taylor woodrow blue/slate/media/regions/migration... · 2013-08-29 · • re branding of sites to...

Taylor Woodrow2003 Full Year Results

2 March 2004Delivering growth

Preliminary Results 2003

Norman Askew

Chairman

Agenda

Introduction Norman Askew

Operational highlights Iain Napier

Financial results Peter Johnson

Outlook Iain Napier

Questions and answers Norman Askew

Record performance

2003 2002 %

Profit before tax * £m 324.0 245.1 32

Adjusted earnings per share p 39.0 29.8 31

Dividends per share p 8.9 7.4 20

• Strategy of growing sustainable shareholder value both organically and by acquisition remains

– Acquisition – e.g. Wilson Connolly

– Organic – e.g. Colchester garrison* Pre exceptional items


Iain Napier

Chief Executive Officer

Record performance

2003 2002

Operating profit £m 337.8 257.7

Operating margin % 12.7 11.7

ROACE * % 22.9 20.1

Gearing % 43.9 18.7

* Pre goodwill and exceptional items

Total Housing

Operating profit *

050

100150200250300350

1998 1999 2000 2001 2002 2003

£m

Marlborough Court, Sutton Coldfield, UK

• Operating profit up 39% to £356.2m *

• Operating margin up 1.3% to 15.9%

• Return on average capital employed up 3.3% to 25.0%

• Completed 10,819 homes and 3,662 lots

* Operating profit is pre goodwill amortisation and exceptional items

2003 Key Highlights

• Operating profit growth from all housing operations• UK Housing up 38% to £244.7m

• North America Housing up 38% to £ 91.2m

• Spain & Gibraltar Housing up 75% to £ 20.3m

• Acquisition of Wilson Connolly

• £21 million of cost savings

First Half vs. Second half

2003H1

2003H2

2003FY

Operating margins

UK Housing ex Wilson Connolly* 15.8 17.1 16.5

Wilson Connolly * n/a 16.3 16.3

UK Housing * 15.8 16.8 16.5

Nth America Housing ** 13.9 12.7 13.3

Other Housing 36.3 26.7 30.8

Property 23.5 (3.1) 12.8

Construction 3.1 1.6 2.3

Total* 13.9 14.0 14.0

%

* pre goodwill and integration costs

** pre goodwill

UK Housing

Operating profit *

0

50

100

150

200

250

1999 2000 2001 2002 2003

£m

Fairford Leys, Aylesbury

• Operating profit up 38% to £244.7m

• ROACE up 2.1% to 23.1%

• Home completions up 23% to 7,690

• Order Book at 31.12.03 of £601m, up 131%

* Operating profit is pre goodwill amortisation and exceptional items

UK Housing

2003 2002 %

Home Completions (#)

Bryant Homes 6,090 6,238 (2)

Wilson Connolly 1,600 - -

Total 7,690 6,238 23

Operating Profit (£m)

Bryant Homes 197.6 177.6 11

Wilson Connolly 47.1 - -

Total 244.7 177.6 38

Operating Margin (%)

Bryant Homes 16.5 15.0

Wilson Connolly 16.3 -

Total 16.5 15.0

Integration progress

• Integration of Wilson Connolly is well advanced

• From 1 January 2004, one integrated business

• 11 Regions, reporting to 3 Operations Directors

• 4 of 11 Regional Managing Directors ex Wilson Connolly

• 10 offices to be closed in total

• 6 now closed

• Last office to close in early May 2004

• Taylor Woodrow management systems being used

Regional Businesses as expected

• As forecast at acquisition, 11 regions based on location of sites

• No site is more than 90 minutes from office

• Sites continue to grow in size

IT systems support to sites

• Site set up procedures

• Schedule production

• Arrange material procurement

• Plan and track sales

• Communicate with regional offices and HQ

• Pass conveyancing information to solicitors

Integration progress

• Integrated core range of house types introduced

• 44 designs, of which 9 come from Wilson Connolly

• Re branding of sites to Bryant Homes

• On track to realise forecast synergies

• £12.5 million in 2004

• £25.0 million in 2005

UK Land Bank

• UK Housing land bank at 31.12.03 was

• 34,918 plots

• 3.3 years

• In addition there was strategic land of

• 90,000 potential plots

• 21% pull through for Bryant Homes in 2003

• 2% pull through for Wilson Connolly in 2003

• Opportunity is to increase Wilson Connolly pull through

UK Housing Active sites

2003 2002

Bryant Homes

Q1 120 134

Q2 131 130

Q3 132 137

Q4 123 118

Full Year 126 130

Actual at year end incl. Wilson Connolly in 2003 207 113

North America Housing

Operating profit *

0

20

40

60

80

100

1999 2000 2001 2002 2003

£m

Stonebridge, Ottawa, Canada


• ROACE up 5.8% to 27.4%



* Operating profit is pre goodwill amortisation

North America Markets

• Florida

• Homes & Lots completions up 14% to 806

• Market performing well

• Opened Tower division

• Land bank of 6.5 years

• Texas


• Two new sites acquired recently

• Houston & Austin economies strong



• Arizona

• Homes & Lots completions up 36% to 2,626

• Excellent performance beating our expectations at acquisition

• Moving to the mid market


• California


• Continuation of strong markets in 2003



• Canada


• Market still remains attractive


Spain & Gibraltar Housing

Operating profit

0

5

10

15

20

25

1999 2000 2001 2002 2003

£m

La Perla, Mallorca, Spain


• ROACE up to 65.9%

• Home completions up 17% to 343


Property

Operating profit

0

10

20

30

40

50

1999 2000 2001 2002 2003

£m

King William Street, London

• Operating profits down 48% to £8.2m

• Continued low exposure to slow market

• Sale of St Katharines Estate

• Remains a core competency

ConstructionPBT

0

5

10

15

20

25

1999 2000 2001 2002 2003

£m

Baltic Quay, Newcastle, UK

• Profit before tax flat at £20.8m

• Internal work grew to £125 million (2002: £82 million)

• Order book up 17% to £785m


Peter Johnson

Finance Director

Financial highlights

0

50

100

150

200

250

300

350

1999 2000 2001 2002 2003

£m

0

2

4

6

8

10

1999 2000 2001 2002 2003

pence per shareOperating Profit Dividends per share

• Turnover up 21% to £2,669.4m

• Operating profits up 31% to £337.8m

• Profit before tax * up 32% to £324.0m

• Adjusted earnings per share up 31% to 39.0p

• Dividends per share up 20% to 8.9p

* Pre exceptional items

Profit and Loss Account£m 2003 2002 % Turnover 2,669.4 2,208.6 21Operating Profit before g/w & exceptionals 372.8 282.8 32Goodwill (15.0) (13.1)Exceptionals (20.0) (12.0)Group Operating Profit 337.8 257.7 31JV operating profits 1.1 2.0Profits on disposals 6.3 8.1Net interest (41.2) (34.7)Profit before tax 304.0 233.1 30Tax (101.5) (76.9)Minorities (0.4) (1.1)Profit for the year 202.1 155.1 30

Operating Profit – Operating Cashflow

0

50

100

150

200

250

300

350

400

£m

OpProfit

338

Land

(114)

WIP

(73)

LandCreditors

73

OtherCreditors

71

OpCash flow

247

(56)

Debtors Other

8

UK Housing Performance2003 2002

Average Selling Price (£k) 181.0 181.9

Home Completions 7,690 6,238

Lot Completions 720 445

Turnover (£m) 1,484.6 1,181.7

Operating Profit (£m) *

Housing 218.2 166.1

Land sales 26.5 11.5

Total 244.7 177.6

Operating Margin (%)* 16.5 15.0

ROACE (%) * 23.1 21.0

* Pre goodwill amortisation/goodwill and exceptional items

UK Housing Ex Wilson Connolly

2003 2002

Average Selling Price (£k) 183.6 181.9

Home Completions 6,090 6,238

Lot Completions 720 445

Turnover (£m) 1,195.1 1,181.7


Housing 179.6 166.1

Land sales 18.0 11.5

Total 197.6 177.6


ROACE (%) * 21.5 21.0

* Pre goodwill amortisation/goodwill and exceptional items

Wilson Connolly Performance 2003 Q4 2003 2002

Average Selling Price (£k) 171.4 180 169

Home Completions 1,600 3,837 4,002

Lot Completions - 84 557

Turnover (£m) 289.5 723.6 714.9


Housing 38.6

Land sales 8.5

Total 47.1 86.6 73.0

Operating Margin (%)* 16.3 12.0 10.2

ROACE (%) * 33.4 na na

* Pre goodwill amortisation and exceptional items

North South Wilson TotalConnolly

Plots Owned 11,597 7,218 9,102 27,917Controlled Plots 576 3,241 3,184 7,001Total Plots with Planning 12,173 10,459 12,286 34,918

Total NBV (owned plots) (£m) 418 294 387 1,099Land Bank Years 3.1 3.6 3.1 3.3

UK Housing Analysis




Completions (homes) 3,472 2,618 1,600 7,690Mvmt since 2002 6% (11%) n/a 23%

ASP (£k) 170 202 171 181Mvmt since 2002 5% (2%) n/a -

ASP/sq ft (£) 164 194 181 178Mvmt since 2002 15% 0% n/a 7%

UK Housing Analysis




Completions (homes) 3,472 2,618 1,600 7,690Mvmt since 2002 6% (11%) n/a 23%

ASP (£k) 170 202 171 181Mvmt since 2002 5% (2%) n/a -

ASP/sq ft (£) 164 194 181 178Mvmt since 2002 15% 0% n/a 7%

Forward Order Book (units) 1,249 685 1,270 3,204Mvmt since 2002 41% 32% n/a 128%

Forward Order Book (£m) 225 137 239 601Mvmt since 2002 54% 20% n/a 131%

UK Housing Analysis

North America Housing Performance

Average Selling Price (£k) 207.1 235.9 (12)

House Completions 2,786 1,839 51

Lot Completions 2,940 2,724 8

Turnover (£m) 686.3 521.8 32

Operating Profit (£m) * 91.2 66.2 38


2003 2002 %

ROACE (%) * 27.4 21.6

* Pre goodwill amortisation

£m 2003 2002

Net Rental Income

- Trading Properties 2.0 0.3

- Investment Properties 11.9 13.9

Development Profits 3.1 12.1

Overheads/Other Income (8.8) (10.6)

Operating Profit before exceptionals 8.2 15.7

UK Property 6.6 14.6Other Property 1.6 1.1

Property Performance

St Katharines and K2 sale

St Katharines• Expect ~£10 million tax free profit from sale of St Katharines

• Proceeds £166.3m, Book £146.3m, Rental Guarantees £8.25m & costs

• Redeem 9.5% 2014 First Mortgage Debenture

• An expected £43m loss (interest cost)

• Effect on overall debt £120m

K2• Target is a pre interest profit margin of 15%

• Still a long way to go with construction

£m 2003 2002

External Turnover 368.7 363.9

Internal Turnover 125.5 82.4

Total Turnover 494.2 446.3

Profit before tax 20.8 21.1

Construction

Cash flows

£m 2003 2002

Operating cash flow 247 147

Interest & returns on investments (43) (18)

Tax (83) (74)

Capital flows (9) 61

Acquisitions (435) (30)

Dividends paid (41) (37)

Cash management 40 (61)

Financing 314 24

Movement in cash (10) 12

Pensions and Taxes

• Pensions

– Pre tax FRS 17 deficit at year end of £182m

– Profit and loss charge £12.7m (2002: £8.0m)

• Taxes

– Sustainable 33% tax rate

Acquisition accounting

£m

Net assets acquired (excl. debt) 606

Net debt acquired (229)

Net assets acquired 377

Goodwill 122

Consideration 499

Satisfied by:

Shares issued 67

Loan notes issued 7

Cash 425

499

Fair value exercise

£m £m £m £m

Book FV Acct’g FVValue Adj Policies

Fixed Assets 30 (20) (3) 7

Current Assets 872 22 (136) 758

Creditors (497) (10) 130 (377)

Provisions (4) (6) - (10)

Net Assets 401 (14) (9) 378

Minorities (1)

Goodwill 122

499

£m £m Opening shareholders funds

• Equity 1,406• Preference -

1,406Prior Year adjustment – own shares (13)Retained profit 152Increase in shares 171Other gains and losses

• FX (2)• Invest Prop Revaluation (19)• Other (1)

(22)Closing shareholders funds

• Equity 1,593• Preference 101

1,694

Balance sheet

Closing no. of shares in issue (m) 584.2 552.7Average no. of shares for eps (m) 550.9 549.3

Shareholders funds per share (p) 276.7 255.6

Gearing (%) 43.9 18.7

ROACE (%) * 22.9 20.1

Average net debt (£m) 584 366

Land creditors 253.7 123.8

2003 2002

*Pre goodwill amortisation and exceptional items

Balance Sheet ratios

Concluding comments

• Good profit and loss performance

• Excellent housing results

• Sufficient headroom in balance sheet for growth


Iain Napier

Chief Executive Officer

Progress on cost savings

• £21m of cost savings delivered this year

• High degree of confidence with delivery of further £9m of incremental cost savings and £12.5m of synergies in 2004

• Rising to £25m synergies in 2005

Started 2004 with strong order books

• Strong order books

– UK Housing £601 million up 131%

– NA Housing £444 million up 35%

– Spanish Housing £65 million up 40%

– Construction £785 million up 17%

UK Housing Market

• Market remains robust

• Excess of demand over supply continues

• Interest rate rises had no discernible effect

• Planning delays continue to frustrate

• Expect house price inflation ~5% in 2004

• Barker Review

• Taylor Woodrow has participated

• Supportive of initiatives to narrow gap between demand and supply

• Desire greater speed, certainty and consistency in planning

North American Housing market

• All markets are very strong

• Assisted by

• Taylor Woodrow market positions

• Low interest rates

• Strong economic growth

• Demographics

• Expect house price inflation ~ 4% to 5%

North American Housebuilders

0

0.5

1

1.5

2

2.5

3

3.5

Centex

Lenna

rDR H

orton Pult

eHov

nanian

Ryland

Toll B

ros

KB Hom

e

MDC

Standard

Pacific

Beaze

rMultiple

0

2

4

6

8

10

12

TimesP/NAV 2004E PE

Source: UBS February 2004

Growth from housing in 2004

• UK Housing

• Expect volumes of around 10,000 in 2004

• 69% reserved for H1, 37% reserved for full year

• Wilson Connolly margins 15% in 2004

• NA Housing

• Strong growth to continue

• 90% reserved for H1, 59% reserved for full year

• Spanish Housing

• Expect similar performance to 2003

• Commercial Property

• Remains weak

• Construction

• Remains at same level of profitability

Conclusion

• Well positioned for further growth in 2004

• Full year benefit from Wilson Connolly

• Synergies and cost savings

• North American business extremely strong

• Continued contribution from Spain

• Construction de-risked and focussed

• Balance sheet remains strong


Questions and Answers

Preliminary Results 2003 - Handouts

1. Operating Profit History

2. Next Guidance to Market

3. Earnings per share

4. Exchange & Dividends

5 – 8 Fair Value Exercise

9. UK Housing Sales Mix

10. UK Housing Price Bands

11- 12 UK Land Bank

13 North American Land Bank

14 Analysis of Stocks

15- 17 Water fall charts

Operating Profit

£m 2003 2002 2001 2000 1999

UK Housing * 244.7 177.6 127.7 43.6 32.4

North America Housing 91.2 66.2 53.4 60.7 46.5

Other Housing ** 20.3 11.6 9.7 9.3 7.3

Property 8.2 15.7 41.7 48.8 43.4

Construction 8.4 11.7 12.2 1.1 2.8

Goodwill (15.0) (13.1) (10.7) - -

Integration/Restructure (20.0) (12.0) (9.8) - -

Other - - - 2.2 6.9

Operating Profit 337.8 257.7 224.2 165.7 139.3

* UK Housing includes Bryant Homes and Capital Developments for 1998-2002 and from 2003 Wilson Connolly

** Other Housing now represents Spain & Gibraltar, historic numbers include the Australian housing business which was sold in 2002

Next guidance to market

• AGM & trading statement 20 April

• Pre interims trading statement early July

• Interim presentations 3 August

• FY trading statement early January 2005

Earnings per shareAdjusted earnings per share 2003 2002

No. m No. m

Opening shares 552.7 551.5

Wilson Connolly issue 27.6 -

Options 3.9 1.2

Closing shares 584.2 552.7

Weighted average 550.9 549.3

£m £m

Net earnings 202.1 155.1

Less finance costs of non equity shares (1.1) -

Add net exceptional costs 14.0 8.4

Adjusted earnings 215.0 163.5

Adjusted earnings per share 39.0p 29.8p

Exchange & dividends

Exchange (£m) Nth America Other Total

Turnover (44.5) 5.4 (39.1)

Operating profit (4.9) 1.4 (3.5)

Profit before tax (4.4) 1.4 (3.0)

(US) (CAN)

2003 Av. Exchange Rate 1.64 2.30

2002 Av. Exchange Rate 1.50 2.36

Dividends

Dividend up 20% to 8.9p

Fair Value Exercise: Methodology

• Accounting policy adjustment

• Financial instruments and provisions

• Land/WIP valuations

• Based around consistent margin based methodology

• External valuation on sample of key sites

• Other assets and liabilities fair valued

Fair Value : Accounting Policies

£m £m

Fixed Assets

Capitalised system development costs (3)

(3)

Current Assets

Land Accounting (130)

Pre acquisition costs and options (10)

Deferred tax on accounting changes 4

(136)

Creditors

Land Accounting 130

Fair Value : Financial Instruments and Provisions

£m £m

CreditorsLoans (6)

Derivatives (4)

(10)

Current AssetsDeferred Tax 4

ProvisionsPensions provision (5)

Contract provision (1)

(6)

Fair Value : Land

£m £m £m

Book value as at 30.09.03(Taylor Woodrow accounting policies) 461

Upwards valuation 56

Downwards valuation (24)

Net Valuation uplift 32

Less:

Wilson Connolly own previous

FV adjustments (8)

Site specific adjustments (6)

(14)

18

Fair Value as at 30.09.03 479

UK Housing sales mix

2003 % 2002 %

1 bed 385 5 387 62 bed 2,596 34 1,750 283 bed 2,425 32 1,900 314 bed 2,117 27 1,992 325+ bed 167 2 209 3Total 7,690 6,238Made up of: - Houses 5,254 68 4,449 71- Apartments 2,436 32 1,789 29

UK Housing Price Bands

Selling Price 2003 2002

% %

<£100k 11.0 13.5

£100-£140k 23.9 26.8

£140-£180k 23.7 22.8

£180-£220k 15.7 14.3

£220-£260k 11.2 8.6

£260-£300k 6.2 6.5

£300k+ 8.3 7.5

UK land bank

UK Housing UK Housing 2003 2002

Plots owned with consent 27,917 16,391

Net book value (£m) 1,098.7 715.5

Average land costper home owned lots (£k) 39.4 43.7

Land cost/house price ratio (%) 22 24

UK Land owned with planning consentPlots

Owned with consent at 01.01.2003 16,391

Purchases/ Planning Changes 10,030

Wilson Connolly plots acquired 9,906

Completions - Houses (7,690)

Completions - Lots (720)

Owned Land Bank at 31.12.2003 27,917

North America - land bank

Arizona California Canada Florida Texas Total

2,444

104

(306)

2,242

Controlled plots1.1.03

530 54 4,677 0 0 5,261

Controlled plots31.12.03

3,663 1,714 5,120 2,313 87 12,897

Total plots31.12.03 5,947 2,379 9,890 5,213 2,329 25,758

7.6

Owned Plots 1.1.03

3,119 706 5,280 3,405 14,954

Purch’d/plan’gchange

1,791 478 959 301 3,633

Completions (2,626) (519) (1,469) (806) (5,726)

Owned plots 31.12.03

2,284 665 4,770 2,900 12,861

Land bank years 2.3 4.6 6.7 6.5 4.5

Analysis of stocks and wip

£m Land WIP Other Total

UK Housing

1,316 560 57 1,933

NA Housing

241 182 28 451

Other Housing

25 36 2 63

Property - - 146 146

Other - 3 1 4

1,582 781 234 2,597

Movements in Turnover

2002Turnover

2,209

UKHousing

303

HousingNA

164

HousingOther

17

Const’n

5

Property

(29)

2003

2,669

Turnover

1500

2000

2500

£m

Movement in Operating Profit

0

50

100

150

200

250

300

350

400

£m

2002Op

Profit

258

HousingUK

67

HousingNA

25

HousingSpain

9

Property

(8)

Const’n

(3)

Other

(10)

2003Op

Profit

338

Movement in Net Debt

0

100

200

300

400

500

600

700

800

£m

OpeningNet Debt

260

Acq’ns

661

Fin Invst& Capex

9

Tax/Int/Divs/Exch

163

ClosingNet Debt

743

(247)

Op CashFlow

IssuedCapital

(103)

taylor woodrow blue/slate/media/regions/migration... · 2013-08-29 · • re branding of sites to...

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