Interim Results
NATIONAL HOUSEBUILDER BELLWAY p.l.c. TODAY, TUESDAY 31 MARCH, ANNOUNCE THEIR
INTERIM RESULTS FOR THE HALF YEAR ENDED 31 JANUARY 2009.
HIGHLIGHTS
* Completed sales of 2,014 homes (2008 - 3,252)
* Average price achieved £156,100 (2008 - £174,800)
* Total Group turnover of £320.2m (2008 - £581.5m)
* Profit before taxation £17.7m * (2008 - £96.9m)
* Interim dividend 3.0p (2008 - 18.1p)
* Gearing of 20.7%, with net debt of £198.8m - ahead of debt reduction
programme
* Further write down of stocks of £66.3m
* Net asset value per ordinary share 834p (31 July 2008 - 871p)
* Before exceptional items
Chairman Howard Dawe said "…. Bellway suffered a fall in volume and average
selling price for the six months ended 31 January 2009…." this "…. produces an
operating margin of 9.2% which the Board believes is a creditable performance,
given current conditions." He added "given the strength of the balance sheet",
Bellway "….is paying an interim dividend of 3 pence per ordinary share."
Furthermore "….in the first eleven weeks of this calendar year, visitor and
subsequent reservation rates have improved upon those seen in the last five
months of 2008."
He concluded "….the Board will continue its current programme of managing land
expenditure and work in progress, but not to the detriment of any opportunities
that may present themselves"….and …. "prepare the business for the future…."
FOR FURTHER INFORMATION, PLEASE CONTACT JOHN WATSON, CHIEF EXECUTIVE OR
ALISTAIR LEITCH, FINANCE DIRECTOR.
TUESDAY 31 MARCH - FRIDAY 3 APRIL
J WATSON: 07855 337007
A LEITCH: 07855 337001
THEREAFTER: 0191 217 0717
CHAIRMAN'S STATEMENT
As anticipated, in this difficult market, Bellway suffered a fall in volume and
average selling price for the six months ended 31 January 2009, consequently
revenue for the Group reduced from £581.5 million to £320.2 million. The number
of homes sold in the period was 2,014 (2008 - 3,252) with the average selling
price being £156,100 (2008 - £174,800). Operating profit before exceptional
items benefited from the reduction in overheads made during 2008 and at
£29.5 million, produces an operating margin of 9.2% which the Board believes
is a creditable performance, given current conditions. Profit before tax and
exceptional charge was £17.7 million compared to £96.9 million in the same
period last year.
House prices have already fallen by around 25% from their peak in August 2007
with price reductions obviously varying from region to region and the Group has
seen falls of anything up to 40% depending upon location and type of site. As
required by current accounting standards, the Board has reviewed the value of
its land and work in progress. This review has resulted in an exceptional
charge in the period of £58.9 million. In addition, the net realisable value of
our part exchange properties and land without planning have been reviewed and
the charge for these further categories is £7.4 million, giving a total
exceptional charge for the Group of £66.3 million.
The exceptional charge produces a loss before tax in the period of
£48.6 million compared to a profit before tax of £96.9 million in 2008. Despite
the lower level of revenue, gearing remained a modest 20% with net debt of
£198.8 million at 31 January. The current net asset value per ordinary share is
834 pence.
Dividend
The Group recognises the importance of dividend payments to shareholders and
given the strength of the balance sheet, is paying an interim dividend of
3 pence per ordinary share. This dividend will be paid on Wednesday 1 July to all
shareholders on the Register of Members on Friday 22 May. The ex-dividend date
is Wednesday 20 May.
Trading
The sales performance in the south has been reasonably robust with volumes
falling by a relatively modest 14% to 1,286 homes with an average sales price
of £164,873. In the north, however, volumes declined more rapidly and resulted
in completions falling by 59% to 728 homes with an average sales price of
£140,729. Included in the above are 379 homes sold to housing associations with
an average selling price of £115,960, the majority of which were concluded by
our southern divisions.
Virtually every private reservation since last summer has been achieved using a
variety of incentives, notably part exchange and Bellway's own shared equity
scheme, `Opening Doors'. A combination of low levels of mortgage lending, high
deposit requirements and the caution adopted by most valuers on behalf of
lenders has not helped consumer confidence. As a consequence, we are
experiencing historically high levels of cancellations of around 26%. However,
in the first eleven weeks of this calendar year, visitor and subsequent
reservation rates have improved upon those seen in the last five months of
2008. These reservations are currently running at only 13% below the same
period last year, generating optimism that our current year end target is
achievable. Our future order book on 23 March stood at £370 million
(2008 - £670 million) and currently the Group has 98% (2008 - 88%) of its annual
target secured.
I am pleased to report that we are currently ahead of our planned debt
reduction programme with net bank borrowings down almost £40 million from July
2008 to the end of January at £178.8 million. The Group's committed facilities
remain at £402 million with £20 million due for renewal in May together with
£2million repayable at the end of May. The remaining maturity dates of the
committed facilities extend
in tranches out to 2015. These facilities were agreed and concluded in April/
May 2008 and the Group continues to operate comfortably within its covenants.
People
As ever, the Group's performance is dependant upon the efforts and abilities of
its many employees, suppliers, sub-contractors and partners. In what continues
to be very difficult circumstances, the Board would like to thank all those,
past and present, who have played a part in helping the Group deliver these
results.
Outlook
Until the Group experiences consistent and prolonged signs of improvement in
customer confidence, combined with a change in lending and valuing criteria,
the Board will continue its current programme of reducing land expenditure and
work in progress, but not to the detriment of any opportunities that may
present themselves. We will continue to focus on the early sale of stock
properties, currently standing at 850 homes, to enhance the cash position.
These actions, combined with those taken in 2008 in rationalising the
divisional structure, should prepare the business for the future and help
maintain the underlying strength of the Group's balance sheet.
H C Dawe
Chairman
30 March 2009
GROUP INCOME STATEMENT
Notes Half year Half year Year
ended ended ended
31 January 31 January 31 July
2009 2008 2008
£m £m £m
Revenue 320.2 581.5 1,149.6
Cost of sales (337.0) (445.3) (1,036.7)
Analysed as:
Cost of sales before (270.7) (445.3) (905.8)
exceptional item
Impairment of inventories 4 (66.3) - (130.9)
Cost of sales (337.0) (445.3) (1,036.7)
Gross (loss) / profit (16.8) 136.2 112.9
Administrative expenses (20.0) (31.0) (58.8)
Operating (loss) / profit (36.8) 105.2 54.1
Analysed as:
Operating profit before 29.5 105.2 185.0
exceptional item
Impairment of inventories 4 (66.3) - (130.9)
Operating (loss) / profit (36.8) 105.2 54.1
Finance income 2.8 3.7 3.6
Finance expenses (14.5) (11.8) (22.6)
Share of loss of equity (0.1) (0.2) (0.3)
accounted entities
(Loss) / profit before (48.6) 96.9 34.8
taxation
Income tax credit / 3 13.6 (28.9) (7.8)
(expense)
(Loss) / profit for the (35.0) 68.0 27.0
period
(Loss) / earnings per - Basic (30.5p) 59.4p 23.6p
ordinary share i
- Diluted (30.5p) 59.2p 23.5p
Dividend per ordinary share 5 3.0p 18.1p 24.1p
Non-GAAP measures
Underlying earnings per - Basic 11.1p 59.4p 104.2p
share ii
- Diluted 11.1p 59.2p 104.1p
i (Loss) / earnings per share calculated in accordance with IAS 33 'Earnings
per share'
ii Underlying earnings per share excludes exceptional items (see note 4)
CONSOLIDATED Statement of Recognised Income and Expense
Note Half year Half year Year
ended ended ended
31 January 31 January 31 July
2009 2008 2008
£m £m £m
Actuarial losses on defined benefit (1.6) (0.7) (14.3)
pension scheme
Tax on items taken directly to equity 3 0.4 0.2 4.0
Net expense recognised directly in (1.2) (0.5) (10.3)
equity
(Loss) / profit for the period (35.0) 68.0 27.0
Total recognised (expense) / income 6 (36.2) 67.5 16.7
for the period
GROUP BALANCE SHEET
Note At At At
31 January 31 January 31 July
2009 2008 2008
£m £m £m
ASSETS
Non-current assets
Property, plant and equipment 9.9 12.3 11.6
Investment property 5.5 2.4 4.1
Investments in equity accounted 0.1 - 0.1
entities
Other financial assets 13.5 6.0 5.6
Deferred tax assets 9.0 5.5 7.9
38.0 26.2 29.3
Current assets
Inventories 1,319.3 1,628.4 1,503.9
Trade and other receivables 70.9 42.9 54.5
Cash and cash equivalents 98.2 25.7 109.3
1,488.4 1,697.0 1,667.7
Total assets 1,526.4 1,723.2 1,697.0
LIABILITIES
Non-current liabilities
Interest bearing loans and borrowings (275.0) (162.0) (295.0)
Retirement benefit obligations (14.8) (3.0) (12.7)
Land payables (41.8) (33.6) (51.3)
(331.6) (198.6) (359.0)
Current liabilities
Interest bearing loans and borrowings (22.0) (91.5) (52.0)
Trade and other payables (214.4) (335.1) (284.9)
Current tax liabilities - (26.6) -
(236.4) (453.2) (336.9)
Total liabilities (568.0) (651.8) (695.9)
Net assets 958.4 1,071.4 1,001.1
EQUITY
Issued capital 14.3 14.3 14.3
Share premium 117.0 116.0 117.0
Other reserves 1.5 1.5 1.5
Retained earnings 825.7 939.7 868.4
Total equity attributable to equity 6 958.5 1,071.5 1,001.2
holders of the parent
Minority interest (0.1) (0.1) (0.1)
Total equity 958.4 1,071.4 1,001.1
GROUP CASH FLOW STATEMENT
Note Half year Half year Year
ended ended ended
31 January 31 January 31 July
2009 2008 2008
£m £m £m
Cash flows from operating activities
(Loss) / profit for the period (35.0) 68.0 27.0
Depreciation charge 1.3 1.4 2.9
Finance income (2.8) (3.7) (3.6)
Finance expenses 14.5 11.8 22.6
Share based payment charge 0.5 1.0 1.7
Income tax (credit) / expense 3 (13.6) 28.9 7.8
Decrease / (increase) in inventories 184.6 (90.5) 33.9
(Increase) / decrease in trade and (16.4) 2.5 13.3
other receivables
Decrease in trade and other payables (96.7) (62.2) (101.6)
Cash inflow / (outflow) from 36.4 (42.8) 4.0
operations
Interest paid (12.0) (9.8) (17.4)
Income tax refunded / (paid) 20.9 (34.6) (62.9)
Net cash inflow / (outflow) from 45.3 (87.2) (76.3)
operating activities
Cash flows from investing activities
Acquisition of property, plant and (0.2) (1.4) (2.1)
equipment
Acquisition of investment property (1.4) (0.1) (1.9)
Proceeds from sale of property, plant 0.6 0.4 0.4
and equipment
Proceeds from the sale of investment - 0.2 0.3
property
Interest received 1.6 2.7 4.6
Net cash inflow from investing 0.6 1.8 1.3
activities
Cash flows from financing activities
(Decrease) / increase in bank (50.0) 135.0 253.0
borrowings
Proceeds from the issue of share - 0.5 1.5
capital on exercise of share options
Purchase of own shares by employee (0.1) (0.5) (0.6)
share option plans
Dividends paid 5 (6.9) (30.2) (51.4)
Net cash (outflow) / inflow from (57.0) 104.8 202.5
financing activities
Net (decrease) / increase in cash and (11.1) 19.4 127.5
cash equivalents
Cash and cash equivalents at beginning 109.3 (18.2) (18.2)
of period
Cash and cash equivalents at end of 98.2 1.2 109.3
period
NOTES
1. Basis of preparation and accounting policies
These condensed financial statements have been prepared in accordance with IAS
34 Interim Financial Reporting as adopted by the EU. They do not include all of
the information required for full annual financial statements, and should be
read in conjunction with the Group financial statements for the year ended 31
July 2008.
These condensed financial statements are unaudited and were approved by the
Board of Directors on 30 March 2009.
The information for the year ended 31 July 2008 does not constitute statutory
financial statements as defined in section 240 of the Companies Act 1985. Those
financial statements have been reported on by the Group's auditors and
delivered to the Registrar of Companies. The report of the auditors was
unqualified and did not contain statements under section 237(2) or (3) of the
Companies Act 1985.
The accounting polices applied by the Group in these condensed financial
statements are the same as those applied by the Group in its consolidated
financial statements for the year ended 31 July 2008.
2. Revenue/segmental analysis
The Group uses business as the basis for primary segmentation. Operations are
carried out within one business segment which is housebuilding. No additional
business segment information is required to be provided. The Group's secondary
segment is geography. It operates in one geographical segment, the United
Kingdom, therefore no additional geographical segment information is required
to be provided.
3. Taxation
The taxation credit / (charge) for the half years ended 31 January 2009 and 31
January 2008 is calculated by applying the Directors' best estimate of the
annual effective tax rate to the (loss) / profit for the period.
4. Exceptional items
Exceptional items are those which, in the opinion of the Board, are material by
size or nature, non-recurring, and of such significance that they require
separate disclosure on the face of the income statement.
A full review of inventories has been performed and land write downs have been
made where cost exceeds net realisable value. Net realisable value represents
the estimated selling price (in the ordinary course of business) less all
estimated costs of completion and overheads. Estimated selling prices have been
reviewed on a site by site basis and selling prices have been reduced based on
local management and the Board's assessment of current market conditions. These
site reviews have resulted in land and work in progress write downs totalling
£58.9m.
In addition, option costs and related fees have been written down by £6.3m to
their net realisable value.
The Board has also reassessed the net realisable value of currently unsold
part-exchange properties and has written down stock by £1.1m.
The above has resulted in an exceptional charge totalling £66.3m (2008 - £nil).
The exceptional charge of £130.9m for the year ended 31 July 2008 is explained
in note 5 of our Annual Report and Accounts.
5. Dividends
Half year Half year Year
ended ended ended
31 January 31 January 31 July
2009 2008 2008
£m £m £m
Final dividend paid for the year ended 31 6.9 30.5 30.5
July 2008 of 6.0p per share
(2007 - 26.675p)
Interim dividend paid for the year ended - - 20.8
31 July 2008 of 18.1p per share
6.9 30.5 51.3
Proposed interim dividend for the year 3.4 20.8 -
ending 31 July 2009 of 3.0p per share
(2008 - 18.1p)
The proposed interim dividend was approved by the Board of Directors on 30
March 2009 and has not been included as a liability at the balance sheet
date.
6. Group statement of changes in equity
Half year Half year Year
ended ended ended
31 January 31 January 31 July
2009 2008 2008
£m £m £m
Total recognised (expense) / income (36.2) 67.5 16.7
Dividends on equity shares (6.9) (30.5) (51.3)
Shares issued - 0.5 1.5
Credit / (charge) in relation to share 0.5 (1.4) (1.0)
options and tax thereon
Purchase of own shares (0.1) (0.5) (0.6)
Net (reduction) / increase in total (42.7) 35.6 (34.7)
equity
Total equity at the start of the period 1,001.2 1,035.9 1,035.9
Total equity at the end of the period 958.5 1,071.5 1,001.2
7. Related party transactions
There have been no related party transactions in the first six months of the
current financial year which have materially affected the financial position or
performance of the Group.
Related parties are consistent with those disclosed in the Group's Annual
Report and Accounts for the year ended 31 July 2008.
8. Half year report
The condensed financial statements were approved by the Board of Directors on
30 March 2009 and copies are being posted to all shareholders. Further copies
are available on application to the Company Secretary, Bellway plc, Seaton Burn
House, Dudley Lane, Seaton Burn, Newcastle upon Tyne, NE13 6BE and are also
available on our website at www.bellway.co.uk.
Principal risks and uncertainties
The directors consider that the principal risks and uncertainties which could
have a material effect on the Group's performance in the remaining six months
of the financial year remain the same as those stated on pages 25 and 26 of our
Annual Report and Accounts for the year ended 31 July 2008 which is available
on our website at www.bellway.co.uk.
Statement of directors' responsibilities
We confirm that to the best of our knowledge:
* the condensed set of financial statements has been prepared in accordance
with IAS 34 Interim Financial Reporting as adopted by the EU;
* the interim management report includes a fair review of the information
required by:
1. DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of
important events that have occurred during the first six months of the
financial year and their impact on the condensed set of financial
statements; and a description of the principal risks and uncertainties for
the remaining six months of the year; and
b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the Group during that period; and any changes in the related
party transactions described in the last annual report that could do so.
The Directors of Bellway p.l.c. are listed in the Annual Report and Accounts
for the year ended 31 July 2008. Leo Finn retired as non executive director on
16 January 2009. Mike Toms was appointed a non executive director on 1 February
2009.
For and on behalf of the Board of Directors
John K Watson
Chief Executive
30 March 2009
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