (2003: 15.0 pence) ***
• Interim dividend up 25% to 3.0 pence per share (2003: 2.4 pence per
share)
• Amendment to the defined benefit pension scheme and adoption of FRS 17
result in one off £26.1 million exceptional gain; other exceptional item is
the £41.1 million interest charge for early redemption of First Mortgage
Debenture
Norman Askew, Chairman of Taylor Woodrow, said today:
'Taylor Woodrow has generated another set of strong results during a year where
Wilson Connolly has been successfully integrated.'
Iain Napier, Chief Executive of Taylor Woodrow, added:
'Following interest rate rises in the UK, the housing market has reverted to a
more normal level of activity and we expect to see the usual market pick up in
September following the holiday period. In North America, all of our markets
remain very strong. We are well positioned for further growth.'
* As detailed in Note 1 to the Financial Statements
** Includes £12.1 million profit on sale of St. Katharine's Estate and excludes
exceptional items and goodwill amortisation as detailed in Note 2 to Financial
Statements
*** Adjusted for exceptional items as detailed in Note 2 to Financial Statements
ends
--------------------------------------------------------------------------------
High resolution photographs are available to the media free of charge at
www.newscast.co.uk, +44 (0)20 7608 1000.
A presentation to analysts and investors will be made at, UBS Investment Bank,
100 Liverpool Street, London at 10:00 hrs.
This presentation will be broadcast live on www.taylorwoodrow.com
The slides presented to the analysts and investors are also available on
taylorwoodrow.com.
For further information, please contact
Ian Morris 0121 600 8520 / 07816 518 767
Taylor Woodrow Corporate Communications
Jonathan Murrin 0121 600 8521 / 07816 518 718
Taylor Woodrow Investor Relations
William Clutterbuck 020 7379 5151
Emma Burdett
Maitland
Operating and Financial Review
Financial results
Group turnover for the six months ending 30 June 2004 was £1,435.4 million.
Profit before tax rose 31 per cent to £168.7 million (2003: £128.3 million).
Basic earnings per share rose 31% to 19.7 pence (2003: 15.0 pence). Annualised
return on average capital employed pre goodwill and exceptional items was 20.6
per cent (2003: 20.9 per cent).
Total Housing
H1 '04 H1'03 FY '03
Restated Restated
Turnover £m 1,214.6 846.4 2,236.8
Average Selling Price £k 198.1 187.8 187.9
Average Capital Employed * £m 1,886.1 1,267.3 1,373.4
Operating Profit ** £m 194.9 133.1 356.4
Return on Average Capital Employed * # % 20.7 21.0 26.0
Operating Margin (%) ** % 16.0 15.7 15.9
* before average goodwill of £351.7 million (H1 '03: £238.0 million; FY '03:
£266.9 million)
** before goodwill amortisation of £10.0 million (H1 '03:£6.7 million; FY '03:
£15.0 million) and exceptional profits of £13.8 million (H1 '03:£NIL;
FY '03: losses of £20.0 million)
# Return on average capital employed is calculated as operating profit pre
goodwill and pre exceptional items divided by the average of opening and
closing capital employed.
H1 '03 and FY '03 are restated for FRS 17.
Our housing businesses in the United Kingdom, North America, Spain and Gibraltar
all had a strong first half of the year. Worldwide housing completions grew to
5,521 from 3,860 primarily due to the acquisition of Wilson Connolly in October
2003.
UK Housing
H1 '04 H1 '03 FY '03
Restated Restated
Turnover £m 822.8 492.3 1,484.6
Average Selling Price £k 199.1 187.1 181.0
Average Capital Employed * £m 1,496.5 893.1 1,009.7
Operating Profit ** £m 132.2 78.2 246.0
Return on Average Capital Employed * % 17.7 17.5 24.4
Operating Margin ** % 16.1 15.9 16.6
Home Completions 3,869 2,336 7,690
* before average goodwill of £345.7 million (H1 '03: £230.9 million; FY '03:
£260.2 million)
** before goodwill amortisation of £9.8 million (H1 '03: £6.4 million; FY '03:
£14.5 million) and exceptional profits of £11.7 million (H1 '03:£NIL;
FY '03:losses of £20.0 million)
The UK housing division, which accounts for 65 per cent of Group operating
profit before goodwill amortisation and exceptional items, reported good growth
in operating profits in the half year. The average sales price increased by 6
per cent to £199,100 (2003: £187,100). On an average selling price per square
foot basis the increase was 13%.
The integration of Wilson Connolly has proceeded to schedule. All regions
achieved their targeted system integration dates during the first half. We
remain firmly on track to deliver £12.5 million of synergy savings by the year
end and £25.0 million in the full year 2005. During the first half of 2004, £5
million synergy benefits were realised.
At 30 June 2004 the UK Housing land bank consisted of 34,856 owned or controlled
plots with at least outline planning permission, representing some 3.4 years'
supply. The strategic land portfolio contains a potential further 87,250 plots.
Our UK forward order book stood at £733 million at 30 June 2004, up 93% on the
same time last year.
North America Housing
H1 '04 H1 '03 FY '03
Restated Restated
Turnover £m 360.5 326.0 686.3
Average Selling Price £k 196.5 188.4 207.1
Average Selling Price $k 357.6 307.2 339.7
Average Capital Employed * £m 353.9 344.2 332.9
Operating Profit ** £m 53.9 44.7 90.1
Return on Average Capital Employed * % 30.5 26.0 27.1
Operating Margin ** % 15.0 13.7 13.1
Home Completions 1,500 1,386 2,786
* before average goodwill of £6.0 million (H1 '03: £7.1 million; FY '03: £6.7
million)
** before goodwill amortisation of £0.2 million (H1 '03: £0.3 million; FY'03:
£0.5 million) and exceptional profits of £2.1 million (H1'03: £NIL, FY'03: £NIL)
*** Note: H1 '04 US$:£ - 1.82, H1'03 US$:£ - 1.63; FY '03 US$:£ - 1.64
In local currency terms, the North American housing business increased operating
profit before goodwill amortisation and exceptional items by 35% to $98.1
million (2003: $72.9 million).
The North American housing division accounts for 26 per cent of Group operating
profit before goodwill amortisation and exceptional items.
In Florida we have seen strong demand in all markets and we are on track to
exceed our expectations for the full year. In particular, our new beachfront
high-rise projects have sold extremely well and this will flow through to
profits next year. In the first half of 2004, we completed 202 homes (2003: 210)
at an average selling price of $559,800 (2003: $513,600).
In Toronto, demand remains buoyant for our traditional low-rise homes. The
high-rise market is stable and we are forward sold in this business into 2005.
Completions in the first half of 2004 were 617 homes (2003: 658) at an average
selling price of C$289,600 (2003: C$276,000).
Our business in California has continued to perform strongly. Completions in the
first half of 2004 were 273 homes (2003: 158). Average selling prices in
California reduced by 9% to $772,200 (2003: $852,000), reflecting our strategy
of moving towards the mid market. New projects have been performing extremely
well and we are well positioned for the remainder of this year.
In Texas, both the Austin and Houston markets remained strong. Home completions
in the first half of 2004 were 33 (2003: 27) at an average selling price of
$449,400 (2003: $437,200). The strength of the market in Austin was reflected in
an increase in lot only completions from 48 to 91.
Our Arizona business is performing ahead of expectations and achieved 375 (2003:
333) home completions. Average selling prices for the first half of the year
were $172,000 (2003: $128,100) reflecting the successful introduction of
mid-market product.
The North American controlled land bank, with planning permission, now contains
27,438 (owned: 13,478) lots compared to 25,758 (owned: 12,861) lots at the end
of 2003, which reflects a 5.1 year supply.
At 30 June 2004, the North American forward order book stood at £646 million, up
53% on last year. All divisions are showing strong growth in their order books,
which positions us very well for the second half of the year.
Spain and Gibraltar Housing
H1 '04 H1 '03 FY '03
Turnover £m 31.3 28.1 65.9
Average Selling Price £k 187.8 195.6 185.9
Average Capital Employed £m 35.7 30.0 30.8
Operating Profit £m 8.8 10.2 20.3
Return on Average Capital Employed % 49.3 68.0 65.9
Operating Margin % 28.1 36.3 30.8
Home Completions 152 138 343
The Spain and Gibraltar business continued to perform well despite the timing
and mix of completions compared to the first half of last year, generating £8.8
million of operating profit in the first half of 2004 (2003: £10.2 million).
The land bank as at 30 June 2004 represented some 1,474 plots, which reflects a
4.0 years supply.
Commercial Property
H1 '04 H1 '03 FY '03
Restated Restated
Average Capital Employed £m 135.7 96.4 112.1
Operating Profit £m 2.9 5.3 (1.4)
Return on Average Capital Employed % 4.3 11.0 (1.2)
Operating Margin % 11.2 17.2 (3.0)
During the first half of the year the major commercial property scheme has been
the construction of the K2 development, which has been pre let and subsequently
pre sold for £117 million. We remain on schedule to complete the construction of
this development by the end of 2004. Apart from mixed use schemes, the
commercial property market remains quiet and our exposure limited.
Investment Property
H1 '04 H1 '03 FY '03
Average Capital Employed £m 78.1 155.3 143.3
Operating Profit £m 1.3 3.7 9.6
Return on Average Capital Employed % 3.3 4.8 6.7
With the sale of St Katharines Estate completed in March 2004 for £166.3
million, the average capital employed has materially diminished.
Construction
H1 '04 H1 '03 FY '03
Restated Restated
Profit before tax * £m 14.9 13.3 19.4
* Before exceptional profits of £12.3 million (H1 '03: £NIL; FY '03: £NIL)
The Construction business has continued to grow its order book, which at 30 June
2004 stood at £825 million, up 10 per cent on last year. During the year we have
seen growth in our facilities management business, in general UK contracting and
also in the amount of work performed supporting our house building projects
which now stands at 26% of total Construction turnover. We have also been
announced as the preferred bidder for the St Helens PFI Hospital which is
anticipated to reach financial close in the first half of 2005.
Overview of first half
We have decided to implement FRS17 Retirement Benefits in 2004. Accordingly
these financial statements have been prepared on that basis. During the period
we agreed amendments to the company's pension arrangements to mitigate current
and future exposures, one consequence of which has been a £26.1 million
exceptional profit arising from the reduction of future pension accruals. Target
pension levels however will remain unchanged with projected benefit shortfalls
being met through existing defined contribution schemes. In this way we have
sought to balance the interests of company and staff.
The half year also saw an exceptional charge of £41.1 million being the loss on
the redemption of the First Mortgage Debenture Stock following the sale of the
St Katharines Estate. £12.1 million of profit on the sale of St Katharines has
been recognised in profit on disposal of investment properties along with an
£8.1 million gain on the disposal of certain PFI interests.
During the six months to June 2004, there was a net inflow of cash from
operating activities of £16.3 million compared to an outflow in the first half
of 2003 of £98.2 million.
During the first six months of the year the company bought for treasury
8,969,104 shares for a total consideration of £25 million on a share buy back
programme. In the second half of 2004, another £25 million will be repurchased.
At 30 June 2004, total shareholders' funds were £1,538.3 million (2003: £1,355.7
million), equivalent to 270.6p pence per share. Net debt was £811.2 million
(2003: £417.6 million). At the half year, net gearing was 52.7 per cent (2003:
30.8 per cent), these figures have been adjusted to reflect the impact of FRS17.
The implementation of FRS 17 has added 3.2% to gearing at 30 June 2004.
Outlook
In the UK, recent interest rate movements and the media debate have returned the
market to more normal conditions. However the continuing undersupply of housing,
good employment levels and the relative value advantage of new homes are
sustaining reasonable market demand. In addition we would expect to see the
normal September pick up in the market following the holiday period. Accordingly
we expect to complete around 10,000 homes in the UK during 2004.
In North America we are well placed to report another strong year of profit
growth and we expect to complete around 3,500 homes in 2004.
Shareholder Information
The Board has declared an interim dividend of 3.0 pence per share (2003: 2.4
pence per share), an increase of 25 per cent. This dividend will be paid on 1st
November 2004 to shareholders on the register at close of business on 1st
October 2004.
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
2004 interim results on 25th August 2004. Copies of the 2004 Interim report and
accounts will also be available from that date on the Company's website
www.taylorwoodrow.com and from the registered office at 2 Princes Way, Solihull,
West Midlands, B91 3ES.
Summary Group profit and loss account
for the six months to 30 June 2004
Before Six months
goodwill Goodwill to 30 June Year to
amortisation amortisation Six months 2003 31 December
and and to 30 June As restated 2003
exceptional exceptional 2004 (note 3) As restated
items items (note 2) (unaudited) (unaudited) (note 3)
Notes £m £m £m £m £m
-------- -------- -------- -------- --------
Continuing
operations
Turnover:
Group and
share of
joint 1,436.2 - 1,436.2 1,060.2 2,672.9
ventures
Less: share
of
joint
ventures' (0.8) - (0.8) (2.7) (3.5)
turnover -------- -------- -------- -------- --------
Group 1 1,435.4 - 1,435.4 1,057.5 2,669.4
turnover -------- -------- -------- -------- --------
Group
operating
profit 1-2 203.9 16.1 220.0 141.4 339.5
Share of
operating
profit in
joint 0.1 - 0.1 1.1 1.1
ventures -------- -------- -------- -------- --------
204.0 16.1 220.1 142.5 340.6
Profit on
disposal of
investments
and 20.1 - 20.1 6.1 6.3
properties -------- -------- -------- -------- --------
Profit on
ordinary
activities
before
interest 224.1 16.1 240.2 148.6 346.9
Interest
receivable 2.1 - 2.1 1.8 4.0
Interest
payable:
Group 2 (30.4) (41.1) (71.5) (18.6) (44.2)
Joint - - - (1.0) (1.0)
ventures
(30.4) (41.1) (71.5) (19.6) (45.2)
Other
finance 3 (2.1) - (2.1) (2.5) (5.2)
charges -------- -------- -------- -------- --------
Profit on
ordinary
activities
before
taxation 193.7 (25.0) 168.7 128.3 300.5
Tax on
profit
on ordinary 4 (58.5) 4.5 (54.0) (46.3) (100.6)
activities -------- -------- -------- -------- --------
Profit on
ordinary
activities
after 135.2 (20.5) 114.7 82.0 199.9
taxation
Minority
interests -
equity and
non-equity (0.2) - (0.2) (0.2) (0.4)
-------- -------- -------- -------- --------
Profit for
the 135.0 (20.5) 114.5 81.8 199.5
period
Dividends
paid
and proposed
(including
dividends on
non-equity
shares of (18.9) (13.0) (50.4)
£2.4m in
2004)
Difference
between
non-equity
finance
costs
and the
related 1.1 - (1.1)
dividends -------- -------- -------- -------- --------
Profit
retained 96.7 68.8 148.0
-------- -------- -------- -------- --------
Basic
earnings 5 19.7p 15.0p 36.0p
per share -------- -------- -------- -------- --------
Diluted
earnings per
share 5 19.6p 14.9p 35.8p
-------- -------- -------- -------- --------
Adjusted
basic
earnings per 21.6p 15.0p 38.6p
share 5 -------- -------- -------- -------- --------
Equity
dividends
per 3.0p 2.4p 8.9p
share -------- -------- -------- -------- --------
Group statement of total recognised gains and losses
for the six months to 30 June 2004
Six months
to 30 June Year to
Six months to 2003 31 December
30 June As restated 2003
2004 (note 3) As restated
(unaudited) (unaudited) (note 3)
Notes £m £m £m
--------- --------- --------- ---------
Profit for the period 114.5 81.8 199.5
Unrealised deficit on
revaluation of - - (19.3)
properties
Revaluation reversed on
properties - (1.1) (1.1)
transferred to stocks
Actuarial gains net of - - 0.7
taxation --------- --------- --------- ---------
114.5 80.7 179.8
Currency translation
differences on (12.2) 11.5 (2.1)
foreign currency net --------- --------- --------- ---------
investments
Total recognised gains and
losses 102.3 92.2 177.7
relating to the period --------- --------- --------- ---------
Prior year adjustment 3 (117.6)
--------- --------- --------- ---------
Total recognised gains and
losses
since last annual report (15.3)
and --------- --------- --------- ---------
financial statements
Reconciliation of movements in Group shareholders' funds
for the six months to 30 June 2004
Six months
to 30 June Year to
Six months 2003 31 December
to 30 June As restated 2003
2004 (note 3) As restated
(unaudited) (unaudited) (note 3)
Notes £m £m £m
-------- -------- -------- --------
Profit for the period 114.5 81.8 199.5
Dividends paid and proposed on
equity and non-equity shares (18.9) (13.0) (50.4)
-------- -------- -------- --------
95.6 68.8 149.1
Other recognised gains and
losses (12.2) 10.4 (21.8)
relating to the period (net)
New share capital subscribed 2.2 1.7 173.1
Redemption of preference (100.0) - -
shares
Proceeds from sale of own 0.4 0.9 1.8
shares
Purchase of own shares (23.6) (3.7) (3.7)
Own shares acquired on
acquisition - - (0.2)
of subsidiary -------- -------- -------- --------
Net (decrease)/increase in
shareholders' funds (37.6) 78.1 298.3
-------- -------- -------- --------
Opening shareholders' funds as
previously stated 1,693.5 1,405.9 1,393.3
Prior year adjustments 3 (117.6) (128.3) (115.7)
-------- -------- -------- --------
Opening shareholders' funds as
restated 1,575.9 1,277.6 1,277.6
-------- -------- -------- --------
Closing shareholders' funds 1,538.3 1,355.7 1,575.9
-------- -------- -------- --------
Group balance sheet
as at 30 June 2004
30 June
2003 31 December
30 June As restated 2003
2004 (note 3) As restated
(unaudited) (unaudited) (note 3)
£m £m £m £m
--------- --------- --------- ---------
Fixed assets
Intangible assets
Goodwill 346.6 234.5 356.7
Tangible assets
Investment properties 13.9 179.7 160.2
Other 28.0 19.2 30.3
Investments
Joint ventures
Share of gross assets (30
June 2003: £0.9m;
31 December 2003: £0.9m) 0.8
Share of gross liabilities
(30 June 2003: £0.9m;
31 December 2003: £0.9m) (0.8)
---------
- - -
Other 3.5 3.4 3.3
--------- --------- --------- ---------
392.0 436.8 550.5
--------- --------- --------- ---------
Current assets
Stocks 2,784.0 1,876.2 2,596.7
Debtors 286.6 257.1 296.0
Cash at bank and in hand 185.1 147.0 146.5
--------- --------- --------- ---------
3,255.7 2,280.3 3,039.2
Creditors: amounts falling
due (887.9) (674.4) (1,001.0)
within one year --------- --------- --------- ---------
Net current assets 2,367.8 1,605.9 2,038.2
--------- --------- --------- ---------
Total assets less current
liabilities 2,759.8 2,042.7 2,588.7
Creditors: amounts falling
due (1,072.1) (542.1) (845.6)
after one year
Provisions for liabilities
and (36.8) (27.5) (36.0)
charges --------- --------- --------- ---------
Net assets before
post-retirement liability 1,650.9 1,473.1 1,707.1
Net post-retirement (111.7) (117.3) (130.1)
liability --------- --------- --------- ---------
Net assets 1,539.2 1,355.8 1,577.0
--------- --------- --------- ---------
Represented by:
Capital and reserves
Non-equity share capital - - 10.0
Equity share capital 146.5 138.4 146.1
--------- --------- --------- ---------
Called up ordinary share
capital 146.5 138.4 156.1
Share premium account 747.2 592.3 745.7
Revaluation reserve - 63.3 38.4
Capital redemption reserve 31.5 21.5 21.5
Other reserve - - 1.1
Profit and loss account 651.0 555.6 627.8
Less: Own shares (37.9) (15.4) (14.7)
--------- --------- --------- ---------
Shareholders' funds 1,538.3 1,355.7 1,575.9
Minority interests - equity
and 0.9 0.1 1.1
non-equity interests --------- --------- --------- ---------
1,539.2 1,355.8 1,577.0
--------- --------- --------- ---------
Shareholders' funds are
analysed as:
Equity interests 1,538.3 1,355.7 1,474.8
Non-equity interests - - 101.1
--------- --------- --------- ---------
Total shareholders' funds 1,538.3 1,355.7 1,575.9
--------- --------- --------- ---------
Summary Group cash flow statement
for the six months to 30 June 2004
Six months
to 30 June Year to
Six months 2003 31 December
to 30 June As restated 2003
2004 (note 3) As restated
(unaudited) (unaudited) (note 3)
£m £m £m
---------- ---------- ----------
Group operating profit 220.0 141.4 339.5
Depreciation and amortisation 12.8 9.3 21.8
Increase in stocks (203.4) (159.5) (201.3)
Decrease/(increase) in debtors 14.6 (56.5) (56.0)
(Decrease)/increase in creditors (25.6) (42.3) 142.3
Exchange adjustments (2.1) 9.4 1.1
---------- ---------- ----------
Net cash inflow/(outflow) from
operating activities 16.3 (98.2) 247.4
Returns on investments and
servicing of finance (84.7) (25.1) (43.5)
Taxation (44.9) (34.0) (82.4)
Capital expenditure and
financial investment 165.6 1.3 (8.9)
Acquisitions and disposals - - (435.2)
Equity dividends paid - - (41.4)
---------- ---------- ----------
Net cash inflow/(outflow) before
use of liquid resources and
financing 52.3 (156.0) (364.0)
Cash inflow from decrease in
liquid resources 50.3 57.5 39.8
Net cash (outflow)/inflow from
financing (19.6) 116.0 313.9
---------- ---------- ----------
Increase/(decrease) in cash in
the period 83.0 17.5 (10.3)
---------- ---------- ----------
Movement in net debt
Increase/(decrease) in cash in
the period 83.0 17.5 (10.3)
Cash inflow from increase in
debt (103.0) (117.1) (210.4)
Cash inflow from decrease in
liquid resources (50.3) (57.5) (39.8)
---------- ---------- ----------
Increase in net debt resulting
from cash flows (70.3) (157.1) (260.5)
Exchange/other non-cash changes
in net debt 2.0 (0.1) (222.0)
---------- ---------- ----------
Increase in net debt in the
period (68.3) (157.2) (482.5)
Net debt at the beginning of the
period (742.9) (260.4) (260.4)
---------- ---------- ----------
Net debt at the end of the
period (811.2) (417.6) (742.9)
---------- ---------- ----------
Notes to the interim financial statements
1. Segmental analysis
Group turnover Group operating profit Capital
(by origin) (by origin) employed
Six months to 30 June Six months to 30 June 30 June 31 December
2003 2003
As restated As restated
2004 2003 2004 (note 3) 2004 (note 3)
£m £m £m £m £m £m
-------- -------- -------- -------- -------- --------
By activity
Housing 1,214.6 846.4 194.9 133.1 1,968.1 1,804.1
Property
development
and investment 29.6 38.3 4.2 9.0 149.9 277.6
Construction 191.2 172.8 4.8 6.0 (114.2) (118.5)
-------- -------- -------- -------- -------- --------
1,435.4 1,057.5 203.9 148.1 2,003.8 1,963.2
Goodwill
amortisation/g
oodwill -
housing(note
2) (10.0) (6.7) 346.6 356.7
Exceptional
item (note 2) 26.1 - - -
-------- -------- -------- -------- -------- --------
220.0 141.4 2,350.4 2,319.9
-------- -------- -------- -------- -------- --------
By market
North 360.5 330.3 53.9 46.0 373.1 340.3
America
Rest of the
World 56.3 52.0 12.5 16.1 42.7 34.1
-------- -------- -------- -------- -------- --------
Total overseas 416.8 382.3 66.4 62.1 415.8 374.4
United Kingdom 1,018.6 675.2 137.5 86.0 1,588.0 1,588.8
-------- -------- -------- -------- -------- --------
1,435.4 1,057.5 203.9 148.1 2,003.8 1,963.2
Goodwill
amortisation/g
oodwill (note
2) (10.0) (6.7) 346.6 356.7
Exceptional
item (note 2) 26.1 - - -
-------- -------- -------- -------- -------- --------
220.0 141.4 2,350.4 2,319.9
-------- -------- -------- -------- -------- --------
Net debt (811.2) (742.9)
Minority
interests (0.9) (1.1)
-------- -------- -------- -------- -------- --------
Shareholders'
funds 1,538.3 1,575.9
-------- -------- -------- -------- -------- --------
Turnover by origin represents sales to third parties and is not materially
different from turnover to third parties by destination.
Operating profit after including goodwill amortisation and exceptional item for
the six months to 30 June 2004 is analysed as Housing £198.7m, Property £4.2m
and Construction £17.1m and geographically as North America £55.8m, Rest of the
World £12.5m and United Kingdom £151.7m (six months to 30 June 2003: Housing
£126.4m, Property £9.0m and Construction £6.0m and, geographically, North
America £45.7m, Rest of the World £16.1m and United Kingdom £79.6m).
Operating profit for construction excludes its share of the construction joint
ventures and interest. Profit before taxation for construction for the six
months to 30 June 2004 is £27.2m (2003 as restated: £13.3m) including these
items.
Goodwill of £346.6m (31 December 2003 as restated: £356.7m) is in respect of
United Kingdom £340.8m (31 December 2003 as restated: £350.6m) and North America
£5.8m (31 December 2003: £6.1m).
The increase in operating profit of £0.7m for the six months to 30 June 2003
arising from restatement because of the adoption of FRS 17 is analysed as
Construction increase £0.7m, North America decrease £0.6m and United Kingdom
increase £1.3m. The decrease in capital employed of £117.6m at 31 December 2003
arising from restatement because of the adoption of FRS 17 is analysed as
Housing £58.6m, Property £1.4m and Construction £66.7m totalling £126.7m before
an increase in Housing goodwill of £9.1m and, geographically, as North America
£0.6m and United Kingdom £126.1m before increase in goodwill of £9.1m.
2. Goodwill amortisation and exceptional items
Goodwill amortisation charged to operating profit for the six months to 30 June
2004 is £10.0m (six months to 30 June 2003: £6.7m, year to 31 December 2003:
£15.0m) and this is in respect of United Kingdom £9.8m (six months to 30 June
2003: £6.4m, year to 31 December 2003: £14.5m) and North America £0.2m (six
months to 30 June 2003: £0.3m, year to 31 December 2003: £0.5m).
Operating profit for the six months to 30 June 2004 is also stated after an
exceptional credit of £26.1m relating to a curtailment of pensions liability,
analysed as Housing £13.8m and Construction £12.3m. The curtailment is
principally in respect of the Group's United Kingdom defined benefit pension
arrangements and arises because defined benefit pensions will no longer be
linked to final salaries but instead to 2004 salaries increased by the lowest of
annual salary increase, increase in the Retail Price Index or 5%; the Group will
contribute to its defined contribution pension scheme in respect of United
Kingdom salaries not covered by defined benefit pension arrangements.
Profit before tax for the six months to 30 June 2004 also includes an
exceptional interest charge of £41.1m being the loss on repurchase of the 9.5%
first mortgage debenture stock 2014.
There were no exceptional items for the six months to 30 June 2003.
Operating profit for the year to 31 December 2003 was stated after deduction of
exceptional administrative expenses of £20.0m relating to the integration of
Wilson Connolly operations with Taylor Woodrow United Kingdom Housing.
The tax effect of the exceptional credit and charges noted above was 30% (note
5).
3. Basis of preparation of the interim financial statements
The interim financial statements have been prepared on a basis which is
consistent with the accounting policies adopted for the year to 31 December 2003
except for the adoption of the accounting standard FRS 17 'Retirement benefits'
which the Group has adopted in full from 1 January 2004. In prior years the
Group complied with the transitional requirements of this standard. The Group
considers that full adoption in 2004 will benefit comparability in future
periods.
The adoption of FRS 17 has led to an increase of £0.7m in operating profit for
the six months to 30 June 2003 and £1.7m for the year to 31 December 2003. In
addition there was also an increase in finance charges of £2.5m for the six
months to 30 June 2003 and £5.2m for the year to 31 December 2003. The tax
impact of these changes was a decrease of £0.5m for the six months to 30 June
2003 and a decrease of £0.9m for the year to 31 December 2003. The overall
effect of adopting FRS 17 was a decrease in retained profit for the financial
period of £1.3m and £2.6m for the six months to 30 June 2003 and year to 31
December 2003 respectively. The adoption of this standard has resulted in a
reduction of £117.6m in net assets at 31 December 2003 and £117.0m at 30 June
2003. The adjustment at 31 December 2003 includes an increase in goodwill of
£9.1m as the fair value of the pensions liability (net of deferred tax) acquired
with Wilson Connolly Holdings plc on 2 October 2003 has now been included on a
FRS 17 basis rather than, as previously, on a SSAP 24 basis. In the summary cash
flow statement the increases in operating profit noted above are matched by
corresponding decreases in creditors with no changes in the net cash flows from
operating activities.
The balance sheet and cash flow statement for the six months to 30 June 2003
have also been restated in respect of the adoption of UITF 38 'Accounting for
ESOP Trusts' in order that they be consistent with the policies adopted for the
year to 31 December 2003. Investments in the company's own shares at 30 June
2003 of £15.4m (31 December 2002: £12.6m) are shown as a deduction within
shareholders' funds rather than as current asset investments and are therefore
no longer shown as part of net debt with the cash outflow of £2.8m regarding
them for the six months to 30 June 2003 shown as part of financing rather than
within management of liquid resources.
The interim financial statements were approved by the board of directors on 3
August 2004.
These interim financial statements do not constitute statutory accounts.
Comparative figures for the year to 31 December 2003 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 comparative figures have also been
restated for the adoption of FRS 17 as noted above. The 2003 annual accounts
have been delivered to the Registrar of Companies.
4. Tax on profit on ordinary activities
Six months Year to
to 30 June 31 December
Six months 2003 2003
to 30 June As restated As restated
2004 (note 3) (note 3)
£m £m £m
-------- -------- --------
United Kingdom tax
Corporation tax 29.1 22.8 50.3
Deferred tax (0.2) 0.3 5.3
Joint ventures - - -
Overseas tax
Current tax 19.6 16.6 36.0
Deferred tax 5.5 6.6 9.0
-------- -------- --------
54.0 46.3 100.6
-------- -------- --------
5. Earnings per share
The calculations of earnings per share are based on the following profits and
numbers of shares:
Basic Adjusted
Year to Year to
Six months 31 Six months 31
to 30 June December to 30 June December
Six months 2003 2003 Six months 2003 2003
to 30 June As restated As restated to 30 June As restated As restated
2004 (note 3) (note 3) 2004 (note 3) (note 3)
£m £m £m £m £m £m
------- ------- ------- ------- ------- -------
Profit for
the
financial 114.5 81.8 199.5 114.5 81.8 199.5
period
Less:
Finance
costs of
non-equity (1.3) - (1.1) (1.3) - (1.1)
shares
Add/(less):
Exceptional
items (note
2)
Curtailment
of
pensions (26.1) - -
liability
Loss on
repurchase
of 41.1 - -
debt
Integration
costs - - 20.0
Less: Tax
effect of
exceptional
items (4.5) - (6.0)
------- ------- ------- ------- ------- -------
113.2 81.8 198.4 123.7 81.8 212.4
------- ------- ------- ------- ------- -------
Year to
Six months Six months 31
to 30 June to 30 June December
2004 2003 2003
m m m
------- ------- -------
Weighted average number of shares:
For basic and adjusted earnings per share 573.6 544.6 550.9
Weighted average of dilutive options 3.8 2.4 3.0
Weighted average of dilutive awards under
bonus plans 0.9 0.4 0.5
------- ------- -------
For diluted earnings per share 578.3 547.4 554.4
------- ------- -------
Taylor Woodrow plc Interim Report 2004
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 2004 which comprises the summary Group profit and
loss account, the Group statement of total recognised gains and losses, the
reconciliation of movements in Group shareholders' funds, the Group balance
sheet, the summary Group cash flow statement, and related notes 1 to 5. 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.
This report is made solely to the company in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the company, for our review work, for this report, or for the conclusions we
have formed.
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 are 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 the 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 2004.
Deloitte & Touche LLP
Chartered Accountants
London
3 August 2004
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