TIDMBVS
RNS Number : 5034O
Bovis Homes Group PLC
09 March 2009
BOVIS HOMES GROUP PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2008
Issued 9 March 2009
The Board of Bovis Homes Group PLC today announced its preliminary results for
2008 which have been prepared in accordance with International Financial
Reporting Standards as adopted by the EU ('IFRS').
* Pre-exceptional pre-tax profit of GBP14.4* million (2007: GBP123.6 million)
* Pre-exceptional basic earnings per share of 9.2p* (2007: 72.4p per share)
* Pre-tax loss for the year of GBP78.7 million (2007: profit of GBP123.6 million)
* Successful renewal of Group's banking arrangements, with committed syndicated
facility in place until 2011, and revised covenant package in place
* GBP108 million of year end net debt** with modest year end gearing of 17% (2007:
GBP44 million of net debt; 6% gearing)
* Inventory provisions of GBP75.2 million, plus restructuring charges of GBP5.7
million and goodwill and other impairment charges of GBP12.2 million: totalling
GBP93.1 million of exceptional items
* Reduction in overhead to GBP42.0*** million following restructuring (2007:
GBP48.7 million), with further savings in 2009 expected to reduce overhead by
40-50% from 2008 starting point
* Total dividend for the year of 5.0p net per ordinary share (2007: 35.0p), with
final dividend passed, reflecting focus on cash generation
* 13,545 plots of land with planning consent (2007: 11,413 plots) and 18,972
potential plots of strategic land (2007: 24,868 potential plots)
* Before exceptional items of GBP93.1 million (2007: GBPnil)
** GBP100.1 million net debt including issue costs of GBP8.3 million
*** Before exceptional overhead items of GBP16.6 million (2007: GBPnil)
Commenting on the results, David Ritchie, the Chief Executive of Bovis Homes
Group PLC said:
"2008 has been an unprecedented year. Declining mortgage
finance availability and poor economic conditions, allied with low consumer
confidence, brought about the toughest trading environment for many years. In
response to this, during the year the Group has restructured its operations,
sharply reduced its expenditure on land and production, renegotiated its banking
agreements and focused its management on the need to manage cashflow in trading
conditions which lack good forward visibility.
The Group has positioned itself well with low year end net debt and commences
2009 with a good number of unsold finished stock homes which it can sell to
generate a strong cash margin. The Group will also benefit from a much lower
overhead cost base, limited cash commitments on land and an expectation of
positive tax cashflow.
Looking forward, the Group expects net debt to reduce, allowing the Group to
manage effectively the trading assets on its balance sheet. The Group's current
organisational structure retains capacity to manage greater levels of activity,
and through orderly trading during the current challenging conditions, the Group
anticipates being well placed to exploit land investment opportunities as
improved activity in the housing market emerges."
+------------+------------------------+----------------+----------------------------+
| Enquiries: | David Ritchie, Chief | Results issued | Andrew Best / Emily |
| | Executive | by: | Bruning |
+------------+------------------------+----------------+----------------------------+
| | Neil Cooper, Finance | | Shared Value Limited |
| | Director | | |
+------------+------------------------+----------------+----------------------------+
| | Bovis Homes Group PLC | | tel: 020 7321 5022/5027 |
+------------+------------------------+----------------+----------------------------+
| | On Monday 9 March - tel: 020 7321 5010 | |
+------------+-----------------------------------------+----------------------------+
| | Thereafter - tel: 01474 876200 | |
+------------+------------------------+----------------+----------------------------+
Certain statements in this press release are forward looking statements.
Forward looking statements involve evaluating a number of risks, uncertainties
or assumptions that could cause actual results to differ materially from those
expressed or implied by those statements. Forward looking statements regarding
past trends, results or activities should not be taken as a representation that
such trends, results or activities will continue in the future. Undue reliance
should not be placed on forward looking statements.
Developments in the wider economy have adversely impacted the housebuilding
marketplace during 2008. Mortgage availability for home purchase has fallen by
around 70%, transaction volumes and house prices have fallen, and consumer
confidence is low. Recognising this, the Group acted quickly and decisively
during 2008 to ensure that it is well placed to see through the downturn in an
orderly manner.
Results overview
For the year ended 31 December 2008, the Group achieved a pre-exceptional
pre-tax profit of GBP14.4 million, as against GBP123.6 million in 2007.
Pre-exceptional basic earnings per share was 9.2p in 2008 as compared to 72.4p
per share in 2007. Total revenue generated was GBP282.3 million (2007: GBP555.7
million), and the Group legally completed 1,817 homes (2007: 2,930 homes).
On a pre-exceptional basis, the Group's operating margin reduced to 7.5%
(2007: 22.4%). This reduction reflected a fall in private home sales prices, a
shift in the selling mix towards social homes and away from private homes and
the de-leveraging impact on cost recovery from the sharp fall in
revenues.
In the light of reductions in activity levels and falls in house
prices in the current market, the Group has reviewed its asset base, and is
charging provisions against the carrying value of some Group assets totalling
GBP77.4 million. Given provisions made against inventory acquired as part of
the Elite Homes acquisition in 2007 as well as the subsequent restructuring of
the Northern business, the Group is writing off the goodwill arising from its
acquisition of Elite Homes, totalling GBP10.0 million. Given the scale and
unusual nature of these charges, these costs have been disclosed as exceptional.
The Group has also charged GBP5.7 million relating to the restructuring
activities it has carried out in the year. Taken together, this has generated a
pre-tax exceptional charge of GBP93.1 million.
After taking into account this charge, the Group made a pre-tax loss of
GBP78.7 million and a basic loss per share of 49.1p in 2008.
Group net assets reduced by GBP91.4 million, from GBP723.7 million to GBP632.3
million, equivalent to GBP5.23 per share at the year end. This reduction in net
assets was driven primarily by the Group's retained loss in the year, inclusive
of exceptional items, and an adverse movement in value of the pension scheme of
GBP7.8 million.
Net debt before issue costs was GBP108 million at the year end, and year
end gearing was a modest 17%, with net borrowing utilisation less than half of
the Group's committed loan facility.
The Group successfully refinanced its banking arrangements during 2008,
providing it with GBP220 million of committed funds, reducing over the life of
the agreement, which ends in March 2011, to GBP160 million. The covenant package
in this agreement has also been renegotiated, allowing the Group to focus on
managing its cashflow through the removal of an interest cover covenant, and its
replacement with a cashflow cover covenant.
Arising from this focus on managing cashflow, the Group reviewed its pricing
policies during the year, and was more aggressive in seeking to hit its internal
volume targets through discounting prices and agreeing bulk sales through the
Government's house buying programme over the second half of the year. Whilst
this has necessarily impacted both average sales price and profit margin, it has
been significantly cash generative.
The Group has also reduced its overhead
cost base, with assertive cost reduction and its regional structure rationalised
from five to three active regions. After starting the year with 1,039
employees, the Group reduced its headcount by circa 60% to 441 employees in
March 2009, through a recruitment freeze and two restructuring events. At
GBP42.0 million, pre exceptional items, Group overhead in 2008 has reduced by
14% from the prior year (2007: GBP48.7 million). Looking ahead, the Group
expects that its overhead during 2009 will be in a range 40%-50% lower than its
start point in 2008 following these actions. Notwithstanding this significant
saving in overheads, the Group has retained an organisational structure which
will facilitate growth in business activity levels as market conditions improve.
Finally, the Group has also reduced housing production sharply to limit the
level of working capital in this area. Despite starting the year with a build
programme designed to construct around 3,500 units of production, the Group was
able to reduce activity to only 1,782 units of production, less than the number
of homes legally completed and a 39% reduction on the previous year (2007: 2,923
units of production). New unit starts fell further, from 3,406 units in 2007 to
1,179 units in 2008, a 65% decrease in activity.Land purchasing activities have
also been reduced significantly, with only 173 plots added to the consented land
bank during 2008 through purchase in the consented land market.
Revenue
Total revenue for the Group was GBP282.3 million in 2008 as compared to GBP555.7
million in 2007. The key component of revenue for the Group is housing revenue,
which was GBP274.0 million for the year ended 31 December 2008, as compared to
GBP525.9 million for the prior year. The Group legally completed 1,817 homes in
2008 compared to 2,930 legal completions in 2007. Of these, 594 were social
homes (2007: 637) and 1,223 were private homes (2007: 2,293), a social mix of
33% as compared to 22% in 2007.
The average sales price of legal completions fell over the year, from GBP179,500
in 2007 to GBP150,800 in 2008. This fall was driven by a combination of
factors. Firstly, the average sales price of private homes fell by 12%, from
GBP206,200 to GBP181,000 as the Group responded to a weaker market to deliver
the Group's volume aspirations and as the average size of private homes legally
completed reduced. Secondly, there was a shift in selling mix towards social
housing, from 22% in 2007 to 33% of legal completions in 2008. With an average
sales price of GBP88,500 in 2008 (2007: GBP83,400), the increase in the mix of
this category diluted the overall average sales price achieved.
The average size of the Group's private homes fell by 5% in 2008 to 972 square
feet as compared to 1,023 square feet in 2007. Taking this into account, the
Group's private sales price per square foot fell by less than the average sales
price, an 8% fall from GBP202 per square foot to GBP186 per square foot.
Overall, the Group's legally completed homes reduced in size from 969 square
feet in 2007 to 909 square feet, a fall of 6%.
Given the dearth of activity in the consented land market and uncertainty over
achievable values, the Group limited disposals of land during 2008 to GBP4.9
million, as compared to GBP25.1 million in 2007. Other income at GBP3.4 million
for 2008 was slightly behind that of the prior year.
Pre exceptional operating profit
The Group achieved GBP21.3 million of operating profit, before exceptional
items, for the year ended 31 December 2008, at an operating margin of 7.5%.
This was a sharp reduction on the previous year's operating profit of GBP124.4
million and operating margin of 22.4%. Gross margins have fallen by around 9
ppts, reflective primarily of an underlying reduction in private home profit
margins as prices fell, but also of an increase in the social mix and a loss of
scale-benefits on strategic planning fees and other costs charged as incurred
against gross profit. Despite a 14% absolute reduction in overhead, from
GBP48.7 million in 2007 to GBP42.0 million in 2008, excluding exceptional
items, the operating margin was further impacted by the lower recovery of
overhead as the ratio to revenue grew from 8.7% in 2007 to 14.9% in 2008.
Profit from land sales, less option costs, was GBP1.3 million in 2008, as
compared with GBP10.0 million in 2007.
Exceptional and non-recurring costs
The Group discloses items as exceptional when the Board deems them material by
size or nature, non-recurring and of such significance that they require
separate disclosure.
The Group has reviewed the carrying value of its assets and liabilities as at 31
December 2008. Following this review, the Group has charged an exceptional
provision against the carrying value of inventory and an impairment charge for
available-for-sale financial assets and fixed assets. The Group has also
written off the goodwill arising from the acquisition of Elite Homes in 2007.
The Group has reviewed its inventory carrying values on a site by site basis,
taking into account local management and the Board's estimates of current
achievable pricing in local markets. Where this gave rise to a situation where
the current carrying costs of the asset were higher than the estimated net
realisable value, a provision has been recognised for the difference. This
provision includes allowance for both land and part-exchange assets. In total,
GBP75.2 million has been provided.
Prior to the expiry of the 12 month review period for fair value adjustments
relating to the acquisition of Elite Homes in October 2007, the Group revised
its fair value estimates downwards by GBP0.8 million, reflecting finalisation of
estimates for liabilities existing at the point of acquisition. This adjustment
increased the cost of acquired goodwill by GBP0.8 million, to GBP10.0 million in
total. Subsequently at the year end, the Group has reviewed the goodwill it is
carrying and, given the fact that provisions have been recognised relating to
the carrying value of land acquired by the Group as part of the Elite
acquisition and given that the Group has restructured its Northern regional
business, the Group has fully impaired this goodwill reflecting the Board's
current view of the value of this intangible asset.
The Group has reviewed the carrying values of its available-for-sale
financial assets, revisiting the long term growth assumptions built into its
valuation model, and in particular the likelihood of a short-term decline in
pricing, with a longer term return to trend. This has given rise to an
impairment charge of GBP1.2 million. An impairment charge of GBP1.0 million has
also been made relating to the Group's freehold offices, given the fall in
commercial property values during 2008.
The Group has also charged restructuring costs of GBP5.7 million reflecting
the one-off costs of two restructuring events that took place during the year.
These costs include redundancies as well as costs relating to office
closures.
Pre-tax loss and loss per share
Together with GBP21.3 million of pre-exceptional operating profit (2007:
GBP124.4 million), the Group incurred GBP6.9 million of net financing charges
(2007: GBP0.8 million) and GBP93.1 million of exceptional items (2007: GBPnil),
resulting in a pre-tax loss of GBP78.7 million (2007: pre-tax profit of GBP123.6
million).
Before exceptional items, the Group delivered basic earnings per share of 9.2p.
However, after exceptional items, basic loss per share was 49.1p. This is as
compared to basic earnings per share of 72.4p in 2007.
Land
The Group's consented land bank grew by 2,132 plots from 11,413 plots at 1
January 2008 to 13,545 plots at 31 December 2008, a closing land bank
representing 7.5 years of supply at 2008 activity levels. The vast majority of
land bank additions during the year related to successful transfers from the
strategic land bank, including 2,200 plots at Filton near Bristol and the first
900 plots at Wellingborough. The Group limited acquisitions in the consented
land market to 173 plots during the year.The strategic land bank as at 31
December 2008 was 18,972 potential plots (2007: 24,868 potential plots). The
Group transferred 3,830 plots into the consented land bank during 2008 and saw a
further net movement of 2,066 potential plots reflecting updated views on the
likelihood of or quantum of viable residential planning consents being achieved
given current conditions in the housing market.Prior to the inventory provision
taken in 2008, the average consented land plot cost was GBP40,200 with the
equivalent figure for 2007 being GBP43,400. Adjusting for the inventory
provision, the average plot cost reduced to GBP35,000.
Financing & cashflow
Net financing charges were GBP6.9 million in 2008 (2007: GBP0.8 million). Net
bank interest charges for 2008 were GBP5.6 million, which included the
amortisation of arrangement fees and commitment fee charges. This was as
compared to GBP2.4 million of net income in 2007. On average during 2008, the
Group had GBP97 million of net debt, as compared to an average net cash in hand
of GBP49 million in 2007. The Group incurred a GBP2.5 million finance charge
(2007: GBP4.1 million), reflecting the difference between the cost and nominal
price of land bought on deferred terms and which is charged to the income
statement over the life of the deferral of the consideration payable. This year
over year reduction was largely driven by a corresponding fall in land
creditors.
The Group benefited from a GBP1.1 million net pension financing credit during
2008. This credit arose as a result of the expected return on scheme assets
being in excess of the interest on the scheme obligations. The equivalent credit
in 2007 was GBP0.9 million. The Group also benefited from a finance credit of
GBP0.1 million arising from the unwinding of the discount on its
available-for-sale financial assets during 2008.
Over the year, the Group managed to limit the net cash outflow from operations
to only GBP4 million, reflecting positively on the actions of the Group in
reducing cash outflows, despite sharply falling revenues. The Group's net
debt before issue costs increased by GBP64 million, from GBP44 million to GBP108
million, the bulk of this increase arising during the first half of 2008. In
addition to the modest cash outflow from operations, the Group paid GBP17
million of tax largely relating to 2007's profits, GBP27 million of dividends
and GBP17 million of interest and related charges, including GBP8.3 million of
arrangement fees and related costs linked to its successful bank facility
refinancing.
As at 31 December 2008, the Group had GBP11.6 million of cash in hand, and
borrowings of GBP120 million. The Group has in place a GBP220 million committed
syndicated banking facility, which steps down to GBP180 million in February 2010
and to GBP160 million in September 2010 and which matures in March 2011.
Looking ahead, the Group anticipates around GBP50 million of net debt by the end
of 2009.
Taxation
The Group has accounted for a tax credit of GBP19.7 million in 2008 (2007: tax
charge of GBP36.7 million). Of this, a GBP3.3 million charge has arisen on
pre-exceptional pre-tax profits of GBP14.4 million, and a GBP23.0 million tax
credit has arisen on pre tax exceptional items of GBP93.1 million.This equates
to an effective tax rate of 25.1% (2007: 29.7%). The major contributor to this
lowered effective rate has been the GBP10.0 million impairment of goodwill
arising on acquisition which is a non-deductible charge. The Group has also
benefited from a GBP1.0 million overprovision of tax charge relating to prior
years.
As a result of the tax credit arising from the exceptional items taken in 2008,
the Group has recognised a tax asset of GBP23.6 million on its closing balance
sheet as at 31 December 2008.
Pensions
At the start of 2008, the Group enjoyed a surplus on its pension scheme of
GBP1.0 million, but following a roll-forward of the valuation, with latest
estimates provided by the Group's actuarial advisors, the Group's pension scheme
had a deficit of GBP6.8 million at 31 December 2008. This adverse movement has
arisen from a combination of a reduction in value of the scheme's assets,
partially offset by a favourable movement in the discount rate applicable to the
scheme's liabilities.
Net assets
The Group's net assets at 31 December 2008 were GBP632.3 million, GBP91.4
million lower than the net asset position as at 31 December 2007. This was
primarily as a result of an GBP86.0 million retained loss, together with a
movement in the value of the pension scheme reserve by GBP6.4 million.
Net assets per share as at 31 December 2008 was GBP5.23 as compared to GBP5.99
at 31 December 2007.
+--------------------------------------------+---+-+--------+-+--------+-+--------+-+
| Analysis of net assets | | |
+--------------------------------------------+----------------+---------------------+
| | | | 2008 | 2007 |
+--------------------------------------------+-----+----------+----------+----------+
| | | | GBPm | GBPm |
+--------------------------------------------+-----+----------+----------+----------+
| | | | | | | | | |
+--------------------------------------------+---+-+--------+-+--------+-+--------+-+
| Net assets at 1 January | | | | | 723.7 | | 677.8 | |
+--------------------------------------------+---+-+--------+-+--------+-+--------+-+
| Pre-exceptional profit after tax for the | | | | | 11.1 | | 86.9 | |
| year | | | | | | | | |
+--------------------------------------------+---+-+--------+-+--------+-+--------+-+
| Exceptional charges net of tax | | | | | (70.1 | )| - | |
+--------------------------------------------+---+-+--------+-+--------+-+--------+-+
| Dividends | | | | | (27.0 | )| (45.0 | )|
+--------------------------------------------+---+-+--------+-+--------+-+--------+-+
| Share capital issued | | | | | 0.5 | | 1.4 | |
+--------------------------------------------+---+-+--------+-+--------+-+--------+-+
| Net actuarial movement on pension scheme | | | | | (6.4 | )| 2.4 | |
| through reserves | | | | | | | | |
+--------------------------------------------+---+-+--------+-+--------+-+--------+-+
| Deferred tax on other employee benefits | | | | | - | | (0.8 | )|
+--------------------------------------------+---+-+--------+-+--------+-+--------+-+
| Current tax recognised directly in equity | | | | | 0.5 | | - | |
+--------------------------------------------+---+-+--------+-+--------+-+--------+-+
| Adjustment to the fair value of cash flow | | | | | - | | 0.1 | |
| hedges | | | | | | | | |
+--------------------------------------------+---+-+--------+-+--------+-+--------+-+
| Adjustment to reserves for share based | | | | | - | | 0.9 | |
| payments | | | | | | | | |
+--------------------------------------------+---+-+--------+-+--------+-+--------+-+
| Net assets at 31 December | | | | | 632.3 | | 723.7 | |
+--------------------------------------------+---+-+--------+-+--------+-+--------+-+
Dividends
During 2008, the Group paid the 2007 final dividend of 17.5p per share and the
2008 interim dividend of 5.0p per share. In total, this equated to GBP27.0
million (2007: GBP45.0 million). As previously announced, the Board has decided
not to recommend payment of a final dividend for 2008, having regard to trading
conditions.
Employees and the Board
2008 has been a difficult year for the employees, suppliers and sub-contractors
of the Group. The Group has seen two restructuring events leading to more than
half its employees leaving the business during the year. The Board took these
necessary and essential decisions after consideration of alternative courses of
action, and recognises the significant impact its decisions have had on many
individuals, which is regrettable. The Board would also like to recognise the
commitments and contribution of those colleagues who have been made redundant
during the year and would like to wish them every success in their future
employment.
Whilst distressing for those individuals leaving, it is often also difficult for
those employees remaining, who may have to take on additional tasks in a more
uncertain environment. In reducing production activity and seeking savings
throughout the business, the Group also recognises that this has been very
challenging for the many suppliers and sub-contractors who provide services to
the business.
The Board would like to thank its employees, suppliers and sub-contractors for
their continued hard work and commitment during a year that has been very
challenging for a great many individuals connected to the Group in many
respects.
The Board would also like to thank Mr Geoff Coleman, the regional Managing
Director of South East region, who retired during the year after more than 20
years service.
During a year of major changes in the marketplace, the Group was pleased that
the retiring Chief Executive, Mr Malcolm Harris, remained a member of the Board
and became non-executive Chairman in July 2008. On this date, Mr David Ritchie
was appointed Chief Executive, having previously been Group Managing Director, a
role which was not thereafter retained. As part of these changes, Mr Alastair
Lyons joined the Group as non-executive Deputy Chairman and Senior Independent
Director in October 2008.
Market conditions & prospects
As has been well reported, the current market for housebuilders is exceedingly
weak, and accordingly, the Group's priorities are to manage through the current
downturn in an orderly way. The Group commenced 2009 with a healthy number of
unsold finished stock homes which it can sell to generate a strong cash margin,
preserving the value in the balance sheet whilst continuing to maintain a
relatively low level of indebtedness.Through its efforts to date, as at 6 March
2009, the Group has secured 772 net reservations for legal completion in 2009,
as compared to 1,262 net reservations at the same point in 2008. Whilst this
represents a decrease year over year of 39%, the 330 private net reservations
achieved in the first nine weeks of the year represents a 22% increase on the
prior year's comparative of 271 net reservations.
Looking ahead, the Group expects that transaction volumes will begin to improve
as lower house prices and lower mortgage interest rates feed through into the
marketplace. This pick up in activity does, however, depend on the credit market
being capable of funding increased transactional growth. With improved volume,
market pricing will begin to stabilise. However, visibility on the timing of
these likely market developments is not good and for the present, the Group is
positioning itself assuming a continuation in 2009 of current market conditions.
With low levels of debt and a largely strategically sourced and long consented
land bank the Group anticipates being well placed in terms of balance sheet
capability for this eventuality.
Bovis Homes Group PLC
Group income statement
+----------------------------+-------------+-+-------------+-+-------------+-+-----------+-+
| For the year ended 31 | Before | | Exceptional | | Continuing | | | |
| December 2008 | exceptional | | items | | operations | | | |
| | items | | | | | | | |
+----------------------------+-------------+-+-------------+-+-------------+-+-----------+-+
| | 2008 | | 2008 | | 2008 | | 2007 | |
+----------------------------+-------------+-+-------------+-+-------------+-+-----------+-+
| | GBP000 | | GBP000 | | GBP000 | | GBP000 | |
+----------------------------+-------------+-+-------------+-+-------------+-+-----------+-+
| | | | | | | | | |
+----------------------------+-------------+-+-------------+-+-------------+-+-----------+-+
| Revenue - continuing | 282,326 | | - | | 282,326 | | 555,702 | |
| operations | | | | | | | | |
+----------------------------+-------------+-+-------------+-+-------------+-+-----------+-+
| Cost of sales | (219,011 | )| (76,487 | )| (295,498 | )| (382,659 | )|
+----------------------------+-------------+-+-------------+-+-------------+-+-----------+-+
| Gross profit / (loss) | 63,315 | | (76,487 | )| (13,172 | )| 173,043 | |
+----------------------------+-------------+-+-------------+-+-------------+-+-----------+-+
| Administrative expenses | (42,018 | )| (16,641 | )| (58,659 | )| (48,653 | )|
+----------------------------+-------------+-+-------------+-+-------------+-+-----------+-+
| Operating profit / (loss) | 21,297 | | (93,128 | )| (71,831 | )| 124,390 | |
| before financing costs | | | | | | | | |
+----------------------------+-------------+-+-------------+-+-------------+-+-----------+-+
| Financial income | 1,389 | | - | | 1,389 | | 6,158 | |
+----------------------------+-------------+-+-------------+-+-------------+-+-----------+-+
| Financial expenses | (8,292 | )| - | | (8,292 | )| (6,962 | )|
+----------------------------+-------------+-+-------------+-+-------------+-+-----------+-+
| Net financing costs | (6,903 | )| - | | (6,903 | )| (804 | )|
+----------------------------+-------------+-+-------------+-+-------------+-+-----------+-+
| Profit / (loss) before tax | 14,394 | | (93,128 | )| (78,734 | )| 123,586 | |
+----------------------------+-------------+-+-------------+-+-------------+-+-----------+-+
| Income tax | (3,319 | )| 23,058 | | 19,739 | | (36,727 | )|
+----------------------------+-------------+-+-------------+-+-------------+-+-----------+-+
| Profit / (loss) for the | 11,075 | | (70,070 | )| (58,995 | )| 86,859 | |
| period attributable to | | | | | | | | |
| equity holders of the | | | | | | | | |
| parent | | | | | | | | |
+----------------------------+-------------+-+-------------+-+-------------+-+-----------+-+
| | | | | | | | | |
+----------------------------+-------------+-+-------------+-+-------------+-+-----------+-+
| Basic earnings/(loss) per | 9.2p | | (58.3p | )| (49.1p | )| 72.4p | |
| ordinary share | | | | | | | | |
+----------------------------+-------------+-+-------------+-+-------------+-+-----------+-+
| Diluted earnings/(loss) | 9.2p | | (58.3p | )| (49.1p | )| 72.2p | |
| per ordinary share | | | | | | | | |
+----------------------------+-------------+-+-------------+-+-------------+-+-----------+-+
Bovis Homes Group PLC
Group balance sheet
+---------------------------------+----------+--+-----------+--+-----------+--+
| At 31 December 2008 | | | 2008 | | 2007 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| | | | GBP000 | | GBP000 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| | | | | | Restated | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Assets | | | | | | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Goodwill | | | - | | 10,036 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Property, plant and equipment | | | 12,347 | | 14,451 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Available for sale financial | | | 6,030 | | 1,085 | |
| assets | | | | | | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Investments | | | 22 | | 22 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Deferred tax assets | | | 5,548 | | 3,568 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Trade and other receivables | | | 2,418 | | 2,589 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Retirement benefit asset | | | - | | 1,010 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Total non-current assets | | | 26,365 | | 32,761 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Inventories | | | 780,808 | | 869,355 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Trade and other receivables | | | 37,947 | | 52,725 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Cash | | | 11,634 | | 346 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Current tax assets | | | 23,550 | | - | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Total current assets | | | 853,939 | | 922,426 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Total assets | | | 880,304 | | 955,187 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Equity | | | | | | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Issued capital | | | 60,497 | | 60,415 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Share premium | | | 157,127 | | 156,734 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Retained earnings | | | 414,654 | | 506,594 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Total equity attributable to | | | 632,278 | | 723,743 | |
| equity holders of the parent | | | | | | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| | | | | | | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Liabilities | | | | | | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Bank loans | | | 111,730 | | 25,000 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Trade and other payables | | | 24,907 | | 28,816 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Retirement benefit obligations | | | 6,790 | | - | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Provisions | | | 1,623 | | 1,463 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Total non-current liabilities | | | 145,050 | | 55,279 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Bank overdraft | | | - | | 3,588 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Bank loans | | | - | | 16,000 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Trade and other payables | | | 101,964 | | 142,291 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Provisions | | | 1,012 | | 500 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Current tax liabilities | | | - | | 13,786 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Total current liabilities | | | 102,976 | | 176,165 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Total liabilities | | | 248,026 | | 231,444 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| | | | | | | |
+---------------------------------+----------+--+-----------+--+-----------+--+
| Total equity and liabilities | | | 880,304 | | 955,187 | |
+---------------------------------+----------+--+-----------+--+-----------+--+
These accounts were approved by the Board of directors on 6 March 2009.
Bovis Homes Group PLC
Group statement of cash flows
+----------------------------------------+---+--+----------+--+----------+--+
| For the year ended 31 December 2008 | | | | | | |
+----------------------------------------+---+--+----------+--+----------+--+
| | | | 2008 | | 2007 | |
+----------------------------------------+---+--+----------+--+----------+--+
| | | | GBP000 | | GBP000 | |
+----------------------------------------+---+--+----------+--+----------+--+
| | | | | | Restated | |
+----------------------------------------+---+--+----------+--+----------+--+
| Cash flows from operating activities | | | | | | |
+----------------------------------------+---+--+----------+--+----------+--+
| (Loss) / profit for the year | | | (58,995 | )| 86,859 | |
+----------------------------------------+---+--+----------+--+----------+--+
| Depreciation | | | 1,168 | | 1,421 | |
+----------------------------------------+---+--+----------+--+----------+--+
| Impairment of goodwill | | | 10,036 | | - | |
+----------------------------------------+---+--+----------+--+----------+--+
| Impairment of assets | | | 2,241 | | - | |
+----------------------------------------+---+--+----------+--+----------+--+
| Financial income | | | (1,389 | )| (6,158 | )|
+----------------------------------------+---+--+----------+--+----------+--+
| Financial expense | | | 8,292 | | 6,962 | |
+----------------------------------------+---+--+----------+--+----------+--+
| Profit on sale of property, plant and | | | (146 | )| (43 | )|
| equipment | | | | | | |
+----------------------------------------+---+--+----------+--+----------+--+
| Equity-settled share-based payment | | | (22 | )| 133 | |
| (credit) / expense | | | | | | |
+----------------------------------------+---+--+----------+--+----------+--+
| Income tax (credit) / expense | | | (19,739 | )| 36,727 | |
+----------------------------------------+---+--+----------+--+----------+--+
| Write-down of inventories | | | 75,202 | | - | |
+----------------------------------------+---+--+----------+--+----------+--+
| Other non-cash items | | | - | | 996 | |
+----------------------------------------+---+--+----------+--+----------+--+
| Operating profit before changes in | | | 16,648 | | 126,897 | |
| working capital and provisions | | | | | | |
+----------------------------------------+---+--+----------+--+----------+--+
| | | | | | | |
+----------------------------------------+---+--+----------+--+----------+--+
| Decrease / (increase) in trade and | | | 8,924 | | (29,821 | )|
| other receivables | | | | | | |
+----------------------------------------+---+--+----------+--+----------+--+
| Decrease / (increase) in inventories | | | 13,345 | | (42,195 | )|
+----------------------------------------+---+--+----------+--+----------+--+
| Decrease in trade and other payables | | | (43,444 | )| (44,149 | )|
+----------------------------------------+---+--+----------+--+----------+--+
| Increase / (decrease) in provisions | | | 702 | | (1,671 | )|
| and employee benefits | | | | | | |
+----------------------------------------+---+--+----------+--+----------+--+
| Cash generated from operations | | | (3,825 | )| 9,061 | |
+----------------------------------------+---+--+----------+--+----------+--+
| | | | | | | |
+----------------------------------------+---+--+----------+--+----------+--+
| Interest paid | | | (8,769 | )| (4,812 | )|
+----------------------------------------+---+--+----------+--+----------+--+
| Income taxes paid | | | (16,924 | )| (39,052 | )|
+----------------------------------------+---+--+----------+--+----------+--+
| Net cash from operating activities | | | (29,518 | )| (34,803 | )|
+----------------------------------------+---+--+----------+--+----------+--+
| | | | | | | |
+----------------------------------------+---+--+----------+--+----------+--+
| Cash flows from investing activities | | | | | | |
+----------------------------------------+---+--+----------+--+----------+--+
| Interest received | | | 187 | | 5,420 | |
+----------------------------------------+---+--+----------+--+----------+--+
| Acquisition of property, plant and | | | (143 | )| (879 | )|
| equipment | | | | | | |
+----------------------------------------+---+--+----------+--+----------+--+
| Proceeds from sale of plant and | | | 214 | | 106 | |
| equipment | | | | | | |
+----------------------------------------+---+--+----------+--+----------+--+
| Acquisition of subsidiary net of cash | | | - | | (73,304 | )|
| acquired | | | | | | |
+----------------------------------------+---+--+----------+--+----------+--+
| Net cash from investing activities | | | 258 | | (68,657 | )|
+----------------------------------------+---+--+----------+--+----------+--+
| | | | | | | |
+----------------------------------------+---+--+----------+--+----------+--+
| Cash flows from financing activities | | | | | | |
+----------------------------------------+---+--+----------+--+----------+--+
| Dividends paid | | | (27,049 | )| (44,990 | )|
+----------------------------------------+---+--+----------+--+----------+--+
| Proceeds from the issue of share | | | 475 | | 1,367 | |
| capital | | | | | | |
+----------------------------------------+---+--+----------+--+----------+--+
| Drawdown of borrowings | | | 79,000 | | 1,000 | |
+----------------------------------------+---+--+----------+--+----------+--+
| Costs associated with refinancing | | | (8,290 | )| - | |
+----------------------------------------+---+--+----------+--+----------+--+
| Net cash from financing activities | | | 44,136 | | (42,623 | )|
+----------------------------------------+---+--+----------+--+----------+--+
| | | | | | | |
+----------------------------------------+---+--+----------+--+----------+--+
| Net increase / (decrease) in cash and | | | 14,876 | | (146,083 | )|
| cash equivalents | | | | | | |
+----------------------------------------+---+--+----------+--+----------+--+
| Cash and cash equivalents at 1 January | | | (3,242 | )| 142,841 | |
+----------------------------------------+---+--+----------+--+----------+--+
| Cash and cash equivalents at 31 | | | 11,634 | | (3,242 | )|
| December | | | | | | |
+----------------------------------------+---+--+----------+--+----------+--+
Bovis Homes Group PLC
Group statement of recognised income and expense
+--------------------------------------+----------+--+----------+--+----------+--+
| For the year ended 31 December 2008 | | | | |
+----------------------------------------------------+----------+--+----------+--+
| | | | 2008 | | 2007 | |
+--------------------------------------+----------+--+----------+--+----------+--+
| | | | GBP000 | | GBP000 | |
+--------------------------------------+----------+--+----------+--+----------+--+
| | | | | | | |
+--------------------------------------+----------+--+----------+--+----------+--+
| Effective portion of changes in fair value of | - | | 160 | |
| interest rate cash flow hedges | | | | |
+----------------------------------------------------+----------+--+----------+--+
| Deferred tax on changes in fair value of interest | - | | (48 | )|
| rate cash flow hedges | | | | |
+----------------------------------------------------+----------+--+----------+--+
| Actuarial (loss) / gain on defined benefits | (8,820 | )| 3,750 | |
| pension scheme | | | | |
+----------------------------------------------------+----------+--+----------+--+
| Deferred tax on actuarial movements on defined | 2,470 | | (1,325 | )|
| benefits pension scheme | | | | |
+----------------------------------------------------+----------+--+----------+--+
| Current tax on share-based payments recognised | 498 | | - | |
| directly in equity | | | | |
+----------------------------------------------------+----------+--+----------+--+
| Deferred tax on other employee benefits | (22 | )| (790 | )|
+----------------------------------------------------+----------+--+----------+--+
| Net (expense) / income recognised directly in | (5,874 | )| 1,747 | |
| equity | | | | |
+----------------------------------------------------+----------+--+----------+--+
| (Loss) / profit for the period | (58,995 | )| 86,859 | |
+----------------------------------------------------+----------+--+----------+--+
| Total recognised income and expense for the period | (64,869 | )| 88,606 | |
| attributable to equity holders of the parent | | | | |
+--------------------------------------+----------+--+----------+--+----------+--+
Notes to the accounts
1 Basis of preparation
Bovis Homes Group PLC ('the Company') is a company domiciled in the United
Kingdom. The consolidated financial statements of the Company for the year ended
31 December 2008 comprise the Company and its subsidiaries (together referred to
as 'the Group') and the Group's interest in associates.
The consolidated financial statements were authorised for issue by the directors
on 6 March 2009. The accounts were audited by KPMG Audit Plc.
The financial information included within this statement does not constitute the
Company's statutory accounts for the year ended 31 December 2007 or 2008. The
information contained in this statement has been extracted from the statutory
accounts of Bovis Homes Group PLC for the year ended 31 December 2008, which
have not yet been filed with the Registrar of Companies, on which the auditors
have given an unqualified audit report, not containing statements under section
237(2) or (3) of the Companies Act 1985.
The consolidated financials statements have been prepared in accordance with
IFRS as adopted by the EU, and the accounting policies have been applied
consistently for all periods presented in the consolidated financial
statements.
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making judgements
about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.
2
Basis of consolidation
The consolidated financial statements incorporate the accounts of the Company
and entities controlled by the Company (its subsidiaries) made up to 31
December. Control is achieved where the Company has the power to govern the
financial and operating policies of an entity so as to obtain benefits from its
activities. The existence and effect of potential voting rights that are
currently exercisable or convertible are considered when assessing whether the
Group controls another entity.
Associates are those entities in which the Group has significant influence, but
not control, over the financial and operating policies. The consolidated
financial statements include the Group's share of the total recognised gains and
losses of associates on an equity accounted basis, from the date that
significant influence commences until the date that significant influence
ceases.
3 Accounting policies
There have been no changes to the Group's accounting policies. These accounting
policies will be disclosed in full within the Group's forthcoming financial
statements.
4 Prior year restatements
In 2007, the cashflow statement movement in
trade and other payables was understated by GBP4,630,000 and the movement in
provisions and employee benefits was overstated by an equal and opposite amount.
In the 2008 Report and Accounts, in the prior year cashflow statement
comparatives, the movement in trade and other payables is now GBP44,149,000
(previously GBP39,519,000) and the movement in provisions and other employee
benefits is now GBP1,671,000 (previously GBP6,301,000).
Finalisation of
the fair valuation exercise arising on acquisition of Elite Homes Group Ltd in
2007 has now taken place. This has had the effect of increasing goodwill arising
on acquisition as at 31 December 2007 from the previously reported GBP9,176,000
to GBP10,036,000, reducing inventories to GBP869,355,000 (previously reported
GBP870,550,000) and increasing deferred tax to GBP3,568,000 (previously
GBP3,233,000).
5 Exceptional items
Write-down of inventories
The Group has
reviewed the carrying costs of its inventory items, comparing the carrying costs
of the asset against estimates of net realisable value. Net realisable value has
been arrived at using the Board's estimates of achievable selling prices taking
into account current market conditions, and after deduction of an appropriate
amount for selling costs. This has given rise to a land write-down totalling
GBP69.9 million and a write-down of GBP5.3 million on unsold part-exchange
properties: a provision of GBP75.2 million in total.
Impairment of goodwill
At 31 December 2008 the Group conducted an impairment review of its goodwill.
This resulted in a GBP10.0 million write-down, reflecting the write-off of all
goodwill held at the balance sheet date.
Restructuring costs
During the year ended 31 December 2008 the Group incurred GBP5.7 million (2007:
GBPnil) of costs in relation to reorganising and restructuring the Group. Of
this total, GBP4.6 million related to staff redundancies.
Other exceptional items
The Group has reviewed the carrying value of its fixed assets, and has made a
GBP1.0 million provision to reflect the impairment to carrying values of its
freehold offices following a fall in commercial property values during 2008. The
Group has also taken an impairment charge to income relating to the impairment
of its available-for-sale financial assets, totalling GBP1.2 million.
6
Reconciliation of net cash flow to net debt
+----------------------------------------+---+--+-----------------+-+-----------+-+
| | | | 2008 | | 2007 | |
+----------------------------------------+---+--+-----------------+-+-----------+-+
| | | | GBP000 | | GBP000 | |
+----------------------------------------+---+--+-----------------+-+-----------+-+
| | | | | | | |
+----------------------------------------+---+--+-----------------+-+-----------+-+
| Net increase / (decrease) in net cash | | | 14,876 | | (146,083 | )|
| and cash equivalents | | | | | | |
+----------------------------------------+---+--+-----------------+-+-----------+-+
| Drawdown of borrowings after issue | | | (70,730 | )| (1,000 | )|
| costs | | | | | | |
+----------------------------------------+---+--+-----------------+-+-----------+-+
| Fair value adjustments to interest | | | - | | 160 | |
| rate swaps | | | | | | |
+----------------------------------------+---+--+-----------------+-+-----------+-+
| Net (debt)/cash at start of period | | | (44,242 | )| 102,681 | |
+----------------------------------------+---+--+-----------------+-+-----------+-+
| Net debt at end of period | | | (100,096 | )| (44,242 | )|
+----------------------------------------+---+--+-----------------+-+-----------+-+
| | | | | | | |
+----------------------------------------+---+--+-----------------+-+-----------+-+
| Analysis of net debt: | | | | | | |
+----------------------------------------+---+--+-----------------+-+-----------+-+
| Cash and cash equivalents | | | 11,634 | | (3,242 | )|
+----------------------------------------+---+--+-----------------+-+-----------+-+
| Unsecured bank loan | | | (120,000 | )| (41,000 | )|
+----------------------------------------+---+--+-----------------+-+-----------+-+
| Issue Costs | | | 8,270 | | - | |
+----------------------------------------+---+--+-----------------+-+-----------+-+
| Net debt | | | (100,096 | )| (44,242 | )|
+----------------------------------------+---+--+-----------------+-+-----------+-+
7 Income taxes
Income tax is the expected tax payable or receivable on the taxable income or
loss for the year, calculated using a corporation tax rate of 28.5% applied to
the pre-tax income or loss, adjusted to take account of deferred taxation
movements and any adjustments to tax payable for previous years. Tax receivable
for current and prior years is classified as a current asset.
8 Dividends
The following dividends were paid by the Group.
+---------------------------------------------+----+-----+----------+--+-----------+
| | | | 2008 | | 2007 |
+---------------------------------------------+----+-----+----------+--+-----------+
| | | | GBP000 | | GBP000 |
+---------------------------------------------+----+-----+----------+--+-----------+
| | | | | | |
+---------------------------------------------+----+-----+----------+--+-----------+
| Prior year final dividend per share of | | | 21,031 | | 23,976 |
| 17.5p (2007: 20.0p) | | | | | |
+---------------------------------------------+----+-----+----------+--+-----------+
| Current year interim dividend per share of | | | 6,018 | | 21,014 |
| 5.0p (2007: 17.5p) | | | | | |
+---------------------------------------------+----+-----+----------+--+-----------+
| Dividend cost | | | 27,049 | | 44,990 |
+---------------------------------------------+----+-----+----------+--+-----------+
The Board has decided not to propose a final dividend in respect of 2008.
9 Earnings or Loss per share
Basic earnings per ordinary share before exceptional items for the year ended
31 December 2008 is calculated on profit after tax of GBP11,075,000 (year ended
31 December 2007 profit: GBP86,859,000) over the weighted average of 120,268,986
(year ended 31 December 2007: 119,984,811) ordinary shares in issue during the
period.
Basic loss per ordinary share on exceptional items for the year
ended 31 December 2008 is calculated on an exceptional loss after tax of
GBP70,070,000 for 2008 (2007: GBPnil) over the weighted average of 120,268,986
(year ended 31 December 2007: 119,984,811) ordinary shares in issue during the
period.
Basic loss per ordinary share for the year ended 31 December 2008
is calculated on loss after tax of GBP58,995,000 (year ended 31 December 2007
profit: GBP86,859,000) over the weighted average of 120,268,986 (year ended 31
December 2007: 119,984,811) ordinary shares in issue during the period.
Diluted earnings per ordinary share before exceptional items for the year ended
31 December 2008 is calculated on profit after tax of GBP11,075,000 (year ended
31 December profit: GBP86,859,000) expressed over the diluted weighted average
of 120,314,451 (year ended 31 December 2007: 120,244,911) ordinary shares
potentially in issue during the period. Diluted loss per ordinary share on
exceptional items for the year ended 31 December 2008 is calculated on an
exceptional loss after tax of GBP70,070,000 for 2008 (2007: GBPnil) and diluted
loss per ordinary share is calculated on loss after tax of GBP58,995,000 (year
ended 31 December 2007 profit: GBP86,859,000) both expressed over the weighted
average of 120,268,986 ordinary shares in issue during the period. The average
number of shares is diluted in reference to the average number of potential
ordinary shares held under option during the period. This dilutive effect
amounts to the number of ordinary shares which would be purchased using the
aggregate difference in value between the market value of shares and the share
option exercise price. The market value of shares has been calculated using the
average ordinary share price during the period. Only share options which have
met their cumulative performance criteria have been included in the dilution
calculation.A loss per share cannot be further reduced through dilution.
10 Circulation to shareholders
The consolidated financial statements will be sent to shareholders on or about 3
April 2009. Further copies will be available on request from the Company
Secretary, Bovis Homes Group PLC, The Manor House, North Ash Road, New Ash
Green, Longfield, Kent DA3 8HQ.
Further information on Bovis Homes Group PLC can be found on the Group's
corporate website www.bovishomes.co.uk/plc, including the slide presentation
document which will be presented at the Group's results meeting on 9 March 2009.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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