RNS Number:0022W
Taylor Woodrow PLC
02 March 2004
TAYLOR WOODROW plc PRELIMINARY RESULTS STATEMENT
(for the year ended 31 December 2003)
Delivering growth
Financial Highlights
* Operating profits up 31 per cent to #337.8 million (2002: #257.7
million)
* Profit before tax up 30 per cent to #304.0 million (2002: #233.1
million)
* Profit before tax and exceptional items up 32 per cent to #324.0m (2002:
#245.1 million) *
* Adjusted earnings per share up 31 per cent to 39.0 pence (2002: 29.8
pence) **
* Dividends per share up 20 per cent to 8.9 pence (2002: 7.4 pence)
Operational Highlights
* World wide home completions up 29% to 10,819
*Successful #499 million acquisition of Wilson Connolly
- Contributed #47.1 million operating profit in 2003
- Integration proceeding well
* Strong order books for 2004
- UK Housing #601 million, up 131%; up 39% on a like for like basis
- North American Housing #444 million, up 35%
- Spain & Gibraltar Housing #65 million, up 40%
- Construction #785 million, up 17%
* Cost savings of #21 million achieved in 2003
* Adjusted for exceptional integration costs in 2003 and restructuring costs in
2002 as detailed in note 5 and after goodwill amortisation of #15.0 million
(2002: #13.1 million)
** Adjusted for exceptional integration costs in 2003 and restructuring costs in
2002 as detailed in note 5.
Norman Askew, Chairman of Taylor Woodrow, said today:
"During 2003, Taylor Woodrow has delivered strong financial results, due to good
positioning in our markets, complemented by the benefits of the business
realignment which we announced last year. The successful acquisition of Wilson
Connolly in October 2003 will be a further driver of growth in the coming years"
Iain Napier, Chief Executive of Taylor Woodrow, subsequently commented:
"2003 was another successful and busy year for Taylor Woodrow. A year ofchange
but also of delivery.
We acquired Wilson Connolly in early October for #499 million. The fit between
the two businesses has proven to be excellent. The integration process has
started extremely well and over the next twelve months we will ensure that we
complete a successful integration of Wilson Connolly and deliver the synergy
savings we outlined at the time of the acquisition.
As previously forecast, we realised #21 million of cost savings from the
realignment and simplificationof our UK business, we reduced our regional
offices and established the new central office in Solihull, West Midlands.
Turning to our markets, the UK housing market remains robust. Demand continues
to outpace supply and recent interest rate rises have had no discernible effect
on our levels of site traffic or conversions. In North America the housing
market continues to be strong across all our businesses.
With high levels of both visitor numbers and reservations, we start 2004 with
confidence. We expect the national house price inflation in the UK to be around
5 per cent. In North America the outlook remains good and we anticipate
continued favourable market conditions over the coming year.
Taylor Woodrow participated in the UK Government's Barker Review of Housing
Supply and welcomed its interim report that was published in December 2003. We
are supportive of initiatives to narrow the gap between demand for new homes and
housing supply through a reform of the UK planning regime to provide greater
speed, certainty and consistency in the planning process.
We made significant progress in our business strategy to create sustainable
shareholder value by growing, both organically and by acquisition, as a
developer of livingand working environments this year. I look forward to
reporting on our future progress. "
- ends -
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High resolution photographs are available to the media free of charge at
www.newscast.co.uk, +44 (0)20 7608 1000.
A presentation to analysts 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
Jonathan Murrin 0121 600 8521 / 07816 518 718
Taylor Woodrow Investor Relations
William Clutterbuck 020 7379 5151 / 07785 292 617
Maitland Consultancy
Operating and Financial Review
Highlights
Taylor Woodrow continued to deliver strong profit growth during 2003 with
operating profit increasing by 31 per cent to #337.8 million. Pre tax profit was
30 per cent higher at #304 million.
A #20 million exceptional item was charged against profits to cover the costs of
integrating Wilson Connolly.
In 2003, cost savings of #21 million were achieved from the realignment of the
UK operations that was announced in 2002. As we have previously announced, these
savings are forecast to rise to #30 million in 2004.
In addition to these cost savings, synergy benefits arising from the integration
of Wilson Connolly Plc into TaylorWoodrow, of #12.5 million are forecast for
2004. These savings are expected to rise to #25 million in 2005.
Return on average capital employed is calculated as operating profit pre
goodwill and exceptional items divided by the average of opening and closing
capital employed, which has been weighted to include 25 per cent (#141.2
million) of Wilson Connolly's average capital employed since acquisition. 2003
return on average capital employed increased to 22.9 per cent (2002: 20.1 per
cent). The balance sheet remains strong with gearing at the year end of 43.9 per
cent (2002 as restated: 18.7 per cent). Shareholders' funds increased by #300.2
million during 2003, to end the year at #1,693.5 million.
Total Housing
2003 2002
Average Capital Employed * #m 1,424.3 1,177.5
Operating Profit ** #m 356.2 255.4
Return on Average Capital Employed % 25.0 21.7
Operating Margin (%) ** % 15.9 14.6
House completions 10,819 8,370
* pre average goodwill of #264.7 million (2002: #244.2 million)
** pre goodwill amortisation of #15.0 million (2002: #13.1 million) and
exceptional items of #20.0 million (2002: #10.4 million)
The housing businesses located in the United Kingdom, North America, Spain and
Gibraltar all hada successful 2003. Worldwide housing completions rose 29 per
cent to 10,819 (2002: 8,370) with operating profits, pre goodwill amortisation
and exceptional items, increasing 39 per cent to #356.2 million, (2002: #255.4
million).
UK Housing
2003 2002
Average Capital Employed * #m 1,060.2 844.2
Operating Profit ** #m 244.7 177.6
Return on Average Capital Employed % 23.1 21.0
Operating Margin ** % 16.5 15.0
Home Completions 7,690 6,238
* pre average goodwill of #258.0 million (2002: #240.6 million)
** pre goodwill amortisation of #14.5 million (2002: #12.9 million) and
exceptional items of #20.0 million (2002: #10.4 million)
The UK housing business, which accounts for 66 per cent of Group operating
profit, operated in more normal markets in 2003, following several years of
exceptionally strong selling price growth. The 2003 results in the table above
include three months' contribution from Wilson Connolly.
UK housing, excluding Wilson Connolly, reported 6,090 home completions (2002:
6,238) and 720 lot completions (2002: 445). The average sales price increased to
#184,000 (2002: #182,000).
UK housing, excluding Wilson Connolly, contributed #197.6 million (2002: #177.6
million) to operatingprofit and achieved an operating margin of 16.5 per cent
(2002: 15.0 per cent).
Since acquisition, Wilson Connolly contributed 1,600 home completions. The
average sales price for homes in this period was #171,000. The business
generated #47.1 million of operating profit at an operating margin of 16.3 per
cent.
At the year end the UK housing land bank consisted of 34,918 owned or controlled
plots with outline planning permission, representing some 3.3 years' supply. In
addition to this there is a strategic land portfolio which should give rise to a
further 90,000 potential plots.
During the year, the Group changed its accounting treatment for professional
fees associated with land development; such costs, consistent with other
development costs, are now included in stocks and, where related to land options
amortised over the life of the option. The effect of the change is to increase
UK housing profit for the year ending 31 December 2003 by #5.4 million.
At the end of the year the UK housing business had a strong forward order book
of #601 million - up 131 per cent on the previous year.
North America Housing
2003 2002
Average Capital Employed * #m 333.3 306.7
Operating Profit ** #m 91.2 66.2
Return on Average Capital Employed % 27.4 21.6
Operating Margin ** % 13.3 12.7
Home Completions 2,786 1,839
* pre average goodwill of #6.7 million (2002: #3.6m)
** pre goodwill amortisation of #0.5 million (2002: #0.2m)
Total home completions for the North American operations increased 51 per cent
to 2,786. Underlying operating profit was up 45.3 per cent to #96.2 million
before allowing for currency translation differences.
We successfully executed our strategy to increase housing volumes in all of our
markets while repositioning our product mix toward the high opportunity segments
of the middle market. While lot sales increased marginally to 2,940 (2002:
2,724), North America is strategically positioned to grow home completions.
Most of the increase in home completions resulted from a full year of operation
in Arizona, 689 (2002: 211), and the turnaround of our California business, 497
(2002: 241). The average price in Arizona remained stable at #80,000, while
average prices in California decreased 32 per cent to #479,000 in line with our
repositioning into the mid-market. Average selling prices in California are
anticipated to reduce by a further 20 per cent in 2004. Both of these regions
exceeded expectations and are well positioned to achieve excellent results in
2004.
Operations in Florida enjoyed strong sales, in line with our expectations. In
2003 home completions increased to 384 (2002: 305) with an average selling price
of #301,000 (2002: #378,000).
In Canada, operating under the Monarch brand, another year of robust performance
was delivered. Home completions in 2003 were 1,157 (2002: 1,030) at an average
selling price of #131,000 (2002: #112,000). The increase in average selling
price resulted solely from the mix of high-rise completions, where prices rose
to #98,000 (2002: #58,000).
In Texas, the region expanded homebuilding operations in Houston with the
acquisition of two additional sites. 2003 home completions were 59 (2002: 52) at
an average selling price of #275,000 (2002: #287,000). Lot sales at the region's
highly successful Steiner Ranch development were 246 (2002: 147).
The total North American owned and controlled land bank contains 25,758 lots
(2002: 20,215), whichreflects a 4.5 year supply. This provides us with
sufficient inventory to meet our growth targets, while managing our capital
efficiently.
Going into 2004, the total order book for North America was #444 million - up 35
per cent on the previous year.
Spain and Gibraltar Housing
2003 2002
Average Capital Employed #m 30.8 27.3
Operating Profit #m 20.3 11.6
Return on Average Capital Employed % 65.9 42.5
Operating Margin % 30.8 24.0
Home Completions 343 293
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 #20.3 million (2002: #11.6 million) at a
marginof 30.8 per cent. Return on average capital employed for these housing
operations increased to 65.9 per cent (2002: 42.5 per cent).
Going into 2004 the order book for Spain and Gibraltar was #65 million - up from
the #46 million at the same time last year. The land bank at the end of the year
consisted of 1,409 units (2002: 1,508).
Commercial property
2003 2002
Average Capital Employed #m 113.5 94.8
Operating (Loss)/Profit #m (1.4) 4.6
Return on Average Capital Employed % (1.2) 4.9
Operating Margin % (3.0) 5.3
* pre exceptional items of #nil in 2003 (2002: #1.0 million)
As we had previously indicated, our commercial property business continues to be
quiet in challenging markets. This is expected to continue. During the second
half of 2003, provisions of #7.6 million were taken against carrying values of
certain properties, causing a #1.4 million loss for the year to be recorded.
Investment Property
2003 2002
Average Capital Employed #m 143.3 196.4
Operating Profit #m 9.6 11.1
Return on Average Capital Employed % 6.7 5.7
Operating Margin % 55.2 43.9
Our investment property portfolio is a non core part of our business and we were
pleased to announce the sale on 27 February 2004 of the investment and
development properties at St Katharine's, London for #283.3 million. Further
information can be seen in Note 9 of the Preliminary Accounts.
Construction
2003 2002
Profit before tax * #m 20.8 21.1
* pre exceptional items of #nil in 2003 (2002: #0.6 million)
Key external areas for the business remain repeat work from blue chip customers,
healthcare PFI and facilities management. However the fastest growing part of
the business is supporting the house building and commercial property
activities. In 2003 #125 million of internal work was completed, 25 per cent of
the construction business' total workload - up 7 per cent on last year.
The construction order book, which includes internal work, stood at #785 million
at the year end - up 17 per cent on the previous year.
Shareholders' Funds
Total shareholders' funds at the end of 2003 increased from #1,393.3 million to
#1,693.5 million.
Retained profit for the year of #151.7 million and new share capital of #173.1
million for the part payment of the Wilson Connolly Plc acquisition were partly
offset by #24.6 million of other movements, of which #19.5 million represents
the downwards revaluation of the investment property portfolio.
At the end of the year, #347.6 million of goodwill remained on the balance
sheet. #121.9 million of goodwill was recorded on the balance sheet for the
Wilson Connolly Holdings plc acquisition. This is being amortised over 20 years.
The amortisation charge for the year was #15.0 million in total - #12.9 million
relating to the Bryant Homes acquisition, #1.6 million relating to the Wilson
Connolly acquisition and #0.5 million to the Journey Homes acquisition.
Shareholders' Returns
Adjusted earnings per share increased by 31 per cent from 29.8 pence to 39.0
pence. The proposed final dividend of 6.5 pence produces a total for the year of
8.9 pence, an increase of 20 per cent over last year, and reflects the Board's
confidence in Taylor Woodrow's continuing strong profit performance and cash
generation. The dividend was covered 4.1 times by earnings. The share price at
31 December 2003 was 267 pence a 4 per cent discount to equity shareholders'
fundsper share. We remain committed to a progressive dividend policy through
the business cycle.
Cash Flow
Through 2003 cash decreased by #10.3 million compared with a #12.3 million
increase in 2002.
Operating profits of #337.8 million resulted in net cash inflows from operating
activities of #247.4 million (2002: #147.4 million). The difference of #90.4
million primarily reflects movements in working capital balances.
Increased land stocks of #113.9 million (excludes land assets acquired with
Wilson Connolly), were partly funded by an increase of #72.6 million in land
creditors. Debtors have increased by #56.0 million, of which #30.9 million
relates to UK land sales.
An increase of #72.6 million in work in progress, primarily related to UK
housing, has been offset by an increase in UK trade creditors.
Net interest payments have increased by 129 per cent from #20.7 million to #47.4
million reflecting changed timings of interest payments and the acquisition
finance for Wilson Connolly.
Net cash flows from capital expenditure and financial investment in 2003 have
reduced by #70.4 million from 2002, primarily due to disposals of investment
properties in the prior year.
The Wilson Connolly acquisition resulted in a net cash outflow of #435.2
million, as detailed in note 8.
The net cash inflow from financing of #313.9 million largely reflects
acquisition financing for Wilson Connolly.
Treasury Management and Funding
Net debt stood at #742.9 million (2002: #260.4 million) equivalent to net
gearing of 43.9 per cent (2002 as restated: 18.7 per cent). Net interest cost
for the year was #41.2 million (2002: #34.7 million).
Average net debt for the year was #584 million.
At the year end Taylor Woodrow had undrawn committed facilities totalling #518.1
million.
Shareholder Information
The 2003 final dividend will be paid on Thursday 1 July 2004 to shareholders
whose names appear on the register of members at the close of business on Friday
28 May 2004.
The company offers a Dividend Re-Investment Plan which provides shareholders
with a facility to use their cash dividends to purchase Taylor Woodrow plc
shares in the market. Details will be sent to ordinary shareholders with the
2003 annual report and accounts which will be posted on 19 March 2004. Copies of
the 2003 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 ended 31 December 2003
Before
goodwill Goodwill
amortisation amortisation
& &
exceptional exceptional
item item (note 1) 2003 2002
Notes #m #m #m #m
Continuing
operations
Turnover: Group and
share of joint
ventures
Existing operations 2,383.4 - 2,383.4 2,215.8
Acquisitions 289.5 - 289.5 -
Continuing 2,672.9 - 2,672.9 2,215.8
operations
Less: share of
joint ventures' (3.5) - (3.5) (7.2)
turnover - existing
operations
Group turnover 1 2,669.4 - 2,669.4 2,208.6
Cost of sales (2,154.0) - (2,154.0) (1,797.9)
Gross profit 515.4 - 515.4 410.7
Administrative (142.6) (35.0) (177.6) (153.0)
expenses
Group operating 1 372.8 (35.0) 337.8 257.7
profit
Existing operations 325.7 (32.0) 293.7 257.7
Acquisitions 47.1 (3.0) 44.1 -
Share of operating
profit in joint 1.1 - 1.1 2.0
ventures
373.9 (35.0) 338.9 259.7
Profit on disposal
of investments 2 6.3 8.1
and properties
Profit on ordinary
activities before 345.2 267.8
interest
Interest receivable 4.0 4.5
Interest payable: (44.2) (35.9)
Group
Joint ventures (1.0) (3.3)
(45.2) (39.2)
Profit on ordinary
activities before 304.0 233.1
taxation
Tax on profit on 3 (101.5) (76.9)
ordinary activities
Profit on ordinary
activities after 202.5 156.2
taxation
Minority interests
(including (0.4) (1.1)
non-equity
interests)
Profit for the 202.1 155.1
financial year
Dividends paid and
proposed on 4 (50.4) (40.6)
equity shares
Finance costs of (1.1) -
non-equity shares
Profit retained 150.6 114.5
Basic earnings per 5 36.5p 28.2p
share
Diluted earnings 5 36.3p 28.1p
per share
Adjusted basic 5 39.0p 29.8p
earnings per share
Group statement of total recognised gains and losses
for the year ended 31 December 2003
2003 2002
#m #m
Profit for the financial year 202.1 155.1
Unrealised deficit on revaluation of properties (19.3) (20.7)
Revaluation reversed on properties transferred to stocks (1.1) (19.8)
Tax on realised revaluation surplus - (1.0)
181.7 113.6
Currency translation differences on foreign currency net
investments (2.1) (25.0)
Total recognised gains and losses relating to the year 179.6 88.6
Reconciliation of movements in Group shareholders' funds
for the year ended 31 December 2003
2002
As restated
2003 (note 6)
#m #m
Profit for the financial year 202.1 155.1
Dividends on equity shares (50.4) (40.6)
151.7 114.5
Other recognised gains and losses relating to the year
(net) (22.5) (66.5)
New share capital subscribed 173.1 1.7
Proceeds from sale of own shares 1.8 2.9
Purchase of own shares (3.7) (11.2)
Own shares acquired on acquisition of subsidiary (0.2) -
Net increase in shareholders' funds 300.2 41.4
Opening shareholders' funds as previously stated 1,405.9 1,356.2
Prior year adjustment (note 6) (12.6) (4.3)
Opening shareholders' funds as restated 1,393.3 1,351.9
Closing shareholders' funds 1,693.51,393.3
Balance sheet
at 31 December 2003
Group
2002
As restated
2003 (note 6)
#m #m #m
Fixed assets
Intangible assets
Goodwill 347.6 241.4
Tangible assets
Investment properties 160.2 183.9
Other 30.3 21.1
Investments
Joint ventures
Share of gross assets (2002: #27.2m) 0.9
Share of gross liabilities (2002: #27.2m) (0.9)
- -
Other 3.3 3.2
541.4 449.6
Current assets
Stocks 2,596.7 1,707.0
Debtors 304.9 212.5
Cash at bank and in hand 146.5 180.6
3,048.1 2,100.1
Creditors: amounts falling due within one year (1,001.2) (632.3)
Net current assets 2,046.9 1,467.8
Total assets less current liabilities 2,588.3 1,917.4
Creditors: amounts falling due after more than (849.4) (497.4)
one year
Provisions for liabilities and charges (44.3) (26.7)
1,694.6 1,393.3
Represented by:
Capital and reserves
Non-equity share capital 10.0 -
Equity share capital 146.1 138.2
Called up share capital 156.1 138.2
Share premium account 745.7 591.2
Revaluation reserve 38.4 63.4
Capital redemption reserve 21.5 21.5
Other reserve 1.1 -
Profit and loss account 745.4 591.6
Less: Own shares (14.7) (12.6)
Shareholders' funds 1,693.5 1,393.3
Minority interests (including non-equity 1.1 -
interests)
1,694.6 1,393.3
Shareholders' funds are analysed as:
Equity interests 1,592.4 1,393.3
Non-equity interests 101.1 -
1,693.5 1,393.3
Group cash flow statement
for the year ended 31 December 2003
2002
As restated
2003 (note 6)
Notes #m #m #m #m
Operating activities
Cash inflow from operating 7 247.4 147.4
activities
Returns on investments and
servicing of finance
Interest received 4.0 4.4
Interest paid (47.4) (20.7)
Dividends paid by subsidiary
undertakings to (0.1) (1.6)
minority shareholders
Net cash outflow from returns
on investments and (43.5) (17.9)
servicing of finance
Taxation
UK Corporation tax paid (48.5) (51.2)
Overseas tax paid (33.9) (23.3)
Tax paid (82.4) (74.5)
Capital expenditure and
financial investment
Purchase of fixed assets and (12.8) (8.8)
properties
Sale of fixed assets and 3.9 70.3
properties
Net cash (outflow)/inflow from
capital expenditure (8.9) 61.5
and financial investment
Acquisitions and disposals
Purchase of subsidiary 8 (425.5) (29.7)
undertaking
Net overdrafts acquired with 8 (9.7) -
subsidiary
Net cash outflow from (435.2) (29.7)
acquisitions and disposals
Equity dividendspaid (41.4) (37.8)
Net cash (outflow)/inflow
before use of liquid (364.0) 49.0
resources and financing
Management of liquid
resources
Cash withdrawn from/(placed on) 39.8 (61.0)
short-term deposit
Net cash inflow/(outflow) from
management of liquid 7 39.8 (61.0)
resources
Financing
Issue of ordinary share capital
by Taylor Woodrow5.8 1.7
plc
Issue of preference share
capital by Taylor Woodrow 100.0 -
plc
Proceeds from sale of own 1.8 2.9
shares
Purchase of own shares (4.1) (11.2)
Debt due within one year:
new loans 411.7 2.9
repayment of loans (482.2) (207.4)
Debt due after one year:
new loans 397.4 263.3
repayment of loans (116.5) (27.9)
Net cash inflow from financing 313.9 24.3
(Decrease)/increase in cash in 7 (10.3) 12.3
the year
Notes to the preliminary accounts
1. Segmental analysis
Group Group
turnover by operating Capital As restated
origin profit employed (note 6)
2003 2002 2003 2002 2003 2002
#m #m #m #m #m #m
By activity
Housing 2,236.8 1,751.8 336.2 245.0 1,862.7 1,225.4
Property
development 63.9 92.9 8.2 14.7 279.0 234.5
and investment
Construction 368.7 363.9 8.4 11.1 (51.8) (47.6)
2,669.4 2,208.6 352.8 270.8 2,089.9 1,412.3
Goodwill
amortisation/
goodwill (15.0) (13.1) 347.6 241.4
- housing
337.8 257.7 2,437.5 1,653.7
By market
North 691.4 544.3 92.5 66.5 340.9 337.8
America
Rest of the 113.5 98.5 33.5 23.3 34.1 7.2
World
Total overseas 804.9 642.8 126.0 89.8 375.0 345.0
United Kingdom 1,864.5 1,565.8 226.8 181.0 1,714.9 1,067.3
2,669.4 2,208.6 352.8 270.8 2,089.9 1,412.3
Goodwill
amortisation/ (15.0) (13.1) 347.6 241.4
goodwill
337.8 257.7 2,437.5 1,653.7
Net debt (742.9) (260.4)
Minority (1.1) -
interests
Shareholders' 1,693.5 1,393.3
funds
Turnover by origin represents sales to third parties and is not materially
different from turnover to third parties by destination.
Operating profit for construction excludes its share of the construction joint
ventures and interest. Profit before taxation for construction is #20.8m (2002:
#21.1m) including these items.
Operating profit in the United Kingdom is stated after deduction of exceptional
administrative expenses of #20.0m relating to the integration of Wilson Connolly
operations with Taylor Woodrow Housing (2002 - #12.0m for restructuring, mainly
redundancies and office relocations, being Housing #10.4m, Property #1.0m and
Construction #0.6m).
The charge for goodwill amortisation of #15.0m (2002: #13.1m) is in respect of
United Kingdom #14.5m (2002: #12.9m) and North America #0.5m (2002: #0.2m).
Goodwill of #347.6m (2002: #241.4m) is in respect of United Kingdom #341.5m
(2002: #234.1m) and North America #6.1m (2002: #7.3m).
The profit and loss account for 2003 includes the following amounts relating to
the acquisition of the Wilson Connolly Holdings Plc Group (for the period from 2
October to 31 December 2003):
#m
Turnover 289.5
Cost of sales (231.2)
Gross profit 58.3
Administrative expenses (including integration costs of #1.4m and
goodwill amortisation of #1.6m) (14.2)
Operating profit 44.1
Immediately following the acquisition, land acquisition and working capital
commenced being managed on a combined basis and it is therefore not possible to
analyse the cash flows of the acquired business separately.
2. Profit on ordinary activities before taxation
2003 2002
#m #m
Ordinary profit before taxation includes
Rents on investment properties, less outgoings 11.9 13.9
Profit on disposal of investments 5.2 3.9
Profiton disposal of investment and fixed asset properties 1.1 4.2
Profit on disposal of investments and properties 6.3 8.1
3. Tax on profit on ordinary activities
2003 2002
#m #m
United Kingdom tax
Corporation tax: Current year 57.8 53.1
Prior year (3.3) (5.3)
Relief for overseas tax (4.2) (3.8)
Deferred tax: Current year 7.6 3.9
Prior year (1.4) 4.2
Joint ventures - 0.7
Overseas tax
Current: Current year 37.7 22.2
Prior year (1.7) (4.7)
Deferred: Current year 5.5 6.2
Prior year 3.5 0.4
101.5 76.9
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 304.0 233.1
Share of joint ventures' (profit)/loss before tax (0.1) 1.3
Group profit on ordinary activities before tax 303.9 234.4
Tax on Group profit on ordinary activities at standard UK
corporation tax rate of 30% (2002: 30%) 91.2 70.3
Effects of:
Overprovision in respect of prior years (5.0) (10.0)
Amortisation of goodwill and fair value adjustments 7.9 6.7
Other permanent disallowable expenditure 3.1 0.5
Non taxable income (7.2) (3.2)
Overseas income receivable 4.2 3.9
Double tax relief for overseas tax (4.2) (3.8)
Higher rates of tax on overseas earnings 7.8 5.2
Capital allowances for the period (less than)/in excess of
depreciation (0.4) 2.5
Short-term timing differences (10.4) (10.3)
Pension provision (0.3) (0.4)
Tax trading losses carried forward (1.2) (0.6)
Other 0.8 0.7
Group current tax charge for year 86.3 61.5
There is no material difference between the tax rates on ordinary activitiesand
exceptional items.
4. Dividends paid and proposed on equity shares
2003 2002
#m #m
Interim paidof 2.4p per ordinary share (2002: 2.2p) 13.0 12.2
Final proposed of 6.5p per ordinary share (2002: 5.2p) 37.4 28.4
50.4 40.6
5. Earnings per share
The calculations of earnings per share are based on the following profits and
numbers of shares:
Basic Adjusted
2003 2002 2003 2002
#m #m #m #m
Profit for the financial year 202.1 155.1 202.1 155.1
Less: Finance costs of non-equity shares (1.1) - (1.1) -
Add: Exceptional integration (2002:
restructuring) costs (note 1) 20.0 12.0
Less: Tax effect of exceptional costs (6.0) (3.6)
201.0 155.1 215.0 163.5
2003 2002
m m
Weighted average number of shares:
For basic and adjusted earnings per share550.9 549.3
Weighted average of dilutive options 3.0 2.8
Weighted average of dilutive awards under the
Group Executive Bonus Plan 0.1 0.3
Weighted average of dilutive awards under the
Cash Bonus Deferral Plan 0.4 -
For diluted earnings per share 554.4 552.4
6. Prior year adjustment
Following the adoption of UITF 38 - "Accounting for ESOP Trusts", investments in
the company's own shares of #14.7m (2002: #12.6m) are shown as a deduction from
shareholders' funds rather than as current asset investments and they are
therefore no longer shown as part ofnet debt with the cash outflow of #2.3m
(2002: outflow of #8.3m) regarding them shown as part of financing rather than
within management of liquid resources. Comparative figures for 2002 have been
restated accordingly.
7. Group cash flow statement
2002
As
restated
2003 (note 6)
#m #m
Reconciliation of operating profit to net cash flow from
operating activities
Operating profit 337.8 257.7
Depreciation and amortisation 21.8 20.3
Increase in stocks (201.3) (253.6)
Increase in debtors (56.0) (20.9)
Increase in creditors 144.0 140.6
Exchange adjustments 1.1 3.3
Net cash inflow from operating activities 247.4 147.4
Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash in year (10.3) 12.3
Cash inflow from increase in debt (210.4) (30.9)
Cash (inflow)/outflow from (decrease)/increase in liquid
resources (39.8) 61.0
Change in net debt resulting from cash flows (260.5) 42.4
Amortisation of discount on issueof debt and expenses of
issue for the year (0.7) (0.7)
Loan notes issued as part of consideration for acquisition (6.6) -
Debt acquired with subsidiary (219.6) -
Exchange movement 4.9 (0.2)
Movement in net debt in the year (482.5) 41.5
Net debt at 1 January (260.4) (301.9)
Net debt at 31 December (742.9) (260.4)
Analysis of net debt
At Acquisition
1 January (excluding At
2003 cash and 31
As restated Cash bank Non-cash Exchange December
(note 6) flow overdrafts) changes movement 2003
#m #m #m #m #m #m
Cash at
bank and 180.6 (30.4) - - (3.7) 146.5
in hand
Less:
Deposits (113.1) 39.8 - - (0.3) (73.6)
due after
one day
Overdrafts
on (2.6) (19.7) - (2.8) - (25.1)
demand
(10.3)
Debt due
after one
year
Debenture (424.4) 10.9 - 11.7 8.6 (393.2)
loans
Bank (0.5) (291.8) (54.0) - - (346.3)
loans
Debt due
within one
year
Debenture (10.5) 5.3 (9.9) (19.0) - (34.1)
loans
Bank loans
and (5.6) 45.5 (155.7) - - (115.8)
overdrafts
Add back
overdrafts
on 2.6 19.7 - 2.8 - 25.1
demand
(210.4)
Liquid
resources
Deposits
due after 113.1 (39.8) - - 0.3 73.6
one day
Total (260.4) (260.5) (219.6) (7.3) 4.9 (742.9)
8. Acquisition of Wilson Connolly Holdings Plc
On 2 October 2003, the Group declared its offer for Wilson Connolly Holdings Plc
unconditional. The company offered 0.132 ordinary shares and 200 pence in cash
for each share issued and to be issued in Wilson Connolly Holdings Plc. The
consideration amounted to the issue of 27.6mordinary shares of 25 pence each in
the company, #6.6m in loan notes and #425.5m in cash, including the expenses of
the acquisition.
Identifiable assets and liabilities acquired and their provisional fair value to
the Group:
Accounting
Book Fair value policy Fair value to
value adjustments alignments Group
#m #m#m #m
Fixed assets
Intangible assets 21.3 (21.3) - -
Tangible assets 8.6 1.6 (2.7) 7.5
Current assets
Stocks 849.0 17.6 (158.5) 708.1
Debtors 22.8 4.4 21.8 49.0
Cash 0.5 - - 0.5
Total assets 902.2 2.3 (139.4) 765.1
Creditors
Debenture loans (9.9) - - (9.9)
Bank loans and overdrafts (210.2) (9.7) - (219.9)
Taxation (1.6) - - (1.6)
Other creditors (275.7) - 130.3 (145.4)
Provisions
Pensions - (4.8) - (4.8)
Other provisions (4.1) (1.3) - (5.4)
Total liabilities (501.5) (15.8) 130.3 (387.0)
Net assets 400.7 (13.5) (9.1) 378.1
Minority interest (0.8)
Own shares 0.2
Goodwill 121.9
499.4
Satisfied by:
#m
Shares issued 67.3
Loan notes issued 6.6
Cash 425.5
499.4
The fair value adjustments are in respect of goodwill, fixed asset properties,
stocks of residential land, deferred tax, bank loans and provisions principally
for pension liabilities. The accounting policy alignments are in respect of the
further amortisation of computer software, the amortisation of land option costs
over the period of the options, the expensing of pre-acquisition professional
fees regarding strategic land and the de-recognition of land purchases and
related land creditors regarding purchases which had not yet been legally
completed at the acquisition date; land deposits for land exchanged but not
legally completed have been stated as debtors.
Net cash outflows in respect of the acquisition comprised:
#m
Cash consideration 425.5
Cash acquired (0.5)
Bank overdrafts acquired 10.2
435.2
Wilson Connolly Holdings Plc earned a profit after taxation for the financial
period from 1 January 2003 to 1 October 2003 of #17.4m (year to 31 December
2002: #34.6m). The unaudited summarisedprofit and loss account from 1 January
2003 to 1 October 2003, shown on the basis of the accounting policies of Wilson
Connolly Holdings Plc prior to the acquisition, is as follows:
Profit and loss account #m
Turnover 434.1
Cost of sales (355.3)
Gross profit 78.8
Administrative expenses (43.8)
Operating profit 35.0
Net interest payable (9.5)
Profit on ordinary activities before taxation 25.5
Taxation (8.1)
Profit on ordinary activities after taxation and for the financial
period 17.4
There were no recognised gains and losses other than profit for the above
financial period. Prior to acquisition Wilson Connolly Holdings Plc proposed an
interim dividend of #6.2m of which #0.7m is to be paid to those shareholders who
elected to receive a 3 pence per share dividend and 197 pence per share instead
of 200 pence per share as the cash part of the consideration for the
acquisition.
9. Post Balance Sheet Event
On 27 February 2004, Taylor Woodrow contracted to sell its investment and
development properties at St Katharine by the Tower, London for #283.3 million.
Of this total consideration, #166.3 million relates to the sale of St
Katharine's Estate investment properties and#117.0 million relates to the sale
of the K2 development property currently under construction. The group has
guaranteed certain rental amounts to the purchasers and will pay no more than
#2.8 million in the first year, #2.7m in the second year, #2.6 million in the
third year and #75,000 in the fourth and fifth years under these arrangements.
10. General
Other than in respect of UITF 38 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 2002.
The preliminary accounts were approved by the Board of Directors on 2 March
2004.
These accounts do not constitute the company's statutory accounts for the years
ended 31 December 2003 or 2002 but are derived from those accounts. Statutory
accounts for 2002 have been delivered to the Registrar of Companies and those
for 2003 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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