TIDMBWY
RNS Number : 2964Q
Bellway PLC
17 October 2023
Bellway p.l.c. ('Bellway' or the 'Group'), the national
housebuilder, announces today, Tuesday 17 October 2023, its
Preliminary Results for the year ended 31 July 2023.
Summary
Resilient performance while maintaining operational strength in
a challenging market
Year ended Year ended Movement
31 July 31 July
2023 2022
Housing completions 10,945 11,198 (2.3%)
Revenue GBP3,406.6m GBP3,536.8m (3.7%)
Underlying performance measures:
Gross profit (underlying) GBP687.3m(2,3) GBP787.0m(2,3) (12.7%)
Gross margin (underlying) 20.2%(2,3) 22.3%(2,3) (210 bps)
Operating profit (underlying) GBP543.9m(2,3) GBP653.2m(2,3) (16.7%)
Operating margin (underlying) 16.0%(2,3) 18.5%(2,3) (250 bps)
Profit before taxation (underlying) GBP532.6m(2,3) GBP650.4m(2,3) (18.1%)
Earnings per share (underlying) 328.1p(2,3) 420.8p(2,3) (22.0%)
RoCE (underlying) 15.8%(2,3) 19.4%(2,3) (360 bps)
Statutory and other measures:
Net legacy building safety expense GBP49.6m GBP346.2m (85.7%)
Profit before taxation GBP483.0m GBP304.2m +58.8%
Earnings per share 297.7p 196.9p +51.2%
Proposed total dividend per share 140.0p 140.0p -
Net asset value per share 2,871p(2) 2,727p(2) +5.3%
Net cash GBP232.0m(2) GBP245.3m(2) (5.4%)
Land bank (total plots) 98,164(5) 97,706(5) +0.5%
Jason Honeyman, Group Chief Executive, commented:
"Bellway has delivered a resilient performance against a
backdrop of rising mortgage interest rates and challenging market
conditions. Looking ahead, our operational strength and experienced
teams will enable the Group to successfully navigate a changing
market, and we will maintain a clear focus on delivering
high-quality homes to our customers and making further progress
against the priorities set out in our 'Better with Bellway'
sustainability strategy.
The depth of our land bank and robust balance sheet provide
ongoing strategic flexibility and scope for outlet growth in the
year ahead. Notwithstanding the near-term market challenges,
Bellway remains very well-placed to capitalise on future growth
opportunities and to continue creating long-term value for all our
stakeholders."
Robust housing output and financial performance in line with our
expectations
-- Near record housing completions of 10,945 homes (2022 -
11,198), at an overall average selling price of GBP310,306 (2022 -
GBP314,399).
-- Total revenue of GBP3,406.6 million (2022 - GBP3,536.8
million), a reduction of 3.7%.
-- The Group's programme of accelerating the construction of
social homes partially offset weaker private demand, which was
impacted by higher mortgage interest rates, cost-of-living
pressures and the end of Help-to-Buy.
-- The overall reservation rate reduced by 28.4% to 156 per week
(2022 - 218) and the private reservation rate decreased by 35.9% to
109 per week (2022 - 170), representing a private reservation rate
per site per week of 0.46 (2022 - 0.70).
-- The underlying operating margin was 16.0%(2,3) (2022 -
18.5%), with the reduction mainly reflecting the effect of build
cost and overhead inflation, extended site durations because of
slower reservation rates and the increased use of targeted selling
incentives.
-- Underlying profit before taxation was GBP532.6 million(2,3)
(2022 - GBP650.4 million) and in line with our expectations.
-- Underlying RoCE was 15.8%(2,3) (2022 - 19.4%) with the
reduction predominantly driven by the lower underlying operating
margin.
Strong balance sheet and value-driven approach to capital
allocation
-- Strong balance sheet, with year-end net cash of GBP232.0
million(2) (2022 - GBP245.3 million) and low adjusted gearing,
inclusive of land creditors, of 4.0%(2) (2022 - 4.4%) provides
resilience and strategic flexibility.
-- The net asset value per share ('NAV') increased by 5.3% to
2,871p(2) (2022 - 2,727p), with the growth supported by the share
buybacks undertaken during the year.
-- The proposed total dividend per share has been held at 140.0p
(2022 - 140.0p), representing dividend cover of 2.3 times(2,3)
underlying earnings and in line with previous guidance.
-- In the current financial year and in line with Board's
previously stated target, underlying dividend cover will be around
2.5 times(2,3) .
-- The GBP100 million share buyback programme launched on 28
March 2023 is progressing well, with 3.8 million shares purchased
at a cost of around GBP83 million as at 1 October 2023.
-- Looking ahead, the strength of our land bank and balance
sheet provide the Group with optionality, and the reinvestment of
capital into compelling land opportunities will continue to be
balanced with future shareholder returns.
High-quality land bank supports outlet opening programme and
long-term growth ambitions
-- The strength of our overall land bank, which comprises 98,164
plots(5) (2022 - 97,706 plots), enables our land teams to remain
highly selective with investment in the year ahead, without
hindering the Group's long-term growth ambitions.
-- Investment activity remains focused on securing land
interests which offer compelling and enhanced financial returns and
where possible, have significant flexibility in the contract
terms.
-- Bellway has a strong owned and controlled land bank which
provides good visibility with regards to sales outlet growth in the
current financial year and beyond.
-- Reflecting the challenging market backdrop and the depth of
our land bank, investment in new land was significantly lower than
the prior year, with only 4,715 plots(4) contracted (2022 - 19,089
plots) across 35 sites(4) (2022 - 107 sites). We have also
continued to review previously contracted land and decided not to
proceed with the purchase of 886 plots across 4 previously approved
sites.
-- Further expansion of our strategic land bank during the year,
which grew to 43,600 plots (2022 - 35,600 plots), underpins the
Group's longer -- term prospects.
'Better with Bellway' - our responsible and sustainable approach
to business
-- Supported by several research projects underway across the
business, strong progress has been made in laying the foundations
for a lower carbon footprint as we work towards a significant
reduction in the Group's emissions by 2030.
-- Our ongoing focus on providing high-quality homes and service
for our customers has resulted in Bellway retaining its position as
a five-star(6) homebuilder for the seventh consecutive year.
-- We are delighted that our colleagues have raised over GBP3.1
million for Cancer Research UK over the last seven years, exceeding
our target of GBP3.0 million.
-- The Group signed the Government's Self-Remediation Terms
('SRT') in March 2023 and has also recently been confirmed as a
member of the Responsible Actors Scheme ('RAS') by the Department
of Levelling Up, Housing and Communities ('DLUHC').
-- The SRT has provided improved clarity on the standards
required for internal and external works on legacy buildings. As a
result, we expect a step up in the level of remediation work
carried out by our Building Safety division on legacy schemes in
the current financial year.
-- We have provided an additional net GBP49.6 million in
relation to legacy building safety, as an adjusting item, which
includes a net GBP43.4 million charge in the second half. The
charge in the second half includes a provision of GBP30.5 million
in relation to an isolated design issue identified with an
apartment scheme built 12 years ago in Greenwich, London.
Recent trading and outlook
-- Since the start of the new financial year, customer demand
continues to be affected by mortgage affordability constraints,
with reservations below the comparative rates in the prior
year.
-- In the nine weeks since 1 August, overall weekly reservations
were 133 per week (1 August to 2 October 2022 - 191) and the
private reservation rate was 99 per week (1 August to 2 October
2022 - 136).
-- The private reservation rate includes a bulk sale to a
private rental sector investor, on compelling financial terms,
comprising 71 homes (1 August to 2 October 2022 - nil). The private
reservation rate per site per week in the period was 0.41 (1 August
to 2 October 2022 - 0.58), including a contribution of 0.03 (1
August to 2 October 2022 - nil) from the bulk sale.
-- The Group has a lower, yet still sizeable forward sales
position with a value of GBP1,232.3 million(2) as at 1 October (2
October 2022 - GBP2,093.8 million). The order book comprised 4,636
homes (2 October 2022 - 7,257 homes), of which 71% were exchanged
(2 October 2022 - 71%).
-- Given the reduced order book and prevailing lower reservation
rates, there will be a material reduction in volume output in the
current financial year. Based on the average private reservation
rate per site per week of 0.46 achieved in financial year 2023, the
Group is targeting to deliver completions of around 7,500 homes
(2023 - 10,945 homes), and to end the year with a higher order book
(2023 - 4,411 homes) to serve as a platform for a return to growth
beyond the current financial year.
-- The Board notes however, that a wider than usual range of
outcomes are possible, and the final volume outturn will depend on
the trajectory of mortgage interest rates and the strength of
demand in the autumn and spring selling seasons.
-- Overall, headline pricing has remained firm across our
regions, although targeted incentives continue to be used to
attract customers and secure reservations. In financial year 2024
we currently expect the overall average selling price to be around
GBP295,000 (2023 - GBP310,306), with the moderation from 2023
primarily reflecting a higher expected proportion of social housing
completions and a continued use of incentives.
-- In the near term, we anticipate headwinds from lower volume
output, ongoing pressures of cost inflation and the use of sales
incentives to persist. Overall, we expect these factors, together
with the effect of extended site durations, to lead to a reduction
in the underlying operating margin(2,3) of at least 600 basis
points in the current financial year.
-- There is a shortage of high-quality and energy efficient
homes across the country and the long-term fundamentals of the UK
housebuilding industry remain attractive. The Group's balance sheet
and operational strengths combined with the depth of our land bank
provide an excellent platform for Bellway to capitalise on future
growth opportunities when they arise.
(1) All figures relating to completions, order book,
reservations, cancellations, and average selling price exclude the
Group's share of its joint ventures, unless otherwise stated.
(2) Bellway uses a range of statutory performance measures and
alternative performance measures when reviewing the performance of
the Group against its strategy. Definitions of the alternative
performance measures, and a reconciliation to statutory performance
measures, are included in note 13.
(3) Underlying refers to any statutory performance measure or
alternative performance measure before net legacy building safety
expense and exceptional items (note 3).
(4) Includes the Group's share of land contracted through joint
venture partners comprising nil plots (2022 - 237 plots), with a
contract value of nil (2022 - GBP12.7 million) across no sites
(2022 - 1 site).
(5) Includes the Group's share of land owned and controlled
through joint venture partners comprising 935 plots (2022 - 962
plots).
(6) As measured by the Home Builders' Federation using the
eight-week NHBC Customer Satisfaction survey.
(7) Comparatives are for the year ended 31 July 2022 or as at 31
July 2022 ('2022') unless otherwise stated.
Analyst presentation, webcast and conference call
There will be an analyst presentation held at the offices of
Numis at 9.30am today. The presentation will be hosted by Jason
Honeyman, Group Chief Executive and Keith Adey, Group Finance
Director.
A listen-only webcast and conference call will accompany the
presentation. To join the webcast, go to the Bellway p.l.c.
corporate website, www.bellwayplc.co.uk/investor-centre .
To join via the conference call, participants should dial +44
(0)33 0551 0200 and quote 'Bellway Full Year Results' when prompted
by the operator.
A playback facility will be available on our corporate website
shortly after the presentation has finished.
For further information, please contact:
Jason Honeyman, Group Chief Executive
Keith Adey, Group Finance Director
Gavin Jago, Group Investor Relations Director
Tel: +44 (0) 191 217 0717
Chair's Statement
Introduction
Bellway has delivered a resilient performance, during a year
which was disrupted by periods of challenging trading conditions.
Our strong order book at the start of the financial year was
decisive in allowing us to weather a period of uncertainty and
supported the delivery of 10,945 much needed new homes - very close
to the prior year's record output. Notwithstanding this, the
industry has faced several headwinds, which combined with higher
levels of taxation, led to a reduction in the Group's underlying
earnings per share to 328.1p(2,3) (2022 - 420.8p).
The performance in the year was achieved whilst maintaining a
focus on quality and customer service and reflects the dedication
and hard work of our colleagues, subcontractors and supply chain
partners. On behalf of the Board, I would like to express our
gratitude to all those who have contributed to these results, for
their resilience, resourcefulness, and ongoing commitment.
Strategic priorities
Our immediate priority is to ensure the Group remains
well-positioned for a prompt return to sustainable growth as the
wider economy recovers and clarity emerges over future housing
policy. All political parties recognise there is a growing
shortfall of good quality homes but remain divided as to how this
can be best addressed. The situation is exacerbated by a
challenging planning system which would benefit from reform and a
longer-term approach to addressing housing need.
As previously announced, due to the uncertain market backdrop,
we recently reorganised our operational structure which resulted in
some headcount reductions across the Group. These measures were
carefully considered to protect the health of the business, and
they will not hinder the Group's long-term growth ambitions.
Bellway's robust balance sheet provides the financial
flexibility to successfully navigate the near-term market
challenges, and the capacity to invest in the future to deliver
long-term volume growth. To drive a long-term improvement in RoCE,
the Board has a sharp focus on margin discipline and will maintain
a value-driven approach to capital allocation. Together with our
responsible approach to business practices, the delivery against
these priorities will help support ongoing value creation for
shareholders. Further details of our strategic priorities are set
out below:
-- Deliver long-term volume growth
-- Drive a long-term improvement in RoCE
-- Operate responsibly and sustainably through our 'Better with
Bellway' strategy
Long-term volume growth
Bellway's successful organic growth strategy has supported the
delivery of a near-doubling of volume output over the last decade.
While we expect a decrease in legal completions in financial year
2024, beyond the near-term, the Board is confident that the
strength of our land bank and balance sheet can help build on our
long-term track record. Our front-footed approach to land
investment in recent years has provided good visibility on the
Group's sales outlet opening programme and, further supported by
our healthy work-in-progress position, we are focused on driving a
recovery in volume output beyond the current financial year.
The long-term housing market fundamentals remain positive and
there is a shortage of high-quality, energy efficient and
affordable homes across many parts of the country. Bellway has a
strong operational structure, now with 20 trading divisions, which
provide the capacity to organically grow volume in the longer-term
to over 13,000 homes per annum. The Group has the ability to scale
up this structure when market conditions allow, and this will
ensure that Bellway continues to play an important role in
increasing housing supply in the years ahead.
Long-term improvement in RoCE
A core part of the Group's strategy is to maintain a sharp focus
on RoCE, which is a key indicator of operating efficiency and
performance. Bellway's RoCE is currently being affected by several
industry headwinds, including higher mortgage interest rates, cost
inflation and planning delays. In the year ahead, these factors
will lead to a further reduction in underlying RoCE from the
15.8%(2,3) reported in financial year 2023 (2022 - 19.4%).
Notwithstanding these near-term challenges, the Board is optimistic
that the backdrop of our cyclical industry will improve and
combined with our strategic focus on growth and operating margin,
the Group is well-placed to again deliver an underlying RoCE of
between 15%(2,3) and 20%(2,3) over the longer term.
To help achieve this, and in addition to our ongoing focus on
margin protection, the expansion of our strategic land bank will
support both our long-term volume growth aspirations and an
improvement in asset turn. Strategic land can also generate margin
enhancement, in some instances, due to land values typically being
agreed at a discount to open market cost, once planning permission
has been obtained. In addition, we are increasing the use of timber
frame construction across the Group, which can improve build
efficiencies and asset turn, as well as reducing carbon emissions
in the supply chain.
The Group is determined to drive benefits from these areas of
focus and together with our value-driven approach to capital
allocation, we have a strong platform to begin to deliver a
recovery in returns beyond the current financial year.
'Better with Bellway'
During the year we have made further progress, through a range
of initiatives, to embed the 'Better with Bellway' sustainability
strategy across the Group's operations. The strategy includes
ambitious targets in respect of our three flagship areas of Carbon
Reduction, Customers and Communities, and becoming an Employer of
Choice.
Supported by several research projects underway across the
business, strong headway has been made in laying the foundations
for a lower carbon footprint as we work towards a significant
reduction in the Group's emissions by 2030. The Group's scope 1 and
scope 2 carbon emissions have reduced by 10.0% compared to the
prior year and by 35.6% since our base year of 2019, and we are in
an excellent position to meet our target of a 46% reduction by
2030.
Reflecting our focus on build quality and customer service, we
are proud to have retained our position as a five-star(6)
homebuilder for the seventh consecutive year. There has also been
an excellent response to our most recent employee engagement survey
and despite challenging circumstances and uncertainty in the
market, 89% of colleagues (2022 - 95%) said they would recommend
Bellway as 'a great place to work'.
In addition to the flagship priority areas, the 'Better with
Bellway' strategy includes targets in respect of biodiversity,
resource efficiency, charitable engagement, sustainability
throughout the supply chain and building quality homes safely. More
details are set out later in this report and are also available on
our website at www.bellwayplc.co.uk/sustainability .
Our ongoing focus on the serious issue of building safety is
reflected by the remediation work being carried out through our
dedicated Building Safety division. Bellway also signed the SRT
with DLUHC on 13 March 2023, and has recently been confirmed as a
member of the RAS by DLUHC, which further reinforce our approach to
acting responsibly on matters relating to building safety in legacy
apartment schemes.
Delivering value creation for shareholders
The successful delivery against our strategic priorities will
ensure the Group continues to generate long-term value for
shareholders, and the Board believes this is best gauged through
increasing NAV per share and supplemented by capital returns.
In the year ended 31 July 2023, NAV rose by 5.3% to 2,871p(2)
(2022 - 2,727p) and in line with previous guidance, the Board is
pleased to recommend that the final dividend is maintained at 95.0p
per share (2022 - 95.0p). This brings the total proposed dividend
to 140.0p per share (2022 - 140.0p) and, if approved, the overall
dividend will be covered 2.3 times(2,3) by underlying earnings
(2022 - 3.0 times). In the current financial year and in line with
Board's previously stated target, underlying dividend cover will be
around 2.5 times (2,3) .
The Group has maintained its disciplined approach to capital
allocation and the GBP100 million share buyback programme launched
on 28 March 2023 is nearing completion with 3.8 million shares
purchased at a cost of around GBP83 million as at 1 October
2023.
Looking ahead, the strength of our land bank and balance sheet
provide the Group with optionality, and the reinvestment of capital
into compelling land opportunities will continue to be balanced
with future shareholder returns.
Competition and Markets Authority Market Study
The UK Competition and Markets Authority ('CMA') launched a
market study into the housebuilding sector in England, Scotland and
Wales on 28 February 2023. The CMA has since announced on 25 August
2023 that it will be looking into five areas of the study in
greater detail, including barriers to entry and expansion in the
industry and if the planning system is impeding the effective
functioning of the housebuilding market.
Bellway has already contributed positively to the study, by
providing information on how the industry operates through the key
stages of land acquisition, planning, construction and sales. We
will continue to engage openly with the CMA through this process,
which also provides an opportunity to help inform the CMA of the
current challenges facing the sector.
Future long-term success
Bellway has an experienced and proven leadership team with
operational strength-in-depth throughout the organisation. Its
dedicated team and loyal supply chain partners are well-placed to
adapt and successfully navigate through changing market conditions.
The strategic flexibility afforded by our strong land bank and
balance sheet also provides the Group with ongoing resilience and a
platform to capitalise on future growth opportunities.
We remain committed to our responsible and sustainable approach
to business and, by building new communities and delivering against
the Group's strategic priorities, I am confident that Bellway will
add further value and create a positive outcome for our
stakeholders over the long term.
John Tutte
Chair
16 October 2023
Chief Executive's Market and Operational Review
Market
Bellway's focus on traditional two-storey family housing
attracts a wide range of customers, with underlying demand for our
high-quality homes partly supported by wage growth and low levels
of unemployment throughout the year. Notwithstanding the broader
market requirement for new homes, trading conditions were
challenging, with cost-of-living pressures and both higher and more
volatile mortgage interest rates leading to significant variations
in reservation rates.
A slower than usual start to the financial year was followed by
a period of challenging trading in the autumn of 2022, when sales
rates were impacted by sharp increases in borrowing costs. By early
2023, mortgage interest rates began to moderate, and we were
encouraged by the levels of demand during the spring selling
season. By June and July, however, there were further rises in
borrowing costs for customers and the resulting uncertainty and
pressure on affordability impacted customer confidence and
reservation rates through the summer.
The overall reservation rate was 28.4% lower than the prior year
at an average of 156 per week (2022 - 218) and, to help mitigate
weaker private demand, we continued with our programme of
accelerating the construction of social homes. The average private
weekly reservation rate reduced by 35.9% to 109 (2022 - 170),
representing a private reservation rate per site per week of 0.46
(2022 - 0.70). The overall cancellation rate rose to an average of
18% (2022 - 13%), with the increase largely driven by softer
private customer demand in the autumn and summer, when mortgage
interest rates were at their highest levels.
The Group operated from an average of 238 outlets (2022 - 242)
with a closing position of 240 outlets (2022 - 235), broadly in
line with our expectations. Outlet growth during the year has been
achieved because of our front-footed approach to investment prior
to financial year 2023, and has been secured notwithstanding a
challenging planning environment, which is fraught with delays.
In general, there remains good availability of mortgage
products, although lenders' re-pricing activity in response to
changes in the Bank of England base rate has affected the
shorter-term availability of mortgage finance at certain points
during the year. Affordability has been impacted by the increase in
mortgage interest rates, which more than offset the effect of wage
increases. Consequently, while average mortgage payments as a
percentage of take-home pay are currently within historical norms,
they remain elevated compared to the levels over the last decade
and we expect this to continue to weigh on reservation rates in the
near-term.
During the year we have continued to see relatively healthy
levels of underlying demand from second-time buyers, which
accounted for 63.8% of private reservations (2022 - 59.4%). The
impact of rising interest rates, however, has been particularly
acute for customers requiring a higher loan-to-value mortgage, and
for first-time buyers this has been exacerbated by the expiry of
Help-to-Buy in England in March 2023. Sales to investors have
remained low and represented around 1% of total reservations (2022
- 1%). In the year ahead, to support construction programmes and
operational efficiency, the Group will continue to consider
investor sales on a disciplined basis, particularly at larger sites
and slower selling outlets.
Overall headline pricing remained robust across our regions,
although the rise in customer borrowing costs in the year has
required our sales teams to increase the use of targeted incentives
on certain sites to secure reservations. The use of selling
incentives generally increased through the summer of 2023 and in
order to encourage further sales, we expect this trend to continue
in the current financial year. Customer demand was generally more
resilient where affordability remains good in the context of the
local market and in areas with healthy employment levels. These
factors, together with our land investment in recent years, have
particularly benefitted our divisions in Manchester, the East
Midlands and Northern Homes Counties, which were notable strong
performers.
Strong land bank provides near-term flexibility and a platform
for long-term volume growth
Bellway has a strong and high-quality land bank which has
enabled our land teams to remain highly selective in the current
economic environment, without hindering the Group's long-term
growth ambitions. The land bank has been enhanced in recent years
by the proactive investment in new sites from the summer of 2020,
when overall activity in the land market was depressed following
the onset of COVID-19.
Given the cyclical nature of the housebuilding industry,
maintaining Bellway's financial strength forms the foundation of
our capital allocation policy, and enables the Group to swiftly
respond to attractive land opportunities when they arise. Ongoing
disciplined investment in land will be essential to achieving our
strategic priority of long-term volume growth, and our value-driven
approach to capital allocation is regularly reviewed by the Board
to ensure an optimal balance between land investment and capital
returns.
Our cautious and targeted approach to investment and rigorous
approval process remains focused on securing land interests which
offer compelling and enhanced financial returns and where possible,
have significant flexibility in the contract terms. There is a
well-established Group-wide oversight for land approval at Bellway
which ensures we focus our investment resource in the areas of
strongest demand. As part of this disciplined process, all
contracted sites are assessed by our divisional teams and again by
the Group's Head Office land acquisition team, which in order to
optimise the margin, challenges acquisition assumptions and reviews
layouts and engineering designs.
Bellway's experienced land teams continue to engage with vendors
although, as previously guided, overall plots contracted have been
significantly lower than the prior two financial years. During the
year, the Group contracted to purchase 4,715 plots(4) (2022 -
19,089 plots) across 35 sites(4) (2022 - 107 sites) with a total
contract value of GBP378.2 million(4) (2022 - GBP1,300.3 million).
We have also continued to review previously contracted land and
decided not to proceed with the purchase of 886 plots across 4
previously approved sites.
The table below analyses the Group's land holdings:
2023 2022
DPP: plots with implementable detailed planning permission 32,229 32,344
Pipeline: plots pending an implementable DPP 21,400 28,800
--------- ---------
Bellway owned and controlled plots 53,629 61,144
Bellway share of land owned and controlled by joint ventures 935 962
Total owned and controlled plots 54,564 62,106
Strategic land holdings 43,600 35,600
--------- ---------
Total land bank (5) 98,164 97,706
--------- ---------
Since the early stages of the COVID-19 pandemic, the planning
system has been impacted by staffing and resource shortages at
local authorities and exacerbated by the uncertainty caused by the
proposed reforms to the Government's National Planning Policy
Framework. In addition to these delays, the sector has been tasked
with accommodating the increasing regulations around water and
nutrient neutrality, and biodiversity. Bellway's Head of
Biodiversity is leading on this area and working with our land
teams to help the Group navigate the associated complexities.
As noted earlier, the Group operated from an average of 238
outlets in the year (2022 - 242) with 240 active outlets at 31 July
2023 (2022 - 235). Reflecting the robust volume output and lower
level of land buying during the year, Bellway's owned and
controlled land bank has decreased yet remains strong at 53,629
plots (2022 - 61,144 plots). This represents a land bank length of
4.9 years (2022 - 5.5 years) when based on the last 12 months'
legal completions.
Within our land bank we have 32,229 plots (2022 - 32,344 plots)
with an implementable detailed planning permission ('DPP') and our
pipeline land bank comprises 21,400 plots (2022 - 28,800 plots).
The reduction in the number of pipeline plots reflects our lower
land activity and several pipeline sites receiving an implementable
DPP in the year. As the Group's pipeline plots achieve planning
permission, they will provide further support for our plans to grow
outlet numbers in the years ahead.
We have good visibility on the expected timing of near-term
planning decisions and, notwithstanding the risks of further
planning delays in the run up to next year's General Election, we
currently expect to open up to 80 new outlets (2023 - 70) in
financial year 2024. Overall, the Group is well-positioned to
increase the average number of outlets by around 3% during the year
to 31 July 2024, with the outcome also dependent on sales rates and
therefore the number of outlets closing during the year.
The proactive and disciplined land investment in recent years
positions us well to help offset planning headwinds and begin to
reverse the reduction in outlet numbers that has affected the wider
industry. This will help mitigate the effects of a slower sales
market and we are targeting a further increase in outlet numbers by
the end of financial year 2025 and beyond.
Overall, the depth of our land bank will allow the Group to
continue with a highly selective approach to land buying in the
year ahead. We will remain cautiously active by assessing sites
with compelling returns, however, given the uncertain market
backdrop we currently expect to contract a limited number of plots
in financial year 2024. We will maintain financial discipline and
as we demonstrated in summer 2020, our balance sheet strength also
provides the Group with the flexibility to respond to changes in
the market, increase investment and capitalise on growth
opportunities when they arise.
Strategic land investment to further support our long-term
growth ambitions
There has been further growth in our strategic land bank during
the year, which has enhanced our overall land supply for a
relatively low initial capital outlay. Bellway's longer-term land
opportunities are primarily sourced through option agreements by
the Group's dedicated strategic land function, with commercial
terms that will reflect future market values and conditions, while
also allowing for prevailing planning policy requirements at the
time of acquisition.
The Group's experienced strategic land team is focused on
promoting and delivering sustainable sites through the planning
system, and is adept at navigating emerging planning policies and
other legislative changes. To complement our team of land
specialists, Bellway also has an ongoing programme of structured
graduate training which will ensure the continued success of the
function.
Our land sourcing was enhanced in October 2022 when the Group
completed the acquisition of a strategic land company, focused on
the South East and Midlands regions. The total consideration was
GBP25.4 million and as part of the transaction, Bellway acquired
promotion agreements in relation to around 6,000 potential plots.
During the year and including the benefit of this acquisition, the
Group entered into option and promotion agreements for 71 sites
(2022 - 46 sites). As at 31 July 2023 the strategic land bank
comprised 43,600 plots (2022 - 35,600 plots) and has grown by
around 60% over the last three years (31 July 2020 - 27,300
plots).
Overall, the Group's ongoing investment in strategic land
continues to provide balance sheet efficiency and financial
flexibility through the use of option and promotion agreements,
while also supporting our longer-term growth prospects, with plots
usually expected to obtain planning permission over a period of
five years or more.
Range of brands for our broad customer base
Bellway continues to operate under three distinctive brands -
Bellway, Ashberry and Bellway London. Our core Bellway brand
remains the foundation of the business and contributed 83.8% of
legal completions (2022 - 83.7%).
Ashberry is primarily used on larger sites, alongside our
Bellway brand, where there is capacity and market demand for two
selling outlets. The use of two brands provides customers with
greater choice through a wider range of elevations and internal
layouts. This can drive higher sales rates and RoCE, while also
acting as a mitigant to slower market conditions. Reflecting this
approach, Ashberry represented a growing proportion of our active
selling sites during 2023 and was used in 11.2% of completions
(2022 - 8.6%).
Bellway London is marketed as a standalone brand for our
operations across the Capital where our product range,
specification and customer approach to buying a home differs to
other parts of the country. The Group has intentionally reduced its
London exposure in recent years due to relative affordability
constraints, and the brand contributed 5.0% of completions (2022 -
7.7%), the large majority of which were apartments. Our strategy in
London remains focused on the more affordable outer transport zones
and, primarily due to changes in mix, the total average selling
price of our Bellway London completions reduced to GBP347,669 (2022
- GBP389,684), an affordable level in the context of the Capital's
residential market.
Production and cost control
During the year, average overall build cost inflation was in the
range of 9% to 10%, with the increase driven by both labour and
materials. We experienced upward pressure on subcontract labour
costs, reflecting both underlying wage inflation and the elevated
level of construction activity required to deliver our robust
volume output. Overall materials inflation was also driven by
building materials manufacturers' own labour cost pressures
together with the pass through of previously elevated energy
prices. In the second half of the financial year, the combined
effect of the fall in energy costs from their peak in summer 2022
and lower industry order books led to a slight moderation in cost
rises.
Bellway has well-established relationships with its supply chain
and subcontract partners and together with our strong commercial
disciplines and controlled approach to production expenditure, some
of the underlying build cost pressures have been alleviated. The
Group's programme of accelerating the construction of social homes
has also provided good visibility on pipeline work and remained
beneficial when negotiating new labour and materials pricing.
The increased use of our Artisan Collection house-types has
delivered a range of benefits across the Group, including improved
site layouts, national procurement deals and our subcontractors
becoming more familiar with the range. To drive further efficiency,
and reflecting several value-engineering initiatives, we have
rationalised the Artisan range since its launch in 2018 and the
house-types have been plotted across a total of 49,000 plots (2022
- 43,000 plots) on 355 developments (2022 - 295 developments). As a
result of this approach, the proportion of Artisan homes within
Group completions rose to 45% of total completions in financial
year 2023 (2022 - 26%) and we expect further growth in the current
year. As part of our strategy, we are also increasing the use of
timber-frame construction across the Group, further details of
which are covered in the 'Better with Bellway' section of this
report.
The industry-wide reduction in reservation rates and order books
has impacted demand for construction materials and as the year
progressed, this resulted in an improving trend of product
availability across the Group. Bellway's experienced procurement
teams continue to work closely with our wide range of supply chain
partners, and where necessary, we have sourced alternative products
whilst maintaining the high standard of our homes.
Since early 2023, build cost inflation has moderated and the
visibility on costs has also improved as, following a period of
temporary energy surcharges and short-term price fluctuations, many
suppliers are reintroducing normalised fixed price periods of
between 9 and 12 months. As weaker industry sales rates continue to
feed through to lower levels of construction activity, the Group
expects overall build cost pressures to ease further in the months
ahead.
Beyond this financial year, as the industry works towards
building to the requirements of the Future Homes Standard, our
Artisan Collection standard house-types and centralised approach to
design, procurement and site layout reviews will continue to help
the Group maintain efficiency and mitigate cost pressures.
To protect the long-term health of the business, we continue to
focus on maintaining balance sheet resilience and tight control
over production expenditure. As previously announced, given the
weaker trading backdrop, we have taken steps to reduce headcount
across the Group, which has unfortunately led to job redundancies
and the closure of two divisional offices. As part of this process,
the sites of the closed divisions have been transferred to
neighbouring divisions, where their ongoing development will be
managed by our experienced teams. Importantly, these changes will
not compromise the Group's ability to return to growth when trading
conditions improve.
Recent trading
The combination of strong volume output and lower reservation
rates during the year led to a reduction in the value of the
forward order book at 31 July 2023. This comprised 4,411 homes
(2022 - 7,223 homes) and had decreased in value by 43.6% to
GBP1,193.5 million(2) (2022 - GBP2,114.3 million).
Since the start of the new financial year customer demand
continues to be affected by mortgage affordability constraints,
with reservations below the comparative rates in the prior year.
Overall, headline pricing has remained firm, although targeted
incentives continue to be used to attract customers and secure
reservations.
In the nine weeks since 1 August, overall weekly reservations
were 133 per week (1 August to 2 October 2022 - 191) and the
private reservation rate was 99 per week (1 August to 2 October
2022 - 136). The private reservation rate includes a bulk sale to a
private rental sector investor, on compelling financial terms,
comprising 71 homes (1 August to 2 October 2022 - nil). The private
reservation rate per site per week in the period was 0.41 (1 August
to 2 October 2022 - 0.58), including a contribution of 0.03 (1
August to 2 October 2022 - nil) from the bulk sale.
Reflecting recent trading and our construction programmes, the
forward order book has increased slightly since the financial year
end and comprised 4,636 homes as at 1 October (2 October 2022 -
7,257 homes), of which 71% were exchanged (2 October 2022 - 71%).
The order book had a value of GBP1,232.3 million(2) as at 1 October
(2 October 2022 - GBP2,093.8 million).
Outlook
The stubborn inflationary environment and resulting increase in
mortgage interest rates over the last year continues to impact
affordability and customer demand. Against this backdrop, Bellway
is well-placed to deliver growth in outlets, however, given the
reduced order book and prevailing lower reservation rates, there
will be a material reduction in volume output in the current
financial year.
Based on an average private reservation rate per site per week
of 0.46 achieved in financial year 2023, the Group is targeting to
deliver completions of around 7,500 homes (2023 - 10,945 homes),
and to end the year with a higher order book (2023 - 4,411 homes)
to serve as a platform for a return to growth beyond the current
financial year. The Board notes however, that a wider than usual
range of outcomes are possible, and the final volume outturn will
depend on the trajectory of mortgage interest rates and the
strength of demand in the autumn and spring selling seasons.
While current trading is challenging, we have been encouraged by
the more recent fall in UK Consumer Price Inflation. If this trend
continues, there are grounds for cautious optimism that this could
lead to a moderation in mortgage interest rates and an improvement
in customer demand.
Over the long term, Bellway's divisional structure has
significant capacity to deliver sustainable volume growth. The
Group's balance sheet and operational strengths combined with the
depth of our land bank provide an excellent platform for Bellway to
capitalise on future growth opportunities when they arise, and to
ensure ongoing value creation for our shareholders.
Jason Honeyman
Group Chief Executive
16 October 2023
Group Finance Director's Review
Trading performance
In a challenging market, the Group has delivered robust housing
revenue of GBP3,396.3 million (2022 - GBP3,520.6 million),
representing a 3.5% reduction on the prior year. Other revenue was
GBP10.3 million (2022 - GBP16.2 million) and comprises ancillary
items such as a land sale, commercial sales and management fee
income earned on our joint venture schemes. Total revenue was 3.7%
lower at GBP3,406.6 million (2022 - GBP3,536.8 million).
The table below shows the number and average selling price of
homes completed in the year, analysed geographically, between
private and social homes:
Homes sold (number) Average selling price (GBP000)
Private Social Total Private Social Total
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
North 4,453 4,637 1,020 817 5,473 5,454 331.1 312.1 131.7 118.7 293.9 283.1
South 3,713 4,503 1,759 1,241 5,472 5,744 392.4 387.3 188.0 187.5 326.7 344.1
Group 8,166 9,140 2,779 2,058 10,945 11,198 359.0 349.1 167.3 160.2 310.3 314.4
------ ------ ------- ------ ------- ------- ------- ------ ------ ------ ------ ------
Volume output was supported by the strong order book at the
start of the financial year, and notwithstanding the reduction in
reservation rates during the year, total completions reduced by
only 2.3% to 10,945 homes (2022 - 11,198). Due to our build
programmes and relative affordability constraints affecting
customer demand in some areas in the South, the Group's private
output in this region reduced by 17.5% to 3,713 homes (2022 - 4,503
homes). Overall private output reduced by 10.7% to 8,166 homes
(2022 - 9,140 homes) and was partly offset by the accelerated
construction of social housing homes. This resulted in the
proportion of social completions increasing to 25.4% of the total
(2022 - 18.4%). We have good visibility on our near-term build
programmes and given the lower private order book and prevailing
sales rates, we expect a further increase in the proportion of
social homes in the current financial year.
The Group's volume output had a broadly even contribution from
divisions located in the North and South of the country. Each of
our four strongest operating divisions delivered in excess of 700
completions, all of which demonstrated the capability of a
well-run, mature division. While total completions will be lower in
the current financial year, all our divisions have capacity for
future growth and Bellway's high-quality land bank and experienced
teams will help to drive a recovery in volume output over the
medium term.
The overall average selling price was GBP310,306 (2022 -
GBP314,399), and this modest 1.3% reduction was primarily driven by
the lower proportion of private completions. The overall average
selling price in the year ending 31 July 2024 is currently expected
to be around GBP295,000 with the moderation from the level in the
prior year reflecting a further increase in the proportion of
social homes and a continued use of incentives, together with
geographic and mix changes.
Underlying operating performance
The Group's commercial disciplines and proactive management of
site-based overheads helped mitigate some of the headwinds faced in
the challenging operating environment during the year.
Notwithstanding this, the impact of build cost inflation, extended
site durations because of slower reservation rates and the
increased use of targeted sales incentives led to a 210 basis point
reduction in the underlying gross margin to 20.2%(2,3) (2022 -
22.3%). As a result, underlying gross profit decreased by 12.7% to
GBP687.3 million(2,3) (2022 - GBP787.0 million).
Other operating income and expenses, which net to an expense of
GBP1.2 million (2022 - GBP0.2 million net income), relate to the
running of our part-exchange programme. Part-exchange activity
remained low and was used for only 1.7% of completions (2022 -
1.1%), with a balance sheet investment as at 31 July 2023 of
GBP18.0 million (2022 - GBP5.4 million). The Group has strong
controls around the use of part-exchange as a selling tool, and we
have the financial capacity to increase its use in the year ahead,
in a disciplined manner, if market conditions require it.
The administrative expense was GBP142.2 million (2022 - GBP134.0
million), and the increase of 6.1% reflects underlying cost
inflation, rises in pay and employee benefits and a full year of
overhead costs for our Building Safety division. As a proportion of
revenue, administrative expenses were 4.2%(2) (2022 - 3.8%).
Given the uncertain outlook, we have a conducted a review of
overheads during the year and continued with a freeze on
recruitment. Two operating divisions have also been closed as part
of our wider workforce planning, and it is anticipated that this
difficult decision will result in a headcount reduction across the
Group of around 5%. In the current financial year, we will maintain
a sharp focus on costs, and due to ongoing underlying cost and
salary inflation, we expect full year administrative expenses to be
similar to the prior year.
The underlying operating margin for the full year decreased by
250 basis points to 16.0%(2,3) (2022 - 18.5%). In the near term, we
anticipate headwinds from lower volume output, ongoing pressures of
cost inflation and the use of sales incentives to persist. Overall,
we expect these factors, together with the effect of extended site
durations, to lead to a reduction in the underlying operating
margin(2,3) of at least 600 basis points in the current financial
year.
As future growth opportunities arise, overhead recovery will
improve, and we will continue with our disciplined approach to land
investment and cost management. Together with the support of stable
conditions in the housing market, the Board believes an underlying
operating margin in the mid-to high-teens(2,3) is sustainable over
the longer-term.
Adjusting item: Net l egacy building safety expense
Bellway continues to act responsibly with regards to building
and resident safety, and this is reflected by the significant
resource and funding the Group has committed to remediate its
legacy apartments.
During the year, the Group signed the SRT with the DLUHC and has
been confirmed as a member of the RAS by the DLUHC. We have also
signed up to the Welsh Government Building Safety Developer
Remediation Pact and the Scottish Safer Buildings Accord,
reinforcing our responsible UK-wide approach to legacy building
safety.
In total, for the year ended 31 July 2023 Bellway set aside a
net GBP49.6 million (2022 - GBP346.2 million) for legacy building
safety improvements. The table below shows the primary components
of the net adjusting charge, split by half year and together with
the full prior year comparative:
H1 2023 H2 2023 FY2023 FY2022
GBPm GBPm GBPm GBPm
SRT and associated review - cost of sales expense 53.0 5.1 58.1 347.0
SRT and associated review - cost of sales recoveries (50.0) - (50.0) (2.8)
Structural defects - cost of sales expense - 30.5 30.5 -
Net cost of sales 3.0 35.6 38.6 344.2
SRT and associated review - finance expenses 3.2 7.8 11.0 2.0
-------- -------- ------- -------
Total net legacy building safety expense 6.2 43.4 49.6 346.2
-------- -------- ------- -------
In the first half of financial year 2023, the Group recognised a
net adjusting charge of GBP6.2 million, including one-off cost
recoveries of GBP50.0 million which had been pursued for several
years across a number of sites. In the second half, the net
adjusting charge was GBP43.4 million and included an adjusting
finance expense of GBP7.8 million which was in line with previous
guidance.
The second half charge includes GBP35.6 million provided through
cost of sales, of which GBP5.1 million reflects the refinement of
overall cost estimates in relation to the SRT and associated
review. It also comprises a GBP30.5 million structural defects
provision in relation to an isolated design issue identified with
the reinforced concrete frame of an apartment scheme built 12 years
ago in Greenwich, London. We intend to seek recoveries from the
entities involved in the development of the Greenwich apartment
scheme, however, given the complexity of this process, these have
not yet been recognised as an asset.
The Group is carrying out a review of other buildings
constructed by, or on behalf of Bellway, where the same third
parties responsible for the design of the frame in the Greenwich
development have been involved. To date, no other similar design
issues with reinforced concrete frames have been identified.
The total amount Bellway has set aside for legacy buildings in
England, Scotland and Wales since 2017 is GBP613.3 million, with a
remaining provision of GBP508.2 million at 31 July 2023. Costs have
been provided regardless of whether Bellway still retains ownership
of the freehold interest in the building or whether warranty
providers have a responsibility to carry out remedial works.
The development of remediation strategies is a complex exercise,
involving many third parties, and there is often a requirement to
obtain planning and regulatory approval before works commence.
Against this backdrop and despite the changes to regulations
through the year, the Group's dedicated Building Safety division
has made further progress with remediation. Work is now completed
on 9 developments, underway on 12 developments and works are due to
commence on a further 2 developments in the first half of the
current financial year.
Looking ahead, while the precise timings of cash outflows for
building safety improvements are uncertain, the SRT has set out the
standards required for internal and external works on legacy
buildings, therefore providing greater clarity for future
remediation. In the current financial year, we anticipate a cash
outflow for building safety to be in the range of GBP60 million to
GBP80 million (2022 - GBP32.9 million).
Bellway has a strong, well-capitalised balance sheet with net
cash of GBP232.0 million(2) , a net asset value of GBP3,461.6
million and committed debt facilities of GBP530 million as at 31
July 2023. In this regard, the Group is well-placed to meet its
commitments for legacy building remediation and importantly, the
expected level and timings of the costs will not be detrimental to
our long-term strategic priorities.
Operating profit
After taking the cost of sales adjusting items into
consideration, total operating profit increased by 63.5% to
GBP505.3 million (2022 - GBP309.0 million).
Net finance expense
The net finance expense was GBP20.9 million(2) (2022 - GBP14.1
million) and comprises an underlying net interest expense of GBP9.9
million(2,3) (2022 - GBP12.1 million) and as highlighted earlier,
an adjusting finance expense of GBP11.0 million (2022 - GBP2.0
million) in relation to the unwinding of the discount on the SRT
and associated review provision. During the year, a higher discount
rate was applied to the provision due to the rise in gilt rates,
and this was the primary driver of the increase in the adjusting
finance expense.
The underlying net finance expense principally includes notional
interest on land acquired on deferred terms, interest on the
Group's fully drawn US Private Placement ('USPP') loan notes and
bank interest. Notional interest on land acquired on deferred terms
was GBP13.1 million (2022 - GBP7.3 million), with the increase
largely reflecting the rise in interest rates. The interest charge
on the fixed rate USPP debt was GBP3.4 million (2022 - GBP3.4
million). Net bank interest income, which includes interest
receivable on cash balances, commitment fees and refinancing costs,
was GBP4.4 million (2022 - GBP2.0 million net expense) and again,
this reflects the rise in interest rates in the period.
Based on prevailing interest rates, the net underlying interest
expense in financial year 2024 is currently expected to be around
GBP10 million(2,3) .
The adjusting finance expense in relation to the discount unwind
of the legacy building safety improvements provision is subject to
a range of assumptions, and based on the 31 July 2023 forward
looking discount rate, we currently anticipate an adjusting expense
of under GBP10 million in the first half of financial year 2024.
The expense in the second half of the year will, in part, be
dependent upon the movement in gilt rates.
Share of results of joint ventures
Our share of loss from joint ventures was GBP1.4 million (2022 -
GBP9.3 million share of profit). The movement in the year primarily
reflected a lower number of completions as a previously active
development came to an end. In the year to 31 July 2024, we
anticipate a modest loss of around GBP4 million for our share of
results from joint ventures, with this driven by higher interest
rates on a longer-term scheme.
Profit before taxation
Underlying profit before taxation was 18.1% lower at GBP532.6
million(2,3) (2022 - GBP650.4 million). Reported profit before
taxation increased by 58.8% to GBP483.0 million (2022 - GBP304.2
million), with the decrease in underlying profitability more than
offset by the lower net legacy building safety expense in the
year.
Taxation
The income tax expense was GBP118.0 million (2022 - GBP61.6
million), reflecting an effective tax rate of 24.4% (2022 - 20.2%).
The effective tax rate increased in the period, following the full
year effect of the Residential Property Developer Tax ('RPDT'),
which was introduced in April 2022 and charged at a rate of 4% of
relevant taxable profits.
In addition, the increase in the standard rate of UK corporation
tax to 25% in April 2023 has contributed to the rise in the tax
rate and its full year effect means that the Group's effective tax
rate is expected to approach 29% in financial year 2024.
Profit for the year
The underlying profit for the year decreased by 22.4%, to
GBP402.2 million(2,3) (2022 - GBP518.5 million) and underlying
earnings per share was 22.0% lower at 328.1p(2,3) (2022 -
420.8p).
After considering taxation charged at the increased effective
rate and the lower net legacy building safety expense, reported
profit for the year rose by 50.5% to GBP365.0 million (2022 -
GBP242.6 million). Basic earnings per share ('EPS') increased by
51.2% to 297.7p (2022 - 196.9p).
Net cash and financial position
Bellway has maintained a strong balance sheet and ended the year
with net cash of GBP232.0 million(2) (2022 - GBP245.3 million),
representing an ungeared(2) position (2022 - ungeared). Average net
cash was GBP192.0 million(2) (2022 - GBP223.9 million),
demonstrating the resilience of the financial position throughout
the year.
Cash expenditure on land, including payment of land creditors,
was GBP467 million (2022 - GBP1,090 million), primarily comprising
cash payments on contracts approved in the previous two financial
years. Committed land obligations remain modest and following
further analysis of the Group's land creditor contracts, we now
assess the year-end balance to be GBP368.8 million (2022 - GBP393.4
million). This represents low adjusted gearing, inclusive of land
creditors, of only 4.0%(2) (2022 - 4.4%).
In addition to the net cash position, the Group has access to
significant levels of committed, medium and long-term debt finance,
totalling GBP530 million. This comprises undrawn bank facilities of
GBP400 million and GBP130 million of fully drawn sterling USPP loan
notes, which have maturity dates that extend in tranches to
February 2031. We remain focused on preserving Bellway's balance
sheet resilience and notwithstanding a lower anticipated volume
output and profit, we expect to maintain an average net cash
balance in the year ahead.
Strong balance sheet
The Group's well-capitalised balance sheet principally comprises
amounts invested in land and work-in-progress, with total
inventories increasing by 3.4% to GBP4,575.6 million (2022 -
GBP4,423.6 million). The carrying value of land was 7.5% lower at
GBP2,578.8 million (2022 - GBP2,786.4 million) and the reduction
was primarily driven by a fall in the number of pipeline plots,
following a period of lower land activity and several pipeline
sites gaining an implementable detailed planning permission during
the year.
Work-in-progress increased by 22.1% to GBP1,861.6 million (2022
- GBP1,524.8 million) with the higher balance reflecting underlying
build cost inflation and our investment in site infrastructure and
early-stage foundation work, in preparation for site openings in
the year ahead. While this provides a platform for outlet growth to
help mitigate a slower sales market, work-in-progress rose to 54.8%
(2022 - 43.3%) as a proportion of housing revenue, and we expect a
further increase in the current financial year, principally due to
an anticipated lower volume output.
In relation to its legacy, defined benefit pension scheme, the
Group had a retirement benefit asset of GBP2.5 million (2022 -
GBP7.1 million) at 31 July 2023, reflecting an ongoing commitment
to fund this future, long-term obligation.
Ongoing value creation
During the year, the Group's net asset value rose by 2.8% to
GBP3,461.6 million (2022 - GBP3,367.8 million). The increase was
mainly driven by profit for the year of GBP365.0 million being
partly offset by cash dividend payments of GBP171.7 million, and
after accounting for the GBP100 million irrevocable share buyback
programme announced on 28 March 2023. The uplift in net asset value
combined with the effect of the share buybacks undertaken during
the year resulted in a 5.3% increase in NAV per share to 2,871p(2)
(2022 - 2,727p).
The Board recognises the value creation opportunity presented by
additional share buybacks and reflecting our disciplined approach
to capital allocation, we will continue to review the Group's cash
requirements as trading evolves in the year ahead.
Underlying post-tax return on equity was 11.7%(2,3) (2022 -
15.4%) and underlying RoCE was 15.8%(2,3) (2022 - 19.4%), or
14.3%(2,3) (2022 - 17.4%) when including land creditors as part of
the capital base. The moderation in these returns metrics was
predominantly driven by the lower underlying operating margin, and
a further reduction is expected in the current financial year given
an anticipated lower volume output and underlying operating profit.
Looking beyond the near-term and given Bellway's financial strength
and high-quality land bank, the Board is confident that through
improvements in both asset turn and operating margin, the Group can
deliver a normalised, longer-term recovery in underlying RoCE to
between 15%(2,3) and 20%(2,3) .
Over the longer-term, our current land bank alongside
disciplined investment in new land is essential to drive volume
output, to ensure the continued success of the Group and to
generate NAV growth. To support this future investment, we will
maintain our financial strength and the Board remains sharply
focused on delivering against the Group's strategic priorities to
generate ongoing value creation for shareholders .
Keith Adey
Group Finance Director
16 October 2023
'Better with Bellway'
Our responsible and sustainable approach to business
'Better with Bellway' is the Group's strategy and long-term
commitment with regards to acting responsibly and sustainably,
which encompasses issues around people and the environment. The
strategy covers eight priority areas each with their own specific
targets and KPIs linked to the underlying operations of the Group,
and since its launch in March 2022, we have made good progress,
through a range of initiatives, to embed the framework across the
business.
The 'Better with Bellway' strategy includes ambitious targets in
respect of our three flagship priority areas of Carbon Reduction,
Customers and Communities, and becoming an Employer of Choice. It
is designed to be a continuously evolving strategy and the
following section details our ambitions and progress made towards
the respective targets for the three flagship areas.
Carbon Reduction
To achieve a lower carbon footprint at Bellway, we have
committed to a significant reduction in scope 1 to 3 greenhouse gas
emissions by 2030. We have already made strong headway in laying
the foundations to meet our stretching targets, which were
validated by the Science Based Targets initiative ('SBTi') in
2022.
Scope 3 emissions - targeting a 55% reduction by 2030
Around 99% of the Group's carbon footprint arises from scope 3
emissions, which are from sources which Bellway does not own or
control, including the products used for the construction of our
homes. By 2030 we are targeting a reduction in scope 3 carbon
intensity by 55% from our 2019 base line.
In financial year 2023, the Group's scope 3 carbon emissions
rose slightly to 1.52 tonnes per m(2) of floor area (2022 - 1.51
tonnes per m(2) ). We expect to drive meaningful improvements in
scope 3 carbon emissions in the years ahead as the industry
transitions towards building to the requirements of the Future
Homes Standard 2025, which will require new homes to be
future-proofed with low carbon heating and built to a very high
standard of energy efficiency.
As we work towards reducing the level of embodied carbon in the
supply chain, we will need to adopt new construction practices and
the use of alternative materials. In this regard, we have increased
the use of timber-frame construction across the Group, as compared
to other mainstream building materials, timber requires minimal
processing and has very low relative levels of embodied carbon.
Timber-frame construction is now being increasingly used in five of
Bellway's divisions, including its long-established use in our two
Scottish divisions.
During the year we have continued to actively engage with
several of our supply chain partners on joint sustainability
solutions, and we are aiming to complete meetings with our top 50
suppliers by the end of 2024. In advance of the Future Homes
Standard 2025, we are also trialling air source heat pumps at sites
in each of Bellway's 20 trading divisions, as homes built to the
Future Homes Standard building regulations will not be reliant on
fossil fuels for their water and space heating.
We have several research projects underway across the business,
where we are trialling new technologies and working with our
customers, to drive best practice for scope 3 carbon reduction. Our
flagship research project is at the University of Salford where a
Bellway 'Future Home' has been constructed in the 'Energy House
2.0' environmental chamber, which can recreate a range of
temperatures and weather conditions. In this controlled
environment, testing is underway for a variety of innovative
technologies and the results will help to inform how Bellway will
build homes in the years ahead and achieve the requirements of the
Future Homes Standard. In addition, the projects will help us to
decide which products are both practical and cost-effective for our
customers and construction teams.
Scope 1 and 2 emissions - targeting a 46% reduction by 2030
The Group's scope 1 and scope 2 emissions are those generated by
Bellway in our own operations, and combined, these account for
around 1% of our total carbon footprint. These include direct
emissions from diesel used in onsite machinery and gas used in
office and construction site heating systems. They also include
indirect emissions generated remotely, from activities undertaken
by Bellway, such as our use of electricity in offices, sales
centres and show homes.
To align to the '1.5 degrees Celsius' pathway in the Paris
Agreement, Bellway is targeting a 46% reduction in these emissions
by 2030 and we have a range of initiatives underway to achieve
this.
The Group is targeting 100% of its purchased electricity to be
Renewable Energy Guarantees of Origin ('REGO') certified by
December 2023 and we have made excellent progress towards achieving
this, with 85% of the Bellway's electricity on REGO tariffs as at
31 July 2023. We have also completed a successful trial to use
hydrotreated vegetable oil ('HVO') biodiesel on over 50 of our
construction sites. The use of HVO can reduce carbon emissions by
over 90% compared to fossil diesel and the Group is now planning a
large-scale switch to HVO across all divisions, which will play a
significant role in our scope 1 and 2 reductions.
During the year we launched the Group's green car salary
sacrifice scheme, which is open to all monthly paid employees and
only offers cars with emissions of 75g/km or under. Since the
scheme commenced in August 2022 the proportion of leased vehicles
which are electric or hybrid has risen to over 50%. We have been
encouraged by the strong levels of take-up as we work towards
achieving the target of our entire company car fleet being 100%
electric or hybrid by July 2025.
As a result of our initiatives, the Group's scope 1 and scope 2
carbon emissions have reduced by 10.0% compared to the prior year
and by 35.6% since our base year of 2019, and we are in an
excellent position to meet our target of a 46% reduction by
2030.
While scope 1 and 2 direct emissions account for a relatively
small proportion of our total carbon footprint, the initiatives to
reduce emissions within Bellway are helping to foster a positive
cultural change, increase colleague engagement and create a strong
platform to deliver sustainability solutions with our supply chain
partners.
To achieve our ambitious targets and in addition to the measures
highlighted, we are considering several further initiatives to
reduce scope 1 to 3 carbon emissions in the years ahead.
Customers and Communities
Bellway aims to provide a consistently high service and quality
homes to all our customers, and the efforts under our Customer
First programme have resulted in the Group retaining its position
as a five-star(6) homebuilder for the seventh consecutive year.
This was awarded with a score of 91.1% (2022 - 93.6%) in the HBF's
most recent Customer Satisfaction survey, which asks customers
whether they would recommend Bellway to a friend, when surveyed
eight weeks after their moving date.
We are also proud to report an improvement in our NHBC
Construction Quality Review score, a measure of underlying
construction quality. Our score has risen to 87.9% at 31 July 2023
(2022 - 84.5%) and ahead of the challenging target of 85.0% we set
for the year.
Bellway's overall drive to deliver high-quality homes has been
reflected by 34 of our site managers winning NHBC Pride in the Job
Awards during the year (2022 - 36). This is the NHBC's flagship
competition for build quality across the UK and, from a field of
over 8,000 site managers entering, only around 5% receive these
awards.
While the Group maintained its five-star(6) status for the
eight-week HBF survey, we have seen a moderation in our score in
the nine-month survey to 80.6% (2022 - 82.1%). This was in part
driven by the challenging operating environment and pressures in
the supply chain throughout the year, which led to extended
response times to minor snagging issues in our new homes. We
recognise that there are areas where we can do better and, in this
regard, we have introduced a new customer care telephone system and
service level KPIs to improve communications with our
customers.
We are working hard to continually improve levels of customer
service and there are a range of other initiatives underway within
the business to achieve this, including additional training across
our sales, customer care and construction teams. During 2023, we
also successfully rolled out Bellway's 'Meet the Builder' days
across our developments. This enables customers to visit their new
home prior to taking ownership and provides an insight into the
construction process and an opportunity to have any questions
answered by our site managers.
As part of our Customer First programme, we are introducing
Bellway's 'House to Home' on all new sites starting construction in
financial year 2024. On each of these sites, a 'House to Home'
standardised demonstration plot will be divided into areas showing
different construction stages to help develop customers' knowledge
of the materials used in the build process, our sustainability
principles, our commitment to energy efficiency and the benefits of
buying a Bellway home. We believe this initiative will enhance the
overall customer experience and underpin confidence in the quality
of our new homes.
Employer of Choice
Bellway is aiming to be an 'Employer of Choice' in the industry
by creating a safe, diverse and inclusive environment that our
colleagues can thrive in. Notwithstanding the challenging and
uncertain market backdrop, we are proud that 89% of colleagues
(2022 - 95%) said they would recommend Bellway as 'a great place to
work' in our 2023 employee engagement survey. The Group is aiming
to improve on this high level of employee satisfaction, and we
continue to seek feedback from our colleagues to attract talent and
improve staff retention.
We are delighted that, well in advance of our July 2024 target,
we have been awarded full accreditation as a Living Wage Employer,
which covers both directly employed and subcontracted staff. A
standard, consistent induction and onboarding process has also been
introduced for all new starters at Bellway and we have seen a
reduction in voluntary staff turnover during the year to 21.9%
(2022 - 25.7%).
The Group also has a range of initiatives in place to promote
inclusion, improve ethnic and gender diversity and to increase the
proportion of colleagues in 'earn and learn' roles. Reflecting our
commitment to create an inclusive workplace for all employees, we
are working towards achieving 'Clear Assured' Silver Standard in
2024, which is awarded to businesses that demonstrate that
diversity and inclusion are reflected across all of its company
policies and processes.
Bellway has already been awarded Gold membership status from the
'5% Club' which recognises employers with 5% or more of their
employees in 'earn and learn' positions. At 31 July 2023 the Group
had 8.3% of the workforce employed in 'earn and learn' roles and we
remain committed to increase this to 12% by 31 July 2024.
Reflecting this ambitious target, we are aiming to achieve the new
Platinum membership status of the '5% Club' in 2024, which is
awarded to participants which have achieved Gold Membership in
three consecutive years, including 10% or more staff members in
'earn and learn' positions in the third year.
Against the backdrop of ongoing rises in the cost-of-living, we
have taken further steps to support our colleagues financially by
awarding increases in pay. This demonstrates our commitment to
social responsibility and together with a range of opportunities
for career progression through our Bellway Academy, will help to
ensure Bellway continues to be a rewarding place to work in the
years ahead.
Further initiatives
The Group has made good progress against the targets and KPIs
set for the other priority areas of the 'Better with Bellway'
strategy.
At Bellway, the health, safety, and wellbeing of our colleagues
and subcontractors is our highest priority and we have set
ambitious targets to raise the quality and safety of our work to
even higher levels. Bellway's standards and practices are subject
to continual review to challenge unsafe behaviours and drive
improvements and during the year we rolled-out improved safety
inductions and training across the Group.
Biodiversity is also a key focus within Bellway and to meet new
legal requirements we are aiming to achieve a 10% biodiversity net
gain on all new sites submitted for planning from July 2023 and
onwards.
Charitable engagement is a core part of Bellway's culture and
during the year we have launched partnerships with several
charities to support disabled and disadvantaged people, which
include opportunities for work placements within Bellway. We are
also delighted that our colleagues have raised over GBP580,000 for
Cancer Research UK in the year to 31 July 2023. Over the last seven
years we have raised over GBP3.1 million for this important charity
and exceeded our target of GBP3.0 million. We have since extended
our partnership with Cancer Research UK and we are targeting an
increase in the cumulative amount raised to GBP4.0 million by
December 2024.
We look forward to reporting further progress on our
sustainability strategy with our interim results in March 2024.
Jason Honeyman
Group Chief Executive
16 October 2023
Group Income Statement
for the year ended 31 July 2023
Note 2023 2022
GBPm GBPm
Revenue 2 3,406.6 3,536.8
Cost of sales (2,757.9) (3,094.0)
----------
Analysed as:
Underlying cost of sales (2,719.3) (2,749.8)
Adjusting item: net legacy building safety expense 3 (38.6) (344.2)
----------------------------------------------------- ----- ---------- ----------
Gross profit 648.7 442.8
Other operating income 29.1 25.3
Other operating expenses (30.3) (25.1)
Administrative expenses (142.2) (134.0)
Operating profit 505.3 309.0
Finance income 8 9.9 1.6
Finance expenses 8 (30.8) (15.7)
----------
Analysed as:
Underlying finance expenses (19.8) (13.7)
Adjusting item: net legacy building safety expense 3 (11.0) (2.0)
----------------------------------------------------- ----- ---------- ----------
Share of result of joint ventures (1.4) 9.3
Profit before taxation 483.0 304.2
Income tax expense 5 (118.0) (61.6)
Profit for the year * 365.0 242.6
---------- ----------
Earnings per ordinary share - Basic 4 297.7p 196.9p
Earnings per ordinary share - Diluted 4 296.3p 196.2p
* All attributable to equity holders of the parent.
Adjusting items
Note 2023 2022
GBPm GBPm
Gross profit
Gross profit per the Group Income Statement 648.7 442.8
Adjusting item: net legacy building safety expense 3 38.6 344.2
------- -------
Underlying gross profit 687.3 787.0
------- -------
Operating profit
Operating profit per the Group Income Statement 505.3 309.0
Adjusting item: net legacy building safety expense 3 38.6 344.2
------- -------
Underlying operating profit 543.9 653.2
------- -------
Profit before taxation
Profit before taxation per the Group Income Statement 483.0 304.2
Adjusting item: net legacy building safety expense 3 49.6 346.2
------- -------
Underlying profit before taxation 532.6 650.4
------- -------
Profit for the year
Profit for the year per the Group Income Statement 365.0 242.6
Adjusting item: net legacy building safety expense 3 49.6 346.2
Adjusting item: income tax on net legacy building
safety expense 3 (12.4) (70.3)
------- -------
Underlying profit for the year 402.2 518.5
------- -------
Group Statement of Comprehensive Income
for the year ended 31 July 2023
Note 2023 2022
GBPm GBPm
Profit for the year 365.0 242.6
Other comprehensive expense
Items that will not be recycled to the income
statement:
Remeasurement losses on defined benefit pension
plans (4.9) (3.5)
Income tax on other comprehensive expense 5 1.4 0.5
Other comprehensive expense for the year, net
of income tax (3.5) (3.0)
-------- --------
Total comprehensive income for the year * 361.5 239.6
-------- --------
* All attributable to equity holders of the
parent.
Group Statement of Changes in Equity
at 31 July 2023
Note Issued Share Capital Other Retained Total
capital premium redemption reserves earnings equity
reserve
GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 1 August
2021 15.4 179.8 20.0 1.5 3,071.1 3,287.8
Total comprehensive
income for the year
Profit for the year - - - - 242.6 242.6
Other comprehensive expense
* - - - - (3.0) (3.0)
--------- --------- ------------ ---------- ---------- ----------
Total comprehensive income
for the year - - - - 239.6 239.6
Transactions with shareholders
recorded directly in
equity:
Dividends on equity shares 11 - - - - (157.2) (157.2)
Purchase of own shares 10 - - - - (7.4) (7.4)
Shares issued - 2.2 - - - 2.2
Credit in relation to
share options and tax
thereon 5 - - - - 2.8 2.8
--------- --------- ------------ ---------- ---------- ----------
Total contributions by
and distributions to
shareholders - 2.2 - - (161.8) (159.6)
Balance at 31 July 2022 15.4 182.0 20.0 1.5 3,148.9 3,367.8
Total comprehensive
income for the year
Profit for the year - - - - 365.0 365.0
Other comprehensive expense
* - - - - (3.5) (3.5)
--------- --------- ------------ ---------- ---------- ----------
Total comprehensive income
for the year - - - - 361.5 361.5
Transactions with shareholders
recorded directly in
equity:
Dividends on equity shares 11 - - - - (171.7) (171.7)
Credit in relation to
share options and tax
thereon 5 - - - - 4.5 4.5
Share buyback programme
and cancellation of shares 10 (0.4) - 0.4 - (100.5) (100.5)
Total contributions by
and distributions to
shareholders (0.4) - 0.4 - (267.7) (267.7)
Balance at 31 July 2023 15.0 182.0 20.4 1.5 3,242.7 3,461.6
--------- --------- ------------ ---------- ---------- ----------
* An additional breakdown is provided in the Group Statement of
Comprehensive Income.
Group Balance Sheet
at 31 July 2023
Note 2023 2022
GBPm GBPm
ASSETS
Non-current assets
Property, plant and equipment 31.7 34.2
Financial assets 38.6 20.9
Equity accounted joint arrangements 4.9 9.3
Deferred tax assets 5 1.7 0.1
Retirement benefit assets 2.5 7.1
79.4 71.6
Current assets
Inventories 4,575.6 4,423.6
Trade and other receivables 88.3 114.6
Corporation tax receivable 8.8 -
Cash and cash equivalents 7 362.0 375.3
5,034.7 4,913.5
Total assets 5,114.1 4,985.1
-------- --------
LIABILITIES
Non-current liabilities
Interest-bearing loans and borrowings 7 130.0 130.0
Trade and other payables 107.3 106.6
Deferred tax liabilities 5 6.2 8.9
Provisions 6 403.5 400.8
647.0 646.3
Current liabilities
Corporation tax payable - 0.1
Trade and other payables 900.8 930.2
Provisions 6 104.7 40.7
1,005.5 971.0
Total liabilities 1,652.5 1,617.3
-------- --------
Net assets 3,461.6 3,367.8
-------- --------
EQUITY
Issued capital 15.0 15.4
Share premium 10 182.0 182.0
Capital redemption reserve 10 20.4 20.0
Other reserves 1.5 1.5
Retained earnings 10 3,242.7 3,148.9
Total equity 3,461.6 3,367.8
-------- --------
Group Cash Flow Statement
for the year ended 31 July 2023
Note 2023 2022
GBPm GBPm
Cash flows from operating activities
Profit for the year 365.0 242.6
Depreciation charge 6.0 6.1
Finance income 8 (9.9) (1.6)
Finance expenses 8 30.8 15.7
Share-based payment expense 4.5 3.1
Share of post tax result of joint ventures 1.4 (9.3)
Income tax expense 5 118.0 61.6
Increase in inventories (152.0) (391.4)
Decrease/(increase) in trade and other receivables 28.7 (33.2)
Decrease in trade and other payables (75.3) (104.5)
Increase in provisions 6 55.7 325.5
Cash from operations 372.9 114.6
Interest paid (6.9) (5.8)
Income tax paid (129.8) (63.8)
Net cash inflow from operating activities 236.2 45.0
-------- --------
Cash flows from investing activities
Acquisition of property, plant and equipment (2.7) (0.5)
Proceeds from sale of property, plant and equipment 0.1 0.1
Increase in loans to joint ventures (15.6) (2.1)
Repayment of loans by joint ventures - 21.6
Dividends from joint ventures 3.0 15.7
Interest received 6.9 0.5
Net cash (outflow)/inflow from investing activities (8.3) 35.3
-------- --------
Cash flows from financing activities
Payment of lease liabilities (3.5) (2.9)
Proceeds from the issue of share capital on exercise
of share options - 2.2
Purchase of own shares - (7.4)
Share buyback programme (66.0) -
Dividends paid 11 (171.7) (157.2)
Net cash outflow from financing activities (241.2) (165.3)
-------- --------
Net (decrease)/increase in cash and cash equivalents (13.3) (85.0)
Cash and cash equivalents at beginning of year 375.3 460.3
Cash and cash equivalents at end of year 7 362.0 375.3
-------- --------
Notes
1. Basis of preparation and accounting policies
a) Basis of consolidation
Bellway p.l.c. (the 'Company') is a company incorporated in
England and Wales.
The financial information set out above does not constitute the
Group's statutory financial statements for the years ended 31 July
2023 or 2022, but is derived from those financial statements.
Statutory financial statements for 2022 have been delivered to the
registrar of companies, and those for 2023 will be delivered in due
course. The auditor, Ernst & Young LLP, has reported on those
financial statements; their reports were (i) unqualified, (ii) did
not include a reference to any matters to which the auditor 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.
Whilst the financial information included in this announcement
has been prepared in accordance with Adopted IFRSs,
this announcement does not itself contain sufficient information
to comply with Adopted IFRSs. The Group expects to
send its 2023 Annual Report and Accounts to shareholders on 8
November 2023.
b) Other financial statement considerations
In preparing the Group financial statements, management has
considered the impact of climate change, and the possible impact of
climate-related and other emerging business risks. A rigorous
assessment of the impact of climate-related risks has been
performed. This included an assessment of inventories and how they
could be affected by measures taken to address global warming. No
issues were identified that would materially impact the carrying
values of the Group's assets or liabilities, or have any other
material impact on the financial statements.
The preparation of financial statements 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 the judgements about
the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these
estimates.
The accounting policies set out within the notes to the
financial statements have, except as noted below, been applied
consistently to all periods presented in these consolidated
financial statements.
The Group recently acquired a number of contractual arrangements
with landowners in order to promote their land through the planning
process to obtain detailed planning permission, and to subsequently
market the sites for residential property development on behalf of
the landowner. These agreements are accounted for in inventory and
the amended inventories policy of the Group is set out below:
Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost, in relation to work-in-progress and showhomes,
comprises direct materials and, where applicable, direct labour
costs and those overheads, not including any general administrative
overheads, that have been incurred in bringing the inventories to
their present location and condition. Net realisable value
represents the estimated selling price less all estimated costs of
completion and overheads.
Land comprises: land held for development; options purchased in
respect of land; investments in land without the benefit of
planning consent; and, promotion agreements in respect of land
without the benefit of planning consent.
Land held for development, including land in the course of
development until legal completion of the sale of the asset, is
initially recorded at cost. Regular reviews are carried out to
identify any impairment in the value of the land by comparing the
total estimated selling prices less estimated selling expenses
against the book cost of the land plus estimated costs to complete.
A provision is made for any irrecoverable amounts. Where, through
deferred payment terms, the fair value of land purchased differs
from the amount that will subsequently be paid in settling the
liability, the difference is charged as a finance expense in the
income statement over the period to settlement.
Options purchased in respect of land are capitalised initially
at cost. Regular reviews are carried out for impairment in the
value of these options and provisions made accordingly to reflect
loss of value. The impairment reviews consider the period elapsed
since the date of purchase of the option given that the option
contract has not been exercised at the review date. Further, the
impairment reviews consider the remaining life of the option,
taking account of any concerns
over whether the remaining time available will allow a
successful exercise of the option. The carrying cost of the option
at the date of exercise is included within the cost of land
purchased as a result of the option exercise.
Investments in land without the benefit of planning consent,
either through the purchase of land or non-refundable deposits paid
on land purchase contracts subject to planning consent, are
included initially at cost. Regular reviews are carried out for
impairment in the values of these investments and provision made to
reflect any irrecoverable element. The impairment reviews consider
the existing use value of the land and assess the likelihood of
achieving planning consent and the value thereof.
Promotion agreements in respect of land without the benefit of
planning consent comprise initial costs of entering into the
agreements. These costs are capitalised initially at cost. Regular
reviews are carried out for impairment in the values of these costs
incurred and provisions made accordingly to reflect loss of value.
The impairment reviews consider the likelihood of securing planning
permission, the successful marketing of the site and the remaining
life of the promotion agreement.
c) Going concern
The Group's activities are financed principally by a combination
of ordinary shares and cash in hand less debt. At 31 July 2023,
Bellway had net cash of GBP232.0 million(2) (note 7), having
utilised cash of GBP13.3 million (note 7) during the year,
including GBP372.9 million of cash generated from operations.
The Group has operated within all its debt covenants throughout
the year, and covenant compliance was considered as part of the
going concern assessment. In addition, the Group had bank
facilities of GBP400.0 million at 31 July 2023, expiring in
tranches up to December 2027. Furthermore, in February 2021 the
Group entered into a contractual arrangement to issue a sterling US
Private Placement ('USPP') for a total amount of GBP130.0 million,
as part of its ordinary course of business financing arrangements,
which has maturity dates in 2028 and 2031. In aggregate, the Group
had committed debt lines of GBP530.0 million at 31 July 2023.
Including committed debt lines and cash, Bellway had access to
total funds of GBP762.0 million, along with net current assets
(excluding cash) of GBP3,667.2 million at 31 July 2023, providing
the Group with appropriate liquidity to meet its current
liabilities as they fall due.
The Group's internal forecasts have been regularly updated,
incorporating our actual experience along with our expected future
outturn. The latest available base forecast has been sensitised,
setting out the Group's resilience to the principal risks and
uncertainties in the most severe but plausible scenario. The
sensitivity includes a recession due to economic uncertainty and a
deterioration in customer confidence. This could lead to a
reduction in both the total number of legal completions and private
average selling price, with overheads, land spend and construction
spend reducing accordingly.
This sensitivity includes the following principal
assumptions:
-- Private completions in H1 FY24 are supported by the forward
order book, but still fall to 55% of that achieved in H1 of FY23.
In the 12 months to 31 January 2025, private completions reduce by
around 50% compared to the 12 month pre-stress peak achieved in
FY22. This is followed by a gradual recovery based on the lower
base position.
-- Private average selling price in H1 FY24 remains in line with
internal forecasts due to the order book position. In the 12 months
to 31 January 2025, the private average selling price reduces by
10% compared to the latest achieved pricing. This is followed by a
gradual recovery based on the lower base position.
-- These assumptions reflect the Group's experience in the
2008-09 Global Financial Crisis.
A number of prudent mitigating actions within the Directors'
control were incorporated into the plausible but severe downside
scenario, including:
-- Plots in the land bank only being replaced at the same rate
that they are utilised.
-- Construction spend reducing in line with housing revenue.
-- Dividends reducing in line with earnings.
The sensitivity analysis was modelled over the period to 31 July
2025 for the going concern assessment, but extended to the 31 July
2027 for the Directors' viability assessment. In addition to the
above, several additional mitigating measures remain available to
management that were not included in the scenario. These include
withholding discretionary land spend and instead trading out of the
substantial existing land holdings.
In the scenario, the Group had significant headroom in both its
financial debt covenants and existing debt facilities and met its
liabilities as they fall due. In relation to climate risks, and in
particular the requirement of the Group to reduce carbon emissions,
the going concern assessment is not considered to be materially
affected by the Future Homes Standard.
The Directors consider that the Group is well placed to manage
business and financial risks in the current economic environment.
Consequently, the Directors are confident that the Group and
Company will have sufficient funds to continue to meet its
liabilities as they fall due for the period to 31 July 2025,
aligning with the first year end after the minimum 12 month
assessment period, and have therefore prepared the financial
statements on a going concern basis.
d) Effect of new standards and interpretations effective for the first time
The Group adopted and applied the following amendments in the
year, none of which had a material effect on the financial
statements:
-- Property, Plant and Equipment: Proceeds before Intended Use -
Amendments to IAS 16.
-- Onerous Contracts - Cost of Fulfilling a Contract -
Amendments to IAS 37.
-- Annual Improvements to IFRS Standards 2018-2020.
-- Reference to the Conceptual Framework - Amendments to IFRS
3.
-- Pillar 2 minimum tax - Amendments to IAS 12.
Standards and interpretations in issue but not yet effective
At the date of authorisation of these financial statements there
were a number of standards and interpretations which were in issue
but not yet effective. These have not been applied in these
financial statements and are not expected to have a material effect
when adopted.
e) Accounting estimates and judgements
While preparing these financial statements, the directors are
required to make significant estimates and judgements that could
have a significant effect on these financial statements when
applying the Group's accounting policies.
When preparing these financial statements, the major judgements
in applying the Group's accounting policies and the major sources
of estimation uncertainty were those applied in the Group's 2022
Annual Report and Accounts.
2. Segmental analysis
The Executive Board (the Chief Operating Decision Maker as
defined in IFRS 8 'Operating Segments') regularly reviews the
Group's performance and balance sheet position at both a
consolidated and divisional level. Each division is an operating
segment as defined by IFRS 8 in that the Executive Board assess
performance and allocates resources at this level. All of the
divisions have been aggregated in to one reporting segment on the
basis that they share similar economic characteristics
including:
-- National supply agreements are in place for key inputs
including materials.
-- Debt is raised centrally and the cost of capital is the same
at each division.
-- Sales demand at each division is subject to the same
macroeconomic factors, such as mortgage availability and government
policy.
Additional information on average selling prices and the unit
sales split between north, south, private and social has been
included in the Group Finance Director's Review. The Board does
not, however, consider these categories to be separate reportable
segments as they review the entire operations at a consolidated and
divisional level when assessing performance and making decisions
about the allocation of resources.
Revenue from contracts with customers
An analysis of the Group's revenue is as follows:
2023 2022
GBPm GBPm
Housing revenue 3,396.3 3,520.6
Non-housing revenue 10.3 16.2
Total revenue 3,406.6 3,536.8
-------- --------
The Group's housing revenue can be analysed as follows:
(a) Private/social
2023 2022
GBPm GBPm
Private 2,931.3 3,190.9
Social 465.0 329.7
Total housing revenue 3,396.3 3,520.6
-------- --------
(b) North/South
2023 2022
GBPm GBPm
North 1,608.8 1,543.9
South 1,787.5 1,976.7
Total housing revenue 3,396.3 3,520.6
-------- --------
3. Net legacy building safety expense
Profit before taxation for the years ended 31 July 2023 and 31
July 2022 has been arrived at after recognising the following items
in the income statement:
2023 2023 2023 2022 2022 2022
SRT and Structural Total SRT and Structural Total
associated defects associated defects
review review
GBPm GBPm GBPm GBPm GBPm GBPm
Provisions (note 6) 58.1 30.5 88.6 347.0 - 347.0
Reimbursement assets
(note 6) (50.0) - (50.0) (2.8) - (2.8)
------------ ----------- ------- ------------ ----------- ------
Net cost of sales 8.1 30.5 38.6 344.2 - 344.2
Finance expenses (notes
6, 8) 11.0 - 11.0 2.0 - 2.0
------------ ----------- ------- ------------ ----------- ------
Total net legacy
building safety expense 19.1 30.5 49.6 346.2 - 346.2
------------ ----------- ------- ------------ ----------- ------
The net legacy building safety expense has been expanded in the
current financial year to include structural defects relating to a
legacy building, as explained below. In previous years, the net
legacy building safety expense only included items related to the
SRT and associated review.
The income tax rate applied to the total net legacy building
safety expense in the income statement is the Group's standard rate
of income tax, including both corporation tax and Residential
Property Developer Tax ('RPDT'), of 25.0% (2022 - 20.3%).
SRT and associated review
Bellway's continued commitment to act responsibly with regards
to fire safety is reflected by the level of our prudent provisions
and the actions the Group has taken since the tragic events at
Grenfell in 2017.
On 7 April 2022, as part of the Building Safety Pledge (the
'Pledge'), we announced that this commitment would be extended to a
30-year period to include buildings constructed by the Group since
5 April 1992 and to reimburse the Building Safety Fund and the ACM
Funds in accordance with the principles set out in the Pledge. The
Group signed the Self-Remediation Terms ('SRT') on 13 March 2023
which converted the principles of the Pledge into a binding
agreement for the housebuilding industry. On 25 May 2023, the Group
also contractually committed to remediate its legacy buildings in
Wales by signing the Pact with The Welsh Ministers (the
'Pact').
In total, for the year ended 31 July 2023 Bellway set aside a
net exceptional pre-tax expense of GBP19.1 million (2022 - GBP346.2
million), in relation to the SRT and associated review. Of this
expense, a net GBP8.1 million (2022 - GBP344.2 million) is
recognised in cost of sales and an adjusting finance expense of
GBP11.0 million (2022 - GBP2.0 million) in relation to the
unwinding of the discount of the provision to present value. The
net amount recognised in cost of sales includes GBP129.7 million
(2022 - GBP349.5 million) relating to cost estimate increases,
which are in part offset by both provision releases of GBP38.6
million (2022 - GBP2.5 million) and GBP33.0 million (2022 - GBPnil)
following an increase in discount rates during the year (note
6).
While the SRT and the Pact relates to developments in England
and Wales, Bellway has taken a responsible, UK-wide approach to
also provide for works in relation to the small number of apartment
buildings the Group has developed in Scotland, where remediation is
required. Taking this into consideration, the total amount Bellway
has set aside in relation to the SRT and associated review since
2017 is GBP582.8 million (2022 - GBP513.7 million). Costs have been
provided regardless of whether Bellway still retains ownership of
the freehold interest in the building or whether warranty providers
have a responsibility to carry out remedial works.
The provision has been calculated using cost estimates based on
our extensive experience to date, using analysis of previously
tendered works and prudent, professional estimates based on
knowledge of known issues. In addition, on developments where full
investigations have not yet been undertaken or cost reports
obtained, costs to date on similar developments have been used to
estimate the likely cost. We have also made assumptions with
regards to the likely cost of resolving potential issues, that we
have not yet been made aware of, on schemes covered by the extended
30-year period.
The provision calculation uses the expected timings of cash
outflows which are adjusted for future estimated cost inflation in
accordance with the Build Cost Information Service ('BCIS') index,
a leading provider of cost and price information to the
construction industry. The provision is discounted back to a
present value using UK gilt rates with maturities which reflect the
expected timing of cash outflows. The unwinding of this discount is
charged through the income statement as an adjusting finance
expense.
The majority of the cash outflow is expected to be over the next
four years, although there will be some residual expenditure beyond
this. The anticipated timing reflects the complex issues around
remediation including identifying the works required, design and
planning obligations, interpretation of Publicly Available
Specification ('PAS') 9980:2022, liaison and negotiations with
building owners, and appointment of contractors.
Notwithstanding these complexities the Group has made good
progress with work now completed on 9 developments, underway on 12
developments and works due to commence on a further 2 developments
in first half of the new financial year.
The net exceptional cost of sales expense includes one-off cost
recoveries of GBP50.0 million, across several sites, which have
been pursued for several years.
Total recoveries recognised since 2017 are GBP80.0 million (2022
- GBP30.0 million). Reimbursement assets of GBPnil (2022 - GBPnil)
remained outstanding at the year end.
Structural defects
During the year a structural defect relating to the reinforced
concrete frame was identified at a historical high-rise apartment
scheme in Greenwich, London with the remediation work expected to
cost GBP30.5 million. This cost estimate is based on an expert
third-party report and reflects management's expected scope of
works. A provision has been recognised as Bellway has a legal
obligation to undertake the remedial work.
The provision calculation uses the expected timings of cash
outflows which are adjusted for future estimated cost inflation in
accordance with the BCIS index. The provision is discounted back to
a present value using UK gilt rates with maturities which reflect
the expected timing of cash outflows. The unwinding of this
discount is charged through the income statement as an adjusting
finance expense.
The Group is carrying out a review of other buildings
constructed by, or on behalf of Bellway, where the same third
parties responsible for the design of the frame in the Greenwich
development have been involved. To date, no other similar design
issues with reinforced concrete frames have been identified.
We are actively seeking recoveries in relation to the structural
defect identified, but as these are not virtually certain at the
balance sheet date, no reimbursement assets have been
recognised.
The cash outflow is expected to be over the next two financial
years.
4. Earnings per ordinary share
Basic earnings per ordinary share is calculated by dividing
earnings by the weighted average number of ordinary shares in issue
during the year (excluding the weighted average number of ordinary
shares held by the Company or Trust which are treated as
cancelled).
Diluted earnings per ordinary share uses the same earnings
figure as the basic calculation. The weighted average number of
shares has been adjusted to reflect the dilutive effect of
outstanding share options allocated under employee share schemes
where the market value exceeds the option price. Diluted earnings
per ordinary share is calculated by dividing earnings by the
diluted weighted average number of ordinary shares.
Reconciliations of the earnings and weighted average number of
shares used in the calculations are outlined below:
Earnings Weighted Earnings Earnings Weighted Earnings
average per share average per share
number number
of ordinary of ordinary
shares shares
2023 2023 2023 2022 2022 2022
GBPm Number p GBPm Number p
For basic earnings
per ordinary share 365.0 122,593,350 297.7 242.6 123,227,544 196.9
Dilutive effect of
options and awards 600,864 (1.4) 416,029 (0.7)
For diluted earnings
per ordinary share 365.0 123,194,214 296.3 242.6 123,643,573 196.2
--------- -------------- ----------- --------- -------------- -----------
Underlying basic and underlying diluted earnings per share
exclude the effect of adjusting items and any associated net tax
amounts. Reconciliations of these are outlined below:
Underlying Weighted Underlying Underlying Weighted Underlying
earnings average earnings earnings average earnings
number per share number per share
of ordinary of ordinary
shares shares
2023 2023 2023 2022 2022 2022
GBPm Number p GBPm Number p
For basic underlying
earnings per ordinary
share 402.2 122,593,350 328.1 518.5 123,227,544 420.8
Dilutive effect of
options and awards 600,864 (1.6) 416,029 (1.4)
For diluted underlying
earnings per ordinary
share 402.2 123,194,214 326.5 518.5 123,643,573 419.4
----------- -------------- ----------- ----------- -------------- -----------
5. Taxation
The effective tax expense is 24.4% of profit before taxation
(2022 - 20.2%). Both the standard tax rate and effective tax rate
include RPDT.
As part of the UK adoption of the Organisation for Economic
Cooperation and Development ('OECD') Pillar Two rules, the UK
government announced two new taxes, the Multinational Top-up Tax
and the Domestic Top-up Tax which are designed to ensure
corporations pay tax at a rate of at least 15%. The Domestic Top-up
Tax will apply to the Group from 1 August 2024. As the Group's
current effective tax rate is in excess of 15%, it is expected the
introduction of this tax will not affect Bellway. The Multinational
Top-up Tax is not expected to affect Bellway.
The carrying amount of the gross deferred tax asset is reviewed
at each balance sheet date and is recognised to the extent that
there will be sufficient taxable profits to allow the asset to be
recovered.
The deferred tax assets/(liabilities) held by the Group at the
start of the comparative year were revalued at the substantively
enacted corporation tax rate that will be effective when they are
expected to be realised. The deferred tax assets/(liabilities) were
revalued at 29% following the introduction of RPDT on 1 April 2022.
The deferred tax assets/(liabilities) were previously recognised at
25% to take into account the increase in the UK corporation tax
rate from 1 April 2023 that was substantively enacted in May
2021.
It is expected that the Group's standard rate of tax, including
RPDT, for the year ending 31 July 2024 will be 29%.
6. Provisions and reimbursement assets
SRT and associated review Structural defects Total legacy building safety
improvements
Provision Reimbursement Total Provision Reimbursement Total Provision Reimbursement Total
assets assets assets
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 August 2022 (441.5) - (441.5) - - - (441.5) - (441.5)
Adjusting item -
cost of sales (note
3) (58.1) 50.0 (8.1) (30.5) - (30.5) (88.6) 50.0 (38.6)
--------------------- ---------- -------------- -------- ---------- -------------- ------- ---------- -------------- ----------
Analysed as:
Additions (129.7) 50.0 (79.7) (30.5) - (30.5) (160.2) 50.0 (110.2)
Released 38.6 - 38.6 - - - 38.6 - 38.6
Change in
discount rate 33.0 - 33.0 - - - 33.0 - 33.0
--------------------- ---------- -------------- -------- ---------- -------------- ------- ---------- -------------- ----------
Utilised/(received) 32.9 (50.0) (17.1) - - - 32.9 (50.0) (17.1)
Unwinding of
discount (notes
3,8) (11.0) - (11.0) - - - (11.0) - (11.0)
At 31 July 2023 (477.7) - (477.7) (30.5) - (30.5) (508.2) - (508.2)
---------- -------------- -------- ---------- -------------- ------- ---------- -------------- ----------
The provision is classified as follows:
SRT and associated review Structural defects Total
legacy building safety improvements
GBPm GBPm GBPm
Current (99.6) (5.1) (104.7)
Non-current (378.1) (25.4) (403.5)
Total (477.7) (30.5) (508.2)
-------------------------- ------------------- -------------------------------------
The Group has established a provision for the cost of performing
fire remedial works on a number of legacy developments and a
structural defect relating to a historical high rise apartment
scheme (note 3).
7. Analysis of net cash
At 1 August Cash At 31
July
2022 flows 2023
GBPm GBPm GBPm
Cash and cash equivalents 375.3 (13.3) 362.0
Fixed rate sterling USPP notes (130.0) - (130.0)
Net cash 245.3 (13.3) 232.0
------------ --------- --------
8. Finance income and expenses
2023 2022
GBPm GBPm
Interest receivable on bank deposits 7.2 0.5
Net interest on defined benefit asset 0.3 0.1
Other interest receivable 2.4 1.0
Finance income 9.9 1.6
----- -----
Interest payable on bank loans and overdrafts 2.8 2.5
Interest payable on fixed rate sterling USPP notes 3.4 3.4
Interest on deferred term land payables 13.1 7.3
Unwinding of the discount on the SRT and associated
review provision 11.0 2.0
Interest payable on leases 0.5 0.5
Finance expenses 30.8 15.7
----- -----
The unwinding of the discount on the SRT and associated review
provision is an adjusting item (note 3).
9. Financial instruments - fair value disclosures
The fair value of financial assets and liabilities are
determined based on discounted cash flow analysis using prevailing
market rates for similar instruments.
The carrying values of financial assets and liabilities
reasonably approximate the fair value of the instruments.
10. Reserves
Share premium
This reserve is not distributable.
Own shares held
The Group holds shares within the Bellway Employee Share Trust
(1992) (the 'Trust') for participants of certain share-based
payment schemes. The cost of these is charged to retained earnings.
During the period nil (2022 - 268,240) shares were purchased by the
Trust and the Trust transferred 3,913 (2022 - 38,978) shares to
employees and Directors. The number of shares held within the Trust
and on which dividends have been waived, at 31 July 2023 was
327,202 (2022 - 331,115). These shares are held within the
financial statements at a cost of GBP8.8 million (2022 - GBP8.9
million). The market value of these shares at 31 July 2023 was
GBP7.3 million (2022 - GBP8.1 million).
Capital redemption reserve
On 7 April 2014 the Company redeemed 20,000,000 GBP1 preference
shares, being all of the preference shares in issue. An amount of
GBP20.0 million, equivalent to the nominal value of the shares
redeemed, was transferred to a capital redemption reserve on the
same date.
During the year, the Company purchased 2,928,794 of its own
shares which it cancelled. On cancellation of the shares, the
aggregate nominal value of GBP0.4 million was transferred from
share capital to the capital redemption reserve.
This reserve is not distributable.
11. Dividends on equity shares
2023 2022
GBPm GBPm
Amounts recognised as distributions to equity holders
in the year:
Final dividend for the year ended 31 July 2022 of 95.0p
per share (2021 - 82.5p) 117.0 101.8
Interim dividend for the year ended 31 July 2023 of 45.0p
per share (2022 - 45.0p) 54.7 55.4
171.7 157.2
-------- --------
Proposed final dividend for the year ended 31 July 2023
o f 95.0p per share (2022 - 95.0p) 114.5 117.0
The 2023 proposed final dividend is subject to approval by shareholders
at the Annual General Meeting on 15 December 2023 and, in accordance
with IAS 10 'Events after the Reporting Period', has not been included
as a liability in these financial statements. The proposed final dividend,
subject to shareholder approval, will be paid on 10 January 2024 to
all ordinary shareholders on the Register of Members on 1 December 2023.
The ex-dividend date is 30 November 2023. At the record date for the
final dividend for the year ended 31 July 2022, shares were held by
the Bellway Employee Share Trust (1992) (the 'Trust') on which dividends
had been waived (see note 10).
The level of distributable reserves are sufficient in comparison to
the proposed dividend.
12. Contingent liabilities
SRT and associated review
We continue to take a proactive approach to nationwide concerns
with regards to fire safety in high-rise buildings across the UK.
Bellway recognises its responsibilities in its legacy apartment
portfolio and continues to review combustion risks, in external
wall systems, on past high-rise developments.
As detailed in note 3, Bellway has identified a number of
developments, which obtained building regulation approval at the
time of construction, where the building materials used may not
fully comply with the most recent government guidance or where
remedial works may need to be performed in line with the SRT. For
these developments we have established that the cost of the
remedial works satisfies the accounting requirements of a provision
at the balance sheet date. While a prudent approach has been taken,
the extent of the provision could increase or reduce, in line with
normal accounting practice if new issues are identified or if
estimates change, as Bellway and building owners continue to
undertake their own investigative works on these and other schemes
within the legacy portfolio.
13. Alternative performance measures
Bellway uses a variety of alternative performance measures
('APMs') which, although financial measures of either historical or
future performance, financial position or cash flows, are not
defined or specified by IFRSs. The Directors use a combination of
APMs and IFRS measures when reviewing the performance, position and
cash of the Group.
The APMs used by the Group are defined below:
-- Underlying gross profit and underlying operating profit -
Both of these measures are stated before net legacy building safety
expense and exceptional items, and are reconciled to total gross
profit and total operating profit on the face of the consolidated
income statement. The Directors consider that the removal of the
net legacy building safety expense provides a better understanding
of the underlying performance of the Group.
-- Underlying gross margin - This is gross profit before net
legacy building safety expense and exceptional items, divided by
total revenue. The Directors consider this to be an important
indicator of the underlying trading performance of the Group.
-- Administrative expenses as a percentage of revenue - This is
calculated as the total administrative overheads divided by total
revenue. The Directors consider this to be an important indicator
of how efficiently the Group is managing its administrative
overhead base.
-- Underlying operating margin - This is operating profit before
net legacy building safety expense and exceptional items divided by
total revenue. The Directors consider this to be an important
indicator of the operating performance of the Group.
-- Net underlying finance expense - This is the net finance
expense before any directly attributable finance expense or finance
income relating to the net legacy building safety expense and
exceptional items. The Directors consider this to be an important
measure when assessing whether the Group is using the most cost
effective source of finance.
-- Net finance expense - This is finance expenses less finance
income. The Directors consider this to be an important measure when
assessing whether the Group is using the most cost effective source
of finance.
-- Underlying profit before taxation - This is the profit before
taxation before net legacy building safety expense and exceptional
items. The Directors consider this to be an important indicator of
the profitability of the Group before taxation.
-- Underlying profit for the year - This is the profit for the
year before net legacy building safety expense and exceptional
items. The Directors consider this to be an important indicator of
the profitability of the Group.
-- Underlying earnings per share - This is calculated as
underlying profit for the year divided by the weighted average
number of ordinary shares in issue during the year (excluding the
weighted average number of ordinary shares held by the Company or
Trust which are treated as cancelled).
-- Underlying dividend cover - This is calculated as underlying
profit for the year per ordinary share for the period divided by
the dividend per ordinary share relating to that period. At the
half year the dividend per ordinary share is the proposed interim
ordinary dividend, and for the full year it is the interim dividend
paid plus the proposed final dividend. The Directors consider this
an important indicator of the proportion of underlying earnings
paid to shareholders and reinvested in the business.
-- Dividend cover - This is calculated as earnings per ordinary
share for the period divided by the dividend per ordinary share
relating to that period. At the half year the dividend per ordinary
share is the proposed interim ordinary dividend, and for the full
year it is the interim dividend paid plus the proposed final
dividend. The Directors consider this an important indicator of the
proportion of earnings paid to shareholders and reinvested in the
business.
-- Capital invested in land, net of land creditors, and
work-in-progress - This is calculated as shown in the table below.
The Directors consider this as an indicator of the net investment
by the Group in the period to achieve future growth.
2023 2022 Mvt 2022 2021 Mvt
Per balance sheet GBPm GBPm GBPm GBPm GBPm GBPm
Land 2,578.8 2,786.4 (207.6) 2,786.4 2,483.9 302.5
Work-in-progress 1,861.6 1,524.8 336.8 1,524.8 1,431.4 93.4
Increase in capital
invested in land
and work-in-progress
in the year 129.2 395.9
Land creditors (368.8) (393.4) 24.6 (393.4) (455.8) 62.4
Increase in capital
invested in land,
net of land creditors,
and work-in- progress
in the year 153.8 458.3
-------- --------
-- Net asset value per ordinary share ('NAV') - This is
calculated as total net assets divided by the number of ordinary
shares in issue at the end of each period. The Directors consider
this to be a proxy when reviewing whether value, on a share by
share basis, has increased or decreased in the period.
-- Capital employed - Capital employed is defined as the total
of equity and net debt. Equity is not adjusted where the Group has
net cash. The Directors consider this to be an important indicator
of the operating efficiency and performance of the Group.
-- Underlying return on capital employed ('underlying RoCE') -
This is calculated as operating profit before net legacy building
safety expense and exceptional items divided by the average capital
employed. Average capital employed is calculated based on opening,
half year and closing capital employed. The calculation is shown in
the table below. The Directors consider this to be an important
indicator of whether the Group is achieving a sufficient return on
its investments.
2023 2023 2023 2022 2022 2022
Capital Land Capital Capital Land Capital
employed creditors employed employed creditors employed
including including
land creditors land
creditors
GBPm GBPm GBPm GBPm GBPm GBPm
Underlying operating
profit 543.9 543.9 653.2 653.2
Capital employed/land
creditors:
Opening 3,367.8 393.4 3,761.2 3,287.8 455.8 3,743.6
Half year 3,481.4 372.4 3,853.8 3,429.8 349.0 3,778.8
Closing 3,461.6 368.8 3,830.4 3,367.8 393.4 3,761.2
Average 3,436.9 378.2 3,815.1 3,361.8 399.4 3,761.2
----------------- ----------- ---------------- ---------- ----------- -----------
Underlying return
on capital employed 15.8% 14.3% 19.4% 17.4%
-- Return on capital employed ('RoCE') - This is calculated as
operating profit divided by the average capital employed. Average
capital employed is calculated based on opening, half year and
closing capital employed. The calculation is shown in the table
below. The Directors consider this to be an important indicator of
whether the Group is achieving a sufficient return on its
investments.
2023 2023 2023 2022 2022 2022
Capital Land Capital Capital Land Capital
employed creditors employed employed creditors employed
including including
land creditors land
creditors
GBPm GBPm GBPm GBPm GBPm GBPm
Operating profit 505.3 505.3 309.0 309.0
Capital employed/land
creditors:
Opening 3,367.8 393.4 3,761.2 3,287.8 455.8 3,743.6
Half year 3,481.4 372.4 3,853.8 3,429.8 349.0 3,778.8
Closing 3,461.6 368.8 3,830.4 3,367.8 393.4 3,761.2
Average 3,436.9 378.2 3,815.1 3,361.8 399.4 3,761.2
---------- ----------- ---------------- ---------- ----------- -----------
Return on capital
employed 14.7% 13.2% 9.2% 8.2%
-- Underlying post tax return on equity - This is calculated as
profit for the year before net legacy building safety expense and
exceptional items, divided by the average of the opening, half year
and closing net assets. The Directors consider this to be a good
indicator of the operating efficiency of the Group.
2023 2022
GBPm GBPm
Underlying profit for the year 402.2 518.5
Net assets:
Opening 3,367.8 3,287.8
Half year 3,481.4 3,429.8
Closing 3,461.6 3,367.8
Average 3,436.9 3,361.8
---------- ----------
Underlying post tax return on equity 11.7% 15.4%
-- Post tax return on equity - This is calculated as profit for
the year divided by the average of the opening, half year and
closing net assets. The Directors consider this to be a good
indicator of the operating efficiency of the Group.
2023 2022
GBPm GBPm
Profit for the year 365.0 242.6
Net assets:
Opening 3,367.8 3,287.8
Half year 3,481.4 3,429.8
Closing 3,461.6 3,367.8
Average 3,436.9 3,361.8
---------- ----------
Post tax return on equity 10.6% 7.2%
-- Total growth in value per ordinary share - The Directors use
this as a proxy for the increase in shareholder value since 31 July
2020. A period of 3 years is used to reflect medium-term
growth.
Net asset value per ordinary share:
At 31 July 2023 2,871p
At 31 July 2020 2,427p
-------
Net asset value growth per ordinary share 444p
Dividend paid per ordinary share:
Year ended 31 July 2023 140.0p
Year ended 31 July 2022 127.5p
Year ended 31 July 2021 85.0p
-------
Cumulative dividends paid per ordinary share 352.5p
Total growth in value per ordinary share 796.5p
---------
-- Annualised accounting return in NAV and dividends paid since
31 July 2020 - This is calculated as the annualised increase in net
asset value per ordinary share plus cumulative ordinary dividends
paid per ordinary share since 31 July 2020 (as detailed above)
divided by the net asset value per ordinary share at 31 July 2020.
The Directors use this as a proxy for the increase in shareholder
value since 31 July 2020.
Net asset value growth per ordinary share 444p
Cumulative dividends paid per ordinary share 352.5p
Total growth in value per ordinary share 796.5p
Net asset value per ordinary share at 31 July 2020 2,427p
Total value per ordinary share 3,223.5p
-----------
Annualised accounting return 9.9%
-- Underlying capital growth in the period - This is calculated
as capital growth in the period before net legacy building safety
expense and exceptional items per share.
Capital growth in the period 284.0p
Net legacy building safety expense per share 30.9p
Underlying capital growth in the period 314.9p
---------
Net asset value at 31 July 2022 2,727p
Underlying capital growth
(314.9p/2,727p) 11.5%
-- Capital growth in the period - This is calculated as the
increase in NAV in the period combined with the ordinary dividend
paid in the year.
Net asset value per ordinary share:
At 31 July 2023 2,871p
At 31 July 2022 2,727p
Net asset value growth per ordinary share 144p
Dividend paid per ordinary share:
Year ended 31 July 2023 140.0p
Capital growth in the period 284.0p
---------
-- Net cash/(debt) - This is the cash and cash equivalents less
bank debt and fixed rate sterling USPP notes. Net cash/(debt) does
not include lease liabilities, which are reported within trade and
other payables on the balance sheet. The Directors consider this to
be a good indicator of the financing position of the Group. This is
reconciled in note 7.
-- Average net cash/(debt) - This is calculated by averaging the
net cash/(debt) position at 1 August and each month end during the
year. The Directors consider this to be a good indicator of the
financing position of the Group throughout the year.
-- Cash generated from operations before investment in land, net
of land creditors, and work-in-progress - This is calculated as
shown in the table below. The Directors consider this as an
indicator of whether the Group is generating cash before investing
in land and work-in-progress to achieve future growth.
2023 2022
GBPm GBPm
Cash from operations 372.9 114.6
Add: increase in capital invested in land, net
of land creditors, and work-in-progress (as described
above) 153.8 458.3
Cash generated from operations before investment
in land, net of land creditors, and work-in-progress 526.7 572.9
-------- --------
-- Adjusted gearing - This is calculated as the total of net
cash/(debt) and land creditors divided by total equity. The
Directors believe that land creditors are a source of long-term
finance so this provides an alternative indicator of the financial
stability of the Group.
-- Gearing - This is calculated as net debt divided by total
equity. The Directors consider this to be a good indicator of the
financial stability of the Group.
-- Order book - This is calculated as the total expected sales
value of current reservations that have not legally completed. The
Directors consider this to be an important indicator of the likely
future operating performance of the Group.
Principal risks and uncertainties
A risk register is maintained detailing all potential risks and
our risk management processes ensure that all aspects of the Group
are considered, from strategy through to operational execution
which includes any specialist business areas.
The risk register is reviewed as part of our management
reporting processes, resulting in the regular assessment of risk,
severity and any required mitigating actions. The severity of risk
is determined based on a defined scoring system assessing risk
impact and likelihood.
A summary of risks is reported to management, the Audit
Committee and the Board, which is mainly, but not exclusively,
comprised of risks considered to be outside of our risk appetite
after mitigation. This summary is reviewed throughout the year,
with the Board systematically considering the risks and any changes
that have occurred.
Once a year, via the Audit Committee, the Board determines
whether the risk management framework is appropriately designed and
operating effectively. The Directors confirm that they have
conducted a robust assessment of the principal risks facing the
Group.
The Board has completed its assessment of the Group's emerging
and principal risks. The following nine principal risks to our
business have been identified:
Risk and Strategic relevance KPIs Mitigation
description
Construction
resources * Failure to secure the required quantity and quality * Number of homes sold. * Robust forecasting and forward planning of labour and
Shortages of of resources causes delays in construction, impacting materials requirements.
building the ability to deliver volume growth targets.
materials * Operating profit.
and * Processes are in place to select, appoint, manage,
appropriately * Pricing pressures / increased costs impact returns. and build long-term relationships with subcontractors
skilled * Operating margin. and suppliers.
subcontractors
at competitive
prices. * EPS. * Review of subcontractor and supplier performance,
with regular communications to understand any
potential issues within their own business and supply
* Gross margin. chain.
* Customer satisfaction score. * Competitive rates and prompt payment.
-------------------------------------------------------------- ------------------------------------------------------------- ---------------------------------------------------------------
Economy and
market * Reduced affordability has a negative impact on * Number of homes sold. * Board level monitoring of the housing market and
Changes in customer demand for new homes and consequently our economic environment alongside key business metrics,
the external ability to generate sales at good returns. leading to development of action plans as necessary.
environment * Operating profit.
(including,
but not * Disciplined operating framework, strong balance sheet
limited * Operating margin. and low financial gearing.
to, house
price
inflation, * RoCE. * Product range and pricing strategy based on regional
interest market conditions.
rates,
mortgage * EPS.
availability, * Regular engagement with industry peers,
unemployment, representative bodies, and new build mortgage
Government * Gross margin. lenders.
housing policy
and
post-Brexit * Customer Satisfaction score. * Use of sales incentives such as part-exchange, and
trade Government-backed schemes to encourage the selling
agreements) process.
reduce the * Reservation rate.
affordability
of new homes. * Quarterly site valuations and monthly budget reviews
* Order book value. based on latest market data.
-------------------------------------------------------------- ------------------------------------------------------------- ---------------------------------------------------------------
Environment
and climate * There is an increased focus on the actions taken by * Tonnes of carbon emissions per legal completion. * Continual monitoring of new and evolving requirements
change businesses in response to climate change and the as part of our legal and regulatory compliance
Failure to disclosures made. Failure to improve policies, framework, including TCFD, the Future Homes Standard
evolve reporting and performance in line with new Government * Percentage of renewable electricity. and the Environment Act.
sustainable regulations and heightened social / market
business expectations could lead to financial penalties and
practices reputational damage. * Tonnes of waste per home built. * Climate change and carbon reduction is a key priority
and operations under the Group's 'Better with Bellway'
in response sustainability strategy.
to climate * The physical impacts of climate change (such as * Percentage of waste diverted from landfill.
change, extreme weather) could lead to disruptions within the
including supply chain and build programmes. * Dedicated sustainability, innovations and
physical biodiversity resource in place to assess risks
environmental relating to climate change, monitor performance and
impacts and drive improvement.
transition
risks
associated * Consultation with specialist external advisors and
with new subject matter experts (e.g. sustainability
regulation, consultants).
reporting
requirements,
and increased * Regular review of the design and features of new
social / homes, along with construction methods and the
market sustainability of materials, to increase energy
expectations. efficiency and reduce waste.
* Investment in energy-saving measures for offices and
sites, including transition to REGO certified
electricity.
* Development of science-based carbon reduction
targets.
-------------------------------------------------------------- ------------------------------------------------------------- ---------------------------------------------------------------
Health and
safety * Failure to maintain safe working conditions would * Number of RIDDOR seven-day reportable incidents per * Health and safety policy and procedures in place,
A serious impact employee wellbeing and the creation of a 100,000 site operatives. supported by Group-wide training.
health positive working environment.
and safety
breach and/or * Health and safety incident rate. * Regular visits to sites by both our Group Health and
incident * Injury to an individual whilst at one of our business Safety function (independent of divisions) and
occurs. locations could delay construction and result in external specialist consultants to monitor standards
criminal prosecution, civil litigation, and * Number of NHBC Pride in the Job Awards. and performance against health and safety policies
reputational damage. and legislation.
* The Board considers health and safety matters at each
meeting.
-------------------------------------------------------------- ------------------------------------------------------------- ---------------------------------------------------------------
Human
resources * Failure to attract and retain people with appropriate * Employee turnover. * Continued development of our Group HR function and
Inability to skills would affect our ability to perform and implementation of our people strategy.
attract, deliver our strategy and volume growth targets.
recruit * Number of graduates, trainees, and apprentices.
and retain * Established human resources programme for apprentices,
high quality graduates, and site management.
people. * Employees who have worked for the Group for 10 years
or more.
* Monitoring of staff turnover and analysis of feedback
from exit interviews.
* Training days per employee.
* Competitive salary and benefits packages which are
* Senior management gender split. regularly reviewed and benchmarked.
* Percentage of staff in earning and learning roles. * Employee engagement activities undertaken, including
an annual survey, with results communicated to the
Board.
* Employee engagement survey response rate.
* Succession plans in place and key person dependencies
identified and mitigated.
* Robust programme of training provided to employees
which is regularly updated and refreshed.
* Development programmes for senior leaders and middle
managers in place.
-------------------------------------------------------------- ------------------------------------------------------------- ---------------------------------------------------------------
IT and
security * Poor performance of our systems would disrupt * Operating profit. * Continued investment in infrastructure and systems.
Failure to operational activity and impact the delivery of our
have suitable strategy.
IT systems * Operating margin. * Group-wide systems in operation which are centrally
in place that controlled by an in-house IT function, supported by a
are * An IT security breach could result in the loss of specialist outsourced provider.
appropriately data, with significant potential fines and * RoCE.
supported and reputational damage.
secured. * IT security policy and procedures in place with
* EPS. regular Group-wide training.
* Gross margin. * Regular review and testing of our IT security
measures, contingency plans and policies.
* Customer Satisfaction score.
* Security Committee in place.
-------------------------------------------------------------- ------------------------------------------------------------- ---------------------------------------------------------------
Land and
planning * Insufficient land at appropriate margins, onerous * Number of homes sold. * Continued development of our Group Strategic Land
Inability to planning conditions or a failure to obtain planning function and implementation of our land strategy.
source approval within appropriate timescales would
suitable exacerbate the challenge of developing new homes, * Operating profit.
land at restrict our ability to deliver volume growth targets * Increased investment in land and more sites with
appropriate and impact future returns. detailed planning permission (DPP).
gross margins * Operating margin.
and return
on capital * Regular review by both Group and divisions of the
employed. * RoCE. quantity, location, and planning status of land
against growth targets to ensure our land bank
Delays and supports immediate, medium-term, and strategic
complexity * EPS. requirements.
in the
planning
process. * Gross margin. * Formal land acquisition process in place for the
appraisal and approval of all land purchases,
including pre-purchase due diligence and Group level
* Number of plots in owned and controlled land bank challenge of viability assumptions.
with DPP.
* Group and divisional planning specialists in place to
* Number of plots in 'pipeline'. support the securing of implementable planning
permissions.
* Number of plots in strategic land bank - positive
planning status.
* Number of plots in strategic land bank - longer-term
interests.
* Number of plots acquired with DPP.
* Number of plots converted from medium-term
'pipeline'.
-------------------------------------------------------------- ------------------------------------------------------------- ---------------------------------------------------------------
Legal and
regulatory * Lack of an appropriate compliance framework and/or * Number of homes sold. * In-house expertise from Group functions such as
compliance compliance breaches could incur fines, delay business Company Secretariat, Legal, Health and Safety and
Failure to operations and lead to re-work across sites, which Technical / Design, who advise and support divisions
comply with will impact our reputation and profitability. * Operating profit. on legal compliance and regulatory matters.
legislation
and regulatory
requirements. * Operating margin. * Consultation with Government agencies, specialist
external legal advisors and subject matter experts,
(e.g., fire safety engineers).
* RoCE.
* Strengthened Group-wide policies, guidance, and
* EPS. training in place supported by externally facilitated
whistleblowing and reporting procedures.
* Gross margin.
* Continual monitoring and review of changes to
legislation and regulation, including Government
guidance, advice notes and sector specific updates.
* Regular liaison with industry peers and the HBF on
compliance requirements and matters.
-------------------------------------------------------------- ------------------------------------------------------------- ---------------------------------------------------------------
Unforeseen
significant * The economic uncertainty brought about by an * NAV. * Strong balance sheet, low financial gearing,
event unforeseen significant event, could materially impact committed bank loan facilities and USPP debt which
An unforeseen the Group's operations and liquidity. would help ensure resilience during a recession.
significant * Operating profit.
national or
global event * Damage to reputation if the Group is not perceived to * Maintenance of business resilience and continuity
occurs. be following Government guidelines and acting * Operating margin. plans covering offices, sites, and IT.
responsibly.
* RoCE. * Experienced and well-established senior management
* We are also mindful of the continuing conflict and team.
humanitarian crisis in Ukraine. We continue to
monitor the situation, acknowledging the potential * EPS.
impact on the UK economy, supply chains and * Continued investment in systems and infrastructure to
inflation. enable robust home working.
* Total dividend per ordinary share.
* Monitoring of Government guidelines (including Public
* Gross margin. Health England and the Construction Leadership
Council).
* Reservation rate.
* Regular communications with subcontractors and
suppliers to understand their position and any
* Order book value. potential issues with their own supply chain.
* Employee turnover.
-------------------------------------------------------------- ------------------------------------------------------------- ---------------------------------------------------------------
The Group also considers any emerging risks that have the
potential to impact the achievement of our strategy, but which
cannot yet be fully defined and assessed. These uncertainties are
reviewed as part of our established risk management framework,
discussed regularly by management, the Audit Committee and the
Board, and elevated to principal risks (either as new risks or an
extension of existing risks) when warranted.
Glossary
Affordable Housing
Social rented and intermediate housing provided to specified
eligible households whose needs are not met by the market, at a
cost low enough for them to afford, determined with regard to local
incomes and local house prices. It is generally provided by
councils and not-for-profit organisations such as housing
associations.
Average Selling Price
Calculated by dividing the total price of homes sold by the
number of homes sold.
Biodiversity Net Gain ('BNG')
Is an approach to development and land management, that aims to
leave the natural environment in a measurably better state than it
was beforehand.
Brownfield
Land which has been previously used for other purposes.
Cancellation Rate
The rate at which customers withdraw from a house purchase after
paying the reservation fee, but before contracts are exchanged,
usually due to difficulties in obtaining mortgage finance.
Reservation fees are refunded in accordance with the New Homes
Quality Code.
Community Infrastructure Levy ('CIL')
The CIL is a tool for local authorities in England and Wales to
help deliver infrastructure to support the development of the
area.
COVID-19
COVID-19 is a disease caused by a new strain of coronavirus.
'CO' stands for corona, 'VI' for virus, and 'D' for disease.
Formerly, this disease was referred to as '2019 novel
coronavirus' or '2019-nCoV'. COVID-19 has been characterised as a
pandemic by the World Health Organization.
DLUHC
Department for Levelling up, Housing and Communities.
DEFRA
Department for Environment, Food and Rural Affairs.
Earnings per Share ('EPS')
Profit attributable to ordinary equity shareholders divided by
the weighted average number of ordinary shares in issue during the
financial year, excluding the weighted average number of ordinary
shares held by the Bellway Employee Trust (1992) which are treated
as cancelled.
Energy Savings Opportunity Scheme ('ESOS')
The ESOS is a mandatory energy assessment scheme for large
organisations in the UK.
Executive Board
The Executive Board is made up of the Executive Directors of
Bellway p.l.c.
Global Reporting Initiative ('GRI')
GRI standards are global standards for sustainability
reporting.
Greenhouse Gas ('GHG')
GHGs are gases that contribute to the greenhouse effect by
absorbing infrared radiation. Carbon dioxide and
chlorofluorocarbons are examples of greenhouse gases.
Home Builders' Federation ('HBF')
The HBF is an industry body representing the homebuilding
industry in England and Wales. It represents member interests on a
national and regional level to create the best possible environment
in which to deliver new homes.
Help-to-Buy
The Help-to-Buy equity loan scheme is a government scheme which
provides equity loans to both first-time buyers and home movers on
newly constructed homes, subject to regional price caps. Buyers
have to contribute at least 5% of the property price as a deposit
and obtain a mortgage of up to 75% (55% in London) and the
government provides a loan for up to 20% (40% in London) of the
price.
Land Bank
The land bank is comprised of three tiers: i) owned or
unconditionally contracted land with an implementable detailed
planning permission ('DPP'); ii) medium-term 'pipeline' land owned
or controlled by the Group, pending an implementable DPP; iii)
strategic long-term plots which currently have a positive planning
status and are typically held under option.
Land with DPP
Plots owned or unconditionally contracted by the Group where
there is an implementable detailed planning permission.
Legacy Building Safety Provision
Included within this provision, there are two components (i) SRT
and associated review, and (ii) Structural defects provision.
Mortgage Market Review ('MMR')
The MMR was a comprehensive review of the mortgage market which
introduced reforms to deliver a mortgage market that is sustainable
and works better for consumers.
National Planning Policy Framework ('NPPF')
The NPPF sets out the government's planning policies for England
and how these are expected to be applied.
It provides a framework within which local people and their
accountable councils can produce their own distinctive local and
neighbourhood plans, which reflect the needs and priorities of
their communities.
National House Building Council ('NHBC')
The NHBC is the leading warranty insurance provider and body
responsible for setting standards of construction for UK
housebuilding for new and newly converted homes.
Net legacy building safety expense
This contains the income statement movements in relation to the
legacy building safety provision and any associated reimbursement
assets.
New Homes Bonus ('NHB')
The NHB was introduced in 2011 by the coalition government with
the aim of encouraging local authorities in England to grant
planning permissions for the building of new houses in return for
additional revenue. Under the scheme, the government has been
matching the council tax raised on each new home built in
England.
New Homes Ombudsman Service ('NHOS')
The NHOS was introduced with the aim to provide dispute
resolution for, and determine complaints by, buyers of new build
homes.
New Homes Quality Board ('NHQB')
An independent not-for-profit body which was established for the
purpose of developing a new framework to oversee reforms in the
build quality of new homes and the customer service provided by
developers.
New Homes Quality Code ('NHQC')
An industry code of practice that lays out a mandatory set of
requirements which must be adopted and observed by all registered
developers.
Pipeline
Plots owned or contracted by the Group, pending an implementable
detailed planning permission, with development generally expected
to commence within the next three years.
Planning Permission
Usually granted by the local planning authority, this permission
allows a plot of land to be built on, change its use or for an
existing building to be redeveloped or altered.
Permission is either 'outline' when detailed plans are still to
be approved, or 'detailed' when detailed plans have been
approved.
Residential Property Developer Tax ('RPDT')
RPDT is a tax, introduced in April 2022, which is charged at a
rate of 4% on certain profits of companies carrying out
residential property development.
RIDDOR
RIDDOR refers to the Reporting of Injuries, Diseases and
Dangerous Occurrences Regulations 2013. The regulations require an
employer to report any absence by an employee of seven days or more
caused by an accident at work to the Health and Safety
Executive.
Science Based Target initiative ('SBTi')
Science-based targets provide companies and financial
institutions with a clearly defined pathway to future-proof growth
by specifying how much and how quickly they need to reduce their
greenhouse gas emissions.
Section 75 and Section 106 Planning Agreements
These are legally-binding agreements or planning obligations
entered into between a landowner and a local planning authority,
under section 75 of the Town and Country Planning (Scotland) Act
1997 or section 106 of the Town and Country Planning Act 1990.
These agreements are a way of delivering or addressing matters that
are necessary to make a development acceptable in planning terms.
They are increasingly used to support the provision of services and
infrastructure, such as highways, recreational facilities,
education, health and affordable housing.
Self-Remediation Terms ('SRT')
Is a commitment to remediate buildings over 11 metres in height
with identified life critical fire safety issues, which were
constructed in England and Wales since 5 April 1992.
Site/Phase
A site is a concise area of land on which homes are being
constructed. Larger sites may be divided into a number of phases
which are developed at different times.
Social Housing
Housing that is let at low rents and on a secure basis to people
in housing need. It is generally provided by councils and
not-for-profit organisations such as housing associations.
SONIA
SONIA is the Sterling Overnight Index Average, and is an
important interest rate benchmark. It is calculated and published
by the Bank of England.
Strategic Plots
Longer-term plots which are typically held under option.
Sustainability Accounting Standards Board ('SASB')
SASB have developed a set of industry standards which identify
the minimal set of financially material sustainability topics and
their associated metrics for the typical company in an industry to
report against.
Task Force on Climate Related Financial Disclosures ('TCFD')
TCFD was created by the Financial Stability Board to develop
consistent climate-related financial risk disclosures.
Total Shareholder Return ('TSR')
The total return of a share to an investor, or the capital gain
plus dividends.
The 5% Club
Members of The 5% Club aspire to achieve 5% of their workforce
in 'earn and learn' positions (including apprentices, sponsored
students and graduates on formalised training schemes) within 5
years of joining.
Underlying
Throughout the Annual report and Accounts, underlying refers to
any statutory performance measure or alternative performance
measure which is before net legacy building safety expense and
exceptional items. The Group believes that underlying metrics are
useful for investors as these measures are closely monitored by the
Directors in assessing Bellway's operating performance, thereby
allowing investors to understand and evaluate performance on the
same basis as management.
United Nations Sustainable Development Goals ('SDGs')
The SDGs are a collection of 17 interlinked global goals
designed to be a 'shared blueprint for peace and prosperity for
people and the plant, now and into the future'.
Certain statements in this announcement are forward-looking
statements which are based on Bellway p.l.c.'s expectations,
intentions and projections regarding its future performance,
anticipated events or trends and other matters that are not
historical facts. Such forward-looking statements can be identified
by the fact that they do not relate only to historical or current
facts. Forward-looking statements sometimes use words such as
"aim", "anticipate", "target", "expect", "estimate", "intend",
"plan", "goal", "believe", or other words of similar meaning. These
statements are not guarantees of future performance and are subject
to known and unknown risks, uncertainties and other factors that
could cause actual results to differ materially from those
expressed or implied by such forward-looking statements. Given
these risks and uncertainties, prospective investors are cautioned
not to place undue reliance on forward-looking statements.
Forward-looking statements speak only as of the date of such
statements and, except as required by applicable law, Bellway
p.l.c. undertakes no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise.
This information is provided by RNS, the news service of the
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END
FR UNVBROAURAAA
(END) Dow Jones Newswires
October 17, 2023 02:00 ET (06:00 GMT)
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