Interim Results

Bellway PLC 26 March 2008 NATIONAL HOUSEBUILDER BELLWAY p.l.c. TODAY, WEDNESDAY 26 MARCH, ANNOUNCE THEIR INTERIM RESULTS FOR THE HALF YEAR ENDED 31 JANUARY 2008. HIGHLIGHTS Half Year Ended 31 January 2008 2007 â€¢ Homes sold 3,252 3,264 â€¢ Average selling price Â£174.8k Â£173.3k â€¢ Turnover Â£581.5m Â£576.5m â€¢ Operating profit Â£105.2m Â£107.8m â€¢ Operating margin 18.1% 18.7% â€¢ Profit before taxation Â£96.9m Â£100.8m â€¢ Basic earnings per ordinary share 59.4p 61.7p â€¢ Dividend per ordinary share 18.1p 16.45p â€¢ Land bank - plots with planning permission 23,000 22,500 â€¢ Total equity Â£1,071.4m Â£953.6m â€¢ Net asset value per ordinary share 934p 833p â€¢ Return on average capital employed 20.9% 22.7% Chairman, howard dawe said 'Bellway has produced a good set of results for the six months.....' he added 'Profit before tax has fallen 3.9% to Â£96.9 million, still a creditable performance against a backdrop of an uncertain market place.' furthermore 'The Board continues its progressive dividend policy.... by announcing an increase in the interim dividend of 10%....' He concluded '.....Bellway is positioning itself to ensure that growth recommences as soon as the housing market returns to more normal levels of activity.' FOR FURTHER INFORMATION, PLEASE CONTACT JOHN WATSON, CHIEF EXECUTIVE OR ALISTAIR LEITCH, FINANCE DIRECTOR WEDNESDAY 26 MARCH - FRIDAY 28 MARCH J WATSON: 07855 337007 A LEITCH: 07855 337001 THEREAFTER: 0191 217 0717 CHAIRMAN'S STATEMENT It has been well documented that since the summer of 2007 the economy and, in particular the housing market, has been suffering from the uncertainties experienced in global financial markets. Nevertheless, Bellway has produced a good set of results for the six months ended 31 January 2008. Interim Results The number of homes sold in the period was similar to last year at 3,252 (2007 - 3,264) and the average price of these sales increased slightly to Â£174,800 (2007 - Â£173,300). Housing turnover has increased by 0.5% to Â£568.4 million. This, combined with other turnover of Â£13.1 million (2007 - Â£10.9 million), which comprises in the main land sales, took total Group turnover to Â£581.5 million, up from Â£576.5 million last year. As has previously been indicated, operating margin did fall from 18.7% to 18.1%, mainly influenced by the increased use of incentives and operating profit has reduced, albeit by only Â£2.6 million, to Â£105.2 million. Net finance costs have risen to Â£8.1 million from Â£6.9 million and are covered almost 13 times, with gearing at 21% at 31 January. Profit before tax has fallen 3.9% to Â£96.9 million, still a creditable performance against a backdrop of an uncertain market place. Basic earnings per ordinary share were 59.4p (2007 - 61.7p) and net assets per ordinary share is now 934p. Dividend The Board continues its progressive dividend policy and emphasises its confidence in the long term prospects for the Group by announcing an increase in the interim dividend of 10% from 16.45p to 18.1p. The interim dividend will be paid on Tuesday 1 July to ordinary shareholders on the Company's Register of Members at the close of business on Friday 23 May 2008. The ex-dividend date is Wednesday 21 May 2008. Trading The current housing market can be described as tough, caused primarily by a change in consumer confidence and the continuing credit crisis. Particularly hard hit are first time buyers who are having to find larger deposits in order to make their first step onto the housing ladder as a result of changes in loan to value criteria announced by lenders. Our full national coverage means that Bellway is not over exposed in any one geographical area and, indeed, is presently performing well in Scotland and the southern part of England where demand and keen pricing in the affordable sector of the market has meant that these divisions are operating at, or close to, our original aspirations. Elsewhere, especially in the Midlands, Yorkshire and North West, the market remains challenging. Bellway's sales teams are armed with a full basket of incentives to offer prospective clients and have recently reported a pleasing visitor rate to sites although this has not, as yet filtered through to encouraging reservation levels. From 1 August through to 17 March the Group has seen its reservations reduce by 9% when compared to the same period last year. However, the Group has benefited from its long established policy of forward selling and at 31 January the order book amounted to Â£580 million (2007 - Â£652 million), and currently the order book stands at Â£670 million. Furthermore, 88% of our revised target output for this year has now been secured. The land market is starting to show signs of softening and, with the strength of the Group's balance sheet coupled with a relatively low level of gearing, Bellway is positioned to take advantage of any opportunistic land buying that may arise. The Group continues to buy land, albeit on a more selective basis, and this has resulted in a reduction of 500 plots in the land bank with planning permission to 23,000 plots. The pipeline holdings of 16,900 plots, when combined with the land bank, provides the Group with an ample supply of land which represents in excess of five years at the current rate of usage. People In these more difficult times the Board is extremely grateful to all its employees, subcontractors, suppliers and partners without whose support these results would not have been achieved. Future Prospects The Board is convinced that its well established model of growing volumes enhances shareholder value in the long term and we intend to continue this strategy, subject to market conditions. Whilst the Group's record of volume growth is not likely to be extended this year, Bellway is positioning itself to ensure that growth recommences as soon as the housing market returns to more normal levels of activity. It is for these reasons that the Board remains confident as to the future long term prospects for the Group. Howard C Dawe Chairman 25 March 2008 GROUP INCOME STATEMENT Half year Half year Year ended ended ended 31 January 31 January 31 July 2008 2007 2007 Â£m Â£m Â£m Revenue 581.5 576.5 1,354.0 Cost of sales (445.3) (439.7) (1,042.1) Gross profit 136.2 136.8 311.9 Administrative expenses (31.0) (29.0) (58.8) Operating profit 105.2 107.8 253.1 Finance income 3.7 2.1 5.1 Finance expenses (11.8) (9.0) (23.0) Share of loss of associates (0.2) (0.1) (0.3) Profit before taxation 96.9 100.8 234.9 Income tax expense (28.9) (30.5) (68.2) Profit for the period 68.0 70.3 166.7 Earnings per ordinary share - Basic 59.4p 61.7p 146.1p - Diluted 59.2p 61.0p 144.7p Dividend per ordinary share 18.1p 16.45p 43.125p GROUP Statement of Recognised Income and Expense Half year Half year Year ended ended ended 31 January 31 January 31 July 2008 2007 2007 Â£m Â£m Â£m Actuarial (losses) / gains on defined benefit pension scheme (0.7) 1.6 5.3 Tax on items taken directly to equity 0.2 (0.5) (1.5) Net (expense) / income recognised directly in equity (0.5) 1.1 3.8 Profit for the period 68.0 70.3 166.7 Total recognised income for the period 67.5 71.4 170.5 GROUP BALANCE SHEET At At At 31 January 31 January 31 July 2008 2007 2007 Â£m Â£m Â£m ASSETS Non-current assets Property, plant and equipment 12.3 13.3 12.7 Investment property 2.4 1.7 2.4 Investments in associates - - - Other receivables 6.0 8.2 5.2 Deferred tax assets 5.5 8.3 7.8 26.2 31.5 28.1 Current assets Inventories 1,628.4 1,519.6 1,537.9 Trade and other receivables 42.9 40.0 45.2 Cash and cash equivalents 25.7 9.5 25.4 1,697.0 1,569.1 1,608.5 Total assets 1,723.2 1,600.6 1,636.6 LIABILITIES Non-current liabilities Interest bearing loans and borrowings (162.0) (154.0) (77.0) Retirement benefit obligations (3.0) (5.3) (2.0) Other payables (33.6) (35.6) (47.9) (198.6) (194.9) (126.9) Current Liabilities Interest bearing loans and borrowings (91.5) (44.2) (60.5) Trade and other payables (335.1) (382.5) (380.9) Current tax liabilities (26.6) (25.4) (32.5) (453.2) (452.1) (473.9) Total liabilities (651.8) (647.0) (600.8) Net assets 1,071.4 953.6 1,035.8 EQUITY Issued capital 14.3 14.3 14.3 Share premium 116.0 114.3 115.5 Other reserves 1.5 1.5 1.5 Retained earnings 939.7 823.6 904.6 Total equity attributable to equity holders of the parent 1,071.5 953.7 1,035.9 Minority interest (0.1) (0.1) (0.1) Total equity 1,071.4 953.6 1,035.8 GROUP CASH FLOW STATEMENT Half year Half year Year ended ended ended 31 January 31 January 31 July 2008 2007 2007 Â£m Â£m Â£m Cash flows from operating activities Profit for the period 68.0 70.3 166.7 Depreciation charge 1.4 1.5 3.1 Profit on sale of property, plant and equipment (0.2) (0.2) - Finance income (3.7) (2.1) (5.1) Finance expenses 11.8 9.0 23.0 Share based payment charge 1.0 1.3 2.6 Income tax expense 28.9 30.5 68.2 Increase in inventories (90.5) (85.6) (103.9) Decrease / (increase) in trade and other receivables 2.5 (15.4) (17.2) (Decrease) / increase in trade and other payables (62.2) 36.3 46.6 Cash (outflow) / inflow from operations (42.8) 45.6 183.8 Interest paid (9.8) (6.4) (19.4) Income tax paid (34.6) (33.1) (63.8) Net cash (outflow) / inflow from operating activities (87.2) 6.1 100.6 Cash flows from investing activities Acquisition of property, plant and equipment (1.4) (1.8) (3.1) Acquisition of investment property (0.1) - (0.7) Proceeds from sale of property, plant and equipment 0.4 1.0 1.2 Proceeds from the sale of investment property 0.2 - - Interest received 2.7 1.5 4.0 Net cash inflow from investing activities 1.8 0.7 1.4 Cash flows from financing activities Increase / (decrease) in bank borrowings 135.0 20.0 (67.0) Proceeds from the issue of share capital on exercise of share 0.5 2.8 3.6 options Purchase of own shares by employee share option plans (0.5) (1.5) (2.4) Dividends paid (30.2) (23.0) (41.7) Net cash inflow / (outflow) from financing activities 104.8 (1.7) (107.5) Net increase / (decrease) in cash and cash equivalents 19.4 5.1 (5.5) Cash and cash equivalents at beginning of period (18.2) (12.7) (12.7) Cash and cash equivalents at end of period 1.2 (7.6) (18.2) 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 2007. These condensed financial statements are unaudited and were approved by the Board of Directors on 25 March 2008. The information for the year ended 31 July 2007 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 2007. 2. Changes in accounting policies In the current financial year, the Group will adopt IFRS 7 'financial instruments' disclosures' for the first time. As IFRS 7 is a disclosure standard, there is no impact of this change in accounting policy on the condensed interim financial statements. Details of the change will be disclosed in the Group's Annual Report and Accounts for the year ending 31 July 2008. 3. 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. 4. Taxation The taxation charge for the half years ended 31 January 2008 and 31 January 2007 is calculated by applying the Director's best estimate of the annual effective tax rate to the profit for the period. 5. Dividends Half year Half year Year ended ended ended 31 January 31 January 31 July 2008 2007 2007 Â£m Â£m Â£m Final dividend paid for the year ended 31 July 2007 of 26.675p 30.5 23.1 23.1 per share (2006 - 20.2p) Interim dividend paid for the year ended 31 July 2007 of 16.45p 18.8 per share - - 30.5 23.1 41.9 Proposed interim dividend for the year ending 31 July 2008 of 20.8 18.9 - 18.1p per share (2007 - 16.45p) The proposed interim dividend was approved by the Board of Directors on 25 March 2008 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 2008 2007 2007 Â£m Â£m Â£m Total recognised income and expense 67.5 71.4 170.5 Dividends on equity shares (30.5) (23.1) (41.9) Shares issued 0.5 2.5 3.7 Charge in relation to share options and tax thereon (1.4) 0.9 2.5 Exercise of share options / share awards (0.5) (1.5) (2.4) Net increase in total equity 35.6 50.2 132.4 Total equity at the start of the period 1,035.9 903.5 903.5 Total equity at the end of the period 1,071.5 953.7 1,035.9 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 2007. 8. Interim report The condensed financial statements were approved by the Board of directors on 25 March 2008 and copies are being posted to all shareholders. Further copies are available on application to the Company Secretary, Bellway p.l.c., Seaton Burn House, Dudley Lane, Seaton Burn, Newcastle upon Tyne NE13 6BE and are also available on our website www.bellway.co.uk. Principal risks and uncertainties The directors consider that the principal risks and uncertainties which could have a material impact on the Group's performance in the remaining six months of the financial year remain the same as those stated on pages 33 and 34 of our Annual Report and Accounts for the year ended 31 July 2007 which is available on our website at www.bellway.co.uk. Statement of directors' responsibilities The Director named below confirms on behalf of the Board of Directors that to the best of his knowledge: â€¢ the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU; â€¢ the interim management report includes a fair review of the information required by: (a) 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 2007 and there has been no change since that date. For and on behalf of the Board of Directors John K Watson Chief Executive 25 March 2008 This information is provided by RNS The company news service from the London Stock Exchange

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