13th Oct 2009 07:00
NATIONAL HOUSEBUILDER BELLWAY p.l.c. TODAY, TUESDAY 13 OCTOBER, ANNOUNCE THEIR PRELIMINARY RESULTS FOR THE YEAR ENDED 31 JULY 2009.
HIGHLIGHTS
- Completed sales of 4,380 homes (2008 - 6,556)
- Average price achieved 154,005 (2008 - 169,729)
- Total Group turnover of 683.8m (2008 - 1,149.5m)
- Profit before taxation 29.8m * (2008 - 165.7m)
- Exceptional items 66.3m (2008 - 130.9m)
- Earnings per ordinary share of 17.7p * (2008 - 104.2p)
- Final dividend for the year 6.0p (2008 - 6.0p)
- Gearing of 3.8%, having reduced borrowings by 180.9m
- Secured forward order book at 30 September of 349.4m (2008 - 342m)
- 120m of land either contracted or agreed terms since 1 August
* Before exceptional items
Chairman Howard Dawe said 'In the summer of 2008 the ghosts of the last majorrecession loomed large' and that 'the primary strategy... was simply to repeatthe lessons learnt in previous downturns, make cash generation a priority'... andalso 'sell homes at positive margins throughout the financial year.'He continued 'I am pleased to report that the Group ended the year with netbank borrowings of 36.8 million' and 'the forward order book at 31 July 2009stood at 368 million...... equivalent to 58% of this year's planned output.'Furthermore 'Since 1 August the Group has contracted or agreed terms in respectof the acquisition of over 120 million of land where there is potential todevelop in excess of 3,370 homes.'
He concluded 'With national coverage, a robust balance sheet and low gearing, the Board believes Bellway is well positioned....'
FOR FURTHER INFORMATION, PLEASE CONTACT JOHN WATSON, CHIEF EXECUTIVE OR ALISTAIR LEITCH, FINANCE DIRECTOR.
TUESDAY 13 OCTOBER - FRIDAY 16 OCTOBER
J WATSON: 07855 337007 & A LEITCH: 07855 337001
THEREAFTER: 0191 217 0717CHAIRMAN'S STATEMENTStrategy
In the summer of 2008 the ghosts of the last major recession loomed large, witha deteriorating economy, low consumer confidence and poor mortgageavailability. The primary strategy of the Board, at that time, was simply torepeat the lessons learnt in previous downturns, make cash generation apriority and a target was set to reduce the opening debt position of 217.7million (excluding the preference share capital of 20 million) by 100 millionby the year end. If achieved, this would generate the necessary headroom inrelation to our bank facilities of 370 million, providing the Group with aplatform for expansion when the housing market returned to more normalconditions. At the same time the Group was also determined to continue, wherepossible, to sell homes at positive margins throughout the financial year.I am pleased to report that the Group ended the year with net bank borrowingsof 36.8 million (2008 - 217.7 million), a 180.9 million reduction,significantly exceeding the internal target and resulting in gearing of 3.8% atthe year end (2008 - 21.7%). The forward order book at 31 July 2009 stood at 368 million (2008 - 370 million) equivalent to 58% of this year's plannedoutput.
The Results
The Group completed the sale of 4,380 homes, a fall of 33% from last year's6,556 homes. The average selling price was lower at 154,005 ( 169,729 in2008), consequently housing turnover fell by 39% from 1,112.7 million to 674.5 million. Other revenue was 9.3 million (2008 - 36.8 million), givingtotal revenue for the Group of 683.8 million. Sales incentives had to be usedextensively and this contributed significantly in the operating margin(pre-exceptional) reducing from 16.1% to 6.7%.
When house prices continued to fall throughout August to December 2008, it became necessary to further review the net realisable value of land and work in progress at January 2009. From this arose an exceptional charge of 66.3 million. In the second half, whilst fragile, some stability returned to the market and further exceptional write downs have not been necessary.
As previously stated, in partnership with our banks, the Group's facilitieswere re-negotiated in April 2008. Low borrowings, significant reductions inoverhead and land and work in progress expenditure have resulted in a 24.6%fall in the net interest charged to 8.9 million compared with 11.8 million in2008. When the technical financing charges are added the net finance charge hasfallen from 19.1 million to 15.8 million. The loss before tax for the yearafter exceptional items is 36.6 million ( 34.8 million profit in 2008), givinga basic loss per share of 23.9p (2008 - 23.6p earnings). The net asset valueper ordinary share at 31 July 2009 stands at 839p (2008 - 871p).
Share Placing
Whilst the debt reduction programme has been successful, the industry is,nonetheless, cyclical in nature and future earnings growth is dependent uponmany factors, most notably opportunistic land acquisition. In the spring of2009, notwithstanding the fragile economic climate, some early indications ofprice and volume stability began returning to the housing market, albeit atlower volume levels. The Board took the view that the time may be right tobegin selectively acquiring land again, especially in the south of England.
In order to help finance this strategy, 5.7 million shares were placed with existing and new institutional shareholders on 6 August 2009, raising net proceeds of 43.7 million. This additional capital, combined with current banking facilities, ensures that the Group is in an excellent position to enter the land market, as appropriate opportunities arise.
Dividend
In these testing times for the industry, the Board is delighted that it stillfeels able to pay dividends and is therefore proposing to maintain the finaldividend at last year's level of 6.0p, resulting in a total dividend for theyear of 9.0p (2008 - 24.1p) per ordinary share. The payment of the dividendtakes into account the favourable current forward order position and thestrength of the Group's balance sheet.
The dividend will be paid on Wednesday 20 January 2010, to all ordinary shareholders on the Register of Members on Friday 11 December 2009. The ex-dividend date is Wednesday 9 December 2009.
People
Whilst the human cost of the downturn should not be underestimated, lookingforward the Board believes the Group's strategy of maintaining a largelyautonomous divisional management structure creates the ideal environment forindividual talent to flourish and for the divisional teams to respond to localmarket conditions. The Board believes it is important to provide appropriateincentives for employees to participate in the recovery that will take placewhen the market finally shows signs of long term sustainable improvement. TheGroup will continue to utilise incentive based remuneration structures toreward key personnel at all levels for significant contribution to theexpansion of the business. This includes the operation of a Save As You EarnShare Scheme which is open to all employees.Delivering these objectives in difficult market conditions is not easy and theBoard would like to sincerely thank all staff, past and present, together withthe Group's suppliers and sub-contractors, for their commitment to the businessover the past twelve months.The BoardOn behalf of the Board, I would like to thank David Perry for his invaluablecontribution to the Group's progress during his ten years of service withBellway as a Non-Executive Director. David will be retiring at the AGM inJanuary 2010 and we wish him a long and happy retirement. At the same time wewelcome on to the Board, in his place, John Cuthbert, a Chartered Accountant,and current Managing Director of Northumbrian Water Group plc, who will bejoining the Group as a Non-Executive Director in November 2009.
Looking Forward
Since the beginning of August the market place has remained incentive led butreservations are 58% ahead compared to the same period twelve months ago. Atthe end of September Bellway had secured 61% of its target output for the yearending July 2010 and a further 440 reservations for 2010/11.It is the Group's intention to selectively open new outlets, increase work inprogress and acquire land, particularly in the south of England, at attractivemargins whilst at the same time carefully monitoring the overall strength ofthe autumn housing market. Since 1 August the Group has contracted or agreedterms in respect of the acquisition of over 120 million of land where there ispotential to develop in excess of 3,370 homes.The pace of economic recovery is still uncertain with lack of mortgageavailability, especially for first time buyers, potential unemployment andpolitical uncertainty all remaining a threat to consumer confidence. However,with national coverage, a robust balance sheet and low gearing, the Boardbelieves Bellway is well positioned should any or all of these uncertaintiesprove not to be an issue in the coming months.H C DaweChairman12 October 2009
Chief Executive's Operating Review
Introduction
Bellway commenced the financial year with a reduced structure of thirteentrading divisions. At the start of the year, mortgage approvals had dropped toaround 33,000 per month, the lowest number since records began in 1993. Thisreceding tide of finance, coupled with low consumer confidence, dictatedstrategy and meant that the Group was about to enter what can be described as aperiod of partial hibernation.
The Housing Market
The weekly sales rates and the market in general had started to deteriorate inspring 2008 and continued through to December 2008. During this time visitorlevels across all outlets were extremely low with some sites seeing as few asfive visitors per week and this, combined with cancellation rates running at anall time high of 26%, resulted in the level of reservations being around 50%below the prior year at an average of just 56 sales per week at that time.However, the beginning of 2009 brought a welcome change for most of ourdivisions. Visitor levels increased and, more importantly, the weeklyreservation rate effectively doubled. This improved market continued through to31 July as tentative signs of stabilisation emerged.
Against this background the Group legally completed the sale of 4,380 homes compared with 6,556 in 2008. The average selling price reduced to 154,005 from 169,729 in 2008.
To achieve this, our sales teams used a variety of incentives on virtuallyevery home to attract buyers. For example, first time buyers require increaseddeposits as a result of lenders tightening mortgage criteria and as aconsequence the Group's shared equity scheme 'Opening Doors' became attractiveto this type of buyer. Whilst typically we receive only 75% of the sellingprice on legal completion, the balance is owed to the Company and is repaidwhen the client ultimately sells or re-mortgages. The 25% stake is viewed as adeposit by lenders. This scheme was used in almost 14% of sales and a similarscheme 'HomeBuy Direct' has now been initiated by the government through theHomes & Communities Agency.Whilst private investors found access to the mortgage market increasinglydifficult the Group found an appetite, especially from southern housingassociations to acquire properties over and above the Section 106 planningrequirement. The Thames Gateway division has been particularly active in thisarea and on several occasions during the year sold 100% of a development to ahousing association.When combined with normal Section 106 planning obligations, sales to housingassociations represented some 34% of total output or 1,484 homes. Part exchangeconversely was used to a lesser extent by the sales teams in only 7% oftransactions as buyers found the lenders' lower valuations more difficult toovercome. Consequently our part exchange stock of 40.6 million at 1 August2008 had reduced to 8.0 million by the year end.
Divisional Performance
The six northern divisions sold 1,833 homes, a decrease of 45% from theprevious year's 3,348 homes, with the average selling price falling by 14.7% to 134,200 (2008 - 157,300). As the economy in this region receded more quicklyespecially in Scotland, Yorkshire and the North West, consumer demand erodedrapidly in these locations. In the East and West Midlands divisions we havebeen able to access the funding provided by the various government initiativesand as a consequence some 30% of completions in these two divisions were soldto housing associations.The seven southern divisions sold 2,547 homes (2008 - 3,208), a strongerperformance than the North and only 21% below the previous year's volumes. Theaverage selling price in the region fell by only7.9% to 168,300 (2008 - 182,700). The Essex and South East divisions actually increased output compared to 2008, the only divisions to do so. Generally developments in and around London, whetherthey be apartments or more traditional housing, have proved more resilient comparedto other parts of the country. This factor is strongly influencing the Group's land buying policy at the present time.
Business Focus
With uncertainty in both the housing market and the wider economy generally,the Board decided to attempt to place the Group in a sound financial positionto protect shareholder value in the downturn and create an opportunity forgrowth in the long term. A target was set at the beginning of the financialyear to further reduce borrowings by 100 million to pursue the followingobjectives:-
Restricting work in progress and site openings
The carry forward position at the beginning of the year stood at 370 millionand the majority of these homes had to be legally completed in the financialyear. However, work in progress on existing outlets, wherever possible, wasrestricted and on new sites only those with forward sales and lowinfrastructure costs were opened. During the course of the year newconstruction was restricted to 2,900 homes (2008 - 6,600) and by the end ofJuly 2009, 27 sites remained mothballed. With regard to the latter, layouts arebeing re-drawn to accelerate the development of the housing association elementand, where possible, we are also looking to introduce a larger percentage oftwo storey housing.As a result of the foregoing, the number of sales outlets fell during the yearfrom last year's average of 210 down to 170 and the number of stock unitsreduced from 1380 at the beginning of the year to 650 at the year end. We feelthat a certain level of stock in this market has advantages and thereforefurther reductions are not envisaged.
Cost Base
The lower activity levels were an opportunity not only to re-design layouts, ifpossible, but more importantly to reduce the cost base. With the workloaddrying up many sub-contract orders were re-tendered and with material andlabour prices softening it is estimated that around 5,000 to 6,000 was savedon a typical family home of say 1,000 square feet over the course of the year.Of course there are cost pressures in the shape of higher planning fees, homeinformation packs and the delivery of the new Code Levels 3 and 4 of thegovernment's Code for Sustainable Homes. However, notwithstanding thesepressures it is hoped that lower costs will persist for some time therebyoffsetting in part any further sales incentives that may need to be offered
toconclude reservations.LandThe control of land expenditure was also a key component in reducing debtlevels and therefore another cautious approach throughout the year wasmaintained. Land owners and their advisers are adjusting to lower land valuesand the operating divisions were instructed wherever possible to withdraw fromconditional contracts and options that were considered to be no longer viable.Consequently, our land expenditure fell to only 93.3 million compared with 275 million in the previous year.During the period only 1,580 plots were acquired, and, as a result land heldwith planning permission has reduced to some 19,260 plots. Land owned,contracted or held under option currently awaiting planning permission hasstabilised and stands at 14,000 plots. Combined, therefore, the Group hasaround 33,260 plots at its disposal within its short and medium term landholdings. This is equivalent to over seven years supply at current output andexcludes long term or strategic land which amounts to around 3,900 plots,typically made up of greenfield land held under option and brownfieldregeneration opportunities.The holding cost of land and work in progress was reviewed throughout the year.During the first half house prices continued to fall and an exercise wascarried out in January 2009 which resulted in a land and work in progresswrite-down of 58.9 million. Together with a further write-down in relation topart exchange stock and land without planning consent of 7.4 million thisproduced a total exceptional charge of 66.3 million. In the second half,whilst fragile, some stability returned to the market and further exceptionalwrite-downs were considered unnecessary.
Environmental Issues
The efficient management of construction waste benefits the environment whilstat the same time improves cost control. Site waste management plans on allsites have contributed to almost 14,000 tonnes of demolition material beingre-used and all plasterboard off-cuts being recycled. Furthermore, around 1,025homes were completed during the year using timber frame constructiontechniques. Using timber from accredited managed sources not only reduces wastegoing to land fill but, because there are approximately 50 to 60 cubic feet ofadditional timber in a typical 1,000 square feet home, reduces the amount ofmasonry used. This produces savings of around four tonnes of CO2 for every homeconstructed (Source - UK Timber Frame Association).The government's Code for Sustainable Homes will require all new private homesto achieve the new Code Level 3 Energy Efficiency Standards from October 2010.In moving towards these new requirements the Group has delivered 428 homes tothese new standards in the financial year (2008 - 48). In a Code Level 3 home,for example, we calculate that water saving devices such as flow restrictors,mixer taps and dual flushing WCs will result in water consumption savings ofaround 103 litres per person per day.Whilst the Group has concluded significantly fewer planning agreements duringthe course of the year, we calculate, nevertheless, that they will contributeover 2 million in total towards community benefits in areas such as neweducation facilities and healthcare.
Putting the Customer First
The Group has continued to improve the quality and standard of finish of itsnew homes. In an independent survey of 300 respondents returned at the end ofMarch 2009, 89% (2008 - 80%) would recommend a friend to purchase a Bellwayhome. However, conversely 50% of respondents found between one to five problemswith their new home after moving in. This is an area where we will bespecifically concentrating in the coming months.The quality of construction and presentation of a new home is a reflection ofthe way a site is organised and run. During the year 56 sites were registeredunder the Considerate Constructors Scheme whereby additional site inspectionsare undertaken by third parties. In addition, despite having fewer outlets wehave retained an in-house team of four health and safety professionals who on asystematic basis carry out regular detailed audits on all the Group'sdevelopments. It is anticipated that this, together with constant training ofsite management, will lead to a long term improvement in construction standardsand therefore greater levels of customer satisfaction.
Looking Forward
The cash generated as a result of the partial hibernation policy greatlyexceeded our expectations and the Group ended the year with only 36.8 millionof net bank debt, a reduction of 180.9 million during the year. Mortgagevaluations are beginning to stabilise and indeed the Council of MortgageLenders has recently announced a further monthly rise in gross lending in July,albeit some 42% below the previous year. This stability, whilst still fragile,is extremely welcome and, consequently, the Group is now looking to selectivelyincrease both work in progress expenditure and the number of outlets.In addition, the Group intends to selectively increase its land bankpredominantly focusing on the southern divisions provided current market andgeneral economic conditions prevail and, since the year end, Bellway hascontracted new land at attractive margins. On 6 August we announced a placementof 5.7 million new ordinary shares with new and existing shareholders,realising 43.7 million net of expenses. This enhances the Group's balancesheet and puts Bellway in an even stronger position to expand as and when themarket shows tangible signs of recovery.J K WatsonChief Executive12 October 2009GROUP INCOME STATEMENT
For the year ended 31 July 2009
2009 2009 2009 2008 2008 2008 Notes Pre-exceptional Exceptional Total Pre-exceptional Exceptional Total item item item item Note 4 Note 4 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 Revenue 2 683,813 - 683,813 1,149,541 - 1,149,541 Cost of sales 4 (596,680) (66,312) (662,992)
(905,745) (130,905) (1,036,650)
Gross profit 87,133 (66,312) 20,821 243,796 (130,905) 112,891 Administrative (41,554) - (41,554) (58,761) - (58,761)expenses Operating (loss) / 45,579 (66,312) (20,733) 185,035 (130,905) 54,130profit Finance income 4,894 - 4,894 3,631 - 3,631 Finance expenses (20,712) - (20,712) (22,683) - (22,683) Share of losses of - - - (315) - (315)equity accounted entities (Loss) / profit before 29,761 (66,312) (36,551) 165,668 (130,905) 34,763taxation Income tax credit / 3 (9,460) 18,567 9,107 (46,159) 38,399 (7,760)(expense) (Loss) / profit for 20,301 (47,745) (27,444) 119,509 (92,506) 27,003the year*
* all attributable to equity holders of the
parent (Loss) / earnings per 6 17.7p (41.6)p (23.9)p 104.2p (80.6)p 23.6pordinary share -Basic (Loss) / earnings per 6 17.6p (41.5)p (23.9)p 104.1p (80.6)p 23.5pordinary share - Diluted Dividend per ordinary 5 9.0p - 9.0p 24.1p - 24.1pshare
GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE
For the year ended 31 July 2009
2009 2008 GBP000 GBP000 Actuarial gains / (losses) on defined benefit pension 353 (14,351)scheme Tax on items taken directly to equity (99)
4,018
Net income / (expense) recognised directly in equity 254 (10,333) (Loss) / profit for the year (27,444) 27,003 Total recognised (expense) / income* (27,190)
16,670
* all attributable to equity holders of the parent
GROUP BALANCE SHEETAt 31 July 2009 Notes 2009 2008 GBP000 GBP000 ASSETS Non-current assets Property, plant and equipment 8,250 11,559 Investment property 7,377 4,092
Investments in subsidiaries and equity -
126accounted entities Other financial assets 20,826 5,607 Deferred tax assets 7,328 7,871 43,781 29,255 Current assets Inventories 4 1,211,351 1,503,936 Corporation tax receivable 9,847 23,900 Trade and other receivables 41,749 30,596 Cash and cash equivalents 7 43,210 109,313 1,306,157 1,667,745 Total assets 1,349,938 1,697,000 LIABILITIES Non-current liabilities Interest bearing loans and borrowings 100,000
295,000
Retirement benefit obligations 11,925 12,709 Land and other payables 26,854 51,306 138,779 359,015 Current liabilities Interest bearing loans and borrowings - 52,000 Trade and other payables 246,147 284,901 246,147 336,901 Total liabilities 384,926 695,916 Net assets 965,012 1,001,084 EQUITY Issued capital 8 14,375 14,372 Share premium 8 117,198 116,928 Other reserves 8 1,492 1,492 Share-based payment reserve 8 - - Retained earnings 8 832,013 868,358 Total equity attributable to equity holders 965,078 1,001,150of the parent Minority interest 8 (66) (66) Total equity 965,012 1,001,084
Approved by the Board of Directors on 12 October 2009 and signed on its behalf by
Howard C Dawe Alistair M LeitchDirector DirectorGROUP CASH FLOW STATEMENT
For the year ended 31 July 2009
Notes 2009 2008 GBP000 GBP000
Cash flows from operating activities
(Loss) / profit for the year (27,444) 27,003 Depreciation charge 2,190 2,858
Loss on sale of property, plant and equipment 4
140
Loss / (profit) on sale of investment properties 55 (151) Finance income (4,894) (3,631) Finance expenses 20,712 22,683 Share based payment charge 1,318 1,685 Income tax (credit) / expense (9,107) 7,760 Decrease in inventories 293,155 33,938 (Increase) / decrease in trade and other (22,744) 13,322receivables Decrease in trade and other payables (69,282) (101,688) Cash from operations 183,963 3,919 Interest paid (14,590) (17,418) Income tax received / (paid) 23,591 (62,875) Net cash inflow / (outflow) from operating 192,964 (76,374)activities
Cash flows from investing activities Acquisition of property, plant and equipment (139)
(2,096)
Acquisition of investment properties (3,383)
(1,858)
Proceeds from sale of property, plant and 684
376equipment
Proceeds from sale of investment properties 43
334 Interest received 1,265 4,557 Net cash (outflow) / inflow from investing (1,530) 1,313activities
Cash flows from financing activities (Decrease) / increase in bank borrowings (247,000)
253,000
Proceeds from the issue of share capital on 273 1,479exercise of share options Purchase of own shares by employee share option (113) (568)plans Dividends paid (10,697) (51,364) Net cash (outflow) / inflow from financing (257,537) 202,547activities Net (decrease) / increase in cash and cash (66,103) 127,486equivalents Cash and cash equivalents at beginning of year 109,313
(18,173)
Cash and cash equivalents at end of year 7 43,210 109,313 NOTES 1. Basis of preparation The financial information set out above has been prepared in accordance withthe recognition and measurement criteria of International Financial ReportingStandards (IFRSs) as adopted by the EU (Adopted IFRSs).The financial information set out above does not constitute the Group'sstatutory accounts for the years ended 31 July 2009 or 2008. Statutory accountsfor 2008 have been delivered to the registrar of companies, and those for 2009will be delivered in due course. The auditors have reported on those accounts;their reports were (i) unqualified, (ii) did not include a reference to anymatters to which the auditors drew attention by way of emphasis withoutqualifying 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 astatement under section 498 (2) or (3) of the Companies Act 2006 in respect ofthe accounts for 2009.
2. Revenue / segmental analysis
The Group uses business as the basis for primary segmentation. Operations arecarried out within one business segment which is housebuilding. No additionalbusiness segment information is required to be provided. The Group's secondarysegment is geography. It operates in one geographical segment, the UnitedKingdom, therefore no additional geographical segment information is requiredto be provided. 3. Taxation The effective rate of taxation for the year is 24.9% (2008 - 22.3%). Thetaxation credit / (charge) for the years ended 31 July 2009 and 31 July 2008 iscalculated by applying the Directors' best estimate of the annual effective taxrate to the (loss) / profit for the period.
4. Exceptional items / inventories
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 beenmade where cost exceeds net realisable value. Net realisable value representsthe estimated selling price (in the ordinary course of business) less allestimated costs of completion and overheads. Estimated selling prices have beenreviewed on a site by site basis and selling prices have been reduced based onlocal management and the Board's assessment of current market conditions.Following this review a material write down in both size (see below), andnature, given the economic conditions in the UK, has taken place.
These site reviews have resulted in land write downs totalling 58.881m (2008 - 112.534m).
In addition, option costs and related fees have been written down by 6.338m (2008 - 15.395m) to their net realisable value.
The Board has also reassessed the net realisable value of part exchange properties and has written down stock by 1.093m (2008 - 2.976m).
The above has resulted in an exceptional charge totalling 66.312m (2008 - 130.905m).
5. Dividends on equity shares
2009 2008 GBP000 GBP000
Amounts recognised as distributions to equity holders in the year :
Final dividend for the year ended 31 July 2008 of 6,897 30,541 6.0p per share (2007 - 26.675p)
Interim dividend for the year ended 31 July 2009 of 3,450 20,765 3.0p per share (2008 - 18.1p)
10,347 51,306
Proposed final dividend for the year ended 31 July 7,245 6,912 2009 of 6.0p per share (2008 - 6.0p)
The 2009 proposed final dividend is subject to approval by shareholders at the Annual General Meeting on 15 January 2010 and, in accordance with IAS 10, has not been included as a liability in these financial statements.
6. Earnings per ordinary share
Basic earnings per ordinary share is calculated by dividing earnings by the weighted average number of ordinary shares in issue during the year (excluding the weighted average number of ordinary shares held by the employee share ownership plans which are treated as cancelled).
Diluted earnings per ordinary share uses the same earnings figure as the basiccalculation except that the weighted average number of shares has been adjustedto reflect the dilutive effect of outstanding share options allocated underemployee share schemes where the market value exceeds the option price. It isassumed that all dilutive potential ordinary shares are converted at thebeginning of the accounting period. Diluted earnings per ordinary share iscalculated by dividing earnings by the diluted weighted average number ofordinary shares.
Reconciliations of the earnings and weighted average number of shares used in the calculations are outlined below:
Pre-exceptional item i Earnings Weighted Earnings Earnings Weighted Earnings / (loss) average / (loss) average per number of per number of share ordinary share ordinary shares shares 2009 2009 2009 2008 2008 2008 GBP000 no. p GBP000 no. p
For basic earnings per 20,301 114,949,883 17.7 119,509 114,615,661
104.2ordinary share Dilutive effect of 339,658 (0.1) 245,743 (0.1)options and awards
For diluted earnings 20,301 115,289,541 17.6 119,509 114,861,404
104.1per ordinary share Post-exceptional item
For basic earnings per (27,444) 114,949,883 (23.9) 27,003 114,615,661
23.6ordinary share Dilutive effect of - - 245,743 (0.1)options and awards ii
For diluted earnings (27,444) 114,949,883 (23.9) 27,003 114,861,404
23.5per ordinary share
i Exceptional charge of 66.3m (2008 - 130.9m) in the current year (note 4) less associated tax credit of 18.6m (2008 - 38.4m).
ii In accordance with IAS 33 potential ordinary shares are only treated as dilutive when their conversion to ordinary shares would increase the loss
per share. 7. Analysis of net debt At 1 August Cash At 31 July 2008 flows 2009 GBP000 GBP000 GBP000 Cash and cash equivalents 109,313 (66,103) 43,210 Bank loans (327,000) 247,000 (80,000) Preference shares redeemable after more (20,000) - (20,000)than one year Net debt (237,687) 180,897 (56,790)
8. Reconciliation of movements in capital and reserves
Attributable to equity holders of the parent Ordinary Share Other Retained Total Minority Total share premium reserves earnings interest equity capital GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 At 1 August 2007 14,337 115,484 1,492 904,567 1,035,880 (66) 1,035,814 Total recognised - - - 16,670 16,670 - 16,670income and expense Dividends on - - - (51,306) (51,306) - (51,306)equity shares Shares issued 35 1,444 - - 1,479 - 1,479 Charge in relation - - - (1,005) (1,005) - (1,005)to share options and tax thereon Purchase of own - - - (568) (568) - (568)shares At 31 July 2008 14,372 116,928 1,492 868,358 1,001,150 (66) 1,001,084 Total recognised - - - (27,190) (27,190) - (27,190)income and expense Dividends on - - - (10,347) (10,347) - (10,347)equity shares Shares issued 3 270 - - 273 - 273 Credit in relation - - - 1,305 1,305 - 1,305to share options and tax thereon Purchase of own - - - (113) (113) - (113)shares
At 31 July 2009 14,375 117,198 1,492 832,013 965,078 (66) 965,012 Within retained earnings are amounts relating to ordinary shares held by the employee share ownership plans. The number of shares held within these plans at 31 July 2009 was nil (2008 - 197,858) which are held within the financial
statements at a value of nil (2008 - 1.872m).
vendorRelated Shares:
Bellway