RNS Number:1543J
Taylor Woodrow PLC
01 March 2005
TAYLOR WOODROW plc PRELIMINARY RESULTS STATEMENT
(for the year ended 31 December 2004)
Delivering shareholder value
Financial Highlights
* Profit before tax (adjusted)* up 27 per cent to #427.1 million (2003:
#335.5 million)
* Profit before tax (FRS3) up 30% to #390.4 million (2003: #300.5 million)
* Operating profits up 40 per cent to #474.5 million (2003: #339.5 million)
* Basic earnings per share up 28 per cent to 46.2 pence (2003: 36.0 pence)
* Adjusted earnings per share** up 25 per cent to 48.2 pence (2003: 38.6 pence)
* Dividends per share up 25 per cent to 11.1 pence (2003: 8.9 pence)
* Return on Average Capital Employed* down 0.1% to 24.6%
* Net gearing down from 47.1% to 34.1%
Operational Highlights
* World wide home completions up 21% to 13,092
* UK Housing operating profit* up 22%. Integration of Wilson Connolly completed
* North America Housing operating profit* up 58% in dollar terms
* Record group housing landbank at 63,701 plots. #590m spend on land, up 9%
* Record group housing order book at #1.13 billion
* #316m free cashflow generated***
* #150 million of shareholders' funds repurchased
* Before exceptional items as detailed in note 2 and goodwill as detailed below
(group goodwill charge of #20.4m)
** Before exceptional items as detailed in note 5
*** Net cash inflow before use of liquid resources and financing
Norman Askew, Chairman of Taylor Woodrow, said today:
"During 2004, Taylor Woodrow demonstrated the benefits of its diversified market
strategy and delivered substantial growth in shareholder value. The group is
well placed for future growth."
Iain Napier, Chief Executive of Taylor Woodrow, subsequently commented:
"2004 was another successful and busy year for Taylor Woodrow.
We completed the integration of Wilson Connolly on schedule and delivered the
synergies as planned. We achieved outstanding growth in our North American
operations. We generated significant cashflows from our operations and from
disposal of assets, which allowed us to strengthen our balance sheet to fund the
next stage of our development.
Turning to 2005, our combined housing business started the year with a record
order book. It is still too early to predict the 2005 UK market, though in
recent weeks, sales rates and visitor levels have been ahead of the last six
months of 2004 and indeed total net reservations for the first seven weeks are
slightly ahead of the same period last year. Against this background our focus
in UK housing is on improving operational and capital efficiencies. In North
America, the housing market continues to be very strong and this, combined with
our excellent forward sold position gives us confidence for another year of good
growth.
Overall our balance of profit generation between the UK, North America and Spain
provides us with alternative growth channels and the ability to mitigate
exposure to any one market.
In 2004 we made significant progress in our business strategy to create
sustainable shareholder value by growing, both organically and by acquisition. I
look forward to reporting on our future progress."
- ends -
--------------------------------------------------------------------------------
A presentation to analysts will be made at 10.00 hrs. This presentation will be
broadcast live on taylorwoodrow.com.
For further information, please contact
Ian Morris 0121 600 8520 / 07816 518 767
Taylor Woodrow Public Relations
John Holland-Kaye 07816 517 200
Taylor Woodrow Investor Relations
Emma Burdett 020 7379 5151 / 07973 319 593
William Clutterbuck 020 7379 5151 / 07785 292 617
Maitland Consultancy
Operating and Financial Review
Highlights
Taylor Woodrow continued to deliver strong profit growth during 2004 with
operating profit increasing by 40 per cent to #474.5 million. Adjusted pre-tax
profit increased by 27 per cent to #427.1 million. Pre tax profit on an FRS3
basis was 30 per cent higher at #390.4 million. Growth was achieved both
organically in North America and through acquisition in the UK.
The integration of Wilson Connolly was completed on schedule, with the UK
housing business operating under the Bryant name supported by standard systems
and processes. Cost savings of #13.5 million were achieved from the integration,
and in line with our previous forecasts these will rise to #25 million in 2005.
The group generated #316m of free cashflow from operations and disposal of
assets, which facilitated the redemption of #100 million of preference shares,
the return of #50 million to shareholders via share buy backs and a reduction in
net gearing to 34.1% from 47.1% last year.
The group spent some #590 million on land (up 10% on 2003), and increased the
number of plots owned and controlled with planning permission to 63,701 plots.
We achieved a significant increase in pull through from strategic land, which
has reduced our average plot cost in the UK. The housing order book increased to
a record #1.13 billion driven by excellent growth in North America.
Our land position and the strength of our balance sheet leave us well placed for
future growth.
Total Housing
2004 2003
Average Capital Employed * #m 1,810.1 1,373.4
Operating Profit ** #m 448.8 356.4
Return on Average Capital Employed % 24.8 26.0
Operating Margin (%) ** % 15.6 15.9
Home completions 13,092 10,819
* pre average goodwill of #349.8 million (2003: #266.9 million)
** pre goodwill amortisation of #20.4 million (2003: #15.0 million) and
exceptional items of #12.5 million profit (2003: #20.0 million loss)
The housing businesses located in the United Kingdom, North America, Spain and
Gibraltar all had a successful 2004. Worldwide housing completions rose 21 per
cent to 13,092 (2003: 10,819) with operating profits, pre goodwill amortisation
and exceptional items, increasing 26 per cent to #448.8 million, (2003: #356.4
million).
UK Housing
2004 2003
Average Capital Employed * #m 1,445.7 1,009.7
Operating Profit ** #m 301.1 246.0
Return on Average Capital Employed % 20.8 24.4
Operating Margin ** % 15.6 16.6
Home Completions 9,053 7,690
* pre average goodwill of #344.1 million (2003: #260.2 million)
** pre goodwill amortisation of #20.0 million (2003: #14.5 million) and
exceptional items of #11.6 million profit (2003: #20.0 million loss)
The UK housing market was very strong in the first half of 2004, but slowed in
the second half as the effect of several interest rate rises started to impact
buyer confidence.
UK housing reported 9,053 home completions (2003: 7,690) and 1,777 plot
completions (2003: 720). The average sales price increased by 9% to #197,300
(2003: #181,000). Land sales increased as we rationalised the land portfolio of
the combined businesses, but overall land profits were broadly the same as last
year.
Social housing represented 9% of completions (2003: 8%) and apartments grew to
36% (2003: 32%) as a result of the increasing impact of PPG3. 64% of completions
were on brownfield sites.
Operating margin at 15.6% shows a 0.7% improvement over the proforma margin for
the combined business, with synergies and gross margin improvements partly
offset by lower overhead recoveries. Return on average capital employed shows a
0.3% improvement over the proforma ROACE.
We took a prudent approach to the UK land market. We have raised our hurdle
rates and increased our focus on securing planning on strategic land. Purchases
of land with planning totalled #328 million. Exercise of options and transfers
from strategic land totalled #147 million (5,755 plots), a significant increase
on previous years. As a result of this strategy, the cost of plots added to the
landbank in the year was 13% less than the cost of plots completed and the
average cost of plots in the UK landbank was reduced by 5%. At the year end the
UK housing land bank consisted of 32,459 owned or controlled plots with outline
planning permission, representing some 3.6 years' supply (based on 2004 home
completions). In addition there is a strategic land portfolio of 20,300 gross
acres, which could ive rise to a further 84,000 potential plots.
At the end of the year the UK housing business had a forward order book of #407
million, which compares with an exceptional level of #601 million at the end of
2003.
North America Housing
2004 2003
Average Capital Employed * #m 325.9 332.9
Operating Profit ** #m 127.6 90.1
Return on Average Capital Employed % 39.2 27.1
Operating Margin ** % 14.8 13.1
Home Completions 3,635 2,786
* pre average goodwill of #5.7 million (2003: #6.7m)
** pre goodwill amortisation of #0.4 million (2003: #0.5m) and exceptional
profit of #0.9 million (2003: nil)
Total home completions for the North American operations increased 30 per cent
to 3,635. Operating profit was up 42 per cent to #127.6 million before allowing
for currency translation differences. In US dollar terms, operating profit
increased by 58% to $233.5 million.
This growth was driven by an increase in housing volumes in all of our
businesses while we continued to reposition our product mix toward the high
opportunity segments of the middle market. Lot sales reduced to 2,323 (2003:
2,940).
In Phoenix, Arizona, the market continued to be buoyant. Home completions
increased to 841 (2003: 689), with Average selling prices increasing 39% to
$183,000 (2003: $132,000). This increase reflects the success of our move into
the middle market.
In California, the market remained very strong as we continued our strategy of
extending into lower price points. Home completions increased by 40% to 697
(2003: 497). Average selling prices were slightly lower at $776,000 (2003:
$786,000).
In Canada, home completions increased by 29% to 1,498. Average selling prices
were flat at C$302,000 (2003: C$302,000). The low rise market remained strong
and we saw some recovery in the high rise market.
Operations in Florida enjoyed strong sales, with home completions increasing to
505 (2002: 384) with an average selling prices increasing by 10% to $544,000
(2003: $494,000). Our increased emphasis on beachfront high rise projects was
well timed as we launched five projects, of which four are sold out and the
fifth is substantially sold out. Three more new projects are scheduled to be
launched for sale in early 2005.
In Texas, the Houston market remained highly competitive and our new
homebuilding operation in Austin has made a promising start. 2004 home
completions were 94 (2003: 59) at an average selling price that was 3% lower at
$440,000 (2003: $452,000).
The total North American owned and controlled land bank contains 30,009 plots
(2003: 25,758), which reflects a 5.0 year supply (based on homes and lots). This
provides us with sufficient inventory to meet our growth targets, while managing
our capital efficiently. Total land spend in North America increased by over 40%
in 2004 to #226 million, reflecting our previously stated capital allocation
strategy.
Going into 2005, the total order book for North America was #649 million
(US$1,246 million) - up 46% (57% in dollar terms) on the previous year.
Spain and Gibraltar Housing
2004 2003
Average Capital Employed #m 38.5 30.8
Operating Profit #m 20.1 20.3
Return on Average Capital Employed % 52.2 65.9
Operating Margin % 26.3 30.8
Home Completions 404 343
Housing operations in Spain and Gibraltar continue to perform well. Taylor
Woodrow is principally active in Mallorca, Costa Blanca and the Costa Del Sol,
and achieved an operating profit of #20.1 million (2003: #20.3 million) at a
margin of 26.3 per cent. Home completions increased by 18% to 404. Return on
average capital employed for these housing operations was 52.2% to per cent
(2003: 65.9 per cent).
Going into 2005 the order book for Spain and Gibraltar was #75 million - up from
#65 million at the same time last year. The land bank at the end of the year
consisted of 1,233 units (2003: 1,409).
Property
2004 2003
Average Capital Employed #m 209.9 255.4
Operating Profit #m 11.9 8.2
Return on Average Capital Employed % 5.7 3.2
Operating Margin % 16.0 12.8
During the year we have disposed of all our investment property assets. We will
have disposed of our remaining commercial trading property assets by the end of
2005. We will retain our commercial expertise for mixed use housing projects,
which are an increasing part of the housing market.
The K2 building, which is pre-sold for #117 million, is now in the process of
tenant handover, which is progressing according to schedule.
Construction
2004 2003
Profit before tax #m 34.6 19.4
Profit before tax increased to #34.6 million, up from #19.4 million. After
allowing for the exceptional pension credit, profit before tax was #22.3
million, an increase of 15%.
Key external areas for the business remain repeat work from blue chip customers,
healthcare PFI and facilities management. Revenue from internal work increased
by 8% to #135 million (2003: #125 million). This is likely to reduce over the
next few years, reflecting a planned reduction in our exposure to the urban high
rise market.
Construction remains a core competence for the group to support the housing
operation in future regeneration projects and the resultant growth in social
housing.
The construction order book, which includes internal work, stood at #815 million
at the year end (2003: #785 million).
Shareholders' Funds
Total shareholders' funds at the end of 2004 increased from #1,575.9 million to
#1,637.8 million.
Net asset value per share increased by 14% to 292.2p.
Retained profit for the year of #201.5 million and capital inflows of #181.3m
allowed us to redeem #100m of preference shares and repurchase #50m of ordinary
shares now held in treasury.
At the end of the year, #342.8 million of goodwill remained on the balance
sheet. The amortisation charge for the year was #20.4 million in total.
Shareholders' Returns
Basic earnings per share increased by 28 per cent from 36.0 pence to 46.2 pence.
Adjusted earnings per share increased by 25 per cent from 38.6 pence to 48.2
pence. The proposed final dividend of 8.1 pence produces a total for the year of
11.1 pence, an increase of 25 per cent over last year, and reflects the Board's
confidence in Taylor Woodrow's continuing profit performance and cash
generation. The dividend was covered 4.2 times by earnings. The share price at
31 December 2004 was 272 pence, a 7 per cent discount to equity shareholders'
funds per share. We remain committed to a progressive dividend policy through
the business cycle.
Cash Flow
Cash flow from operating activities increased by 62 per cent to #400.4 million.
Operating profit of #474.5 million was offset by increased stocks of #54
million, primarily in North America, and a reduction in creditors of #79.0
million, primarily consisting of UK land creditors. Against this, debtors
decreased by #26.1 million.
Fixed asset and investment property sales generated cash inflows of #189.9
million, primarily resulting from the sale of the St Katharine Estate. Net
interest payments increased by #66.3 million, primarily due to the #41.1 million
exceptional redemption premium on the First Mortgage Debenture stock 2014
following the sale of the St Katharine's estate. Increased levels of debt
following the Wilson Connolly acquisition account for the rest of the increase.
Treasury Management and Tax
Net debt stood at #557.7 million (2003: #742.9 million) equivalent to net
gearing of 34.1 per cent (2003 as restated: 47.1 per cent). Net interest cost
for the year was #107.4 million (2003 as restated: #46.4 million), including
#41.1 million for the exceptional redemption of the First Mortgage Debenture.
Interest cover (excluding the exceptional redemption charge) now stands at 7.5
times.
Average net debt for the year was #948 million. The underlying tax rate fell
from 33.5% to 32.0%. We believe 32% is a sustainable level going forward.
At the year end Taylor Woodrow had undrawn committed facilities totalling #800
million.
Outlook for 2005
In the UK, sales rates and visitor levels in recent weeks have been ahead of the
last six months of 2004 and indeed total net reservations for the first seven
weeks are slightly ahead of the same period last year. Whilst this is an
encouraging start, it is too early to predict the 2005 market. Under these
circumstances we will continue to focus on prudent land buying, cost control and
efficient use of capital, while remaining flexible to exploit market
opportunities as they arise.
On a medium term basis the UK housing market remains very attractive,
underpinned by the fundamentals of shortage of supply, a low interest rate
environment and good economic conditions.
In North America, we look forward with confidence to another year of growth. We
have an excellent order book of $1.2 billion secured against significant
non-refundable deposits and therefore our completions are more predictable. The
markets we operate in are all very attractive because of their strong economies,
housing growth rates and overall low risk profile. We will continue to allocate
appropriate levels of capital to continue our proven record of growth.
Overall our balance of profit generation between the UK, North America and Spain
provides us with alternative growth channels and the ability to mitigate
exposure to any one market.
Shareholder Information
The 2004 final dividend will be paid on Friday 1 July 2005 to shareholders whose
names appear on the register of members at the close of business on Friday 3
June 2005.
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 annual report and accounts, which will be posted on 29 March 2005. Copies
of the 2004 annual report and accounts will also be available from that date on
the Company's website taylorwoodrow.com and from the registered office at 2
Princes Way, Solihull, West Midlands, B91 3ES.
Group Profit and Loss Account
for the year ending 31 December 2004
Before Goodwill
goodwill amortisation &
amortisation & exceptional 2003
exceptional items(notes As restated
items 1 - 2) 2004 (note 6)
Notes #m #m #m #m
------ -------- -------- -------- --------
Continuing operations
Turnover: Group and share of
joint ventures 3,361.2 - 3,361.2 2,672.9
Less: share of joint
ventures' turnover (2.6) - (2.6) (3.5)
--------------------------- -------- -------- -------- --------
Group turnover 1 3,358.6 - 3,358.6 2,669.4
Cost of sales (2,699.3) 16.8 (2,682.5) (2,152.7)
--------------------------- -------- -------- -------- --------
Gross profit 659.3 16.8 676.1 516.7
Administrative expenses
(2003: includes exceptional
expenses of #20.0m - note 2) (189.2) (12.4) (201.6) (177.2)
--------------------------- -------- -------- -------- --------
Group operating profit -
continuing operations 1 470.1 4.4 474.5 339.5
Share of operating profit
in joint ventures 0.2 - 0.2 1.1
--------------------------- -------- -------- -------- --------
470.3 4.4 474.7 340.6
Profit on disposal of
properties and investments 2 23.1 - 23.1 6.3
--------------------------- -------- -------- -------- --------
Profit on ordinary
activities before interest 493.4 4.4 497.8 346.9
Interest receivable 4.2 - 4.2 4.0
-------- -------- -------- --------
Interest payable:
Group (66.3) (41.1) (107.4) (44.2)
Joint ventures - - - (1.0)
-------- -------- -------- --------
(66.3) (41.1) (107.4) (45.2)
Other finance charges (4.2) - (4.2) (5.2)
--------------------------- -------- -------- -------- --------
Profit on ordinary
activities before taxation 2 427.1 (36.7) 390.4 300.5
Tax on profit on ordinary
activities 3 (129.9) 4.9 (125.0) (100.6)
--------------------------- -------- -------- -------- --------
Profit on ordinary
activities after taxation 297.2 (31.8) 265.4 199.9
Minority interests (including
non-equity interests) (0.6) - (0.6) (0.4)
--------------------------- -------- -------- -------- --------
Profit for the financial year 296.6 (31.8) 264.8 199.5
Dividends paid and
proposed on equity and
non-equity shares 4 (64.4) (50.4)
Difference between
non-equity finance costs
and the related dividends 1.1 (1.1)
--------------------------- -------- --------
Profit retained 201.5 148.0
--------------------------- -------- --------
Basic earnings per share 5 46.2p 36.0p
--------------------------- -------- --------
Diluted earnings per share 5 45.9p 35.8p
--------------------------- - -------- --------
Adjusted basic earnings
per share 5 48.2p 38.6p
--------------------------- -------- --------
Group Statement of Total Recognised Gains and Losses
for the year ended 31 December 2004
2003
As restated
2004 (note 6)
#m #m
-------- --------
Profit for the financial year 264.8 199.5
Unrealised deficit on revaluation of properties - (19.3)
Revaluation reversed on properties transferred to stocks - (1.1)
Actuarial gains net of deferred taxation of #5.0m
(2003: #0.6m) 10.5 0.7
--------------------------- -------- --------
275.3 179.8
Currency translation differences on foreign currency
net investments (9.0) (2.1)
--------------------------- -------- --------
Total recognised gains and losses relating to the year 266.3 177.7
--------------------------- -------- --------
Prior year adjustment (note 6) (117.6)
--------------------------- --------
Total recognised gains and losses since last annual
report and financial statements 148.7
--------------------------- --------
Reconciliation of Movements in Group Shareholders' Funds
for the year ended 31 December 2004
2003
As restated
2004 (note 6)
#m #m
-------- --------
Profit for the financial year 264.8 199.5
Dividends paid and proposed on equity and
non-equity shares (64.4) (50.4)
------------------------------- -------- --------
200.4 149.1
Other recognised gains and losses relating to
the year 1.5 (21.8)
New share capital subscribed 3.7 173.1
Redemption of preference shares (100.0) -
Proceeds from sale of own shares 3.2 1.8
Purchase of own shares (46.9) (3.7)
Own shares acquired on acquisition of subsidiary - (0.2)
------------------------------- -------- --------
Net increase in shareholders' funds 61.9 298.3
------------------------------- -------- --------
Opening shareholders' funds as previously stated 1,693.5 1,393.3
Prior year adjustment (note 6) (117.6) (115.7)
------------------------------- -------- --------
Opening shareholders' funds as restated 1,575.9 1,277.6
------------------------------- -------- --------
Closing shareholders' funds 1,637.8 1,575.9
------------------------------- -------- --------
Balance Sheet
at 31 December 2004
Group
-----
2003
As restated
2004 (note 6)
#m #m #m
-------- -------- --------
Fixed assets
Intangible assets
Goodwill 342.8 356.7
Tangible assets
Investment properties - 160.2
Other 24.4 30.3
Investments
Joint ventures
Share of gross assets (2003: #0.9m) 1.4
Share of gross liabilities (2003: #0.9m) (1.4)
--------
- -
Other 3.4 3.3
-------- --------
370.6 550.5
-------- --------
Current assets
Stocks 2,618.9 2,596.7
Debtors 282.1 296.0
Cash at bank and in hand 118.4 146.5
---------------------- -------- --------
3,019.4 3,039.2
Creditors: amounts falling due within one year (901.5) (1,001.0)
---------------------- -------- --------
Net current assets 2,117.9 2,038.2
---------------------- -------- --------
Total assets less current liabilities 2,488.5 2,588.7
Creditors: amounts falling due after more than (710.7) (845.6)
one year
Provisions for liabilities and charges (37.4) (36.0)
---------------------- -------- --------
Net assets before post-retirement liability 1,740.4 1,707.1
Net post-retirement liability (101.6) (130.1)
---------------------- -------- --------
Net assets 1,638.8 1,577.0
---------------------- -------- --------
Represented by:
Capital and reserves
Non-equity share capital - 10.0
Equity share capital 146.7 146.1
---------------------- -------- --------
Called up share capital 146.7 156.1
Share premium account 748.1 745.7
Revaluation reserve - 38.4
Capital redemption reserve 31.5 21.5
Other reserve - 1.1
Profit and loss account 769.9 627.8
Less: Own shares (58.4) (14.7)
---------------------- -------- --------
Shareholders' funds 1,637.8 1,575.9
Minority interests - equity and
non-equity interests 1.0 1.1
---------------------- -------- --------
1,638.8 1,577.0
-------- --------
Shareholders' funds are analysed as:
Equity interests 1,637.8 1,474.8
Non-equity interests - 101.1
---------------------- -------- --------
1,637.8 1,575.9
-------- --------
Group Cash Flow Statement
for the year ended 31 December 2004
2004 2003
Notes #m #m #m #m
-------- -------- -------- -------- --------
Operating activities
Cash inflow from operating 7 400.4 247.4
activities
Returns on investments and
servicing of finance
Interest received 4.2 4.0
Interest paid (113.9) (47.4)
Preference dividends paid (2.4) -
Dividends paid by subsidiary
undertakings to minority shareholders (0.7) (0.1)
------------------------- -------- --------
Net cash outflow from returns on
investments and servicing of finance (112.8) (43.5)
Taxation
UK Corporation tax paid (54.3) (48.5)
Overseas tax paid (45.0) (33.9)
------------------------- -------- -------- --------
Tax paid (99.3) (82.4)
Capital expenditure and financial
investment
Purchase of fixed assets and
properties (8.6) (12.8)
Sale of fixed assets and properties 189.9 3.9
------------------------- -------- --------
Net cash inflow/(outflow) from
capital expenditure and
financial investment 181.3 (8.9)
Acquisitions and disposals
Purchase of subsidiary undertaking - (425.5)
Net overdrafts acquired with
subsidiary - (9.7)
------------------------- -------- --------
Net cash outflow from acquisitions
and disposals - (435.2)
Equity dividends paid (53.9) (41.4)
------------------------- -------- --------
Net cash inflow/(outflow) before
use of liquid resources
and financing 315.7 (364.0)
Management of liquid resources
Cash withdrawn from short-term
deposit 38.7 39.8
------------------------- -------- --------
Net cash inflow from management of
liquid resources 7 38.7 39.8
Financing
Issue of ordinary share capital by
Taylor Woodrow plc 3.7 5.8
Issue of preference share capital
by Taylor Woodrow plc - 100.0
Proceeds from sale of own shares 3.2 1.8
Purchase of own shares (50.3) (4.1)
Redemption of preference shares (100.0) -
Debt due within one year:
new loans 210.6 411.7
repayment of loans (319.8) (482.2)
Debt due after one year:
new loans 463.9 397.4
repayment of loans (568.2) (116.5)
------------------------- -------- --------
Net cash (outflow)/inflow from
financing (356.9) 313.9
------------------------- -------- --------
Decrease in cash in the year 7 (2.5) (10.3)
------------------------- -------- -------- --------
1. Segmental analysis
Group Group
turnover operating 2003 Capital 2003
by origin profit As restated employed As restated
2004 2003 2004 (note 6) 2004 (note 6)
#m #m #m #m #m #m
-------- -------- -------- -------- -------- --------
By activity
Housing 2,874.0 2,236.8 448.8 356.4 1,816.2 1,804.1
Property
development
and investment 74.2 63.9 11.9 8.2 142.1 277.6
Construction 410.4 368.7 9.4 9.9 (104.6) (118.5)
-------------------- -------- -------- -------- -------- -------- --------
3,358.6 2,669.4 470.1 374.5 1,853.7 1,963.2
Goodwill
amortisation/
goodwill - housing (20.4) (15.0) 342.8 356.7
Exceptional
items (note 2) 24.8 (20.0)
-------------------- -------- --------
474.5 339.5 2,196.5 2,319.9
-------- -------- -------- --------
By market
North America 863.8 691.4 127.6 91.4 317.0 340.3
Rest of the World 123.7 113.5 25.1 33.5 51.1 34.1
-------------------- -------- -------- -------- -------- -------- --------
Total overseas 987.5 804.9 152.7 124.9 368.1 374.4
United Kingdom 2,371.1 1,864.5 317.4 249.6 1,485.6 1,588.8
-------------------- -------- -------- -------- -------- -------- --------
3,358.6 2,669.4 470.1 374.5 1,853.7 1,963.2
Goodwill
amortisation/
goodwill (20.4) (15.0) 342.8 356.7
Exceptional
items (note 2) 24.8 (20.0)
-------------------- -------- --------
474.5 339.5 2,196.5 2,319.9
-------- -------- -------- --------
Net debt (557.7) (742.9)
Minority interests (1.0) (1.1)
-------------------- -------- --------
Shareholders'
funds 1,637.8 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 items is
analysed as Housing #440.9m, Property #11.9m and Construction #21.7m and
geographically as North America #128.1m, Rest of the World #25.1m and United
Kingdom #321.3m (2003 as restated: Housing #321.4m, Property #8.2m and
Construction #9.9m and, geographically, North America #90.9m, Rest of the World
#33.5m and United Kingdom #215.1m).
Operating profit for construction excludes its share of the construction joint
ventures and interest. Profit before taxation for construction is #34.6m (2003
as restated: #19.4m) including these items.
Goodwill of #342.8m (2003 as restated: #356.7m) is in respect of United Kingdom
#337.5m (2003 as restated: #350.6m) and North America #5.3m (2003: #6.1m).
The increase in operating profit of #1.7m for 2003 arising from restatement
because of the adoption of FRS 17 is analysed as Housing increase #0.2m and
Construction increase #1.5m; North America decrease #1.1m and United Kingdom
increase #2.8m. The decrease in capital employed of #117.6m at 31 December 2003
arising from this restatement 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 an increase in goodwill of #9.1m.
2. Profit on ordinary activities before taxation
2004 2003
#m #m
-------- --------
Profit before taxation includes:
Exceptional cost of sales credit 16.8 -
Exceptional administrative expenses credit 8.0 -
-------------------------------- -------- --------
Total exceptional credit - curtailment of pensions liability
(see below) 24.8 -
-------------------------------- -------- --------
Profit on disposal of investment and other fixed asset 15.0 1.1
properties
Profit on disposal of investments 8.1 5.2
-------------------------------- -------- --------
Profit on disposal of properties and investments 23.1 6.3
-------------------------------- -------- --------
Profit before taxation is after charging:
Exceptional administrative expenses - integration of Wilson
Connolly operations with Taylor Woodrow United Kingdom Housing - 20.0
Exceptional interest payable - loss on repurchase of 9.5%
first mortgage debenture stock 2014 41.1 -
--------------------------------- -------- --------
The curtailment of pensions liability 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.
3. Tax on profit on ordinary activities
2003
As restated
2004 (note 6)
#m #m
-------- --------
United Kingdom tax
Corporation tax: Current year 67.2 57.8
Prior year 1.8 (3.3)
Relief for overseas tax (1.3) (4.2)
Deferred tax: Current year (0.5) 6.7
Prior year 0.5 (1.4)
Joint ventures 0.1 -
Overseas tax
Current: Current year 60.8 37.7
Prior year (0.4) (1.7)
Deferred: Current year (4.7) 5.5
Prior year 1.5 3.5
------------------------------- -------- --------
125.0 100.6
-------- --------
The differences between the total current tax shown above
and the amount calculated by applying the standard rate
of UK corporation tax to the profit before tax are as
follows:
Profit on ordinary activities before tax 390.4 300.5
Share of joint ventures' profit before tax (0.2) (0.1)
------------------------------- -------- --------
Group profit on ordinary activities before tax 390.2 300.4
------------------------------- -------- --------
Tax on Group profit on ordinary activities at standard UK
corporation tax rate of 30% (2003: 30%) 117.1 90.1
Effects of:
Under/(over)provision in respect of prior years 1.4 (5.0)
Amortisation of goodwill and fair value adjustments 8.2 7.9
Other permanent disallowable expenditure 1.6 3.1
Non taxable income (3.3) (7.2)
Overseas income receivable 1.8 4.2
Double tax relief for overseas tax (1.3) (4.2)
Higher rates of tax on overseas earnings 6.1 7.8
Capital allowances for the period less than/(in
excess of) depreciation 0.1 (0.4)
Short-term timing differences 2.6 (10.4)
Pension provision (7.2) 0.8
Tax trading losses carried forward (0.1) (1.2)
Other 1.1 0.8
------------------------------- -------- --------
Group current tax charge for year 128.1 86.3
------------------------------- -------- --------
The tax effect of the exceptional credit and charges was 30% (note 5). The tax
effect of the profit on disposal of investment and other fixed asset properties
and investments was #nil (2003: #nil).
Deferred tax recognised in the Group statement of total recognised gains and
losses relates to actuarial gains on post-retirement liability.
4. Dividends paid and proposed on equity and non-equity shares
2004 2003
#m #m
-------- --------
Dividends on equity shares
Interim paid of 3.0p per ordinary share (2003: 2.4p) 16.5 13.0
Final proposed of 8.1p per ordinary share (2003: 6.5p) 45.5 37.4
------------------------------- -------- --------
62.0 50.4
Dividends on non-equity shares
5.09875% preference dividend paid (2003: nil) 2.4 -
------------------------------- -------- --------
64.4 50.4
-------- --------
5. Earnings per share
The calculations of earnings per
share are based on the following
profits and numbers of shares: Basic Adjusted
------------------------------- -------- --------
2003 2003
As restated As restated
2004 (note 6) 2004 (note 6)
#m #m #m #m
-------- -------- -------- --------
Profit for the financial year 264.8 199.5 264.8 199.5
Less: Finance costs of (1.3) (1.1) (1.3) (1.1)
non-equity shares
Add/(less): Exceptional items
(note 2)
Curtailment of pensions
liability (24.8) -
Loss on repurchase of debt 41.1 -
Integration costs - 20.0
Less: Tax effect of exceptional
items (4.9) (6.0)
------------------------------- -------- --------
263.5 198.4 274.9 212.4
-------- -------- -------- --------
2004 2003
m m
-------- --------
Weighted average number of shares:
For basic and adjusted earnings
per share 570.4 550.9
Weighted average of dilutive
options 3.1 3.0
Weighted average of dilutive
awards
under bonus plans 1.0 0.5
-------- --------
For diluted earnings per share 574.5 554.4
------------------------------- -------- --------
Adjusted earnings per share have been shown to disclose the impact of
exceptional items on underlying earnings.
6. Prior year adjustment
The Group has adopted FRS 17 "Retirement benefits" in full for the year to 31
December 2004 and comparative figures for 2003 have been restated accordingly.
Net post-retirement liability comprises net pensions liability of #98.9m (2003:
#127.3m) and net post-retirement health care liability of #2.7m (2003: #2.8m).
For the year to 31 December 2003, the Group previously accounted for retirement
benefits under SSAP 24 and gave disclosures under the FRS 17 transitional
arrangements.
The adoption of FRS 17 has led to an increase of #1.7m in operating profit for
the year to 31 December 2003. There was also an increase in finance charges of
#5.2m for the year to 31 December 2003. The tax impact of these changes was 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 year of
#2.6m for the year to 31 December 2003. Apart from the exceptional item
regarding curtailment of pensions liability (note 2), the effect of the prior
year adjustment on the current year profit is not otherwise material. The
adoption of this standard has resulted in a reduction of #117.6m in net assets
at 31 December 2003. On the basis that Wilson Connolly Holdings Plc was acquired
on 2 October 2003, less than three months prior to 31 December 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 has now been
included on a FRS 17 basis rather than, as previously, on a SSAP 24 basis. In
the cash flow statement the increase in operating profit noted above is matched
by a corresponding decrease in creditors with no change in the net cash flow
from operating activities. Post-retirement health care insurance premiums
accruals for retired long-service employees previously shown as accruals of
#4.0m (including #0.2m due under one year) at 31 December 2003 are now shown as
part of the net post-retirement liability net of #1.2m deferred tax asset,
previously shown within debtors.
7. Group cash flow statement
2003
2004 As restated
#m (note 6)
-------- --------
Reconciliation of operating profit to net cash flow
from operating activities
Operating profit 474.5 339.5
Depreciation and amortisation 27.1 21.8
Increase in stocks (54.0) (201.3)
Decrease/(increase) in debtors 26.1 (56.0)
(Decrease)/increase in creditors (79.0) 142.3
Exchange adjustments 5.7 1.1
------------------------------------------ -------- --------
Net cash inflow from operating activities 400.4 247.4
------------------------------------------ -------- --------
Reconciliation of net cash flow to movement in net debt
Decrease in cash in year (2.5) (10.3)
Cash outflow/(inflow) from decrease/(increase) in debt 213.5 (210.4)
Cash inflow from decrease in liquid resources (38.7) (39.8)
------------------------------------------ -------- --------
Change in net debt resulting from cash flows 172.3 (260.5)
Amortisation of debt 0.6 (0.7)
Loan notes issued as part of consideration for
acquisition - (6.6)
Debt acquired with subsidiary - (219.6)
Exchange movement 12.3 4.9
------------------------------------------ -------- --------
Movement in net debt in the year 185.2 (482.5)
Net debt at 1 January (742.9) (260.4)
------------------------------------------ -------- --------
Net debt at 31 December (557.7) (742.9)
------------------------------------------ -------- --------
Analysis of net debt
At At
1 January Cash Non-cash Exchange 31 December
2004 flow changes movemen 2004
#m #m #m #m #m
-------- -------- -------- -------- --------
Cash at bank and in hand 146.5 (26.1) - (2.0) 118.4
Less: Deposits due
after one day (73.6) 38.7 - (0.5) (35.4)
Overdrafts on demand (25.1) (15.1) - (0.1) (40.3)
--------
(2.5)
Debt due after one year
Debenture loans (393.2) (237.7) 1.6 14.0 (615.3)
Bank loans (346.3) 342.0 0.6 0.1 (3.6)
Debt due within one year
Debenture loans (34.1) 19.8 (2.3) 0.3 (16.3)
Bank loans and overdrafts (115.8) 74.3 0.7 (0.1) (40.9)
Add back overdrafts
on demand 25.1 15.1 - 0.1 40.3
--------
213.5
Liquid resources
Deposits due after
one day 73.6 (38.7) - 0.5 35.4
-------------------------- -------- -------- -------- -------- --------
Total (742.9) 172.3 0.6 12.3 (557.7)
-------------------------- -------- -------- -------- -------- --------
8. General
Other than in respect of FRS 17 referred to in note 6 above, the preliminary
accounts have been prepared on a basis which is consistent with the accounting
policies adopted for the year to 31 December 2003.
The preliminary accounts were approved by the Board of Directors on 1 March
2005.
These accounts do not constitute the company's statutory accounts for the years
ended 31 December 2004 or 2003 but are derived from those accounts. Statutory
accounts for 2003 have been delivered to the Registrar of Companies and those
for 2004 will be delivered following the company's annual general meeting. The
auditors have reported on these accounts; their reports were unqualified and did
not contain a statement under section 237 (2) or (3) of the Companies Act 1985.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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