Home builder Bellway PLC (BWY.L) on Tuesday announced preliminary results for fiscal year 2009, reporting a loss compared to a profit last year, as difficult market conditions led to a steep decline in number of homes sold as well as average selling price. However, the company issued an optimistic forecast for the next fiscal year.
For the year ended July 31, the company said its pre-tax loss was GBP 36.55 million compared to pre-tax profit of GBP 34.76 million in the prior year. Before exceptional items, the company reported a pre-tax profit of GBP 29.76 million, compared to a pre-tax profit of GBP 165.67 million in the previous year.
The company posted a loss of GBP 27.44 million or 23.9 pence per share for 2009, compared to a profit of GBP 27 million or 23.5 pence per share last year. Before exceptional items, profit was GBP 20.30 million, or 17.6 pence per share, a sharp decline from GBP 119.51 million or 104.1 pence per share reported last year.
Exceptional items amounted to GBP 66.3 million in fiscal 2009, compared to GBP 130.9 million last year. Exceptional items include land write-downs of GBP 58.88 million compared to GBP 112.53 million last year.
Revenue declined to GBP 683.81 million from GBP 1.15 billion a year ago. The company is a volume house builder and sells primarily in the private market. It also acquires and sells second hand homes taken in part exchange.
The company sold 4,380 homes in fiscal 2009, compared to 6,556 sales in fiscal 2008. Average price achieved reduced to GBP 154,005 from GBP 169,729 in the prior year.
The company's six northern divisions sold 1,833 homes, down 45% from the previous year's 3,348 homes. The seven southern divisions sold 2,547 homes, down 21% from last year's 3,208.
Bellway noted that due to the discouraging housing market environment, sales incentives had to be used extensively, which contributed significantly in the decline in operating margin, pre-exceptional, to 6.7% from 16.1%.
Administrative expenses declined to GBP 41.55 million from GBP 58.76 million, and finance expenses dropped to GBP 20.71 million from GBP 22.68 million.
Finance income grew to GBP 4.89 million from GBP 3.63 million in the previous year. An income tax credit of GBP 9.11 million was recorded in 2009, compared to an income tax expense of GBP 7.76 million last year. The effective rate of taxation for 2009 was 24.9%, compared to 22.3% in 2008.
Gearing stood at 3.8% at the end of 2009, compared to 21.7% in 2008, as a result of reduction in borrowings by GBP 180.9 million.
In March, the company reported a pre-tax first-half loss of GBP 48.6 million, compared to a pre-tax profit of GBP 96.9 million in the year-ago period. Loss was GBP 35 million, or 30.5 pence per share, compared to a profit of GBP 68 million, or 59.2 pence per share, in the prior-year period. Revenue for the six-month period dropped to GBP 320.2 million from GBP 581.5 million a year ago.
Additionally, Bellway said today that its Board proposed to maintain the final dividend at last year's level of 6.0 pence, resulting in a total dividend for the year of 9.0 pence per ordinary share. The dividend will be paid on January 20, 2010 to all ordinary shareholders on the register of members on December 11, 2009.
Further, the company said David Perry would retire as a Non-Executive Director at the AGM in January 2010. He will be replaced by John Cuthbert, currently Managing Director of Northumbrian Water Group plc, who will join the Group as a Non-Executive Director in November 2009.
Regarding the new fiscal, Bellway said that since the beginning of August the marketplace has remained incentive led but reservations are 58% ahead, compared to the same period last year. At the end of September, Bellway had secured 61% of its target output for the year ending July 2010 and another 440 reservations for 2010/11.
Since 1 August, the company contracted or agreed terms in respect of the acquisition of over GBP 120 million of land where there is potential to develop in excess of 3,370 homes.
In a note of caution, the company said, "The pace of economic recovery is still uncertain with lack of mortgage availability, especially for first time buyers, potential unemployment and political uncertainty all remaining a threat to consumer confidence." However, the company believes that with its national coverage, strong balance sheet and low gearing, it is well positioned for the future.
BWY.L is currently trading at 819.50 pence, up 14.00 or 1.74%, on 53,480 shares.
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