Taylor Woodrow PLC - Final Results
March 24 1998 - 2:35AM
UK Regulatory
RNS No 9013h
TAYLOR WOODROW PLC
24th March 1998
TAYLOR WOODROW plc PRELIMINARY STATEMENT
For the year ended 31 December 1997 (Audited)
'Diversity delivers strong profits growth, with housing powering ahead,' says
Chairman
- Improved profits in all major operating divisions
- Pre-tax profits up 23% to #82.1 million
- Worldwide housing profits up 24% to #40.8 million
- Significant uplift in investment property portfolio valuation
- Breakthrough in construction performance
1997 1996
Group turnover #1,296 million #1,190 million
Group operating profit #85.1 million #73.3 million
Profit before tax #82.1 million #66.8 million
Earnings per share 14.2p 12.0p
Proposed final dividend per share 3.25p 2.75p
Net debt (1996 as restated) #36.8 million #57.4 million
Net debt (1996 as restated) as %
of shareholders' funds 6% 10.6%
Shareholders' funds per share 154.2p 137.5p
Taylor Woodrow plc, the international housing, property, construction and
trading group, today announced pre-tax profits of #82.1 million for the year
ended 31 December 1997, compared with #66.8 million for the previous year.
Group operating profits increased 16% to #85.1 million from #73.3 million.
Group turnover was up 9% at #1,296 million boosted primarily by significantly
higher housing sales.
Commenting on the results, chairman and chief executive Colin Parsons said,
'Our clear strategy to improve returns and grow our inter-related businesses
has produced another strong set of results.
'Once again the powerhouse was our international housing business, notably
Canada and the UK. Strong support came from our substantial property
investment and development activities and the continued growth of the
merchanting division, Greenham Trading.
'I am also pleased that the worldwide construction operations have returned
solidly into profit and we have a growing order book of carefully won projects
to take forward into 1998 and beyond.
'Taylor Woodrow is looking at 1998 with some optimism. Market conditions
appear generally positive for all our operations. We believe there is still
great potential to carve out better margins and improve the returns we achieve
across the divisions. We also see significant opportunities for growth across
the group either through further organic expansion or acquisition. Although
our gearing levels will rise significantly this year, our balance sheet
strength will allow us to seize new opportunities as they arise.'
The year end net debt position was significantly better than anticipated due
to the receipt of significant contract mobilisation payments, the strength of
the housing market in the UK and North America and the delay in expenditures
on land and property developments brought about mainly by planning issues.
Debt levels are expected to rise in 1998 as commitments for land and property
development are spent.
The board is recommending a final dividend of 3.25p compared with 2.75p in
1996. It is to be paid as a foreign income dividend. This results in a total
dividend for 1997 of 4.5p, a 20% increase on the previous year and a further
demonstration of the intention to increase returns to shareholders as profits
improve.
REVIEW OF OPERATIONS
Housing
1997 1996
Profit before tax #40.8 million #32.8 million
The group's international housing businesses stepped up the pace in 1997 with
profits rising 24% to #40.8 million. Completions of homes and lots were up 10%
at 4,333.
For the second year running the worldwide housing business contributed nearly
50% of the group's profits and turnover moved up to #470 million, more than
35% of the group total. Continued investment has been made in international
markets, ensuring we do not overpay for land. In 1997 a total of #132 million
was invested in housing land in the UK, the USA, Canada, Australia and Spain.
New opportunities are continually being sought in all these areas.
In the UK, Taywood Homes produced a strong profit performance of #11m, a rise
of #4 million on the previous year. This increase was achieved by maximising
returns on individual house sales rather than pushing volume with the
consequent impact on landbank. Sales of homes rose to 1,487 compared with
1,365 in the previous year. This sensible approach is being carried through
into this year with a target of 1,600 sales nationwide.
A highlight for Taywood Homes in 1997, that will filter into the company's
performance in 1998 and beyond, was the success of its strategic land
operations. During the year over 1,200 lots of prime residential land were
brought through the planning system at a discount to open market values.
In light of Government announcements that it would like to see 60% of new
homes developed on 'recycled sites,' the group was delighted to be selected as
part of the winning consortium for the Greenwich Millennium Village. This high
profile scheme of 1,400 homes offers a great opportunity to set new standards
for residential development that can be applied to future work in urban
regeneration schemes.
Central London residential operations had a good year at Kensington Green in
1997 and generated strong sales interest at new developments in St Katharine's
and Battersea.
Early signs from the UK housing market suggest customer interest remains high
across the country. However, there is an expectation that the rate of house
price growth will slow in comparison with the rapid rises in 1997.
In Canada, a sharp improvement in the market for new homes and substantial
closings from the high-rise condominium division resulted in an impressive #5
million increase in profits to #12 million.
Completions of single-family homes rose 18%. High-rise condominium completions
shot up to 238, over four times the number achieved in 1996. There are further
high-rise developments in the pipeline that will bring in further substantial
profits in 1999 and beyond, but the phasing of completions means there will be
a reduction in profits from high-rise operations in 1998. With low interest
rates, strong economic growth and improved consumer confidence, the Canadian
housing market remains buoyant.
In the USA, operations in Florida and California had another profitable year.
Both made strategic investments in new markets within the respective States.
In Florida, the first development in Orlando is now up and running and new
development sites are being sought to grow this business. In California,
acquisitions have been made in the northern part of the State in the San
Francisco Bay area. This gives us access to another dynamic market, building
on the successful housing operation in Southern California.
To date, customer interest in both Florida and California this year has
remained extremely positive and with a strong order book, better profits are
expected this year. Our operations at Houston in Texas are also growing
steadily.
The housing recession that has dogged the Australian housing market for the
past two years has eased and our profits doubled. There have been further
signs of growth this year and a well purchased, well-positioned landbank is in
place to take advantage of the improving conditions.
Property
1997 1996
Profit before tax #21.4 million #19.7 million
The strategy of increasing returns in property through active management of a
substantial investment portfolio and growing the scope of higher return
development activity is proving successful.
Careful management of the UK investment portfolio plus a very strong domestic
property market in the second half of 1997, saw a revaluation surplus at the
year end of #32 million, an 11% uplift in value. Void levels reduced to 1.9%
at the year-end, down from just over 5% at the start of 1997. Significantly,
the St Katharine's estate was effectively fully let.
Development profits were slightly higher, stimulated by the successful sale of
schemes such as office developments in Reigate and Warrington and an
industrial scheme in Warrington. However, with 17 UK development schemes in
progress and a number scheduled for completion this year, a strong performance
is expected from development activities in the future. Further suitably priced
development opportunities are being pursued.
In Canada, Monarch announced several new property developments during 1997
that will increase the 1.8 million sq ft investment portfolio by around 25% by
the end of this year.
Property markets in both the UK and Canada are expected to remain positive
through 1998.
Construction
1997 1996
Profit before tax #5.3 million #0.1 million
Construction operations had a better year in 1997. Profits moved forward to
#5.3 million.
By the end of 1997, the total construction order book had risen 14% to #867
million in comparison with the year-end figure in 1996. This is our highest
construction order book for five years. New projects were awarded in all
sectors of operation.
Following the agreement in December 1997 settling all claims between
Eurotunnel and TML, #10 million of provision was released. However, this had
no net effect on the construction results because of non-recurring charges
mainly in respect of litigation arising from disputes on contracts completed
several years ago.
The comprehensive review of worldwide construction activities confirmed that
to succeed in the future, the construction business must focus on providing
high quality construction solutions to clients around the world, concentrate
on core competencies and focus its bidding.
To achieve this, a new construction organisation was announced last month to
amalgamate the large number of subsidiary companies into a single TWC unit
that makes best use of all available resources.
As a result of these further changes to the construction division
organisation, with a solid order book in place and a number of new
opportunities on the horizon, prospects for construction operations in 1998
look more promising than in recent years, although the business remains
intensely competitive.
Greenham Trading
1997 1996
Profit before tax #8.3 million #7.6 million
Greenham Trading had another record breaking year for profits and turnover in
1997. This success was once again based on growth in sales across all parts of
the business. Branch capacity rose 12% to 638,000 sq ft through organic
development. The company also continued to target new markets through the
introduction of selected new products.
During the year Greenham opened up a new concept - its first stand-alone shop
in Glasgow - to take advantage of the special requirements of highly populated
urban markets. New outlets are being actively considered in various parts of
the country.
In 1997, Greenham Trading also completed its first bolt-on acquisition - Total
Safety in Ireland. This has proved to be a very successful addition with good
sales growth and great potential to sell Greenham's extensive product range
into a brand new market. The company's other European operations in Denmark
and Germany also contributed to the improved overall performance.
In 1998 Greenham Trading is focused on extending its operations through
organic growth of its branch capacity in the UK and further appropriate
bolt-on acquisitions.
MANAGEMENT
Last month, Paul Phipps was invited to join the board of Taylor Woodrow plc.
He brings a wide range of international housing experience gained from both
inside and outside the group, and has a track record of developing and running
successful residential operations.
OUTLOOK
Taylor Woodrow is looking at 1998 with some optimism. Market conditions appear
generally positive for all operations. There is still great potential to
carve out better margins and improve the returns achieved across the
divisions. There are significant opportunities for growth across the group
either through further organic expansion or acquisition. Although gearing
levels will rise significantly this year, the group's balance sheet strength
will allow it to seize new opportunities as they arise.
The outlook for worldwide housing is very positive backed by favourable
conditions for property investment and development activity and Greenham
Trading. The early signs in the reorganised construction operations are also
encouraging.
SHAREHOLDER INFORMATION
Subject to shareholders' approval at the Annual General Meeting to be held on
Friday 5 June 1998, the final dividend for 1997 will be paid to shareholders
appearing on the register of members at the close of business on 3 April 1998
and posted on 30 June 1998 for payment on 1 July 1998. The company, once
again, proposes to offer shareholders the opportunity to use their dividends
to purchase shares under the terms of the Dividend Re-investment Plan. Full
details will be mailed to shareholders with the Annual Report and Accounts on
17 April 1998.
Media enquiries:
Taylor Woodrow:
Press office: 0181 578 2366 (all day)
Matthew Moth: 0171 629 1201 (After 13.00)
Mobile: 0836 598522
Home: 0181 451 7716
E-mail: matthew.moth@taywood.co.uk
Grandfield:
Charles Cook
Michael Henman: 0171 417 4170
Analyst enquiries:
Taylor Woodrow:
David Green: 0171 629 1201
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 December 1997
1997 1996
#m #m notes
CONTINUING OPERATIONS
Turnover: Group and share of joint ventures 1,306.1 1,199.9
Less: share of joint ventures' turnover (10.4) (10.2)
______ ______
Group turnover 1,295.7 1,189.7 1
Cost of sales (1,086.7) (1,002.0)
_______ _______
Gross profit 209.0 187.7
Distribution costs (37.4) (34.5)
Administrative expenses (86.5) (81.3)
Utilisation of provision for
operations to be discontinued - 1.4
______ ______
Group operating profit 85.1 73.3
Share of operating profit in joint
ventures 0.4 2.9
Profit on disposal of properties and
investments 5.2 1.4
______ ______
Profit on ordinary activities before
interest 90.7 77.6
Interest receivable 9.1 8.1
Interest payable (17.7) (18.9)
______ ______
Profit on ordinary activities before
taxation 82.1 66.8 1
Tax on profit on ordinary activities (20.7) (17.0) 2
______ ______
Profit on ordinary activities after
taxation 61.4 49.8
Minority equity interests (5.2) (3.0)
______ ______
Profit for the financial year 56.2 46.8
Dividends paid and proposed (17.8) (14.7) 3
______ ______
Profit retained 38.4 32.1
================================= ===== =====
Earnings per share 14.2p 12.0p 4
===== =====
===========================================================================
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED
GAINS AND LOSSES
for the year ended 31 December 1997
1997 1996
#m #m
______ ______
Profit for the financial year 56.2 46.8
Unrealised surplus on revaluation of properties 36.4 4.7
______ ______
92.6 51.5
Currency translation differences on foreign
currency net investments (4.9) (20.0)
______ ______
Total recognised gains and losses relating
to the year 87.7 31.5
====== ======
CONSOLIDATED BALANCE SHEET
at 31 December 1997
1997 1996
_____________________________________ #m #m #m notes
______ _____ _____
Fixed assets
Tangible assets
Investment properties 387.6 385.9
Other 103.6 111.6
Investments
Joint ventures
Share of gross assets (1996 - #41.6m) 51.9
Share of gross liabilities(1996 - #35.3m)(49.9)
____ 2.0 6.3
_____ _____
493.2 503.8
_____ _____
Current assets
Stocks 511.8 432.5
Debtors 201.9 207.0
Current asset investments 1.4 0.4
Cash at bank and in hand 152.1 109.5
_____ _____
867.2 749.4
Creditors: amounts falling due within one year (490.8) (471.4)
_____ _____
Net current assets 376.4 278.0
_____ _____
Total assets less current liabilities 869.6 781.8
Creditors: amounts falling due after one year (177.3) (166.9)
Provisions for liabilities and charges (10.2) (11.2)
_____ _____
682.1 603.7
Minority interests in equity of subsidiary
undertakings (69.4) (63.5)
_____ _____
Shareholders' funds 612.7 540.2
===== =====
Represented by:
Capital and reserves - equity
Called up ordinary share capital 99.3 98.2
Capital redemption reserve 8.4 8.4
Share premium account 224.8 221.7
Revaluation reserve 72.2 38.5
Profit and loss account 208.0 173.4
_____ _____
612.7 540.2
===== =====
Net debt(1996 as restated) #36.8m #57.4m 5
Net gearing (1996 as restated) 6.0% 10.6%
Shareholders' funds per share 154.2p 137.5p
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 1997
1997 1996
as restated
___________ ___________
#m #m #m #m notes
______________________________________ _____ ____ ____ ___
Operating activities
Cash flow from operating activities 50.7 69.8 5
Returns from investments and servicing
of finance
Interest received 8.9 8.1
Interest paid (16.9) (18.9)
Dividends from joint ventures 0.6 2.5
Dividends paid by subsidiary
undertakings to minority shareholders (0.8) (1.4)
Net cash outflow from returns on
investments and servicing of finance _____ (8.2) ____ (9.7)
Taxation
UK Corporation tax paid (0.9) (3.5)
Overseas tax paid (10.3) (7.6)
Tax paid _____ (11.2) ____ (11.1)
Capital expenditure and financial
investment
Purchase of fixed assets and properties (28.2) (33.5)
Loans repaid by joint ventures - 0.1
Sale of fixed assets and properties 39.8 52.6
Net cash inflow from capital expenditure
and financial investment _____ 11.6 ____ 19.2
Equity dividends paid (14.6) (12.5)
_____ _____
Net cash inflow before use for liquid
resources and financing 28.3 55.7
Management of liquid resources
Cash placed on short-term deposit (41.2) (8.8)
Purchase of current asset investments (1.0) (0.4)
Net cash outflow from management of
liquid resources _____ (42.2) _____ (9.2) 5
Financing
Issue of ordinary share capital by
Taylor Woodrow plc 4.5 7.7
Subsidiary undertakings to minority
shareholders - 5.2
Debt due within one year:
new loans 9.5 7.9
repayment of loans (14.2) (15.7)
Debt due after one year:
new loans 39.4 2.7
repayment of loans (18.5) (21.7)
Net cash inflow/(outflow) from
financing ______ 20.7 ______ (13.9)
_____ _____
Increase in cash in the year 6.8 32.6 5
===== =====
The consolidated cash flow statement for the year ended 31 December 1996 has
been restated following the promulgation of Financial Reporting Standard No. 1
(Revised).
NOTES ON THE ACCOUNTS
1 ANALYSIS OF TURNOVER, ORDINARY PROFIT
BEFORE TAXATION AND NET ASSETS
Profit
Turnover before
by origin taxation Net assets
________________ __________ ____________
1997 1996 1997 1996 1997 1996
#m #m #m #m #m #m
By activity
Housing 470.6 386.4 40.8 32.8 337.2 297.1
Property development and
investment 93.6 92.0 21.4 19.7 292.6 264.8
Construction 579.3 562.0 5.3 0.1 (6.3) (31.6)
Greenham Trading 134.5 129.3 8.3 7.6 36.8 34.1
Other 17.7 20.0 6.3 6.6 64.4 70.5
_______ ______ ____ ____ _____ _____
1,295.7 1,189.7 82.1 66.8 724.7 634.9
======= ======= ==== ==== ===== =====
By market
Australia 14.1 11.4 2.3 1.2 38.8 42.5
Canada 83.2 64.1 14.8 10.3 92.3 83.5
United States of America 206.0 168.0 13.5 12.1 154.9 137.1
Rest of the world 188.4 204.1 2.1 6.2 34.2 16.6
______ _____ _____ ____ _____ _____
Total overseas 491.7 447.6 32.7 29.8 320.2 279.7
United Kingdom 804.0 742.1 49.4 37.0 404.5 355.2
______ ______ ____ ____ _____ _____
1,295.7 1,189.7 82.1 66.8 724.7 634.9
======= ======= ==== ====
Taxation on profits creditors
(including deferred taxation) (29.7) (20.4)
Dividend creditor (12.9) (10.8)
Minority interests (69.4) (63.5)
_____ _____
Shareholders' funds 612.7 540.2
===== =====
Ordinary profit before taxation includes rents on investment properties,
less outgoings for the year of #32.8m (1996 - #37.7m).
==============================================================================
2 TAX ON PROFIT ON ORDINARY ACTIVITIES 1997 1996
#m #m
United Kingdom tax
Corporation tax 8.1 8.3
Deferred tax - (1.6)
Relief for overseas tax (0.4) (1.1)
Overseas tax
Current 12.4 7.4
Deferred 0.5 3.6
Joint ventures 0.1 0.4
____ ____
20.7 17.0
==== ====
The UK tax charges are below the standard rates mainly due to the utilisation
of tax losses.
=============================================================================
3 EQUITY DIVIDENDS ON ORDINARY SHARES 1997 1996
#m #m
Interim of 1.25p per share (1996 - 1.0p) 4.9 3.9
Proposed final of 3.25p per share (1996 - 2.75p) 12.9 10.8
____ ____
17.8 14.7
==== ====
The interim dividend for 1997 was paid as a foreign income dividend and
the proposed final dividend for 1997 is to be paid as a foreign income
dividend.
===========================================================================
4 EARNINGS PER SHARE
Earnings per share has been calculated on the weighted average of 395.5m
shares (1996 - 389.9m) and on a profit of #56.2m (1996 - #46.8m).
Earnings per share on a fully diluted basis would not be materially
different from the stated earnings per share.
===========================================================================
5 CONSOLIDATED CASH FLOW STATEMENT
Reconciliation of operating profit
to net cash flow from operating activities
1997 1996
#m #m
Operating profit 85.1 73.3
Depreciation 21.8 17.2
Increase in stocks (69.5) (23.9)
Increase in debtors (0.9) (4.6)
Increase in creditors 20.9 8.5
Exchange adjustments (6.7) (0.7)
____ ____
Net cash inflow from operating activities 50.7 69.8
==== ====
Reconciliation of net cash flow to movement in net debt
#m #m
Increase in cash in the year 6.8 32.6
Cash (inflow)/outflow from (increase)/decrease in
debt (16.2) 26.8
Cash outflow from increase in liquid resources 42.2 9.2
____ ____
Change in net debt resulting from cash flow 32.8 68.6
Amortisation of discount on issue of 9.5% first
mortgage debenture stock 2014 and expenses of
issue for the year (0.3) (0.3)
Exchange movement (11.9) 1.6
____ ____
Movement in net debt in the year 20.6 69.9
Net debt at 1 January 1997 (57.4) (127.3)
____ _____
Net debt at 31 December 1997 (36.8) (57.4)
==== =====
=========================================================================
6 FINANCIAL REPORTING STANDARD NO. 9
The accounts have been prepared in compliance with Financial Reporting
Standard No. 9. References in the 1996 accounts to associated undertakings
have been changed to joint ventures. These changes have no effect on the
results or net assets for 1996 or 1997.
==========================================================================
7 GENERAL
These accounts and notes set out above do not constitute the company's
statutory accounts for the years ended 31 December 1997 or 1996 but are
derived from those accounts. Statutory accounts for 1996 have been
delivered to the Registrar of Companies and those for 1997 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.
=============================================================================
END
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