www.bellway.co.uk
Bellway p.l.c.
Seaton Burn House,
Dudley Lane,
Seaton Burn,
Newcastle upon Tyne
NE13 6BE
Tel: (0191) 217 0717
Fax: (0191) 236 6230
DX: 711760 Seaton Burn
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Annual Report & Accounts 2009
www.bellway.co.uk
Introduction
Bellway p.l.c.
Annual Report & Accounts 2009
Since its formation more
than 50 years ago, Bellway
has built over 100,000
homes. It is recognised
throughout the industry
for building quality homes.
Contents
Business Review
Financial Highlights
Chairman’s Statement
Chief Executive’s Operating Review
Corporate Responsibility Policy
2009 Corporate Responsibility Statement
Key Performance Indicators
Environmental Policy Statement
Financial Review
Operating Risk Statement
Governance
Board of Directors
Advisers
Report of the Directors
Report of the Board on Directors’ Remuneration
Statement of Directors’ Responsibilities in respect
of the Annual Report and Accounts
Independent Auditors’ Report to the
Members of Bellway p.l.c.
Accounts
Group Income Statement
Statements of Recognised Income and Expense
Balance Sheets
Cash Flow Statements
Accounting Policies
Notes to the Accounts
Other Information
Five Year Record
Shareholder Information
Notice of Annual General Meeting
Notes
Principal Offices
Front cover:
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02
06
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35
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Inside Back Cover
Bellway p.l.c.
Seaton Burn House, Dudley Lane, Seaton Burn, Newcastle upon Tyne NE13 6BE
Tel: (0191) 217 0717; Fax: (0191) 236 6230; DX: 711760 Seaton Burn; Website: www.bellway.co.uk
NORTHERN REGION
SOUTHERN REGION
Bellway Homes Limited
Wessex
Bellway House
Embankment Way
Castleman Business Centre
Ringwood
Hampshire BH24 1EU
Tel: (01425) 477 666
Fax: (01425) 476 774
DX: 45710 Ringwood
OTHER SUBSIDIARY
Bellway Housing Trust Limited
Seaton Burn House
Dudley Lane
Seaton Burn
Newcastle upon Tyne
NE13 6BE
Tel: (0191) 217 0717
Fax: (0191) 236 6230
DX: 711760 Seaton Burn
East Midlands
No. 3 Romulus Court
Meridian East
Meridian Business Park
Braunstone Town
Leicester LE19 1YG
Tel: (0116) 282 0400
Fax: (0116) 282 0401
North East
Peel House
Main Street, Ponteland
Newcastle upon Tyne
NE20 9NN
Tel: (01661) 820 200
Fax: (01661) 821 010
DX: 68924 Ponteland 2
North West
Bellway House
2 Alderman Road
Liverpool L24 9LR
Tel: (0151) 486 2900
Fax: (0151) 336 9393
Scotland
Bothwell House
Hamilton Business Park
Caird Street
Hamilton ML3 0QA
Tel: (01698) 477 440
Fax: (01698) 477 441
DX: HA13 Hamilton
West Midlands
Bellway House
Relay Point
Relay Drive, Tamworth
Staffordshire B77 5PA
Tel: (01827) 255 755
Fax: (01827) 255 766
DX: 717023 Tamworth
Yorkshire
2 Deighton Close
Wetherby
West Yorkshire LS22 7GZ
Tel: (01937) 583 533
Fax: (01937) 548 443
DX: 16815 Wetherby
Essex
Bellway House
1 Rainsford Road
Chelmsford
Essex CM1 2PZ
Tel: (01245) 259 989
Fax: (01245) 259 996
DX: 121935 Chelmsford 6
North London
Bellway House
Bury Street, Ruislip
Middlesex HA4 7SD
Tel: (01895) 671 100
Fax: (01895) 671 111
Northern Home Counties
Oak House
Woodlands Business Park
Breckland, Linford Wood
Milton Keynes MK14 6EY
Tel: (01908) 328 800
Fax: (01908) 328 801
DX: 729383 Milton Keynes 16
South East
Bellway House
London Road North
Merstham
Surrey RH1 3YU
Tel: (01737) 644 911
Fax: (01737) 646 319
Thames Gateway
Osprey House
Crayfields Business Park
New Mill Road
Orpington
Kent BR5 3QJ
Tel: (01689) 886 400
Fax: (01689) 886 410
Wales
Alexander House
Excelsior Road
Western Avenue
Cardiff CF14 3AT
Tel: (029) 2054 4700
Fax: (029) 2054 4701
Top left – Aspire, Chelmsford, Essex.
Right – Employee Tanya Davies at The Edge development
in Bocking, Essex.
Middle – Rubicon, London Borough of Greenwich.
Bottom left – Blakenhall, Wolverhampton, West Midlands.
Designed and produced by Radley Yeldar www.ry.com
Printed on paper sourced from sustainable sources, using vegetable-based inks.
01
Financial Highlights
Bellway p.l.c.
Annual Report & Accounts 2009
Completed sales
4,380 homes
(2008 – 6,556)
Average price achieved
£154,005
(2008 – £169,729)
Total Group revenue
£683.8m
(2008 – £1,149.5m)
Exceptional items
£66.3m
(2008 – £130.9m)
Final dividend for the year
6.0p
(2008 – 6.0p)
* Pre-exceptional items (note 5)
Profit before taxation
£29.8m*
(2008 – £165.7m)*
Earnings per ordinary share
17.7p*
(2008 – 104.2p)*
Gearing of
3.8%
having reduced borrowings by £180.9m to £36.8m
(excluding preference shares) (2008 – 21.7%)
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Chairman’s Statement
Bellway p.l.c.
Annual Report & Accounts 2009
Quality
We build homes of quality and character
that provide good value for money.
03
Bellway p.l.c.
Annual Report & Accounts 2009
“I am pleased to report that the Group ended the year with net bank
borrowings of £36.8 million (2008 – £217.7 million), a £180.9 million
reduction.”
Strategy
In the summer of 2008 the ghosts of the
last major recession loomed large, with a
deteriorating economy, low consumer
confidence and poor mortgage availability.
The primary strategy of the Board, at that
time, was simply to repeat the lessons learnt
in previous downturns, make cash generation
a priority and a target was set to reduce the
opening debt position of £217.7 million
(excluding the preference share capital of
£20 million) by £100 million by the year end.
If achieved, this would generate the necessary
headroom in relation to our bank facilities of
£370 million, providing the Group with a
platform for expansion when the housing
market returned to more normal conditions.
At the same time the Group was also
determined to continue, where possible, to
sell homes at positive margins throughout the
financial year.
I am pleased to report that the Group
ended the year with net bank borrowings
of £36.8 million (2008 – £217.7 million),
a £180.9 million reduction, significantly
exceeding the internal target and resulting
in gearing of 3.8% at the year end
(2008 – 21.7%). The forward order book
at 31 July 2009 stood at £368 million
(2008 – £370 million) equivalent to 58%
of this year’s planned output.
The Results
The Group completed the sale of
4,380 homes, a fall of 33% from last year’s
6,556 homes. The average selling price was
lower at £154,005 (£169,729 in 2008),
consequently housing turnover fell by 39%
from £1,112.7 million to £674.5 million.
Other revenue was £9.3 million (2008 –
£36.8 million), giving total revenue for the
Group of £683.8 million. Sales incentives
had to be used extensively and this
contributed significantly in the operating
margin (pre-exceptional) reducing
from 16.1% to 6.7%.
When house prices continued to fall
throughout August to December 2008,
it became necessary to further review the
net realisable value of land and work in
progress at January 2009. From this arose
an exceptional charge of £66.3 million.
In the second half, whilst fragile, some
stability returned to the market and
further exceptional write-downs have
not been necessary.
As previously stated, in partnership with
our banks, the Group’s facilities were
re-negotiated in April 2008. Low borrowings,
significant reductions in overhead and land
and work in progress expenditure have
resulted in a 24.6% fall in the net interest
charged to £8.9 million compared with
£11.8 million in 2008. When the technical
financing charges are added the net finance
charge has fallen from £19.1 million to
£15.8 million. The loss before tax for the
year after exceptional items is £36.6 million
(£34.8 million profit in 2008), giving a basic
loss per share of 23.9p (2008 – 23.6p
earnings). The net asset value per ordinary
share at 31 July 2009 stands at 839p
(2008 – 871p).
Share Placing
Whilst the debt reduction programme has
been successful, the industry is, nonetheless,
cyclical in nature and future earnings growth
is dependent upon many factors, most
notably opportunistic land acquisition. In the
spring of 2009, notwithstanding the fragile
economic climate, some early indications of
price and volume stability began returning to
the housing market, albeit at lower volume
levels. The Board took the view that the time
may be right to begin selectively acquiring
land again, especially in the south of England.
In order to help finance this strategy,
5.7 million shares were placed with existing
and new institutional shareholders on
6 August 2009, raising net proceeds of
£43.7 million. This additional capital, combined
with current banking facilities, ensures that the
Group is in an excellent position to enter the
land market, as appropriate opportunities
arise.
Dividend
In these testing times for the industry, the
Board is delighted that it still feels able to pay
dividends and is therefore proposing to
maintain the final dividend at last year’s level
of 6.0p, resulting in a total dividend for the
year of 9.0p (2008 – 24.1p) per ordinary
share. The payment of the dividend takes into
account the favourable current forward order
position and the strength of the Group’s
balance sheet.
The dividend will be paid on Wednesday
20 January 2010, to all ordinary shareholders
on the Register of Members on Friday
11 December 2009. The ex-dividend date
is Wednesday 9 December 2009.
fThe Edge, Bocking, Essex.
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Chairman’s Statement continued
Bellway p.l.c.
Annual Report & Accounts 2009
f Fairfield Place, Stowmarket, Suffolk.
s Burtons Farm Park, North Solihull,
West Midlands (part of the Solihull
regeneration project).
05
Bellway p.l.c.
Annual Report & Accounts 2009
“With national coverage, a robust balance sheet and low gearing,
the Board believes Bellway is well positioned.”
People
Whilst the human cost of the downturn
should not be underestimated, looking
forward the Board believes the Group’s
strategy of maintaining a largely autonomous
divisional management structure creates the
ideal environment for individual talent to
flourish and for the divisional teams to
respond to local market conditions.
The Board believes it is important to provide
appropriate incentives for employees to
participate in the recovery that will take place
when the market finally shows signs of
long–term sustainable improvement.
The Group will continue to utilise incentive
based remuneration structures to reward
key personnel at all levels for significant
contribution to the expansion of the business.
This includes the operation of a Save As
You Earn Share Scheme which is open to
all employees.
Delivering these objectives in difficult market
conditions is not easy and the Board would
like to sincerely thank all staff, past and
present, together with the Group’s suppliers
and sub-contractors, for their commitment to
the business over the past 12 months.
The Board
On behalf of the Board, I would like to thank
David Perry for his invaluable contribution to
the Group’s progress during his ten years of
service with Bellway as a non-executive
director. David will be retiring at the AGM in
January 2010 and we wish him a long and
happy retirement. At the same time we
welcome on to the Board, in his place, John
Cuthbert, a Chartered Accountant, and
current Managing Director of Northumbrian
Water Group plc, who will be joining the
Group as a non-executive director in
November 2009.
Looking Forward
Since the beginning of August the market
place has remained incentive led but
reservations are 58% ahead compared to
the same period 12 months ago. At the end
of September Bellway had secured 61% of its
target output for the year ending July 2010
and a further 440 reservations for 2010/11.
It is the Group’s intention to selectively open
new outlets, increase work in progress and
acquire land, particularly in the south of
England, at attractive margins whilst at the
same time carefully monitoring the overall
strength of the autumn housing market.
Since 1 August the Group has contracted or
agreed terms in respect of the acquisition
of over £120 million of land where there
is potential to develop in excess of
3,370 homes.
The pace of economic recovery is still
uncertain with lack of mortgage availability,
especially for first time buyers, potential
unemployment and political uncertainty all
remaining a threat to consumer confidence.
However, with national coverage, a robust
balance sheet and low gearing, the Board
believes Bellway is well positioned should any
or all of these uncertainties prove not to be
an issue in the coming months.
Howard C Dawe
Chairman
12 October 2009
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06
Chief Executive’s Operating Review
Bellway p.l.c.
Annual Report & Accounts 2009
Choice
We create homes that people want,
designed to meet local requirements.
07
Bellway p.l.c.
Annual Report & Accounts 2009
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“The beginning of 2009 brought a welcome change for most of our
divisions. Visitor levels increased and, more importantly, the weekly
reservation rate effectively doubled. This improved market continued
through to 31 July as tentative signs of stabilisation emerged.”
Introduction
Bellway commenced the financial year with a
reduced structure of 13 trading divisions.
At the start of the year, mortgage approvals
had dropped to around 33,000 per month,
the lowest number since records began in
1993. This receding tide of finance, coupled
with low consumer confidence, dictated
strategy and meant that the Group was
about to enter what can be described as a
period of partial hibernation.
The Housing Market
The weekly sales rates and the market in
general had started to deteriorate in spring
2008 and continued through to December
2008. During this time visitor levels across all
outlets were extremely low with some sites
seeing as few as five visitors per week and
this, combined with cancellation rates running
at an all time high of 26%, resulted in the level
of reservations being around 50% below the
prior year at an average of just 56 sales per
week at that time. However, the beginning of
2009 brought a welcome change for most of
our divisions. Visitor levels increased and,
more importantly, the weekly reservation
rate effectively doubled. This improved
market continued through to 31 July as
tentative signs of stabilisation emerged.
Against this background the Group legally
completed the sale of 4,380 homes
compared with 6,556 in 2008. The average
selling price reduced to £154,005 from
£169,729 in 2008.
To achieve this, our sales teams used a variety
of incentives on virtually every home to
attract buyers. For example, first time buyers
require increased deposits as a result of
lenders’ tightening mortgage criteria and as a
consequence the Group’s shared equity
scheme “Opening Doors” became attractive
to this type of buyer. Whilst typically we
receive only 75% of the selling price on legal
completion, the balance is owed to the
Company and is repaid when the client
ultimately sells or re-mortgages. The 25%
stake is viewed as a deposit by lenders. This
scheme was used in almost 14% of sales and
a similar scheme “HomeBuy Direct” has now
been initiated by the government through
the Homes & Communities Agency.
Whilst private investors found access to the
mortgage market increasingly difficult the
Group found an appetite, especially from
southern housing associations to acquire
properties over and above the section 106
planning requirement. The Thames Gateway
division has been particularly active in this
area and on several occasions during the year
sold 100% of a development to a housing
association.
When combined with normal section 106
planning obligations, sales to housing
associations represented some 34% of total
output or 1,484 homes. Part exchange
conversely was used to a lesser extent by the
sales teams in only 7% of transactions as
buyers found the lenders’ lower valuations
more difficult to overcome. Consequently
our part exchange stock of £40.6 million at
1 August 2008 had reduced to £8.0 million
by the year end.
f Customer Samantha Allen at Prospect Place,
Grangetown, Cardiff, loved the fact she
could choose from a large range of options
to personalise her new home.
Divisional Performance
The six northern divisions sold 1,833 homes,
a decrease of 45% from the previous year’s
3,348 homes, with the average selling price
falling by 14.7% to £134,200 (2008 –
£157,300). As the economy in this region
receded more quickly especially in Scotland,
Yorkshire and the North West, consumer
demand eroded rapidly in these locations.
In the East and West Midlands divisions
we have been able to access the funding
provided by the various government
initiatives and as a consequence some
30% of completions in these two divisions
were sold to housing associations.
The seven southern divisions sold 2,547
homes (2008 – 3,208), a stronger
performance than the North and only
21% below the previous year’s volumes.
The average selling price in the region fell by
only 7.9% to £168,300 (2008 – £182,700).
The Essex and South East divisions actually
increased output compared to 2008, the only
divisions to do so. Generally developments
in and around London, whether they be
apartments or more traditional housing, have
proved more resilient compared to other
parts of the country. This factor is strongly
influencing the Group’s land buying policy at
the present time.
Business Focus
With uncertainty in both the housing market
and the wider economy generally, the Board
decided to attempt to place the Group
in a sound financial position to protect
shareholder value in the downturn and
create an opportunity for growth in the long
term. A target was set at the beginning of the
financial year to further reduce borrowings
by £100 million to pursue the following
objectives:-
8
For more information
visit our website
www.bellway.co.uk
08
Chief Executive’s Operating Review continued
Bellway p.l.c.
Annual Report & Accounts 2009
f Phoenix Park, Letchworth, Hertfordshire.
s An interior view at our development at
Millbank, Greenfield, Greater Manchester.
09
Bellway p.l.c.
Annual Report & Accounts 2009
“The Group has around 33,260 plots at its disposal within its short
and medium-term land holdings. This is equivalent to over seven
years’ supply at current output and excludes long-term or strategic
land which amounts to around 3,900 plots, typically made up of
greenfield land held under option and brownfield regeneration
opportunities.”
Levels 3 and 4 of the government’s Code for
Sustainable Homes. However, notwithstanding
these pressures it is hoped that lower costs
will persist for some time thereby offsetting in
part any further sales incentives that may
need to be offered to conclude reservations.
Land
The control of land expenditure was also a
key component in reducing debt levels and
therefore another cautious approach
throughout the year was maintained. Land
owners and their advisers are adjusting to
lower land values and the operating divisions
were instructed wherever possible to
withdraw from conditional contracts and
options that were considered to be no longer
viable. Consequently, our land expenditure fell
to only £93.3 million compared with £275
million in the previous year.
During the period only 1,580 plots were
acquired, and as a result, land held with
planning permission has reduced to some
19,260 plots. Land owned, contracted or held
under option currently awaiting planning
permission has stabilised and stands at 14,000
plots. Combined, therefore, the Group has
around 33,260 plots at its disposal within its
short and medium-term land holdings. This is
equivalent to over seven years’ supply at
current output and excludes long-term or
strategic land which amounts to around
3,900 plots, typically made up of greenfield
land held under option and brownfield
regeneration opportunities.
Restricting Work in Progress and Site
Openings
The carry forward position at the beginning
of the year stood at £370 million and the
majority of these homes had to be legally
completed in the financial year. However,
work in progress on existing outlets,
wherever possible, was restricted and on
new sites only those with forward sales and
low infrastructure costs were opened. During
the course of the year new construction was
restricted to 2,900 homes (2008 – 6,600)
and by the end of July 2009, 27 sites
remained mothballed. With regard to the
latter, layouts are being re-drawn to
accelerate the development of the housing
association element and, where possible, we
are also looking to introduce a larger
percentage of two storey housing.
As a result of the foregoing, the number of
sales outlets fell during the year from last
year’s average of 210 down to 170 and the
number of stock units reduced from 1,380 at
the beginning of the year to 650 at the year
end. We feel that a certain level of stock in
this market has advantages and therefore
further reductions are not envisaged.
Cost Base
The lower activity levels were an opportunity
not only to re-design layouts, if possible, but
more importantly to reduce the cost base.
With the workload drying up many
sub-contract orders were re-tendered and
with material and labour prices softening it is
estimated that around £5,000 to £6,000 was
saved on a typical family home of say 1,000
square feet over the course of the year. Of
course there are cost pressures in the shape
of higher planning fees, Home Information
Packs and the delivery of the new Code
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10
Chief Executive’s Operating Review continued
Bellway p.l.c.
Annual Report & Accounts 2009
Service
We are committed to providing a high level of personal service
from reservation to completion and after sales service.
11
Bellway p.l.c.
Annual Report & Accounts 2009
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f Century Fields, West Malling, Kent.
f f Customers Jonathan and Clare Turner
in front of their new Bellway home at
Ham Stone Court, Stalbridge, Dorset.
Looking Forward
The cash generated as a result of the partial
hibernation policy greatly exceeded our
expectations and the Group ended the year
with only £36.8 million of net bank debt, a
reduction of £180.9 million during the year.
Mortgage valuations are beginning to stabilise
and indeed the Council of Mortgage Lenders
has recently announced a further monthly
rise in gross lending in July, albeit some 42%
below the previous year. This stability, whilst
still fragile, is extremely welcome and,
consequently, the Group is now looking to
selectively increase both work in progress
expenditure and the number of outlets.
In addition, the Group intends to selectively
increase its land bank predominantly focusing
on the southern divisions provided current
market and general economic conditions
prevail and, since the year end, Bellway has
contracted new land at attractive margins.
On 6 August we announced a placing of 5.7
million new ordinary shares with new and
existing shareholders, realising £43.7 million
net of expenses. This enhances the Group’s
balance sheet and puts Bellway in an even
stronger position to expand as and when the
market shows tangible signs of recovery.
John K Watson
Chief Executive
12 October 2009
In a Code Level 3 home, for example, we
calculate that water-saving devices such as
flow restrictors, mixer taps and dual flushing
WCs will result in water consumption savings
of around 103 litres per person per day.
Whilst the Group has concluded significantly
fewer planning agreements during the course
of the year, we calculate, nevertheless, that
they will contribute over £2 million in total
towards community benefits in areas such as
new education facilities and healthcare.
Putting the Customer First
The Group has continued to improve the
quality and standard of finish of its new
homes. In an independent survey of 300
respondents returned at the end of March
2009, 89% (2008 – 80%) would recommend
a friend to purchase a Bellway home.
However, conversely 50% of respondents
found between one to five problems with
their new home after moving in. This is an
area where we will be specifically
concentrating in the coming months.
The quality of construction and presentation
of a new home is a reflection of the way a
site is organised and run. During the year 56
sites were registered under the Considerate
Constructors Scheme whereby additional site
inspections are undertaken by third parties. In
addition, despite having fewer outlets, we have
retained an in-house team of four health and
safety professionals who, on a systematic basis,
carry out regular detailed audits on all the
Group’s developments. It is anticipated that
this, together with constant training of site
management, will lead to a long-term
improvement in construction standards and
therefore greater levels of customer
satisfaction.
The holding cost of land and work in
progress was reviewed throughout the year.
During the first half, house prices continued
to fall and an exercise was carried out in
January 2009 which resulted in a land and
work in progress write-down of £58.9 million.
Together with a further write-down in
relation to part exchange stock and land
without planning consent of £7.4 million this
produced a total exceptional charge of
£66.3 million. In the second half, whilst fragile,
some stability returned to the market and
further exceptional write-downs were
considered unnecessary.
Environmental Issues
The efficient management of construction
waste benefits the environment whilst at the
same time improves cost control. Site waste
management plans on all sites have
contributed to almost 14,000 tonnes of
demolition material being re-used and all
plasterboard off-cuts being recycled.
Furthermore, around 1,025 homes were
completed during the year using timber
frame construction techniques. Using timber
from accredited managed sources not only
reduces waste going to landfill but, because
there are approximately 50 to 60 cubic feet
of additional timber in a typical 1,000 square
foot home, reduces the amount of masonry
used. This produces savings of around four
tonnes of CO2 for every home constructed
(Source – UK Timber Frame Association).
The government’s Code for Sustainable
Homes will require all new private homes to
achieve the new Code Level 3 Energy
Efficiency Standards from October 2010.
In moving towards these new requirements
the Group has delivered 428 homes to
these new standards in the financial
year (2008 – 48).
f We undertake to provide our customers
with the best possible service. In our latest
survey, 89% of our customers would
recommend a friend to purchase a
Bellway home.
12
Corporate Responsibility Policy
Bellway p.l.c.
Annual Report & Accounts 2009
Commitment
Through sustainable building we aim to create new communities and
lasting environments for people now and in the future.
Bellway believes that its reputation is critical
to the creation of long-term value for its
shareholders. We recognise that financial
success is reinforced by our behaviour
beyond the balance sheet. Protecting and
enhancing our reputation and social licence to
operate is a significant element of sustained
financial success.
At Bellway, the term Corporate Responsibility
describes how we manage the environmental,
social and economic effects of our business
and how these affect our employees,
customers, shareholders, suppliers, the
communities where we work and the
environment that we operate in, and goes
beyond our legal or regulatory obligations.
This policy sets out how we will operate
and drives the Group’s corporate
responsibility activity.
Through Bellway’s commitment to corporate
responsibility we will:
p engage and respond to stakeholders,
including shareholders, employees,
customers, government and communities
that we affect.
p comply with all relevant legislation as a
minimum standard.
p work towards recognised good practice in
sustainability and corporate responsibility.
p treat all employees fairly and invest in
training for the long term to bring out the
best in our people.
p provide a healthy and safe environment in
which to work through an effective health
and safety management system.
p report regularly to the Board and external
stakeholders on performance using
sustainability indicators.
The following structure has been put in place
to achieve these commitments:
p the Chief Executive is responsible for this
policy and advises the Board on all
corporate responsibility matters.
p demonstrate continual improvement in
p the Chief Executive is supported by the
our approach to sustainable developments
(in both design and practice).
p recognise and respond to the challenges
and opportunities that are presented by
climate change.
p invest in the communities we develop in
a way that contributes to local community
needs.
p manage our environmental footprint and
aim to enhance our performance in areas
where we operate, particularly in relation
to energy and waste.
p consider and respond to the social and
environmental effects of the homes we
develop and communities that we create.
p improve internal and external awareness of
our corporate responsibility programmes
and initiatives.
Sustainability Management Working Group
which includes senior employees from
across the Group who are responsible for
the development and review of this policy.
p the financial directors or managers of each
regional division are responsible for
implementation and reporting on
performance.
Bellway is committed to reporting annually
on its approach to corporate responsibility
and has established key performance
indicators to enable others to judge our
performance. This policy does not replace
existing policies on environment, health and
safety and wood procurement, but has been
developed to work in conjunction with them.
All policies are available on the Bellway
website www.bellway.co.uk and are
reviewed annually.
p The Retreat, Mildenhall, Suffolk.
13
Bellway p.l.c.
Annual Report & Accounts 2009
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Bellway p.l.c.
Annual Report & Accounts 2009
p Rubicon, London Borough
of Greenwich.
p p Prospectus, Chelmsford, Essex.
s This year we have re-used 13,843
tonnes of demolition material
on our sites.
15
2009 Corporate Responsibility Statement
Bellway p.l.c.
Annual Report & Accounts 2009
As one of the largest developers of new homes in the UK we realise
that Bellway has a significant role to play in combating climate change
and reducing greenhouse gas emissions.
Climate change is one of the biggest
challenges facing society today. It is clear that
the way we manage our businesses and live
our lives will have a profound affect on future
generations. Managing the energy used in our
homes and the way they are constructed will
play a significant role in limiting greenhouse
gas emissions.
As one of the largest developers of new
homes in the UK we realise that Bellway has
a significant role to play in combating climate
change and reducing greenhouse gas
emissions.
Recognising our responsibilities we have
developed the following five strategic
principles that steward our day-to-day
activities:
p protection of the environment in which
we are working.
p prudent use of natural resources.
p creating environments that have the
potential to add to economic growth and
employment opportunities.
p social considerations that recognise the
needs for a changing and advancing
population.
p the development of communities that will
endure and where people will aspire to live.
The construction industry was one of the
first sectors to be affected by the tightening
of credit markets, and for Bellway, this year
has been one of consolidation.
Notwithstanding this, we have continued to
make good progress in delivering more
homes that meet higher sustainability
standards. In line with our Climate Change
Policy, we have delivered 428 homes to Code
Level 3, which represents an increase of 380
over the corresponding period of 2008.
The Code measures the sustainability of a
home against nine specific design criteria
including the use of renewable energy, the
inclusion of water conservation systems and
the promotion of greener transport options.
It is intended to minimise the environmental
effects of the construction process and help
combat climate change and has been geared
to improve the environmental credentials of
homes over the long term. In meeting the
Code’s requirements we have installed 242
solar panels and 23 heat pumps. Water-saving
devices in a typical Bellway home will save
103 litres per person per day.
For several years Bellway has built a large
percentage of its production in timber frame.
Timber is a renewable material and we
estimate that for every timber frame home
we build we save about four tonnes of CO2
(about the same amount produced by driving
14,000 miles).
In addition to energy savings in the home,
when planning new sites we take into
account transport considerations and, where
possible, offer alternative options such as car
clubs and cycling to work schemes. This year
174 of our sites have been developed within
500 metres of a transport node and over
2,211 homes have access to a cycle store.
The careful management of waste can result
in significant benefits to the environment as
well as cost savings. Bellway recognised some
time ago the importance of managing waste
efficiently and has steadily been making
improvements to the way we manage our
site waste. This is particularly important as
the current landfill tax will rise from £40 per
tonne to £73 per tonne by 2013.
All Bellway sites operate Site Waste
Management Plans. These plans help to
reduce the amount of waste produced
which means less waste is sent to landfill, less
energy is used in transporting waste and
more materials are recycled. This year we
have saved more than £550,000 in landfill tax
by re-using 13,843 tonnes of demolition
material on our sites.
We measure our improvements in waste
management in terms of skips used per
home sold. Last year we reported that 4.3
skips had been used per home sold, this year
we have improved upon that measure and
have reduced the figure to 3.6 skips per
home sold. In addition to managing site waste,
all our offices recycle ink cartridges and
segregate waste paper.
The general public are becoming increasingly
aware of the need to reduce waste and, in
some sites, we have been able to introduce
waste segregation facilities in kitchens or
communal recycling facilities in apartment
schemes.
In 2004 we introduced our “Don’t let your
home get away with it” campaign and sent
all our customers good practice guidelines
detailing simple household management
practices they could follow that would benefit
the environment. This campaign is still running
today with all Bellway hand-over packs
containing a list of good practice guidelines
which we encourage our buyers to follow.
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2009 Corporate Responsibility Statement continued
Bellway p.l.c.
Annual Report & Accounts 2009
This year 84% of the land we developed was
brownfield, and over many years we have
built a successful track record for our
regenerative capabilities. Working in some of
the most challenging environments we have
returned derelict and deprived problem areas
back to the community. Where we are
working in North Solihull the physical
regeneration aims to improve the entire area
through the provision of new housing. The
business plan with our partners is shaped so
that the land receipts are recycled and money
is ploughed back into the community which
benefits local residents.
We are particularly pleased to have received
the “Major Housebuilder of the Year” award
this year. The award is judged by peers of the
industry and takes account of our approach
to customer satisfaction, design, sustainability,
planning and health and safety awareness.
The health and safety of our staff,
sub-contractors, and those visiting our
developments is of the utmost importance
to us. During the year we have instigated a
number of awareness campaigns to improve
site safety. We are pleased to report that we
have had no injuries on site involving broken
bones, as a consequence of regular tool box
talks, focusing on ladder campaigns to
eliminate the risk of falls from height and
working with the Health and Safety Executive
to bring greater awareness to working with
quick hitch buckets on excavators. Our
overall performance has improved for the
fourth consecutive year – lost time accidents
totalled 20, as opposed to 45 last year.
This year we have registered one in three of
our sites with the Considerate Constructors
Scheme. The Site Code of Considerate
Practice commits us to ensure that during the
build process we are considerate and
respectful good neighbours. The scheme is
monitored independently taking into account
site cleanliness, safety, environmental
awareness and ensures that we are
accountable and responsible in the manner in
which we steward our site operations.
f A donation from Bellway supported the
Great North Air Ambulance.
f fAldington Meadow, Aldington, Kent.
During the year we have also engaged our
employees in a local initiative and offered
them a cycle to work scheme enabling them
to make substantial savings on the purchase
of a new bicycle. For employees with young
children we have also provided childcare
vouchers which can be used towards the
cost of childcare, saving an employee around
£900 per year.
Bellway employees make a very real
difference to the communities in which they
work and we are proud of the contribution
our own staff make to many voluntary
organisations around the country. Regular
initiatives such as dress down days, raffles and
staff sponsorships result in valuable funding
for a variety of charitable causes throughout
the country.
The building industry provides an important
source of employment across a broad range
of specialist trades. Despite the very difficult
economic environment we have sought to
maintain our base of skilled craftsmen
including 30 apprentice positions. We have
also now started to recruit workers on a
limited scale and hope to continue building
our workforce as the economic climate
improves.
Considerate Constructors Scheme
The Considerate Constructors Scheme is the national initiative
set up by the construction industry to improve its image.
Sites and companies that register with the Scheme sign up to
and are monitored against a Code of Considerate Practice,
designed to encourage best practice beyond statutory
requirements.
Major Housebuilder of the Year
Bellway Homes was named “Major Housebuilder of the Year”
at the Building Awards 2009.
17
Key Performance Indicators
Bellway p.l.c.
Annual Report & Accounts 2009
We use these KPIs to help us measure our performance
against our objectives.
2005
2006
2007
2008
2009
Financial year ended 31 July
Key Performance Indicators
Commercial
Total number of homes sold
Number of homes sold to Registered Social Landlords
Number of plots with planning permission
7,001
828
22,500
Number of sites registered with the Considerate Constructors Scheme
–
Environmental
Percentage of homes developed on brownfield sites
Density of homes per hectare (number of homes)
Number of EcoHomes with at least “Very Good” rating
Number of homes built to Code Level 3(1)
Average SAP (energy) rating for all Bellway homes
Number of homes built with renewable energy technology
Percentage of homes built using timber frame
Tonnes of plasterboard recycled
Measure of waste (number of 7m3 skips/home sold)
Number of compliance breaches
Number of sites with car clubs
Number of sites within 500m of a transport node
Number of sites with sustainable urban drainage schemes (“SUDS”)
designed into the scheme
Employees
Training days per employee
Employee turnover
Number of site workers (including sub-contractors) accredited
with Construction Skills Certification Scheme (“CSCS”) cards
Number of apprentices employed
Number of NHBC Pride in the Job Awards received
Health and Safety
Lost time accidents per capita
Number of health and safety prosecutions
78%
69
224
–
89.60
–
25%
2,408
7.55
1
–
–
–
1.18
27.0%
305
139
14
0.022
–
7,117
790
22,600
–
81%
69
263
–
90.20
–
32%
4,708
7.10
3
–
–
–
1.22
31.1%
597
206
18
0.019
1
7,638
900
23,500
–
81%
66
326
–
91.20
17
34%
3,900
5.70
9
–
–
–
1.24
25.6%
783
203
19
0.019
–
6,556
1,337
4,380
980
22,500
19,260
–
56
79%
63
1,194
48
88.00
307
30%
2,868
4.30
6
–
–
–
1.03
33.7%
1,042
149
20
0.020
–
84%
67
786
428
85.30
636
23%
1,408
3.60
–
5
174
77
1.20
65.2%
1,793
30
15
0.016
1
(1) The Code for Sustainable Homes Level 3 applies to newly constructed social housing units from April 2008 and therefore 2008 was the first year
of reporting.
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Environmental Policy Statement
Bellway p.l.c.
Annual Report & Accounts 2009
Consideration
We recognise that we have responsibilities to both limit
damage to, and enhance, the environment.
19
Bellway p.l.c.
Annual Report & Accounts 2009
i Conservation strategies are an important
element in planning new developments to
ensure the protection of wildlife. We work
with ecologists to protect wildlife habitats.
The Bellway Group is one of the largest housebuilders in the UK.
The housebuilding process affects the environment by the use of land
and consumption of resources throughout the development process.
It is our objective to ensure that, at the conclusion of a development,
an attractive and sustainable new environment has been created that
will continue over time.
p recognise and respond to the challenges
and opportunities that are presented by
climate change.
In addition to our key commitments, the
Group has identified a number of specific
priority areas which we will endeavour to
achieve:
p consideration of environmental aspects in
the selection and procurement of land for
development, including implications for
biodiversity and sustainable development.
p meeting and, where possible, exceeding
government targets for the redevelopment
of brownfield land.
p influencing the design of sites, housing, and
fittings to minimise effects on both the
natural and built environment.
p providing environmental benefits and
minimising nuisance arising from
construction activities and preventing
pollution on development sites.
p consideration of environmental issues
within our corporate functions and
everyday business decision-making
processes.
The above statement will be balanced against
economic considerations.
Bellway is one of the largest housebuilding
groups in the UK. The housebuilding process
affects the environment by the use of land
and consumption of resources throughout
the development process. It is our objective
to ensure that at the conclusion of a
development an attractive and desirable new
environment has been created that will be
sustainable over time.
Recognising that we have responsibilities
to both limit damage to, and enhance, the
environment, this statement sets out our
policies for managing the environmental
aspects across our business.
Key objectives are to:
p minimise any deleterious effects on the
environment and, where possible, to seek
environmental enhancements,
concentrating on areas where there is
most room for improvement.
p aim to meet and, where practicable,
exceed all relevant environmental
legislation and regulations.
p improve our environmental performance.
p set specific environmental objectives and
targets and periodically review progress
against these.
p ensure that Bellway’s environmental aims
and their importance are communicated
throughout the Group, including to
appropriate sub-contractors and suppliers,
and that a copy of this policy statement is
displayed in each Bellway office and site.
p consider the role that Bellway can play in
helping to contribute to the principles of
sustainable development within the UK.
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Financial Review
Bellway p.l.c.
Annual Report & Accounts 2009
Sales
The Group builds an extensive range of homes within its one UK operating segment; a geographical summary of the homes sold in the year to 31 July is
shown in the following table.
Northern Region
Southern Region
GROUP TOTAL
The total of 4,380 new homes sold includes
980 (2008 – 1,337) housing association sales.
In addition, the Group derived £9.3 million
(2008 – £36.8 million) revenue from other
sources. This consisted of land sales, financial
services, commercial developments, rental
income and miscellaneous items.
The Group will, in the appropriate economic
environment, seek to secure forward sales of
homes. This policy involves securing a
purchaser in advance of the physical
completion of the home. Marketing
frequently begins at an early stage of
development and prospective purchasers are
able to pay a small deposit of between £250
and £1,000 in order to register their interest
in a property. At this stage there is no legal
obligation for the prospective purchaser to
buy the property and no legal obligation for
the Group to sell. The Group is merely giving
an undertaking not to secure another
purchaser within a particular number of
weeks. The deposit is held in the balance
sheet as a payment in advance of the
purchase. If the prospective purchaser does
not proceed to exchange and completion the
cash deposit is classified as a forfeited deposit
and recognised in the income statement.
Homes sold
Number
Average selling price
£000
Revenue
£m
2009
1,833
2,547
4,380
2008
3,348
3,208
6,556
2009
134.2
168.3
154.0
2008
157.3
182.7
169.7
2009
245.9
428.6
674.5
2008
526.6
586.1
1,112.7
In addition, option costs and related fees have
been written down by £6.3 million (2008 –
£15.4 million) to their net realisable value.
The Board has also reassessed the net
realisable value of part exchange properties
and has written down stock by £1.1 million
(2008 – £3.0 million).
The above has resulted in an exceptional
charge totalling £66.3 million (2008 –
£130.9 million) as discussed further in
note 5 on page 53.
Gross profit (pre-exceptional item)
decreased from £243.8 million to £87.1
million and administrative expenses during
the year decreased from £58.8 million to
£41.6 million representing 6.1% of revenue
(2008 – 5.1%).
Once contracts are exchanged, a larger
deposit is paid and there is a legal obligation
to purchase, and to sell, the home. This
increased deposit is also held in the balance
sheet as a payment in advance. All deposits
are recognised in the income statement,
on legal completion, as part of revenue.
The Group acquires second-hand homes
taken in part exchange against sales of
new homes. The subsequent sale of these
properties is not included in homes sold or
revenue. The net result of the part-exchange
transaction is classified as a cost of sale.
Exceptional Items
For the year ended 31 July 2009, a full review
of inventories has been performed and write
downs have been made where cost exceeds
net realisable value. Net realisable value
represents the estimated selling price (in the
ordinary course of business) less all estimated
costs of completion and overheads. Estimated
selling prices have been reviewed on a
site-by-site basis and selling prices have been
reduced, based on local management and
the Board’s assessment of current market
conditions. These site reviews have resulted
in write-downs totalling £58.9 million
(2008 – £112.5 million).
21
Bellway p.l.c.
Annual Report & Accounts 2009
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Revenue (£m)
£683.8m
(2008 – £1,149.5m)
09
08
07
06
05
Earnings per ordinary share* (p)
683.8
1,149.5
1,354.0
1,240.2
1,178.1
17.7p
(2008 – 104.2p)
17.7
09
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06
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104.2
146.1
137.5
133.1
Operating margin* (%)
Dividend per ordinary share (p)
6.7
6.7%
(2008 – 16.1%)
09
08
07
06
05
16.1
18.7
19.3
19.5
9.0p
(2008 – 24.1p)
09
08
07
06
05
9.0
24.1
43.1
34.5
31.3
Profit before taxation* (£m)
Net asset value per ordinary share (p)
£29.8m
(2008 – £165.7m)
29.8
09
08
07
06
05
*Pre-exceptional items (note 5)
165.7
234.8
220.7
213.8
839p
(2008 – 871p)
09
08
07
06
05
839
871
903
793
689
Income Statement
The operating profit (pre-exceptional item)
of £45.6 million compares to £185.0 million
last year, giving an operating margin of
6.7% (pre-exceptional item) on revenue
(2008 – 16.1%).
All of the Group’s operating profit arose in
the United Kingdom.
Interest is written off as it is incurred and this
year amounted to £15.8 million compared to
£19.1 million in 2008. Net interest payable on
bank loans and overdrafts of £10.4 million
(2008 – £12.3 million) is covered 4.4 times
(pre-exceptional item) (2008 – 15.0 times).
The profit before taxation (pre-exceptional
item) of £29.8 million is £135.9 million lower
than the previous year’s figure of £165.7
million, a decrease of 82%.
The tax charge (pre-exceptional item) for the
year (including deferred tax) of £9.5 million
(2008 – £46.2 million) is 31.8% (2008 –
27.9%) of profit before taxation (pre-
exceptional item). The current tax charge
(pre-exceptional item) is 30.3% (2008 –
27.1%) and this compares with the
Group’s standard tax rate for the year
of 28.0% (2008 – 29.3%). The Group has
unused tax losses of £7.5 million available
to offset against future trading profits.
The Board is declaring a dividend for the year
of 9.0p per ordinary share and this is a
decrease of 62.7% on the previous year,
which is covered 2.0 times by earnings
(2008 – 4.3 times). Basic earnings per share
(“EPS”) (pre-exceptional item) amount to
17.7p, compared to 104.2p in 2008,
a decrease of 83.0%.
22
Financial Review continued
Bellway p.l.c.
Annual Report & Accounts 2009
23
Bellway p.l.c.
Annual Report & Accounts 2009
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Finance
Other than the proceeds obtained from the
issue of ordinary shares and reinvestment of
retained profits, the Group’s activities are
financed principally by a combination of
preference shares, bank borrowings and cash
in hand. Bank borrowing facilities comprise
medium-term loans, short-term floating rate
loans and overdrafts. In addition, the Group
often obtains deferred payment terms in its
contracts for land purchases. Facilities are due
for renewal in the following time periods:
By July 2010
By July 2011
By July 2012
By July 2013
By July 2014
By July 2015
TOTAL
£65 million
£145 million
£35 million
£85 million
£20 million
£20 million
£370 million
Fair Value
The fair values of the Group’s financial
instruments at 31 July 2009 are disclosed in
note 17 on page 63. This states that the fair
values are not materially different to their
book value except for the 9.5% cumulative
redeemable preference shares where the
fair value exceeds book value by £1.5 million.
This reflects the movement in long-term
interest rates since these financial instruments
were entered into.
Share Price and Net Asset Value
The share price at 31 July 2009 was 735.00p
(2008 – 477.25p). This compares with a book
net asset value at 31 July 2009 of 839p
(2008 – 871p).
Dividend
The Board has maintained the final dividend
of 6.0p (2008 – 6.0p). The total dividend for
the year is 9.0p which compares with 24.1p
for 2008.
Treasury Policy and Liquidity Risk
The Group’s treasury policy has, as its
principal objective, the maintenance of flexible
bank facilities in order to cover anticipated
borrowing requirements. A sophisticated cash
forecasting system enables the Group to plan
and assess its future treasury needs.
Short-term cash surpluses are placed on
deposit. Other than mentioned above, there
are no financial instruments, derivatives or
commodity contracts used.
Interest Rate Risk
The Group’s attitude to interest rate risk is
influenced by the existing and forecast
conditions prevailing at the time that each
new interest-bearing instrument is entered
into. This will determine, amongst other things,
the term and whether a fixed or floating
interest rate is obtained.
Alistair M Leitch
Finance Director
12 October 2009
Balance Sheet
The balance sheet remains strong with
inventories, after write-downs, showing
a measured decrease, down from £1,503.9
million to £1,211.4 million. Land holdings at
31 July 2009 with residential planning
permission total some 19,260 units (2008 –
22,500). In addition, there are extensive land
interests with development potential.
At 31 July 2009 the Group’s borrowings,
including preference shares and net of cash
balances, were £56.8 million, which compared
with £237.7 million last year. The Group’s
gearing at 31 July 2009 was 3.8% (excluding
preference shares) compared with 21.7%
last year. Net current assets decreased by
£270.8 million from £1,330.8 million to
£1,060.0 million.
Total equity decreased by £36.1 million from
£1,001.1 million to £965.0 million, reflecting
total recognised expense of (£27.2) million,
ordinary dividends paid of (£10.4) million and
share issues and share option movements in
reserves of £1.5 million.
The actuarial valuation of the defined benefit
section of the Bellway p.l.c. 1972 Pension &
Life Assurance Scheme (the “Scheme”) as
at 1 August 2008 revealed a shortfall of
£2.673 million. The Scheme actuary has
advised the Trustees of the Scheme that the
remaining funding shortfall at 31 July 2009
was £1.668 million, after allowing for certain
adjustments, principally in connection with
the closure of both the final salary and the
money purchase sections of the Scheme
to further accrual on 31 October 2008.
The Group paid £1.668 million into the
Scheme on 7 October 2009.
f Keepers Chase, Audenshaw, Greater Manchester.
24
Operating Risk Statement
Bellway p.l.c.
Annual Report & Accounts 2009
Risk is a natural part of any business. The management of risk
is a key operating component for the Group. The manner in
which this is carried out is very important to the long-term
success of the business.
The Group has identified, evaluated and put in place strategies to mitigate the principal risks faced by the
business, shown in the table below:
Area of Risk
Description of Risk
Mitigation of Risk
Inability to source suitable land at satisfactory
margins would have a detrimental effect on
the Group’s land bank and consequently, its
future success.
p Endeavour to ensure that a land bank with planning permission for at
least three years’ construction programme is in place on a rolling basis.
p Thorough pre-purchase due diligence and viability assessments.
p Authorisation of land purchases in line with robust Group procedures.
Delays and the increasing complexity of the
planning process hampers and slows the
Group’s growth prospects.
p Centralised and regional planning personnel provide advice and
support to divisions to assist with progressing the planning
permission process.
Land
Planning
Sales
Ensuring that the effects of any diminution in
the size of the market place, the ability of
prospective customers to access credit
facilities or the sales prices achieved are
managed in such a way as to limit any
adverse financial or operational effects on
the Group’s performance.
Construction
Ensuring that appropriately skilled personnel
are available and that suitable materials are
also available at the right price.
p In consultation with Head Office, local divisional management
determines product range and pricing strategy commensurate with
regional market conditions.
p Use of sales incentives where appropriate to encourage selling process,
such as part exchange, try before you buy, shared ownership etc.
p Use of government-backed schemes to encourage home ownership
where appropriate, such as HomeBuy Direct.
p Ensure that construction rates are managed and equate to sales achieved.
p Identifying training needs and allocating appropriate resources
to training.
p Ensure systems are in place for engagement of and monitoring
and control of work carried out by sub-contractors.
p Ensuring competitive reward systems are in place.
p Group purchasing arrangements in place to secure materials
at competitive prices.
Environment
Housebuilding has a significant effect on the
environment. It is important that the effects
of the Group’s developments are, as far as
possible, positive rather than negative.
p It is our objective to ensure that at the conclusion of a development
an attractive and sustainable new environment has been created
that will continue over time. See our Environmental Policy on
pages 18 and 19 for further information.
25
Bellway p.l.c.
Annual Report & Accounts 2009
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Area of Risk
Area of Risk
Description of Risk
Mitigation of Risk
Health and
Safety
Personnel
It is important to ensure that the Group has
adequate systems in place to mitigate, as far
as possible, the dangers inherent in the
construction process.
p The Board considers health and safety issues at each Board meeting.
p Regular visits to sites by senior management (independent of our
divisions) and external consultants to monitor health and safety
standards and performance against the Group’s health and safety
policies and procedures.
Attracting and retaining suitable personnel
is key to the Group’s long-term success.
Failure to do so will severely affect the
Group’s ability to perform in a highly
competitive market.
p The Group offers a competitive salary and benefits package.
p Divisional training plans in place.
p Succession planning for key posts.
p 96% of site based personnel are fully accredited under CSCS.
Information
and Reporting
Systems
It is vital that the Group has suitable systems
in place to ensure that, as far as possible,
a smooth flow of information operates
throughout the Group and that the risk
of system loss is mitigated and supported
by appropriate contingency plans.
p Group-wide systems in place which are centrally controlled with
outsourced support function in place.
Asset
Protection
The way in which the Group carries out its
operations can have a material effect on the
value of its assets.
p The Group prepares viability assessments on all of its land purchases
and construction projects, and keeps these under regular review to
protect, wherever possible, the value of its assets.
Treasury
Management
Ensuring suitable financial resources at
appropriate costs are in place to meet
Group requirements.
Legal and
Regulatory
Compliance
Failure to comply with current laws and
regulations or to have appropriately worded
contracts in place could expose the Group
to disadvantageous contractual obligations,
regulatory fines and adverse publicity.
p Central negotiation and control of banking facilities to ensure liquidity
and debt levels are appropriate.
p Facilities distributed across various sources.
p Careful monitoring of cash forecasts.
p Central secretariat and legal functions advise divisions on compliance
and ensure policies and procedures are kept up to date to minimise
risk of non-compliance.
In addition, the Board ensures that adequate insurance cover is maintained to underpin and support the many areas in which the Group is exposed
to risk of loss.
26
Board of Directors
Bellway p.l.c.
Annual Report & Accounts 2009
1
4
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Bellway p.l.c.
Bellway p.l.c.
Annual Report & Accounts 2009
Annual Report & Accounts 2009
As at 12 October 2009
1. Howard C Dawe
Date of Birth: 7 April 1944
Mr Dawe joined Bellway in 1961, was
appointed a director in 1977 and was
appointed Group Chief Executive in 1985.
In May 1997 he was appointed Acting
Chairman, and Chairman on 1 November
1999, when he relinquished the role of
Group Chief Executive. On 1 November
2004, Mr Dawe became non-executive
Chairman. He is a member of the
Nomination Committee.
2. John K Watson
Date of Birth: 21 March 1954
Mr Watson, a Chartered Surveyor, joined
Bellway in 1978. He was later appointed
Managing Director of the North East division,
a position which he held for 12 years.
He joined the Board as Technical Director
in 1995 and became Chief Executive on
1 November 1999. He is Chairman of the
Board Committee on Non-Executive
Directors’ Remuneration.
3. Peter J Stoker
Date of Birth: 23 May 1956
Mr Stoker qualified as a Solicitor in 1979 and
joined Bellway in 1981. He was appointed
Company Secretary in 1985 and joined the
Board as an executive director in 1995.
He resigned as Company Secretary to take
up his new role as Commercial Director on
1 August 2002. He is a member of the Board
Committee on Non-Executive Directors’
Remuneration.
4. Alistair M Leitch
Date of Birth: 14 February 1954
Mr Leitch qualified as a Chartered
Accountant in 1977 and joined Bellway
in 1981. He has held a number of senior
positions in the Company including, from
1996, the post of Group Chief Accountant.
He was appointed Finance Director on
1 August 2002. He is a member of the
Board Committee on Non-Executive
Directors’ Remuneration.
5. Peter M Johnson
Date of Birth: 17 April 1948
Mr Johnson, a Chartered Accountant, was
appointed a non-executive director on
1 November 2003. He had been, on his
retirement in September 2000, a partner in
KPMG for 23 years. He is a non-executive
director of Sunderland Marine Mutual
Insurance Company Limited and Honorary
Treasurer of the University of Newcastle
upon Tyne. He became senior independent
non-executive director on 16 January 2009.
He is Chairman of the Audit Committee
and is also a member of both the Board
Committee on Executive Directors’
Remuneration and the Nomination
Committee.
6. David G Perry
Date of Birth: 26 December 1937
Mr Perry was appointed a non-executive
director on 1 November 1999. He was
formerly Chairman of Waddington PLC
and Anglian Group PLC. He is Chairman
of the Nomination Committee and is also
a member of both the Audit Committee
and the Board Committee on Executive
Directors’ Remuneration. Mr Perry will retire
at the conclusion of the forthcoming AGM
on 15 January 2010.
7. Mike R Toms
Date of Birth: 1 July 1953
Mr Toms was appointed a non-executive
director on 1 February 2009. He is currently
non-executive Chairman of Northern Ireland
Electricity plc, and a non-executive director
of UK Coal PLC and Birmingham Airport
Holdings Limited. He was formerly an
executive director of BAA plc and was a
non-executive director of Viridian Group
PLC. He is a member of the Royal Institution
of Chartered Surveyors (MRICS) and a
member of the Royal Town Planning Institute
(MRTPI). He is Chairman of the Board
Committee on Executive Directors’
Remuneration and a member of the Audit
and Nomination Committees of the Board.
Group Company Secretary
8. G Kevin Wrightson
Date of Birth: 27 October 1954
Mr Wrightson, a Chartered Secretary, joined
Bellway in 1990. He has held senior posts
within the Group, including that of Deputy
Group Secretary, before being appointed
as Group Company Secretary on
1 August 2002.
From 1 November 2009
John A Cuthbert
Date of Birth: 9 February 1953
Mr Cuthbert will join the Board on
1 November 2009 as an independent
non-executive director and will join the Audit
and the Nomination Committees and the
Board Committee on Executive Directors’
Remuneration from 15 January 2010.
Mr Cuthbert is currently Managing Director
of Northumbrian Water Group plc, and has
worked in the water industry since 1991.
He was formerly Managing Director of
North East Water plc and Managing Director
of Essex and Suffolk Water plc. He is
Chairman of Castle View Enterprise Academy
in Sunderland.
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Advisers
Group Company Secretary and
Registered Office
G K Wrightson FCIS
Bellway p.l.c.
Seaton Burn House
Dudley Lane, Seaton Burn
Newcastle upon Tyne NE13 6BE
Registered number 1372603
Registrars and Transfer Office
Capita Registrars Limited
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
West Yorkshire HD8 0LA
Financial Advisers
N M Rothschild & Sons Limited
Stockbrokers
Citigroup Global Markets Limited
Bankers
Barclays Bank PLC
Lloyds Banking Group plc
Auditors
KPMG Audit Plc
28
Report of the Directors
Bellway p.l.c.
Annual Report & Accounts 2009
The directors have pleasure in submitting the Annual Report and Accounts of Bellway p.l.c. to the shareholders for the year ended 31 July 2009.
Principal activities
The Company is a holding company, owning subsidiary undertakings which continue to be engaged principally in housebuilding in the United Kingdom
(“UK”).
Performance and prospects
A review of the Group’s performance and prospects that fulfils the requirements of the business review can be found in the Chairman’s Statement
on pages 2 to 5, the Chief Executive’s Operating Review on pages 6 to 11, the Corporate Responsibility Policy on page 12, the 2009 Corporate
Responsibility Statement on pages 15 to 17, the Environmental Policy Statement on pages 18 and 19, and the Financial Review on pages 20 to 23.
In addition, information in respect of the principal operating risks of the business is set out in the Operating Risk Statement on pages 24 and 25.
Results and dividends
The loss for the year attributable to equity holders of the parent company amounts to £27.4 million (2008 – £27.0 million profit).
Ordinary dividends
The directors have proposed a final ordinary dividend for the year ended 31 July 2009 of 6.0p per share. This has not been included within creditors as it
was not approved before the year end. Dividends paid during the year comprise a final dividend of 6.0p per share in respect of the previous year ended
31 July 2008, together with an interim dividend in respect of the year ended 31 July 2009 of 3.0p per share.
The directors recommend payment of the final dividend on 20 January 2010 to shareholders on the Register of Members at the close of business on
11 December 2009.
Directors
All the directors of the Company, who are shown on page 26, served throughout the year, apart from Mr Toms who was appointed on 1 February
2009. Mr Finn was a director at the start of the year and retired on 16 January 2009. Mr Cuthbert joins the Board on 1 November 2009.
Two directors retire from the Board and offer themselves for re-election at the forthcoming Annual General Meeting (“AGM”). Mr Dawe and
Mr Watson retire by rotation in accordance with the Company’s Articles of Association (the “Articles”) and the Combined Code. Mr Perry will retire
at the forthcoming AGM and is not seeking re-election. Mr Toms will offer himself for re-election at the forthcoming AGM, having been appointed
a director since the previous AGM. The directors’ biographies are shown on page 27.
As reported in the Chairman’s Statement on page 5, Mr John Cuthbert’s appointment as a non-executive director takes effect from 1 November 2009.
Mr Cuthbert will join the Audit Committee, the Nomination Committee and the Board Committee on Executive Directors’ Remuneration following
Mr Perry’s retirement on 15 January 2010. Mr Cuthbert will offer himself for re-election at the forthcoming AGM, the first following his appointment.
None of the executive directors hold external directorships.
Following formal rigorous evaluation, the Chairman, acting on behalf of the Board, is satisfied as to the effectiveness and commitment of the Chief
Executive, Mr Watson, and Mr Johnson, as senior independent non-executive director, acting on behalf of the Board, is satisfied as to the effectiveness
and commitment of Mr Dawe.
29
Bellway p.l.c.
Annual Report & Accounts 2009
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Directors’ contracts
Details of the terms of appointment of the two directors who are retiring and offering themselves for re-election, and the two directors who are offering
themselves for re-election at the forthcoming AGM are set out below:
First appointed
as a
director
Current contract/letter
of appointment
commencement date
Current contract/letter
of appointment
expiry date
Unexpired term
at the date
of this report
Notice period
by the
Company
Service contract of executive director
J K Watson
1 August 1995
Letter of appointment of non-executive directors
16 March 2001,
amended
7 October 2009
Normal
retirement age (60)
12 months
12 months
H C Dawe
M R Toms
9 August 1977
1 November 2007
31 October 2010
1 February 2009
1 February 2009
31 January 2012
12 months
27 months
3 months
3 months
Mr J A Cuthbert is to be appointed as a non-executive director with effect from 1 November 2009 for a term of three years with a notice period on
either side of three months.
Details of the terms of appointment of all the directors are given in the Report of the Board on Directors’ Remuneration on pages 36 and 37.
Directors’ interests
The directors’ interests in the share capital of the Company and in share ownership plan arrangements are given in the Report of the Board on
Directors’ Remuneration on pages 38 to 41.
Takeovers Directive
The information for shareholders required pursuant to section 992 of the Companies Act 2006 which implements the Takeovers Directive is disclosed
in this report and in the Shareholder Information section on page 79.
Notifiable shareholders’ interests
As at 12 October 2009, the Company had been notified of the following interests amounting to 3% or more of the voting rights in the issued ordinary
share capital of the Company:
Fidelity International Ltd/FMR Corp
Aegon UK Group of Companies
JP Morgan Asset Management Holdings Inc.
AXA Framlington Investment Management.
Legal & General Group plc
Polaris Capital Management, LLC
HBOS plc
Credit Suisse Securities (Europe) Limited
Number of shares
with voting rights
% total
voting rights
9,300,000
6,051,142
6,046,514
5,603,638
4,545,633
4,407,939
4,261,453
3,890,282
7.70
5.01
5.01
4.64
3.76
3.65
3.53
3.22
Corporate governance
Introduction
The Board acknowledges the importance of, and is committed to, the principle of achieving and maintaining a high standard of corporate governance.
This report, together with the Report of the Board on Directors’ Remuneration, as detailed on pages 35 to 41, describes how the Principles of Good
Governance, which are set out in section 1 of the Combined Code, are applied by the Group.
Statement of compliance with the Code of Best Practice
The Board considers that it has complied with the detailed provisions of the revised Combined Code, which was amended in June 2008, throughout
the year to 31 July 2009 and up to the date of this report. The Combined Code is publicly available free of charge from FRC publications,
tel: 020 8247 1264, e-mail: customer.services@cch.co.uk and online at: www.frcpublications.com.
Statement about applying the Principles of Good Governance
The Group has applied the Principles of Good Governance, including both the Main Principles and the Supporting Principles, by complying with the
Combined Code as reported above. Further explanations of how the Main Principles and Supporting Principles have been applied are set out below
and, in connection with the directors’ remuneration, in the Report of the Board on Directors’ Remuneration.
The Chairman’s Statement, the Chief Executive’s Operating Review and the Financial Review present a balanced and comprehensive assessment of the
Group’s position and prospects.
30
Report of the Directors continued
Bellway p.l.c.
Annual Report & Accounts 2009
The Board
At the date of this report the Board consists of seven directors whose names, responsibilities and other details appear on pages 26 and 27. Three of
the directors are executive and four of the directors, including the Chairman, are non-executive. One of the non-executive directors, Mr Perry, will
retire at the AGM on 15 January 2010 and will not seek re-election. Mr John Cuthbert has accepted an appointment as a non-executive director from
1 November 2009, putting the number of Board members temporarily up to eight for a period of two and a half months. The Board discharges its
responsibilities by providing entrepreneurial leadership of the Company within a framework of prudent and effective controls, which enables risk to be
assessed and managed. It sets the Company’s strategic aims, ensures that the necessary financial and human resources are in place for the Company
to meet its objectives and reviews management performance. It also defines the Company’s values and standards and ensures that its obligations to
its shareholders are understood and met.
The Board has adopted a schedule of matters which are specifically reserved for its decision which includes various matters to do with Companies Acts
and other legal requirements, listing requirements, Board membership and Board Committees, management, corporate governance, employment,
financial and other miscellaneous items. In addition, it has a series of matters that are dealt with at regular Board meetings including an operational review,
a financial review, strategy, land acquired, major projects, personnel, corporate governance, internal control and health and safety. It has also adopted
a framework of delegated commercial and operational authorities which define the scope of powers delegated to management below Board level.
All directors have access to the advice and services of the Group Company Secretary and all the directors may take independent professional advice
at the Group’s expense where they judge it necessary to discharge their responsibility as directors.
Board effectiveness
The directors possess an appropriate balance of skills and experience to meet the requirements of the business.
During the year there were eleven Board meetings, four Audit Committee meetings, seven meetings of the Board Committee on Executive Directors’
Remuneration, one meeting of the Board Committee on Non-Executive Directors’ Remuneration and two Nomination Committee meetings.
There were no absences from any Board or Committee meetings by any director, with the exception that Mr Stoker, Mr Perry and Mr Johnson were
each unable to attend one Board meeting.
During the year the non-executive directors met without the executive directors on one occasion, and also met once during the year without the
Chairman present.
One-third of the directors offer themselves for re-election each year at the AGM and all directors seek re-election every three years in accordance with
the Articles. New directors appointed since the last AGM are required to offer themselves for re-election at the next AGM.
Training and development
The Board received appropriate training and updates on various matters relevant to its role as and when required during the year. Training needs are
reviewed as part of the performance evaluation process and on an ongoing basis.
Board balance and independence
The roles of Chairman and Chief Executive, which are recorded in writing and approved by the Board, are separate with a clear division of
responsibilities, ensuring a balance of responsibility and authority at the head of the Group.
The senior independent non-executive director is Mr Johnson, who was appointed to this role following Mr Finn’s retirement on 16 January 2009.
The senior independent non-executive director is available for shareholders to contact with any queries or concerns they may have.
Each of the non-executive directors, excluding the Chairman, has at all times acted independently of management and has no relationship which would
materially affect the exercise of his independent judgement and decision-making. The Company considers all of its non-executive directors, excluding
the Chairman, to be independent, as defined in the Combined Code. With regard to Mr Perry, as at 1 November 2009 he will have served on the
Board and its Committees for ten years. The Company has carefully considered Mr Perry’s character and judgement. He has been subject to a rigorous
evaluation process and the Company can confirm that, in its view, he remains independent and therefore it is appropriate for him to remain in post until
his retirement on 15 January 2010.
Whenever any director considers that he is interested in any contract or arrangement to which the Group is or may be a party, due notice is given to
the Board. No such instances of any significance have arisen during the year.
Board evaluation
During the year the directors undertook an evaluation of the performance and effectiveness of the Board, its Committees and individual directors.
The evaluation was performed using a self-assessment questionnaire. This involved the Chairman, acting on behalf of the Board, evaluating the
performance of the other individual directors, and the non-executive directors, led by the senior independent non-executive director, assessing the
performance of the Chairman, taking into account the views of the executive directors. The Board, led by the Chairman, evaluated its own performance,
and the Committees, led by the Chairman of each, evaluated their own performance.
As part of the process of ensuring Board effectiveness, the non-executive directors, led by the senior independent non-executive director, met without
the Chairman present. Additionally, the Chairman held a meeting with the non-executive directors without the executives present. The Chairman also
had meetings with each of the executive directors.
The Board and its Committees reviewed the results of these evaluations and are satisfied with the evidence they provided about the balance,
effectiveness and performance of the Board and its Committees and the effectiveness and commitment of each director.
31
Bellway p.l.c.
Annual Report & Accounts 2009
The Board Committees
The Board has properly constituted Audit, Remuneration and Nomination Committees. The terms of reference for the Committees are available either
on request, at the AGM or on the Company’s website: www.bellway.co.uk.
Audit Committee
The Audit Committee comprises three independent non-executive directors, Mr Johnson (Chairman) and Mr Perry, who were members of the
Committee throughout the year, and Mr Toms who joined the Committee on his appointment to the Board on 1 February 2009. Mr Finn was a
member of the Committee until his retirement on 16 January 2009. Mr Perry retires on 15 January 2010 and he will be replaced on the Committee
from 15 January 2010 by Mr Cuthbert.
The Committee meets at least three times a year and met four times during the year under review. The Committee’s responsibilities include
the following.
(cid:131) to consider the appointment/re-appointment of the external auditors and assess their independence each year.
(cid:131) to recommend the audit fee to the Board and pre-approve any fees in respect of non-audit services provided by the external auditors and to ensure
that the provision of non-audit services does not affect the external auditors’ independence or objectivity.
(cid:131) to agree the nature and scope of the audit and review the quality control procedures and steps taken by the auditors to respond to changes in
regulatory and other requirements.
(cid:131) to oversee the process for selecting the external auditors and make appropriate recommendations through the Board to the shareholders to consider
at the AGM.
(cid:131) to consider annually whether there is a need for an internal audit function and make a recommendation to the Board.
(cid:131) to review the Group’s procedures for handling allegations from whistleblowers.
(cid:131) to review management’s reports on the effectiveness of systems for internal financial control, financial reporting and risk management.
(cid:131) to assess the scope and effectiveness of the systems established by management to identify, assess, manage and monitor financial and non-financial risks.
(cid:131) to review and make recommendations in relation to the half year and annual accounts prior to submission to the Board.
The Board believes that Mr Johnson, the Committee Chairman, has recent relevant financial experience as a Chartered Accountant. The Group
has a written Independent Auditor Policy in place which seeks to preserve the independence of its auditors by defining those non-audit services
the independent auditors may and may not provide. There are clearly defined levels of approval depending on the value of work to be provided.
Where fees exceed £100,000, or where total non-audit fees equate to 100% of audit fees, Board approval would be required. Any material project with
fees in excess of £200,000, where the auditors are considered for the provision of services, would be the subject of a competitive tendering process.
During the year the Committee met the auditors without management present on two occasions. In addition, the Committee Chairman had regular
contact with the Finance Director and the external auditors.
Board Committee on Executive Directors’ Remuneration
The Board Committee on Executive Directors’ Remuneration comprises Mr Toms (Chairman), Mr Perry and Mr Johnson. Mr Perry and Mr Johnson
were members of the Committee throughout the year, and Mr Toms joined the Committee as Chairman on his appointment as a non-executive
director on 1 February 2009. Mr Finn was a member of the Committee until his retirement on 16 January 2009. Mr Perry is to retire at the AGM
on 15 January 2010, and he will be replaced on this Committee by Mr Cuthbert.
The Committee meets at least twice a year and during the year it met on seven occasions. Its duties are to review and recommend the basic salary,
benefits in kind, terms and conditions of employment, including performance related payments, long-term incentive schemes and other benefits of
the executive directors and the Chairman. The Report of the Board on Directors’ Remuneration on pages 35 to 41 contains details of directors’
remuneration and the Group’s policies in relation to directors’ remuneration.
Board Committee on Non-Executive Directors’ Remuneration
The Board Committee on Non-Executive Directors’ Remuneration comprises the executive directors and is chaired by Mr Watson. It meets at least
once a year to review and recommend the terms, conditions and remuneration of the non-executive directors. Last year it met on one occasion to
review the fees and terms of appointment of the non-executive directors.
Nomination Committee
The Nomination Committee comprises Mr Perry (Chairman), Mr Johnson and Mr Dawe, who were members of the Committee throughout the year,
and Mr Toms who joined the Committee on his appointment to the Board on 1 February 2009. Mr Finn was a member of the Committee until his
retirement on 16 January 2009. Mr Perry is to retire at the AGM on 15 January 2010, and he will be replaced on this Committee by Mr Cuthbert and
replaced as Chairman of the Committee by Mr Dawe.
The Committee’s main duties are to formulate plans for succession for both executive and non-executive directors and, in particular, for the key roles
of Chairman and Chief Executive and to make recommendations regarding appointments to the Board.
The Committee meets at least twice a year and last year met on three occasions.
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Bellway p.l.c.
Annual Report & Accounts 2009
Appointments to the Board are made on merit through a formal, rigorous and transparent process against objective criteria recommended by the
Committee. The Committee also guides the whole Board in arranging orderly succession for appointments to the Board. The appointment of a
non-executive director is for a specified term and re-appointment is not automatic and is made on the recommendation of the Committee.
During the year the Committee was requested by the Board to recommend a suitable candidate to fill the vacancy to be created when Mr Perry retires
from the Board at the conclusion of the AGM on 15 January 2010. The Committee consulted the Board and the Group Company Secretary, and did
not use recruitment consultants or open advertising because the Committee felt able to recruit a suitably qualified individual using its own resources
and that of the Company. The Committee recommended Mr Cuthbert to the Board and the Board agreed with the Committee’s recommendation.
His appointment will commence on 1 November 2009. Mr Cuthbert’s biography is shown on page 27.
Other committees of the Board are formed to perform certain specific functions as required from time to time.
Directors’ and officers’ liability insurance
The Company carries appropriate insurance cover in respect of possible legal action being taken against its directors and senior employees.
Directors’ remuneration
The principles and details of directors’ remuneration are detailed in the Report of the Board on Directors’ Remuneration on pages 35 to 41.
Accountability and audit
The statement on going concern and the Statement of Directors’ Responsibilities in respect of the Annual Report and Accounts are shown on pages 33
and 42 respectively.
The Audit Committee has meetings at least twice a year with the Company’s auditors, KPMG Audit Plc. Its role is detailed above.
Internal control
The Board is responsible for the Group’s system of internal control and also for reviewing its effectiveness. The Board has reviewed, on an ongoing basis,
the effectiveness of the system of internal control throughout the year and up to the date of approval of the Annual Report and Accounts. The system
is regularly reviewed by the Board in accordance with the guidance contained in the Turnbull Report “Internal Control Guidance for Directors of Listed
Companies Incorporated in the United Kingdom”. The Board acknowledges its responsibility to establish, maintain and monitor a system of internal
control relating to operational, financial and compliance controls and risk management to safeguard the shareholders’ interests in the Company’s assets.
This system, however, is designed to manage and meet the Group’s particular requirements and reduce the risk to which it is exposed rather than
eliminate the risk of failure to achieve business objectives. It can provide only reasonable and not absolute assurance against material misstatement or loss.
The Board has reviewed the effectiveness of the system of internal control and, in particular, it has reviewed the process for identifying and evaluating the
significant risks affecting the business and the policies and procedures by which these risks are managed.
Management is responsible for the identification and evaluation of significant risks applicable to particular areas of the business together with the design
and operation of suitable controls. These significant risks, which are described in the Operating Risk Statement on pages 24 and 25, are regularly assessed
and cover all aspects of the business, but in particular land acquisition, planning, construction, health and safety, information and reporting systems, sales,
environmental issues, personnel, asset protection, treasury management and legal and regulatory compliance. In addition, there is a responsibility to
mitigate risk by the provision of adequate insurance cover and by management reporting on material changes in the business or external environment
affecting the risk profile.
There is a system of regular reporting to the Board which provides for appropriate details and assurances on the assessment and control of risks.
The continuing role of the Board is, on a systematic basis, to review the key risks inherent in the business, the operation of the systems and controls
necessary to manage such risks and its effectiveness and satisfy itself that all reasonable steps are being taken to mitigate these risks. The key areas of
control are as follows:
(cid:131) the Board has agreed a list of key risks which affect the Group and has considered the extent to which the measures taken by the Group mitigate
those risks.
(cid:131) an established monitoring structure is in place, which provides short lines of communication and easy access to members of the Board.
(cid:131) delegation of clearly defined responsibilities to divisional boards with clear procedures and authority limits in place to provide and maintain effective
controls across the Group.
(cid:131) a comprehensive reporting system entailing annual budgets, regular forecasting and financial reporting.
(cid:131) a central treasury function operates at Head Office.
(cid:131) regular meetings with management attended by members of the Board to review divisional performance.
(cid:131) the acquisition of land and land interests is subject to checking by management and approval by the Board to ensure that purchasing criteria are met.
(cid:131) regular reviews of site costs and revenues by senior Head Office personnel which are reported to the Board.
(cid:131) regular visits to sites by senior management and external consultants to monitor health and safety standards and performance.
(cid:131) a number of the Group’s key functions are dealt with centrally. These include finance, banking, taxation, financial services, pensions, insurance,
information technology, legal, personnel and company secretarial.
33
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Annual Report & Accounts 2009
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Internal audit
The Company does not have an internal audit function and, as recommended by the Combined Code, the Audit Committee considers annually
whether there is a need for an internal audit function and makes a recommendation to the Board. During the year, having considered the position,
the Audit Committee recommended that no internal audit function, as such, was presently required, given the robust systems and strong controls
already present in the Group. The position will continue to be monitored by the Audit Committee on behalf of the Board.
Whistleblowing arrangements
The Group has operated throughout the year a “whistleblowing” arrangement whereby all employees of the Group are able, via an independent
external third party, to confidentially report any malpractice or matters of concern they have regarding the actions of management and employees.
The Audit Committee and the Board regularly review the effectiveness of this arrangement.
Relations with shareholders
The Company encourages active dialogue with its private and institutional shareholders, both current and prospective. Meetings are held with both
existing and prospective institutional shareholders on a regular basis and as requested. Shareholders are also kept up to date with Company affairs
through the Annual and Half Year Reports, Trading Updates and Interim Management Statements. The AGM is used to communicate with institutional
and private investors and their participation is encouraged by the taking of questions by the whole Board, both during, and also informally, before and
after the meeting. The senior independent non-executive director is always available to discuss issues with current and prospective shareholders and
institutions, as required. In addition, the whole Board is regularly updated on shareholder and investor views and activities at Board meetings by the
Chief Executive and the Finance Director. Further information for shareholders is available under Shareholder Information on pages 77 to 80 and also
on the Company’s website at www.bellway.co.uk.
Going concern
After making due enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence
for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the accounts as discussed further on page 47.
Employees
The Group is an equal opportunities employer. It is the Group’s policy to develop and apply, throughout the Group, procedures and practices which are
designed to ensure that equal opportunities are provided to employees of the Group, or those who seek employment with the Group, irrespective of
their age, colour, disability, ethnic origin, gender, marital status, nationality, parental status, race, religion or sexual orientation.
All employees, whether part time, full time or temporary, are treated fairly and equally. Selection for employment, promotion, training or other matters
affecting their employment is on the basis of aptitude and ability. All employees are assisted and encouraged to develop their full potential and the talents
and resources of the workforce are fully utilised to maximise the efficiency of the organisation.
It is Group policy to give full and fair consideration to the employment needs of disabled persons (and persons who become disabled whilst employed
by the Group) and to comply with any current legislation with regard to disabled persons. Training at each division is planned and monitored through an
annual training plan.
The importance of good communications with employees is recognised by the directors. Each division maintains employee relations using a variety of
means appropriate to its own particular needs.
New employees, when eligible, are invited to join the Company’s pension and life assurance arrangements and the Savings Related Share Option
Scheme. The Company also offers a private medical scheme, childcare vouchers, a cycle to work scheme and personal accident insurance arrangements.
In accordance with statutory requirements, the Company also has a designated stakeholder pension arrangement.
Environmental issues
The Board recognises the importance of environmental issues and, when carrying out its business, endeavours to make a positive contribution to the
quality of life, both for the present and the future. An Environmental Policy Statement, approved by the Board, has been adopted by all trading entities
within the Group. Environmental issues are addressed in the Corporate Responsibility Policy on page 12, the 2009 Corporate Responsibility Statement
on pages 15 to 17, the Environmental Policy Statement on pages 18 and 19, and in the Corporate Responsibility Report itself which is available to view
on the Company’s website www.bellway.co.uk or from the Group Company Secretary at the Company’s registered office. In addition, the Company is
developing its systems in line with the ISO14001 Environmental Standard.
Health and safety at work
The Group promotes all aspects of health and safety throughout its operations in the interests of employees, sub-contractors and visitors to its sites and
premises and the general public. Health and safety issues are considered at each Board meeting, and are addressed in the Chief Executive’s Operating
Review on pages 6 to 11, in the Corporate Responsibility Policy on page 12, in the 2009 Corporate Responsibility Statement on pages 15 to 17, and in
the Corporate Responsibility Report on the Company’s website www.bellway.co.uk.
Donations
During the year the Group made no political contributions but donated £11,275 (2008 – £22,010) for charitable purposes.
Significant relationships
The Company is party to a number of banking agreements with major clearing banks. The withdrawal of such facilities could have a material effect on the
financing of the business.
Other than the foregoing the Group has contractual and other arrangements in place with suppliers and other third parties which support its business
activities. None of these arrangements are considered to be critical to the performance of the business.
34
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Bellway p.l.c.
Annual Report & Accounts 2009
Suppliers
The Group agrees terms and conditions under which business transactions with suppliers are conducted. The policy is that payments to suppliers are
made in accordance with these terms and conditions, provided that the supplier is also complying with the terms and conditions. The Group follows the
Better Payment Practice Code and its current policy concerning the payment of the majority of its materials suppliers and sub-contractors is for payment
to be made at the month end following the month of the invoice. For other supplies, particularly land, the terms are many and varied. Trade creditors
due within one year at 31 July 2009 of £52.610 million (2008 – £75.075 million) gave a creditor payment period of 26 days (2008 – 27 days).
Land creditors due within one year were £83.588 million (2008 – £81.806 million). Including land creditors, the creditor payment period was 68 days
(2008 – 57 days).
The parent company had no land or trade creditors at 31 July 2009 (2008 – £nil).
Purchase of the Company’s own shares
The Company was given authority at the 2009 AGM to purchase its own ordinary and preference shares. As at the date of this report no market
purchases have been made by the Company and this authority will expire at the end of the 2010 AGM. Shareholders will be asked to renew this
authority at the 2010 AGM.
Indemnification of directors
The Company has in place directors’ and officers’ insurance and the Articles provide the directors with further protection against liability to third parties,
subject to the conditions set out in the Companies Act 2006. Such qualifying third party indemnity provision remains in force as at the date of approving
this report.
Disclosure of all relevant information to auditors
The directors who held office at the date of approval of this report confirm that, so far as they are each aware, there is no relevant audit information of
which the Company’s auditors are unaware and each director has taken all the steps that he ought to have taken as a director to make himself aware of
any relevant audit information and to establish that the Company’s auditors are aware of that information.
Auditors
In accordance with section 489 of the Companies Act 2006, a resolution for the re-appointment of KPMG Audit Plc as auditors of the Company is to
be proposed at the forthcoming AGM.
AGM – special business
Five resolutions will be proposed as special business at the AGM to be held on Friday 15 January 2010. Explanatory notes on these resolutions are set
out in Shareholder Information on pages 77 and 78.
By order of the Board
G Kevin Wrightson
Group Company Secretary
12 October 2009
35
Report of the Board on Directors’ Remuneration
Bellway p.l.c.
Annual Report & Accounts 2009
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Introduction
The remuneration of the executive directors is determined by the Board Committee on Executive Directors’ Remuneration (the “Committee”) within a
framework set by the Board. As at the date of this report, the Committee’s members are three non-executive directors, Mr Toms (Chairman), Mr Perry
and Mr Johnson. Mr Perry is to retire at the AGM on 15 January 2010, and he will be replaced on this Committee by Mr John Cuthbert. None of the
Committee members has a personal financial interest, other than as shareholders, in the matters to be decided. There are no conflicts of interest arising
from cross-directorships and no day-to-day involvement in running the business.
During the year, the Group Company Secretary attended a number of Committee meetings at the invitation of the Committee and provided advice on
issues other than those relating to his own remuneration. The Committee also received independent external advice from Hewitt New Bridge Street.
Hewitt New Bridge Street was appointed by the Committee and does not provide any other services to the Company other than to the Board
Committee on Non-Executive Directors’ Remuneration.
The remuneration of the non-executive directors (apart from the Chairman) is determined by the Board Committee on Non-Executive Directors’
Remuneration, which comprises the executive directors. The Board Committee on Non-Executive Directors’ Remuneration also receives advice from
the Group Company Secretary and Hewitt New Bridge Street.
The Chairman’s remuneration is determined by the other non-executive directors.
Context
This year’s report is set in the context of the vote against the advisory resolution to approve the directors’ remuneration report for 2007/08 at the
Annual General Meeting (“AGM”) in January 2009. The opposition of shareholders reflected concerns about the decision of the Committee to base the
2007/08 annual bonus on a broad judgement of the performance of management in a volatile market, rather than to determine the bonus using a range
of fixed operating profit targets, based around budget, as had been the case in previous years. It also reflected concerns that the Committee had failed to
consult shareholders adequately in making this change.
The Committee has been very mindful of these concerns, and undertook extensive consultations with institutional shareholders on future bonus
arrangements in the spring of this year. As a result of these consultations it made significant changes to bonus arrangements including:
(cid:131) reducing the maximum annual bonus payable from 120% (150% of salary in exceptional circumstances) to 100% of salary.
(cid:131) for this year, further reducing maximum bonus potential to one-third of salary, to reflect the fact that the bonus terms were not established until
March 2009.
(cid:131) restructuring the bonus for this year from a payment based solely on operating profit, to a payment based on fixed targets for operating profit (before
exceptional items) (40%) and cash generation (excluding any equity raising) (40%), with 20% based on personal performance, to be evaluated by the
Committee after the year end, thereby providing a more rounded assessment of performance.
The Committee also determined to freeze the salaries and certain benefits of executive directors for the 2009/10 financial year.
Shareholders were consulted before these changes were implemented, and were supportive of the arrangements.
The Committee considers these actions to be a measured and reasonable response to shareholders’ concerns and hopes that they will be endorsed.
The Company has also addressed the vesting of the award of shares granted in 2006 under the Bellway p.l.c. (2004) Performance Share Plan (“PSP”).
The award was based on relative Total Shareholder Return (“TSR”) and the calculation as at 31 July 2009 confirmed that the TSR condition had
been met. Before confirming the award, the Committee also considered the financial underpin which requires the Committee to satisfy itself that the
Company’s TSR reflects the Company’s underlying financial performance. The underpin, which was approved by shareholders at the AGM in 2004,
is defined in narrow and precise terms. The Committee considers that the terms of the underpin have been met and the awards will vest.
The Committee has engaged with shareholders regarding certain matters in relation to the future operation of the PSP, including the wording of
a financial underpin to apply to future awards and will give due consideration to these issues for the financial year commencing 1 August 2010.
36
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Bellway p.l.c.
Annual Report & Accounts 2009
Objectives
The aim of the Committee is to ensure that the Company has competitive remuneration packages in place in order to recruit, retain and motivate
executive directors in the overall interests of shareholders, the Company, its employees and its customers. The Committee has set, as an objective,
a policy of paying remuneration around the median of a peer group of similar UK housebuilding businesses and it is satisfied that the structure of the
executives’ packages broadly achieves this objective. The Committee has used this comparative approach to benchmarking with caution, recognising
the risk of upward only reviews of remuneration. The structure of the package has been designed to ensure that the performance-related elements of
remuneration (annual bonus and long-term incentives) constitute a significant proportion of an executive’s potential total remuneration package, but
are only receivable if demanding and stretching performance targets are achieved. The Committee considers that the remuneration level and structure
are fully competitive with the market, with a significant element of the package payable in the form of share-based incentives, subject to long-term
performance conditions, including relative TSR performance against other UK housebuilders, thereby creating an alignment with the interests of
shareholders.
In framing the Company’s remuneration policy for executive directors, the Committee has given full consideration to the best practice provisions in the
Combined Code and the Association of British Insurers’ (“ABI”) guidance.
Summary of remuneration policy
The policy in relation to each component of executive remuneration is described below:
Component
Policy
Performance period
How achieved
Salary
To be market competitive
n/a
Benefits
To provide a range and value
which is market competitive
n/a
Annual Bonus
Long-term incentives
(performance shares
and matching shares)
To reward achievement of annual
operational-based performance
targets
1 year
3 years
To encourage long-term value
creation, to aid retention, to
encourage shareholding, and to
promote alignment of interest
with shareholders
Salary levels set by reference to the mid-market level of a peer group
of similar UK housebuilding businesses, taking account of individual
performance and experience. In practice, notwithstanding the fact
that the current management team is highly experienced and well
regarded, packages are generally at or below the median.
Benefits to be at the mid-market level of a peer group of similar UK
housebuilding businesses which include a salary supplement in lieu of
pension contributions, car or car allowance, life assurance, medical
cover and permanent health insurance.
By providing the opportunity to earn a bonus of up to 100% of
salary for outstanding operational performance, both financial and
non-financial.
By using share-based incentives with performance conditions which
are aligned with shareholders’ interests, such as TSR, which are
assessed over a three-year period.
Service contracts and letters of appointment
The executive directors have fixed-term service contracts which specify that retirement is at age 60, with a 12-month notice period from the Company
and a six-month notice period from the executive. On termination by the Company, an amount equivalent to one year’s salary, benefits and the average
amount of the last two years’ annual bonus payments, would be payable. Within six months of a change of control, if the Company or the executive
director serves notice to terminate the contract, the liquidated damages payment would be triggered.
The inclusion of average annual bonus in the calculation of compensation payable for early termination will ensure that there is variability in the potential
level of compensation. In particular, after a period of poor performance, it could be expected that little or no bonus would be payable, reducing potential
payout in these circumstances.
The service contracts of all executive directors have been reviewed and amended, including the removal of the right to indexation of basic salaries.
The Committee has also proposed amendments to the terms of future contracts. These actions will make service contracts consistent with current best
practice. The details of the executive directors’ service contracts are as follows:
Executive director
J K Watson
P J Stoker
A M Leitch
First appointed
as a director
1 August 1995
1 August 1995
1 August 2002
Current contract
commencement date
16 March 2001, amended 7 October 2009
19 January 1996, amended with effect from
1 November 2003 and further amended 7 October 2009
1 September 2002, amended 7 October 2009
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Annual Report & Accounts 2009
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All non-executive directors have letters of appointment with the Company of no more than three years with a three-month notice period by either side.
Non-executive director
H C Dawe
D G Perry
P M Johnson
M R Toms
First appointed
as a director
9 August 1977
1 November 1999
1 November 2003
1 February 2009
Current letter of appointment
commencement date
Current letter of appointment
expiry date
1 November 2007
1 November 2006
1 November 2006
1 February 2009
31 October 2010
15 January 2010
31 October 2009
31 January 2012
On the expiry of his existing letter of appointment, it is the intention of the Company to issue a new letter of appointment to Mr Johnson for a term of
three years. Mr Cuthbert is to be appointed as a non-executive director with effect from 1 November 2009 and his letter of appointment will run from
1 November 2009 to 31 October 2012.
Salaries and fees
Salaries are reviewed on 1 August each year, taking into account the general settlement across the Company. Any changes are implemented from
that date.
For the year under review, the executive directors were awarded a rise of 3% with effect from 1 August 2008. For the 2009/10 financial year salaries
were frozen from 1 August 2009.
Fee levels for non-executive directors reflect the time commitment and responsibilities of the role and are reviewed annually, taking into account the
level of fees for similar positions in comparable companies. They are not entitled to any benefits (with the exception of the Chairman) or pension.
They do not participate in any bonus or long-term incentive plan and they are not entitled to compensation on termination of their agreements, other
than normal notice provisions of three months’ notice given by either party.
Benefits in kind
Benefits in kind provided to the executive directors relate to the provision of motor vehicles and private medical insurance.
Annual bonus scheme
For several years the annual bonus scheme had a potential of 120% of basic salary (with 150% for exceptional performance). Following engagement
with institutional shareholders, for the year under review the maximum was reduced to 100% of basic salary. Furthermore, in view of the fact that the
performance conditions had not been determined until two-thirds of the 2008/09 financial year had elapsed, the maximum bonus potential was scaled
back to one-third of basic salary. The performance conditions for the 2008/09 bonus were operating profit (before exceptional items) (40%), debt
reduction (excluding any equity raising) (40%) and personal performance (20%). The latter to be assessed on the basis of how well management
is perceived to have negotiated the Company through the present housing downturn during the year. Full details of the bonus payments and the
performance conditions are set out in the notes to the table of directors’ emoluments. Annual bonuses are not pensionable.
The 2009/10 bonuses will also be capped at 100% of basic salary. The performance conditions will be operating profit (before exceptional items) (80%)
and personal performance (20%), with personal performance being assessed by reference to succession planning, land bank management, health and
safety and customer care. The greater weighting on operating profit (before exceptional items) at the expense of debt reduction in last year’s bonus plan
reflects the improved opportunities for growth this year.
The bonus will be payable in cash, with executives having the opportunity to invest up to 25% of their net cash bonus in Bellway shares under the terms
of the Bellway p.l.c. (2008) Share Matching Plan.
Long-term incentive schemes
The Company operates two long-term incentive plans, designed to focus executive directors on longer term value creation, provide a strong retentive
element and provide alignment of interest with shareholders.
The Bellway p.l.c. (2004) Performance Share Plan (the “PSP”) was introduced for the Company’s executive directors and the Group Company
Secretary. Under the PSP, executives have been granted awards over shares worth 100% of basic salary each year, subject to the achievement of
TSR-based performance conditions or, in January 2008, a combination of TSR and Return on Capital Employed (“ROCE”) conditions.
The policy for long-term incentives to be granted in the 2009/10 financial year, as was the case in prior years, will be for awards to be granted over
shares worth 100% of basic salary. Awards will vest to executives after three years subject to the achievement of performance conditions based around
TSR, which compares the stock market performance (share price movement and dividends paid) of different companies.
A TSR performance condition will compare Bellway’s TSR against that of an index created by the average TSR of the other UK housebuilders.
Awards will start to vest at 25% if Bellway’s TSR matches the performance of the index. Full vesting will occur if Bellway’s TSR out-performs the
index by an average of 7.5% per annum over three years. The Committee has carried out significant modelling, the results of which support the
premise that 7.5% per annum outperformance is equivalent to average “upper quartile” TSR performance of the housebuilders over the long term.
Further, regardless of TSR performance, no part of the TSR element of an award will vest unless the Committee considers that the Company’s TSR
over the performance period reflects underlying financial performance.
The companies comprising the Index for the awards to be granted in the financial year commencing on 1 August 2009 are Barratt Developments PLC,
The Berkeley Group plc, Bovis Homes Group PLC, Persimmon plc, Redrow plc and Taylor Wimpey plc.
TSR is recognised as enabling alignment with the interests of institutional shareholders through providing a reward mechanism for delivering superior
stock market performance.
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Bellway p.l.c.
Annual Report & Accounts 2009
The Bellway p.l.c. (2008) Share Matching Plan (the “SMP”) operates in conjunction with the annual bonus plan. Under the SMP senior executives may
invest up to 25% of their net cash bonus, on a voluntary basis, in Bellway shares, which must be held for a minimum of three years. Invested shares will
not be subject to a risk of forfeiture and executives will enjoy full beneficial ownership (including voting rights and dividends).
In return for investing in shares, under the SMP, an award of matching shares is granted. The level of matching is on a gross basis to the net of tax bonus
invested in shares.
Matching shares will vest subject to the executive remaining employed, retention of the invested shares and also subject to a performance condition.
No awards have been made to date. For any awards which may be made the performance condition will be the same as will apply to the award under
the PSP in the same period.
In addition to the two executive plans detailed above, the Bellway p.l.c. (2003) Savings Related Share Option Scheme (“2003 SRSOS”) is available to all
employees, including the executive directors.
Shareholding guidelines
There is a minimum shareholding requirement for the executive directors, equivalent to 100% of basic salary. As at 31 July 2009, and at the date of this
report, all executive directors hold shares with an equivalent value well in excess of 100% of their basic salary. Any executive directors appointed in the
future will be given an appropriate period of time to acquire the requisite shareholding.
Directors’ interests
The directors’ interests (including family interests and holdings in which the directors are interested only as trustees) in the ordinary share capital of the
Company are set out below:
Beneficial interests
H C Dawe
J K Watson
P J Stoker
A M Leitch
D G Perry
P M Johnson
M R Toms
Fully paid ordinary 12.5p shares
31 July 2009
1 August 2008
143,634
400,527
540,000
132,473
5,000
4,300
–
143,634
400,527
536,531
132,473
5,000
4,300
–
There has been no change in the above interests between 31 July 2009 and the date of this report.
In addition, Mr Dawe had a beneficial interest in 629,164 Bellway p.l.c. 9.5% cumulative redeemable preference shares 2014 of £1 each which are held
in his Self Invested Personal Pension Plan (“SIPP”) at 31 July 2009 and at the date of this report (1 August 2008 – 554,164). Mr Leitch had a beneficial
interest in 50,000 Bellway p.l.c. 9.5% cumulative redeemable preference shares 2014 of £1 each, which he held at 31 July 2009 and at the date of this
report (1 August 2008 – 50,000).
Pensions
As disclosed in last year’s report, in July 2008 the executive directors took enhanced transfer values from the final salary section of the Bellway plc 1972
Pension & Life Assurance Scheme, and therefore have no accrued pension entitlements. Since 1 June 2008 they have received a cash payment in lieu of
pension contributions amounting to 30% of basic salary.
The auditors are required to report on the information contained in the following part of this report.
39
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Annual Report & Accounts 2009
Directors’ remuneration
Non-executive Chairman
H C Dawe
Executive directors
J K Watson
P J Stoker
A M Leitch
Non-executive directors
P M Johnson
D G Perry
M R Toms(4)
L P Finn(5)
Totals
Notes:
Salary and
Fees
Taxable
Benefits(1)
Annual
Bonus(2)
£
£
228,094
2,020
£
–
Payment in
lieu of
pension(3)
£
Total
2009
£
2008
£
–
230,114
222,863
515,000
334,750
334,750
49,675
47,380
23,690
23,835
25,755
24,933
24,696
104,391
67,854
67,854
154,500
100,425
100,425
–
–
–
–
–
–
–
–
–
–
–
–
799,646
527,962
527,725
49,675
47,380
23,690
23,835
824,917
544,276
544,009
46,000
46,000
–
50,000
1,557,174
77,404
240,099
355,350
2,230,027
2,278,065
1. Taxable benefits relate to the provision of motor vehicles and private medical insurance.
2. The annual bonus is payable in November 2009 for performance during the year ended 31 July 2009. The performance conditions for the 2008/09 bonus are operating profit (before exceptional
items) (40%), debt reduction (excluding any equity raising) (40%) and personal performance (20%). The latter has been assessed on the basis of how well management is perceived to have negotiated
the Company through the present housing downturn during the year. In addition, the bonus potential was scaled back by two-thirds as these targets were not set until March 2009. The actual bonus
payments against each of these metrics were determined on the following basis.:
(cid:131) operating profit was £45.6 million, which was at the lower end of the target range. A bonus of 1.94% of salary was therefore achieved.
(cid:131) debt reduction was £180.9 million and the Company finished the year with debt of £36.8 million. This was well above the maximum of the target range and a bonus of 13.33% of salary
was achieved.
(cid:131) in respect of personal performance the Committee considered that the management team had clearly identified its strategic priorities and had jointly responded effectively to market conditions by
reducing the size of the business and exerting strict cost control. A bonus of 5% of salary was therefore awarded to each executive director.
3. Executive directors receive a cash payment in lieu of pension contribution amounting to 30% of basic salary.
4. Appointed 1 February 2009.
5. Retired 16 January 2009.
Directors’ interests in deferred bonus plan
The executive directors have a beneficial interest in certain shares held in the Bellway Employee Share Trust (1992) pursuant to the grant of deferred
bonus entitlements under the terms of the Bellway p.l.c. 2003 Deferred Bonus Plan (a legacy plan). The number of shares held in the Trust in respect
of each director is as follows:
J K Watson
P J Stoker
A M Leitch
Notes:
Fully paid ordinary 12.5p shares
Entitlements
held in Trust as
at 1 August 2008
Entitlements
awarded
during the year
Entitlements
vested
during the year(1)
Entitlements
held in Trust as
at 31 July 2009
41,844
30,621
27,204
–
–
–
(23,987)
(17,675)
(15,150)
17,857
12,946
12,054
1. Additional shares (not included above) were awarded on vesting in lieu of dividends accrued on the shares held in the Trust from the date of the award to vesting in respect of each director as
follows: Mr Watson 2,874 shares, Mr Stoker 2,117 shares and Mr Leitch 1,815 shares.
2. There has been no change in the above holdings between 31 July 2009 and the date of this report.
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40
Report of the Board on Directors’ Remuneration continued
Bellway p.l.c.
Annual Report & Accounts 2009
Directors’ interests in Performance Share Plan (“PSP”)
In addition, the executive directors have a potential future beneficial interest in certain shares held in the Bellway Employee Share Trust (1992) pursuant
to the allocation of shares under the PSP. Further information on the PSP is set out on pages 35 and 37. The number of shares allocated in the Trust in
respect of each director, along with the market price of the shares at the date of award, is shown below:
Fully paid ordinary 12.5p shares
Potential future beneficial interests
J K Watson
Totals
P J Stoker
Totals
A M Leitch
Totals
Notes:
Award date
14.11.2005(1)
18.10.2006(2)
16.01.2008(3)
04.11.2008(4)
14.11.2005(1)
18.10.2006(2)
16.01.2008(3)
04.11.2008(4)
14.11.2005(1)
18.10.2006(2)
16.01.2008(3)
04.11.2008(4)
Awards held
at 1 August 2008
Awarded
during the year
Awards lapsed
during the year
Awards vested
during the year(5)
Awards held
at 31 July 2009
42,083
33,482
67,159
–
142,724
30,510
23,065
43,653
–
97,228
28,406
23,065
43,653
–
95,124
–
–
–
89,487
89,487
–
–
–
58,167
58,167
–
–
–
58,167
58,167
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(42,083)
–
–
–
–
33,482
67,159
89,487
(42,083)
190,128
(30,510)
–
–
–
–
23,065
43,653
58,167
(30,510)
124,885
(28,406)
–
–
–
–
23,065
43,653
58,167
(28,406)
124,885
1. Market value on award 950.50p (14.11.2005), performance period 1 August 2005 – 31 July 2008.
2. Market value on award 1,344.00p (18.10.2006), performance period 1 August 2006 – 31 July 2009.
3. Market value on award 744.50p (16.01.2008), performance period 1 August 2007 – 31 July 2010.
4. Market value on award 575.50p (04.11.2008), performance period 1 August 2008 – 31 July 2011.
5. Market value on 24 November 2008, which was the day the shares vested, was 513.00p. The awards vested at 100% of the full entitlement. Aggregate gross gains made by these directors on vesting
of these awards under the PSP in the year were £507,840.17 (2008 – £620,886.34).
6. The performance conditions for each award are summarised below:
(a) For awards made on 14 November 2005 and 18 October 2006, vesting is conditional on the achievement of a TSR performance condition requiring Bellway’s TSR to be at least at the median
of a comparator group of other housebuilders (at which point 33% of the award vests). Full vesting requires Bellway’s TSR to be at the upper quartile. The Comparator group comprises Barratt
Developments PLC, The Berkeley Group plc, Bovis Homes Group PLC, Persimmon plc, Redrow plc and Taylor Wimpey plc (plus Countryside Properties PLC, Crest Nicholson plc, McCarthy &
Stone plc, Taylor Woodrow plc, Westbury plc and Wilson Bowden plc, all of whom have now delisted).
(b) For awards made on 16 January 2008, two performance conditions applied to separate parts of the award:
(i) 50% of the award is based on a TSR condition against other housebuilders but, instead of a ranking approach (comparing Bellway’s TSR to that of each other company) an Index is created
out of the TSR of the other housebuilders in the group. Bellway’s TSR is compared to that of the Index. If Bellway’s TSR matches that of the Index, 25% of the TSR part of the award vests
(reduced from the previous vesting profile whereby 33% of the award vested at median). Full vesting is achieved for 7.5% per annum outperformance of the Index. The companies comprising
the Index for the awards made on 16 January 2008 are Barratt Developments PLC, The Berkeley Group plc, Bovis Homes Group PLC, Persimmon plc, Redrow plc and Taylor Wimpey plc.
(ii) The remaining 50% of the award is based on a range of ROCE based targets requiring average annual ROCE of 15% per annum (at which point, 25% of the ROCE part of the award would
vest) to 22% per annum for all of this part of the award to vest. Awards vest on a straight-line basis in between these two points.
(c) For the award made on 4 November 2008 the TSR part of the award applied as the sole performance condition (compared to the same companies as for the award made on 16 January 2008).
Further, regardless of TSR performance, no part of the TSR element of an award will vest unless the Committee considers that the Company’s TSR over the performance period reflects underlying
financial performance.
7. The market price of the ordinary shares at 31 July 2009 was 735.00p and the range during the year was 400.50p to 780.00p.
There has been no change in the above potential future beneficial interests between 31 July 2009 and the date of this report.
41
Bellway p.l.c.
Annual Report & Accounts 2009
Directors’ share options
Details of all directors’ interests under the all-employee savings related share option scheme are shown below:
Scheme
1 August 2008
Granted during
the year
Withdrawn from
during the year
31 July 2009
Exercise price (p)
Exercisable from
Expiry date
J K Watson
2003 SRSOS
2003 SRSOS
Totals
P J Stoker
Totals
2003 SRSOS
2003 SRSOS
A M Leitch
2003 SRSOS
Totals
Notes:
1,133
–
1,133
1,133
–
1,133
1,133
1,133
–
2,857
2,857
–
2,857
2,857
–
–
(1,133)
–
(1,133)
(1,133)
–
(1,133)
(1,133)
(1,133)
–
2,857
2,857
–
2,857
2,857
–
–
847.20
336.00
1 Feb 2011
31 July 2011
1 Feb 2012
31 July 2012
847.20
336.00
1 Feb 2011
31 July 2011
1 Feb 2012
31 July 2012
847.20
1 Feb 2011
31 July 2011
1. All of the above options were granted for nil consideration.
2. The market price of the ordinary shares at 31 July 2009 was 735.00p and the range during the year was 400.50p to 780.00p.
Performance graph
The graph below shows the total shareholder return performance of the Company and a “broad equity market index” over the past five financial years.
As the Company has been a constituent of the FTSE 250 Index over this period, the Committee considers that index to be the most appropriate for
comparison purposes.
Total shareholder return over the last five financial years
Source: Datastream
250
230
210
190
170
150
130
110
90
70
50
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This graph looks at the value at 31 July 2009, of £100 invested in Bellway p.l.c. on 31 July 2004 compared with the value of £100 invested in the
FTSE 250 Index over the same period.
This report will be put to an advisory vote of the Company’s shareholders at the AGM on 15 January 2010.
On behalf of the Board of Bellway p.l.c.
Mike R Toms
Chairman of the Board Committee on Executive Directors’ Remuneration
12 October 2009
42
Statement of Directors’ Responsibilities in respect of the Annual Report and Accounts
Bellway p.l.c.
Annual Report & Accounts 2009
The directors are responsible for preparing the Annual Report and Accounts 2009 and the Group and parent company financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare group and parent company financial statements for each financial year. Under that law they are required
to prepare the Group financial statements in accordance with International Financial Reporting Standards (“IFRSs”) as adopted by the EU and applicable
law and have elected to prepare the parent company financial statements on the same basis.
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state
of affairs of the Group and parent company and of their profit or loss for that period. In preparing each of the Group and parent company financial
statements, the directors are required to:
(cid:131) select suitable accounting policies and then apply them consistently;
(cid:131) make judgements and estimates that are reasonable and prudent; and
(cid:131) state whether they have been prepared in accordance with IFRSs as adopted by the EU.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company’s transactions and
disclose with reasonable accuracy at any time the financial position of the parent company and enable them to ensure that its financial statements comply
with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the
Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the directors are also responsible for preparing a Directors’ Report, Directors’ Remuneration Report and
Corporate Governance Statement that complies with that law and those regulations.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website.
Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Responsibility statement of the directors in respect of the Annual Report and Accounts
We confirm that to the best of our knowledge:
(cid:131) the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
(cid:131) the Directors’ Report includes a fair review of the development and performance of the business and the position of the issuer and the undertakings
included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
Alistair M Leitch
Finance Director
12 October 2009
43
Independent Auditors’ Report to the Members of Bellway p.l.c.
Bellway p.l.c.
Annual Report & Accounts 2009
We have audited the financial statements of Bellway p.l.c. for the year ended 31 July 2009 set out on pages 44 to 75. The financial reporting framework
that has been applied in their preparation is applicable law and International Financial Reporting Standards (“IFRSs”) as adopted by the EU and, as regards
the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
This report is made solely to the Company’s members, as a body, in accordance with sections 495, 496 and 497 of the Companies Act 2006. Our audit
work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditors’ report
and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and
the Company’s members, as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the directors’ responsibilities statement set out on page 42, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable
law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (“APB’s”) Ethical
Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB’s website at www.frc.org.uk/apb/scope/UKP.
Opinion on financial statements
In our opinion:
(cid:131) the financial statements give a true and fair view of the state of the Group’s and of the parent company’s affairs as at 31 July 2009 and of the Group’s
loss for the year then ended;
(cid:131) the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the EU;
(cid:131) the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the EU and as applied in accordance
with the provisions of the Companies Act 2006; and
(cid:131) the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group financial
statements, Article 4 of the IAS Regulation.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
(cid:131) the part of the Report of the Board on Directors’ Remuneration to be audited has been properly prepared in accordance with the Companies Act
2006; and
(cid:131) the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the
financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
(cid:131) adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches
not visited by us; or
(cid:131) the parent company financial statements and the part of the Report of the Board on Directors’ Remuneration to be audited are not in agreement
with the accounting records and returns; or
(cid:131) certain disclosures of directors’ remuneration specified by law are not made; or
(cid:131) we have not received all the information and explanations we require for our audit.
Under the Listing Rules we are required to review:
(cid:131) the directors’ statement, set out on page 33, in relation to going concern; and
(cid:131) the part of the corporate governance statement relating to the Company’s compliance with the nine provisions of the June 2008 Combined Code
specified for our review.
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M R Thompson (Senior Statutory Auditor)
for and on behalf of KPMG Audit Plc, Statutory Auditor
Chartered Accountants
Quayside House, 110 Quayside
Newcastle upon Tyne NE1 3DX
12 October 2009
44
Group Income Statement
for the year ended 31 July 2009
Bellway p.l.c.
Annual Report & Accounts 2009
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating (loss)/profit
Finance income
Finance expenses
Notes
1
5
4
2
2
Share of losses of equity accounted entities
11
(Loss)/profit before taxation
Income tax credit/(expense)
(Loss)/profit for the year*
* All attributable to equity holders of the parent.
(Loss)/earnings per ordinary
share – Basic
(Loss)/earnings per ordinary
share – Diluted
6
8
8
2009
Pre-exceptional
item
£000
2009
Exceptional item
note 5
£000
2009
Total
£000
2008
Pre-exceptional
item
£000
2008
Exceptional item
note 5
£000
2008
Total
£000
683,813
(596,680)
87,133
(41,554)
–
683,813
1,149,541
–
1,149,541
(66,312)
(662,992)
(905,745)
(130,905)
(1,036,650)
(66,312)
20,821
243,796
(130,905)
–
(41,554)
(58,761)
–
112,891
(58,761)
45,579
(66,312)
(20,733)
185,035
(130,905)
54,130
4,894
(20,712)
–
29,761
(9,460)
–
–
–
4,894
3,631
(20,712)
(22,683)
–
(315)
–
–
–
(66,312)
18,567
(36,551)
9,107
165,668
(46,159)
(130,905)
38,399
3,631
(22,683)
(315)
34,763
(7,760)
20,301
(47,745)
(27,444)
119,509
(92,506)
27,003
17.7p
17.6p
(41.6)p
(23.9)p
104.2p
(80.6)p
23.6p
(41.5)p
(23.9)p
104.1p
(80.6)p
23.5p
Statements of Recognised Income and Expense
for the year ended 31 July 2009
Actuarial gains/(losses) on defined benefit pension scheme
Tax on items taken directly to equity
Net expense recognised directly in equity
(Loss)/profit for the year
Total recognised (expense)/income*
* All attributable to equity holders of the parent.
Notes
24
6
19
Group 2009
£000
Group 2008
£000
Company 2009
£000
Company 2008
£000
353
(99)
254
(27,444)
(27,190)
(14,351)
4,018
(10,333)
27,003
16,670
–
–
–
–
–
–
(1,873)
(1,873)
(1,900)
(1,900)
45
Balance Sheets
at 31 July 2009
Bellway p.l.c.
Annual Report & Accounts 2009
ASSETS
Non-current assets
Property, plant and equipment
Investment property
Investments in subsidiaries and equity accounted entities
Other financial assets
Deferred tax assets
Current assets
Inventories
Corporation tax receivable
Trade and other receivables
Cash and cash equivalents
Total assets
LIABILITIES
Non-current liabilities
Interest-bearing loans and borrowings
Retirement benefit obligations
Land and other payables
Current liabilities
Interest-bearing loans and borrowings
Trade and other payables
Total liabilities
Net assets
EQUITY
Issued capital
Share premium
Other reserves
Share-based payment reserve
Retained earnings
Total equity attributable to equity holders of the parent
Minority interest
Total equity
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Notes
Group 2009
£000
Group 2008
£000
Company 2009
£000
Company 2008
£000
9
10
11
14
12
8,250
7,377
–
20,826
7,328
43,781
11,559
4,092
126
5,607
7,871
–
–
–
–
26,788
25,470
–
–
–
–
29,255
26,788
25,470
13
1,211,351
1,503,936
9,847
41,749
43,210
1,306,157
1,349,938
23,900
30,596
109,313
1,667,745
1,697,000
–
–
703,617
4,953
708,570
735,358
–
–
715,578
5,139
720,717
746,187
100,000
295,000
20,000
20,000
11,925
26,854
12,709
51,306
–
–
–
–
138,779
359,015
20,000
20,000
–
246,147
246,147
384,926
52,000
284,901
336,901
695,916
–
858
858
20,858
–
1,058
1,058
21,058
965,012
1,001,084
714,500
725,129
14,375
117,198
1,492
–
832,013
965,078
14,372
14,375
116,928
117,198
1,492
–
868,358
1,001,150
2,145
10,585
570,197
714,500
–
14,372
116,928
2,145
9,267
582,417
725,129
–
(66)
(66)
965,012
1,001,084
714,500
725,129
14
21
15
24
16
15
16
18
19
19
19
19
19
Approved by the Board of Directors on 12 October 2009 and signed on its behalf by
Registered number 1372603
Howard C Dawe
Director
Alistair M Leitch
Director
46
Cash Flow Statements
for the year ended 31 July 2009
Bellway p.l.c.
Annual Report & Accounts 2009
Notes
Group 2009
£000
Group 2008
£000
Company 2009
£000
Company 2008
£000
(1,873)
(1,900)
Cash flows from operating activities
(Loss)/profit for the year
Depreciation charge
Loss on sale of property, plant and equipment
Loss/(profit) on sale of investment properties
Finance income
Finance expenses
Share-based payment charge
Income tax (credit)/expense
Decrease in inventories
(Increase)/decrease in trade and other receivables
(Decrease)/increase in trade and other payables
Cash from operations
Interest paid
Income tax received/(paid)
Net cash inflow/(outflow) from operating activities
Cash flows from investing activities
Acquisition of property, plant and equipment
Acquisition of investment properties
Proceeds from sale of property, plant and equipment
Proceeds from sale of investment properties
Interest received
Net cash (outflow)/inflow from investing activities
Cash flows from financing activities
(Decrease)/increase in bank borrowings
Proceeds from the issue of share capital on exercise of share options
Purchase of own shares by employee share option plans
Dividends paid
Net cash (outflow)/inflow from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
21
9
4
2
2
24
6
(27,444)
2,190
4
55
(4,894)
20,712
1,318
(9,107)
293,155
(22,744)
(69,282)
183,963
(14,590)
23,591
192,964
(139)
(3,383)
684
43
1,265
(1,530)
27,003
2,858
140
(151)
(3,631)
22,683
1,685
7,760
33,938
13,322
(101,688)
(2,096)
(1,858)
376
334
4,557
1,313
3,919
12,111
(17,418)
(62,875)
(76,374)
(1,900)
(1,900)
–
–
10,211
50,033
–
–
–
(27)
1,900
–
–
–
11,961
150
–
–
–
–
27
27
–
273
–
–
–
–
–
1,900
–
–
–
51,784
149
51,933
–
–
–
–
–
–
–
1,479
–
(51,364)
(49,885)
148
4,991
5,139
(247,000)
253,000
273
(113)
1,479
(568)
(10,697)
(51,364)
(10,697)
(257,537)
202,547
(10,424)
(66,103)
109,313
43,210
127,486
(18,173)
109,313
(186)
5,139
4,953
47
Accounting Policies
Bellway p.l.c.
Annual Report & Accounts 2009
Basis of preparation
Bellway p.l.c. (the “Company”) is a company incorporated in the UK.
Both the Company financial statements and the Group financial statements have been prepared and approved by the directors in accordance with
International Financial Reporting Standards as adopted by the EU (“Adopted IFRSs”) and have been prepared on the historical cost basis except for
other financial assets, which are stated at their fair value. On publishing the Company financial statements here together with the Group financial
statements, the Company is taking advantage of the exemption in section 408 of the Companies Act 2006 not to present its individual income
statement and related notes that form a part of these approved financial statements.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these consolidated
financial statements.
The preparation of financial statements in conformity with Adopted IFRSs 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 carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from
these estimates.
The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the Chief
Executive’s Operating Review on pages 6 to 11. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described
in the Financial Review on pages 20 to 23. Note 17 to the financial statements sets out the Group’s policies and processes for managing its capital,
financial risk, and its exposures to credit risk and liquidity risk.
The Group’s activities are financed principally by a combination of ordinary shares, preference shares, bank borrowings and cash in hand. During the year
the Group has reduced the level of bank debt by £180.9 million to £36.8 million, thereby reducing the Group’s interest rate exposure. The Group has
operated within all of its banking covenants throughout the year. At 31 July 2009 borrowings, net of cash balances, were £56.8 million, representing
gearing of 5.9% (including preference shares). In addition, the Group had bank facilities of £370.0 million, expiring in tranches up to April 2015, with
£290.0 million available for drawdown under such facilities as at 31 July 2009. On 6 August 2009 the Group raised net proceeds of £43.7 million from
the issue of 5,747,648 12.5p new ordinary shares.
The directors consider that the Group is well placed to manage business and financial risks in the current economic environment and have a reasonable
expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly they continue to adopt
the going concern basis in preparing the Annual Report and Accounts.
Judgements made by the directors, in the application of these accounting policies and Adopted IFRSs, that have a significant effect on the financial
statements and estimates with a significant risk of material adjustment in the next year are discussed below.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries)
made up to 31 July. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity so
as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account.
The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that
control ceases.
The consolidated financial statements include the Group’s share of the total recognised income and expenses of equity accounted entities. When the
Group’s share of losses exceeds its interest in an equity accounted entity, the Group’s carrying amount is reduced to nil and recognition of further losses
is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of an investee.
Jointly controlled entities are those entities over whose activities the Group has joint control, established by contractual agreement. The consolidated
financial statements include the Group’s proportionate share of the significant entities’ assets, liabilities, income and expenses with items of a similar nature
on a line-by-line basis, from the date that joint control commences until the date that joint control ceases.
The Group and Company own 25%–50% of the ordinary share capital of several small entities which were previously accounted for using the equity
method. The results, assets and liabilities of these jointly controlled entities have been proportionately consolidated in the current year. These entities
were equity accounted in the prior year. The amounts relating to the year ended 31 July 2008 have not been restated as they are not considered to
be significant.
Property, plant and equipment
Items are stated at cost less accumulated depreciation and impairment losses. Depreciation on property, plant and equipment is charged to the income
statement on a straight-line basis over their estimated useful lives over the following number of years:
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Plant, fixtures and fittings – 3 to 10 years.
Freehold buildings – 40 years.
Freehold land is not depreciated.
48
Accounting Policies continued
Bellway p.l.c.
Annual Report & Accounts 2009
Investment property
Investment property is initially recognised at cost. Subsequent to recognition, investment property is measured using the cost model and is carried at cost
less any accumulated impairment losses.
Depreciation is charged, where material, so as to write off the cost, less residual value, of the investment properties over their estimated useful lives.
The residual values and useful lives of investment properties are reviewed at each financial year end.
The useful life of investment properties has been assessed as 40 years (2008 – 40 years).
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 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. 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.
Trade and other receivables
Trade receivables are stated at their fair value at the date of initial recognition and subsequently at amortised cost less allowances for impairment.
Other financial assets
Other financial assets are classified as being available-for-sale and are stated at fair value, with any resultant gain or loss being recognised directly in equity
within an available-for-sale reserve, except for impairment losses. When these investments are de-recognised, the cumulative gain or loss previously
recognised directly in equity is recognised in the income statement. Where these investments are interest-bearing, interest calculated using the effective
interest method is recognised in the income statement.
Cash and cash equivalents
Cash and cash equivalents are defined as cash balances in hand and in the bank (including short-term cash deposits). The Group utilises bank overdraft
facilities, which are repayable on demand, as part of its cash management policy. As a consequence, bank overdrafts are included as a component of net
cash and cash equivalents within the cash flow statement. Offset arrangements across Group businesses are applied to arrive at the cash and overdraft
figures in the balance sheet.
Interest-bearing loans and borrowings
Interest-bearing loans and borrowings are stated at their fair value at the date of initial recognition and subsequently at amortised cost.
Trade and other payables
Trade payables on normal terms are not interest-bearing and are stated at their nominal value. Trade payables on deferred terms, most notably in
relation to land purchases, are recorded initially at their fair value. The discount to nominal value is amortised over the period to settlement and charged
to finance expenses.
Share capital
I. Preference share capital
Preference share capital is redeemable on 6 April 2014 or at the option of the Company (subject to relevant conditions set out in note 15) and is
classified as a liability.
II. Dividends
Dividends on redeemable preference shares are recognised as a liability and accrued using the effective interest rate method. They are recognised in the
income statement within finance expenses.
Other dividends are recognised as a liability in the period in which they are approved by the shareholders. Interim dividends are recognised when paid.
49
Bellway p.l.c.
Annual Report & Accounts 2009
Classification of equity instruments and financial liabilities issued by the Group
Equity instruments issued by the Group are treated as equity only to the extent that they meet the following two conditions:
(a) they include no contractual obligations upon the Company (or Group as the case may be) to deliver cash or other financial assets or to exchange
financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the Company (or Group); and
(b) where the instrument will or may be settled in the Company’s own equity instruments, it is either a non-derivative that includes no obligation to
deliver a variable number of the Company’s own equity instruments or is a derivative that will be settled by the Company exchanging a fixed amount
of cash or other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes the legal
form of the Company’s own shares, the amounts presented in these financial statements for called up share capital and share premium exclude amounts
in relation to those shares.
Grants
Grants are included within work in progress in the balance sheet to the extent that they contribute to construction costs and within deferred income
to the extent that they contribute to site income. Grants are credited to the income statement over the life of the developments to which they relate.
Revenue recognition
Revenue from private housing sales and land is recognised when transactions have legally completed.
Incentives
Sales incentives are substantially cash in nature but include part-exchange costs which mainly relate to amounts written down, where the part-exchange
allowance given to the purchaser of the new home is greater than the valuation of the part-exchange property. Incentives are accounted for by reducing
the housebuild revenue by the cost to the Company of providing the incentive.
Sales incentives also include shared equity schemes which are accounted for as Other Financial Assets as described above.
Rental income
Rental income is recognised in the income statement on a straight-line basis over the term of the lease.
Part exchange properties
The purchase and subsequent sale of part exchange properties is an activity undertaken in order to achieve the sale of a new property. As such, the
activity is regarded as a mechanism for selling. Impairments and gains or losses on the sale of part-exchange properties are classified as a cost of sale.
Any subsequent write-down below the part-exchange valuation is posted to cost of sales.
Contingent liabilities
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within the Group, the Company
considers these to be insurance arrangements, and accounts for them as such. In this respect, the Company treats the guarantee contract as a contingent
liability until such time as it becomes probable that the Company will be required to make a payment under the guarantee.
Taxation
The charge for taxation is based on the result for the year and takes into account current and deferred taxation. The charge is recognised in the income
statement except to the extent that it relates to items recognised in equity in which case it is recognised in equity.
Deferred taxation is provided for all temporary differences between the carrying amounts of assets and liabilities in the financial statements and the
corresponding tax bases. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount
of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised.
Deferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is no longer probable that the related tax benefit will
be realised.
Employee benefits – retirement benefit costs
For the defined benefit scheme, the liability is calculated as the present value of the defined benefit obligation at the balance sheet date. The fair values of
scheme assets are then deducted. The calculation is performed by a qualified actuary using the projected unit credit method. All actuarial gains and losses
are recognised immediately in the Statement of Recognised Income and Expense (“SORIE”). Further details of the scheme and the valuation methods
applied may be found in note 24 on pages 67 to 70.
Defined contribution pension costs are charged to the income statement in the period for which contributions are payable.
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Accounting Policies continued
Bellway p.l.c.
Annual Report & Accounts 2009
Employee benefits – share-based payment
In accordance with IFRS 2, the fair value of equity settled share options granted is recognised as an employee expense with a corresponding increase
in equity. The fair value is measured as at the date the options are granted and the charge is only amended if vesting does not take place due to non-
market conditions not being met. Various option pricing models are used according to the terms of the option scheme under which the options were
granted. The fair value is spread over the period during which the employees become unconditionally entitled to the options. The amount recognised
as an expense is adjusted to reflect the actual number of options that vest. At the balance sheet date if it is expected that non market conditions will not
be satisfied then the cumulative expense recognised in relation to the relevant options is reversed.
IFRS 2 has been applied to options granted after 7 November 2002 which had not vested at 1 January 2005.
With respect to share-based payments, a deferred tax asset is recognised on the relevant tax base. The tax base is then compared to the cumulative
share-based payment expense recognised in the income statement. Deferred tax arising on the excess of the tax base over the cumulative share-based
payment expense recognised in the income statement has been recognised directly in equity outside the SORIE as share-based payments are considered
to be transactions with shareholders.
A deferred tax asset relating to awards issued before 7 November 2002, which follow the exemption of IFRS 1 and have not been accounted for under
IFRS 2, has been recognised on transition. Subsequent reversal of the deferred tax asset and any excess tax benefits are recognised directly in equity.
Where the Company grants options over its own shares to the employees of its subsidiaries it recognises, in its individual financial statements, an increase
in the cost of investment in its subsidiaries equivalent to the equity settled share-based payment charge recognised in its consolidated financial statements
with the corresponding credit being recognised in equity.
Own shares held by ESOP trust
Transactions of the Group-sponsored ESOP trust are included in the Group financial statements but are not accounted for within the Company’s
financial statements. The purchase of shares in the Company by the trust are charged directly to equity.
Operating leases
Operating lease rentals are charged to the income statement on a straight-line basis over the period of the lease.
Finance income and expenses
Finance income includes interest receivable on bank deposits. Other financial assets relate to the deferred element of revenues receivable from the sale
of homes under shared equity schemes. The discounting of these other financial assets produces a notional interest receivable amount and this is also
credited to finance income.
Finance expenses includes interest on bank borrowings and dividends on redeemable preference shares. The discounting of the deferred payments for
land purchases produces a notional interest payable amount and this is also charged to finance expenses.
Exceptional items
Exceptional items are those which, in the opinion of the Board, are material by size or nature, non-recurring, and of such significance that they require
separate disclosure on the face of the income statement.
Accounting estimates and judgements
Management considers the key estimates and judgements made in the financial statements to be related to:
Valuation of work in progress and land held for development
Inventories are carried at the lower of cost and net realisable value, less payments on account. Net realisable value represents the estimated selling
price (in the ordinary course of business) less all estimated costs of completion and overheads. Valuations of site work in progress are carried out at
regular intervals and estimates of the cost to complete a site and estimates of anticipated revenues are required to enable a development profit to
be determined. Management are required to employ considerable judgement in estimating the profitability of a site and in assessing any impairment
provisions which may be required.
Exceptional items
For both the years ended 31 July 2009 and 31 July 2008, a full review of inventories has been performed and write-downs have been made where
cost exceeds net realisable value. Estimated selling prices have been reviewed on a site-by-site basis and selling prices have been reduced based on
local management and the Board’s assessment of current market conditions. These site reviews have resulted in write downs totalling £58.9 million
(2008 – £112.5 million). In addition option costs and part exchange properties have been written down by £7.4 million (2008 – £18.4 million)
to their net realisable value resulting in a total exceptional charge of £66.3 million (2008 – £130.9 million).
Whilst management remain cautious, selling prices and volumes have stabilised, however the market remains fragile. Should there be further significant
movements in selling prices, either further reductions or a stepped recovery, exceptional charges or credits may be necessary.
Pension
The Group has utilised a rate of return on assets and a discount rate having been advised by its actuary. To the extent that such assumed rates are
different from what actually transpires, the pension liability of the Group would change.
Income Taxes
A certain degree of estimation and judgement is required in establishing the tax figures prior to formal resolution with HMRC. In accordance with the
contingent asset rules, detailed in IAS 37, the Group’s policy is to be prudent in assessing the level of benefit which may accrue.
51
Bellway p.l.c.
Annual Report & Accounts 2009
Standards and interpretations in issue but not yet effective
At the date of authorisation of these financial statements, the following relevant Standards and Interpretations, which have not been applied in these
financial statements, were in issue and endorsed by the EU but not yet effective:
(cid:131) IFRS 8 “Operating Segments”. This standard amends the current segmental reporting requirements of IAS 14 with a requirement for segmental
information to be presented on the same basis as that used by management for internal reporting purposes. This standard will apply to the Group’s
financial statements for the period commencing 1 August 2009, with the requirement of additional disclosures. The Board considers there to be one
operating segment and accordingly does not expect any additional disclosure to be required.
(cid:131) IFRIC 15 “Agreements for the Construction of Real Estate”. This IFRIC provides guidance on whether the construction of real estate should be
accounted for under IAS 11 or IAS 18. The interpretation is effective from 1 January 2009, however, the Group already accounts for the construction
of real estate in accordance with IFRIC 15 and consequently there will be no effect on the Group’s financial statements.
(cid:131) IAS 23 (Amendment) “Borrowing Costs”. This amendment requires an entity to capitalise borrowing costs directly attributable to the acquisition,
construction or production of a qualifying asset as part of the cost of the asset, removing the option to immediately expense such costs. The Board
has concluded that the Group does not hold any material qualifying assets. The Board will continue to assess whether this amendment is applicable
to future assets under construction.
(cid:131) IFRS 1 (Amendment) “First Time Adoption of International Financial Reporting Standards”. This amendment allows a first-time adopter, at its date
of transition to IFRSs in its separate financial statements, to use a deemed cost to account for an investment in a subsidiary, jointly controlled entity
or associate. The amendment is effective for periods beginning on or after 1 January 2009, however, as the Group already applies IFRSs there will
be no effect on the Group’s financial statements.
(cid:131) IAS 27 (Amendment) “Consolidated and Separate Financial Statements”. The amendments remove the definition of the “cost method” currently
set out in IAS 27, and instead, require all dividends from a subsidiary, jointly controlled entity or associate to be recognised in the separate financial
statements of the investor when the right to receive the dividend is established. The Board does not consider that there will be any effect on the
Group’s financial statements.
(cid:131) IFRS 2 (Amendment) “Share-Based Payment”. The definition of vesting conditions in IFRS 2 has been amended to clarify that vesting conditions are
limited to service conditions and performance conditions. Conditions other than service or performance conditions are considered non-vesting
conditions. The amendment also specifies that all cancellations, whether by the entity or by other parties, should receive the same accounting
treatment, i.e. an acceleration of the charge, rather than being treated as a reversal. The amendment applies to periods beginning on or after
1 January 2009, however, the Board does not consider that there will be a significant effect on the Group’s financial statements.
(cid:131) IAS 32 (Amendment) “Financial Instruments: Presentation” and IAS 1 (Amendment) “Presentation of Financial Statements”. The amendments provide
exemptions from the requirement to classify as a liability certain financial instruments under which an entity has an unavoidable obligation to deliver
cash. The Board has concluded that the Group does not hold any applicable financial instruments.
(cid:131) IFRIC 14 – IAS 19 “The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction”. This IFRIC outlines when refunds or
reductions in future contributions can be treated as available under IAS 19 and how a minimum funding requirement affects future contributions or
may give rise to a liability. This interpretation applies to the Group’s financial statements from the accounting period commenced on 1 August 2009.
The Board anticipates that no additional liabilities will be recognised on adoption of IFRIC 14.
(cid:131) IAS 1 (Amendment) “Presentation of Financial Statements”. This is mandatory for accounting periods beginning on or after 1 January 2009. The Board
does not expect that this standard will have a material effect on the financial statements of the Group as it solely relates to presentational requirements.
(cid:131) Annual Improvements 2009. This is a collection of amendments to 12 standards as part of the IASB programme of annual improvements. The latest
amendments were included in exposure drafts published in October 2007, August 2008 and January 2009. Most of the amendments are effective for
annual periods beginning on or after 1 January 2010. The Board is assessing the applicability of these Annual Improvements, although at present it does
not believe that this will have a material effect on the Group.
Of the other IFRSs that are available for early adoption, none are expected to have a material effect on the financial statements.
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Notes to the Accounts
Bellway p.l.c.
Annual Report & Accounts 2009
1 Revenue/segmental analysis
The Group uses business as the basis for primary segmentation. Operations are carried out within one business segment which is housebuilding.
No additional business segment information is required to be provided. The Group’s secondary segment is geography. It operates in one geographical
segment, the United Kingdom, therefore no additional geographical segment information is required to be provided.
2 Finance income and expenses
Interest receivable on bank deposits
Interest income from financial assets
Other interest income
Finance income
Interest payable on bank loans and overdrafts
Interest on deferred term land payables
Interest element of movement in pension scheme deficit
Other interest expense
Preference dividends
Finance expenses
3 Employee information
Group employment costs, including directors, comprised:
Wages and salaries
Social security
Pension costs (note 24)
Share-based payments (note 24)
2009
£000
1,438
1,594
1,862
4,894
11,857
5,663
906
386
1,900
20,712
2009
£000
48,028
5,069
816
1,318
2008
£000
2,706
–
925
3,631
15,049
5,262
63
409
1,900
22,683
2008
£000
80,768
9,215
784
1,685
55,231
92,452
The average number of persons employed by the Group during the year was 1,240 (2008 – 2,203) comprising 452 (2008 – 704) administrative and 788
(2008 – 1,499) production and others employed in housebuilding and associated trading activities.
Pension costs for the current year are net of a settlement gain of £1.348 million (2008 – £1.783 million).
The Executive Directors and the Group Company Secretary are the only employees of the Company and the emoluments of the executive directors
are disclosed in the Report of the Board on Directors’ Remuneration on pages 35 to 41.
Key management personnel remuneration, including directors, comprised:
Salaries and fees
Taxable benefits
Annual bonus – cash
Pension costs
Share-based payments
2009
£000
2,192
122
335
12
1,040
3,701
2008
£000
1,733
75
807
358
1,161
4,134
Key management personnel, as disclosed under IAS 24: “Related party disclosures”, comprises the directors and other senior operational management.
53
Bellway p.l.c.
Annual Report & Accounts 2009
4 Operating (loss)/profit
Operating (loss)/profit is stated after charging:
Staff costs (note 3)
Loss on sale of property, plant and equipment
Depreciation
Hire of plant and machinery
Operating lease charges for land and buildings
Auditors’ remuneration:
Audit of these financial statements
Amounts receivable by the auditors and their associates in respect of:
Audit of financial statements of subsidiaries pursuant to legislation
Other services relating to taxation
Pension scheme audits
Other services
2009
£000
2008
£000
55,231
4
2,190
4,648
1,271
92,452
140
2,858
10,210
1,569
29
31
180
84
5
66
177
127
5
6
Amounts paid to the Company’s auditors and their associates in respect of services to the Company, other than the audit of the Company’s financial
statements, have not been disclosed as the information is required instead to be disclosed on a consolidated basis.
5 Exceptional items
Exceptional items are those which, in the opinion of the Board, are material by size or nature, non-recurring, and of such significance that they require
separate disclosure on the face of the income statement.
A full review of inventories has been performed and land write-downs have been made where cost exceeds net realisable value. Net realisable value
represents the estimated selling price (in the ordinary course of business) less all estimated costs of completion and overheads. Estimated selling prices
have been reviewed on a site-by-site basis and selling prices have been reduced based on local management and the Board’s assessment of current
market conditions. Following this review a material write-down in both size (see below), and nature, given the economic conditions in the UK,
has taken place.
These site reviews have resulted in land write downs totalling £58.881 million (2008 – £112.534 million).
In addition, option costs and related fees have been written down by £6.338 million (2008 – £15.395 million) to their net realisable value.
The Board has also reassessed the net realisable value of part exchange properties and has written down stock by £1.093 million
(2008 – £2.976 million).
The above has resulted in an exceptional charge totalling £66.312 million (2008 – £130.905 million).
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Notes to the Accounts continued
Bellway p.l.c.
Annual Report & Accounts 2009
6 Income tax (credit)/expense
Current tax (credit)/expense:
UK corporation tax
Adjustments in respect of prior years
Deferred tax (credit)/expense:
Origination and reversal of temporary differences
Adjustments in respect of prior years
Total income tax (credit)/expense in income statement
Reconciliation of effective tax rate:
(Loss)/profit before tax
Tax calculated at UK corporation tax rate
Non-deductible expenses
Effect of hybrid rate of tax
Adjustments in respect of prior years – current tax
Effective tax rate and tax (credit)/expense for the year
– deferred tax
2009
£000
2008
£000
(6,927)
(2,611)
(9,538)
(2,317)
2,748
431
(9,107)
2009
%
2009
£000
2008
%
(36,551)
(10,234)
1,305
(315)
(2,611)
2,748
(9,107)
28.0
(3.6)
0.9
7.1
(7.5)
24.9
28.0
5.6
1.3
(12.6)
–
22.3
10,855
(4,378)
6,477
1,277
6
1,283
7,760
2008
£000
34,763
9,734
1,936
462
(4,378)
6
7,760
The UK corporation tax rate changed from 30% to 28% with effect from 1 April 2008. The hybrid tax rate continued to affect the tax credit for the year
ended 31 July 2009 with respect to losses carried back from that period.
The adjustment in respect of prior years’ current and deferred tax has been applied to the pre-exceptional charge in the income statement.
Tax recognised directly in equity:
Relating to equity-settled transactions
Relating to actuarial movement on the defined benefit pension scheme
Income tax
2009
£000
Deferred tax
2009
£000
–
–
(13)
(99)
Total
2009
£000
(13)
(99)
Total
2008
£000
(2,690)
4,018
55
Bellway p.l.c.
Annual Report & Accounts 2009
7 Dividends on equity shares
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 July 2008 of 6.0p per share (2007 – 26.675p)
Interim dividend for the year ended 31 July 2009 of 3.0p per share (2008 – 18.1p)
Proposed final dividend for the year ended 31 July 2009 of 6.0p per share (2008 – 6.0p)
2009
£000
2008
£000
6,897
3,450
10,347
7,245
30,541
20,765
51,306
6,912
The 2009 proposed final dividend is subject to approval by shareholders at the Annual General Meeting on 15 January 2010 and, in accordance with IAS 10,
has not been included as a liability in these financial statements.
8 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 employee share ownership plans which are treated as cancelled).
Diluted earnings per ordinary share uses the same earnings figure as the basic calculation except that 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. It is assumed that all dilutive potential ordinary shares are converted at the beginning of the accounting period. 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:
Pre-exceptional item(1)
For basic earnings per ordinary share
Dilutive effect of options and awards
Earnings/
(loss)
2009
£000
Weighted
average number
of ordinary
shares
2009
no.
20,301
114,949,883
339,658
For diluted earnings per ordinary share
20,301
115,289,541
Earnings/
(loss) per
share
2009
p
17.7
(0.1)
17.6
Earnings
2008
£000
Weighted
average number
of ordinary
shares
2008
no.
119,509
114,615,661
245,743
119,509
114,861,404
Post-exceptional item
For basic earnings per ordinary share
(27,444) 114,949,883
(23.9)
27,003
114,615,661
Dilutive effect of options and awards(2)
–
–
245,743
For diluted earnings per ordinary share
(27,444) 114,949,883
(23.9)
27,003
114,861,404
(1) Exceptional charge of £66.3 million (2008 – £130.9 million) in the current year (note 5) less associated tax credit of £18.6 million (2008 – £38.4 million).
(2) In accordance with IAS 33 potential ordinary shares are only treated as dilutive when their conversion to ordinary shares would increase the loss per share.
Earnings
per share
2008
p
104.2
(0.1)
104.1
23.6
(0.1)
23.5
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Bellway p.l.c.
Annual Report & Accounts 2009
9 Property, plant and equipment
Group
Cost
At 1 August 2007
Additions
Disposals
At 1 August 2008
Additions
Disposals
Reclassification
At 31 July 2009
Depreciation
At 1 August 2007
Charge for year
On disposals
At 1 August 2008
Charge for year
On disposals
At 31 July 2009
Net book value
At 31 July 2009
At 31 July 2008
At 31 July 2007
Land and
property
£000
Plant,
fixtures and
fittings
£000
Total
£000
6,891
2
(92)
6,801
–
(79)
(570)
18,225
2,260
(2,269)
18,216
139
(3,166)
–
25,116
2,262
(2,361)
25,017
139
(3,245)
(570)
6,152
15,189
21,341
677
140
–
817
140
–
11,768
2,718
(1,845)
12,641
2,050
(2,557)
12,445
2,858
(1,845)
13,458
2,190
(2,557)
957
12,134
13,091
5,195
5,984
6,214
3,055
5,575
6,457
Land and property with a book cost of £0.570 million was reclassified from property, plant and equipment to inventories during the year.
10 Investment property
Group
Cost
At 1 August 2007
Additions
Disposals
At 1 August 2008
Additions
Disposals
At 31 July 2009
Investment properties, which represent properties where Bellway has retained an interest in a sold property, are valued under the cost model and are held
at cost less accumulated impairment losses. A formal internal valuation of investment properties was carried out at the end of the financial year, updating the
formal external valuation performed at the end of the previous financial year.
The fair value of investment properties was assessed at £7.983 million (2008 – £9.038 million).
8,250
11,559
12,671
Total
£000
2,417
1,858
(183)
4,092
3,383
(98)
7,377
57
Bellway p.l.c.
Annual Report & Accounts 2009
10 Investment property continued
As noted above, the Group assessed the residual values as being highly likely to exceed cost and, in the event that costs exceed residual values, any
excess would be viewed as not likely to be material in the Group’s financial statements. The Group has determined, therefore, that no depreciation
should be charged (2008 – nil).
The investment properties are a proportion of the cost of residential units constructed by the Group, the units being sold under a shared
ownership scheme.
11 Investments in subsidiaries, equity accounted entities and proportionately consolidated jointly controlled entities
The Group and Company have the following investments in subsidiaries and proportionately consolidated jointly controlled entities:
Subsidiaries
Company
Cost
At 1 August 2008
Additions
At 31 July 2009
Shares in
subsidiary
undertakings
£000
25,470
1,318
26,788
Principal subsidiary undertakings
A summary of the principal subsidiary undertakings is given in note 26 on page 75.
Equity accounted entities
The Group and Company own 25%–50% of the ordinary share capital of several small entities which were previously accounted for using the equity
method. The results, assets and liabilities of these jointly controlled entities are now proportionately consolidated. The amounts relating to the year
ended 31 July 2008 have not been restated as they are not considered to be significant.
Cost
At 1 August 2008
Reclassification
At 31 July 2009
Share of post-acquisition reserves
At 1 August 2008
Reclassification
At 31 July 2009
Net book value
At 31 July 2009
At 31 July 2008
Investments in
equity accounted
entities
£000
5
(5)
–
121
(121)
–
–
126
The amount by which the accumulated share of post-acquisition losses exceeds the cost of the investment in individual equity accounted entities has,
where required by the Group accounting policy, been transferred to current liabilities and included within note 16.
One of the equity accounted entities had a net asset position at 31 July 2008. The other equity accounted entity had a net liability position for that year.
The figure for investments in equity accounted entities at 31 July 2008 represents the amount for the entity which had a net asset position.
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Notes to the Accounts continued
Bellway p.l.c.
Annual Report & Accounts 2009
11 Investments in subsidiaries, equity accounted entities and proportionately consolidated jointly controlled entities continued
Summary of financial information on equity accounted entities – 100%
Total assets
Total liabilities
Net liabilities of equity accounted entities
Revenue
Loss after interest
Taxation
Loss after interest and taxation
Proportionately consolidated jointly controlled entities
Name
Barking Riverside Limited
Country of incorporation
Great Britain
The Group and Company also own 25%–50% of the ordinary share capital of several smaller proportionately consolidated jointly controlled entities,
which were previously equity accounted (see above). All of these entities are incorporated in Great Britain and registered in England and Wales.
Aggregated amounts relating to share of proportionately consolidated jointly controlled entities not adjusted for transactions with Group companies
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net liabilities
Income
Expenses
Guarantees relating to the overdrafts of jointly controlled entities have been given by the Company (note 22).
2009
£000
–
–
–
–
–
–
–
2008
£000
3,922
(5,348)
(1,426)
983
(630)
38
(592)
Percentage of shares owned
directly by Bellway p.l.c.
51%
2008
£000
288
2009
£000
565
27,816
23,452
(471)
–
(31,793)
(24,180)
(3,883)
(440)
1,111
(3,845)
638
(1,331)
59
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Annual Report & Accounts 2009
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12 Deferred taxation
The following are the deferred tax assets recognised by the Group and the movements thereon during the current and prior year :
Group
At 1 August 2007
Income statement credit/(charge)
Credit to statement of recognised
income and expense
Charge to equity
At 31 July 2008
Income statement credit/(charge)
Charge to statement of recognised
income and expense
Charge to equity
At 31 July 2009
Capital
allowances
£000
Retirement benefit
obligations
£000
Share-based
payments
£000
430
57
–
–
487
192
–
–
556
(1,016)
4,018
–
3,558
(120)
(99)
–
679
3,339
4,246
(1,127)
–
(2,690)
429
337
–
(13)
753
Land payables
£000
2,354
851
–
–
3,205
(3,205)
–
–
–
Losses
£000
Other temporary
differences
£000
–
–
–
–
–
2,104
–
–
240
(48)
–
–
192
261
–
–
Total
£000
7,826
(1,283)
4,018
(2,690)
7,871
(431)
(99)
(13)
2,104
453
7,328
There are no deferred tax balances in respect of the Company.
13 Inventories
Group
Land
Work in progress
Showhomes
Part-exchange properties
2009
£000
2008
£000
774,677
386,570
42,106
7,998
920,778
497,713
44,786
40,659
1,211,351
1,503,936
Inventories of £643.9 million were expensed in the year (2008 – £872.0 million).
In the ordinary course of business inventories have been written down by a net £5.7 million (2008 – net write back £18.3 million) in the year.
There has also been an exceptional write down of inventories in 2009 of £66.3 million (2008 – £130.9 million) as outlined in note 5 on page 53.
Land with a carrying value of £63.6 million (2008 – £61.2 million) was used as security for land payables (note 16).
The Company has no inventory.
14 Trade and other receivables
Non-current receivables
Other financial assets
Current receivables
Trade receivables
Other receivables
Amounts owed by Group undertakings
Prepayments and accrued income
Group
2009
£000
20,826
Group
2009
£000
11,032
27,166
–
3,551
41,749
Group
2008
£000
5,607
Group
2008
£000
13,644
15,130
Company
2009
£000
–
Company
2009
£000
–
–
Company
2008
£000
–
Company
2008
£000
–
–
–
703,617
715,578
1,822
30,596
–
–
703,617
715,578
The Group assesses the ageing of trade receivables in terms of whether amounts are receivable in less than one year or more than one year. None of the
trade receivables are past their due dates (2008 – nil).
60
Notes to the Accounts continued
Bellway p.l.c.
Annual Report & Accounts 2009
14 Trade and other receivables continued
Other financial assets due after more than one year are recorded at fair value, being the amount receivable by the Group discounted to present day
values. The difference between the nominal value and the initial fair value is credited over the deferred term to finance income, with the financial asset
increasing to its full expected cash settlement value on the anticipated receipt date. Credit risk is accounted for in determining fair values and appropriate
discount factors are applied. None of the other financial assets are past their due dates (2008 – nil).
The Group holds a second charge over properties sold under shared equity schemes.
Other receivables due within one year include £4.096 million (2008 – £5.509 million) in relation to VAT recoverable.
15 Interest-bearing loans and borrowings
Non-current liabilities
Bank loans
Preference shares (see note below)
Current liabilities
Bank loans
Preference shares
Group
2009
£000
80,000
20,000
100,000
Group
2009
£000
–
Group
2009
£000
Group
2008
£000
275,000
20,000
295,000
Group
2008
£000
52,000
Company
2009
£000
–
20,000
20,000
Company
2009
£000
–
Group
2008
£000
Company
2009
£000
Company
2008
£000
–
20,000
20,000
Company
2008
£000
–
Company
2008
£000
Authorised, allotted, called up and fully paid
Number
20,000,000 at 1 August 2008 and 31 July 2009
20,000
20,000
20,000
20,000
With regard to the 9.5% cumulative redeemable preference shares 2014 of £1 each the following rights are attached:
(a) The holders are entitled to a preferential fixed cumulative dividend at an annual rate of 9.5% payable half-yearly on 6 April and 6 October.
(b) The shares are redeemable by the Company at any time at a sum calculated by reference to the yield on 12% Exchequer Stock 2013/2017
provided such sum is neither less than the nominal value nor more than twice the nominal value of the shares. Any shares still in issue shall be
redeemed at par on 6 April 2014.
(c)
In the event of a winding up of the Company, the preference shareholders are entitled to a preferential payment in addition to any arrears of
dividend, equivalent to the nominal value of the preference shares, or in the event of a voluntary winding up, an amount per share calculated by
reference to the yield on 12% Exchequer Stock 2013/2017, provided such sum is neither less than the nominal value nor more than twice the
nominal value of the shares.
(d) The preference shareholders have no ordinary voting rights except in circumstances where the fixed dividend on the preference shares is
six months in arrears or where the business of a General Meeting includes the consideration of certain resolutions as defined in the Articles of
Association relating to winding up, changes in the rights of preference shareholders or failure by the Company to redeem the preference shares
by 6 April 2014.
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Annual Report & Accounts 2009
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16 Trade and other payables
Non-current liabilities
Land payables
Other payables
Group
2009
£000
26,379
475
26,854
Group
2008
£000
51,306
–
51,306
Company
2009
£000
Company
2008
£000
–
–
–
–
–
–
Land payables of £6.246 million (2008 – £12.154 million) are secured on the land to which they relate. The carrying value of the land used for security
is £6.246 million (2008 – £24.327 million)
Current liabilities
Trade payables
Land payables
Social security and other taxes
Other payables
Accrued expenses and deferred income
Payments on account
Group
2009
£000
52,610
83,588
1,712
15,454
49,713
43,070
Group
2008
£000
75,075
81,806
4,984
3,137
82,707
37,192
246,147
284,901
Company
2009
£000
Company
2008
£000
–
–
–
257
601
–
858
–
–
–
457
601
–
1,058
Land payables of £50.473 million (2008 – £17.546 million) are secured on the land to which they relate. The carrying value of the land used for security
is £57.354 million (2008 – £36.831 million)
17 Financial risk management
The Group’s financial instruments comprise cash, bank loans and overdrafts and various items such as trade receivables and trade payables that arise
directly from its operations. The main objective of the Group’s policy towards financial instruments is to maximise returns on the Group’s cash balances,
manage the Group’s working capital requirements and finance the Group’s ongoing operations.
The Company’s only financial instruments are cash and preference shares.
Capital management
The Board’s policy is to maintain a strong capital base to underpin the future development of the business in order to deliver value to shareholders.
The Group finances its operations through retained earnings, bank borrowings and the management of working capital. From time to time, the trustees
of the Bellway Employee Share Trust (1992) also purchase shares for the future satisfaction of employee share options.
On 6 August 2009 the Group announced the successful placing of 5,747,648 new ordinary shares of 12.5p each representing approximately 5.0% of the
Group’s issued ordinary share capital prior to the Placing (note 27). The net proceeds from the placing of £43.659 million will help provide the Group
with the financial flexibility to take advantage of attractive opportunities to acquire land as and when they arise.
Management of financial risk
The main risks associated with the Group’s financial instruments have been identified as credit risk, liquidity risk and interest rate risk. The Board is
responsible for managing these risks and the policies adopted, which have remained largely unchanged during the year, are set out below.
Credit risk
The Group’s exposure to credit risk is limited by the fact that the Group generally receives cash at the point of legal completion of its sales.
There is no specific concentration of credit risk in respect of home sales as the exposure is spread over a number of customers. In respect of trade
receivables and other financial assets, the amounts presented in the balance sheet are stated after adjusting for any doubtful receivables, based on the
judgement of the Group’s management through using both previous experience and knowledge of the current position (see note 14). In managing risk
the Group assesses the credit risk of its counterparties before entering into a transaction. No credit limits were exceeded during the reporting period or
subsequently and the Group does not anticipate any losses from non-performance by these counterparties. In relation to land payables, certain payables
are secured on the respective land asset held (see note 16). No other security is held against any other financial assets of the Group.
The Board considers the Group’s exposure to credit risk to be acceptable and normal for an entity of its size given the industry in which it operates.
Liquidity risk
The Group finances its operations through a mixture of equity (comprising share capital, reserves and retained earnings) and debt (comprising bank
overdraft facilities and borrowings). The Group manages its liquidity risk by monitoring existing facilities and cash flows against forecast requirements
based on a two year rolling cash forecast.
62
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Bellway p.l.c.
Annual Report & Accounts 2009
17 Financial risk management continued
The Group’s banking arrangements outlined below are considered to be adequate in terms of flexibility and liquidity for its medium-term cash flow
needs therefore mitigating the Group’s liquidity risk.
Interest rate risk
Interest rate risk reflects the Group’s exposure to fluctuations to interest rates in the market. The risk arises because the Group’s overdraft and floating
rate bank loans bear interest based on either LIBOR or to the Bank of England base rate.
For the year ended 31 July 2009 it is estimated that an increase of 1% in interest rates applying for the full year would decrease the Group’s profit before
tax by £1.8 million (2008 – £2.2 million).
Housing market risk
The Group is affected by movements in UK house prices. These in turn are affected by factors such as credit availability, employment levels, interest rates,
consumer confidence and supply of land with planning.
Whilst it is not possible for the Group to fully mitigate housing market risk on a national macroeconomic basis the Group does continually monitor its
geographical spread within the UK, seeking to balance investment in areas offering the best immediate returns with a long-term spread of its operations
throughout the UK to minimise the effect of local microeconomic fluctuations.
Land purchased on deferred terms
The Group sometimes acquires land on deferred payment terms. In accordance with IAS 39 the deferred creditor is recorded at fair value being the
price paid for the land discounted to present day. The difference between the nominal value and the initial fair value is amortised over the deferred term
to finance expenses, increasing the land creditor to its full cash settlement value on the payment date.
The maturity profile of the total contracted cash payments in respect of amounts due on land creditors at the balance sheet date is as follows:
At 31 July 2009
At 31 July 2008
Balance at
31 July
£000
Total contracted
cash payment
£000
Within one year or
on demand
£000
109,967
133,112
113,474
139,916
85,341
83,279
1–2
years
£000
21,230
42,306
2–5
years
£000
6,752
7,125
More than
5 years
£000
151
7,206
The maturity profile of the total contracted payments in respect of financial liabilities (excluding amounts due on land creditors shown separately above)
is as follows:
Bank loans – floating rates
Preference shares
Trade and other payables
At 31 July 2009
Bank loans – floating rates
Bank loan – fixed rates
Preference shares
Trade and other payables
At 31 July 2008
Balance at
31 July
£000
Total contracted
cash payment
£000
Within one year or
on demand
£000
80,000
20,000
69,776
169,776
325,000
2,000
20,000
115,404
462,404
84,521
29,500
69,776
183,797
334,151
2,134
31,400
115,404
483,089
1,030
1,900
69,776
72,706
59,151
2,134
–
115,404
176,689
1–2
years
£000
1,030
1,900
–
2,930
–
–
–
–
–
2–5
years
£000
62,262
25,700
–
87,962
235,000
–
–
–
More than
5 years
£000
20,199
–
–
20,199
40,000
–
31,400
–
235,000
71,400
The interest rates on the fixed rate borrowing and preference shares apply to the whole term of the relevant instruments.
No interest rate has been calculated for the imputed interest on land payables as this is an accounting transaction with no actual interest payment being
made by the Group.
At the year end, the Group had £290.0 million (2008 – £294.3 million) of undrawn bank facilities available.
The Company’s only financial liabilities are preference shares as disclosed in the maturity profile above.
63
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Annual Report & Accounts 2009
17 Financial risk management continued
Cash and cash equivalents
This comprises cash held by the Group and short-term bank deposits with a maturity date of less than one month.
The amounts of cash and cash equivalents for the years ended July 2009 and July 2008 for both the Group and the Company are shown in note 21.
At 31 July 2009 the average interest rate earned on the temporary closing cash balance was 0.22% (2008 – 3.69%).
The carrying amount of these assets approximates their fair value.
Fair values
Financial assets
The carrying values of financial assets equates to their fair values.
Financial liabilities
A comparison of the book values and fair values of the Group’s fixed rate preference shares and fixed rate bank loan at 31 July is as follows:
Preference shares – fixed rate
Bank loan – fixed rate
2009
£000
Book
value
2009
£000
Fair
value
20,000
21,500
–
–
2008
£000
Book
value
20,000
2,000
2008
£000
Fair
value
20,400
2,021
The fair value of the fixed rate preference shares is based on quoted mid-market prices at 31 July.
The fair value of the fixed rate bank loan is based on an indicative rate which could have been obtained on the market at 31 July 2008.
In aggregate, the fair values of the Group’s other financial assets and liabilities are not materially different from their book value.
18 Issued capital
Group and Company
Authorised
Ordinary shares of 12.5p each
Allotted, called up and fully paid equity
At 1 August 2008
Issued on exercise of options
At 31 July 2009
2009
Number
’000
2009
£000
2008
Number
’000
2008
£000
146,000
18,250
146,000
18,250
114,951
14,372
114,670
55
3
281
115,006
14,375
114,951
14,337
35
14,372
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Bellway p.l.c.
Annual Report & Accounts 2009
18 Issued capital continued
Share options
At 31 July 2009 all outstanding options to purchase ordinary shares in Bellway p.l.c., in accordance with the terms of the applicable schemes, were
as follows:
(a) Bellway p.l.c. (1995) Employee Share Option Scheme
(b) Bellway p.l.c. (1996) Employee Share Option Scheme
(c) Bellway p.l.c. (2005) Employee Share Option Scheme
Number
of shares
Exercise
price (p)
Dates from which
exercisable
Expiry
date
7,500
2,000
3,500
10,600
23,243
800
2,500
143,940
194,083
500
3,700
6,650
6,500
3,500
120,260
329,850
248.00
277.50
409.30
474.00
524.00
621.50
712.50
716.00
409.30
474.00
524.00
621.50
712.50
716.00
844.00
13 April 2003
17 October 2003
25 April 2004
18 April 2005
13 May 2006
24 October 2006
10 May 2007
17 November 2007
25 April 2004
18 April 2005
13 May 2006
24 October 2006
10 May 2007
17 November 2007
31 October 2008
750
1122.00
16 May 2009
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
12 April 2010
16 October 2010
24 April 2011
17 April 2012
12 May 2013
23 October 2013
9 May 2014
16 November 2014
24 April 2011
17 April 2012
12 May 2013
23 October 2013
9 May 2014
16 November 2014
30 October 2015
15 May 2016
471,710
91,350
11,700
103,050
844.00
1470.00
31 October 2008
7 February 2010
to
to
30 October 2015
6 February 2017
(d) Bellway p.l.c. (2007) Employee Share Option Scheme
27,300
1470.00
7 February 2010
to
6 February 2017
(e) Bellway p.l.c. (2003) Savings Related Share Option Scheme
537.60
676.00
1092.00
1092.00
847.20
847.20
336.00
336.00
1 February 2010
to
1 February 2011
1 February 2010
1 February 2012
1 February 2011
1 February 2013
1 February 2012
1 February 2014
to
to
to
to
to
to
to
31 July 2010
31 July 2011
31 July 2010
31 July 2012
31 July 2011
31 July 2013
31 July 2012
31 July 2014
27,314
18,374
11,312
4,098
14,992
4,832
662,072
276,061
1,019,055
1,815,198
Total
Details of directors’ share options are contained within the Report of the Board on Directors’ Remuneration on pages 35 to 41.
65
Bellway p.l.c.
Annual Report & Accounts 2009
19 Reconciliation of movements in capital and reserves
Group
At 1 August 2007
Total recognised income and expense
Dividends on equity shares
Shares issued
Charge in relation to share options
and tax thereon
Purchase of own shares
At 31 July 2008
Total recognised income and expense
Dividends on equity shares
Shares issued
Credit in relation to share options
and tax thereon
Purchase of own shares
At 31 July 2009
Attributable to equity holders of the parent
Ordinary
share capital
£000
14,337
Share
premium
£000
115,484
Other
reserves
£000
Retained
earnings
£000
Total
£000
Minority
interest
£000
Total
equity
£000
1,492
904,567
1,035,880
(66)
1,035,814
–
–
35
–
–
–
–
1,444
–
–
–
–
–
–
–
16,670
16,670
(51,306)
(51,306)
–
1,479
(1,005)
(568)
(1,005)
(568)
–
–
–
–
–
16,670
(51,306)
1,479
(1,005)
(568)
14,372
116,928
1,492
868,358
1,001,150
(66)
1,001,084
–
–
3
–
–
–
–
270
–
–
–
–
–
–
–
(27,190)
(10,347)
–
1,305
(113)
(27,190)
(10,347)
273
1,305
(113)
–
–
–
–
–
(27,190)
(10,347)
273
1,305
(113)
14,375
117,198
1,492
832,013
965,078
(66)
965,012
Within retained earnings are amounts relating to ordinary shares held by the employee share ownership plans. The number of shares held within these plans
at 31 July 2009 was nil (2008 – 197,858) which are held within the financial statements at a value of £nil (2008 – £1.872 million).
Company
At 1 August 2007
Total recognised income
and expense
Dividends on equity shares
Shares issued
Credit in relation to
share options
At 31 July 2008
Total recognised income
and expense
Dividends on equity shares
Shares issued
Credit in relation to
share options
At 31 July 2009
Attributable to equity holders of the parent
Share-based
payment
reserve
£000
Retained
earnings
Total
Minority
interest
£000
£000
£000
Ordinary
share capital
Share
premium
Other
reserves
£000
£000
14,337
115,484
£000
2,145
–
–
35
–
–
–
1,444
–
–
–
–
–
14,372
116,928
2,145
–
–
3
–
–
–
270
–
–
–
–
–
7,582
635,623
775,171
–
–
–
1,685
9,267
–
–
–
1,318
(1,900)
(51,306)
–
–
(1,900)
(51,306)
1,479
1,685
582,417
725,129
(1,873)
(10,347)
–
–
(1,873)
(10,347)
273
1,318
Total
equity
£000
775,171
(1,900)
(51,306)
1,479
1,685
725,129
(1,873)
(10,347)
273
1,318
714,500
–
–
–
–
–
–
–
–
–
–
–
14,375
117,198
2,145
10,585
570,197
714,500
As permitted by section 408 of the Companies Act 2006, the Company’s income statement has not been included in these financial statements.
The Company’s loss for the financial year was £1.873 million (2008 – £1.900 million).
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Notes to the Accounts continued
Bellway p.l.c.
Annual Report & Accounts 2009
20 Reconciliation of net cash flow to net debt
Group
(Decrease)/increase in net cash and cash equivalents
Decrease/(increase) in bank loans
Decrease/(increase) in net debt from cash flows
Net debt at 1 August
Net debt at 31 July
Company
(Decrease)/increase in net cash and cash equivalents
Net debt at 1 August
Net debt at 31 July
21 Analysis of net debt
Group
Cash and cash equivalents
Bank loans
Preference shares redeemable after more than one year
Net debt
Company
Cash and cash equivalents
Preference shares redeemable after more than one year
Net debt
2009
£000
2008
£000
(66,103)
127,486
247,000
180,897
(237,687)
(56,790)
(253,000)
(125,514)
(112,173)
(237,687)
2009
£000
(186)
(14,861)
(15,047)
At 1 August
2008
£000
109,313
Cash
flows
£000
(66,103)
(327,000)
247,000
(20,000)
–
(237,687)
180,897
At 1 August
2008
£000
5,139
(20,000)
(14,861)
Cash
flows
£000
(186)
–
(186)
2008
£000
148
(15,009)
(14,861)
At 31 July
2009
£000
43,210
(80,000)
(20,000)
(56,790)
At 31 July
2009
£000
4,953
(20,000)
(15,047)
22 Contingent liabilities
The Company is liable, jointly and severally with other members of the Group, under guarantees given to the Group’s bankers in respect of overdrawn
balances on certain Group bank accounts and in respect of other overdrafts, loans and guarantees given by the banks to or on behalf of other Group
undertakings. At 31 July 2009 there were bank overdrafts of £nil (2008 – £nil) and loans of £80.0 million (2008 – £327.0 million). The Company
has given performance and other trade guarantees on behalf of subsidiary undertakings. The Company has guaranteed the overdrafts of associated
undertakings up to a maximum of £7.5 million (2008 – £6.5 million).
67
Bellway p.l.c.
Annual Report & Accounts 2009
23 Commitments
Group
Capital commitments
Contracted not provided
Authorised not contracted
2009
£000
–
–
2008
£000
–
–
Operating leases
At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which
expire as follows:
Expiring within one year
Expiring within the second to fifth years
Expiring in more than five years
2009
£000
88
3,218
2,510
5,816
2008
£000
1,298
4,331
2,778
8,407
Operating lease payments principally relate to rents payable by the Group for office premises. These leases are subject to periodic rent reviews.
Company
The commitments of the Company were £nil (2008 – £nil).
24 Employee benefits
Retirement benefit obligations
The Group sponsors the Bellway p.l.c. 1972 Pension and Life Assurance Scheme which has a funded defined benefit arrangement. The last full actuarial
valuation of this scheme was carried out by a qualified independent actuary as at 1 August 2008 and updated on an approximate basis to 31 July 2009.
Contributions of £1.393 million (2008 – £0.866 million) were charged to the income statement for the defined contribution section of the Scheme.
With regard to the defined benefit section of the Scheme, the regular contributions made by the employer over the financial year have been
£0.179 million (2008 – £1.174 million). The employer also paid special contributions amounting to £0.581 million (2008 – £2.435 million). Expenses
were paid in addition.
The actuarial valuation of the Scheme as at 1 August 2008, which is used to determine cash contributions to the Scheme, revealed a funding shortfall of
£2.673 million.
The Scheme actuary has advised the Trustees that the remaining funding shortfall is £1.668 million after allowing for certain adjustments, principally in
connection with the closure of both the final salary and money purchase sections of the scheme to further accrual on 31 October 2008. The Group paid
into the scheme £1.668 million on 7 October 2009.
It is the policy of the Group to recognise all actuarial gains and losses in the year in which they occur outside the income statement and in the statement
of recognised income and expense.
Insured pensions and defined contributions have been excluded from the assets and liabilities.
Present values of defined benefit obligations, fair value of scheme assets and deficit:
Present value of defined benefit obligation
Fair value of scheme assets
Deficit in Scheme
As all actuarial gains and assets are recognised, the deficits shown above are those recognised in the balance sheet.
2009
£000
(39,870)
27,945
(11,925)
2008
£000
(47,472)
34,763
(12,709)
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Notes to the Accounts continued
Bellway p.l.c.
Annual Report & Accounts 2009
24 Employee benefits continued
Best estimate of contributions to be paid to the Scheme for the year ending 31 July 2010
This best estimate of contributions to be paid to the Scheme for the year ending 31 July 2010 is £1.668 million (2009 – £0.808 million).
Reconciliation of opening and closing balances of the present value of the defined benefit obligation:
Defined benefit obligation at start of year
Current service cost
Interest cost
Contributions by scheme participants
Actuarial (gain)/loss
Benefit paid, death in service insurance premiums and expenses
Settlement
Past service cost
Defined benefit obligation at end of year
Reconciliation of opening and closing balances of the fair value of Scheme assets:
Fair value of assets at start of year
Expected return on assets
Actuarial losses
Contributions by employer
Contributions by scheme participants
Benefit paid, death in service insurance premiums and expenses
Settlement
Fair value of assets at end of year
Total expense/(income) recognised in the income statement:
Current service cost
Interest on liabilities
Expected return on assets
Settlement
Past service cost
Total expense/(income)
2009
£000
47,472
199
2,822
16
(4,350)
(1,711)
(5,150)
572
39,870
2009
£000
34,763
1,916
(3,997)
760
16
(1,711)
(3,802)
27,945
2009
£000
199
2,822
(1,916)
(1,348)
572
329
2008
£000
51,531
1,530
2,948
67
8,103
(2,485)
(14,393)
171
47,472
2008
£000
49,545
2,885
(6,248)
3,609
67
(2,485)
(12,610)
34,763
2008
£000
1,530
2,948
(2,885)
(1,783)
171
(19)
Of the total expense, income of £0.577 million (2008 – £0.082 million) is recognised within administrative expenses and an expense of £0.906 million
(2008 – £0.063 million) is recognised within finance expenses.
69
Bellway p.l.c.
Annual Report & Accounts 2009
24 Employee benefits continued
Gains/(losses) recognised in statement of recognised income and expense:
Difference between expected and actual return on
Scheme assets:
2009
£000
(3,997)
2008
£000
(6,248)
2009
%
14
2008
%
18
of Scheme assets
Experience gains and losses arising on the Scheme liabilities
5,351
(1,001)
(13)
Effects of changes in the demographic and financial
assumptions underlying the present value of the
Scheme liabilities
Total gain/(loss) recognised in statement
of recognised income and expense
(1,001)
(7,102)
3
353
(14,351)
(1)
2 of the present value of
Scheme liabilities
15 of the present value of
Scheme liabilities
30 of the present value of
Scheme liabilities
The cumulative amount of actuarial gains and losses recognised in the statement of recognised income and expense since adoption of IAS 19 is a loss
of £15.973 million.
Assets
The fair value of Scheme assets is:
Equities
Bonds
Cash
Total
2009
£000
15,206
11,715
1,024
27,945
2008
£000
18,993
12,459
3,311
34,763
None of the fair values of the assets shown above include any of the Group’s own financial instruments or any property occupied by, or other assets used by,
the Group.
Expected long-term rates of return
The expected long-term return on cash is related to bank base rates at the balance sheet date. The expected return on bonds is determined by reference
to UK long dated gilt and bond yields at the balance sheet date. The expected rate of return on equities has been determined by setting an appropriate
risk premium above gilt/bond yields having regard to market conditions at the balance sheet date.
The expected long-term rates of return are as follows:
Equities
Bonds
Cash
Overall for Scheme
Period
commencing
1 August 2008
% per annum
Period
commencing
1 August 2007
% per annum
Period
commencing
1 August 2006
% per annum
Period
commencing
1 August 2005
% per annum
6.30
4.80
5.00
5.60
6.50
5.00
5.00
5.90
6.50
5.00
4.00
5.90
6.50
5.00
4.00
5.90
Actual return on Scheme assets
The actual return on the Scheme assets over the year ended 31 July 2009 was a reduction of 4.70% (31 July 2008 – reduction of 7.35%).
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Notes to the Accounts continued
Bellway p.l.c.
Annual Report & Accounts 2009
24 Employee benefits continued
Assumptions
Inflation
Salary increases
Rate of discount
Allowance for pension in payment increases of RPI or 2.5% p.a. if less
Allowance for pension in payment increases of RPI or 5% p.a. if less
Allowance for revaluation of deferred pensions of RPI or 5% p.a. if less
Allowance for commutation of pension for cash at retirement
2009
% per annum
2008
% per annum
3.70
4.70
5.80
–
3.70
3.70
–
3.90
4.90
6.00
–
3.90
3.90
–
The mortality assumptions adopted at 31 July 2009 are based on the PA00 tables using the long cohort improvements and allow for future improvement
in mortality. The tables used imply the following life expectancies at age 65:
Male retiring at age 65 in 2009
Female retiring at age 65 in 2009
Male retiring at age 65 in 2029
Female retiring at age 65 in 2029
23.0 years
25.5 years
25.0 years
27.4 years
Amounts for the current and previous four years
Fair value of assets
Defined benefit obligation
Deficit in Scheme
Experience adjustment on Scheme liabilities
Experience adjustment on Scheme assets
Effects of changes in the demographic and financial assumptions
underlying the present value of the plan liabilities
2009
£000
27,945
(39,870)
(11,925)
5,351
(3,997)
2008
£000
34,763
(47,472)
(12,709)
(1,001)
(6,248)
2007
£000
49,545
(51,531)
(1,986)
(967)
1,262
2006
£000
41,622
(53,338)
(11,716)
(543)
1,435
2005
£000
34,603
(46,687)
(12,084)
(3,341)
3,876
(1,001)
(7,102)
4,973
(3,095)
(5,575)
Share-based payments
The Group operates a long-term incentive plan (“LTIP”), an annual bonus scheme, employee share ownership schemes (“ESOS”) and savings related
share option schemes (“SRSOS”) all of which are detailed below. IFRS 2 has been applied to options granted after 7 November 2002, which had not
vested at 1 January 2005.
Awards under the LTIP and the annual bonus scheme have been made to executive directors and the Group Company Secretary.
Share options issued under the Bellway p.l.c. (1995) Employee Share Option Scheme (“1995 ESOS”) have been granted to employees at all levels
as well as to executive directors. The last tranche of shares was awarded to directors in October 2003. No further options may be granted under this
scheme. Options issued under the Bellway p.l.c. (1996) Employee Share Option Scheme (“1996 ESOS”) have been granted to employees at all levels
as well as to executive directors. The last tranche of shares was awarded to employees in May 2006. No further options may be granted under this
scheme. The Bellway p.l.c. (2005) Employee Share Option Scheme (“2005 ESOS”) replaces the 1995 ESOS. Awards may be granted on a discretionary
basis to employees at all levels as well as to executive directors and are subject to performance conditions. The Bellway p.l.c. (2007) Employee Share
Option Scheme (“2007 ESOS”) replaces the 1996 ESOS. It is an unapproved discretionary scheme which provides for the grant of options over
ordinary shares to employees and executive directors. It is, however, the current intention that no executive directors of the Company should be
granted options under the scheme. Awards will be available to vest after three years, subject to objective performance targets.
Options issued under the SRSOS are offered to all employees including the executive directors.
An outline of the performance conditions in relation to the above Schemes is detailed under the long-term incentive scheme section on pages 37
and 40 within the Report of the Board on Directors’ Remuneration.
71
Bellway p.l.c.
Annual Report & Accounts 2009
24 Employee benefits continued
Share-based payments continued
For awards made prior to 16 January 2008, vesting of awards under the LTIP is dependent upon total shareholder return of the Group measured against
relevant comparator companies as detailed on pages 37 and 40 within the Report of the Board on Directors’ Remuneration. For awards made on
16 January 2008, vesting of awards is dependent upon two conditions, total shareholder return and return on capital employed. For awards made on
4 November 2008, vesting of awards is dependent only on total shareholder return as detailed on pages 37 and 40 within the Report of the Board
on Directors’ Remuneration.
With regard to the annual bonus scheme, for awards up to and including those for the year ended 31 July 2006, one half was payable in November
each year following the announcement of the Group’s annual results. The other half was used to acquire Bellway shares at the prevailing market value.
These shares are held in the Bellway Employee Share Trust (1992) for three years. The shares can then be transferred into the employee’s name.
In addition, various small share awards were made for years 2003 through to 2007 to employees, mainly at divisional management level. These awards
mainly had three-year vesting periods. Awards to executive directors and to the Group Company Secretary in relation to the year ended 31 July 2007,
and subsequent years, are made in cash with no compulsory deferral element.
Share options have been valued by an external third party using various models detailed below, based on publicly available market data at the time of the
grant, which the directors consider to be the most appropriate method of determining their fair value.
Reconciliations of share options outstanding and weighted average exercise prices for each type of share option are shown below:
LTIP
Outstanding at the beginning of the year
Granted during the year
Lapsed during the year
Exercised during the year
Outstanding at the end of the year
Exercisable at the end of the year
Number of
share options
2009
Number of
share options
2008
384,982
235,799
–
(116,502)
504,279
355,851
176,963
(69,334)
(78,498)
384,982
–
–
The weighted average share price at the date of exercise for share options exercised during the year was 513.00p (2008 – 914.25p). The options
outstanding at 31 July 2009 had a weighted average remaining life of 1.6 years (2008 – 1.5 years).
Annual bonus
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Outstanding at the end of the year
Exercisable at the end of the year
Number of
share options
2009
Number of
share options
2008
146,149
5,000
248,868
16,064
(83,681)
(118,783)
67,468
146,149
1,000
12,000
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Notes to the Accounts continued
Bellway p.l.c.
Annual Report & Accounts 2009
24 Employee benefits continued
The weighted average share price at the date of exercise for share options exercised during the year was 518.6p (2008 – 881.9p). The options outstanding at
31 July 2009 had a weighted average remaining contractual life of 0.7 years (2008 – 0.7 years).
1995,1996, 2005 and 2007 ESOS
Outstanding at the beginning of the year
Forfeited during the year
Exercised during the year
Outstanding at the end of the year
Number of
share
options
2009
Weighted
average
exercise price
2009
Number of
share
options
2008
Weighted
average
exercise price
2008
959,873
796.6p
1,301,193
(154,730)
(789.2p)
(255,200)
(10,000)
(581.1p)
795,143
801.9p
(86,120)
959,873
792.0p
(828.3p)
(637.1p)
796.6p
Exercisable at the end of the year
756,143
767.4p
409,923
558.2p
The weighted average share price at the date of exercise for share options exercised during the year was 711.7p (2008 – 958.4p). The options outstanding
at 31 July 2009 had exercise prices ranging from 248.0p to 1,470.0p (2008 – 273.5p to 1,470.0p) and the weighted average remaining contractual life of
these options was 5.7 years (2008 – 6.6 years).
SRSOS
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year
Outstanding at the end of the year
Number of
share
options
2009
Weighted
average
exercise price
2009
Number of
share
options
2008
Weighted
average
exercise price
2008
514,275
970,830
774.8p
336.0p
700,983
267,031
(420,480)
(770.7p)
(262,340)
(44,570)
(544.9p)
(191,399)
1,020,055
370.3p
514,275
680.9p
847.2p
(815.9p)
(475.3p)
774.8p
Exercisable at the end of the year
–
–
–
–
The weighted average share price at the date of exercise for share options exercised during the year was 669.7p (2008 – 796.2p). The options outstanding
at 31 July 2009 had exercise prices ranging from 336.0p to 1,092.0p (2008 – 490.0p to 1,092.0p) and the weighted average remaining contractual life of
these options was 3.4 years (2008 – 2.6 years).
Valuation methodology
For the LTIP, a Monte Carlo simulation method is used which allows the Group's performance, in terms of total shareholder return, to be measured
against its comparator companies. Individual share price volatilities are calculated for each of the comparator companies. A correlation assumption,
appropriate to the building sector, is also used.
In the case of the deferred element of the annual bonus, a simplified Black Scholes method is applied with an exercise price and dividend yield of zero.
This is because no performance conditions attach to the award and no dividends are credited to the individual. The result is that the fair value equates
to the face value of the award.
The Black Scholes method is used for the SRSOS due to the relatively short exercise window of six months.
For the 1995, 1996, 2005 and 2007 ESOSs, a lattice method is used which enables early exercise behaviour to be modelled in a more sophisticated manner
than under Black Scholes.
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Annual Report & Accounts 2009
24 Employee benefits continued
The inputs into the Monte Carlo model for the various grants under the LTIP were as follows:
Grant date
Risk free interest rate
Exercise price
Share price at date of grant
Expected dividend yield
Expected life
Date vested
Expected volatility
Fair value of option
January
2004
November
2004
November
2005
October
2006
January
2008
(ROCE
element)
January
2008
(TSR
element)
November
2008
19 Jan 2004 30 Nov 2004 14 Nov 2005 18 Oct 2006
16 Jan 2008
16 Jan 2008
4 Nov 2008
–
–
667.5p
3.00%
3 years
–
–
712p
3.00%
–
–
999p
2.90%
3 years
3 years
–
–
1,372p
2.40%
3 years
–
–
766p
5.60%
–
–
766p
5.60%
–
–
576p
4.00%
3 years
3 years
3 years
19 Jan 2007 30 Nov 2007 14 Nov 2008 18 Oct 2009
16 Jan 2011
16 Jan 2011
4 Nov 2011
25%
343.0p
25%
292.0p
25%
480.0p
25%
–
30%
676.4p
650.0p
359.0p
50%
395.0p
The inputs into the simplified Black Scholes model used for the shares issued under the annual bonus scheme were as follows:
Grant date
Exercise price
May
2003
November
2003
October
2004
November
2005
October
2006
February
2007
November
2007
January
2008
April
2008
31 May 2003 18 Nov 2003 26 Oct 2004 14 Nov 2005 18 Oct 2006
7 Feb 2007 23 Nov 2007
21 Jan 2008 17 Apr 2008
Share price at date of grant
575.5p
621.5p
Expected dividend yield
–
–
–
–
–
675p
–
–
999p
–
–
–
–
–
–
1,372p
1,542p
993.5p
772.5p
783.5p
–
–
–
–
–
Expected life
Date vested
Fair value of option
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
31 May 2006 18 Nov 2006 26 Oct 2007 18 Nov 2008 18 Oct 2009
7 Feb 2010 23 Nov 2010
21 Jan 2011 17 Apr 2011
575.5p
621.5p
675p
999p
1,372p
1,542p
993.5p
772.5p
783.5p
The inputs into the binomial lattice model for the various grants under the 1995, 1996, 2005 and the 2007 ESOSs were as follows:
Grant date
Risk free interest rate
Exercise price
Share price at date of grant
Expected dividend yield
Expected life
Date vested
Expected volatility
Fair value of option
April
2003
May
2003
October
2003
May
2004
November
2004
October
2005
May
2006
February
2007
22 Apr 2003 13 May 2003 24 Oct 2003 10 May 2004 17 Nov 2004 31 Oct 2005 16 May 2006
7 Feb 2007
4.10%
548.5p
548.5p
3.00%
3 years
4.00%
524p
524p
3.00%
3 years
4.90%
621.5p
621.5p
3.00%
3 years
5.10%
712.5p
712.5p
3.00%
3 years
4.70%
716p
716p
3.00%
3 years
4.40%
844p
844p
3.40%
3 years
4.40%
1,122p
1,122p
3.40%
3 years
5.40%
1,470p
1,542p
2.20%
3 years
22 Apr 2006 13 May 2006 24 Oct 2006 10 May 2007 17 Nov 2007 31 Oct 2008 16 May 2009
7 Feb 2010
25%
129p
25%
123p
25%
155p
25%
180p
25%
183p
25%
197p
25%
197p
25%
466p
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Notes to the Accounts continued
Bellway p.l.c.
Annual Report & Accounts 2009
24 Employee benefits continued
Share-based payments continued
The inputs into the Black Scholes model for the various grants under the SRSOS were as follows:
November
2002
5 Year
SRSOS
November
2003
5 Year
SRSOS
November
2004
3 Year
SRSOS
November
2004
5 Year
SRSOS
November
2005
3 Year
SRSOS
November
2005
5 Year
SRSOS
November
2006
3 Year
SRSOS
November
2006
5 Year
SRSOS
November
2007
3 Year
SRSOS
November
2007
5 Year
SRSOS
November
2008
3 Year
SRSOS
November
2008
5 Year
SRSOS
26 Nov
2002
25 Nov
2003
19 Nov
2004
19 Nov
2004
15 Nov
2005
15 Nov
2005
14 Nov
2006
14 Nov
2006
13 Nov
2007
13 Nov
2007
13 Nov
2008
13 Nov
2008
4.50%
5.00%
4.70%
4.70%
4.40%
4.40%
5.00%
4.90%
4.80%
4.80%
2.90%
3.50%
384.0p
489.6p
537.6p
537.6p
676.0p
676.0p
1,092p
1,092p
847.2p
847.2p
336.0p
336.0p
451.0p
638p
720p
720p
995p
995p
1,397p
1,397p
1,034p
1,034p
515p
515p
3.00%
3.00%
3.00%
3.00%
2.90%
2.90%
2.30%
2.30%
3.50%
3.50%
4.50%
4.50%
5 years
2 months
5 years
2 months
3 years
2 months
5 years
2 months
3 years
2 months
5 years
2 months
3 years
2 months
5 years
2 months
3 years
2 months
5 years
2 months
3 years
2 months
5 years
2 months
1 Feb
2008
25%
126p
1 Feb
2009
25%
209p
1 Feb
2008
25%
224p
1 Feb
2010
25%
239p
1 Feb
2009
25%
349p
1 Feb
2011
25%
363p
1 Feb
2010
25%
436p
1 Feb
2012
25%
482p
1 Feb
2011
25%
268p
1 Feb
2013
25%
291p
1 Feb
2012
50%
212p
1 Feb
2014
40%
195p
Grant date
Risk free interest rate
Exercise price
Share price at date
of grant
Expected
dividend yield
Expected life
Date vested
Expected volatility
Fair value of option
The expected volatility for all models was determined by considering the volatility levels historically for the Group. Volatility levels for more recent years were
considered to have more relevance than earlier years for the period reviewed.
The Group recognised total expenses of £1.318 million (2008 – £1.685 million) in relation to equity-settled share-based payment transactions.
25 Related party transactions
Transactions between fellow subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed.
Group
During the year the Group entered into the following related party transactions with its associates and jointly controlled entities:
Invoiced to associates in respect of land purchases and infrastructure works
Invoiced from associates in respect of management fees
Invoiced to jointly controlled entities in respect of accounting, management fees, interest on loans,
land purchases and infrastructure works
Invoiced from jointly controlled entities in respect of fees , land purchases and infrastructure works
Amounts owed to associates in respect of management fees at the year end
Amounts owed by jointly controlled entities in respect of accounting, management fees, interest,
land purchases and infrastructure works
2009
£000
–
–
1,525
(1,555)
–
2008
£000
1
(22)
1,440
(21)
(11)
31,577
23,055
75
Bellway p.l.c.
Annual Report & Accounts 2009
25 Related party transactions continued
Company
During the year the Company entered into the following related party transactions with its subsidiaries and jointly controlled entities:
Amounts received in the year from subsidiaries in respect of dividends and shares issued
Amounts paid in the year by subsidiaries on behalf of the Company in respect of dividends and finance expenses
Amounts owed by subsidiaries in respect of dividends and shares issued net of amounts paid on behalf of the Company
2009
£000
276
(12,236)
703,617
2008
£000
1,479
(53,198)
715,578
26 Principal subsidiary undertakings
The Company owns the whole of the ordinary share capital of the following active subsidiary undertakings incorporated in Great Britain, registered in
England and Wales and engaged in housebuilding and associated activities.
Bellway Homes Limited
Bellway Properties Limited
Bellway (Services) Limited
Litrose Investments Limited
Bellway Financial Services Limited
Bellway Housing Trust Limited
The Victoria Dock Company Limited (60% owned)*
* These shares are held indirectly.
27 Subsequent events
On 6 August 2009 the Group announced the successful placing of 5,747,648 new ordinary shares of 12.5p each (the “Placing Shares”) at a price of
779p per Placing Share, raising gross proceeds of £44.774 million. The Placing Shares issued represent approximately 5.0% of the Company’s issued
ordinary share capital prior to the Placing.
The Placing Shares are credited as fully paid and rank equally in all respects with the existing ordinary shares of Bellway, including the right to receive
all dividends and other distributions declared, made or paid in respect of such shares after the date of the issue of the Placing Shares.
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Five Year Record
Bellway p.l.c.
Annual Report & Accounts 2009
Income statement
Revenue
Operating profit*
Exceptional items
Net finance expenses
Share of profit/(losses) of associates
Profit/(loss) before taxation
Income tax (expense)/credit
2005
£m
2006
£m
2007
£m
2008
£m
2009
£m
1,178.1
230.1
–
(16.4)
0.1
213.8
(64.6)
1,240.2
239.3
–
(18.4)
(0.2)
220.7
(65.0)
1,354.0
253.0
–
(17.9)
(0.3)
234.8
(68.1)
1,149.5
185.1
(130.9)
(19.1)
(0.3)
34.8
(7.8)
683.8
45.6
(66.3)
(15.8)
–
(36.5)
9.1
Profit/(loss) for the year (all attributable to equity holders
of the parent)
149.2
155.7
166.7
27.0
(27.4)
Balance sheet
ASSETS
Non-current assets
Current assets
LIABILITIES
Non-current liabilities
Current liabilities
EQUITY
Total equity
Statistics
Dividend per ordinary share
Basic earnings/(loss) per ordinary share
Number of homes sold
Average price of new homes
Operating margin
Net assets per ordinary share
Land portfolio – plots with planning permission
36.7
1,381.4
(287.4)
(350.9)
31.4
1,462.8
(194.7)
(396.0)
28.1
1,608.5
(126.9)
(473.9)
29.3
43.8
1,667.7
1,306.2
(359.0)
(336.9)
(138.8)
(246.2)
779.8
903.5
1,035.8
1,001.1
965.0
31.25p
133.1p
7,001
34.5p
137.5p
7,117
43.125p
146.1p
7,638
24.1p
23.6p
6,556
9.0p
(23.9)p
4,380
£163.8k
£169.0k
£173.3k
£169.9k
£154.0k
19.5%
689p
22,500
19.3%
793p
22,600
18.7%
903p
23,500
16.1%*
871p
22,500
6.7%*
839p
19,260
Weighted average no. of ordinary shares
112,054,913
113,248,814
114,108,350
114,615,661 114,949,883
No. of ordinary shares in issue at end of year
113,229,119
113,988,310
114,670,396
114,950,915 115,006,480
* Operating margin is stated before exceptional item (note 5)
77
Shareholder Information
Bellway p.l.c.
Annual Report & Accounts 2009
Annual General Meeting (“AGM”)
This section is important. If you are in any doubt as to what action to take you should consult an appropriate independent financial adviser.
If you have sold or transferred all of your shares in Bellway p.l.c. you should pass this document and all accompanying documents to the person through
whom the sale or transfer was effected, for transmission to the purchaser or transferee.
Special business
Five resolutions will be proposed as special business at the forthcoming AGM. The effect of these resolutions is as follows:
Resolution 10 – Authority to directors to issue shares
This is an ordinary resolution which authorises the directors to allot ordinary shares up to an aggregate nominal value of £5,032,058, which is equivalent
to approximately one-third of the Company’s issued ordinary share capital as at 12 October 2009, and also gives the directors authority to allot, by way
of rights issue only, ordinary shares up to an aggregate nominal value of £10,064,116, which is equivalent to approximately two-thirds of the Company’s
issued ordinary share capital as at 12 October 2009, such authority, if granted, to expire at the conclusion of the AGM of the Company to be held in
2011. As at 12 October 2009 the Company held no shares as treasury shares. At present, the directors only intend to use this authority to satisfy the
exercise of awards under the Company’s share schemes. The directors wish to obtain the necessary authority from shareholders so that allotments can
be made (if required and if suitable market conditions arise) at short notice and without the need to convene a general meeting of the Company which
would be both costly and time consuming.
Resolution 11 – Disapplication of pre-emption rights
This is a special resolution and is the customary annual request, in substitution for the authority granted to the directors by shareholders on 16 January
2009 which expires at the conclusion of the forthcoming AGM, that shareholders empower the directors to allot ordinary shares for cash without first
offering them pro rata to existing shareholders as would otherwise be required by section 561 of the Companies Act 2006 (a) in connection with a
rights issue or other pre-emptive offer and (b) (otherwise than in connection with a rights issue or other pre-emptive offer) up to an aggregate nominal
value of £754,809, being approximately equal to 5% of the issued ordinary share capital of the Company as at 12 October 2009.
Resolution 12 – Company’s purchase of its own shares
The Company’s authority to purchase its own ordinary and preference shares, given at the last AGM, expires at the conclusion of the forthcoming AGM.
This authority was not used during the year. The directors propose, as a special resolution, that it should be renewed for a further year to expire on the
date of the 2011 AGM.
The directors will review opportunities to use this authority in light of stock market conditions and trading opportunities during the year.
The directors will only make purchases (which will reduce the number of shares in issue) after paying due attention to the effect on the financing of the
Group, its assets and earnings per share for the remaining shareholders. Any shares purchased under this authority may be cancelled (in which case the
number of shares in issue will be reduced accordingly) or may be held in treasury.
Resolution 13 – Adoption of new Articles of Association
The Company proposes, as a special resolution, to adopt new Articles of Association (the “new Articles”) at the forthcoming AGM. These incorporate
amendments to the current Articles to reflect the changes brought about by the Companies Act 2006 which came into effect on 1 October 2009,
and by the Companies (Shareholders’ Rights) Regulations 2009 (the “Shareholders’ Rights Regulations”) which came into force on 3 August 2009.
A summary of the amendments is set out on page 78. A copy of the current Articles and of the new Articles will be available for inspection during
normal business hours on Monday to Friday (public holidays excepted) at the registered office of the Company and at the offices of Dickinson Dees LLP,
Gate House, 1 Farringdon Street, London EC4M 7LG from the date of publication of this notice until the close of the AGM and on the Company’s
website www.bellway.co.uk. These documents will also be available for inspection during the AGM and for at least 15 minutes before it begins.
Resolution 14 – Length of notice of meeting
The Companies Act 2006 was amended by the Shareholders’ Rights Regulations on 3 August 2009 to increase the notice period required for general
meetings of the Company to 21 days unless shareholders approve a shorter notice period, which cannot be less than 14 days. This resolution is
therefore proposed as a special resolution to approve 14 days as the minimum notice period for all general meetings of the Company, other than
AGMs. The approval will be effective until the Company’s next AGM, when it is intended that the approval be renewed.
Recommendation
Your directors consider each of the resolutions set out in the Notice of AGM to be in the best interests of the Company and its shareholders as a
whole. Accordingly, they unanimously recommend that you vote in favour of the resolutions as they intend to do in respect of their own beneficial
shareholdings.
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Shareholder Information continued
Bellway p.l.c.
Annual Report & Accounts 2009
Summary of proposed amendments to the Company’s Articles of Association
The principal amendments introduced in the new Articles are summarised below. Other changes, which are of a minor, technical or clarifying nature and
also some minor changes which merely reflect changes made by the Companies Act 2006 (the “Act”) or the Shareholders’ Rights Regulations have not
been noted below. A copy of the new Articles showing all the changes to the current Articles is available for inspection as indicated above.
(a) Objects
The Company’s memorandum of association contains the objects clause which sets out the scope of activities the Company is authorised to
undertake. The Act states that unless a company’s articles provide otherwise, its objects are unrestricted. This abolishes the need for companies to
have objects clauses. Resolution 13(a) removes the objects clause together with any other parts of the memorandum which, because of the Act,
are treated as forming part of the Articles. The new Articles contain a statement about the limited liability of shareholders as this Resolution
removes this statement from the memorandum.
(b) Authorised share capital
The Act abolishes the requirement for a company to have an authorised share capital and the new Articles reflect this. The directors will still be
limited as to the number of shares they can allot because allotment authority continues to be required under the Act, except in respect of
employee share schemes.
(c) Share transfers
Under the Act share transfers must be registered as soon as practicable. The power in the current Articles to suspend the registration of transfers is
inconsistent with this requirement and has therefore been removed. In addition, directors are now obliged to give reasons for any refusal to register
a share transfer and the new Articles amend the current Articles to reflect this.
(d) Adjournment for lack of quorum
Under the Act, as amended by the Shareholders’ Rights Regulations, general meetings adjourned for lack of quorum must be held at least ten clear
days after the original meeting. The new Articles reflect this requirement.
(e) Chairman’s casting vote
The new Articles remove the provision giving the chairman a casting vote at general meetings in the event of an equality of votes as this is no longer
permitted under the Act.
(f) Multiple proxies
The Act provides that, where a member appoints more than one proxy, each proxy must be appointed to exercise the rights attached to a
different share or shares held by him. The new Articles reflect this.
(g) Corporate representatives
The new Articles remove provisions in the current Articles dealing with voting by corporate representatives on the basis that these are dealt with in
the Act, as amended by the Shareholders’ Rights Regulations.
(h) Directors’ conflict of interests
Under the Act the directors must avoid a situation where they have, or can have a direct or indirect interest that conflicts, or possibly may conflict,
with the Company’s interests. The new Articles update the provisions allowing the directors to authorise such conflicts or potential conflicts in line
with the requirements of the Act. They also contain provisions about confidential information, attendance at board meetings and availability of
board papers to protect a director if a conflict of interest or potential conflict of interest arises. These provisions will only apply following
authorisation of the potential conflict by the directors.
79
Bellway p.l.c.
Annual Report & Accounts 2009
Takeovers Directive
Where not provided in the Directors’ Report the following sets out the information required to be provided to shareholders in compliance with the
Takeovers Directive.
Share capital
The Company’s total issued ordinary and preference share capital as at 31 July 2009 consisted of 115,006,480 ordinary shares of 12.5p each
(representing 42% of the Company’s total issued share capital) and 20,000,000 9.5% Cumulative Redeemable Preference Shares 2014 of £1 each
(representing 58% of the Company’s total issued share capital). Further details of the issued capital of the Company and brief details of the rights in
relation to the preference shares can be found in notes 18 and 15 to the accounts. The rights and obligations attaching to the ordinary and preference
shares in the Company are set out in the Articles. Copies of the Articles can be obtained from Companies House or by writing to the Group Company
Secretary at the Company’s registered office.
Restrictions on the transfer of shares
The restrictions on the transfer of shares are set out in the Articles. In addition, in compliance with the FSA Listing Rules, Company approval is required
for directors, certain employees and their connected persons to deal in the Company’s ordinary shares.
No person has special rights of control over the Company’s share capital.
Rights in relation to the shares held in the employee benefit trust
The voting rights on shares held in the employee benefit trust in relation to the Company’s employee share schemes are exercisable by the trustees.
Restrictions on voting rights
Details of the deadlines for exercising voting rights are set out in the Company’s Articles. The directors are not aware of any agreements between
shareholders that may result in restrictions on the transfer of securities or on voting rights.
Appointment and replacement of directors
The Company’s rules about the appointment and replacement of directors are set out in the Articles and are summarised in the Directors’ Report on
pages 30 and 32.
Amendments to the Company’s Articles
The Company may amend its Articles by passing a special resolution at a general meeting of its shareholders.
Powers of the Board
The business and affairs of the Company are managed by the directors, who may exercise all such powers of the Company as are not by law or by the
Articles required to be exercised by the Company in general meetings. Subject to the provisions of the Articles, all powers of the directors are exercised
at meetings of the directors which have been validly convened and at which a quorum is present.
Allotment of shares
During the year 55,565 new ordinary shares were issued to satisfy awards made under the Company’s employee share schemes. After the year end, on
6 August 2009, the Company placed 5,747,648 new ordinary shares with new and existing institutional shareholders, representing approximately 5% of
the Company’s existing issued ordinary share capital at that time. The directors have authority to allot shares within limits agreed by shareholders. Details
of the renewal of this authority are set out on page 77, and Resolutions 10 and 11 in the Notice of Meeting of the AGM to be held on 15 January 2010
on pages 81 and 82 seek to renew this authority.
Purchase of own shares
The Company has not purchased any of its own shares during the year. The directors have authority to purchase the Company’s own shares within
limits agreed by shareholders. Details of the renewal of this authority are set out on page 77, and Resolution 12 in the Notice of Meeting of the AGM
to be held on 15 January 2010 on page 82 seeks to renew this authority.
Significant agreements – change of control provisions
The Company is party to a number of banking agreements which may be terminable in the event of a change of control of the Company.
Agreements for compensation for loss of office following a change of control
The service agreements between the Company and the executive directors and the Group Company Secretary contain provisions that entitle the
individual to terminate the agreement following a takeover offer and receive an amount equivalent to one year’s salary, benefits and the average amount
of the last two years’ annual bonus payment.
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Financial calendar
Announcement of results and ordinary dividends
Half year
Full year
Ordinary share dividend payments
Interim
Final
March
October
July
January
Preference share dividend payments at the rate
of 9.5% per annum paid half yearly
April and October
80
Shareholder Information continued
Bellway p.l.c.
Annual Report & Accounts 2009
Financial calendar continued
Annual report posted to shareholders
November
Final ordinary dividend – ex-dividend date
9 December 2009
Final ordinary dividend – record date
11 December 2009
AGM
Final ordinary dividend – payment date
15 January 2010
20 January 2010
Shareholders by size of holding at 31 July 2009
0 – 2,000
2,001 – 10,000
10,001 – 50,000
50,001 and over
Total
Holdings
Shares
Number %
Holding
%
2,149
71.75
1,395,324
475
174
197
15.86
1,956,770
5.81
4,546,761
6.58 107,107,625
2,995
100.0 115,006,480
1.21
1.71
3.95
93.13
100.0
Dividend Re-Investment Plan (“DRIP”)
Shareholders may agree to participate in the Company’s DRIP to receive dividends in the form of shares in Bellway p.l.c. instead of in cash. For further
information please e-mail Capita Registrars Limited at shares@capitaregistrars.com or telephone 0871 664 0300 – calls cost 10p per minute plus
network extras. If calling from overseas please call +44 208 639 3399. Lines are open from 8.30 am to 5.30 pm on Monday to Friday (excluding Bank
Holidays).
Share dealing service
The Company’s registrars, Capita Registrars Limited, provide a share dealing service to existing shareholders to buy or sell the Company’s shares.
Online and telephone dealing facilities provide an easy to access and simple to use service.
For further information on this service, or to buy or sell shares, please contact: www.capitadeal.com for online dealing, or call 0871 458 4577 for
telephone dealing.
Please note that the directors of the Company are not seeking to encourage shareholders to either buy or sell their shares in the Company.
Shareholders in any doubt as to what action to take are recommended to seek financial advice from an independent financial adviser, authorised under
the terms of the Financial Services and Markets Act 2000.
Discount to shareholders
The following discount arrangement is currently available to shareholders.
Should you intend to purchase a new Bellway home, you will be entitled to a discount of £2,000 per £25,000, or pro rata on part thereof, of the
purchase price provided that:
(a) you have been the registered holder of at least 2,000 ordinary shares for a minimum period of 12 months prior to the reservation of your new
home; and
(b) you inform our sales representative on-site when reserving your property that you are claiming shareholder discount.
The above discount arrangement is only available to shareholders on the Company’s Register of Members. Employees of investing companies or
members of investing institutions would not therefore be eligible. Underlying beneficial shareholders would be entitled to benefit from the arrangements.
For further details please contact the Group Company Secretary, Bellway p.l.c., Seaton Burn House, Dudley Lane, Seaton Burn, Newcastle upon Tyne
NE13 6BE, telephone 0191 217 0717 or e-mail kevin.wrightson@bellway.co.uk.
Beneficial owners of shares with “information rights”
Beneficial owners of shares who have been nominated by the registered holder of those shares to receive information rights under section 146 of
the Companies Act 2006 are required to direct all communications to the registered holder of their shares rather than to the Company’s registrar,
Capita Registrars Limited, or to the Company directly.
Corporate Responsibility Report 2009
The Company’s Corporate Responsibility Report 2009 is available to view on the Company’s website www.bellway.co.uk.
81
Notice of Annual General Meeting
Bellway p.l.c.
Annual Report & Accounts 2009
NOTICE IS HEREBY GIVEN that the Annual General Meeting of the Company will be held at The Copthorne Hotel, The Close, Quayside,
Newcastle upon Tyne NE1 3RT on Friday 15 January 2010 at 12.00 noon for the following purposes:
Ordinary business
To consider and, if thought fit, pass the following resolutions which will be proposed as ordinary resolutions:
1. THAT the Accounts for the financial year ended 31 July 2009 and the Directors’ Report and the Auditors’ Report on those Accounts and the
auditable part of the Report of the Board on Directors’ Remuneration be received and adopted.
2. THAT a final dividend for the year ended 31 July 2009 of 6.0p per ordinary 12.5p share, as recommended by the directors, be declared.
3. THAT Mr H C Dawe be re-elected as a director of the Company.
4. THAT Mr J K Watson be re-elected as a director of the Company.
5. THAT Mr M R Toms be re-elected as a director of the Company.
6. THAT Mr J A Cuthbert be re-elected as a director of the Company.
7. THAT KPMG Audit Plc be re-appointed as the auditors of the Company to hold office from the conclusion of this meeting until the conclusion
of the next general meeting at which Accounts are laid before the Company.
8. THAT the directors are authorised to agree the remuneration of the auditors of the Company.
9. THAT the Report of the Board on Directors’ Remuneration shown on pages 35 to 41 of the Annual Report and Accounts for the year ended
31 July 2009 be approved.
Special business
To consider and, if thought fit, pass the following resolution which will be proposed as an ordinary resolution:
10. THAT the directors be generally and unconditionally authorised pursuant to and in accordance with section 551 of the Companies Act 2006
(the “Act”) to exercise all the powers of the Company to:
(a) allot shares in the Company and to grant rights to subscribe for, or to convert any security into, shares in the Company (“Rights”) up to a
maximum nominal amount of £5,032,058; and
(b) allot equity securities (within the meaning of section 560 of the Act) up to a maximum nominal amount of £10,064,116 (such amount to be
reduced by the nominal amount of any shares issued or in respect of which Rights are granted under (a) above) in connection with an offer
by way of a rights issue to ordinary shareholders in proportion (as nearly as may be practicable) to their existing holdings and so that the
directors may impose any limits or restrictions and make any arrangements which they consider necessary or appropriate to deal with
fractional entitlements, record dates, legal, regulatory or practical problems in, or under the laws of, any territory or any other matter,
provided that:
(i)
(ii)
this authority shall expire at the conclusion of the Annual General Meeting of the Company to be held in 2011, but may be previously
revoked or varied by an ordinary resolution of the Company; and
this authority shall permit and enable the Company to make offers or agreements before the expiry of this authority which would or
might require shares to be allotted or Rights to be granted after such expiry and the directors shall be entitled to allot shares and grant
Rights pursuant to any such offers or agreements as if this authority had not expired; and
(iii) all unexercised authorities previously granted to the directors to allot shares and grant Rights be and are hereby revoked.
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Notice of Annual General Meeting continued
Bellway p.l.c.
Annual Report & Accounts 2009
To consider and, if thought fit, pass the following resolutions which will be proposed as special resolutions:
11. THAT,
(a) subject to resolution 10 above being passed as an ordinary resolution, the directors be empowered pursuant to section 570 and section 573
of the Companies Act 2006 (“the Act”) to allot equity securities (within the meaning of section 560 of the Act) for cash pursuant to the
authority so conferred or by way of sale of treasury shares in each case as if section 561(1) of the Act did not apply to any such allotment,
provided that this power shall be limited to:
(i)
(ii)
the allotment of equity securities in connection with a pre-emptive offer (but in the case of the authority conferred under paragraph (b)
of resolution 10 in connection with an offer by way of rights issue only); and
the allotment to any person or persons (otherwise than pursuant to paragraph (i) above) of equity securities up to an aggregate nominal
amount of £754,809;
(b) the power given by this resolution shall expire at the conclusion of the Annual General Meeting of the Company to be held in 2011 except
that the Company may, before such expiry, make an offer or agreement which would, or might, require equity securities to be allotted after
such expiry and the directors may allot equity securities pursuant to such an offer or agreement as if the power conferred by this resolution
had not expired; and
(c)
for the purposes of this resolution, “pre-emptive offer” means a rights issue, open offer or other offer of equity securities open for acceptance
for a fixed period, by the directors to ordinary shareholders of the Company on the Register on a fixed record date in proportion (as nearly
as may be) to their then holdings of such equity securities (but subject to such exclusions or other arrangements as the directors may deem
necessary or expedient to deal with legal or practical problems under the laws of, or the requirements of, any regulatory body or any stock
exchange in, any overseas territory or fractional entitlements or any other matter whatsoever).
12. THAT the Company be generally and unconditionally authorised for the purposes of section 701 of the Companies Act 2006 (“the Act”) to
purchase ordinary shares and preference shares in the capital of the Company by way of one or more market purchases (within the meaning
of section 693 of the Act) on the London Stock Exchange upon, and subject to the following conditions:
(i)
(ii)
the maximum number of ordinary shares hereby authorised to be purchased is 12,076,940, being approximately 10 per cent of the ordinary
shares in issue;
the maximum number of preference shares hereby authorised to be purchased is 20,000,000 9.5% Cumulative Redeemable Preference
Shares 2014 of £1 each, being the total amount of preference shares in issue;
(iii) the maximum price at which ordinary shares may be purchased is an amount equal to 105 per cent of the average of the middle market
quotations derived from the London Stock Exchange Limited Official List for the five business days immediately preceding the date on
which the ordinary shares are contracted to be purchased and the minimum price is 12.5p per share, in both cases exclusive of expenses;
(iv) the maximum price at which preference shares may be purchased shall be an amount calculated in accordance with the provisions contained
in the Articles of Association of the Company; and
(v) unless previously renewed, varied or revoked, the authority to purchase conferred by this resolution shall expire at the conclusion of the
next Annual General Meeting of the Company or, if earlier, 15 months after the passing of this resolution provided that any contract for the
purchase of any shares, as aforesaid, which was concluded before the expiry of the said authority may be executed wholly or partly after the
said authority expires and the relevant shares purchased pursuant thereto.
13. THAT with immediate effect:
(a)
the Articles of Association of the Company be amended by deleting all the provisions of the Company’s Memorandum of Association which,
by virtue of section 28 of the Companies Act 2006, are treated as provisions of the Company’s Articles of Association; and
(b) the Articles of Association produced to the meeting and for the purpose of identification, signed by the chairman of the meeting be adopted
as the Articles of Association of the Company in substitution for, and to the exclusion of, the existing Articles of Association.
14. THAT a general meeting of the Company, other than an annual general meeting of the Company, may be called on not less than 14 clear
days’ notice.
83
Bellway p.l.c.
Annual Report & Accounts 2009
Notes:
(i) A member entitled to attend and vote at the meeting convened by the above notice may appoint one or more proxies to attend and speak and vote instead of
him/her, provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that member. A proxy need not be a member
of the Company.
(ii) A form of proxy is enclosed separately. Completion and return of the proxy will not preclude shareholders from attending in person and voting at the meeting.
(iii) CREST members will be able to cast their vote using CREST electronic proxy voting using the procedures described in the CREST Manual (available via
www.euroclear.com/CREST). In order to be valid, the Company’s registrars must receive CREST Proxy Instructions not less than 48 hours before the time
of the meeting or any adjourned meeting.
(iv) The above statement as to proxy rights contained in note (i) above does not apply to a person who receives this notice of general meeting as a person nominated
to enjoy “information rights” under section 146 of the Companies Act 2006. If you have been sent this notice of meeting because you are such a nominated person,
the following statements apply: (a) you may have a right under an agreement between you and the member of the Company by whom you were nominated to be
appointed or to have someone else appointed as a proxy for this general meeting; and (b) if you have no such right or do not wish to exercise it, you may have a right
under such an agreement to give instructions to that member as to the exercise of voting rights. Nominated persons should contact the registered member by whom
they were nominated in respect of these arrangements.
(v) To be entitled to attend and vote at the meeting (and for the purposes of determination by the Company of the number of votes cast), shareholders must be entered
on the Company’s Register of Members at 5.30 pm on Wednesday 13 January 2010 (or, in the event of any adjournment, at 5.30 pm on the date which is two days
prior to the adjourned meeting). Changes to the Register of Members after the relevant deadline shall be disregarded in determining the rights of any person to attend
and vote at the meeting or adjourned meeting.
(vi) Pursuant to section 527 of the Companies Act 2006, where requested by either a member or members having a right to vote at the general meeting and holding at
least 5% of total voting rights of the Company or at least 100 members having a right to vote at the meeting and holding, on average, at least £100 of paid up share
capital, the Company must publish on its website a statement setting out any matter that such members propose to raise at the meeting relating to either the audit of
the Company’s accounts that are to be laid before the meeting or the circumstances connected with an auditor ceasing to hold office since the last meeting at which
accounts were laid. Where the Company is required to publish such a statement on its website, it may not require the members making the request to pay any
expenses incurred by the Company in complying with the request. It must forward the statement to the Company’s auditors and the statement may be dealt with
as part of the business of the meeting.
(vii) Any member attending the meeting has the right to ask questions. The Company must cause to be answered any such questions relating to the business being dealt
with at the meeting but no such answer need be given if (a) to do so would interfere unduly with the preparation of the meeting or involve the disclosure of
confidential information, (b) the answer has already been given on a website in the form of an answer to a question, or (c) it is undesirable in the interests of the
Company or the good order of the meeting that the question be answered.
(viii) Members have the right, under section 338 of the Companies Act 2006, to require the Company to give its members notice of a resolution which the shareholders
wish to be moved at an annual general meeting of the Company. Additionally, members have the right under section 338A of the Companies Act 2006 to require the
Company to include a matter (other than a proposed resolution) in the business to be dealt with at the annual general meeting. The Company is required to give such
notice of a resolution or include such matter once it has received requests from members representing at least 5% of the total voting rights of all the members who
have a right to vote at the annual general meeting or from at least 100 members with the same right to vote who hold shares in the Company on which there has
been paid up an average sum per member of at least £100. This request must be received by the Company not later than six weeks before the annual general meeting
or, if later, the time at which notice is given of the annual general meeting. In the case of a request relating to section 338A of the Companies Act 2006, the request
must be accompanied by a statement setting out the grounds for the request.
(ix) Except as provided above, members who wish to communicate with the Company in relation to the AGM should do so in writing either to the Group Company
Secretary at the registered office address or to the Company’s registrar, Capita Registrars Limited, Northern House, Woodsome Park, Fenay Bridge, Huddersfield,
West Yorkshire HD8 0LA. No other methods of communication will be accepted. In particular you may not use any electronic address provided either in this notice
of meeting or in any related documents to communicate with the Company for any purposes other than those expressly stated.
(x) There will be available for inspection during the AGM and for at least 15 minutes before it begins, a copy of the current Memorandum and Articles of Association,
a copy of the proposed new Articles of Association, and the directors’ appointment letters and service contracts.
(xi) A copy of this notice and the other information required by section 311A of the Companies Act 2006 can be found at www.bellway.co.uk.
(xii) As at the date of this notice there are 120,769,397 ordinary shares in issue and the total voting rights of the Company are therefore 120,769,397.
By order of the Board
G Kevin Wrightson
Group Company Secretary
Registered Office
Bellway p.l.c.
Seaton Burn House
Dudley Lane
Seaton Burn
Newcastle upon Tyne NE13 6BE
Registered in England and Wales
No. 1372603
12 October 2009
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Notes
Bellway p.l.c.
Annual Report & Accounts 2009
Introduction
Bellway p.l.c.
Annual Report & Accounts 2009
Since its formation more
than 50 years ago, Bellway
has built over 100,000
homes. It is recognised
throughout the industry
for building quality homes.
Contents
Business Review
Financial Highlights
Chairman’s Statement
Chief Executive’s Operating Review
Corporate Responsibility Policy
2009 Corporate Responsibility Statement
Key Performance Indicators
Environmental Policy Statement
Financial Review
Operating Risk Statement
Governance
Board of Directors
Advisers
Report of the Directors
Report of the Board on Directors’ Remuneration
Statement of Directors’ Responsibilities in respect
of the Annual Report and Accounts
Independent Auditors’ Report to the
Members of Bellway p.l.c.
Accounts
Group Income Statement
Statements of Recognised Income and Expense
Balance Sheets
Cash Flow Statements
Accounting Policies
Notes to the Accounts
Other Information
Five Year Record
Shareholder Information
Notice of Annual General Meeting
Notes
Principal Offices
Front cover:
01
02
06
12
15
17
18
20
24
26
27
28
35
42
43
44
44
45
46
47
52
76
77
81
84
Inside Back Cover
Bellway p.l.c.
Seaton Burn House, Dudley Lane, Seaton Burn, Newcastle upon Tyne NE13 6BE
Tel: (0191) 217 0717; Fax: (0191) 236 6230; DX: 711760 Seaton Burn; Website: www.bellway.co.uk
NORTHERN REGION
SOUTHERN REGION
Bellway Homes Limited
Wessex
Bellway House
Embankment Way
Castleman Business Centre
Ringwood
Hampshire BH24 1EU
Tel: (01425) 477 666
Fax: (01425) 476 774
DX: 45710 Ringwood
OTHER SUBSIDIARY
Bellway Housing Trust Limited
Seaton Burn House
Dudley Lane
Seaton Burn
Newcastle upon Tyne
NE13 6BE
Tel: (0191) 217 0717
Fax: (0191) 236 6230
DX: 711760 Seaton Burn
East Midlands
No. 3 Romulus Court
Meridian East
Meridian Business Park
Braunstone Town
Leicester LE19 1YG
Tel: (0116) 282 0400
Fax: (0116) 282 0401
North East
Peel House
Main Street, Ponteland
Newcastle upon Tyne
NE20 9NN
Tel: (01661) 820 200
Fax: (01661) 821 010
DX: 68924 Ponteland 2
North West
Bellway House
2 Alderman Road
Liverpool L24 9LR
Tel: (0151) 486 2900
Fax: (0151) 336 9393
Scotland
Bothwell House
Hamilton Business Park
Caird Street
Hamilton ML3 0QA
Tel: (01698) 477 440
Fax: (01698) 477 441
DX: HA13 Hamilton
West Midlands
Bellway House
Relay Point
Relay Drive, Tamworth
Staffordshire B77 5PA
Tel: (01827) 255 755
Fax: (01827) 255 766
DX: 717023 Tamworth
Yorkshire
2 Deighton Close
Wetherby
West Yorkshire LS22 7GZ
Tel: (01937) 583 533
Fax: (01937) 548 443
DX: 16815 Wetherby
Essex
Bellway House
1 Rainsford Road
Chelmsford
Essex CM1 2PZ
Tel: (01245) 259 989
Fax: (01245) 259 996
DX: 121935 Chelmsford 6
North London
Bellway House
Bury Street, Ruislip
Middlesex HA4 7SD
Tel: (01895) 671 100
Fax: (01895) 671 111
Northern Home Counties
Oak House
Woodlands Business Park
Breckland, Linford Wood
Milton Keynes MK14 6EY
Tel: (01908) 328 800
Fax: (01908) 328 801
DX: 729383 Milton Keynes 16
South East
Bellway House
London Road North
Merstham
Surrey RH1 3YU
Tel: (01737) 644 911
Fax: (01737) 646 319
Thames Gateway
Osprey House
Crayfields Business Park
New Mill Road
Orpington
Kent BR5 3QJ
Tel: (01689) 886 400
Fax: (01689) 886 410
Wales
Alexander House
Excelsior Road
Western Avenue
Cardiff CF14 3AT
Tel: (029) 2054 4700
Fax: (029) 2054 4701
Top left – Aspire, Chelmsford, Essex.
Right – Employee Tanya Davies at The Edge development
in Bocking, Essex.
Middle – Rubicon, London Borough of Greenwich.
Bottom left – Blakenhall, Wolverhampton, West Midlands.
Designed and produced by Radley Yeldar www.ry.com
Printed on paper sourced from sustainable sources, using vegetable-based inks.
www.bellway.co.uk
Bellway p.l.c.
Seaton Burn House,
Dudley Lane,
Seaton Burn,
Newcastle upon Tyne
NE13 6BE
Tel: (0191) 217 0717
Fax: (0191) 236 6230
DX: 711760 Seaton Burn
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Annual Report & Accounts 2009
www.bellway.co.uk