Annual Report & Accounts 2008
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Bellway cover AW 08:Annual report cover 18/11/08 11:39 Page 1 ANNUAL REPORT & ACCOUNTS 2008 BELLWAY p.l.c. ANNUAL REPORT & ACCOUNTS 2008 Bellway p.l.c. is committed to the efficient use of natural resources. This Annual Report and Accounts is printed using environmentally friendly recycled paper called 9 lives and environmentally friendly inks. Bellway p.l.c. Seaton Burn House . Dudley Lane . Seaton Burn . Newcastle upon Tyne NE13 6BE Tel. 0191 217 0717 Fax. 0191 236 6230 DX 711760 Seaton Burn www.bellway.co.uk Bellway cover AW 08:Annual report cover 18/11/08 11:39 Page 2 Bellway p.l.c. Contents Seaton Burn House, Dudley Lane, Seaton Burn, Newcastle upon Tyne NE13 6BE Tel: (0191) 217 0717 . Fax: (0191) 236 6230 . DX 711760 Seaton Burn . Web site - www.bellway.co.uk Bellway Homes Limited 02 Chairman’s Statement 03 Figures at a glance NORTHERN REGION SOUTHERN REGION Wessex Bellway House 05 The Board East Midlands Essex Embankment Way No 3 Romulus Court Bellway House Castleman Business Centre 06 Advisers Meridian East 1 Rainsford Road Ringwood Meridian Business Park Chelmsford Hampshire BH24 1EU 07 Chief Executive’s Operating Review Braunstone Town Essex CM1 2PZ Tel: (01425) 477 666 Leicester LE19 1YG Tel: (01245) 259 989 13 Corporate Responsibility Policy Fax: (01425) 476 774 Tel: (0116) 282 0400 Fax: (01245) 259 996 DX 45710 Ringwood 15 Summary Corporate Responsibility Statement Fax: (0116) 282 0401 DX 121935 Chelmsford 6 19 Environmental Policy Statement North East North London OTHER 21 Financial Review Peel House Bellway House Planning & Development Main Street, Ponteland Bury Street Seaton Burn House 25 Operating Risk Statement Newcastle upon Tyne NE20 9NN Ruislip Dudley Lane Tel: (01661) 820 200 Middlesex HA4 7SD Seaton Burn 27 Report of the Directors Fax: (01661) 821 010 Tel: (01895) 671 100 Newcastle upon Tyne NE13 6BE 34 Report of the Board on Directors’ Remuneration DX 68924 Ponteland 2 Fax: (01895) 671 111 Tel: (0191) 217 0717 Fax: (0191) 236 6230 42 Statement of Directors’ Responsibilities in respect North West Northern Home Counties DX 711760 Seaton Burn of the Annual Report and the Accounts Bellway House Oak House 2 Alderman Road Woodlands Business Park City Solutions 43 Independent Auditors’ Report to the Members Liverpool L24 9LR Breckland Seaton Burn House of Bellway p.l.c. Tel: (0151) 486 2900 Linford Wood Dudley Lane Fax: (0151) 336 9393 Milton Keynes MK14 6EY Seaton Burn 44 Group Income Statement Tel: (01908) 328 800 Newcastle upon Tyne NE13 6BE Fax: (01908) 328 801 44 Statements of Recognised Income and Expense Scotland Tel: (0191) 217 0717 Bothwell House DX 729383 Milton Keynes 16 Fax: (0191) 236 6230 45 Balance Sheets Hamilton Business Park DX 711760 Seaton Burn Caird Street Southern Counties 46 Cash Flow Statements Hamilton ML3 0QA Bellway House OTHER SUBSIDIARY London Road North 47 Accounting Policies Tel: (01698) 477 440 Fax: (01698) 477 441 Merstham Bellway Housing Trust Limited 52 Notes to the Accounts DX HA13 Hamilton Surrey RH1 3YU Seaton Burn House Tel: (01737) 644 911 Dudley Lane 79 Five Year Record Seaton Burn West Midlands Fax: (01737) 646 319 Newcastle upon Tyne NE13 6BE 80 Shareholder Information Bellway House, Relay Point Relay Drive, Tamworth Thames Gateway Tel: (0191) 217 0717 Fax: (0191) 236 6230 83 Notice of Annual General Meeting Staffordshire B77 5PA Osprey House DX 711760 Seaton Burn Tel: (01827) 255 755 Crayfields Business Park 86 Principal Offices Fax: (01827) 255 766 New Mill Road DX 717023 Tamworth 8 Orpington Kent BR5 3QJ Yorkshire Tel: (01689) 886 400 2 Deighton Close Fax: (01689) 886 410 Wetherby West Yorkshire LS22 7GZ Wales Tel: (01937) 583 533 Alexander House Fax: (01937) 586 147 Excelsior Road DX 16815 Wetherby Cardiff CF14 3AT Tel: (029) 2054 4700 Fax: (029) 2054 4701 Chairman’s Statement Results Crystal Park, Airdrie, Lanarkshire The current state of the housing and mortgage markets has been well documented and the speed of the deterioration is unprecedented. Nevertheless, the Group completed the sale of 6,556 homes, a fall of 14.2% from last year’s record level of 7,638. The average price achieved for these sales was £169,729, down 2.1% from £173,300 in 2007, resulting in housing turnover reducing by 15.9% from £1,323.7 million to £1,112.7 million. Other turnover increased from £30.3 million to £36.8 million, resulting in total turnover for the Group of £1,149.5 million, compared to £1,354.0 million in 2007. Operating margins have come under increasing pressure as the market rapidly contracted and, in response to this, more incentives were used. As a consequence, the operating margin, as mentioned in the Trading Update on 14 August, has fallen from 18.7% in 2007 to 16.1%, before any exceptional charge. This has resulted in operating profit falling from £253.1 million to £185.0 million. The net interest charge for the period is £19.1 million, up from £17.9 million, mainly reflecting changes in interest rates. Gearing, as at 31 July 2008, was 23.7%, with 42.5% of the Group’s £512 million bank facilities having been utilised. In light of ongoing adverse market conditions, the Group considered it prudent to review its stocks by applying current expectations of revenues, dependent upon location and product. The Group has also written down costs incurred on sites, not yet purchased, where the likelihood is that we will not conclude a purchase under current contractual terms. In addition, our stock of unsold part exchange properties has been written down by 10%. The total exceptional charge created by these actions is £130.9 million, equating to 8.0% of stocks at 31 July 2008. The net profit before tax, and after exceptional items, was £34.8 million giving earnings per ordinary share of 23.6p, compared to 146.1p in 2007. Net assets per ordinary share at 31 July 2008 were 871p compared to 903p at 31 July 2007. Dividend The Board recognises the importance of cash dividends to shareholders and, consequently, despite the current instability in the financial markets and the resultant effects on the general economy, has decided to propose a final dividend of 6p per ordinary share. This results in a total dividend for the year of 24.1p, representing 56% of last year’s payment of 43.125p. The Board believes this level of dividend for the year is an appropriate reduction, given current trading conditions. Future dividend payments will be quantified with reference to cash generation. The dividend will be paid on Wednesday 21 January 2009 to all ordinary shareholders on the Register of Members on Friday 12 December 2008. The ex-dividend date is Wednesday 10 December 2008. Bellway p.l.c. Annual Report & Accounts 2008 02 Figures at a glance 2008 2007 TOTAL GROUP REVENUE £1,149.5m £1,354.0m OPERATING PROFIT - PRE EXCEPTIONAL ITEM £185.0m £253.1m - POST EXCEPTIONAL ITEM £54.1m £253.1m PROFIT BEFORE TAXATION - PRE EXCEPTIONAL ITEM £165.7m £234.8m - POST EXCEPTIONAL ITEM £34.8m £234.8m EARNINGS PER ORDINARY SHARE - PRE EXCEPTIONAL ITEM 104.2p 146.1p - POST EXCEPTIONAL ITEM 23.6p 146.1p TOTAL DIVIDEND FOR THE YEAR 24.1p 43.125p INCREASE IN SOCIAL HOUSING COMPLETIONS OF 49% TO 1,337 HOMES GEARING OF 23.7% 03 Bellway p.l.c. Annual Report & Accounts 2008 People In these extremely testing times our employees, sub-contractors, suppliers and partners have contributed more than ever to the production of these results and the Board is extremely grateful to all of them, including those who have now, sadly, left the business. The Board Leo Finn, our senior independent non-executive director, steps down at the forthcoming AGM on 16 January 2009 and will not seek re-election. Leo has given thirteen years of sterling service to the Group and the Board would like to thank him for all his efforts on behalf of Bellway. He is to be replaced on 1 February 2009 by Mike Toms whose current directorships include the role of non-executive director of UK COAL PLC and whose past directorships include the role of executive director of BAA plc. We wish Mike every success in his new role, which will incorporate the chairmanship of the Board Committee on Executive Directors’ Remuneration. Peter Johnson will become senior independent director from 16 January 2009. Outlook In its long experience, the Board has never witnessed such a swift change in the housing market as has been seen in the last twelve months. The Board has a clear strategy, aimed primarily at conserving cash and reducing the cost base, whilst maintaining the essential operational fabric and protecting shareholder value so that growth may commence when the market returns to more normal conditions. Dovecote Barns, Purfleet, Essex Castell Maen, Warrington, Caerphilly Howard C Dawe Chairman 24 October 2008 Bellway p.l.c. Annual Report & Accounts 2008 04 The Board has a clear strategy, aimed “primarily at conserving cash and reducing the cost base, whilst maintaining the essential operational fabric and protecting shareholder value so that growth may commence when the market returns to more normal conditions.” The Board I HOWARD C DAWE I JOHN K WATSON I PETER J STOKER I ALISTAIR M LEITCH Date of Birth: 07.04.44 Date of Birth: 21.03.54 Date of Birth: 23.05.56 Date of Birth: 14.02.54 Mr Dawe joined Bellway in Mr Watson, a Chartered Mr Stoker qualified as a Mr Leitch qualified as a 1961, was appointed a Surveyor, joined Bellway in Solicitor in 1979 and joined Chartered Accountant in 1977 director in 1977 and was 1978.