Interim Results
Taylor Wimpey PLC
31 July 2007
31 July 2007
Taylor Wimpey plc
Interim Results for 6 months to 30 June 2007
Group Highlights:
• Merger of George Wimpey Plc and Taylor Woodrow plc became effective on 3
July 2007
• Integration progressing well: substantial progress made, management teams
in place, operating as a combined business in both UK and North America.
• Annualised pre-tax synergy estimate increased to £100m.
• Strong UK Housing margin performance, with both businesses advancing
margins significantly in the first half of 2007.
• Land provisions of £86m in Taylor Woodrow's North American business
arising from continued decline in Florida and California markets (including
the £25m announced in early May).
• Interim dividend: 5.5 pence per share (H1 2006: 5.0p)
• £750m share buy back commencing today and to be completed during the next
eighteen months.
Group Financial Highlights
6 months to 30 June 2007
Pro forma combined*
H1 2007
-----------------------------------------------------
Home completions 12,228
Revenue £2,671.9m
Profit from operations before exceptional £313.2m
items
Profit before tax before exceptional items £259.0m
Profit before tax £140.9m
Net assets £4,113.4m
-----------------------------------------------------
* These pro forma numbers reflect the aggregate of the underlying financial
information of Taylor Woodrow plc and George Wimpey Plc. In aggregating the two
sets of financial information no alignment of accounting policies has been
performed and intra-Group trading and balances between the two entities have not
been eliminated. Whilst the pro forma numbers contain an illustrative goodwill
figure before fair value adjustments, a detailed fair value exercise will be
performed prior to publishing the final accounts for the year ending 31 December
2007. Detailed pro forma numbers, along with details of the basis of preparation
can be found at the end of this announcement.
Historical Taylor Woodrow plc business
6 months to 30 June 2007
H1 2007 H1 2006
-------------------------------------------------------------------
Home completions 4,857 5,052
Revenue £1,441.4m £1,494.4m
Pre-exceptional profit from operations £152.8m £195.1m
before JV interest and tax
Pre-exceptional profit before tax £119.8m £160.8m
Profit before tax £18.3m £160.8m
Equity shareholders' funds per share 357.1 pence 345.4 pence
Gearing 34.1% 40.1%
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Pete Redfern, Group Chief Executive, Taylor Wimpey plc commented:
'We have made excellent progress in the UK in the first half of 2007, with both
Taylor Woodrow and George Wimpey demonstrating significant margin improvement.
As expected, given very difficult trading conditions, the respective
performances in North America are substantially below the record results
achieved in the first half of 2006.
The completion of the merger on 3 July has created the UK's largest homebuilder.
We are well-placed to continue to deliver margin improvement in the UK through
cost synergies and the combination of George Wimpey's build cost efficiencies
with Taylor Woodrow's land development skills. In North America, the combination
of our two businesses leaves Taylor Wimpey well positioned to manage the tough
conditions, and benefit as the market recovers.'
Contacts:
For further information, please contact:
Pete Redfern, Group Chief Executive James Murgatroyd
Peter Johnson, Group Finance Director
Jonathan Drake, Investor Relations
Taylor Wimpey plc
Tel: +44 (0) 7816 517039 on 31 July 2007 Finsbury
Tel: +44 (0) 207 963 6352 thereafter Tel: +44 (0) 20 7251 3801
A presentation to analysts will be made at 09:00 hours. This presentation will
be broadcast live on www.taylorwimpey.com.
Chairman and Chief Executive's Review
This is the first interim review for Taylor Wimpey plc, following the merger of
Taylor Woodrow plc and George Wimpey Plc, which completed on 3 July 2007. In
this Chairman and Chief Executive's review we focus on the forward strategy for
the combined business, as well as the historical performance for the first half
for Taylor Woodrow, as the acquiring entity. Where practical we have also
provided pro forma numbers for the combined Group for illustrative purposes.
We have already made significant progress on our primary objective of UK margin
improvement, and on the process of merging the two businesses. Despite the
difficult trading conditions in the US, we are confident of delivering
significant value to shareholders through both future earnings growth and the
efficient management and investment of capital.
Taylor Wimpey overview and strategy
UK Housing
Our primary objective in the UK is to drive improvement in the operating margin.
Excellent progress has been made in the first half, with a strong increase in
underlying housing margin in both parts of the business. We have extended George
Wimpey's commitment to an operating margin of over 14 per cent for 2007 to the
whole Taylor Wimpey UK housing business. The medium term target remains to
achieve industry average margins over a 2-3 year period.
The drivers of this improvement are the changes in land strategy, the drive to
reduce costs and the impact of an improved sales strategy.
The merger has allowed us to move quickly to a balanced portfolio of short,
medium and long term land. This provides the opportunity to add value through
planning and development, a more stable base for business planning and the
opportunity for land swaps and dual branding. We will also reduce our level of
land sales as we focus on delivering value from the landbank.
The merger will also allow us to reduce overhead costs per completion
significantly once the full synergies have been attained. However, we expect the
largest benefit to be achieved in build costs where the opportunities for both
procurement efficiencies and design and engineering savings are significant.
As previously stated, we will seek to maximise margin performance by controlling
sales incentives tightly. We have maintained a strategy of strong forward
selling, and as at 30 June our pro forma order book is 5 per cent by value ahead
year on year. This strategy will enable us to manage more effectively the less
buoyant market conditions we expect in the second half.
In addition to improving margins, a further key objective in the UK is to
deliver volume growth by increasing outlet numbers. We have already identified a
number of new outlets from sharing sites between the Bryant Homes and George
Wimpey brands and from potential land swaps. We currently have 471 open outlets
across the Group, with many more in the pipeline. Our business structure has the
capacity to manage 600 outlets. This long term target is clearly reliant on the
planning system, which is becoming increasingly difficult.
North American Housing
Our existing markets benefit from significant inward migration of both people
and jobs. Our long term strategy is to grow the North American business in
markets of significant employment driven demand growth. In the short to medium
term, market conditions are expected to remain difficult. We will focus on cost
reductions and cash management whilst preserving the long term capacity of the
business and the value locked up in excellent long term positions. These actions
will both maintain the underlying value of the business and put us in the best
position to reinvest in new sites as value opportunities become available.
We expect to have reduced headcount in our North American business by nearly 25
per cent by the end of the year from a combination of synergies and reductions
due to market conditions. The drive to reduce build costs is also seeing some
significant gains, with Morrison homes already exceeding our previously stated
target of $10m of build cost savings.
The merger has ensured that we have scale positions in almost all of our current
markets. We have reviewed all of our existing markets, and have as a result
decided to exit the Dallas market, which has never been a successful
contributor.
Where we have outstanding longer term positions (sometimes with up to 6-7 years
of future potential), we will continue to manage these positions carefully in
order to maintain long term value. However we have adjusted carrying values to
reflect current market conditions. Although we have been and remain extremely
cautious in the land market in most states, we are starting to see some
significant changes in the quality and pricing of land available for sales. In a
number of instances these are in 'A' locations that were unavailable in the
heated markets of 2004/5. We do not at this point anticipate major cash
investment in the short term but believe that there will be an increasing number
of attractive opportunities, which we are well placed to take advantage of at
the appropriate time.
In order to release cash for reinvestment and maintain momentum in the rest of
the business, we will actively look to work through other, shorter term, sites
at a steady rate. In markets where we had taken this view already, we have
established sales pricing at levels which allow us to obtain sensible traction
and a sub-normal but steady sales rate of around 0.65 per site per week. In this
way we can reduce our investment in these short term sites steadily, and recycle
cash into new investments.
It became increasingly evident over the course of the second quarter that
certain US markets had continued to deteriorate. In particular, in both Florida
and Southern California the depth and severity of the adverse conditions has
meant that projections of any recovery must be deferred. In light of this, in
respect of the first half of 2007 we have reviewed Taylor Woodrow's land
portfolio in these markets and the bases of provisions. As a consequence we are
providing a further £60.9 million against land holdings in both the above
markets. This is in addition to the provisions announced in May. Approximately
90% of these additional provisions are in respect of Florida landholdings. The
consequence of these provisions will be to permit, where appropriate, the price
reductions necessary to achieve realistic sales rates in line with the rest of
the North American businesses. Total NRV provisions for the Taylor Woodrow
business in the first half of 2007 total £86 million. A significant proportion
of the land affected will not be brought forward to market until 2009 or beyond.
Integration
The integration of the businesses is progressing extremely well. In the UK, the
management team and their direct reports were in place at completion, and the
business is operating extremely well. In North America, these conclusions have
been finalised and implemented during July.
Taylor Wimpey's philosophy is to operate with very slim Group functions. The new
Corporate function was in place from the day of completion and will move into a
new London office during September.
In the UK, the combined Housing business will operate under the Bryant Homes,
George Wimpey and G2 brands, with the Laing Homes and Wilson Connolly brands
being retired. The business will consist of three divisions, focusing on the
North, Midlands and South. Each division will be headed by a Chairman and there
will be a total of 34 regions. Four regional offices will close as a result of
the merger, along with the George Wimpey City business and the former Taylor
Woodrow head office in Solihull. A new UK Head Office has been identified, and
the move is expected to be complete by the end of the year.
In North America the combined business will operate under the Taylor Woodrow,
Morrison Homes and Monarch brands. The geographical spread of the businesses is
highly complementary and, therefore, regional offices will be combined in four
locations where there is an overlap as a result of the merger. The former
Morrison Homes head office will also close.
Across the Group efforts have been made to redeploy affected staff into other
vacancies across the business, but total redundancies are expected to be around
700. In almost all instances the staff affected have been informed, with the
final consultation period finishing on 3 August.
The speed and effectiveness of the integration process is a testament to the
skill and diligence of our employees and we would like to record our particular
thanks for the professionalism of those people who will not have a continuing
role within the combined business.
In the merger prospectus and associated documentation we announced our
expectation of achieving annualised pre-tax synergies significantly in excess of
£70m. Integration work undertaken since the publication of the documentation has
confirmed the potential for a further £30m of savings arising principally from
build cost efficiencies. We are therefore revising our synergy target upwards to
£100m. The additional £30m of synergies are expected to be delivered by the end
of 2009. We continue to expect one-off costs associated with the merger of
around £60m.
Review of capital requirements
Following announcement of the merger to create Taylor Wimpey, the company
announced an intention to review the ongoing capital requirements of the group
and to communicate the conclusions of this review before the end of 2007. The
purpose of this review, which has now been completed, was to ensure that the
requirements for growth are balanced by a suitable and efficient capital
structure. Following this review the Board has authorised a share buy back
programme of up to £750 million, to be completed over the next 18 months. Whilst
we will be commencing this programme with immediate effect, we will require the
approval of shareholders to the extent that the buyback exceeds 10 per cent of
the Group's issued share capital. We will seek to maintain year end adjusted
gearing (excluding goodwill and pensions) within a range of 40 per cent to 60
per cent and interest cover between five and seven times in normal market
conditions.
We believe that this policy will allow the group to pursue an ambitious growth
plan over the next several years, whilst also delivering strong cash returns to
shareholders through the buyback programme and continued progressive growth in
our dividend.
Board changes
On behalf of the Board, we would like to record our thanks for the contributions
made by the outgoing Board members.
In the case of Taylor Woodrow plc, Ian Smith and Vernon Sankey resigned from the
Board at the time of the merger. Following the completion of the merger, John
Landrum has also left the Board with effect from today. John has helped us
through the early stages of integration in North America and will continue to be
available as this process continues. He plans to pursue other entrepreneurial
real estate investments outside the Group in the future. John will be succeeded
as CEO of the North American business by Sheryl Palmer. Sheryl has had 18 years
of experience in the homebuilding and land development industry, much of it with
Pulte Homes and Del Webb, prior to joining Morrison Homes in early 2006.
In the case of George Wimpey Plc, the Board would also like to thank John
Robinson, Andrew Carr-Locke, Steve Parker, Robert Sharpe and Christine Cross.
Dividends
In line with its progressive dividend policy, the Board has declared an interim
dividend of 5.5 pence per share (H1 2006: 5.0 pence). This dividend will be paid
on 1 November 2007 to shareholders on the register at close of business on 28
September 2007.
The company offers shareholders the opportunity to use their dividends to
purchase shares on the market under the terms of the Dividend Re-Investment
Plan. Further details can be found on our website www.taylorwimpey.com.
Outlook
In the UK, we anticipate that the impact of recent interest rate rises will
result in more subdued market conditions for the second half of 2007. Current
conditions are stable and the business is in a strong position to respond to any
change in the market. Our strong pro forma order book, which is 5 per cent up
year on year, combined with completions to date accounts for over 80 per cent of
our full year volume expectations. Taylor Wimpey enters the second half of the
year with a strong landbank, with a good balance between short-term, medium-term
and strategic land. We will continue to invest in our UK landbank, in order to
support our future growth ambitions. We are confident in the delivery of our
improvement plans for the business.
In North America, short term market conditions remain difficult to predict. We
continue to expect completions, margins and return on capital employed for the
full year to be significantly lower than those achieved in 2006. Our focus in
North America remains on managing costs and cash and maintaining a steady sales
rate. In the medium-term, the merger leaves us well positioned to benefit from a
return to more normal market conditions.
Market conditions in mainland Spain remain subdued and we expect full year
profits to be well below the levels achieved in 2006. Construction remains on
course to deliver a stable performance in 2007, with profit timing weighted
towards the second half.
Historical Taylor Woodrow Results
Results
Total revenue for Taylor Woodrow plc for the six months to 30 June 2007 was
£1.44bn (2006: £1.49bn). Profit before tax was £119.8m before the effect of the
exceptional provisions in North America (H1 2006: £160.8m). Exceptional
provisions of £101.5 million were made in the first half as detailed below.
Including the effect of these exceptional items, profit before tax was £18.3m.
Also as a result of the provisions in North America, a tax credit of £4.6m has
been recorded in the period (H1 2006: £48.8m charge).
Basic earnings per share before exceptional items were 14.9 pence (2006: 19.5
pence). Including the effect of these exceptional items basic earnings per share
were 3.9 pence. Equity per share increased by 3 per cent to 357.1 pence.
Total equity before minority interests stood at £2,072.8m at 30 June 2007 (2006:
£1,979.6m). Net debt was £706.0m (2006: £793.7m) resulting in net gearing of
34.1 per cent (2006: 40.1 per cent).
UK Housing
H1 2007 H1 2006 Change FY 2006
----------------------------------------------------------------------
Revenue, including joint 780.3 742.2 5.1% 1,842.0
ventures £m
Profit from operations* £m 103.0 82.0 25.6% 221.5
Operating margin* % 13.2 11.0 2.2ppt 12.0
Home completions 3,378 3,369 0.3% 8,294
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The UK Housing business has performed well in the first half of the year,
capitalising on a solid UK housing market. Home completions were broadly flat
year on year, and good progress was made on margin improvement as a result of
ongoing value engineering and design initiatives. Housing operating margins have
increased to 13.2 per cent (H1 2006: 11.0 per cent).
Average selling prices were ahead by 6 per cent year on year at £205k (2006:
£193k), despite an increase in the proportion of social housing completions from
14 per cent to 17 per cent. Average selling prices per square foot increased by
6 per cent over the same period.
Taylor Woodrow made a number of land sales during the first half, generating a
total operating profit, after allocated overhead, of £15.8m (H1 2006: £9.4m). We
anticipate that in the future land sales will represent a significantly smaller
proportion of UK Housing profit, although we will continue to make some land
sales and swaps as part of our management of larger sites.
As at 30 June 2007, the owned and controlled landbank stood at 34,131 plots
(December 2006: 34,827 plots) in addition to its strategic landbank of 79,000
potential plots (December 2006: 79,000).
The order book at 30 June 2007 stood at £700m, up by 8 per cent on the position
at 30 June 2006.
* Throughout the Chairman and Chief Executive's review, the profit from
operations and operating margins in the historical Taylor Woodrow results are
before joint ventures' interest and tax (see Note 3) and exceptional items (see
Note 9); joint venture revenue is used in the margin calculation (see Note 3).
North America Housing
H1 2007 H1 2006 Change FY 2006
----------------------------------------------------------------------
Revenue, including joint 353.2 446.7 (20.9)% 1,194.3
ventures £m
Profit from operations before 46.4 96.0 (51.7)% 221.3
exceptional items* £m
Operating margin before 13.1 21.5 (8.4)ppt 18.5
exceptional items * %
Exceptional provisions (101.5) - N/A -
Home completions 1,376 1,512 (9.0)% 4,492
----------------------------------------------------------------------
Market conditions in North America continue to be very challenging. The markets
in Arizona, California and Florida remain very tough, with conditions in Florida
particularly worsening during the period. However, in Texas, where we operate in
Austin and Houston, we have seen a limited impact from reduced credit
availability. Our markets in Canada remain healthy.
The tough market conditions are reflected in the comparison of first half
profits for the North America business, which reported record profits in the
equivalent period of 2006. The business has seen reduced home completions during
2007, although average selling prices were higher at US$455k (H1 2006: US$440k).
As previously announced, Taylor Woodrow took the decision to suspend sales for
three high-rise tower projects in Florida following a very poor Spring selling
season. This has resulted in a one-off non-cash provision of £15.6m relating to
land holdings in this sector.
As the market has continued to weaken, and in our view the likely duration of
the downturn has increased, we have reviewed the carrying value of all land
holdings and the bases of provisions. As highlighted above, this review has
resulted in a £60.9m provision against land holdings and projects in Florida and
California, in addition to the £9.5m announced in early May.
As disclosed in the 2006 Report and Accounts, a jury trial in Florida awarded
damages against Taylor Woodrow subsidiaries totalling £22.7m in November 2006.
On 4 April 2007, the judge ruled on post-trial motions filed by Taylor Woodrow
and reduced the award to £13.9m. We will be pursuing an appeal, but as
previously announced we have provided £15.5m this year against the potential
liability including associated costs.
As a result of our ongoing caution in the land market, the owned and controlled
landbank stood at 29,452 plots on 30 June 2007, a reduction of 18 per cent
against the position at 30 June 2006.
The order book stood at £484m at 30 June 2007, a decline of 45 per cent from 30
June 2006, reflecting the continuing market weakness.
Spain and Gibraltar Housing
Our markets in Mallorca and Gibraltar remain stable, but we have seen a
significant slowing in our markets in mainland Spain. This reflects overcapacity
in these markets, along with the dampening effect of higher interest rates on
demand from British buyers.
We sold 103 homes in the first half of 2007 (H1 2006: 171), at an increased
average selling price of £284k (H1 2006: £190k) reflecting an increased
proportion of completions from Gibraltar. Operating margins are below the strong
levels of recent years, as a result of the increased level of competition for
sales. The major contributory factor to the fall in operating profits for the
first half is a significant land sale in the same period last year.
Our landbank of 2,388 plots remains at a similar level to that reported in
December 2006 and the order book of £91m is broadly similar to the position at
the end of June 2006.
Construction
Our Construction business continues to build strong relationships with both blue
chip and public sector clients. The profit from operations was £1.6m (H1 2006:
£5.2m) and the external order book was increased by 7 per cent to £1.16bn (2006:
£1.09bn).
Historical George Wimpey Results
At a Group level, George Wimpey Plc delivered profit before tax of £122.6m (H1
2006: £152.3m) from revenue of £1.27bn (H1 2006: £1.40bn). Total equity stood at
£1.79bn at 30 June 2007 (H1 2006: £1.61bn). Net debt was £525.9m (H1 2006:
698.4m) resulting in net gearing of 29 per cent (H1 2006: 43 per cent).
George Wimpey's UK Housing business delivered a strong performance in the first
half of 2007. Operating profit at £159m was 38 per cent ahead of 2006. Home
completions stood at 5,828 (H1 2006: 5,854), with an average selling price of
£179k (H1 2006: £176k). Excellent progress has been made on margin improvement,
with the first half margin of 15.2 per cent significantly ahead of the prior
year comparative (H1 2006: 11.2 per cent). The UK order book at 30 June 2007
stood at £1,084m, an increase of 2 per cent year on year (H1 2006: £1,057m). The
business remains on track to deliver the previously announced £25m of cost
reductions, in addition to the synergies arising from the merger.
In the US, as expected Morrison Homes has continued to encounter tough trading
conditions. Home completions fell to 1,543 (H1 2006: 1,968) and margins were
also lower at 3.6 per cent (H1 2006: 19.1 per cent). Land values were reviewed
as at the end of the period and no additional net realisable value provisions
were found to be required. The US order book at 30 June 2007 stood at £174m (H1
2006: £373m).
Acquisition accounting
Full acquisition accounting will be performed in the second half of 2007,
including alignment of accounting policies, fair value adjustments on the George
Wimpey net assets acquired and the recognition of other intangibles including
goodwill. The financial statements for Taylor Wimpey plc for the year ended 31
December 2007 will include the full impact of acquisition accounting.
Other
This report was approved by the Board of Directors on 30 July 2007.
INDEPENDENT REVIEW REPORT TO TAYLOR WIMPEY PLC
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 June 2007 which comprise the consolidated income
statement, the consolidated statement of recognised income and expense, the
consolidated balance sheet, the consolidated cash flow statement and related
notes 1 to 10 and the reconciliation of movements in consolidated equity. 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 International Standards on Auditing (UK and Ireland)
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 2007.
Deloitte & Touche LLP
Chartered Accountants
London, UK
30 July 2007
Taylor Wimpey plc
Consolidated income statement for the six months to 30 June 2007
for the historical Taylor Woodrow plc business
Audited
Reviewed Year to 31
Before Six months to 30 June December
exceptional Exceptional 2007 2006 2006
Note items items * £m £m £m
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Continuing operations
Revenue: Group and 3 1,441.4 1,441.4 1,494.4 3,679.0
share of joint ventures
Less share of joint (39.5) (39.5) (43.0) (106.9)
ventures
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Consolidated revenue 3 1,401.9 1,401.9 1,451.4 3,572.1
Cost of sales (1,170.1) (101.5) (1,271.6) (1,175.1) (2,933.4)
---------------------------------------------------------------------------------------
Gross profit 231.8 (101.5) 130.3 276.3 638.7
Profit on disposal of 5.8 5.8 5.5 9.1
properties and
investments
Administrative expenses (99.6) (99.6) (97.8) (200.1)
Share of results of 12.2 12.2 9.1 22.1
joint ventures
---------------------------------------------------------------------------------------
Profit from operations 3 150.2 (101.5) 48.7 193.1 469.8
Interest receivable 5.2 5.2 3.6 9.1
Finance costs (35.6) (35.6) (35.9) (73.3)
---------------------------------------------------------------------------------------
Profit before tax 119.8 (101.5) 18.3 160.8 405.6
Tax 4 (33.6) 38.2 4.6 (48.8) (115.0)
---------------------------------------------------------------------------------------
Profit for the period 86.2 (63.3) 22.9 112.0 290.6
---------------------------------------------------------------------------------------
Attributable to:
Equity holders of the parent 22.7 111.5 289.5
Minority interest 0.2 0.5 1.1
---------------------------------------------------------------------------------------
22.9 112.0 290.6
---------------------------------------------------------------------------------------
Earnings per share
From continuing
operations
Basic 6 3.9p 19.5p 50.5p
---------------------------------------------------------------------------------------
Diluted 6 3.9p 19.2p 50.1p
---------------------------------------------------------------------------------------
* Refer to accounting policies (note 2). The current period items refer to legal
provisions and land write-off provisions (note 9).
Consolidated statement of recognised income and expense for the six months to 30 June 2007
for the historical Taylor Woodrow plc business
Audited
Reviewed Year to 31
Six months to 30 June December
2007 2006 2006
£m £m £m
--------------------------------------------------------------------------------------------
Net exchange differences on translation of foreign operations 1.4 (23.9) (49.0)
Effect of change in tax rate on the pension deficit deferred tax (3.9) - -
Actuarial gains/(losses) on defined benefit pension schemes - 16.3 (1.6)
Tax on actuarial gains/(losses) taken directly to equity - (4.9) 0.5
Net surplus on revaluation - - 1.0
--------------------------------------------------------------------------------------------
Net expense recognised directly in equity (2.5) (12.5) (49.1)
Profit for the period 22.9 112.0 290.6
--------------------------------------------------------------------------------------------
Total recognised income and expense for the period 20.4 99.5 241.5
--------------------------------------------------------------------------------------------
Reconciliation of movements in consolidated equity for the six months to 30 June 2007
Audited
Reviewed Year to 31
Six months to 30 June December
Note 2007 2006 2006
£m £m £m
----------------------------------------------------------------------------------------
Total recognised income for the period 20.4 99.5 241.5
Dividends on equity shares 5 (56.6) (51.0) (79.7)
New share capital subscribed 0.1 3.1 3.8
Purchase of own shares - (0.5) (6.1)
Proceeds from sale of own shares 8.1 3.1 15.0
Share-based payments 2.1 3.5 6.1
(Decrease)/increase in share-based payment tax reserve - (2.7) 4.2
Cash cost of satisfying share options (4.9) - (8.0)
Loss on disposal of own shares (3.2) -
Increase / (decrease) in other reserve 0.3 (0.1) (0.6)
Decrease in minority interests (0.2) (0.5) -
----------------------------------------------------------------------------------------
Net (decrease) / increase in equity (30.7) 51.2 176.2
Opening equity 2,105.5 1,929.3 1,929.3
----------------------------------------------------------------------------------------
Closing equity 2,074.8 1,980.5 2,105.5
----------------------------------------------------------------------------------------
Consolidated balance sheet at 30 June 2007 for the historical Taylor Woodrow plc business
Reviewed Audited
30 June 31 December
2007 2006 2006
£m £m £m
-------------------------------------------------------------------------------
Non-current assets
Goodwill 362.9 363.4 363.1
Property and plant 23.3 24.7 25.5
Interests in joint ventures 54.2 53.6 56.2
Trade and other receivables 26.7 65.1 56.0
Deferred tax assets 131.8 79.3 95.4
-------------------------------------------------------------------------------
598.9 586.1 596.2
-------------------------------------------------------------------------------
Current assets
Inventories 3,041.2 3,147.0 2,946.5
Trade and other receivables 387.6 314.2 294.9
Tax receivables 21.7 - 19.7
Cash and cash equivalents 151.3 84.7 236.5
-------------------------------------------------------------------------------
3,601.8 3,545.9 3,497.6
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total assets 4,200.7 4,132.0 4,093.8
-------------------------------------------------------------------------------
Current liabilities
Trade and other payables (883.1) (870.0) (926.0)
Tax liabilities (50.5) (37.9) (74.1)
Debenture loans (2.3) (4.1) (2.5)
Bank overdrafts and loans (22.8) (49.5) (12.3)
-------------------------------------------------------------------------------
(958.7) (961.5) (1,014.9)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net current assets 2,643.1 2,584.4 2,482.7
-------------------------------------------------------------------------------
Non-current liabilities
Trade and other payables (97.8) (123.3) (123.1)
Debenture loans (563.3) (621.5) (610.6)
Bank loans (268.9) (203.3) (2.4)
Retirement benefit obligation (210.0) (206.9) (208.6)
Deferred tax liabilities (0.8) (0.9) (0.8)
Long-term provisions (26.4) (34.1) (27.9)
-------------------------------------------------------------------------------
(1,167.2) (1,190.0) (973.4)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total liabilities (2,125.9) (2,151.5) (1,988.3)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net assets 2,074.8 1,980.5 2,105.5
-------------------------------------------------------------------------------
Equity
Share capital 148.6 148.5 148.5
Share premium account 758.4 759.0 758.8
Revaluation reserve 0.5 0.5 1.5
Own shares (36.9) (51.4) (45.0)
Share-based payment tax reserve 8.2 1.3 8.2
Capital redemption reserve 31.5 31.5 31.5
Other reserve 5.1 5.3 4.8
Translation reserve (17.7) 6.0 (19.1)
Retained earnings 1,175.1 1,078.9 1,214.3
-------------------------------------------------------------------------------
Equity attributable to equity holders of the 2,072.8 1,979.6 2,103.5
parent
Minority interests 2.0 0.9 2.0
-------------------------------------------------------------------------------
Total equity 2,074.8 1,980.5 2,105.5
-------------------------------------------------------------------------------
Consolidated cash flow statement for the six months to 30 June 2007 for the
historical Taylor Woodrow plc business
Audited
Year to
Reviewed 31
Six months to 30 June December
2007 2006 2006
Note £m £m £m
---------------------------------------------------------------------------------
Net cash from operating activities 7 (341.4) (408.6) 57.0
Investing activities
Interest received 5.3 4.5 9.1
Dividends received from joint ventures 8.1 15.6 22.6
Proceeds on disposal of properties, plant and 13.4 43.8 48.0
investments
Purchases of properties, plant and (3.4) (3.2) (6.7)
investments
Amounts invested in joint ventures (2.0) (5.5) (9.2)
Amounts repaid by joint ventures 3.2 3.4 5.3
---------------------------------------------------------------------------------
Net cash from investing activities 24.6 58.6 69.1
---------------------------------------------------------------------------------
Financing activities
Equity dividends paid - - (79.7)
Dividends paid by subsidiaries to minority (0.1) (0.5) (0.1)
shareholders
Issue of ordinary share capital 0.1 3.1 3.3
Proceeds from sale of own shares 8.1 3.1 15.9
Purchase of own shares (4.9) (2.0) (12.4)
New bank loans raised 277.1 315.0 608.7
Repayment of debenture loans (50.0) (2.6) (4.3)
Repayment of bank loans (13.7) (91.0) (600.9)
Increase/(decrease) in bank overdrafts 13.1 19.1 (2.7)
---------------------------------------------------------------------------------
Net cash from/(used in) financing activities 229.7 244.2 (72.2)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Net (decrease)/increase in cash and cash equivalents (87.1) (105.8) 53.9
Cash and cash equivalents at beginning of year 236.5 197.3 197.3
Effect of foreign exchange rate changes 1.9 (6.8) (14.7)
---------------------------------------------------------------------------------
Cash and cash equivalents at end of period 151.3 84.7 236.5
---------------------------------------------------------------------------------
Notes to the consolidated financial statements for six months to 30 June 2007
for the historical Taylor Woodrow plc business
1. General information
The interim report has been prepared in accordance with the recognition and
measurement criteria of IFRS and the disclosure requirements of the Listing
Rules.
The information for the year ended 31 December 2006 does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. A copy
of the statutory accounts for that year prepared under IFRS has been delivered
to the Registrar of Companies. The auditors' report on those accounts was
unqualified and did not contain statements under section 237 (2) or (3) of the
Companies Act 1985.
These interim accounts were approved by the Directors on 30 July 2007. They are
unaudited but have been reviewed by the auditors whose review report is set out
below.
2. Accounting policies
The accounting policies adopted are consistent with those followed in the
preparation of the Group's annual financial statements for the year ended 31
December 2006.
Exceptional items are defined as items of income and expenditure which are
material and unusual in nature and of such significance that they require
separate disclosure on the face of the income statement in accordance with IAS
1, Presentation of Financial Statements.
3. Business segments
The following is an analysis of the revenue, results and capital employed,
analysed by business segment, the Group's primary basis of segmentation.
Housing Housing Housing
United North Spain and Housing
Kingdom America Gibraltar Total Construction Consolidated
Six months to 2007 2007 2007 2007 2007 2007
30 June 2007 £m £m £m £m £m £m
----------------------------------------------------------------------------------------
Revenue:
External sales 751.5 342.5 30.0 1,124.0 277.9 1,401.9
Inter-segment sales - - - - 20.5 20.5
Eliminations - - - - (20.5) (20.5)
----------------------------------------------------------------------------------------
Total revenue 751.5 342.5 30.0 1,124.0 277.9 1,401.9
Share of joint 28.8 10.7 - 39.5 - 39.5
ventures' revenue
----------------------------------------------------------------------------------------
Group and share 780.3 353.2 30.0 1,163.5 277.9 1,441.4
of joint ventures
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Result:
Profit before 96.7 37.9 1.8 136.4 1.6 138.0
joint ventures &
exceptional items
Share of joint 6.3 8.5 - 14.8 - 14.8
ventures' profit
----------------------------------------------------------------------------------------
Profit * 103.0 46.4 1.8 151.2 1.6 152.8
Exceptional items * - (101.5) - (101.5) - (101.5)
Share of joint (2.1) (0.5) - (2.6) - (2.6)
ventures'
interest and tax
----------------------------------------------------------------------------------------
Profit from 100.9 (55.6) 1.8 47.1 1.6 48.7
operations
Finance costs, net (30.4)
----------------------------------------------------------------------------------------
Profit before tax 18.3
Tax 4.6
----------------------------------------------------------------------------------------
Profit for the period 22.9
----------------------------------------------------------------------------------------
Capital employed** 1,710.6 706.2 97.7 2,514.5 (96.6) 2,417.9
---------------------------------------------------------------------------
Goodwill 362.9
Net debt (706.0)
----------------------------------------------------------------------------------------
Net assets 2,074.8
----------------------------------------------------------------------------------------
* Profit is profit from operations before joint ventures' interest and tax and
also before exceptional items. Exceptional items refer to legal provisions and
land write-off provisions.
**The Group is unable to allocate the defined benefit pension scheme assets and
liabilities on an actuarial basis by entity. However, for the purposes of the
segmental analysis above the Group has allocated the deficit on the basis of
contributing members. This allocation is performed solely for the purposes of
providing a more meaningful segmental analysis and is not an appropriate
apportionment in accordance with IAS 19.
3. Business and geographical segments continued
Housing Housing Housing
United North Spain and Housing
Kingdom America Gibraltar Total Construction Consolidated
Six months to 2006 2006 2006 2006 2006 2006
30 June 2006 £m £m £m £m £m £m
----------------------------------------------------------------------------------------
Revenue:
External sales 713.3 432.6 43.6 1,189.5 261.9 1,451.4
Inter-segment sales - - - - 34.7 34.7
Eliminations - - - - (34.7) (34.7)
----------------------------------------------------------------------------------------
Total revenue 713.3 432.6 43.6 1,189.5 261.9 1,451.4
Share of joint 28.9 14.1 - 43.0 - 43.0
ventures' revenue
----------------------------------------------------------------------------------------
Group and share 742.2 446.7 43.6 1,232.5 261.9 1,494.4
of joint ventures
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Result:
Profit before 77.3 89.7 11.9 178.9 5.1 184.0
joint ventures
Share of joint 4.7 6.3 - 11.0 0.1 11.1
ventures' profit
----------------------------------------------------------------------------------------
Profit* 82.0 96.0 11.9 189.9 5.2 195.1
Share of joint (1.7) (0.3) - (2.0) - (2.0)
ventures'
interest and tax
----------------------------------------------------------------------------------------
Profit from 80.3 95.7 11.9 187.9 5.2 193.1
operations
----------------------------------------------------------------------------------------
Finance costs, net (32.3)
----------------------------------------------------------------------------------------
Profit before tax 160.8
----------------------------------------------------------------------------------------
Tax (48.8)
----------------------------------------------------------------------------------------
Profit for the period 112.0
Capital employed** 1,728.2 727.3 69.8 2,525.3 (114.5) 2,410.8
----------------------------------------------------------------------------
Goodwill 363.4
Net debt (793.7)
----------------------------------------------------------------------------------------
Net assets 1,980.5
----------------------------------------------------------------------------------------
3. Business and geographical segments continued
Housing Housing Housing
United North Spain and Housing
Kingdom America Gibraltar Total Construction Consolidated
Year to 2006 2006 2006 2006 2006 2006
31 December 2006 £m £m £m £m £m £m
----------------------------------------------------------------------------------------
Revenue:
External sales 1,759.2 1,170.2 92.1 3,021.5 550.6 3,572.1
Inter-segment sales 4.1 - - 4.1 60.8 64.9
Eliminations (4.1) - - (4.1) (60.8) (64.9)
----------------------------------------------------------------------------------------
Total revenue 1,759.2 1,170.2 92.1 3,021.5 550.6 3,572.1
Share of joint 82.8 24.1 - 106.9 - 106.9
ventures'revenue
----------------------------------------------------------------------------------------
Group and share 1,842.0 1,194.3 92.1 3,128.4 550.6 3,679.0
of joint ventures
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Result:
Profit before 206.8 206.4 26.4 439.6 8.1 447.7
joint ventures
Share of joint 14.7 14.9 - 29.6 - 29.6
ventures' profit
----------------------------------------------------------------------------------------
Profit* 221.5 221.3 26.4 469.2 8.1 477.3
Share of joint (6.1) (1.4) - (7.5) - (7.5)
ventures'
interest and tax
----------------------------------------------------------------------------------------
Profit from 215.4 219.9 26.4 461.7 8.1 469.8
operations
Finance costs, net (64.2)
----------------------------------------------------------------------------------------
Profit before tax 405.6
Tax (115.0)
----------------------------------------------------------------------------------------
Profit for the year 290.6
----------------------------------------------------------------------------------------
Capital employed** 1,574.4 577.2 89.6 2,241.2 (107.5) 2,133.7
----------------------------------------------------------------------------
Goodwill 363.1
Net debt (391.3)
----------------------------------------------------------------------------------------
Net assets 2,105.50
----------------------------------------------------------------------------------------
4. Taxation
Six months to 30 June Year to 31
December
2007 2006 2006
£m £m £m
------------------------------------------------------------------------------------
Current taxation
UK corporation tax 22.8 17.5 48.9
Relief for foreign tax (1.0) - (8.3)
Foreign tax 13.6 18.3 72.1
Deferred taxation
UK 2.4 0.3 (3.2)
Overseas (42.4) 12.7 5.5
------------------------------------------------------------------------------------
(4.6) 48.8 115.0
------------------------------------------------------------------------------------
Corporation tax for the interim period is credited at 25.1% (six months to 30
June 2006: 30.3%). This includes a tax credit on exceptional items of £38.2m.
The best estimate of the weighted average annual corporation tax rate
pre-exceptional items for the full financial year is 28.0% (2006: 28.3%).
The UK tax rate will reduce from 30% to 28% on 1 April 2008, which has resulted
in a reduction in the Group net deferred tax asset of £4.3m of which £3.9m has
been reflected in the SORIE.
5. Dividends
Six months to 30 June Year to 31
December
2007 2006 2006
£m £m £m
------------------------------------------------------------------------------------
Final dividend for the year to 31 December 2006 of 9.75p 56.6 51.0 51.0
(2005: 8.9p) per share
Interim dividend for the year to 31 December 2006 of 5.0p - 28.7
per share
------------------------------------------------------------------------------------
56.6 51.0 79.7
------------------------------------------------------------------------------------
Six months to 30 June
2007 2006
£m £m
----------------------------------------------------------------------------
Proposed interim dividend for the year to 31 December 2007 63.0 28.7
of 5.5p (2006: 5.0p) per share
----------------------------------------------------------------------------
The proposed interim dividend was approved by the Board on 30 July 2007 and has
not been included as a liability as at 30 June 2007. This dividend will be paid
on 1 November 2007 to shareholders on the register at close of business on 28
September 2007.
6. Earnings per share
Earnings per share Six months Six months Year to 31
30 June 30 June December
2007 2006 2006
----------------------------------------------------------------------
Basic 3.9p 19.5p 50.5p
Diluted 3.9p 19.2p 50.1p
Adjusted Basic 14.9p 19.5p 50.5p
Adjusted Diluted 14.8p 19.2p 50.1p
----------------------------------------------------------------------
The calculation of earnings per share is based on the following data:
Six months Year to 31
Six months to to 30 June December
30 June 2006 2006
Earnings 2007 £m £m £m
-------------------------------------------------------------------------------------
Earnings for basic earnings per 22.7 111.5 289.5
share and diluted earnings per share
Less: Exceptional legal provisions 101.5 - -
and land write-off provisions
Plus: Tax effect of exceptional items (38.2) - -
-------------------------------------------------------------------------------------
Adjusted earnings 86.0 111.5 289.5
-------------------------------------------------------------------------------------
Year to 31
Six months to 30 June December
2007 2006 2006
Weighted average number of shares m m m
------------------------------------------------------------------------------------
For basic earnings per share 579.3 572.4 572.9
Weighted average of dilutive options 2.4 7.7 5.0
Weighted average of dilutive awards under bonus plans 0.1 0.6 0.5
------------------------------------------------------------------------------------
For diluted earnings per share 581.8 580.7 578.4
------------------------------------------------------------------------------------
7. Note to the consolidated cash flow statement
Year to 31
Six months to 30 June December
2007 2006 2006
£m £m £m
------------------------------------------------------------------------------------
Profit from operations 48.7 193.1 469.8
Adjustments for:
Depreciation of plant 3.4 3.0 7.7
Share-based payment charge 2.1 3.5 6.1
Gain on disposal of property and plant (5.8) (5.5) (9.1)
Share of joint ventures' operating profit (12.2) (9.1) (22.1)
Exceptional legal provisions and land 101.5 - -
write-off provisions
Increase/(decrease) in other provisions (0.5) 3.1 8.5
Operating cash flows before movement in working 137.2 188.1 460.9
capital
Increase in inventories (204.6) (489.7) (347.5)
(Increase)/decrease in receivables (65.1) (70.6) (37.2)
Increase/(decrease) in payables (100.9) 63.2 174.4
Pension contributions - - (27.3)
Cash (used in)/generated by operations (233.4) (309.0) 223.3
Income taxes paid (62.0) (54.1) (95.2)
Interest paid (46.0) (45.5) (71.1)
Net cash (used in)/from operating activities (341.4) (408.6) 57.0
Net Debt
31
30 June 30 June December
2007 2006 2006
£m £m £m
------------------------------------------------------------------------------------
Cash and cash equivalents 151.3 84.7 236.5
Bank overdrafts and bank loans (291.7) (252.8) (14.7)
Debenture loans (565.6) (625.6) (613.1)
------------------------------------------------------------------------------------
(706.0) (793.7) (391.3)
------------------------------------------------------------------------------------
Cash and cash equivalents (which are presented as a single class of asset on the
face of the balance sheet) comprise cash at bank and other short-term highly
liquid investments with a maturity of three months or less.
8. Related party transactions
Transactions between the company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note. Transactions between the Group and its joint ventures are as follows:
The Group purchased land from joint ventures for £8.0m during the six months to
30 June 2007 (six months to 30 June 2006: £8.9m; year to 31 December 2006: £30.7m).
9. Exceptional Items
As a result of weaker markets in Florida and Southern California and a decision
to suspend sales efforts in the high-rise tower division in Florida, non cash
land write downs of £70.4m (Florida and Southern California) and £15.6m
(high-rise tower division in Florida) were booked during the period.
As disclosed in our 2006 Report and Accounts, a jury trial in Florida awarded
damages against several US-based Taylor Woodrow subsidiaries totalling £22.7m in
November 2006. On 4 April 2007, the judge ruled on post-trial motions filed by
Taylor Woodrow and reduced the award to £13.9m. We will be pursuing an appeal,
but have provided £15.5m this year against the potential liability including
associated costs.
10.Post balance sheet event
On 3 July 2007 the Group issued 563,919,759 shares in consideration for the
total equity of George Wimpey Plc. The statutory results of the Group for the
six months ended 30 June 2007 therefore exclude trading of the former George
Wimpey Plc businesses.
Additional pro forma unaudited financial information for continuing operations
Basis of preparation
The Group completed the acquisition of George Wimpey Plc on 3 July 2007. The
statutory results of the Group for the six months ended 30 June 2007 therefore
exclude trading of the former George Wimpey Plc businesses.
To assist investors in understanding the performance of the enlarged Taylor
Wimpey plc Group, pro forma primary statements have been prepared, in which the
two underlying sets of financial information for the six months to 30 June 2007
for Taylor Woodrow plc ('TW') and the 26 weeks to 1 July 2007 for George Wimpey
Plc ('GW'), have been aggregated to illustrate the effect of the merger of TW
and GW as if the transaction had taken place on 1 January 2007. The results from
the two businesses have been prepared on the basis of the existing accounting
policies in the two Groups. In aggregating the two sets of financial
information, intra-Group trading and balances between the two entities have not
been eliminated. This information has not been audited or reviewed.
The excess of the fair value of shares issued to acquire the GW business over
the net assets less book goodwill has been recognised as a provisional goodwill
number. Full acquisition accounting will be performed during the second half of
2007 in which this provisional goodwill number will change due to accounting
policy alignments, fair value adjustments on the GW net assets acquired and the
recognition of other intangibles. The financial statements for Taylor Wimpey plc
for the year ended 31 December 2007 will include the full impact of acquisition
accounting.
Pro forma unaudited combined group summary income statement for
six months to 30 June 2007
----------------------------------
6 months to 30 June 2007
----------------------------------
Taylor George Pro forma
Woodrow Wimpey Combined
£m £m £m
--------------------------------------------------------------------------
Consolidated Revenue 1,401.9 1,270.0 2,671.9
Cost of sales (1,170.1) (1,056.2) (2,226.3)
--------------------------------------------------------------------------
Gross profit 231.8 213.8 445.6
Profit on disposal of 5.8 - 5.8
properties and investments
Net operating expenses (99.6) (54.4) (154.0)
Share of results of joint 12.2 3.6 15.8
ventures
--------------------------------------------------------------------------
Profit from operations before 150.2 163.0 313.2
exceptional items
Exceptional items (note B) (101.5) (16.6) (118.1)
--------------------------------------------------------------------------
Profit from operations 48.7 146.4 195.1
Net finance costs (30.4) (23.8) (54.2)
--------------------------------------------------------------------------
Profit before tax 18.3 122.6 140.9
Tax 4.6 (39.7) (35.1)
--------------------------------------------------------------------------
Profit for the period 22.9 82.9 105.8
--------------------------------------------------------------------------
Pro forma unaudited combined group balance sheet at 30 June 2007
------------------------------------------------
30 June 2007
------------------------------------------------
Taylor George Acquisition Pro forma
Woodrow Wimpey Entry Combined
£m £m £m £m
------------------------------------------------------------------------------
Goodwill 362.9 5.4 249.8 618.1
Fixed assets and 77.5 64.8 142.3
joint ventures
Land 1,867.7 2,360.0 4,227.7
Land creditors (314.3) (470.7) (785.0)
Other net 921.2 529.9 1,451.1
operating assets
Tax and provisions 11.3 (85.9) (74.6)
Net pension deficit (145.5) (88.8) (234.3)
------------------------------------------------------------------------------
Capital Employed 2,780.8 2,314.7 249.8 5,345.3
Shareholders' funds 2,072.8 1,788.8 249.8 4,111.4
Minority interests 2.0 - - 2.0
Net debt 706.0 525.9 - 1,231.9
------------------------------------------------------------------------------
2,780.8 2,314.7 249.8 5,345.3
------------------------------------------------------------------------------
Notes to the Pro forma unaudited combined group financial statements for
six months to 30 June 2007
A. Pro forma combined group segmental profit from operations before exceptional items
---------------------------------------
6 months to 30 June 2007
---------------------------------------
Taylor George Pro-forma
Woodrow Wimpey Combined
£m £m £m
---------------------------------------------------------------
UK Housing 100.9 162.1 263.0
NA Housing 45.9 8.1 54.0
Spain & Gibraltar 1.8 - 1.8
Housing
Construction 1.6 - 1.6
Corporate - (7.2) (7.2)
---------------------------------------------------------------
150.2 163.0 313.2
---------------------------------------------------------------
B. Pro forma combined group exceptional items
---------------------------------------
6 months to 30 June 2007
---------------------------------------
Taylor George Pro-forma
Woodrow Wimpey Combined
£m £m £m
-----------------------------------------------------------------
Land write down (86.0) (86.0)
Provision for legal (15.5) (15.5)
Transaction costs (16.6) (16.6)
-----------------------------------------------------------------
(101.5) (16.6) (118.1)
-----------------------------------------------------------------
Exceptional items are defined as items of income and expenditure which are
material and unusual in nature and of such significance that they require
separate disclosure on the face of the income statement.
As a result of weaker markets in Florida and Southern California and a decision
to suspend sales efforts in the high-rise tower division in Florida, a one-off
non cash land write down of £86.0m was booked during the period.
As disclosed in our 2006 Report and Accounts, a jury trial in Florida awarded
damages against several US-based Taylor Woodrow subsidiaries totalling £22.7m in
November 2006. On 4 April 2007, the judge ruled on post-trial motions filed by
Taylor Woodrow and reduced the award to £13.9m. We will be pursuing an appeal,
but have provided £15.5m this year against the potential liability including
associated costs.
£16.6m of one time transaction costs were incurred by George Wimpey Plc as a
consequence of the merger. As George Wimpey was identified as the acquired under
IFRS 3, these costs have been expensed. Transaction costs incurred by Taylor
Woodrow plc are held on the balance sheet at 30 June 2007.
This information is provided by RNS
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