1st Mar 2005 07:02
Taylor Woodrow PLC01 March 2005 TAYLOR WOODROW plc PRELIMINARY RESULTS STATEMENT (for the year ended 31 December 2004) Delivering shareholder value Financial Highlights • Profit before tax (adjusted)* up 27 per cent to £427.1 million (2003: £335.5 million) • Profit before tax (FRS3) up 30% to £390.4 million (2003: £300.5 million) • Operating profits up 40 per cent to £474.5 million (2003: £339.5 million) • Basic earnings per share up 28 per cent to 46.2 pence (2003: 36.0 pence) • Adjusted earnings per share** up 25 per cent to 48.2 pence (2003: 38.6 pence) • Dividends per share up 25 per cent to 11.1 pence (2003: 8.9 pence) • Return on Average Capital Employed* down 0.1% to 24.6% • Net gearing down from 47.1% to 34.1% Operational Highlights • World wide home completions up 21% to 13,092 • UK Housing operating profit* up 22%. Integration of Wilson Connolly completed • North America Housing operating profit* up 58% in dollar terms • Record group housing landbank at 63,701 plots. £590m spend on land, up 9% • Record group housing order book at £1.13 billion • £316m free cashflow generated*** • £150 million of shareholders' funds repurchased * Before exceptional items as detailed in note 2 and goodwill as detailed below(group goodwill charge of £20.4m)** Before exceptional items as detailed in note 5*** Net cash inflow before use of liquid resources and financing Norman Askew, Chairman of Taylor Woodrow, said today: "During 2004, Taylor Woodrow demonstrated the benefits of its diversified marketstrategy and delivered substantial growth in shareholder value. The group iswell placed for future growth." Iain Napier, Chief Executive of Taylor Woodrow, subsequently commented: "2004 was another successful and busy year for Taylor Woodrow. We completed the integration of Wilson Connolly on schedule and delivered thesynergies as planned. We achieved outstanding growth in our North Americanoperations. We generated significant cashflows from our operations and fromdisposal of assets, which allowed us to strengthen our balance sheet to fund thenext stage of our development. Turning to 2005, our combined housing business started the year with a recordorder book. It is still too early to predict the 2005 UK market, though inrecent weeks, sales rates and visitor levels have been ahead of the last sixmonths of 2004 and indeed total net reservations for the first seven weeks areslightly ahead of the same period last year. Against this background our focusin UK housing is on improving operational and capital efficiencies. In NorthAmerica, the housing market continues to be very strong and this, combined withour excellent forward sold position gives us confidence for another year of goodgrowth. Overall our balance of profit generation between the UK, North America and Spainprovides us with alternative growth channels and the ability to mitigateexposure to any one market. In 2004 we made significant progress in our business strategy to createsustainable shareholder value by growing, both organically and by acquisition. Ilook forward to reporting on our future progress." - ends --------------------------------------------------------------------------------- A presentation to analysts will be made at 10.00 hrs. This presentation will bebroadcast live on taylorwoodrow.com. For further information, please contactIan Morris 0121 600 8520 / 07816 518 767Taylor Woodrow Public Relations John Holland-Kaye 07816 517 200Taylor Woodrow Investor Relations Emma Burdett 020 7379 5151 / 07973 319 593William Clutterbuck 020 7379 5151 / 07785 292 617 Maitland Consultancy Operating and Financial Review Highlights Taylor Woodrow continued to deliver strong profit growth during 2004 withoperating profit increasing by 40 per cent to £474.5 million. Adjusted pre-taxprofit increased by 27 per cent to £427.1 million. Pre tax profit on an FRS3basis was 30 per cent higher at £390.4 million. Growth was achieved bothorganically in North America and through acquisition in the UK. The integration of Wilson Connolly was completed on schedule, with the UKhousing business operating under the Bryant name supported by standard systemsand processes. Cost savings of £13.5 million were achieved from the integration,and in line with our previous forecasts these will rise to £25 million in 2005. The group generated £316m of free cashflow from operations and disposal ofassets, which facilitated the redemption of £100 million of preference shares,the return of £50 million to shareholders via share buy backs and a reduction innet gearing to 34.1% from 47.1% last year. The group spent some £590 million on land (up 10% on 2003), and increased thenumber of plots owned and controlled with planning permission to 63,701 plots.We achieved a significant increase in pull through from strategic land, whichhas reduced our average plot cost in the UK. The housing order book increased toa record £1.13 billion driven by excellent growth in North America. Our land position and the strength of our balance sheet leave us well placed forfuture growth. Total Housing 2004 2003Average Capital Employed * £m 1,810.1 1,373.4Operating Profit ** £m 448.8 356.4Return on Average Capital Employed % 24.8 26.0Operating Margin (%) ** % 15.6 15.9Home completions 13,092 10,819 * pre average goodwill of £349.8 million (2003: £266.9 million)** pre goodwill amortisation of £20.4 million (2003: £15.0 million) andexceptional items of £12.5 million profit (2003: £20.0 million loss) The housing businesses located in the United Kingdom, North America, Spain andGibraltar all had a successful 2004. Worldwide housing completions rose 21 percent to 13,092 (2003: 10,819) with operating profits, pre goodwill amortisationand exceptional items, increasing 26 per cent to £448.8 million, (2003: £356.4million). UK Housing 2004 2003Average Capital Employed * £m 1,445.7 1,009.7Operating Profit ** £m 301.1 246.0Return on Average Capital Employed % 20.8 24.4Operating Margin ** % 15.6 16.6Home Completions 9,053 7,690 * pre average goodwill of £344.1 million (2003: £260.2 million)** pre goodwill amortisation of £20.0 million (2003: £14.5 million) andexceptional items of £11.6 million profit (2003: £20.0 million loss) The UK housing market was very strong in the first half of 2004, but slowed inthe second half as the effect of several interest rate rises started to impactbuyer confidence. UK housing reported 9,053 home completions (2003: 7,690) and 1,777 plotcompletions (2003: 720). The average sales price increased by 9% to £197,300(2003: £181,000). Land sales increased as we rationalised the land portfolio ofthe combined businesses, but overall land profits were broadly the same as lastyear. Social housing represented 9% of completions (2003: 8%) and apartments grew to36% (2003: 32%) as a result of the increasing impact of PPG3. 64% of completionswere on brownfield sites. Operating margin at 15.6% shows a 0.7% improvement over the proforma margin forthe combined business, with synergies and gross margin improvements partlyoffset by lower overhead recoveries. Return on average capital employed shows a0.3% improvement over the proforma ROACE. We took a prudent approach to the UK land market. We have raised our hurdlerates and increased our focus on securing planning on strategic land. Purchasesof land with planning totalled £328 million. Exercise of options and transfers from strategic land totalled £147 million (5,755 plots), a significant increase on previous years. As a result of this strategy, the cost of plots added to the landbank in the year was 13% less than the cost of plots completed and the average cost of plots in the UK landbank was reduced by 5%. At the year end the UK housing land bank consisted of 32,459 owned or controlled plots with outline planning permission, representing some 3.6 years' supply (based on 2004 home completions). In addition there is a strategic land portfolio of 20,300 gross acres, which could ive rise to a further 84,000 potential plots. At the end of the year the UK housing business had a forward order book of £407million, which compares with an exceptional level of £601 million at the end of2003. North America Housing 2004 2003Average Capital Employed * £m 325.9 332.9Operating Profit ** £m 127.6 90.1Return on Average Capital Employed % 39.2 27.1Operating Margin ** % 14.8 13.1Home Completions 3,635 2,786 * pre average goodwill of £5.7 million (2003: £6.7m)** pre goodwill amortisation of £0.4 million (2003: £0.5m) and exceptionalprofit of £0.9 million (2003: nil) Total home completions for the North American operations increased 30 per centto 3,635. Operating profit was up 42 per cent to £127.6 million before allowingfor currency translation differences. In US dollar terms, operating profitincreased by 58% to $233.5 million. This growth was driven by an increase in housing volumes in all of ourbusinesses while we continued to reposition our product mix toward the highopportunity segments of the middle market. Lot sales reduced to 2,323 (2003:2,940). In Phoenix, Arizona, the market continued to be buoyant. Home completionsincreased to 841 (2003: 689), with Average selling prices increasing 39% to$183,000 (2003: $132,000). This increase reflects the success of our move intothe middle market. In California, the market remained very strong as we continued our strategy ofextending into lower price points. Home completions increased by 40% to 697(2003: 497). Average selling prices were slightly lower at $776,000 (2003:$786,000). In Canada, home completions increased by 29% to 1,498. Average selling priceswere flat at C$302,000 (2003: C$302,000). The low rise market remained strongand we saw some recovery in the high rise market. Operations in Florida enjoyed strong sales, with home completions increasing to505 (2002: 384) with an average selling prices increasing by 10% to $544,000(2003: $494,000). Our increased emphasis on beachfront high rise projects waswell timed as we launched five projects, of which four are sold out and thefifth is substantially sold out. Three more new projects are scheduled to belaunched for sale in early 2005. In Texas, the Houston market remained highly competitive and our newhomebuilding operation in Austin has made a promising start. 2004 homecompletions were 94 (2003: 59) at an average selling price that was 3% lower at$440,000 (2003: $452,000). The total North American owned and controlled land bank contains 30,009 plots(2003: 25,758), which reflects a 5.0 year supply (based on homes and lots). Thisprovides us with sufficient inventory to meet our growth targets, while managingour capital efficiently. Total land spend in North America increased by over 40%in 2004 to £226 million, reflecting our previously stated capital allocationstrategy. Going into 2005, the total order book for North America was £649 million(US$1,246 million) - up 46% (57% in dollar terms) on the previous year. Spain and Gibraltar Housing 2004 2003Average Capital Employed £m 38.5 30.8Operating Profit £m 20.1 20.3Return on Average Capital Employed % 52.2 65.9Operating Margin % 26.3 30.8Home Completions 404 343 Housing operations in Spain and Gibraltar continue to perform well. TaylorWoodrow is principally active in Mallorca, Costa Blanca and the Costa Del Sol,and achieved an operating profit of £20.1 million (2003: £20.3 million) at amargin of 26.3 per cent. Home completions increased by 18% to 404. Return onaverage capital employed for these housing operations was 52.2% to per cent(2003: 65.9 per cent). Going into 2005 the order book for Spain and Gibraltar was £75 million - up from£65 million at the same time last year. The land bank at the end of the yearconsisted of 1,233 units (2003: 1,409). Property 2004 2003Average Capital Employed £m 209.9 255.4Operating Profit £m 11.9 8.2Return on Average Capital Employed % 5.7 3.2Operating Margin % 16.0 12.8 During the year we have disposed of all our investment property assets. We willhave disposed of our remaining commercial trading property assets by the end of2005. We will retain our commercial expertise for mixed use housing projects,which are an increasing part of the housing market. The K2 building, which is pre-sold for £117 million, is now in the process oftenant handover, which is progressing according to schedule. Construction 2004 2003Profit before tax £m 34.6 19.4 Profit before tax increased to £34.6 million, up from £19.4 million. Afterallowing for the exceptional pension credit, profit before tax was £22.3million, an increase of 15%. Key external areas for the business remain repeat work from blue chip customers,healthcare PFI and facilities management. Revenue from internal work increasedby 8% to £135 million (2003: £125 million). This is likely to reduce over thenext few years, reflecting a planned reduction in our exposure to the urban highrise market. Construction remains a core competence for the group to support the housingoperation in future regeneration projects and the resultant growth in socialhousing. The construction order book, which includes internal work, stood at £815 millionat the year end (2003: £785 million). Shareholders' Funds Total shareholders' funds at the end of 2004 increased from £1,575.9 million to£1,637.8 million. Net asset value per share increased by 14% to 292.2p. Retained profit for the year of £201.5 million and capital inflows of £181.3mallowed us to redeem £100m of preference shares and repurchase £50m of ordinaryshares now held in treasury. At the end of the year, £342.8 million of goodwill remained on the balancesheet. The amortisation charge for the year was £20.4 million in total. Shareholders' Returns Basic earnings per share increased by 28 per cent from 36.0 pence to 46.2 pence.Adjusted earnings per share increased by 25 per cent from 38.6 pence to 48.2pence. The proposed final dividend of 8.1 pence produces a total for the year of11.1 pence, an increase of 25 per cent over last year, and reflects the Board'sconfidence in Taylor Woodrow's continuing profit performance and cashgeneration. The dividend was covered 4.2 times by earnings. The share price at31 December 2004 was 272 pence, a 7 per cent discount to equity shareholders'funds per share. We remain committed to a progressive dividend policy throughthe business cycle. Cash Flow Cash flow from operating activities increased by 62 per cent to £400.4 million. Operating profit of £474.5 million was offset by increased stocks of £54million, primarily in North America, and a reduction in creditors of £79.0million, primarily consisting of UK land creditors. Against this, debtorsdecreased by £26.1 million. Fixed asset and investment property sales generated cash inflows of £189.9million, primarily resulting from the sale of the St Katharine Estate. Netinterest payments increased by £66.3 million, primarily due to the £41.1 millionexceptional redemption premium on the First Mortgage Debenture stock 2014following the sale of the St Katharine's estate. Increased levels of debtfollowing the Wilson Connolly acquisition account for the rest of the increase. Treasury Management and Tax Net debt stood at £557.7 million (2003: £742.9 million) equivalent to netgearing of 34.1 per cent (2003 as restated: 47.1 per cent). Net interest costfor the year was £107.4 million (2003 as restated: £46.4 million), including£41.1 million for the exceptional redemption of the First Mortgage Debenture.Interest cover (excluding the exceptional redemption charge) now stands at 7.5times. Average net debt for the year was £948 million. The underlying tax rate fellfrom 33.5% to 32.0%. We believe 32% is a sustainable level going forward. At the year end Taylor Woodrow had undrawn committed facilities totalling £800million. Outlook for 2005 In the UK, sales rates and visitor levels in recent weeks have been ahead of thelast six months of 2004 and indeed total net reservations for the first sevenweeks are slightly ahead of the same period last year. Whilst this is anencouraging start, it is too early to predict the 2005 market. Under thesecircumstances we will continue to focus on prudent land buying, cost control andefficient use of capital, while remaining flexible to exploit marketopportunities as they arise. On a medium term basis the UK housing market remains very attractive,underpinned by the fundamentals of shortage of supply, a low interest rateenvironment and good economic conditions. In North America, we look forward with confidence to another year of growth. Wehave an excellent order book of $1.2 billion secured against significantnon-refundable deposits and therefore our completions are more predictable. Themarkets we operate in are all very attractive because of their strong economies,housing growth rates and overall low risk profile. We will continue to allocateappropriate levels of capital to continue our proven record of growth. Overall our balance of profit generation between the UK, North America and Spainprovides us with alternative growth channels and the ability to mitigateexposure to any one market. Shareholder Information The 2004 final dividend will be paid on Friday 1 July 2005 to shareholders whosenames appear on the register of members at the close of business on Friday 3June 2005. The company offers a Dividend Re-Investment Plan which provides shareholderswith a facility to use their cash dividends to purchase Taylor Woodrow plcshares in the market. Details will be sent to ordinary shareholders with the2004 annual report and accounts, which will be posted on 29 March 2005. Copiesof the 2004 annual report and accounts will also be available from that date onthe Company's website taylorwoodrow.com and from the registered office at 2Princes Way, Solihull, West Midlands, B91 3ES. Group Profit and Loss Accountfor the year ending 31 December 2004 Before Goodwill goodwill amortisation & amortisation & exceptional 2003 exceptional items(notes As restated items 1 - 2) 2004 (note 6) Notes £m £m £m £m ------ -------- -------- -------- --------Continuing operationsTurnover: Group and share of joint ventures 3,361.2 - 3,361.2 2,672.9 Less: share of joint ventures' turnover (2.6) - (2.6) (3.5)--------------------------- -------- -------- -------- --------Group turnover 1 3,358.6 - 3,358.6 2,669.4Cost of sales (2,699.3) 16.8 (2,682.5) (2,152.7)--------------------------- -------- -------- -------- --------Gross profit 659.3 16.8 676.1 516.7Administrative expenses(2003: includes exceptionalexpenses of £20.0m - note 2) (189.2) (12.4) (201.6) (177.2)--------------------------- -------- -------- -------- --------Group operating profit -continuing operations 1 470.1 4.4 474.5 339.5Share of operating profit in joint ventures 0.2 - 0.2 1.1--------------------------- -------- -------- -------- -------- 470.3 4.4 474.7 340.6Profit on disposal ofproperties and investments 2 23.1 - 23.1 6.3--------------------------- -------- -------- -------- --------Profit on ordinaryactivities before interest 493.4 4.4 497.8 346.9Interest receivable 4.2 - 4.2 4.0 -------- -------- -------- --------Interest payable: Group (66.3) (41.1) (107.4) (44.2) Joint ventures - - - (1.0) -------- -------- -------- -------- (66.3) (41.1) (107.4) (45.2)Other finance charges (4.2) - (4.2) (5.2)--------------------------- -------- -------- -------- --------Profit on ordinaryactivities before taxation 2 427.1 (36.7) 390.4 300.5Tax on profit on ordinaryactivities 3 (129.9) 4.9 (125.0) (100.6)--------------------------- -------- -------- -------- --------Profit on ordinaryactivities after taxation 297.2 (31.8) 265.4 199.9Minority interests (includingnon-equity interests) (0.6) - (0.6) (0.4)--------------------------- -------- -------- -------- --------Profit for the financial year 296.6 (31.8) 264.8 199.5Dividends paid and proposed on equity and non-equity shares 4 (64.4) (50.4)Difference between non-equity finance costs and the related dividends 1.1 (1.1)--------------------------- -------- --------Profit retained 201.5 148.0--------------------------- -------- --------Basic earnings per share 5 46.2p 36.0p--------------------------- -------- --------Diluted earnings per share 5 45.9p 35.8p--------------------------- - -------- --------Adjusted basic earnings per share 5 48.2p 38.6p--------------------------- -------- -------- Group Statement of Total Recognised Gains and Lossesfor the year ended 31 December 2004 2003 As restated 2004 (note 6) £m £m -------- --------Profit for the financial year 264.8 199.5Unrealised deficit on revaluation of properties - (19.3)Revaluation reversed on properties transferred to stocks - (1.1)Actuarial gains net of deferred taxation of £5.0m (2003: £0.6m) 10.5 0.7--------------------------- -------- -------- 275.3 179.8Currency translation differences on foreign currency net investments (9.0) (2.1)--------------------------- -------- --------Total recognised gains and losses relating to the year 266.3 177.7--------------------------- -------- --------Prior year adjustment (note 6) (117.6)--------------------------- -------- Total recognised gains and losses since last annualreport and financial statements 148.7--------------------------- -------- Reconciliation of Movements in Group Shareholders' Fundsfor the year ended 31 December 2004 2003 As restated 2004 (note 6) £m £m -------- -------- Profit for the financial year 264.8 199.5Dividends paid and proposed on equity and non-equity shares (64.4) (50.4)------------------------------- -------- -------- 200.4 149.1Other recognised gains and losses relating to the year 1.5 (21.8)New share capital subscribed 3.7 173.1Redemption of preference shares (100.0) -Proceeds from sale of own shares 3.2 1.8Purchase of own shares (46.9) (3.7)Own shares acquired on acquisition of subsidiary - (0.2)------------------------------- -------- --------Net increase in shareholders' funds 61.9 298.3------------------------------- -------- --------Opening shareholders' funds as previously stated 1,693.5 1,393.3Prior year adjustment (note 6) (117.6) (115.7)------------------------------- -------- --------Opening shareholders' funds as restated 1,575.9 1,277.6------------------------------- -------- --------Closing shareholders' funds 1,637.8 1,575.9------------------------------- -------- -------- Balance Sheetat 31 December 2004 Group ----- 2003 As restated 2004 (note 6) £m £m £m -------- -------- --------Fixed assetsIntangible assets Goodwill 342.8 356.7Tangible assets Investment properties - 160.2 Other 24.4 30.3Investments Joint ventures Share of gross assets (2003: £0.9m) 1.4 Share of gross liabilities (2003: £0.9m) (1.4) -------- - -Other 3.4 3.3 -------- -------- 370.6 550.5 -------- --------Current assetsStocks 2,618.9 2,596.7Debtors 282.1 296.0Cash at bank and in hand 118.4 146.5---------------------- -------- -------- 3,019.4 3,039.2Creditors: amounts falling due within one year (901.5) (1,001.0)---------------------- -------- --------Net current assets 2,117.9 2,038.2---------------------- -------- --------Total assets less current liabilities 2,488.5 2,588.7Creditors: amounts falling due after more than (710.7) (845.6)one yearProvisions for liabilities and charges (37.4) (36.0)---------------------- -------- --------Net assets before post-retirement liability 1,740.4 1,707.1Net post-retirement liability (101.6) (130.1)---------------------- -------- --------Net assets 1,638.8 1,577.0---------------------- -------- --------Represented by:Capital and reservesNon-equity share capital - 10.0Equity share capital 146.7 146.1---------------------- -------- --------Called up share capital 146.7 156.1Share premium account 748.1 745.7Revaluation reserve - 38.4Capital redemption reserve 31.5 21.5Other reserve - 1.1Profit and loss account 769.9 627.8Less: Own shares (58.4) (14.7)---------------------- -------- --------Shareholders' funds 1,637.8 1,575.9Minority interests - equity and non-equity interests 1.0 1.1---------------------- -------- -------- 1,638.8 1,577.0 -------- --------Shareholders' funds are analysed as:Equity interests 1,637.8 1,474.8Non-equity interests - 101.1---------------------- -------- -------- 1,637.8 1,575.9 -------- -------- Group Cash Flow Statementfor the year ended 31 December 2004 2004 2003 Notes £m £m £m £m -------- -------- -------- -------- --------Operating activitiesCash inflow from operating 7 400.4 247.4activities Returns on investments andservicing of financeInterest received 4.2 4.0Interest paid (113.9) (47.4)Preference dividends paid (2.4) -Dividends paid by subsidiaryundertakings to minority shareholders (0.7) (0.1)------------------------- -------- -------- Net cash outflow from returns oninvestments and servicing of finance (112.8) (43.5) TaxationUK Corporation tax paid (54.3) (48.5)Overseas tax paid (45.0) (33.9)------------------------- -------- -------- --------Tax paid (99.3) (82.4) Capital expenditure and financialinvestmentPurchase of fixed assets and properties (8.6) (12.8)Sale of fixed assets and properties 189.9 3.9------------------------- -------- -------- Net cash inflow/(outflow) fromcapital expenditure and financial investment 181.3 (8.9) Acquisitions and disposalsPurchase of subsidiary undertaking - (425.5)Net overdrafts acquired with subsidiary - (9.7)------------------------- -------- -------- Net cash outflow from acquisitionsand disposals - (435.2) Equity dividends paid (53.9) (41.4)------------------------- -------- --------Net cash inflow/(outflow) beforeuse of liquid resources and financing 315.7 (364.0) Management of liquid resourcesCash withdrawn from short-term deposit 38.7 39.8------------------------- -------- -------- Net cash inflow from management ofliquid resources 7 38.7 39.8 FinancingIssue of ordinary share capital byTaylor Woodrow plc 3.7 5.8Issue of preference share capitalby Taylor Woodrow plc - 100.0Proceeds from sale of own shares 3.2 1.8Purchase of own shares (50.3) (4.1)Redemption of preference shares (100.0) -Debt due within one year: new loans 210.6 411.7 repayment of loans (319.8) (482.2)Debt due after one year: new loans 463.9 397.4 repayment of loans (568.2) (116.5)------------------------- -------- -------- Net cash (outflow)/inflow from financing (356.9) 313.9------------------------- -------- --------Decrease in cash in the year 7 (2.5) (10.3)------------------------- -------- -------- -------- 1. Segmental analysis Group Group turnover operating 2003 Capital 2003 by origin profit As restated employed As restated 2004 2003 2004 (note 6) 2004 (note 6) £m £m £m £m £m £m -------- -------- -------- -------- -------- --------By activityHousing 2,874.0 2,236.8 448.8 356.4 1,816.2 1,804.1Propertydevelopmentand investment 74.2 63.9 11.9 8.2 142.1 277.6Construction 410.4 368.7 9.4 9.9 (104.6) (118.5)-------------------- -------- -------- -------- -------- -------- -------- 3,358.6 2,669.4 470.1 374.5 1,853.7 1,963.2Goodwillamortisation/goodwill - housing (20.4) (15.0) 342.8 356.7Exceptionalitems (note 2) 24.8 (20.0)-------------------- -------- -------- 474.5 339.5 2,196.5 2,319.9 -------- -------- -------- --------By marketNorth America 863.8 691.4 127.6 91.4 317.0 340.3Rest of the World 123.7 113.5 25.1 33.5 51.1 34.1-------------------- -------- -------- -------- -------- -------- --------Total overseas 987.5 804.9 152.7 124.9 368.1 374.4United Kingdom 2,371.1 1,864.5 317.4 249.6 1,485.6 1,588.8-------------------- -------- -------- -------- -------- -------- -------- 3,358.6 2,669.4 470.1 374.5 1,853.7 1,963.2Goodwillamortisation/goodwill (20.4) (15.0) 342.8 356.7Exceptional items (note 2) 24.8 (20.0)-------------------- -------- -------- 474.5 339.5 2,196.5 2,319.9 -------- -------- -------- --------Net debt (557.7) (742.9)Minority interests (1.0) (1.1)-------------------- -------- --------Shareholders'funds 1,637.8 1,575.9-------------------- -------- --------Turnover by origin represents sales to third parties and is not materiallydifferent from turnover to third parties by destination. Operating profit after including goodwill amortisation and exceptional items isanalysed as Housing £440.9m, Property £11.9m and Construction £21.7m andgeographically as North America £128.1m, Rest of the World £25.1m and UnitedKingdom £321.3m (2003 as restated: Housing £321.4m, Property £8.2m andConstruction £9.9m and, geographically, North America £90.9m, Rest of the World£33.5m and United Kingdom £215.1m). Operating profit for construction excludes its share of the construction jointventures and interest. Profit before taxation for construction is £34.6m (2003as restated: £19.4m) including these items. Goodwill of £342.8m (2003 as restated: £356.7m) is in respect of United Kingdom£337.5m (2003 as restated: £350.6m) and North America £5.3m (2003: £6.1m). The increase in operating profit of £1.7m for 2003 arising from restatementbecause of the adoption of FRS 17 is analysed as Housing increase £0.2m andConstruction increase £1.5m; North America decrease £1.1m and United Kingdomincrease £2.8m. The decrease in capital employed of £117.6m at 31 December 2003arising from this restatement is analysed as Housing £58.6m, Property £1.4m andConstruction £66.7m totalling £126.7m before an increase in Housing goodwill of£9.1m and, geographically, as North America £0.6m and United Kingdom £126.1mbefore an increase in goodwill of £9.1m. 2. Profit on ordinary activities before taxation 2004 2003 £m £m -------- --------Profit before taxation includes:Exceptional cost of sales credit 16.8 -Exceptional administrative expenses credit 8.0 --------------------------------- -------- --------Total exceptional credit - curtailment of pensions liability(see below) 24.8 --------------------------------- -------- --------Profit on disposal of investment and other fixed asset 15.0 1.1propertiesProfit on disposal of investments 8.1 5.2-------------------------------- -------- --------Profit on disposal of properties and investments 23.1 6.3-------------------------------- -------- -------- Profit before taxation is after charging:Exceptional administrative expenses - integration of WilsonConnolly operations with Taylor Woodrow United Kingdom Housing - 20.0Exceptional interest payable - loss on repurchase of 9.5%first mortgage debenture stock 2014 41.1 ---------------------------------- -------- -------- The curtailment of pensions liability is principally in respect of the Group'sUnited Kingdom defined benefit pension arrangements and arises because definedbenefit pensions will no longer be linked to final salaries but instead to 2004salaries increased by the lowest of annual salary increase, increase in theRetail Price Index or 5%; the Group will contribute to its defined contributionpension scheme in respect of United Kingdom salaries not covered by definedbenefit pension arrangements. 3. Tax on profit on ordinary activities 2003 As restated 2004 (note 6) £m £m -------- --------United Kingdom taxCorporation tax: Current year 67.2 57.8Prior year 1.8 (3.3)Relief for overseas tax (1.3) (4.2)Deferred tax: Current year (0.5) 6.7Prior year 0.5 (1.4)Joint ventures 0.1 -Overseas taxCurrent: Current year 60.8 37.7Prior year (0.4) (1.7)Deferred: Current year (4.7) 5.5Prior year 1.5 3.5------------------------------- -------- -------- 125.0 100.6 -------- -------- The differences between the total current tax shown aboveand the amount calculated by applying the standard rateof UK corporation tax to the profit before tax are asfollows:Profit on ordinary activities before tax 390.4 300.5Share of joint ventures' profit before tax (0.2) (0.1)------------------------------- -------- --------Group profit on ordinary activities before tax 390.2 300.4------------------------------- -------- --------Tax on Group profit on ordinary activities at standard UKcorporation tax rate of 30% (2003: 30%) 117.1 90.1Effects of:Under/(over)provision in respect of prior years 1.4 (5.0)Amortisation of goodwill and fair value adjustments 8.2 7.9Other permanent disallowable expenditure 1.6 3.1Non taxable income (3.3) (7.2)Overseas income receivable 1.8 4.2Double tax relief for overseas tax (1.3) (4.2)Higher rates of tax on overseas earnings 6.1 7.8Capital allowances for the period less than/(in excess of) depreciation 0.1 (0.4) Short-term timing differences 2.6 (10.4)Pension provision (7.2) 0.8Tax trading losses carried forward (0.1) (1.2)Other 1.1 0.8------------------------------- -------- --------Group current tax charge for year 128.1 86.3------------------------------- -------- --------The tax effect of the exceptional credit and charges was 30% (note 5). The taxeffect of the profit on disposal of investment and other fixed asset propertiesand investments was £nil (2003: £nil).Deferred tax recognised in the Group statement of total recognised gains andlosses relates to actuarial gains on post-retirement liability. 4. Dividends paid and proposed on equity and non-equity shares 2004 2003 £m £m -------- --------Dividends on equity sharesInterim paid of 3.0p per ordinary share (2003: 2.4p) 16.5 13.0Final proposed of 8.1p per ordinary share (2003: 6.5p) 45.5 37.4------------------------------- -------- -------- 62.0 50.4Dividends on non-equity shares5.09875% preference dividend paid (2003: nil) 2.4 -------------------------------- -------- -------- 64.4 50.4 -------- -------- 5. Earnings per share The calculations of earnings per share are based on the following profits and numbers of shares: Basic Adjusted------------------------------- -------- -------- 2003 2003 As restated As restated 2004 (note 6) 2004 (note 6) £m £m £m £m -------- -------- -------- --------Profit for the financial year 264.8 199.5 264.8 199.5Less: Finance costs of (1.3) (1.1) (1.3) (1.1)non-equity sharesAdd/(less): Exceptional items(note 2) Curtailment of pensions liability (24.8) - Loss on repurchase of debt 41.1 - Integration costs - 20.0Less: Tax effect of exceptional items (4.9) (6.0)------------------------------- -------- -------- 263.5 198.4 274.9 212.4 -------- -------- -------- -------- 2004 2003 m m -------- --------Weighted average number of shares:For basic and adjusted earningsper share 570.4 550.9Weighted average of dilutiveoptions 3.1 3.0Weighted average of dilutiveawards under bonus plans 1.0 0.5 -------- --------For diluted earnings per share 574.5 554.4------------------------------- -------- -------- Adjusted earnings per share have been shown to disclose the impact ofexceptional items on underlying earnings. 6. Prior year adjustment The Group has adopted FRS 17 "Retirement benefits" in full for the year to 31December 2004 and comparative figures for 2003 have been restated accordingly.Net post-retirement liability comprises net pensions liability of £98.9m (2003:£127.3m) and net post-retirement health care liability of £2.7m (2003: £2.8m).For the year to 31 December 2003, the Group previously accounted for retirementbenefits under SSAP 24 and gave disclosures under the FRS 17 transitionalarrangements. The adoption of FRS 17 has led to an increase of £1.7m in operating profit forthe year to 31 December 2003. There was also an increase in finance charges of£5.2m for the year to 31 December 2003. The tax impact of these changes was adecrease of £0.9m for the year to 31 December 2003. The overall effect ofadopting FRS 17 was a decrease in retained profit for the financial year of£2.6m for the year to 31 December 2003. Apart from the exceptional itemregarding curtailment of pensions liability (note 2), the effect of the prioryear adjustment on the current year profit is not otherwise material. Theadoption of this standard has resulted in a reduction of £117.6m in net assetsat 31 December 2003. On the basis that Wilson Connolly Holdings Plc was acquiredon 2 October 2003, less than three months prior to 31 December 2003, theadjustment at 31 December 2003 includes an increase in goodwill of £9.1m as thefair value of the pensions liability (net of deferred tax) acquired has now beenincluded on a FRS 17 basis rather than, as previously, on a SSAP 24 basis. Inthe cash flow statement the increase in operating profit noted above is matchedby a corresponding decrease in creditors with no change in the net cash flowfrom operating activities. Post-retirement health care insurance premiumsaccruals for retired long-service employees previously shown as accruals of£4.0m (including £0.2m due under one year) at 31 December 2003 are now shown aspart of the net post-retirement liability net of £1.2m deferred tax asset,previously shown within debtors. 7. Group cash flow statement 2003 2004 As restated £m (note 6) -------- --------Reconciliation of operating profit to net cash flow from operating activitiesOperating profit 474.5 339.5Depreciation and amortisation 27.1 21.8Increase in stocks (54.0) (201.3)Decrease/(increase) in debtors 26.1 (56.0)(Decrease)/increase in creditors (79.0) 142.3Exchange adjustments 5.7 1.1------------------------------------------ -------- --------Net cash inflow from operating activities 400.4 247.4------------------------------------------ -------- --------Reconciliation of net cash flow to movement in net debtDecrease in cash in year (2.5) (10.3)Cash outflow/(inflow) from decrease/(increase) in debt 213.5 (210.4)Cash inflow from decrease in liquid resources (38.7) (39.8)------------------------------------------ -------- --------Change in net debt resulting from cash flows 172.3 (260.5)Amortisation of debt 0.6 (0.7)Loan notes issued as part of consideration for acquisition - (6.6)Debt acquired with subsidiary - (219.6)Exchange movement 12.3 4.9------------------------------------------ -------- --------Movement in net debt in the year 185.2 (482.5)Net debt at 1 January (742.9) (260.4)------------------------------------------ -------- --------Net debt at 31 December (557.7) (742.9)------------------------------------------ -------- -------- Analysis of net debt At At 1 January Cash Non-cash Exchange 31 December 2004 flow changes movemen 2004 £m £m £m £m £m -------- -------- -------- -------- --------Cash at bank and in hand 146.5 (26.1) - (2.0) 118.4Less: Deposits due after one day (73.6) 38.7 - (0.5) (35.4) Overdrafts on demand (25.1) (15.1) - (0.1) (40.3) -------- (2.5)Debt due after one year Debenture loans (393.2) (237.7) 1.6 14.0 (615.3) Bank loans (346.3) 342.0 0.6 0.1 (3.6)Debt due within one year Debenture loans (34.1) 19.8 (2.3) 0.3 (16.3)Bank loans and overdrafts (115.8) 74.3 0.7 (0.1) (40.9) Add back overdrafts on demand 25.1 15.1 - 0.1 40.3 -------- 213.5Liquid resources Deposits due after one day 73.6 (38.7) - 0.5 35.4-------------------------- -------- -------- -------- -------- --------Total (742.9) 172.3 0.6 12.3 (557.7)-------------------------- -------- -------- -------- -------- -------- 8. General Other than in respect of FRS 17 referred to in note 6 above, the preliminaryaccounts have been prepared on a basis which is consistent with the accountingpolicies adopted for the year to 31 December 2003. The preliminary accounts were approved by the Board of Directors on 1 March2005. These accounts do not constitute the company's statutory accounts for the yearsended 31 December 2004 or 2003 but are derived from those accounts. Statutoryaccounts for 2003 have been delivered to the Registrar of Companies and thosefor 2004 will be delivered following the company's annual general meeting. Theauditors have reported on these accounts; their reports were unqualified and didnot 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 ExchangeRelated Shares:
Taylor Wimpey