Taylor Woodrow PLC - Interim Results
September 16 1997 - 3:32AM
UK Regulatory
RNS No 9247a
TAYLOR WOODROW PLC
16th September 1997
TAYLOR WOODROW plc INTERIM STATEMENT
for the six months ended 30 June 1997 (unaudited)
'Strong performance in the first half' says Chairman
- improved profits in all four operating divisions
- pre-tax profits up 43% to #36.2 million
- worldwide housing profits up 71% to #16.4 million
- earnings per share up 41% to 6.2p
- interim dividend up 25% to 1.25p
1997 1996
six months six months
turnover #625.8 million #556.4 million
operating profit #40.0 million #29.4 million
profit before tax #36.2 million #25.4 million
earnings per share 6.2p 4.4p
interim dividend 1.25p 1.0p
Taylor Woodrow plc, the international construction, property, housing
and trading group, today announced pre-tax profits of #36.2 million
for the six months ended 30 June 1997, compared with #25.4 million for
the same period in 1996. Operating profits for the half year rose 36%
to #40.0 million.
Commenting on the results Colin Parsons, Chairman, said, 'This is
another important step forward for Taylor Woodrow with a strong
performance in the first half of 1997. All four operating divisions
improved their performance and made a contribution to the higher
profits.
'Worldwide housing led the way once again with a 71% increase in
profits to #16.4 million supported by good results in our property and
Greenham Trading activities. Our construction operations also produced
a modest profit in the first half, with both UK and overseas
activities in the black.'
'The outlook for Taylor Woodrow throughout the remainder of 1997 is
positive. Overall, trading in the second half has started well.
However, due to the phasing of certain major housing developments,
notably in Toronto and London, we anticipate profits in 1997 will be
more evenly balanced over the two halves than has traditionally been
the case.'
'At Taylor Woodrow we have created a strong platform for steady growth
in our four businesses of housing, property, construction and Greenham
Trading. The task is to utilise this strong base to build better
performance and generate greater value for our shareholders.'
Group turnover was up 12.5% at #625.8 million in the first half,
particularly boosted by higher worldwide housing sales.
Earnings per share improved by 41% to 6.2p.
The half year dividend payment is to be increased by 25% to 1.25p. It
will be paid as a Foreign Income Dividend. While legislation allows
and it is possible for us to do so, we intend to take advantage of
paying dividends as FIDs. It remains Taylor Woodrow's policy to
improve returns to shareholders as the business moves forward. This
level of dividend increase is also intended to create a more even
balance between interim and final dividend payments. Consequently,
shareholders should not expect such a degree of uplift to be repeated
for the final dividend.
In spite of heavy investment particularly in housing, through careful
cashflow control there has been only a small increase in net
borrowings since the year end. Net gearing at the half year remained
modest at 13.2%. However, it is anticipated that this will rise as the
year progresses in view of expenditure in worldwide housing and in
property development.
We have taken actuarial advice on the effects on our UK pension fund
of the Government's decision, announced in the Budget, to abolish the
tax credits on UK dividends. We believe that as a consequence of our
conservative funding policy over the years and having not taken
pension holidays, there will not be any change to our contribution
rate until at least the regular triennial revaluation of the pension
fund in June 1999.
Commenting on the results and his initial impressions of the group,
new Chief Executive John Castle said, 'We have achieved a significant
improvement in our results compared to the first half of 1996. As
Taylor Woodrow has a secure operating base, I am in the fortunate
position of being able to choose a path of progressive development of
group activities rather than sudden change.
'The markets for each of our four principal businesses have scope for
sensible and profitable growth. We are benefiting from the cyclical
upswing in economic and building activity, particularly in the UK and
North America.'
'The strong performance of housing and property, supported by the
Greenham Trading operations and the modest improvement in
construction, gives us time to develop our future strategic thinking.'
'There is also headroom to improve margins in many parts of our
business and this will be a key priority for the management team in
the coming months. As a starting point we will be looking to develop a
more integrated approach to managing the group which will provide us
with an even better basis for controlling costs, improving margins,
and managing cash.'
'I also see opportunities to bring together the various skills of the
four divisions to give us a new level of groupwide competitive
advantage. We are already doing this in some areas but I believe that
by using groupwide skills more effectively we can create opportunities
to improve our competitive position.'
'In addition, a review of our construction operations is in progress
and we plan to have the results by the end of the year. While our
construction operations are getting better, the fact remains that we
are still not generating an acceptable level of margin from this
business and we are addressing this as a matter of some urgency. The
main aim of the review is to increase our ability to concentrate
resources and skills in construction projects where we can generate
margins which reflect a more sensible balance between risk and
reward.'
REVIEW OF OPERATIONS
CONSTRUCTION
Both our UK and overseas construction operations were profitable
during the first half of 1997. They produced a modest profit of #1.0
million compared to a small loss in the same period of 1996. This
reflects the continuing rationalisation of the division and the more
focused approach to bidding which started over two years ago.
We are seeing some signs of improvement in the UK market although
there is nothing dramatic to report. Overseas markets remain highly
competitive but opportunities are arising in certain areas, although
they take time to come to fruition. This is not unusual because our
overseas projects on average are much larger and the order book tends
to be more lumpy.
At the half year the construction order book stood at #702 million.
While new work in the UK market increased by 4% compared with the end
of last year, we experienced a relatively quiet time in gaining new
projects overseas. Nonetheless since the half year we have been
awarded a number of major contracts in target sectors which bodes well
for the future and improves the order book situation.
PROPERTY
In property the existing strategy of increasing the level of higher
return development activity, while still actively managing the
sizeable investment portfolio, is working well. This is evidenced by
profits for the first half of 1997 of #11.8 million, a 23% increase on
the same period in 1996.
Management focus is on finding new profitable development
opportunities both in the UK and Canada. Close attention is still
being paid to the active management of the investment portfolio. Work
on the St Katharine's Estate in particular is showing rewards, with
virtually all space let. Void levels across the UK portfolio are down
to 2.2%.
HOUSING
Housing was the powerhouse behind our improved results in 1996 and the
trend has continued in the first half of 1997. These expanded housing
operations produced profits up 71% at #16.4 million based on home
completions up 26%.
Based on this performance we will continue our strategy of growing
our new homes and land development businesses in selected geographic
markets around the world. There has been stronger demand across all
our operating regions with particularly good home sales in Canada and
the UK.
Our UK housebuilding business, Taywood Homes, has come a long way in
recent years. We have achieved another improvement in margins this
half year and would expect this positive trend to continue. We are
concentrating on improving margins on individual sales rather than
chasing volume and the mix has moved to higher value homes. Our
average selling price in the UK increased to #93,700 during the first
half of the year from an average price of #79,500 during 1996.
The attention paid to strategic land supply is also beginning to bear
fruit and we will continue to follow this direction. Over 1,600 plots
were added to the UK land bank in the first half, 60% of which came
through strategic land purchases and planning changes at a discount to
current open market values.
The strong market for quality new-build Central London residential
properties has continued this year. In August we completed Kensington
Green and reservations have been very encouraging at our two current
schemes here at St Katharine's and at Montevetro in Battersea - both
from UK and international buyers.
Building on the successes we have had developing golf course
communities in Florida, we have purchased a substantial golf course
opportunity in Marbella, Spain. This has been achieved at a price
which gives us excellent potential for profitable development over the
next few years.
Housing operations in Canada have more than reflected the strong surge
in the market. Completions were up 81% at 412, particularly benefiting
from the well-timed move into the high-rise apartment sector. Profits
in Canada in the first half were #5 million compared with #2 million
in the same period in 1996. With its landbank centred on the
Metropolitan Toronto area - the major housing market in Canada -
Monarch is well-positioned to take full advantage of the continuing
upturn.
In US housing, we are finding that the geographic locations in which
we operate, principally Florida and California, are benefiting from
strong local economies. Although the US operation produced a more
modest result in the first half, the future looks positive. In both
Florida and California we have leading positions as high quality
developers and the businesses are expanding.
The demand for Taylor Woodrow homes and serviced lots in Florida has
remained strong throughout the year, with sales continuing at a good
pace, countering the traditional mid-year lull. We have just launched
our first development in the Orlando area and it has been well-
received.
In California, we had a slower start to the year as we brought a
number of new sites through to production. However, demand remains
very strong and results will improve in the second half as the
completions come through. In order to provide a first foothold in a
major new market for homes, the group also completed its first land
acquisition in Northern California near San Francisco.
In Australia, we are seeing the first signs of an end to the long
period of recession and a pick-up in purchaser interest. We therefore
expect a better performance in the second half. In addition, to
improve future results the local management team is taking action to
balance the business, by developing a number of smaller, faster-
turnaround sites to complement the larger, longer term developments in
our land bank.
GREENHAM TRADING
In the first half of 1997, profits at Greenham Trading, the industrial
merchanting and distribution business, rose to #4 million, an 11%
increase on the same period in 1996. To develop the business into a
new phase and to improve market share, bolt-on acquisitions will be
made on a selective basis in addition to achieving further organic
growth.
The first example of this is the purchase of Total Safety in the
Republic of Ireland which was completed in July. This greatly
strengthens our expertise in the specialist safety equipment field and
gives Greenham access to another European market, in addition to
Denmark and Germany. We will be able to exploit the broader product
range across all of our markets.
SHAREHOLDER INFORMATION
The interim dividend will be paid wholly in cash as a Foreign Income
Dividend (FID) on Monday 3 November 1997 to shareholders whose names
appear on the Register of Members on Friday 26 September 1997.
Since UK taxation legislation prevents the use of scrip dividends
whenever a FID is paid, the board has decided to suspend the operation
of the existing scrip dividend arrangement until further notice. Any
scrip dividend mandate forms which shareholders have lodged with the
Company will therefore also be suspended and will cease to have effect
until further notice from the Company.
Introduction of Dividend Re-investment Plan
The board believes that many shareholders who are now precluded from
participating in the scrip dividend arrangement may still wish to be
able to use their cash dividends to purchase Taylor Woodrow plc
shares. To meet this possible interest, the Company has decided to
introduce a Dividend Re-investment Plan under which shareholders will
be offered the opportunity to use their cash dividends to purchase
Taylor Woodrow plc 25p ordinary shares in the market on competitive
dealing terms.
A brochure describing the operation of the Plan will be sent to all
shareholders along with the interim report, which is to be posted to
shareholders today and copies of the interim report are now available
at the Company's registered office.
Media enquiries:
Corporate Communications Department 0181 578 2366
Matthew Moth - after 14.00 on 16 September - Office: 0171 629 1201
Home: 0181 451 7716
Mobile: 0836 598522
Grandfield - Charles Cook 0171 417 4170
Analyst enquiries:
David Green - after 14.00 0171 629 1201
DETAILED FINANCIAL INFORMATION FOLLOWS
TAYLOR WOODROW plc
SUMMARY CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE SIX MONTHS ENDED 30 JUNE 1997
Six months ended Year ended
30 June 30 June 31 December
1997 1996 1996 Notes
#m #m #m
(Unaudited)
Turnover 625.8 556.4 1,189.7 1
===== ===== =======
Operating profit 40.0 29.4 73.3
Share of results of associated
undertakings - 2.1 2.9
Profit on disposal of properties - - 1.4
____ ____ ____
Profit on ordinary activities
before interest 40.0 31.5 77.6
Net interest payable (3.8) (6.1) (10.8)
____ ____ ____
Profit on ordinary activities
before taxation 36.2 25.4 66.8 1
Tax on profit on ordinary activities (9.1) (7.1) (17.0) 3
____ _____ _____
Profit on ordinary activities
after taxation 27.1 18.3 49.8
Minority equity interests (2.7) (1.4) (3.0)
____ ____ _____
Profit attributable to shareholders 24.4 16.9 46.8
Dividends (4.9) (3.9) (14.7)
____ _____ _____
Profit retained 19.5 13.0 32.1
==== ===== =====
Earnings per share 6.2p 4.4p 12.0p 4
===== ==== ====
Equity dividends per ordinary share 1.25p 1.0p 3.75p 5
===== ==== ====
CONSOLIDATED STATEMENT OF TOTAL
RECOGNISED GAINS AND LOSSES
FOR THE SIX MONTHS ENDED 30 JUNE 1997
#m #m #m
Profit attributable to shareholders 24.4 16.9 46.8
Unrealised surplus on revaluation
of properties - - 4.7
Currency translation differences
on foreign currency net investments 1.9 1.7 (20.0)
____ ____ ____
Total recognised gains and losses
relating to the period 26.3 18.6 31.5
==== ==== ====
TAYLOR WOODROW plc
SUMMARY CONSOLIDATED BALANCE SHEET
AT 30 JUNE 1997
30 June 31 December
1997 1996 Notes
#m #m
(Unaudited)
Fixed assets
Investment properties 378.7 385.9
Other tangible assets 106.9 111.6
Investments 6.2 6.3
______ _____
491.8 503.8
_____ _____
Current assets
Stocks 486.0 432.5
Debtors 235.1 207.0
Current asset investments 0.4 0.4
Cash at bank and in hand 99.1 109.5
____ _____
820.6 749.4
Creditors:
amounts falling due within one year (499.3) (471.4)
_____ _____
Net current assets 321.3 278.0
_____ _____
Total assets less current liabilities 813.1 781.8
Non-current creditors and provisions (178.6) (178.1)
_____ _____
634.5 603.7
Minority interests in equity of
subsidiary undertakings (69.5) (63.5)
_____ _____
Shareholders' funds 565.0 540.2
===== =====
Represented by:
Capital and reserves - equity
Called up ordinary share capital 98.9 98.2
Capital redemption reserve 8.4 8.4
Share premium account 224.2 221.7
Revaluation reserve 39.8 38.5
Profit and loss account 193.7 173.4
_____ _____
565.0 540.2
===== =====
Net debt (1996 as restated) #74.6m #57.4m 2
===== =====
Net gearing (1996 as restated) 13.2% 10.6% 2
===== =====
Shareholders' funds per share 142.8p 137.5p
===== ======
TAYLOR WOODROW plc
SUMMARY CONSOLIDATED CASH FLOW
STATEMENT FOR THE SIX MONTHS ENDED 30
JUNE 1997
Year ended
31 December
Six months ended 1996
30 June 30 June as restated
1997 1996 (note 2)
#m #m #m
(Unaudited)
Operating profit 40.0 29.4 73.3
Depreciation 9.7 8.2 17.2
Movement in working capital (63.0) (31.0) (20.7)
_____ _____ _____
Net cash (outflow)/inflow from
operating activities (13.3) 6.6 69.8
Net interest paid (3.5) (6.3) (10.8)
Net dividends (paid)/received (0.3) (0.3) 1.1
Tax paid (6.7) (4.5) (11.1)
Capital expenditure and financial
investment 3.6 (14.9) 19.2
Equity dividends paid - - (12.5)
____ ____ ____
Net cash (outflow)/inflow before
financing (20.2) (19.4) 55.7
Issue of ordinary share capital by
Taylor Woodrow plc 3.4 6.7 7.7
Subsidiary undertakings to minority
shareholders - - 5.2
Exchange (0.4) 0.8 1.3
____ ____ ____
Movement in net debt (17.2) (11.9) 69.9
==== ==== ====
TAYLOR WOODROW plc
NOTES ON THE INTERIM ACCOUNTS
1. ANALYSIS OF TURNOVER, ORDINARY PROFIT BEFORE TAXATION AND NET
ASSETS
Turnover Profit
by origin before taxation
Six months ended Six months ended Net Assets
30 June 30 June 30 June 30 June 30 June 31 December
1997 1996 1997 1996 1997 1996
By activity #m #m #m #m #m #m
Construction 307.4 284.9 1.0 (1.2) (14.1) (31.6)
Property
development and
investment 45.8 47.7 11.8 9.6 267.1 264.8
Housing 197.7 149.6 16.4 9.6 307.6 297.1
Greenham Trading 66.1 65.1 4.0 3.6 34.9 34.1
Other 8.8 9.1 3.0 3.8 77.3 70.5
_____ _____ ____ ____ _____ _____
625.8 556.4 36.2 25.4 672.8 634.9
===== ===== ==== ==== ===== =====
By market
Australia 3.3 4.8 0.1 0.3 40.9 42.5
Canada 40.4 26.8 6.9 4.0 88.9 83.5
United States
of America 67.1 63.4 2.7 2.9 144.1 137.1
Rest of the world 89.3 91.6 2.6 4.0 20.1 16.6
_____ _____ ____ ____ _____ _____
Total overseas 200.1 186.6 12.3 11.2 294.0 279.7
United Kingdom 425.7 369.8 23.9 14.2 378.8 355.2
_____ ____ ____ ____ ____ ____
625.8 556.4 36.2 25.4 672.8 634.9
===== ==== ==== ====
Taxation on profits creditors (including deferred
taxation) (22.6) (20.4)
Dividend creditor (15.7) (10.8)
Minority interests (69.5) (63.5)
______ _____
Shareholders' funds 565.0 540.2
====== ======
TAYLOR WOODROW plc
NOTES ON THE INTERIM ACCOUNTS (continued)
2. BASIS OF PREPARATION OF THE INTERIM ACCOUNTS
The interim accounts have been prepared on a basis which is consistent
with the accounting policies adopted for the year ended 31 December
1996.
In accordance with our stated accounting policy, investment and fixed
asset properties have not been valued since 31 December 1996.
Investment and fixed asset properties will next be valued at 31 December
1997.
Net debt and net gearing at 31 December 1996 and the summary
consolidated cash flow statement for the year ended 31 December 1996
have been restated following the promulgation of Financial Reporting
Standard No. 1 (Revised).
3. TAX ON PROFIT ON ORDINARY ACTIVITIES
Six months ended Year ended
30 June 30 June 31 December
1997 1996 1996
#m #m #m
United Kingdom 3.1 2.7 5.6
Overseas 6.0 4.1 11.0
Associated undertakings - 0.3 0.4
___ ___ ___
9.1 7.1 17.0
=== === ===
The effective overall tax rate is 25% (1996 interim - 28%; 1996 full
year - 25%). The UK tax charges are below the standard tax rates
mainly due to the utilisation of tax losses.
4. EARNINGS PER SHARE
Earnings per share has been calculated on the weighted average of
394.4m shares (1996 interim - 387.4m; 1996 full year -389.9m) and on
a profit of #24.4m (1996 interim - #16.9m; 1996 full year - #46.8m).
5. EQUITY DIVIDENDS ON ORDINARY SHARES
The interim dividend for 1997 is to be paid as a foreign income
dividend.
These accounts do not constitute statutory accounts. Comparative figures
for the year to 31 December 1996 have been extracted, except as restated
for Financial Reporting Standard No. 1 (Revised), from the latest
published accounts on which the report of the auditors was unqualified
and which have been delivered to the Registrar of Companies.
END
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