15 Jul 2010 07:00
ABBEY PLC
Preliminary Statement for the year ended 30 April 2010
The Board of Abbey plc reports a profit of €15.2 million before taxation against a loss of €54.4 million in the previous year. After a tax charge of €2.9 million the Group made a profit of €12.3 million reflecting earnings per share of 49.92 cents. Group operating profits during the year were €12.8 million against losses of €55.7 million in the previous year.
Our housebuilding operations completed 535 sales (UK 395, Ireland 112, CZK 28) with a turnover of €86.6 million generating an operating profit of €12.9 million. A strong second half performance in the UK underpinned our results. Market conditions over the period sustained the improvement previously noted and a better cost environment helped support our margins. In recent weeks the market has noticeably softened and further weakness cannot be ruled out. In Ireland aggressive selling continues to clear inventory. As in England sub-contractor costs have significantly reduced mitigating to some degree falling prices and supporting margins. Except in a few select locations a substantial oversupply of stock continues to be a feature of the market. Further tough months lie ahead before a more natural balance between buyers and sellers is restored. In Prague we completed 28 sales and are able to report an operating profit for the period. Sales are very slow in the city and we are continuing to struggle to achieve a satisfactory pace of construction. In England the impact of the aggressive support measures of 2009 show clear signs of waning and with an increased supply of property for sale the immediate outlook is at best dull. We are budgeting significantly lower turnover in both England and Ireland this year reflecting our relative success in sales during the reporting period and the slow pace of our restocking.
At the year end the Group owned and controlled land with the benefit of planning permission for the supply of 1,613 plots. Of these plots 441 were located in England. Since the year end a further 207 plots across four sites have been acquired in England. Terms have been agreed for further acquisitions and we expect to increase our UK land stocks this year.
M & J reported operating losses of €780,000 on a turnover of €10.1 million. In addition a gain of €273,000 was recorded in the income statement as a result of the disposal of some M&J property during the year. The trading environment remains difficult however year on year turnover numbers are now marginally improving. The business has continued to generate cash and we are hopeful of some improvement this year. The plant hire business is closely linked to the general construction market and the UK government's austerity measures may directly impact our business in the periods ahead.
Rental income during the period was €474,000.
The Group enjoyed good cash flow throughout the year and held €51.8 million in cash together with €52.1 million in UK government bonds at the end of April.
The outlook for the year ahead is for lower levels of housebuilding activity in both Ireland and England as we operate with slow moving stock (Ireland) and depleted stock levels (England). Looking further ahead the acquisition of fresh building land in England is now underway and with a fair wind the current year may mark the low point for our UK turnover in this cycle.
The Board has given careful consideration to dividend policy. In particular very tight credit conditions place a high premium on strong levels of liquidity. The Group is engaged in a necessary restocking operation which will call for significant investment. Further considerable weakness in our markets is likely in the short and quite possibly into the medium term. The Group currently enjoys a strong financial position. Shareholders may reasonably expect an income return on their investment and paying a regular sustainable dividend in other than exceptional circumstances should widen the pool of investors willing to consider investing capital in the Group. For a small company maintaining a wide pool of potential investors is always a material consideration. In the circumstances the Board will recommend a dividend of 5.0 cents per share for approval at the Annual General Meeting.
At the year end shareholders' funds stood at €160.4 million representing €6.51 per share.
Shareholders should carefully note the exchange rates used for this statement. The income statement uses the average exchange rate for the year of 100 cents:- STG 88.36p. The balance sheet uses the ratio prevailing on 30 April of 100 cents: STG 86.84p.
On behalf of the Board
CHARLES H GALLAGHER
CHAIRMAN
15 July 2010
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