26th Mar 2008 07:00
Bellway PLC26 March 2008 NATIONAL HOUSEBUILDER BELLWAY p.l.c. TODAY, WEDNESDAY 26 MARCH, ANNOUNCE THEIRINTERIM RESULTS FOR THE HALF YEAR ENDED 31 JANUARY 2008. HIGHLIGHTS Half Year Ended 31 January 2008 2007• Homes sold 3,252 3,264• Average selling price £174.8k £173.3k• Turnover £581.5m £576.5m• Operating profit £105.2m £107.8m• Operating margin 18.1% 18.7%• Profit before taxation £96.9m £100.8m• Basic earnings per ordinary share 59.4p 61.7p• Dividend per ordinary share 18.1p 16.45p• Land bank - plots with planning permission 23,000 22,500• Total equity £1,071.4m £953.6m• Net asset value per ordinary share 934p 833p• Return on average capital employed 20.9% 22.7% Chairman, howard dawe said "Bellway has produced a good set of results for thesix months....." he added "Profit before tax has fallen 3.9% to £96.9 million, still a creditableperformance against a backdrop of an uncertain market place." furthermore "The Board continues its progressive dividend policy.... byannouncing an increase in the interim dividend of 10%...." He concluded ".....Bellway is positioning itself to ensure that growthrecommences as soon as the housing market returns to more normal levels ofactivity." FOR FURTHER INFORMATION, PLEASE CONTACT JOHN WATSON, CHIEF EXECUTIVE OR ALISTAIRLEITCH, 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, inparticular the housing market, has been suffering from the uncertaintiesexperienced in global financial markets. Nevertheless, Bellway has produced agood 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 £174,800 (2007- £173,300). Housing turnover has increased by 0.5% to £568.4 million. This,combined with other turnover of £13.1 million (2007 - £10.9 million), whichcomprises in the main land sales, took total Group turnover to £581.5 million,up from £576.5 million last year. As has previously been indicated, operatingmargin did fall from 18.7% to 18.1%, mainly influenced by the increased use ofincentives and operating profit has reduced, albeit by only £2.6 million, to£105.2 million. Net finance costs have risen to £8.1 million from £6.9 millionand are covered almost 13 times, with gearing at 21% at 31 January. Profitbefore tax has fallen 3.9% to £96.9 million, still a creditable performanceagainst a backdrop of an uncertain market place. Basic earnings per ordinaryshare 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 itsconfidence in the long term prospects for the Group by announcing an increase inthe interim dividend of 10% from 16.45p to 18.1p. The interim dividend will bepaid on Tuesday 1 July to ordinary shareholders on the Company's Register ofMembers at the close of business on Friday 23 May 2008. The ex-dividend date isWednesday 21 May 2008. Trading The current housing market can be described as tough, caused primarily by achange in consumer confidence and the continuing credit crisis. Particularlyhard hit are first time buyers who are having to find larger deposits in orderto make their first step onto the housing ladder as a result of changes in loanto value criteria announced by lenders. Our full national coverage means that Bellway is not over exposed in any onegeographical area and, indeed, is presently performing well in Scotland and thesouthern part of England where demand and keen pricing in the affordable sectorof the market has meant that these divisions are operating at, or close to, ouroriginal aspirations. Elsewhere, especially in the Midlands, Yorkshire andNorth West, the market remains challenging. Bellway's sales teams are armedwith a full basket of incentives to offer prospective clients and have recentlyreported a pleasing visitor rate to sites although this has not, as yet filteredthrough to encouraging reservation levels. From 1 August through to 17 March the Group has seen its reservations reduce by9% when compared to the same period last year. However, the Group has benefitedfrom its long established policy of forward selling and at 31 January the orderbook amounted to £580 million (2007 - £652 million), and currently the orderbook stands at £670 million. Furthermore, 88% of our revised target output forthis year has now been secured. The land market is starting to show signs of softening and, with the strength ofthe Group's balance sheet coupled with a relatively low level of gearing,Bellway is positioned to take advantage of any opportunistic land buying thatmay 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 planningpermission to 23,000 plots. The pipeline holdings of 16,900 plots, whencombined with the land bank, provides the Group with an ample supply of landwhich 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 itsemployees, subcontractors, suppliers and partners without whose support theseresults would not have been achieved. Future Prospects The Board is convinced that its well established model of growing volumesenhances shareholder value in the long term and we intend to continue thisstrategy, subject to market conditions. Whilst the Group's record of volumegrowth is not likely to be extended this year, Bellway is positioning itself toensure that growth recommences as soon as the housing market returns to morenormal levels of activity. It is for these reasons that the Board remainsconfident as to the future long term prospects for the Group. Howard C DaweChairman 25 March 2008 GROUP INCOME STATEMENT Half year Half year Year ended ended ended 31 January 31 January 31 July 2008 2007 2007 £m £m £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 5.1Finance 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 £m £m £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 £m £m £m ASSETSNon-current assetsProperty, plant and equipment 12.3 13.3 12.7Investment property 2.4 1.7 2.4Investments in associates - - -Other receivables 6.0 8.2 5.2Deferred tax assets 5.5 8.3 7.8 26.2 31.5 28.1Current assetsInventories 1,628.4 1,519.6 1,537.9Trade and other receivables 42.9 40.0 45.2Cash 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 LIABILITIESNon-current liabilitiesInterest 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 LiabilitiesInterest 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 EQUITYIssued capital 14.3 14.3 14.3Share premium 116.0 114.3 115.5Other reserves 1.5 1.5 1.5Retained 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 £m £m £m Cash flows from operating activitiesProfit for the period 68.0 70.3 166.7 Depreciation charge 1.4 1.5 3.1Profit 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 23.0Share based payment charge 1.0 1.3 2.6Income tax expense 28.9 30.5 68.2Increase 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 activitiesAcquisition 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 1.2Proceeds 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 activitiesIncrease / (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 3.6optionsPurchase 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 IAS34 Interim Financial Reporting as adopted by the EU. They do not include all ofthe information required for full annual financial statements, and should beread in conjunction with the Group financial statements for the year ended 31July 2007. These condensed financial statements are unaudited and were approved by theBoard of Directors on 25 March 2008. The information for the year ended 31 July 2007 does not constitute statutoryfinancial statements as defined in section 240 of the Companies Act 1985.Those financial statements have been reported on by the Group's auditors anddelivered to the Registrar of Companies. The report of the auditors wasunqualified and did not contain statements under section 237(2) or (3) of theCompanies Act 1985. The accounting polices applied by the Group in these condensed financialstatements are the same as those applied by the Group in its consolidatedfinancial statements for the year ended 31 July 2007. 2. Changes in accounting policies In the current financial year, the Group will adopt IFRS 7 'financialinstruments' disclosures' for the first time. As IFRS 7 is a disclosurestandard, there is no impact of this change in accounting policy on thecondensed interim financial statements. Details of the change will be disclosedin 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 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 required tobe provided. 4. Taxation The taxation charge for the half years ended 31 January 2008 and 31 January 2007is calculated by applying the Director's best estimate of the annual effectivetax 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 £m £m £m Final dividend paid for the year ended 31 July 2007 of 26.675p 30.5 23.1 23.1per share (2006 - 20.2p)Interim dividend paid for the year ended 31 July 2007 of 16.45p 18.8per 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 March2008 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 £m £m £m Total recognised income and expense 67.5 71.4 170.5Dividends on equity shares (30.5) (23.1) (41.9)Shares issued 0.5 2.5 3.7Charge in relation to share options and tax thereon (1.4) 0.9 2.5Exercise 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 thecurrent financial year which have materially affected the financial position orperformance of the Group. Related parties are consistent with those disclosed in the Group's Annual Reportand Accounts for the year ended 31 July 2007. 8. Interim report The condensed financial statements were approved by the Board of directors on 25March 2008 and copies are being posted to all shareholders. Further copies areavailable on application to the Company Secretary, Bellway p.l.c., Seaton BurnHouse, Dudley Lane, Seaton Burn, Newcastle upon Tyne NE13 6BE and are alsoavailable on our website www.bellway.co.uk. Principal risks and uncertainties The directors consider that the principal risks and uncertainties which couldhave a material impact on the Group's performance in the remaining six months ofthe financial year remain the same as those stated on pages 33 and 34 of ourAnnual Report and Accounts for the year ended 31 July 2007 which is available onour website at www.bellway.co.uk. Statement of directors' responsibilities The Director named below confirms on behalf of the Board of Directors that tothe best of his 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: (a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication ofimportant events that have occurred during the first six months of the financialyear and their impact on the condensed set of financial statements; and adescription of the principal risks and uncertainties for the remaining sixmonths of the year; and (b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related partytransactions that have taken place in the first six months of the currentfinancial year and that have materially affected the financial position orperformance of the Group during that period; and any changes in the relatedparty 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 forthe 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 WatsonChief Executive 25 March 2008 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Bellway