Final Results

RNS Number : 2017I

Bovis Homes Group PLC

08 March 2010

 



BOVIS HOMES GROUP PLC

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2009

Issued 8 March 2010

The Board of Bovis Homes Group PLC today announced its preliminary results for 2009 which have been prepared in accordance with International Financial Reporting Standards as adopted by the EU ('IFRS').

·      Pre tax profit for the year of £4.8 million (2008: pre tax loss of £78.7 million)

·      Basic earnings per share of 2.8p (2008: basic loss per share 49.1p)

·      Pre-exceptional pre tax profit of £7.5 million (2008: £14.4 million)

·      Pre-exceptional basic earnings per share of 4.4p  (2008: 9.2p per share)

·      Net inventory provision release of £11.6 million in the second half year

·      Total exceptional charges of £2.7 million (2008: £93.1 million)

·      £112 million of net cash at 31 December 2009 (2008: £108 million net debt pre issue costs)

·      Cheaper, longer term and more flexible banking facilities agreed at the end of 2009

·      Overheads cut by 34% versus 2008 and by circa 45% relative to base at start of 2008

·      Land acquisition recommenced, with four consented sites acquired and terms agreed in principle on further 15 sites at 31 December 2009

·      12,042 plots of land with planning consent (2008: 13,545 plots) and 16,363 potential plots of strategic land (2008: 18,972 potential plots)

Commenting on the results, David Ritchie, the Chief Executive of Bovis Homes Group PLC said:

"The Group has successfully delivered on its strategic objectives for 2009: achieving a pre tax profit, increasing private homes reservations in the year by 82%, reducing overheads by 34% and generating £221 million of cash inflow including the £59 million benefit of an equity placing.  The Group is also pleased to announce the first release of previously taken inventory provisions, reflecting recovery of site viability in certain locations arising from improved sales prices and reduced construction costs.

The Group has recommenced investment in land and is pleased with the progress made to date, with four consented sites acquired in the last quarter of 2009 and terms agreed in principle at the year end on a further 15 sites, all of which have been progressed during the early part of 2010.  With £112 million of net cash in hand at 31 December 2009 the Group is well positioned to increase its output capacity, as markets recover, supporting future profitable growth."

Enquiries:	David Ritchie, Chief Executive	Results issued by	Andrew Best / Peter Edsinger
	Neil Cooper, Finance Director		Shared Value Limited
	Bovis Homes Group PLC		On Monday 8 March - tel: [phone]
	On Monday 8 March - tel: [phone]
	Thereafter – tel: [phone]

Certain statements in this press release are forward looking statements.  Forward looking statements involve evaluating a number of risks, uncertainties or assumptions that could cause actual results to differ materially from those expressed or implied by those statements.  Forward looking statements regarding past trends, results or activities should not be taken as a representation that such trends, results or activities will continue in the future.  Undue reliance should not be placed on forward looking statements.

2009 Overview

With the backdrop of the UK housing market continuing to be challenging, the Group is pleased to be able to report on a successful year in 2009.  Good progress was made in delivery of the strategic objectives laid out by the Group at the start of 2009: progress which leaves the Group well placed to deliver profitable growth looking ahead.

The Group achieved strong year over year growth during 2009 in both the number of private homes legally completed and the private reservations taken in the year.  It benefited from new initiatives such as the upgrading of sales systems and by innovations in how the Group marketed and sold its homes, including methods to assist customers in raising the necessary mortgage deposits.  During 2009, the Group achieved 1,801 private reservations, representing an 82% increase in sales levels compared to the 989 private reservations taken in 2008.

For the year ended 31 December 2009, the Group generated £281.5 million of revenue (2008: £282.3 million) from the legal completion of 1,803 homes (2008: 1,817 homes).  The Group achieved a pre-exceptional pre tax profit of £7.5 million in 2009 (2008: £14.4 million) with pre-exceptional basic earnings per share at 4.4p (2008: 9.2p per share). 

On a pre-exceptional basis, the Group achieved an operating margin of 6.2% in 2009 (2008: 7.5%).  A 9% decline in private home prices impacted gross margins, though this was substantially offset by the Group's strong performance in controlling costs and reducing overhead.  Overhead levels were reduced by 34% on the prior year and by circa 45% compared to the overhead base of the Group at the start of 2008.

There was a £2.7 million pre tax exceptional charge for the year following the release in the second half of £11.6 million of inventory provision not now required.  This provision release offset an £8.9 million inventory provision charged in the first half of 2009.  There was also a £4.2 million exceptional interest charge linked to the refinancing of the Group's facility agreement, which was agreed in December 2009 and signed in January 2010, and £1.2 million of other items.

Taking exceptional items into account, the Group achieved a pre tax profit of £4.8 million (2008: pre tax loss £78.7 million) and a basic earnings per share of 2.8p (2008: basic loss per share of 49.1p).

The Group's net assets increased from £632.3 million at the start of 2009 to £692.6 million at 31 December 2009, equating to a net asset value of £5.20 per share.  The major element of the net asset movement over the year of £60.3 million was the net £59.0 million raised by the Group's equity placing in September.  Retained earnings increased by £1.2 million including retained profit in the year of £3.5 million and the reserves adjustment for the Group's pension deficit which increased from £6.8 million to £8.9 million.

The Group constructed 911 units worth of production during 2009, with only 221 units built in the first half, and a further 690 units in the second half as the market backdrop generally improved.  This has enabled the Group to free up considerable cash from working capital, as nearly 900 more units were legally completed than were built.   As planned, the level of work in progress held at the year end has fallen sharply, from 1,878 units worth of production at the end of 2008 to 986 units worth of production at the end of 2009.  Within this work in progress, the number of unsold finished stock units has also been reduced sharply.  Looking ahead, the Group expects that levels of production will broadly match the levels of legal completions, such that there is not likely to be further substantial release of cash from work in progress, but equally, the Group will be vigilant to ensure that it does not invest unnecessary levels of capital in work in progress.

As at 31 December 2009, the Group had net cash in hand of £112 million.  Given the financial position of the Group at the start of the year, with £108 million of net debt pre issue costs, this represents £221 million cash inflow over the year as a whole including £59 million from the Group's placing in September:  a positive outcome reflecting well on the focus of the Group in this area.

At the end of the year, the Group had in place a £220 million committed syndicated banking facility, which was due to step down to £180 million in February 2010 and to £160 million in September 2010 and which was due to mature in March 2011.  Well ahead of this maturity, the Group chose to refinance this facility, taking advantage of improved credit conditions in the banking marketplace.  As at 31 December 2009, the Group had received credit approval for a new facility which it entered into in January 2010, at which point its existing facility was cancelled.  The new facility is a £150 million committed syndicated facility with a longer term, maturing in September 2013, with more flexible borrowing terms and a cheaper cost. 

The Group is now well placed to use its balance sheet strength to acquire new land for homes to support future growth.

 
Revenue

The Group delivered £278.8 million of housing revenue in 2009, 1.8% ahead of the prior year (2008: £274.0 million).  There was no income from land sales in 2009 (2008: £4.9 million).  Together with £2.7 million of other income (2008: £3.4 million) the Group's total revenue for 2009 was £281.5 million which was broadly in line with total revenue in 2008 at £282.3 million.

With 1,803 legal completions achieved during 2009, the Group's performance was similar to its performance in the previous year (2008: 1,817 legal completions).  This comparison masks the success achieved by the Group in increasing its volume of private homes in 2009 by 25%, with 1,527 legal completions in 2009 versus 1,223 units in 2008.  Given the lower private home forward sales position at the start of 2009 as compared to the start of 2008, this improvement in private legal completions arose from an 82% increase in the number of private homes reserved in 2009, with 1,801 private home reservations as compared to 989 private home reservations in 2008.  Offsetting this was a fall in the volume of social homes legally completed, from 594 units (33% of total volume) in 2008 to 276 units in 2009 (15% of total volume).  The Group expects that the social housing mix will rise in 2010 as new sites are started.

As a result of this reduction in social housing in the mix, the Group's average sales price increased by 3% to £154,600 (2008: £150,800).  The average sales price of the Group's private legal completions in 2009 was £165,500, a 9% decline on the average sales price seen in 2008 (£181,000) and a 20% decline on the average sales price in 2007 (£206,200).  The average sales price of the Group's social legal completions was £94,600, a 7% increase on the equivalent in 2008 (£88,500).

Given an increase in the average size of the Group's private homes from 972 square feet in 2008 to 993 square feet in 2009, the underlying sales price per square foot fell by 11%.  Overall, the average size of the Group's legally completed homes increased from 909 square feet in 2008 to 958 square feet in 2009, showing the effect of the reduction in social mix, given the smaller average size of social legal completions at 762 square feet per unit.

Pre-exceptional operating profit

The Group delivered a pre-exceptional operating profit for the year ended 31 December 2009 of £17.4 million at an operating margin of 6.2%, as compared to £21.3 million in the previous year, at an operating margin of 7.5%. 

Pre-exceptional gross margins fell by circa six percentage points, from 22.4% in 2008 to 16.1% in 2009, largely driven by a reduction in private home profit margins as the average sales price on private legal completions fell by 9% in 2009 as compared to 2008.  Largely offsetting this, the Group's pre-exceptional overhead ratio to revenue improved by circa five percentage points to 9.9% from 14.9% in 2008.  As the Group increases its volume of housebuilding and land acquisition, it is anticipated that overheads will rise in 2010 as essential land buying and technical resources are added to the business to support growth.

With no land sales in 2009, net option costs were £1.5 million, as compared to £1.3 million of land sales profit less option costs in 2008. 

Exceptional and non-recurring costs

The Group discloses items as exceptional when the Board deems them material by size or nature, non-recurring and of such significance that they require separate disclosure. 

Periodically, the Group reviews its inventory carrying values on a site by site basis, taking into account local management and the Board's estimates of current achievable pricing in local markets.  Where this gives rise to a situation where the then current carrying costs of the asset plus estimated costs to complete are higher than the estimated net realisable value, a provision is recognised for the difference.  Where a subsequent review indicates a net realisable value in excess of the carrying cost plus estimated costs to complete, any remaining un-utilised provision is required to be released. 

The Group has reviewed the carrying value of its assets and liabilities as at 31 December 2009.  Following this year end review, the Group has released £11.6 million of provisions held against the carrying costs of inventory.  This release increases the land cost base going forward which is expected to impact 2010 cost of sales by circa £5 million.  Of the Group's £11.6 million provision release in the second half, there was a gross release of £14.0 million offset by an additional further provision of £2.4 million.

Taking into account the £11.6 million year end inventory provision release, and the £8.9 million inventory provision charged in the first half of 2009, the net inventory provision release for the year as a whole was £2.7 million.

Offsetting this, the Group has written off the £4.2 million remaining un-amortised element of the one-off fee paid to its banking syndicate in relation to the facility agreement entered into in December 2008 following the agreement of a new deal, approved in December 2009 and entered into during January 2010.  The Group has also taken a £1.0 million provision relating to a potential onerous land contract and a £0.2 million impairment on the carrying value of its available for sale asset portfolio. 

In total, the Group has taken £2.7 million of exceptional items before tax in 2009 (2008: £93.1 million) 

Pre tax profit and earnings per share

The Group achieved pre-exceptional profit before tax of £7.5 million, with pre-exceptional operating profit of £17.4 million and net financing charges of £9.9 million.  This compares to £21.3 million of pre-exceptional operating profit and £6.9 million of net financing charges in 2008 which generated £14.4 million of pre-exceptional profit before tax in that year.

After accounting for £2.7 million of exceptional charges (2008: exceptional charges of £93.1 million) the Group made a pre tax profit of £4.8 million for the year as a whole (2008: £78.7 million pre tax loss).

Pre-exceptional basic earnings per share for the year was 4.4p and basic earnings per share after exceptional charges was 2.8p.  This is as compared to pre-exceptional basic earnings per share of 9.2p and basic loss per share after exceptional charges of 49.1p in 2008.

Land

Given the caution shown by the Group in the consented land market since 2006, and the uncertainty engendered by market conditions more recently, sales outlet numbers have fallen over 2009, with 85 sales outlets on average during the year.  The Group has commented that this average is likely to fall in 2010 to around 70 outlets.  The challenge ahead for the Group is to use its balance sheet strength to acquire residential land and thus grow its sales outlet count: either through consented land purchase or via conversion of the existing strategic land the Group controls.  To this end, four new consented sites were acquired in the final quarter of 2009, with terms agreed in principle on a further 15 sites by 31 December 2009.  

The Group held a consented land bank of 12,042 plots at 31 December 2009, over six and a half years supply at current levels of activity, although it has reduced over the year from 13,545 plots at 31 December 2008, demonstrating the impact of the Group's aforementioned caution in land acquisition.  The consented land bank reduced by virtue of the 1,803 legal completions during 2009 whilst there were 300 net plots added after adjusting for the effect of replanning.  The average consented land plot cost at the start of 2009 was £35,000.  This has increased over the year, following a net inventory provision release over 2009, to £35,200 at 31 December 2009.

The strategic land bank at 31 December 2009 amounted to 16,363 potential plots as compared to 18,972 potential plots at 31 December 2008.  Given the relatively low levels of additions into the strategic land bank during the year, and the transfer of only one site into the consented land bank, the major factor in this movement has been the removal of a large option-controlled site from the potential plot numbers as views on the delivery of an acceptable residential planning consent in that location have been revised.  The remaining un-amortised option costs relating to this site were written off during the year. 

Financing & cashflow

Pre-exceptional net financing charges were £9.9 million in 2009 (2008: £6.9 million).  Net bank charges for 2009 were £8.6 million, which included the amortisation of arrangement fees (£4.3 million) and commitment fee charges (£3.2 million).  This compares to £5.6 million of net charges in 2008.  On average during 2009, the Group had £9 million of net debt, as compared to an average net debt of £97 million in 2008, the improvement arising from strong working capital and other expenditure control as well as from the positive impact of the Group's equity placing in September 2009.  The Group was net cash positive from August 2009.  The Group incurred a £1.7 million finance charge (2008: charge of £2.5 million), reflecting the difference between the cost and nominal price of land bought on deferred terms which is charged to the income statement over the life of the deferral of the consideration payable.  The Group benefited from a £0.2 million net pension financing credit during 2009.  This credit arose as a result of the expected return on scheme assets being in excess of the interest on the scheme obligations.   The equivalent credit in 2008 was £1.1 million.  The Group also benefited from a finance credit of £0.5 million arising from the unwinding of the discount on its available-for-sale financial assets during 2009 (2008: £0.1 million). There were also £0.3 million of other financing charges during the year.

The Group started the year with £108.4 million of net debt before issue costs.  As at 31 December 2009, the Group held £114.6 million of cash in hand, offset by a £2 million loan received as part of the Government's Kickstart programme, aimed at supporting national housebuilders and encouraging increased levels of production, and a £0.3 million interest rate swap fair value adjustment: in total £112.3 million.  As the Group had substantial cash in hand at the year end, there was no year end gearing.

Having commenced the year with a number of strategies designed to strengthen its balance sheet through maximisation of cashflow generation, the circa £221 million of cash inflow achieved by the Group in the year demonstrates good success in this area.  There were a number of factors enabling the Group to deliver this strong cash inflow: firstly and most significantly, successful working capital management enabled the Group to reduce work in progress by £105 million.  Secondly, the Group received £22 million of tax rebates following its post exceptional loss in 2008.  Finally, the Group raised £59 million of new equity capital during the year as a result of its placing in September 2009. 

Taxation

The Group has recognised a tax charge of £1.3 million on pre tax profits of £4.8 million at an effective rate of 27.1% (2008: tax credit of £19.7 million at an effective rate of 25.1%).  Of this, a £2.0 million charge has arisen on pre-exceptional pre tax profits of £7.5 million, and a £0.7 million tax credit has arisen on pre tax exceptional items of £2.7 million.  The Group continues to recognise a current tax asset of £0.8 million in its closing balance sheet as at 31 December 2009 (2008: £23.6 million).

Pensions

Following a roll-forward of the valuation of the Group's pension scheme, with latest estimates provided by the Group's actuarial advisors, the Group's pension scheme had a deficit of £8.9 million at 31 December 2009, an increase of £2.1 million on the opening deficit of £6.8 million at 31 December 2008.  Whilst scheme assets grew strongly over the year, from £58.7 million to £67.6 million, the scheme liabilities increased to a greater extent, from £65.5 million to £76.5 million, impacted by a fall in bond yields.  As well as benefiting from a generally stronger stock market in 2009, scheme assets benefited from a £1.9 million special cash contribution made by the Group into the scheme in December 2009.   

Net assets

Net assets per share as at 31 December 2009 was £5.20 as compared to £5.23 at 31 December 2008.

Analysis of net assets
					2009		2008
					£m		£m
Net assets at 1 January					632.3		723.7
Pre-exceptional profit after tax for the year					5.5		11.1
Exceptional charges net of tax					(2.0	)	(70.1	)
Dividends					-		(27.0	)
Share capital issued					59.1		0.5
Net actuarial movement on pension scheme through reserves					(3.0	)	(6.4	)
Current tax recognised directly in equity					-		0.5
Adjustment to reserves for share based payments					0.7		-
Net assets at 31 December					692.6		632.3

Dividends

As previously announced, having regard to trading conditions, the Board did not recommend payment of a final dividend for 2008, and did not pay an interim dividend in 2009.   No cash payments have therefore been made in 2009 relating to dividends.  The Board does not propose payment of a final dividend for 2009 although it recognises the importance of dividends to shareholders, and anticipates that delivery of the Group's trading and investment plans will create a solid basis for the resumption of dividends.

Employees and the Board

Following on from what was a challenging year for its employees in 2008, the Group would like to thank its employees for their hard work and commitment during 2009, a year in which the Group made real progress in strengthening its balance sheet so as to enable it to compete successfully in the future.  The Board recognises that in 2009 its employees were working in a business with substantially reduced headcount, focussing on cash preservation and generation whilst also taking actions to facilitate future business growth.   Those actions to generate savings also impacted on the suppliers and sub-contractors of the Group and the Board would like to thank them for their contribution to the performance of the Group.

There were no changes to the Board during 2009, although the Group Finance Director, Mr Neil Cooper, announced his intention in November 2009 to leave the Group in order to pursue career options elsewhere. Mr Cooper will continue serving with the Group until the 2009 Annual General Meeting on 6 May 2010.  The Board would like to thank Mr Cooper for his significant contribution to the Board and to the robust performance of the Group in the current challenging market conditions.  The Board would also like to thank Mrs Lesley MacDonagh, who steps down at the upcoming AGM, for her contribution to the success of the Group since 2003.

Market conditions & prospects

The Group expects that a degree of stabilisation in house prices evidenced in the marketplace in later 2009 will continue into 2010.  Statistics would suggest the market as a whole has seen the commencement of modest pricing growth in the second half of 2009, although the Group remains somewhat cautious due to the relatively low levels of second hand stock supporting price growth in the second hand market which appears to have moved ahead at a faster rate than the new build sector during 2009.

Pricing is a function of both supply and demand. Whilst supply as evidenced by second hand stocks appears to have been relatively lower than demand over 2009, absolute demand in 2009 has been limited by reduced mortgage availability.  Positively, the number of mortgages being approved for home purchase has grown during 2009 although it still remains difficult for first time buyers to access the market given the large shift in deposit requirements, and the absolute level of mortgages approved for home purchase still remains below historical levels.

Overall, therefore, the Group expects that the pricing environment in 2010, whilst potentially volatile month by month, will be relatively stable taking the year as a whole.

The Group entered 2010 with a stronger forward sales position than in the prior year, reflecting its focus on delivering early sales activity to support volume aspirations for 2010 as a whole.  Given the already mentioned lower number of sales outlets available to the Group in 2010 and the prevailing market conditions, the Group has made a solid start to 2010 in terms of reservations.  For the first nine weeks of 2010, the Group has achieved an average private sales rate of 0.42 net reservations per site per week.  This compares with an average private sales rate per site per week throughout 2009 of 0.41 and an average in the first nine weeks of 0.39.  As at 5 March 2010, reflecting the strong opening position, the Group held 969 net sales for legal completion in 2010, as compared to 772 net sales at the same point in 2009.  Within the current year total, private sales amount to 701 units (2009: 515 units) and social sales amount to 268 units (2009: 257 units).

The Group is strongly placed with the financial capability to acquire consented land which will enable it to grow its output capacity as measured by sales outlet numbers, without relying on a resurgence in the housing market, thus increasing both revenue and profit in the mid term.  In 2009 the Group's strategy was clear: control of working capital and cash generation.  The strategy for 2010 is equally clear: investment in new land to generate strong future returns.

Bovis Homes Group PLC
Group income statement

For the year ended 31 December	2009						2008
	Before exceptional items		Exceptional items				Before exceptional items		Exceptional items
	£000		£000		£000		£000		£000		£000
Revenue	281,505		-		281,505		282,326		-		282,326
Cost of sales	(236,339	)	1,471		(234,868	)	(219,011	)	(76,487	)	(295,498	)
Gross profit/(loss)	45,166		1,471		46,637		63,315		(76,487	)	(13,172	)
Administrative expenses	(27,769	)	-		(27,769	)	(42,018	)	(16,641	)	(58,659	)
Operating profit/(loss) before financing costs	17,397		1,471		18,868		21,297		(93,128	)	(71,831	)
Financial income	2,304		-		2,304		1,389		-		1,389
Financial expenses	(12,178	)	(4,197	)	(16,375	)	(8,292	)	-		(8,292	)
Net financing costs	(9,874	)	(4,197	)	(14,071	)	(6,903	)	-		(6,903	)
Profit/(loss) before tax	7,523		(2,726	)	4,797		14,394		(93,128	)	(78,734	)
Income tax (expense)/credit	(2,070	)	763		(1,307	)	(3,319	)	23,058		19,739
Profit/(loss) for the period attributable to equity holders of the parent	5,453		(1,963	)	3,490		11,075		(70,070	)	(58,995	)
Earnings/(loss) per share
Basic	4.4p		(1.6p	)	2.8p		9.2p		(58.3p	)	(49.1p	)
Diluted	4.4p		(1.6p	)	2.8p		9.2p		(58.3p	)	(49.1p	)
Dividend per share charged in period
2008 interim paid November 2008					-						5.0p
2007 final paid May 2008					-						17.5p
					-						22.5p

Bovis Homes Group PLC

Group statement of comprehensive income

For the year ended 31 December
			2009		2008
			£000		£000
Profit / (loss) for the period			3,490		(58,995	)
Actuarial loss on defined benefits pension scheme			(4,210	)	(8,820	)
Deferred tax on actuarial movements on defined benefits pension scheme			1,179		2,470
Total comprehensive income and expense for the period attributable to equity holders of the parent			459		(65,345	)

Bovis Homes Group PLC

Group balance sheet

At 31 December			2009		2008
			£000		£000
Assets
Property, plant and equipment			11,574		12,347
Investments			22		22
Deferred tax assets			6,446		5,548
Trade and other receivables			2,213		2,418
Available for sale financial assets			21,291		6,030
Total non-current assets			41,546		26,365
Inventories			630,709		780,808
Trade and other receivables			30,771		37,947
Cash			114,595		11,634
Current tax assets			831		23,550
Total current assets			776,906		853,939
Total assets			818,452		880,304
Equity
Issued capital			66,570		60,497
Share premium			210,181		157,127
Retained earnings			415,815		414,654
Total equity attributable to equity holders of the parent			692,566		632,278
Liabilities
Bank and other loans			2,337		111,730
Trade and other payables			23,077		24,907
Retirement benefit obligations			8,910		6,790
Provisions			1,700		1,623
Total non-current liabilities			36,024		145,050
Trade and other payables			87,698		101,964
Provisions			2,164		1,012
Total current liabilities			89,862		102,976
Total liabilities			125,886		248,026
Total equity and liabilities			818,452		880,304

These accounts were approved by the Board of directors on 5 March 2010.                           

Bovis Homes Group PLC

Group statement of changes in equity

	Total		Issued	Share	Total
For the twelve months ended         31 December	retained earnings		capital	premium
	£000		£000	£000	£000
Balance at 1 January 2008	506,594		60,415	156,734	723,743
Total comprehensive income and expense	(65,345	)	-	-	(65,345	)
Deferred tax on other employee benefits	(22	)	-	-	(22	)
Current taxation recognised directly in equity	498		-	-	498
Issue of share capital	-		82	393	475
Share based payments	(22	)	-	-	(22	)
Dividends paid to shareholders	(27,049	)	-	-	(27,049	)
Balance at 31 December 2008	414,654		60,497	157,127	632,278
Balance at 1 January 2009	414,654		60,497	157,127	632,278
Total comprehensive income and expense	459		-	-	459
Deferred tax on other employee benefits	(2	)	-	-	(2	)
Issue of share capital	-		6,073	53,054	59,127
Share based payments	704		-	-	704
Dividends paid to shareholders	-		-	-	-
Balance at 31 December 2009	415,815		66,570	210,181	692,566

Bovis Homes Group PLC

Group statement of cash flows

For the year ended 31 December
			2009		2008
			£000		£000
Cash flows from operating activities
Profit/(loss) for the year			3,490		(58,995	)
Depreciation			769		1,168
Impairment of goodwill			-		10,036
Impairment of assets			245		2,241
Financial income			(2,304	)	(1,389	)
Financial expense			16,375		8,292
Loss/(profit) on sale of property, plant and equipment			3		(146	)
Equity-settled share-based payment expense / (credit)			704		(22	)
Income tax expense / (credit)			1,307		(19,739	)
(Release) / write-down of inventories			(2,664	)	75,202
Operating profit before changes in working capital and provisions			17,925		16,648
(Increase) / Decrease in trade and other receivables			(7,555	)	8,924
Decrease in inventories			152,762		13,345
Decrease in trade and other payables			(17,173	)	(43,444	)
(Decrease) / Increase in provisions and employee benefits			(611	)	702
Cash generated from operations			145,348		(3,825	)
Interest paid			(6,684	)	(8,769	)
Income taxes received / (paid)			21,688		(16,924	)
Net cash from operating activities			160,352		(29,518	)
Cash flows from investing activities
Interest received			1,481		187
Acquisition of property, plant and equipment			(44	)	(143	)
Proceeds from sale of plant and equipment			45		214
Net cash from investing activities			1,482		258
Cash flows from financing activities
Dividends paid			-		(27,049	)
Proceeds from the issue of share capital			60,662		475
Costs associated with share placing			(1,535	)	-
(Repayment) / drawdown of borrowings			(118,000	)	79,000
Costs associated with refinancing			-		(8,290	)
Net cash from financing activities			(58,873	)	44,136
Net increase in cash and cash equivalents			102,961		14,876
Cash and cash equivalents at 1 January			11,634		(3,242	)
Cash and cash equivalents at 31 December			114,595		11,634

Notes to the accounts

1       Basis of preparation

Bovis Homes Group PLC ('the Company') is a company domiciled in the United Kingdom.  The consolidated financial statements of the Company for the year ended 31 December 2009 comprise the Company and its subsidiaries (together referred to as 'the Group') and the Group's interest in associates.

The consolidated financial statements were authorised for issue by the directors on 5 March 2010.  The accounts were audited by KPMG Audit Plc.

The financial information set out above does not constitute the company's statutory accounts for the years ended 31 December 2009 or 2008 but is derived from those accounts.  Statutory accounts for 2008 have been delivered to the registrar of companies, and those for 2009 will be delivered in due course. The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 237 (2) or (3) of the Companies Act 1985 in respect of the accounts for 2008 nor a statement under section 498 (2) or (3) of the Companies Act 2006 in respect of the accounts for 2009.

The consolidated financials statements have been prepared in accordance with IFRS as adopted by the EU, and the accounting policies have been applied consistently for all periods presented in the consolidated financial statements.

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.  The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates.

2              Basis of consolidation

The consolidated financial statements incorporate the accounts of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December.  Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.  The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies.  The consolidated financial statements include the Group's share of the total recognised gains and losses of associates on an equity accounted basis, from the date that significant influence commences until the date that significant influence ceases.

3              Accounting policies

There have been no changes to the Group's accounting policies.  These accounting policies will be disclosed in full within the Group's forthcoming financial statements.

4              Exceptional items

Inventory carrying value

The Group has reviewed the carrying value of its inventory items, comparing the carrying cost of the asset against estimates of net realisable value.  Net realisable value has been arrived at using the Board's estimates of achievable selling prices taking into account current market conditions, and after deduction of an appropriate amount for selling costs.  This has given rise in the second half to an £11.6 million release of previously taken provision: this release comprised a gross release of £14.0 million and a further provision of £2.4 million.  Taken together with the £8.9 million provision taken in the first half, the net inventory provision release for the year as a whole was £2.7 million (2008: £75.2 million provision taken).

Financing charge

Following the credit approval of a new banking facility in December 2009 followed by the entering into of that agreement during January 2010, the Group has written off the £4.2 million remaining un-amortised element of the one-off and other capitalised transaction fees in relation to the facility agreement entered into in December 2008 (2008: £nil).

Other exceptional items

The Group has taken a £0.2 million impairment charge relating to available-for-sale assets (2008: £1.2 million) and a £1.0 million provision for a potential onerous land contract (2008: £nil).

Other items in 2008 included a £10.0 million goodwill write-off, a £1.0 million fixed asset impairment and a £5.7 million restructuring charge.

Total exceptional charges for 2009 are £2.7 million (2008: £93.1 million).  

5              Reconciliation of net cash flow to net debt

			2009		2008
			£000		£000
Net increase in net cash and cash equivalents			102,961		14,876
Repayment/(drawdown) of borrowings			118,000		(70,730	)
Fair value adjustments to interest rate swaps			(337)		-
Movement in financing prepayment			(8,270	)	-
Net debt at start of period			(100,096	)	(44,242	)
Net cash/(debt) at end of period			112,258		(100,096	)
Analysis of net cash/(debt):
Cash and cash equivalents			114,595		11,634
Unsecured bank and other loans			(2,000	)	(120,000	)
Fair value of interest rate swaps			(337	)	-
Issue Costs			-		8,270
Net cash/(debt)			112,258		(100,096	)

6              Income taxes

Current tax

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, calculated using a corporation tax rate of 28.0% applied to the pre-tax income or loss, adjusted to take account of deferred taxation movements and any adjustments to tax payable for previous years.  Current tax receivable for current and prior years is classified as a current asset.

7              Dividends

The following dividends were paid by the Group.

			2009		2008
			£000		£000
Prior year final dividend per share of nil (2008: 17.5p)			-		21,031
Current year interim dividend per share of nil (2008: 5.0p)			-		6,018
Dividend cost			-		27,049

The Board has decided not to propose a final dividend in respect of 2009.

8              Earnings or Loss per share

Basic earnings per ordinary share before exceptional items for the year ended 31 December 2009 is calculated on pre-exceptional profit after tax of £5,453,000 (year ended 31 December 2008 profit: £11,075,000) over the weighted average of 124,179,686 (year ended 31 December 2008: 120,268,986) ordinary shares in issue during the period.

Basic loss per ordinary share on exceptional items for the year ended 31 December 2009 is calculated on an exceptional loss after tax of £1,963,000 for 2009 (year ended 31 December 2008 loss: £70,070,000) over the weighted average of 124,179,686 (year ended 31 December 2008: 120,268,986) ordinary shares in issue during the period.

Basic earnings per ordinary share for the year ended 31 December 2009 is calculated on profit after tax of £3,490,000 (year ended 31 December 2008 loss: £58,995,000) over the weighted average of 124,179,686 (year ended 31 December 2008: 120,268,986) ordinary shares in issue during the period.

Diluted earnings per ordinary share before exceptional items for the year ended 31 December 2009 is calculated on pre-exceptional profit after tax of £5,453,000 (year ended 31 December 2008 profit: £11,075,000) expressed over the diluted weighted average of 124,203,192 (year ended 31 December 2008: 120,314,451) ordinary shares potentially in issue during the period. 

Diluted loss per ordinary share on exceptional items for the year ended 31 December 2009 is calculated on an exceptional loss after tax of £1,963,000 (year ended 31 December 2008 loss: £70,070,000) expressed over the weighted average of 124,179,686 ordinary shares in issue during the period (year ended 31 December 2008: 120,268,986). 

Diluted earnings per ordinary share for the year ended 31 December 2009 is calculated on profit after tax of £3,490,000 (year ended 31 December 2008 loss: £58,995,000) expressed over the diluted weighted average of 124,203,192 ordinary shares potentially in issue during the period (year ended 31 December 2008: 120,268,986).

The average number of shares is diluted in reference to the average number of potential ordinary shares held under option during the period.  This dilutive effect amounts to the number of ordinary shares which would be purchased using the aggregate difference in value between the market value of shares and the share option exercise price.  The market value of shares has been calculated using the average ordinary share price during the period.  Only share options which have met their cumulative performance criteria have been included in the dilution calculation.  A loss per share cannot be further reduced through dilution.

In a manner consistent with IAS33, the Group has reviewed the impact of its equity placing in September 2009 on its prior year earnings per share disclosures.  As the impact is immaterial, no prior year restatement has occurred.

9              Circulation to shareholders

The consolidated financial statements will be sent to shareholders on or about 6 April 2010.  Further copies will be available on request from the Company Secretary, Bovis Homes Group PLC, The Manor House, North Ash Road, New Ash Green, Longfield, Kent  DA3 8HQ.

Further information on Bovis Homes Group PLC can be found on the Group's corporate website www.bovishomes.co.uk/plc, including the slide presentation document which will be presented at the Group's results meeting on 8 March 2010.

 

END

 

 

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