RNS Number:4803P
Taylor Wimpey PLC
06 March 2008
6 March 2008
Taylor Wimpey plc
Preliminary Results for the year ended 31 December 2007
14% growth in pro forma* pre-exceptional profits from UK housing to £608.5m
North America business well positioned for difficult market conditions
Operational Highlights
• Successful and rapid integration to create the new Taylor Wimpey Group
• Strong growth in pro forma* UK operating margins to 15.2% from 12.8%,
ahead of target
• Actions in place to achieve full synergy targets with further progress
expected
• North American unsold inventory reduced by 29% in second half of 2007
Pro Forma* Reporting Highlights
• Total Group completions 27,642 (2006: 31,128)
• Group revenue £5,887.5m (2006: £6,719.5m)
• Group pre-exceptional profit before tax £535.6m (2006: £776.5m)
* Pro forma numbers represent unaudited aggregated full year financial
information for the underlying Taylor Woodrow plc and George Wimpey Plc
businesses prior to the impact of accounting policy changes and fair value
adjustments.
Statutory Reporting Summary
• After the impact of exceptional items, particularly land and work in
progress write downs in the US, loss before tax was £19.5m (2006: profit
before tax of £405.6m)
• Pre-exceptional EPS of 30.8p (2006: 50.5p) and post-exceptional loss per
share of 24.2p (2006: earnings per share of 50.5p)
• Year end gearing 38.2% (2006: 18.6%) following £250m share buyback
• Full year dividend per share increased by 6.8% to 15.75p
• Equity shareholders' funds per share 352.3p (2006: 364.7p)
Commenting on the results, Norman Askew, Chairman, said:
"The 2007 merger of Taylor Woodrow plc and George Wimpey Plc has already
realised significant benefits. It has changed the face of, and the opportunities
for, the business. The benefits of the merger are as valid today as they were in
July. This is especially true in the difficult market conditions that we
currently face.
"The rapid progress we have made in delivering an integrated Taylor Wimpey and
the confidence we have in the business is underlined by the proposed 6.8%
increase in the total dividend for the year."
Pete Redfern, Group Chief Executive, said:
"We have delivered a strong margin improvement in the UK Housing business during
2007, substantially exceeding our target of 14%. We continue to anticipate a
more difficult trading environment in the UK during 2008. However, we have
actively positioned the business for more challenging conditions and are well
placed for the future with a strengthened land bank, excellent momentum and a
robust financial position.
"In North America, following the merger, we are better positioned to navigate
the ongoing challenges. In the short term, our strategy remains to focus on
realising cash from existing sites, reducing the cost base, and maintaining a
steady sales pace. Whilst it remains too early to make significant land
purchases, we are well placed to take advantage of any high quality land
acquisition opportunities that arise as a result of the prolonged market
weakness."
-ends-
A presentation to analysts will be made at 09.00 hrs on 6 March 2008. This
presentation will be broadcast live on taylorwimpey.com.
For further information please contact:
Pete Redfern, Group Chief Executive James Murgatroyd
Peter Johnson, Group Finance Director Faeth Birch
Jonathan Drake, Investor Relations
Taylor Wimpey plc Finsbury
Tel: +44 (0) 7816 517 039 on 6 March Tel: +44 (0) 20 7251 3801
Tel: +44 (0) 20 7355 8109 thereafter
Group Strategy Summary
Taylor Wimpey's primary financial objective is to deliver market leading returns
from both the UK and from our selected markets in North America.
Following the successful completion of the largest ever merger in the UK
housebuilding industry, we are making excellent progress in the delivery of the
anticipated business benefits:
• Operating margin growth in the UK
• Economies of scale in the UK
• A stronger business in North America
• Material annual synergies
Despite currently challenging market conditions, we believe that in the medium
term we can produce excellent returns from our core markets.
Our focus is to continue to deliver synergies and cost savings, whilst
positioning the business cautiously for tougher trading conditions. This will
involve measures to improve both cost efficiency to maintain margins and working
capital efficiency to reduce risk and improve returns.
Basis of Reporting
The results set out in the commentary below for both 2007 and 2006 are based on
pro forma financial information and are before exceptional items unless
otherwise stated.
Pro forma numbers represent aggregated full year financial information for the
underlying Taylor Woodrow plc and George Wimpey Plc businesses prepared on the
basis set out in the Additional Pro Forma Unaudited Financial Information at the
end of this announcement. The financial statements included within this
announcement and the associated notes are prepared on the statutory accounting
basis, which includes the results of the legacy George Wimpey business from 3
July 2007.
UK Housing
Strategy and integration
We have already made excellent progress on improving our UK Housing margin. We
have achieved margin growth of 2.4 percentage points to 15.2%, exceeding the 14
per cent operating margin target set for the combined UK business for 2007 at
our Interim Results in July. The key drivers of this margin improvement are
changes in land strategy, a focus on reducing costs and the impact of an
improved sales strategy.
The business has a strong land base, with a good mix of both short term and long
term land. Over the last six months, we have reviewed the combined land bank in
detail, and sold a number of sites that did not meet our ongoing requirements.
These sales include sites where the two businesses had duplicate holdings, or
where the nature of the site did not meet our ongoing strategy.
We have also focused on our outlet opening programme, key to driving sales
volumes without damaging pricing. We are extremely pleased that we have achieved
our stretch target of 500 active outlets at the year end, including over 100 new
outlets which were opened in the fourth quarter of 2007.
Synergy savings as a result of the merger will result in lower overhead costs
per home sold, and we also have significant opportunities to reduce build costs
over time. Our work comparing standard housetypes from the two historic product
ranges suggests that savings of as much as £8,000 per home could be achievable.
The first of these savings will start to come through in 2008.
Prior to the merger, George Wimpey had announced a target of £25 million of
build cost savings to be achieved in 2007. This target, which is in addition to
the synergy savings outlined above, has been exceeded during the year.
We have successfully implemented a revised sales strategy to complement our
focus on margin improvement rather than driving volume. As a result, we have
been able to manage sales incentives tightly during the more subdued market
conditions of the second half of 2007.
We continue to make excellent progress on our internal integration targets. The
UK management team and their direct reports were in place on the date of
completion of the merger and the majority of head office staff are now based at
our office in High Wycombe.
The four regional offices identified for closure at the time of the merger have
now been closed, with the responsibility for all of their sites transferred to
neighbouring regions. Following the merger, we are now operating through 34
regions across the UK, with a further 5 satellite regions providing additional
geographic coverage.
Wherever possible we sought to redeploy staff following the merger. However, a
total of 593 roles will be removed from the business due to duplication. 323
roles were removed by the end of 2007.
We have been able to accelerate our progress on achieving synergies in both
build and overhead costs. Against an overall target exit rate of £70 million for
the UK by the end of 2009, we have already identified specific savings in excess
of this, and expect around £50 million of synergies to flow through in 2008.
Financial review
2007 2006
--------------------------------------------------------------------------------
Completions 20,690 21,910
--------------------------------------------------------------------------------
Average Selling Price £188k £186k
--------------------------------------------------------------------------------
Revenue £3,998.8m £4,150.4m
--------------------------------------------------------------------------------
Profit before exceptional items, interest and tax £608.5m £533.0m
--------------------------------------------------------------------------------
Operating margin 15.2% 12.8%
--------------------------------------------------------------------------------
Average outlets 471 461
--------------------------------------------------------------------------------
Order book as a percentage of revenue 26% 31%
--------------------------------------------------------------------------------
Owned and controlled plots with planning
or resolution to grant 86,155 84,959
--------------------------------------------------------------------------------
UK housing revenue stood at £3,998.8 million (2006: £4,150.4 million), primarily
driven by the decrease in completions.
Profit before exceptional items, interest and tax was £608.5 million, an
increase of 14.2% against the previous year (2006: £533.0 million), reflecting
the significant improvement in the operating margin.
The operating margin for 2007 was 15.2% (2006: 12.8%).
Sales, completions and pricing
Whilst sales and cancellation rates were steady year on year for the first half
of 2007, second half sales levels were around 15% lower than the equivalent
period of 2006. Cancellation rates in the second half of 2007 were running above
30%, compared to a long run average of around 20%. This reflected the more
subdued market conditions being experienced across the UK, particularly in the
fourth quarter of 2007. We completed 20,690 homes in 2007 (2006: 21,910).
The average selling price of our homes in 2007 was £188,000 (2006: £186,000).
The average selling price of a private home was £203,000 (2006: £197,000),
whilst the average selling price of an affordable home was £106,000 (2006:
£98,000).
The estimated underlying cost inflation of labour and materials has been running
at around 3% per annum during 2007. The initiatives underway as a result of the
merger are expected to more than offset inflationary increases.
Our year end order book stood at £1,064 million (2006: £1,316 million).
As at the end of February 2008, our order book had increased to £1,335 million
(February 2007: £1,668 million).
Product range and branding
Following the merger, we are operating with two core brands in the UK, Bryant
Homes and George Wimpey. We have identified a number of ways to differentiate
our brands to offer customers more choice on our sites, whilst retaining a
shared set of 'core values'. Some of these differentiating factors, such as the
range of optional extras that can be purchased, are already being rolled out.
Other factors, such as changes to the design of the housetype portfolio, will
take time to come into effect.
In addition, we are continuing to develop the G2 brand, with a product and price
range specifically targeted at first time buyers. We built our second G2
development during 2007 and 70 per cent of the homes were sold within one day.
We offer a wide range of products from apartments to five-bedroom houses, with
prices ranging from under £100,000 to over £500,000. During 2007, the majority
of our homes were priced within a range from £100,000 to £200,000.
Quality and customers
We remain committed to delivering high quality homes for all of our customers.
Our key performance indicator for customer satisfaction during 2007 was the
percentage of customers who would recommend us. Both Bryant Homes and George
Wimpey scored 87%, although different methodologies had been used by the legacy
businesses. Going forward, we will be using a new measurement system
administered by the National House-Building Council.
We have once again been very successful in the NHBC Pride in the Job Awards,
looking at build quality, with our UK site managers winning 65 Quality Awards,
20 Seals of Excellence and 4 Regional Awards.
Landbank
Combining Taylor Woodrow's strong strategic landbank and George Wimpey's short
term land has delivered a well balanced portfolio that puts Taylor Wimpey in an
excellent position for future home completions. At the year end all plots
required for forecast 2008 completions had detailed planning consents in place
and 90 per cent of forecast completions were on sites which were already
actively selling.
We have undertaken a number of land sales in the second half of 2007, following
our review of the combined landbank. For the year as a whole, land sales have
generated £163 million of revenue (2006: £227 million) and contributed an
operating profit of £38.7 million (2006: £42.8 million).
As part of the review of the landbank, we have also reviewed in detail our
disclosure, and as a result, have provided more information on the structure of
the landbank. This includes both the actual stage of planning and a greater
breakdown of the way in which the land is held.
Plots 2007 2006
-----------------------------------------------------------------------------
Owned Controlled Pipeline Total Total
-----------------------------------------------------------------------------
Detailed planning 42,459 2,435 267 45,161 47,925
-----------------------------------------------------------------------------
Outline planning 26,148 5,123 881 32,152 27,130
-----------------------------------------------------------------------------
Resolution to grant 4,109 5,881 3,756 13,746 15,996
-----------------------------------------------------------------------------
Sub total 72,716 13,439 4,904 91,059 91,051
-----------------------------------------------------------------------------
Allocated strategic 3,717 8,477 301 12,495 11,734
-----------------------------------------------------------------------------
Non allocated strategic 25,514 64,347 536 90,397 92,171
-----------------------------------------------------------------------------
Total 101,947 86,263 5,741 193,951 194,956
-----------------------------------------------------------------------------
Our UK short term landbank, representing owned or controlled land with planning,
or a resolution to grant planning stood at 86,155 plots at 31 December 2007
(2006: 84,959 plots). The average cost of plots acquired during the year was
£47,100 (2006: £47,200).
As a result of the strength of our landbank, and given an uncertain UK market,
we have been able to be increasingly selective in our land purchasing since the
start of October 2007 and we expect to continue with this policy into 2008.
North America Housing
Strategy and integration
Our markets in North America benefit from significant inward migration and job
growth and our long term strategy remains to grow the business. However, current
conditions in the US require us to focus in the short to medium term on cost
reductions and cash management, whilst preserving the value inherent in our long
term land positions.
We are closely monitoring sales rates at each of our sites, actively adjusting
our pricing and incentive packages to ensure that we remain competitive in local
markets. Where we have high quality land holdings in areas of current market
weakness we are opting to postpone production in order to preserve longer term
value.
Both the legacy Taylor Woodrow and Morrison Homes businesses had already
achieved significant build cost and overhead cost reductions prior to the merger
in response to the slowdown in 2006. As this has continued through 2007 we have
increased our savings in these areas through renegotiation with suppliers and
rationalisation of our operations.
We are not currently approving further new land acquisitions in the US and we
are exercising our right to exit option deals where the price is no longer
attractive. We are also reducing the amount of cash invested in work in progress
through a number of initiatives to lower the level of inventory homes in our
operations.
These short term actions will both maintain the underlying value of the business
and put us in the best position to reinvest in new sites as value becomes
available.
The merger provides the North American business with:
• Strong geographical overlap, with critical mass in more of its markets;
• A broader product offering;
• Synergy savings; and
• Combined homebuilder/land developer business model
We are now operating as a combined business, with 4 regions and a total of 13
divisions. All of the personnel decisions were taken by 31 July 2007, with all
property moves completed by 30 September 2007. An implementation programme for a
common integrated suite of business systems is underway and is expected to be
complete by early 2009.
We remain on target to deliver merger related cost savings at an exit rate of
£20 million by the end of 2009, in addition to the market related savings
outlined above. The majority of these savings are expected to impact on 2008.
Financial Review
2007 2006
-------------------------------------------------------------------------------
Completions 6,740 8,839
-------------------------------------------------------------------------------
Average Selling Price £175,000 £202,000
-------------------------------------------------------------------------------
Revenue £1,215.0m £1,926.4m
-------------------------------------------------------------------------------
Profit before exceptional
items, interestand tax £62.4m £336.8m
-------------------------------------------------------------------------------
Operating margin 5.1% 17.5%
-------------------------------------------------------------------------------
Average outlets 242 218
-------------------------------------------------------------------------------
Order book as a percentage of revenue 43% 28%
-------------------------------------------------------------------------------
Owned and controlled plots 40,603 50,090
-------------------------------------------------------------------------------
North America housing revenue stood at £1,215.0 million (2006: £1,926.4
million), reflecting the ongoing weakness in market conditions in the US. Profit
before exceptional items, interest and tax was £62.4 million (2006: £336.8
million). The operating margin for 2007 was 5.1% (2006: 17.5%).
Due to the ongoing weakness in market conditions experienced during the year we
have conducted regular reviews of the carrying value of our land holdings. As a
result of these reviews, we have taken land and work in progress write downs
totalling £283.4 million on a statutory reported basis during 2007.
Sales, completions and pricing
The combined business operated with an average of 242 outlets during 2007 (2006:
218). Total home completions were 6,740 (2006: 8,839) and we completed 966 lots
(2006: 2,640).
Sales rates for North America as a whole in the second half of 2007 were below
those achieved in the first half. Cancellation rates were 28% for the second
half.
The average selling price of our North American homes in 2007 was £175,000
(2006: £202,000), reflecting the weaker market conditions and also a shift in
sales away from higher priced products in Florida and California.
Our year end order book was £529 million (2006: £549 million).
Product range
We offer a wide range of homes to our customers in North America, ranging from
entry level to luxury homes. Our product range includes high rise apartments,
single family homes, townhomes and full service country club properties. At
present our only upcoming high rise projects are in the Canadian market.
Our US homebuilding operations are now trading under the Taylor Morrison brand,
with land development branded Taylor Woodrow Communities, whilst our Canadian
business continues to operate as Monarch.
Quality and customers
Quality is a key focus for all of our operations and we are particularly proud
of our Canadian business, which was rated as the number one in Ottawa in the JD
Power & Associates customer satisfaction survey for 2007. Similar to our UK
business, our key performance indicator for customer satisfaction was the
percentage of customers who would recommend us. Both legacy businesses recorded
scores exceeding 80% during 2007, although different survey methodologies had
been used. Going forward, we will be using a new measurement system administered
by an independent third party organisation.
We are running a series of best practice conferences to learn from the customer
care experience of our legacy businesses. This consultation process will inform
the development of core practices and guidelines.
Landbank
We remain extremely cautious with regard to land purchases in the US, although
we have continued to invest in land for our Canadian operations and renegotiate
existing terms on option contracts in Florida, California, and Arizona.
At the year end, we had an owned and controlled landbank of 40,603 plots (2006:
50,090 plots).
Net operating assets in the US stood at £574.3 million at 31 December 2007
(2006: £925.5 million).
Spain & Gibraltar Housing
Strategy
We deliver high quality homes in popular locations in Spain that appeal to both
foreign and Spanish buyers. In Gibraltar, we service the luxury apartment
market, selling off plan well in advance of construction.
Performance
We completed a total of 212 homes in 2007 (2006: 379) at an average selling
price of £279,000 (2006: £205,000).
Profit before exceptional items, interest and tax of £7.9 million, was below the
£26.4 million achieved in 2006 as a result of weaker market conditions and a
one-off land sale in the Malaga area undertaken during 2006.
We achieved an operating margin of 12.3 per cent (2006: 28.7 per cent).
The landbank has remained at similar levels to last year as we have become
increasingly cautious in our approach to land purchases. Our year end order book
stood at £83 million (2006: £100 million).
We have undertaken a review of the carrying value of our landbank in Spain,
which has resulted in an inventory provision of £6.3 million (2006: £nil).
Construction
Strategy
We provide construction and facilities management services to high growth
industry sectors throughout the UK and for key customers in selected overseas
markets.
Performance
Revenue increased by 10.7 per cent in 2007 to £609.3 million (2006:
£550.6million), delivering a profit before interest and tax of £2.0 million
(2006: £8.1 million). This fall is primarily due to losses on a small number of
road construction contracts in Ghana. We have no further similar contracts. The
UK business delivered a strong performance, recording an operating profit of
£16.3 million (2006: £5.3 million).
The year end order book was £1.19 billion (2006: £1.17 billion), reflecting a
steady flow of contract awards in our chosen sectors. In particular, our
facilities management operations have secured a number of new contracts from
blue chip customers.
Pro Forma Financial Summary
Group revenue fell by 12.4 per cent to £5,887.5 million (2006: £6,719.5
million). Group completions fell by 11.2 per cent to 27,642 (2006: 31,128)
reflecting the continued poor trading conditions in the US.
Group profit before tax and exceptional items amounted to £535.6 million for the
year to 31 December 2007 (2006: £776.5 million).
Statutory Reported Financial Summary
Group profit before tax and exceptional items amounted to £360.2 million for the
year to 31 December 2007 (2006: £405.6 million). The UK housing business
performed well in 2007, delivering an operating margin of 13.7% after the impact
of fair value adjustments and accounting policy alignment. However, continuing
material weakness in the Group's US and Spanish markets has resulted in land and
work in progress write downs of £289.7 million. Other exceptional items of £90.0
million relate to restructuring costs and the write off of the Morrison Homes
and Laing brands.
As disclosed in the 2007 interim results we had provided £15.5 million during
the first half of 2007 against a potential liability arising from a legal case
in Florida. During the second half of the year the case was settled at £5.2
million and the remaining provision has been released.
The Group has returned a loss before tax of £19.5 million (2006 profit before
tax: £405.6 million) after charging net finance costs of £112.1 million (2006:
£64.2 million). The tax charge was £177.2 million (2006: £115.0 million),
bringing the loss for the year to £196.7 million (2006 profit for the year:
£290.6 million).
The pre-exceptional Group tax rate for 2007 was 29.7%. In addition, there has
been a significant exceptional tax charge of £70.2 million, principally being
the write-off of deferred tax assets due to the weakening of the US markets in
the second half of the year.
In total, the Group has unrecognised potential deferred tax assets in the US of
£189.4 million as at 31 December 2007 primarily due to the reduced opportunities
in the US to utilise inventory provisions in the near future against taxable
income.
Net assets total £3.7 billion (2006: £2.1 billion), with net tangible assets
amounting to £2.9 billion (£1.7 billion). Shareholders' funds per share totalled
352.3 pence (2006: 364.7 pence). Tangible net worth per share stood at 274.3
pence.
Year end gearing stood at 38.2 per cent (2006: 18.6 per cent). Undrawn committed
facilities stood at £1,193 million at the year end (2006: £630 million).
Share buyback and dividend
In July we set out the conclusions of our review of capital requirements and
balance sheet targets, including the plan to return £750 million of capital to
shareholders through a share buyback programme. £250 million of this programme
was carried out in during 2007. The purpose of the review was to ensure that our
requirements for growth are balanced by a suitable and efficient capital
structure. We remain committed to maintaining year end adjusted gearing within a
range of 40% to 60% and interest cover between five and seven times in normal
market conditions.
However given the uncertainty in the UK housing market, the Board has decided to
suspend the buy back programme temporarily until conditions improve. In order to
maintain flexibility we will be seeking the usual authority at the forthcoming
Annual General Meeting on 17 April 2008 to purchase up to 10% of our shares.
A 5% increase in the final dividend to 10.25 pence is being proposed, reflecting
our continuing confidence in the future of the Group. If approved, this will
bring full year dividends to 15.75 pence per share (2006: 14.75 pence).
Group Outlook
The Group is well placed following the merger to benefit from a strengthened
landbank, operational efficiencies, ongoing cost savings programmes and a strong
financial position. We have continued to identify additional areas for further
savings and efficiencies.
In the UK, although sales and cancellation rates have improved in the early part
of 2008, they remain weaker than seasonal norms. Our order book at the end of
February 2008 is £1.3 billion with a greater than historical weighting towards
affordable homes. We anticipate that the current subdued conditions will
continue, with interest rates and mortgage availability being key determinants
of customer confidence. Our focus is on preserving value through maintaining a
steady, but reduced, sales rate and controlling land and work in progress spend
tightly. We anticipate that these actions will result in significant cash
generation, particularly in the second half of 2008.
In North America, we do not expect market conditions in the US to improve
significantly during 2008. In the short term, our strategy remains to focus on
managing out existing sites and reducing the cost base. We are well placed to
take advantage of land acquisition opportunities as they arise in the future.
Shareholder Information
The Company's 2008 Annual General Meeting will be held at 11:00am on Thursday 17
April 2008 at the Royal College of Physicians, 11 St Andrews Place, Regent's
Park, London NW1 4LE.
Subject to confirmation at the Annual General Meeting, the 2007 final dividend
of 10.25 pence per share will be paid on Tuesday 1 July 2008 to shareholders on
the register of members at the close of business on Friday 23 May 2008.
Shareholders are again being offered the opportunity to re-invest some or all of
their dividend under the Dividend Re-Investment Plan, details of which will be
contained in the Shareholder Information section of the 2007 Annual Report and
Accounts, which will be posted to shareholders on Friday 14 March 2008.
The latest date for receipt of the Dividend Re-Investment Plan mandate forms for
the 2007 final dividend is Monday 2 June, 2008. The latest date for receipt of
notices of withdrawal from the Plan for the 2007 final dividend is Monday 16
June, 2008.
Copies of the Report and Accounts 2007 will also be available from Friday 14
March on the Company's website taylorwimpey.com and from the registered office
at 80 New Bond Street, London, W1S 1SB.
Consolidated Income Statement
For the year to 31 December 2007
Before
exceptional Exceptional
items items* Total
2007 2007 2007 2006
Continuing Operations Note £m £m £m £m
--------------------------------------------------------------------------------
Revenue 1 4,714.3 - 4,714.3 3,572.1
Cost of sales (3,975.9) (289.7) (4,265.6) (2,933.4)
--------------------------------------------------------------------------------
Gross profit 738.4 (289.7) 448.7 638.7
Net operating expenses 2 (289.5) (90.0) (379.5) (191.0)
Share of results of joint
ventures 23.4 - 23.4 22.1
--------------------------------------------------------------------------------
Profit on ordinary activities
before finance costs and
amortisation of brands 476.0 (349.7) 126.3 469.8
Amortisation of brands (3.7) (30.0) (33.7) -
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Profit on ordinary activities
before finance costs 472.3 (379.7) 92.6 469.8
Interest receivable 9.7 - 9.7 9.1
Finance costs 3 (121.8) - (121.8) (73.3)
--------------------------------------------------------------------------------
(Loss)/profit on ordinary
activities before taxation 360.2 (379.7) (19.5) 405.6
Taxation 4 (107.0) (70.2) (177.2) (115.0)
--------------------------------------------------------------------------------
(Loss)/profit for the year 253.2 (449.9) (196.7) 290.6
--------------------------------------------------------------------------------
Attributable to:
Equity holders of the parent (197.9) 289.5
Minority interest 1.2 1.1
--------------------------------------------------------------------------------
(196.7) 290.6
--------------------------------------------------------------------------------
Proposed/paid dividends
per ordinary share
Interim 5 5.5p 5.0p
Final 5 10.25p 9.75p
(Loss)/earnings per
ordinary share - basic 6 (24.2p) 50.5p
(Loss)/earnings per
ordinary share - diluted 6 (24.2p) 50.1p
--------------------------------------------------------------------------------
* The current period items relate to restructuring costs, brand impairments and
land and work in progress write-downs (note 2). There were no exceptional items
in 2006.
Consolidated Statement of Recognised Income and Expense
For the year to 31 December 2007
2007 2006
£m £m
--------------------------------------------------------------------------------
Exchange differences on translation of foreign operations 21.7 (49.0)
Actuarial gains/(losses) on defined benefit pension schemes 91.3 (1.6)
Surplus on revaluation - 1.0
Tax on items taken directly to equity (28.5) 0.5
--------------------------------------------------------------------------------
Net income/(expense) recognised directly in equity 84.5 (49.1)
(Loss)/profit for the year (196.7) 290.6
--------------------------------------------------------------------------------
Total recognised (expense)/income for the year (112.2) 241.5
--------------------------------------------------------------------------------
Attributable to:
Equity holders of the parent (113.4) 240.4
Minority interests 1.2 1.1
--------------------------------------------------------------------------------
(112.2) 241.5
--------------------------------------------------------------------------------
Consolidated Balance Sheet
at 31 December 2007
2007 2006
£m £m
--------------------------------------------------------------------------------
Non-current assets
Goodwill 699.8 363.1
Other intangible assets 120.5 -
Property, plant and equipment 39.0 25.5
Interests in joint ventures 59.9 56.2
Trade and other receivables 76.4 56.0
Deferred tax assets 117.7 95.4
--------------------------------------------------------------------------------
1,113.3 596.2
--------------------------------------------------------------------------------
Current assets
Inventories 6,017.8 2,946.5
Trade and other receivables 391.3 294.9
Tax receivables 16.8 19.7
Cash and cash equivalents 130.0 236.5
--------------------------------------------------------------------------------
6,555.9 3,497.6
--------------------------------------------------------------------------------
Total assets 7,669.2 4,093.8
--------------------------------------------------------------------------------
Current liabilities
Trade and other payables (1,540.3) (926.0)
Tax payables (154.4) (74.1)
Debenture loans (1.4) (2.5)
Bank loans and overdrafts (12.2) (12.3)
Provisions (48.2) -
--------------------------------------------------------------------------------
(1,756.5) (1,014.9)
--------------------------------------------------------------------------------
Net current assets 4,799.4 2,482.7
--------------------------------------------------------------------------------
Non-current liabilities
Trade and other payables (388.4) (123.1)
Debenture loans (823.3) (610.6)
Bank loans (708.5) (2.4)
Retirement benefit obligation (219.1) (208.6)
Deferred tax liabilities (29.8) (0.8)
Provisions (38.4) (27.9)
--------------------------------------------------------------------------------
(2,207.5) (973.4)
--------------------------------------------------------------------------------
Total liabilities (3,964.0) (1,988.3)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net assets 3,705.2 2,105.5
--------------------------------------------------------------------------------
Equity
Share capital 289.6 148.5
Share premium account 758.1 758.8
Merger relief reserve 1,934.2 -
Revaluation reserve 0.5 1.5
Own shares (282.0) (45.0)
Share-based payment tax reserve 5.6 8.2
Capital redemption reserve 31.5 31.5
Other reserve 4.8 4.8
Translation reserve 3.7 (19.1)
Retained earnings 957.1 1,214.3
--------------------------------------------------------------------------------
Equity attributable to equity holders of the parent 3,703.1 2,103.5
Minority interests 2.1 2.0
--------------------------------------------------------------------------------
Total equity 3,705.2 2,105.5
--------------------------------------------------------------------------------
Consolidated Cash Flow Statement
For the year to 31 December 2007
2007 2006
Note £m £m
--------------------------------------------------------------------------------
Net cash (used in)/from operating activities 7 (163.3) 57.0
Investing activities
Interest received 2.3 9.1
Dividends received from joint ventures 24.4 22.6
Amounts invested in software development (0.4) -
Proceeds on disposal of property, plant and investments 17.3 48.0
Purchases of property, plant and investments (13.6) (6.7)
Amounts invested in joint ventures (3.1) (9.2)
Amounts repaid by joint ventures 10.6 5.3
Acquisition of George Wimpey Plc 28.1 -
Net cash inflow on acquisition of remaining 50% of North
Central Management Limited 2.9 -
--------------------------------------------------------------------------------
Net cash from investing activities 68.5 69.1
--------------------------------------------------------------------------------
Financing activities
Dividends paid (117.3) (79.7)
Dividends paid by subsidiaries to minority shareholders (1.1) (0.1)
Proceeds on issue of ordinary share capital - 3.3
Proceeds from sale of own shares 4.7 15.9
Purchase of own shares (251.6) (12.4)
New bank loans raised 2,083.8 608.7
New debenture loans raised 256.2 -
Repayment of debenture loans (52.1) (4.3)
Repayment of bank loans (1,944.6) (600.9)
Increase/(decrease) in bank overdrafts 0.5 (2.7)
--------------------------------------------------------------------------------
Net cash used in financing activities (21.5) (72.2)
--------------------------------------------------------------------------------
Net (decrease)/increase in cash and cash equivalents (116.3) 53.9
Cash and cash equivalents at beginning of year 236.5 197.3
Effect of foreign exchange rate changes 9.8 (14.7)
--------------------------------------------------------------------------------
Cash and cash equivalents at end of year 130.0 236.5
--------------------------------------------------------------------------------
Notes to the Consolidated Financial Statements
For year to 31 December 2007
1. Business and geographical segments
Business segments
-----------------
For management purposes, the Group is currently organised into five operating
divisions - Housing - United Kingdom, Housing - North America, Housing - Spain
and Gibraltar, Construction and Corporate. These divisions are the basis on
which the Group reports its primary segment information.
Segment information about these businesses is presented below.
Housing
Housing Housing Spain
United North and
Kingdom America Gibraltar Construction Corporate Consolidated
2007 £m £m £m £m £m £m
-----------------------------------------------------------------------------------------------------
Revenue
External sales 3,053.8 986.8 64.4 609.3 - 4,714.3
Inter-segment sales - - - 34.5 - 34.5
Eliminations - - - (34.5) - (34.5)
-----------------------------------------------------------------------------------------------------
Total revenue 3,053.8 986.8 64.4 609.3 - 4,714.3
Result:
Operating profit/(loss)
before joint ventures,
brand amortisation
and exceptional items 409.1 53.3 2.2 3.4 (15.4) 452.6
Share of results of
joint ventures 9.1 14.2 - 0.1 - 23.4
-----------------------------------------------------------------------------------------------------
Profit/(loss) on
ordinary activities
before finance costs,
exceptional items and
amortisation of brands 418.2 67.5 2.2 3.5 (15.4) 476.0
Brand amortisation (3.7) - - - - (3.7)
Exceptional items (47.9) (321.3) (6.3) - (4.2) (379.7)
-----------------------------------------------------------------------------------------------------
Profit/(loss) on
ordinary activities
before finance costs 366.6 (253.8) (4.1) 3.5 (19.6) 92.6
Finance costs,(net) (112.1)
Taxation (177.2)
-----------------------------------------------------------------------------------------------------
Loss for the year (196.7)
-----------------------------------------------------------------------------------------------------
Inter-segment construction and housing revenue relates to contracts conducted on an arm's-length
basis.
Housing
Housing Housing Spain
United North and
Kingdom America Gibraltar Construction Corporate Consolidated
2007 £m £m £m £m £m £m
-----------------------------------------------------------------------------------------------------
Asset and
liabilities:
Segment assets 5,350.1 976.7 182.1 96.6 39.5 6,645.0
Joint ventures 39.6 20.0 0.2 0.1 - 59.9
Segment liabilities (1,548.7) (316.4) (66.7) (232.0) (70.6) (2,234.4)
-----------------------------------------------------------------------------------------------------
Net operating assets/
(liabilities)* 3,841.0 680.3 115.6 (135.3) (31.1) 4,470.5
-----------------------------------------------------------------------------------------------------
Goodwill 699.8
Current taxation (net) (137.6)
Deferred taxation (net) 87.9
Net debt (1,415.4)
-----------------------------------------------------------------------------------------------------
Net assets 3,705.2
-----------------------------------------------------------------------------------------------------
* The Group is unable to allocate the defined benefit pension scheme assets and liabilities of the
Taylor Woodrow Group Pension and Life Assurance Fund on an actuarial basis by entity. However,
for the purposes of the segmental analysis above the Group has allocated the deficit on the basis of
members in the plan. This allocation is performed solely for the purposes of providing a more
meaningful segmental analysis and is not an appropriate apportionment in accordance with IAS 19.
The assets and liabilities of the George Wimpey Staff Pension Scheme have been allocated in their
entirety to UK Housing.
Housing
Housing Housing Spain
United North and
Kingdom America Gibraltar Construction Corporate Consolidated
2007 £m £m £m £m £m £m
-----------------------------------------------------------------------------------------------------
Other information:
Property, plant and
equipment additions 6.2 5.8 0.3 1.3 - 13.6
Amortisation of
intangibles* 15.7 20.0 - - - 35.7
Depreciation - plant
and equipment 3.3 3.6 0.1 1.3 - 8.3
-----------------------------------------------------------------------------------------------------
Other non-cash
expenses:
Provisions provided 48.7 28.7 0.6 - - 78.0
-----------------------------------------------------------------------------------------------------
* The amortisation of intangibles includes impairment losses of £10.0m on the Laing Homes brand
(Housing United Kingdom) and £20.0m on the Morrison Homes brand (Housing North America)
following their current retirements.
Housing
Housing Housing Spain
United North and
Kingdom* America* Gibraltar* Construction* Corporate* Consolidated
2006 £m £m £m £m £m £m
-----------------------------------------------------------------------------------------------------
Revenue
External sales 1,759.2 1,170.2 92.1 550.6 - 3,572.1
Inter-segment sales 4.1 - - 60.8 - 64.9
Eliminations (4.1) - - (60.8) - (64.9)
-----------------------------------------------------------------------------------------------------
Total revenue 1,759.2 1,170.2 92.1 550.6 - 3,572.1
-----------------------------------------------------------------------------------------------------
Result:
Operating profit/(loss)
before joint ventures 215.4 209.1 26.8 9.6 (13.2) 447.7
Share of results of joint
ventures 8.6 13.5 - - - 22.1
-----------------------------------------------------------------------------------------------------
Profit/(loss) on ordinary
activities before
finance costs 224.0 222.6 26.8 9.6 (13.2) 469.8
Finance costs,(net) (64.2)
Taxation (115.0)
-----------------------------------------------------------------------------------------------------
Profit for the year 290.6
-----------------------------------------------------------------------------------------------------
Asset and liabilities:
Segment assets 2,160.0 865.0 173.7 106.1 18.1 3,322.9
Joint ventures 33.5 19.4 - 3.3 - 56.2
Segment liabilities (609.5) (318.9) (82.2) (249.1) (25.9) (1,285.6)
-----------------------------------------------------------------------------------------------------
Net operating assets/
(liabilities) 1,584.0 565.5 91.5 (139.7) (7.8) 2,093.5
-----------------------------------------------------------------------------------------------------
Goodwill 363.1
Current taxation (net) (54.4)
Deferred taxation (net) 94.6
Net debt (391.3)
-----------------------------------------------------------------------------------------------------
Net assets 2,105.5
-----------------------------------------------------------------------------------------------------
* The Corporate segment has been added in 2007 to reflect better the way the Group is managed.
As a consequence the comparative segmental analysis has been restated to reflect this as necessary.
Housing
Housing Housing Spain
United North and
Kingdom America Gibraltar Construction Corporate Consolidated
2006 £m £m £m £m £m £m
-----------------------------------------------------------------------------------------------------
Other information:
Property, plant and
equipment additions 2.5 1.7 0.3 2.2 - 6.7
Depreciation - plant and
equipment 1.1 1.1 0.1 5.4 - 7.7
-----------------------------------------------------------------------------------------------------
Other non-cash
expenses:
Provisions provided 11.2 10.2 0.3 - - 21.7
-----------------------------------------------------------------------------------------------------
Geographical segments
---------------------
The Group's operations are located primarily in the United Kingdom and North America. The Group's
housing divisions are already segmented geographically above. The construction division is primarily
located in the United Kingdom.
The following table provides an analysis of the Group's sales by geographical market, irrespective of
the origin of the goods/services:
Sales revenue by geographical market
2007 2006
£m £m
--------------------------------------------------------------------------------
United Kingdom 3,614.7 2,243.6
North America 986.8 1,170.1
Rest of the world 112.8 158.4
--------------------------------------------------------------------------------
4,714.3 3,572.1
--------------------------------------------------------------------------------
The following is an analysis of the carrying amount of segment assets, and additions to property and
plant, analysed by the geographical area in which the assets are located:
Carrying amount of Additions to property
segment assests and plant
2007 2006 2007 2006
£m £m £m £m
--------------------------------------------------------------------------------
United Kingdom 6,205.9 2,854.9 6.9 2.6
North America 1,231.8 1,012.3 5.8 1.7
Rest of the world 231.5 226.6 0.9 2.4
--------------------------------------------------------------------------------
7,669.2 4,093.8 13.6 6.7
--------------------------------------------------------------------------------
2. Net operating expenses and profit on ordinary activities before finance costs
2007 2006
Net operating expenses: £m £m
--------------------------------------------------------------------------------
Administration expenses 302.4 200.1
Net other income (12.9) (9.1)
Exceptional item 90.0 -
--------------------------------------------------------------------------------
379.5 191.0
--------------------------------------------------------------------------------
Net other income includes profits on the sale of property, plant & equipment and
broker fees from mortgage origination services.
Restructuring costs 60.0 -
Brand impairments 30.0 -
Land write-downs 289.7 -
--------------------------------------------------------------------------------
Exceptional items 379.7 -
--------------------------------------------------------------------------------
3. Finance costs
2007 2006
£m £m
--------------------------------------------------------------------------------
Interest on bank overdrafts and loans 45.9 22.9
Interest on debenture loans 47.4 41.2
Movement on interest rate derivatives 5.4 -
--------------------------------------------------------------------------------
98.7 64.1
Amortisation of discount on land creditors 19.3 6.5
Notional interest on pension liability 3.8 2.7
--------------------------------------------------------------------------------
121.8 73.3
--------------------------------------------------------------------------------
4. Tax
2007 2006
£m £m
--------------------------------------------------------------------------------
Current tax:
UK corporation tax: Current year 88.9 58.8
Prior years (9.8) (9.9)
Relief for foreign tax (5.0) (8.3)
Foreign tax: Current year 18.0 80.4
Prior years 16.9 (8.3)
--------------------------------------------------------------------------------
109.0 112.7
--------------------------------------------------------------------------------
Deferred tax:
UK: Current year (9.1) (3.0)
Prior years 6.3 (0.2)
Foreign: Current year 80.9 (4.8)
Prior years (9.9) 10.3
--------------------------------------------------------------------------------
68.2 2.3
--------------------------------------------------------------------------------
177.2 115.0
--------------------------------------------------------------------------------
Corporation tax is calculated at 30 per cent (2006: 30 per cent) of the estimated
assessable profit for the year in the UK.
Taxation outside the UK is calculated at the rates prevailing in the respective
jurisdictions.
Deferred tax recognised in the Group statement of recognised income and expense
is due to actuarial gains on post-retirement liabilities at the prevailing rate
in the relevant jurisdiction. This includes the effect of the change in the UK rate
of corporation tax from 30 per cent to 28 per cent from 1 April 2008.
5. Dividends
2007 2006
£m £m
-----------------------------------------------------------------------------------------------------
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 December 2006 of 9.75p (2005:8.9p) per share 56.6 51.0
Interim dividend for the year ended 31 December 2007 of 5.5p (2006: 5.0p) per share 60.7 28.7
-----------------------------------------------------------------------------------------------------
117.3 79.7
-----------------------------------------------------------------------------------------------------
Proposed final dividend for the year ended 31 December 2007 of 10.25p (2006:9.75p)
per share 107.7 56.6
-----------------------------------------------------------------------------------------------------
6. Earnings per share
2007 2006
From continuing operations £m £m
--------------------------------------------------------------------------------
Basic (24.2p) 50.5p
--------------------------------------------------------------------------------
Diluted (24.2p) 50.1p
--------------------------------------------------------------------------------
Adjusted basic 30.8p 50.5p
--------------------------------------------------------------------------------
Adjusted diluted 30.7p 50.1p
--------------------------------------------------------------------------------
Adjusted basic and adjusted diluted earnings per share, which exclude the impact of exceptional
items and the associated tax effects, are shown to provide clarity on the underlying performance
of the Group.
The calculation of the basic and diluted earnings per share is based on the following data:
2007 2006
Earnings £m £m
---------------------------------------------------------------------------------------
Earnings for basic earnings per share and diluted earnings per share (197.9) 289.5
Add exceptional items (note 2): 379.7 -
Add tax effect of exceptional items 70.2 -
---------------------------------------------------------------------------------------
Earnings for adjusted basic and adjusted diluted earnings per share 252.0 289.5
---------------------------------------------------------------------------------------
2007 2006
Weighted average number of shares: m m
---------------------------------------------------------------------------------------
For basic earnings per share 818.5 572.9
Weighted average of dilutive options 2.5 5.0
Weighted average of dilutive awards under bonus plans - 0.5
---------------------------------------------------------------------------------------
For diluted earnings per share 821.0 578.4
---------------------------------------------------------------------------------------
7. Notes to the cash flow statement
2007 2006
£m £m
--------------------------------------------------------------------------------
Profit on ordinary activities before finance costs 92.6 469.8
Adjustments for:
Amortisation of brands 33.7 -
Amortisation of software development costs 2.0 -
Depreciation of plant and equipment 8.3 7.7
Share-based payment charge 0.6 6.1
Gain on disposal of property and plant (5.7) (9.1)
Share of joint ventures' operating profit (23.4) (22.1)
Increase in provisions 38.6 8.5
--------------------------------------------------------------------------------
Operating cash flows before movements in working capital 146.7 460.9
Increase in inventories (26.3) (347.5)
Decrease/(increase) in receivables 38.9 (37.2)
(Decrease)/increase in payables (81.6) 174.4
Pension contributions in excess of charge (30.0) (27.3)
--------------------------------------------------------------------------------
Cash generated by operations 47.7 223.3
Income taxes paid (127.3) (95.2)
Interest paid (83.7) (71.1)
--------------------------------------------------------------------------------
Net cash (used in)/from operating activities (163.3) 57.0
--------------------------------------------------------------------------------
Cash and cash equivalents (which are presented as a single class of assets on the face of the
balance sheet) comprise cash at bank and other short-term highly liquid investments with an original
maturity of three months or less.
2007 2006
£m £m
--------------------------------------------------------------------------------
Net debt
Cash and cash equivalents 130.0 236.5
Bank overdrafts and bank loans (720.7) (14.7)
Debenture loans (824.7) (613.1)
--------------------------------------------------------------------------------
Net debt (1,415.4) (391.3)
--------------------------------------------------------------------------------
8. Statutory Accounts
The Report and Accounts were approved by the Board of Directors on 5 March 2008. This
announcement does not constitute the company's statutory accounts for the years ended 31
December 2007 and 2006 but is derived from those accounts. Statutory accounts for 2006 have been
delivered to the Registrar of Companies and those for 2007 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.
While the financial information included in this preliminary announcement has been prepared in
accordance with the recognition and measurement criteria of International Financial Reporting
Standards (IFRSs), this announcement does not itself contain sufficient information to comply with
IFRSs. The Group expects to publish full financial statements that comply with IFRSs in March 2008.
Basis of preparation
--------------------
The Group completed the merger with George Wimpey Plc on 3 July 2007. The statutory results of
the Group for the year to 31 December 2007 therefore exclude the first six months trading of the
former George Wimpey Plc businesses.
To assist investors in understanding the performance of the combined Taylor Wimpey plc Group, a
summary pro forma income statement has been prepared by aggregating the underlying financial
information for the year to 31 December 2007 of the former Taylor Woodrow plc ("TW") and the
former George Wimpey Plc ("GW"), to illustrate the effect of the merger of TW and GW as if the
transaction had taken place on 1 January 2006. The results from the two legacy businesses have
been prepared on the basis of their historic accounting policies as published in the 2006 financial
statements of the two Groups. In aggregating the two sets of financial information, intra-Group
trading between the two entities has not been eliminated and fair value adjustments arising from the
acquisition accounting have been excluded. This information has not been audited.
Pro Forma Unaudited Combined Group Summary Income Statement
For the year to 31 December 2007
Pro forma Pro forma
Combined Combined
before before
exceptional items exceptional items
year to year to
31 December 2007 31 December 2006
£m £m
--------------------------------------------------------------------------------
Consolidated Revenue 5,887.5 6,719.5
Cost of sales (4,899.7) (5,514.6)
--------------------------------------------------------------------------------
Gross profit 987.8 1,204.9
Net operating expenses (347.8) (342.0)
Share of results of joint ventures 27.0 29.7
--------------------------------------------------------------------------------
Profit on ordinary activities before finance costs 667.0 892.6
Net finance costs (131.4) (116.1)
--------------------------------------------------------------------------------
Profit on ordinary activities before taxation 535.6 776.5
--------------------------------------------------------------------------------
Pro forma Pro forma
Combined Combined
before before
Revenue exceptional items exceptional items
year to year to
31 December 2007 31 December 2006
£m £m
--------------------------------------------------------------------------------
Housing United Kingdom 3,998.8 4,150.4
Housing North America 1,215.0 1,926.4
Housing Spain and Gibraltar 64.4 92.1
Construction 609.3 550.6
Corporate - -
--------------------------------------------------------------------------------
5,887.5 6,719.5
--------------------------------------------------------------------------------
Pro forma Pro forma
Combined Combined
before before
exceptional items exceptional items
year to year to
Profit on ordinary activities 31 December 2007 31 December 2006
before finance costs £m £m
--------------------------------------------------------------------------------
Housing United Kingdom 608.5 533.0
Housing North America 62.4 336.8
Housing Spain and Gibraltar 7.9 26.4
Construction 2.0 8.1
Corporate (13.8) (11.7)
--------------------------------------------------------------------------------
667.0 892.6
--------------------------------------------------------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR JAMJTMMMMTLP
