Taylor Woodrow PLC - Final Results
March 16 1999 - 2:34AM
UK Regulatory
RNS No 1263j
TAYLOR WOODROW PLC
16th March 1999
TAYLOR WOODROW plc PRELIMINARY STATEMENT
for the year ended 31 December 1998 (audited)
'Impressive performance from worldwide housing powers Group to #100 million
pre-tax profit'
- pre-tax profits up 22% to #100.3 million
- worldwide housing profits up 38% to #56.3 million
- all divisions show increased profits
- US housing profits increase 136% to #26 million
- final dividend up 10.8% to 3.6p
1998 1997
Group turnover #1,401 million #1,296 million
Group operating profit #110.2 million #85.1 million
Profit before tax #100.3 million #82.1 million
Basic earnings per share 17.1 p 14.2 p
Proposed final dividend
per share 3.6 p 3.25 p
Shareholders' funds per share 169.7 p 154.2 p
Taylor Woodrow plc, the international housing, property, construction and
trading group, today announced pre-tax profits of #100.3 million for the year
ended 31 December 1998, compared with #82.1 million for the previous year.
Group operating profits increased 29% to #110.2 million. Turnover was up 8% at
#1,401 million primarily boosted by higher housing sales.
Commenting on the results, chairman Colin Parsons said: "The Group's
continuing success reflects the benefits of our well balanced blend of
complementary business activities. Each of them contributed to the improvement
but undoubtedly the dynamo behind the enhanced performance was our US housing
operations, lifting their profits by a spectacular 136% to #26 million and
contributing over a quarter of the Group's profits".
Keith Egerton, chief executive commented: "In terms of overall strategy we are
clearly an international housing and property group supported by construction
and trading businesses. In 1998 we invested heavily in housing and property
and they provide nearly 80% of the Group's total profit. This emphasis will
continue and indeed increase.
"We are clear as to our broad strategy for construction but the pace of change
has to accelerate. We intend to reduce the division to a more solid core and
have determined that we must reduce our exposure to construction projects
where the rewards do not match the risk.
"Greenham has grown successfully in the 1990's generating high returns and I
have initiated a review which will consider our options for developing the
business in the future, including how we can increase growth for the long
term."
In his remarks Mr Egerton commented that he intended to double the size of the
UK housing operation within five years. The businesses in California and
Florida would also be grown. In California, operations in the north would be
progressed faster than the south to achieve increased balance between the two
areas. Florida would continue to expand, although not limited to its local
market, and would therefore consider moving into nearby states.
The benefit of the Group's switch into property development activity was
materialising with profits growing threefold in this area. Mr Egerton
commented that an enlarged UK and Canada trading development activity,
sensibly based, continued to be a clear objective.
In closing he said that net gearing at the year end was moderately low at
20.7%. It will increase as has been signalled, during the course of 1999, but
not to the extent that the Group cannot take advantage of any weakness in the
market to purchase land and assets.
The board is recommending a final dividend of 3.6p compared with 3.25p in
1997. This results in a total dividend for 1998 of 5.1p, a 13% increase on the
previous year and a further demonstration of the Group's policy of continuing
dividend growth
OUTLOOK
Commenting on the outlook for 1999 Mr Parsons said: "Many of our markets are
proving generally resilient to the economic slowdown that was predicted in
1998. Already this year trading activity in our housing markets has started
very positively. Property markets are firmer, however conditions in
construction will remain difficult. Greenham Trading's markets are also
showing signs of improvement.
"I am very confident of the progress that Taylor Woodrow will make in future
years"
SHAREHOLDER INFORMATION
If approved at the annual general meeting on 11 June 1999 the final dividend
will be paid on 1 July 1999 to shareholders whose names appear on the register
of members at the close of business on 14 May 1999.
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. Full details of the facility will be sent to
shareholders with the annual report, which is expected to be mailed on 8 April
1999.
Copies of the annual report will be available from the company's registered
office, 4 Dunraven Street, London W1Y 3FG with effect from 8 April 1999.
Media enquiries: Press Office 0181 575 4188
Tom MacQuillan Office: 0171 629 1201
Mobile: 0836 598522
Grandfield - Charles Cook 0171 417 4170
Analyst enquiries:
David Green (Finance Director) - after 14.00 0171 629 1201
REVIEW OF OPERATIONS
Housing 1998 1997
Profit before tax #56.3 million #40.8 million
US housing operations were the dynamo behind the overall improvement in
performance, with buoyant market conditions in California, Florida and Texas
producing a #15 million improvement in profits to #26 million.
The past heavy investment in land, which is now producing excellent results,
has continued in 1998. Three new sites were acquired in Florida and our
strategic expansion into Northern California is gathering momentum with a
further three sites being purchased in the year, bringing the total to five,
from which the first completions will occur in early 1999.
Canadian housing profits were, as expected, lower in 1998 due to the timing of
completions of high-rise condominium units. Because of the stage of
development of these schemes, only 36 units closed in 1998 compared with 238
in 1997. Sales throughout 1998 were, nevertheless strong, and these will
convert into completions through the second half of 1999 and into 2000 as
buildings are finished. The high-rise condominium order book has more than
tripled in the year to over C$100 million.
Profits in the UK for Taywood Homes rose strongly, reflecting the strategy of
focusing on margin improvement rather than volume. As a result, operating
margins moved ahead from 8.1% to 10.0% with home completions slightly ahead at
1491. The well known problems caused by the current planning system have
affected the overall growth of the business in all parts of the country and
the government must address the issue.
The performance of the Central London residential business was good despite
the uncertain market for luxury London apartments for most of the year. During
the year the portfolio was diversified with a 50% joint venture partner being
introduced into the Montevetro project in Battersea and two smaller schemes
being taken on in Chelsea and Covent Garden.
Property 1998 1997
Profit before tax #22.9 million #21.4 million
In the UK, the growth of the development activity continued, with emphasis
placed on projects in locations where there is strong tenant demand and
evidence of limited supply. The benefits of this increase in development
activity are now materialising, and make up for the fact that there were no
investment property sales profits in 1998, which had provided #5m of profit in
1997. Twenty schemes are under various stages of development with increased
profits anticipated from this activity as we go forward.
Net rental income for the year was #32.8 million, the same as in 1997,
demonstrating good rental growth from the investment portfolio. The annual
revaluation of the UK portfolio resulted in a 6% enhancement to values, with a
6.6% increase being achieved in Canada.
In Canada the property market is strong, with rising rents and lower levels of
tenant inducement. The portfolio has grown substantially in 1998 with net
lettable space increasing 16% to 2.2 million sq. ft.
Construction 1998 1997
Profit before tax #6.1 million #5.3 million
The construction business continued its progress as profits moved ahead 15% to
#6.1 million. Turnover increased 6% to #614 million with the order book down
at the year end at #784 million compared with #867 million in 1997.
Although the construction company earned modest profits in 1998, it failed to
meet the Group's expectations. Profits included earlier than anticipated
claim settlements on completed contracts reduced by losses on difficult
projects.
Work to concentrate on the division's core strengths continued. As part of
this process several small non-core businesses were disposed of in 1998
including Jonathan James, the specialist plastering business to its existing
management, and the Group's wind energy interests.
Work under the Private Finance Initiative progressed well as the A19 design,
build, finance and operate road scheme was handed over ahead of programme. The
Group was also finally successful in closing Bromley its second PFI hospital
scheme, following South Buckinghamshire and worth #150 million. Other PFI
projects in health, transport and water sectors are being pursued actively.
Greenham Trading 1998 1997
Profit before tax #8.7 million #8.3 million
Turnover at Greenham Trading increased 4%, lower than in recent years due to
the recession in the manufacturing sector and lack of major public works and
large civil engineering projects. Profits rose in line with turnover
maintaining the record of seven years consecutive growth.
The strategy of expansion through organic growth and bolt-on acquisitions
continued with the expansion of branches in Dublin and Manchester, a new
branch in Aberdeen and the acquisition of City Service Supply Company Limited
based in Harrow. Overall branch and warehouse capacity has increased 5 % to
673,000 sq. ft.
DETAILED FINANCIAL INFORMATION FOLLOWS
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 December 1998
1998 1997
#m #m #m notes
------------------------------------ ----- ------- -------
CONTINUING OPERATIONS
Turnover: Group and share of joint
ventures 1,408.0 1,306.1
Less: share of joint ventures'
turnover (7.5) (10.4)
------- -------
Group turnover 1,400.5 1,295.7 1
Cost of sales (1,157.0) (1,086.7)
------- -------
Gross profit 243.5 209.0
Distribution costs (39.9) (37.4)
Administrative expenses (93.4) (86.5)
------- -------
Group operating profit 110.2 85.1
Share of operating profit in joint
ventures 0.7 0.4
Profit on disposal of properties and
investments - 5.2
------- -------
Profit on ordinary activities
before interest 110.9 90.7
Interest receivable 10.2 9.1
Interest payable:
Group (1997 - #17.7m) (20.5)
Joint ventures (1997 - #nil) (0.3)
----- (20.8) (17.7)
------- -------
Profit on ordinary activities before
taxation 100.3 82.1 1
Tax on profit on ordinary activities (26.6) (20.7) 2
------- -------
Profit on ordinary activities after
taxation 73.7 61.4
Minority equity interests (5.5) (5.2)
------- -------
Profit for the financial year 68.2 56.2
Dividends paid and proposed (20.5) (17.8) 3
------- -------
Profit retained 47.7 38.4
==================================== ======= =======
Basic earnings per share 17.1p 14.2p 4
======= =======
Diluted earnings per share 16.9p 14.0p 4
======= =======
==================================================================
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 31 December 1998
#m #m
----------------------------------------- ---- ----
Profit for the financial year 68.2 56.2
Unrealised surplus on revaluation of properties 21.1 36.4
---- ----
89.3 92.6
Currency translation differences on foreign
currency net investments (6.2) (4.9)
---- ----
Total recognised gains and losses relating to
the year 83.1 87.7
==== ====
==================================================================
CONSOLIDATED BALANCE SHEET
at 31 December 1998
1998 1997
#m #m #m notes
----------------------------------- ---- ----- -----
Fixed assets
Tangible assets
Investment properties 397.1 387.6
Other 103.9 103.6
Investments
Joint ventures
Share of gross assets
(1997 - #51.9m) 59.3
Share of gross liabilities
(1997 - #49.9m) (55.8)
---- 3.5 2.0
----- -----
504.5 493.2
----- -----
Current assets
Stocks 665.4 511.8
Debtors 187.6 201.9
Current asset investments 4.4 1.4
Cash at bank and in hand 81.2 152.1
----- -----
938.6 867.2
Creditors: amounts falling due within
one year (476.8) (490.8)
----- -----
Net current assets 461.8 376.4
----- -----
Total assets less current liabilities 966.3 869.6
Creditors: amounts falling due after
one year (202.0) (177.3)
Provisions for liabilities and charges (11.1) (10.2)
----- -----
753.2 682.1
Minority interests in equity of
subsidiary undertakings (69.5) (69.4)
----- -----
Shareholders' funds 683.7 612.7
===== =====
Represented by:
Capital and reserves - equity
Called up ordinary share capital 100.7 99.3
Capital redemption reserve 8.4 8.4
Share premium account 231.3 224.8
Revaluation reserve 94.4 72.2
Profit and loss account 248.9 208.0
----- -----
683.7 612.7
================================= ===== =====
Net debt #141.7m #36.8m 5
Net gearing 20.7% 6.0%
Shareholders' funds per share 169.7p 154.2p
==================================================================
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 1998
1998 1997
-------------- --------------
#m #m #m #m notes
---- ---- ---- ----
Operating activities
Cash flow from operating
activities (47.2) 50.7 5
Returns on investments and
servicing of finance
Interest received 10.4 8.9
Interest paid (19.7) (16.9)
Dividends from joint ventures 0.3 0.6
Dividends paid by subsidiary
undertakings to minority
shareholders (0.7) (0.8)
Net cash outflow from returns
on investments and
servicing of finance ---- (9.7) ---- (8.2)
Taxation
UK Corporation tax paid (6.7) (0.9)
Overseas tax paid (16.7) (10.3)
Tax paid ---- (23.4) ---- (11.2)
Capital expenditure and
financial investment
Purchase of fixed assets and
properties (34.8) (28.2)
Sale of fixed assets and
properties 17.8 39.8
Net cash (outflow)/inflow
from capital expenditure
and financial investment ---- (17.0) ---- 11.6
Equity dividends paid (18.9) (14.6)
---- ----
Net cash (outflow)/inflow
before use for liquid
resources and financing (116.2) 28.3
Management of liquid resources
Cash withdrawn from/(placed on)
short-term deposit 45.9 (41.2)
Purchase of current asset
investments (3.0) (1.0)
Net cash inflow/(outflow) from
management of liquid
resources ---- 42.9 ---- (42.2) 5
Financing
Issue of ordinary share capital
by
Taylor Woodrow plc 7.8 4.5
Debt due within one year:
new loans 5.7 9.5
repayment of loans (8.7) (14.2)
Debt due after one year:
new loans 51.0 39.4
repayment of loans (15.4) (18.5)
Net cash inflow from
financing ---- 40.4 ---- 20.7
---- ----
(Decrease)/increase in cash
in the year (32.9) 6.8 5
==== ====
NOTES ON THE ACCOUNTS
1 SEGMENTAL ANALYSIS Profit
Turnover before Net
by origin taxation Assets
---------------- ------------- ------------
1998 1997 1998 1997 1998 1997
as as as
re- re- re-
stated stated stated
#m #m #m #m #m #m
------- ------- ----- ---- ----- -----
By activity
Housing 540.4 470.6 56.3 40.8 372.7 337.2
Property development
and investment 87.7 93.6 22.9 21.4 324.2 292.6
Construction 613.5 579.3 6.1 5.3 14.6 (6.3)
Greenham Trading 139.8 134.5 8.7 8.3 38.4 36.8
Other 19.1 17.7 6.3 6.3 46.2 64.4
------- ------- ----- ---- ----- -----
1,400.5 1,295.7 100.3 82.1 796.1 724.7
======= ======= ===== ==== ===== =====
By market
Canada 68.1 83.2 10.2 14.8 90.4 92.3
United States of
America 250.8 206.0 27.7 13.5 171.1 154.9
Rest of the world 175.2 202.5 8.3 4.4 50.1 73.0
------- ------- ----- ---- ----- -----
Total overseas 494.1 491.7 46.2 32.7 311.6 320.2
United Kingdom 906.4 804.0 54.1 49.4 484.5 404.5
------- ------- ----- ---- ----- -----
1,400.5 1,295.7 100.3 82.1 796.1 724.7
======= ======= ===== ====
Taxation on profits creditors (including deferred taxation) (28.4) (29.7)
Dividend creditor (14.5) (12.9)
Minority interests (69.5) (69.4)
----- -----
Shareholders' funds 683.7 612.7
===== =====
The segmental analysis has been changed to include Australia within Rest
of the world. The effect is to increase Rest of the world turnover by
#13.5m (1997 - #14.1m), profit before taxation by #1.4m (1997 - #2.3m)
and net assets by #36.9m (1997 - #38.8m). The Australian segment is no
longer shown separately, reflecting the decline in its relative
significance. Comparative figures for 1997 have been restated
accordingly.
==========================================================================
2 TAX ON PROFIT ON ORDINARY ACTIVITIES 1998 1997
#m #m
---- ----
United Kingdom tax
Corporation tax 15.9 8.1
Relief for overseas tax (6.2) (0.4)
Overseas tax
Current 16.4 12.4
Deferred (0.2) 0.5
Joint ventures 0.7 0.1
---- ----
26.6 20.7
==== ====
The tax charges are below standard rates mainly due to the utilisation
of tax losses.
==========================================================================
3 ORDINARY DIVIDENDS ON EQUITY SHARES 1998 1997
#m #m
---- ----
Interim of 1.5p per share (1997 - 1.25p) 6.0 4.9
Proposed final of 3.6p per share (1997 - 3.25p) 14.5 12.9
---- ----
20.5 17.8
==== ====
The interim and final dividends for 1997 were paid as foreign income
dividends.
==========================================================================
4 EARNINGS PER SHARE #m #m
----- -----
Earnings per share has been calculated by dividing:
Profit for the financial year 68.2 56.2
===== =====
by the weighted average number of shares
for basic earnings per share 397.9m 395.5m
weighted average of dilutive options 4.3m 6.2m
weighted average of dilutive
awards under the Group Executive Bonus Plan 0.8m 0.3m
----- -----
for diluted earnings per share 403.0m 402.0m
===== =====
==========================================================================
5 CONSOLIDATED CASH FLOW STATEMENT
Reconciliation of operating profit
to net cash flow from operating activities 1998 1997
#m #m
----- -----
Operating profit 110.2 85.1
Depreciation 13.1 21.8
Increase in stocks (164.7) (69.5)
Decrease/(increase) in debtors 8.2 (0.9)
(Decrease)/increase in creditors (18.9) 20.9
Exchange adjustments 4.9 (6.7)
----- -----
Net cash (outflow)/inflow from operating activities (47.2) 50.7
===== =====
Reconciliation of net cash flow to movement in net debt #m #m
----- -----
(Decrease)/increase in cash in the year (32.9) 6.8
Cash inflow from increase in debt (32.6) (16.2)
Cash (inflow)/outflow from (decrease)/increase in
liquid resources (42.9) 42.2
----- -----
Change in net debt resulting from cash flows (108.4) 32.8
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 3.8 (11.9)
----- -----
Movement in net debt in the year (104.9) 20.6
Net debt at 1 January (36.8) (57.4)
----- -----
Net debt at 31 December (141.7) (36.8)
===== =====
Analysis of net debt
At At
1 January Cash Non-cash Exchange 31 December
1998 flow changes movement 1998
#m #m #m #m #m
--------- ---- -------- -------- -----------
Cash at bank
and in hand 152.1 (69.5) - (1.4) 81.2
less
Deposits due
after one day (85.1) 45.9 - (0.1) (39.3)
Overdrafts on
demand (8.0) (9.3) - 0.1 (17.2)
-----
(32.9)
Debt due after one
year
Debenture loans (166.6) (20.7) 9.6 3.9 (173.8)
Bank loans (1.8) (14.9) - 0.4 (16.3)
Debt due within
one year
Debenture loans (11.6) 5.5 (9.9) 0.6 (15.4)
Bank loans and
overdrafts (10.3) (11.8) - 0.3 (21.8)
add back
Overdrafts on
demand 8.0 9.3 - (0.1) 17.2
-----
(32.6)
Liquid resources
Deposits due
after one day 85.1 (45.9) - 0.1 39.3
Current asset
investments 1.4 3.0 - - 4.4
-----
(42.9)
---- ----- ---- ---- -----
Total (36.8) (108.4) (0.3) 3.8 (141.7)
==== ===== ==== ==== =====
=========================================================================
6 GENERAL
The preliminary accounts have been prepared on a basis which is
consistent with the accounting policies adopted for the year to 31
December 1997.
The preliminary accounts were approved by the board of directors on
16 March 1999.
These accounts do not constitute the company's statutory accounts for
the years ended 31 December 1998 or 1997 but are derived from those
accounts. Statutory accounts for 1997 have been delivered to the
Registrar of Companies and those for 1998 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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