Earnings Release • Jan 31, 2012
Earnings Release
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| Completed sales |
|---|
| 2,455 homes |
| (2011 – 2,332) |
Total Group revenue £458.6m (2011 – £407.9m)
Interim dividend
6.0p (2011 – 3.7p)
Earnings per share 25.2p (2011 – 15.3p)
Average price achieved £182,753 (2011 – £168,428)
Profit before taxation £40.6m (2011 – £24.0m)
Net asset value per ordinary share 902p (31 July 2011 – 888p)
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Front cover: Carillons, Wokingham, Berkshire. Back cover: Church Meadow, East Huntspill, Somerset.
Bellway p.l.c. Half Year Report 2012
"Bellway has completed another six-month period of growth in volume, selling price and operating margin."
I am pleased to report that Bellway has completed another six-month period of growth in volume, selling price and operating margin.
The Group completed the sale of 2,455 (2011 – 2,332) homes in the six months ended 31 January 2012, an increase of 5.3% compared with the same period last year. The average selling price of those homes has risen by 8.5% to £182,753 (2011 – £168,428), primarily derived from continuing changes in geographical and product mix. Other revenue for the period was £9.9 million (2011 – £15.1 million) resulting in the Group generating total revenue of £458.6 million (2011 – £407.9 million), an increase of 12.4% compared with the prior year.
The operating margin continued its upward trend, principally due to the greater proportion of homes sold on higher margin land acquired since the economic downturn, thereby producing a healthy improvement of 320 basis points to 10.1%. The operating profit of £46.4 million (2011 – £28.1 million) represents an increase of 65% on the prior year. There are net finance costs of £5.8 million (2011 – £4.1 million) resulting in profit before tax of £40.6 million (2011 – £24.0 million) and growth in earnings per share to 25.2p (2011 – 15.3p).
The Group has continued cautiously investing in both land and work in progress to achieve its strategy of volume growth. As a result, the Group spent £105 million on land and land creditors and has terms agreed on a further 4,600 plots as at 31 January 2012. With net bank debt of £11.6 million, representing negligible gearing of just over 1% and committed bank facilities of £300 million, the Group has the capacity to continue to deliver ongoing volume growth. The net asset value per ordinary share has grown from 888p at 31 July 2011 to 902p at 31 January 2012.
The Board has maintained its record of paying a dividend every year since the Group's flotation in 1979, having continued this record throughout the recent economic downturn. I am therefore delighted to announce that the interim dividend will be increased substantially by over 62%, from 3.7p to 6.0p per ordinary share. Furthermore, the Board intend to maintain a full year cover of between 3 and 3.5 times, thereby balancing the need for certainty of return to shareholders with continued investment in land in order to maintain volume growth. The dividend will be paid on Monday 2 July 2012 to all ordinary shareholders on the Register of Members on Friday 25 May 2012. The ex-dividend date is Wednesday 23 May 2012.
The Group's operating divisions completed the sale of 2,048 (2011 – 1,784) private homes during the period, an increase of 14.8% on the prior year, together with a further 407 (2011 – 548) sales to housing associations. The increase in private completions has been achieved despite a reduction in shared equity sales from 14% to fewer than 5% of homes sold.
Our southern divisions performed particularly well, having completed the sale of 1,282 homes (2011 – 1,146), an increase of 11.9%, whereas the number of completions from our northern divisions remained stable at 1,173 homes (2011 – 1,186).
Ongoing changes in mix have contributed to the improvement in the average selling price, which in the north has risen by 4.3% to £151,468 (2011 – £145,174), primarily due to the increase in more traditional two storey family housing in this region.
The average selling price in the south showed a more robust 9.8% increase to £211,378 (2011 – £192,493) where demand remains strongest within the Greater London boroughs as the Group continues to invest in higher value developments. Whilst these developments typically have an average selling price in excess of £250,000, they remain affordable in the context of the London market.
Reservation rates in the six months to 31 January 2012 have averaged 89 (2011 – 80) per week, an increase of 11%. This rate has increased further in the six weeks since 1 February to an average of 120 per week from 205 sites, an encouraging start to the spring selling season. The order book at 11 March stood at £498.5 million (2011 – £479.2 million), representing 2,718 homes and, as a consequence, the Group has reserved or legally completed 94% of its current full year volume target.
Whilst uncertainties in the wider economy and the threat of unemployment continue, there remains an underlying demand for our homes and, as a consequence, visitor levels since the start of the calendar year have followed their usual upward seasonal trend.
The availability of affordable, higher loan to value mortgage products has so far remained restricted. We are, however, hopeful that the government's NewBuy initiative will assist in underpinning future sales rates, although this is unlikely to have any significant effect on the number of completions for the current financial year.
Bellway's strong balance sheet provides capacity to grow and means it has the flexibility to continue its disciplined investment in attractive land opportunities. The Group therefore intends to continue its three-pronged strategy of delivering volume, selling price and operating margin growth, thereby achieving a sustainable improvement in shareholder return.
Chairman 26 March 2012
| Half year ended |
Half year ended |
Year ended |
|
|---|---|---|---|
| Notes | 31 January 2012 £m |
31 January 2011 £m |
31 July 2011 £m |
| Revenue | 458.6 | 407.9 | 886.1 |
| Cost of sales | (388.7) | (357.5) | (766.7) |
| Gross profit | 69.9 | 50.4 | 119.4 |
| Administrative expenses | (23.5) | (22.3) | (44.2) |
| Operating profit | 46.4 | 28.1 | 75.2 |
| Finance income | 0.5 | 1.3 | 1.8 |
| Finance expenses | (6.3) | (5.4) | (9.8) |
| Profit before taxation | 40.6 | 24.0 | 67.2 |
| Income tax expense 3 |
(10.2) | (5.5) | (17.0) |
| Profit for the period * | 30.4 | 18.5 | 50.2 |
| * All attributable to equity holders of the parent. | |||
| Earnings per ordinary share – Basic |
25.2p | 15.3p | 41.5p |
| – Diluted | 25.1p | 15.3p | 41.4p |
| Dividend per ordinary share 5 |
6.0p | 3.7p | 12.5p |
| Notes | Half year ended 31 January 2012 £m |
Half year ended 31 January 2011 £m |
Year ended 31 July 2011 £m |
|---|---|---|---|
| Profit for the period | 30.4 | 18.5 | 50.2 |
| Other comprehensive (expense)/income | |||
| Actuarial (losses)/gains on defined benefit pension plans | (3.0) | 2.0 | 0.7 |
| Income tax on other comprehensive (expense)/income 3 |
0.7 | (0.5) | (0.6) |
| Other comprehensive (expense)/income for the period, net of income tax | (2.3) | 1.5 | 0.1 |
| Total comprehensive income for the period * | 28.1 | 20.0 | 50.3 |
* All attributable to equity holders of the parent.
| Issued capital |
Share premium |
Other reserves | Retained earnings |
Total | Non controlling |
Total equity |
|
|---|---|---|---|---|---|---|---|
| £m | £m | £m | £m | £m | interest £m |
£m | |
| Half year ended 31 January 2012 | |||||||
| Balance at 1 August 2011 | 15.1 | 160.7 | 1.5 | 896.1 | 1,073.4 | (0.1) | 1,073.3 |
| Total comprehensive income for the period | |||||||
| Profit for the period | – | – | – | 30.4 | 30.4 | – | 30.4 |
| Other comprehensive expense * | – | – | – | (2.3) | (2.3) | – | (2.3) |
| Total comprehensive income for the period | – | – | – | 28.1 | 28.1 | – | 28.1 |
| Transactions with shareholders recorded directly in equity: | |||||||
| Dividends on equity shares | – | – | – | (10.6) | (10.6) | – | (10.6) |
| Shares issued | – | 0.1 | – | – | 0.1 | – | 0.1 |
| Credit in relation to share options and tax thereon | – | – | – | 0.8 | 0.8 | – | 0.8 |
| Purchase of own shares | – | – | – | (1.0) | (1.0) | – | (1.0) |
| Total contributions by and distributions to shareholders | – | 0.1 | – | (10.8) | (10.7) | – | (10.7) |
| Balance at 31 January 2012 | 15.1 | 160.8 | 1.5 | 913.4 | 1,090.8 | (0.1) | 1,090.7 |
| Half year ended 31 January 2011 | |||||||
| Balance at 1 August 2010 | 15.1 | 160.6 | 1.5 | 857.7 | 1,034.9 | (0.1) | 1,034.8 |
| Total comprehensive income for the period | |||||||
| Profit for the period | – | – | – | 18.5 | 18.5 | – | 18.5 |
| Other comprehensive income * | – | – | – | 1.5 | 1.5 | – | 1.5 |
| Total comprehensive income for the period | – | – | – | 20.0 | 20.0 | – | 20.0 |
| Transactions with shareholders recorded directly in equity: | |||||||
| Dividends on equity shares | – | – | – | (8.1) | (8.1) | – | (8.1) |
| Credit in relation to share options and tax thereon | – | – | – | 0.6 | 0.6 | – | 0.6 |
| Purchase of own shares | – | – | – | (0.6) | (0.6) | – | (0.6) |
| Total contributions by and distributions to shareholders | – | – | – | (8.1) | (8.1) | – | (8.1) |
| Balance at 31 January 2011 | 15.1 | 160.6 | 1.5 | 869.6 | 1,046.8 | (0.1) | 1,046.7 |
| Year ended 31 July 2011 | |||||||
| Balance at 1 August 2010 | 15.1 | 160.6 | 1.5 | 857.7 | 1,034.9 | (0.1) | 1,034.8 |
| Total comprehensive income for the period | |||||||
| Profit for the period | – | – | – | 50.2 | 50.2 | – | 50.2 |
| Other comprehensive income * | – | – | – | 0.1 | 0.1 | – | 0.1 |
| Total comprehensive income for the period | – | – | – | 50.3 | 50.3 | – | 50.3 |
| Transactions with shareholders recorded directly in equity: | |||||||
| Dividends on equity shares | – | – | – | (12.5) | (12.5) | – | (12.5) |
| Shares issued | – | 0.1 | – | – | 0.1 | – | 0.1 |
| Credit in relation to share options and tax thereon | – | – | – | 1.2 | 1.2 | – | 1.2 |
| Purchase of own shares | – | – | – | (0.6) | (0.6) | – | (0.6) |
| Total contributions by and distributions to shareholders | – | 0.1 | – | (11.9) | (11.8) | – | (11.8) |
| Balance at 31 July 2011 | 15.1 | 160.7 | 1.5 | 896.1 | 1,073.4 | (0.1) | 1,073.3 |
* Additional breakdown is provided in the Condensed Group Statement of Comprehensive Income.
| At 31 January 2012 £m |
At 31 January 2011 £m |
At 31 July 2011 £m |
|
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Property, plant and equipment | 10.3 | 8.7 | 9.0 |
| Investment property | 9.4 | 7.8 | 8.9 |
| Other financial assets | 34.2 | 36.2 | 33.5 |
| Deferred tax assets | 4.6 | 3.7 | 3.7 |
| 58.5 | 56.4 | 55.1 | |
| Current assets | |||
| Inventories | 1,270.1 | 1,190.5 | 1,270.3 |
| Trade and other receivables | 53.2 | 50.6 | 62.2 |
| Cash and cash equivalents | 23.4 | 93.3 | 83.4 |
| 1,346.7 | 1,334.4 | 1,415.9 | |
| Total assets | 1,405.2 | 1,390.8 | 1,471.0 |
| LIABILITIES | |||
| Non-current liabilities | |||
| Interest bearing loans and borrowings | (20.0) | (100.0) | (85.0) |
| Retirement benefit obligations | (11.6) | (6.9) | (8.4) |
| Trade and other payables | (29.8) | (18.2) | (31.2) |
| Deferred tax liabilities | – | (0.5) | (0.1) |
| (61.4) | (125.6) | (124.7) | |
| Current liabilities | |||
| Interest bearing loans and borrowings | (35.0) | (20.0) | (15.0) |
| Corporation tax payable | (11.6) | (9.6) | (11.8) |
| Trade and other payables | (206.5) | (188.9) | (246.2) |
| (253.1) | (218.5) | (273.0) | |
| Total liabilities | (314.5) | (344.1) | (397.7) |
| Net assets | 1,090.7 | 1,046.7 | 1,073.3 |
| EQUITY | |||
| Issued capital | 15.1 | 15.1 | 15.1 |
| Share premium | 160.8 | 160.6 | 160.7 |
| Other reserves | 1.5 | 1.5 | 1.5 |
| Retained earnings | 913.4 | 869.6 | 896.1 |
| Total equity attributable to equity holders of the parent | 1,090.8 | 1,046.8 | 1,073.4 |
| Non-controlling interest | (0.1) | (0.1) | (0.1) |
| Total equity | 1,090.7 | 1,046.7 | 1,073.3 |
| Half year | Half year | Year | |
|---|---|---|---|
| ended 31 January |
ended 31 January |
ended 31 July |
|
| Notes | 2012 £m |
2011 £m |
2011 £m |
| Cash flows from operating activities | |||
| Profit for the period | 30.4 | 18.5 | 50.2 |
| Depreciation charge | 0.9 | 0.8 | 1.7 |
| Profit on sale of property, plant and equipment | (0.1) | (0.1) | (0.3) |
| Finance income | (0.5) | (1.3) | (1.8) |
| Finance expenses | 6.3 | 5.4 | 9.8 |
| Share-based payment charge | 0.6 | 0.5 | 1.0 |
| Income tax expense 3 |
10.2 | 5.5 | 17.0 |
| Decrease/(increase) in inventories | 0.2 | (41.8) | (121.6) |
| Decrease/(increase) in trade and other receivables | 8.2 | (10.1) | (19.2) |
| (Decrease)/increase in trade and other payables | (42.8) | (41.0) | 29.9 |
| Cash inflow/(outflow) from operations | 13.4 | (63.6) | (33.3) |
| Interest paid | (4.3) | (2.1) | (5.6) |
| Income tax (paid)/refunded | (10.6) | 1.1 | (8.4) |
| Net cash outflow from operating activities | (1.5) | (64.6) | (47.3) |
| Cash flows from investing activities | |||
| Acquisition of property, plant and equipment | (2.2) | (1.4) | (2.6) |
| Acquisition of investment property | (0.5) | (0.1) | (1.2) |
| Proceeds from sale of property, plant and equipment | 0.1 | 0.2 | 0.3 |
| Proceeds from the sale of investment property | – | 0.1 | 0.2 |
| Interest received | 0.6 | 2.1 | 1.3 |
| Net cash (outflow)/inflow from investing activities | (2.0) | 0.9 | (2.0) |
| Cash flows from financing activities | |||
| (Decrease)/increase in bank borrowings | (45.0) | 20.0 | – |
| Proceeds from the issue of share capital on exercise of share options | 0.1 | – | 0.1 |
| Purchase of own shares by employee share option plans | (1.0) | (0.6) | (0.6) |
| Dividends paid 5 |
(10.6) | (8.1) | (12.5) |
| Net cash (outflow)/inflow from financing activities | (56.5) | 11.3 | (13.0) |
| Net decrease in cash and cash equivalents | (60.0) | (52.4) | (62.3) |
| Cash and cash equivalents at beginning of period | 83.4 | 145.7 | 145.7 |
| Cash and cash equivalents at end of period | 23.4 | 93.3 | 83.4 |
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's Annual Report and Accounts for the year ended 31 July 2011.
These condensed financial statements are unaudited and were approved by the Board of Directors on 26 March 2012.
The comparative figures for the financial year ended 31 July 2011 are not the Group's statutory financial statements for that year. 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 (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 498 (2) or (3) of the Companies Act 2006.
The accounting polices applied by the Group in these condensed financial statements are consistent with those applied by the Group in its Annual Report and Accounts for the year ended 31 July 2011. The adoption of new standards, amendments and interpretations during the period has not had a material effect on the Group's profit for the period or equity. Further details are included on page 54 of the Annual Report and Accounts for the year ended 31 July 2011.
The Board regularly reviews the Group's performance and balance sheet position for its entire operations, which are based in the UK, and receives financial information for the UK as a whole. As a consequence the Group has one reportable segment which is UK housebuilding.
As there continues to be only one reportable segment whose revenue, profits, expenses, assets, liabilities and cash flows are measured and reported on a basis consistent with the Group financial statements, no additional numerical disclosures are necessary.
The taxation expense for the half years ended 31 January 2012 and 31 January 2011 is calculated by applying the directors' best estimate of the annual effective tax rate to the profit for the period. The taxation expense also includes adjustments in respect of prior years and the period to 31 January 2012 benefits from the finalisation of prior year corporation tax returns.
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 was performed at 31 January 2012 and the carrying value of land was compared to the net realisable value. Net realisable value represents the estimated selling price (in the ordinary course of business) less all estimated costs of completion and overheads. Estimated selling prices were reviewed on a site-by-site basis and selling prices were amended based on local management and the Board's assessment of current market conditions. No further exceptional land write downs or land write backs were required as a result of this review.
There were no exceptional items in the six months ended 31 January 2011 or in the year ended 31 July 2011.
| Half year ended 31 January 2012 £m |
Half year ended 31 January 2011 £m |
Year ended 31 July 2011 £m |
|
|---|---|---|---|
| Final dividend paid for the year ended 31 July 2011 of 8.8p per share (2010 – 6.7p) | 10.6 | 8.1 | 8.1 |
| Interim dividend paid for the year ended 31 July 2011 of 3.7p per share (2010 – 3.3p) | – | – | 4.4 |
| 10.6 | 8.1 | 12.5 | |
| Proposed interim dividend for the year ending 31 July 2012 of 6.0p per share (2011 – 3.7p) | 7.2 | 4.5 | – |
The proposed interim dividend was approved by the Board on 26 March 2012 and has not been included as a liability at the balance sheet date.
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 2011.
The condensed financial statements were approved by the Board on 26 March 2012 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 at www.bellway.co.uk.
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 24 and 25 of our Annual Report and Accounts for the year ended 31 July 2011 which is available on our website at www.bellway.co.uk.
We confirm that to the best of our knowledge:
The directors of Bellway p.l.c. are listed in the Annual Report and Accounts for the year ended 31 July 2011. Peter Stoker, the Commercial Director, retired from the Board on 31 July 2011 and our Southern Regional Chairman, Edward (Ted) Ayres, joined the Board on 1 August 2011. Alistair Leitch, the Finance Director, retired from the Board on 31 January 2012, and our Group Chief Accountant, Keith Adey, joined the Board on 1 February 2012.
For and on behalf of the Board
26 March 2012
Chief Executive Registered number 1372603
Seaton Burn House, Dudley Lane, Seaton Burn, Newcastle upon Tyne NE13 6BE Tel: (0191) 217 0717; Fax: (0191) 236 6230; DX: 711760 Seaton Burn; Website: www.bellway.co.uk
No. 3 Romulus Court Meridian East Meridian Business Park Braunstone Town Leicester LE19 1YG Tel: (0116) 282 0400 Fax: (0116) 282 0401
Bellway House 1 Rainsford Road Chelmsford Essex CM1 2PZ Tel: (01245) 259 989 Fax: (01245) 259 996 DX: 121935 Chelmsford 6
Bellway House, Kings Park Kingsway North Team Valley, Gateshead Tyne and Wear, NE11 0JH Tel: (0191) 482 8800 Fax: (0191) 491 4537 DX: 745710 Gateshead 7
Bellway House Bury Street, Ruislip Middlesex HA4 7SD Tel: (01895) 671 100 Fax: (01895) 671 111
Bellway House 2 Alderman Road Liverpool L24 9LR Tel: (0151) 486 2900 Fax: (0151) 336 9393
Oak House Woodlands Business Park Breckland, Linford Wood Milton Keynes MK14 6EY Tel: (01908) 328 800 Fax: (01908) 328 801 DX: 729383 Milton Keynes 16
Bothwell House Hamilton Business Park Caird Street Hamilton ML3 0QA Tel: (01698) 477 440 Fax: (01698) 477 441 DX: HA13 Hamilton
Bellway House London Road North Merstham Surrey RH1 3YU Tel: (01737) 644 911 Fax: (01737) 646 319
Osprey House Crayfields Business Park New Mill Road Orpington Kent BR5 3QJ Tel: (01689) 886 400 Fax: (01689) 886 410
Alexander House Excelsior Road Western Avenue Cardiff CF14 3AT Tel: (029) 2054 4700 Fax: (029) 2054 4701
Bellway House Embankment Way Castleman Business Centre Ringwood Hampshire BH24 1EU Tel: (01425) 477 666 Fax: (01425) 474 382 DX: 45710 Ringwood
Bellway House Relay Point Relay Drive, Tamworth Staffordshire, B77 5PA Tel: (01827) 255 755 Fax: (01827) 255 766 DX: 717023 Tamworth
2 Deighton Close Wetherby West Yorkshire LS22 7GZ Tel: (01937) 583 533 Fax: (01937) 586 147 DX: 16815 Wetherby
Bellway Housing Trust Limited Seaton Burn House Dudley Lane Seaton Burn Newcastle upon Tyne NE13 6BE Tel: (0191) 217 0717 Fax: (0191) 236 6230 DX: 711760 Seaton Burn
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