B
e
l
l
w
a
y
p
.
l
.
c
.
A
n
n
u
a
l
R
e
p
o
r
t
a
n
d
A
c
c
o
u
n
t
s
2
0
1
3
annual Report and
accounts 2013
BuiLDiNg
HomES,
BuiLDiNg
vaLuE
Bellway p.l.c.
annual Report and accounts 2013
Overview
AbOut us
From its origins nearly
70 years ago as a
small family owned
housebuilding business
in Newcastle upon
tyne, bellway has
become one of the uK’s
largest housebuilding
companies, with annual
revenue of more than
£1 billion.
It has its headquarters
in Newcastle but now
operates from 15
divisions throughout
the uK and has
built and sold over
100,000 homes.
Overview
1 Financial Highlights
3 Chairman’s Statement
Performance
9
Chief Executive’s
operating Review
15 Corporate
Responsibility Policy
16
20
2013 Corporate
Responsibility
Statement
Key Performance
indicators
(Non-Financial)
21 Environmental Policy
22 group Finance
Director’s Review
26 operating Risk
Statement
Governance
28 Board of Directors
29 advisers
30
Chairman's Statement
on Corporate
governance
31 Report of the Directors
39
54
Report of the
Board on Directors’
Remuneration
Statement of Directors’
Responsibilities
in respect of the
annual Report and
accounts
55
independent auditor’s
Report to the members
of Bellway p.l.c.
Accounts
56 group income
Statement
56
Statements of
Comprehensive income
57 Statements of Changes
in Equity
59 Balance Sheets
60 Cash Flow Statements
61 accounting Policies
66 Notes to the accounts
Other Information
86 Five Year Record
87 Shareholder information
94 Notice of annual
general meeting
97 glossary
99 Notes
iBC Principal offices
1
Overview
FINANcIAl hIghlIghts
Completed sales
(homes)
average selling
price (£)
Total group
revenue (£m)
4,380
4,595
4,922
5,226
5,652
186,648
193,025
175,613
154,005
163,175
1,110.7
1,004.2
886.1
768.3
683.8
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
2009
2010
2011
2012 2013
5,652 homes
+8.2%
£193,025
+3.4%
£1,110.7m
+10.6%
operating margin
(%)
Profit before
taxation (£m)
Earnings per
ordinary share (p)
13.6
11.4
6.7*
6.7
8.5
140.9
105.3
89.3
65.5
67.2
44.4
29.8*
41.5
29.7
17.7*
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
2009
2010
2011
2012 2013
13.6%
+220bps
£140.9m
+33.8%
89.3p
+36.3%
Dividend per
ordinary share (p)
Net asset value per
ordinary share (p)
Return on capital
employed (%)
30.0
20.0
9.0
10.0
12.5
839
856
888
933
1,001
12.3
10.1
7.0
4.0*
4.9
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
2009
2010
2011
2012 2013
30.0p
+50.0%
*Pre-exceptional items.
1,001p
+7.3%
12.3%
+220bps
Cover
Scholars Field, Crawley,
West Sussex
Above and opposite
The Pavilions, Hale village,
London Borough of Haringey
Scan this code with one
of the many available
QR reader apps on your
smartphone to access our
interactive online report
For further detail on our business please visit:
www.bellway.co.uk
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 2
dIVIdENd PER ORdINARY SHARE
30.0p
+50%
Bellway p.l.c. Annual Report and Accounts 2013 3
Overview
chAIrmAN’s stAtemeNt
“ another strong performance
with profit before taxation
increasing by almost 34% to
£140.9 million.”
John Watson
Chairman
Introduction
i am pleased to report, in my first year as Chairman,
another strong performance by the group with
profit before taxation increasing by almost 34%
to £140.9 million (2012 – £105.3 million).
There has been a significant improvement in trading
conditions during the year, largely stimulated through
wider access to more affordable, higher loan to value
mortgages. government support, and the Help to Buy
scheme in particular since its launch on 1 april, has had
a significant effect on the housing market, improving
mortgage availability and helping to satisfy previously
restrained consumer demand.
These more favourable mortgage conditions,
a gradual improvement in consumer confidence,
together with a continuing programme of site
openings, have allowed the group to deliver its
fourth consecutive year of earnings growth.
Opposite
The Limes, Crossgates,
West Yorkshire
Trading and results
The financial year began well with visitor numbers
and reservations slightly ahead of initial expectations.
The reservation rate gathered momentum with
the onset of spring and the commencement of the
Help to Buy scheme brought with it the strongest
market conditions seen since the downturn in 2008.
This strong demand has enabled the group to
complete the sale of 5,652 homes (2012 – 5,226),
an increase of 8.2% compared to last year. The
average selling price of homes sold has increased
by 3.4% to £193,025 (2012 – £186,648) as a result of
continuing changes in product and geographic mix.
as a result, housing revenue in the year has risen by
nearly 12% to £1,091.0 million (2012 – £975.4 million)
and this, together with other revenue of £19.7 million
(2012 – £28.8 million), has resulted in total revenue
increasing by almost 11% to £1,110.7 million
(2012 – £1,004.2 million).
The group delivered a 31.8% increase in operating
profit to £151.1 million (2012 – £114.6 million) at an
operating margin of 13.6% (2012 – 11.4%). This
improvement in the operating margin continues to
be generated from a combination of the growing
proportion of completions derived from higher margin
land, acquired since the downturn, together with
robust cost control.
Net finance costs remain low at under £10.2 million
(2012 – £9.3 million) resulting in profit before taxation
of £140.9 million (2012 – £105.3 million), an increase
of 33.8% compared with the prior year.
Basic earnings per share have increased by 36.3%
to 89.3p (2012 – 65.5p) and this has resulted in growth
of 7.3% in the net asset value per share to 1,001p at
31 July 2013 (2012 – 933p).
The group applies strong capital disciplines and
continues to meet its acquisition criteria in respect
of gross margin and return on capital employed on
all new land acquisitions. as a result of this approach,
the group’s return on capital employed has further
improved to 12.3% (2012 – 10.1%).
Bellway ended the financial year with net bank debt
of £5.8 million after spending £300 million on land
and land creditors. This balance sheet strength,
compounded by a limited exposure to historic shared
equity schemes and a relatively insignificant pension
deficit, ensures that the group retains its ability to
continue investing in land. This should support the
further growth of the business where favourable
opportunities can be sourced by our land teams.
Bellway p.l.c. Annual Report and Accounts 2013OverviewPerformanceGovernanceAccountsOther Information 4
Overview
chAIrmAN’s stAtemeNt cONtINued
dividend
Outlook
Since 31 July, reservations have remained ahead of
last year and demand remains strong in most areas
of the country.
The group has expanded its divisional structure by
opening two new divisions, in manchester and in
the Thames valley, with effect from 1 august 2013.
This increased operational capacity, coupled with an
order book of over £644 million at 29 September (30
September 2012 – £438 million), means that, subject to
construction delivery, Bellway is well placed to further
increase the rate of volume growth in the year ahead.
This increased operational capacity, together with
a strong balance sheet and a focus on return on
capital, should mean that the group is able to
continue delivering sustainable, responsible growth
in net asset value, whilst maintaining its progressive
dividend policy.
John Watson
Chairman
14 october 2013
given the group’s strong earnings growth and balance
sheet position, the Board is proposing to increase
the final dividend by 50% to 21.0p per ordinary share
(2012 – 14.0p). This rise also produces a 50% increase
in the total dividend for the year to 30.0p (2012 – 20.0p)
with this being covered by earnings almost 3.0 times
(2012 – 3.3 times).
People
The continued commitment of all those who work
for and with Bellway is critical to its ongoing success
and this has enabled the group to achieve significant
growth in profitability during the year. i would like to
express the Board’s gratitude to all Bellway’s
employees, sub-contractors and partners whose
commitment and loyalty will help to facilitate the
future growth of the business.
Board changes
Peter Johnson, the senior independent non-executive
director will retire on 31 January 2014 following ten
years of dedicated service with Bellway. on behalf of
the Board, i would like to thank him for his commitment
and invaluable contribution to the progress of the
group. John Cuthbert, who joined the Board on
1 November 2009, will succeed Peter in the role
of senior independent non-executive director
on 1 February 2014.
We welcome to the Board Paul Hampden Smith
and Denise Jagger, as independent non-executive
directors, who joined Bellway on 1 august 2013.
i would like to take this opportunity to wish both
Paul and Denise every success in their new roles and
i am sure they will make a valuable contribution to
the progress of the group in the years to come.
Left
The Fairways, Rowley Regis,
West midlands
Opposite
Cherrywood, Ware,
Hertfordshire
Bellway p.l.c. Annual Report and Accounts 2013 5
Bellway p.l.c.
annual Report and accounts 2013
returN ON cApItAl emplOyed
12.3%
+220bps
OverviewPerformanceGovernanceAccountsOther Information
6
Overview
buIldINg hOmes, buIldINg vAlue
Top
Five mile Park, North gosforth,
Tyne and Wear
Centre
Prospect Place, grangetown,
Cardiff
Above
Hanbury Drive, Hornchurch,
Essex
Opposite
abbotswood Park,
abbots Langley, Hertfordshire
Bellway p.l.c. Annual Report and Accounts 2013 7
Bellway p.l.c. Annual Report and Accounts 2013OverviewPerformanceGovernanceAccountsOther Information 8
Bellway p.l.c.
annual Report and accounts 2013
AVERAGE WEEkLY RESERVATION
RATE duRING THE YEAR
128
homes per week
+27%
performance
chIeF executIve’s OperAtINg revIew
9
” The group has delivered
another strong set of results,
with further growth in volume,
average selling price and
operating margin.”
Ted Ayres
Chief Executive
Market overview
The market for new homes has benefited from
improving consumer confidence throughout the year,
further stimulated by government schemes in the form
of NewBuy and Help to Buy. The latter was introduced
in England in april 2013 and offers purchasers the
ability to acquire newly constructed houses and
apartments, with only a 5% deposit. The group’s sales
rate improved significantly following the introduction
of Help to Buy, with the scheme having been used in
29% of reservations in the period since its launch, up
to 31 July 2013.
visitor numbers to our developments and website
have risen during the year resulting in the average
weekly reservation rate rising by almost 27% to 128
homes per week (2012 – 101).
Set against this backdrop of rising consumer
confidence and wider accessibility to higher loan to
value mortgages, the group has delivered another
strong set of results, with further growth in volume,
average selling price and operating margin contributing
to a growth in earnings and an improvement in return
on capital employed.
Opposite
mulberry Lodge, Tiptree, Essex
Building shareholder value
The improvement in market conditions, together with
the group’s operational and balance sheet capacity
for growth, ensures that Bellway is well positioned to
deliver further volume growth in the years ahead, whilst
maintaining strict capital disciplines.
This should enable the group to build further
shareholder value through continued growth in net
asset value together with a progressive dividend policy.
Regional performance
our divisions in the north of the country have
benefited from investment in new sites and as a result,
completions have increased by 11.7% to 2,652 homes
(2012 – 2,375). The Scotland and Yorkshire divisions
showed noticeable improvement in volume with the
number of legal completions rising to 414 (2012 – 336)
and 301 (2012 – 225) respectively.
The average selling price in the north has increased
by 8.0% to £163,534 (2012 – £151,376) largely as a result
of changes in product mix with Bellway continuing
its focus on traditional two storey family housing.
For example, the group sold 965 homes (2012 – 734)
with four bedrooms or more, an increase of 31.5%
compared to last year. The effect of this change in
product mix is most pronounced in the North West
and Yorkshire divisions, where the average selling price
increased to £171,204 (2012 – £156,389) and £168,751
(2012 – £148,442) respectively.
our southern divisions have also performed well,
benefiting in many areas from a strong consumer
demand for new homes. as a result, completions have
increased by 5.2% to 3,000 homes (2012 – 2,851) and
the average selling price in the south rose slightly to
£219,094 (2012 – £216,031).
Four of the group’s southern divisions also benefit from
a strong presence in the London Boroughs, where
Bellway completed the sale of 865 homes, representing
19% of total housing revenue. The average selling
price in the London Boroughs has risen by almost 5%
in the period to £240,539 (2012 – £229,794) with this
being affordable in the context of the London market.
Bellway has developed successfully within the London
Boroughs for a number of years and traded from 22
outlets during the year.
Strong cost control
Strong cost control has contributed to the group’s
performance with construction costs remaining
relatively benign throughout the year. The vast majority
of materials used throughout the group are centrally
procured and our supply chain contracts are fixed in
advance for periods of 12 months or more. This has
enabled the group to ensure consistent cost and
quality control. We have encountered some material
and sub-contractor labour shortages in recent months
and as volumes continue to grow in the industry, the
group’s procurement teams will face inevitable cost
pressures. We will continue to work closely with the
existing supplier and sub-contractor base to minimise
any cost increases.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 10
PLOTS IN LANd BANk
AT 31 JuLY 2013
32,991
plots
+6.0%
Bellway p.l.c. Annual Report and Accounts 2013 11
performance
chIeF executIve’s OperAtINg revIew cONtINued
A strong presence in the London Boroughs
Land bank and planning
The group’s controlled approach to land buying
requires the divisional land teams to appraise both
gross margin and return on capital employed for
each potential land acquisition. Whilst adopting this
approach, Bellway has expended £300 million on
land and land creditors during the year, with a focus
on the acquisition of land that has the benefit of
implementable detailed planning permission (‘DPP’)
or is conditional on obtaining implementable DPP.
The land bank at 31 July 2013 totalled 32,991 plots
(2012 – 31,136), comprising 18,991 plots (2012 – 17,636)
owned with a DPP, together with a further 14,000
plots (2012 – 13,500) in the ‘pipeline’. The group
defines its ‘pipeline’ as plots which are either owned
or contracted, often conditionally, pending an
implementable DPP. The group’s success at acquiring
land on a conditional basis, often at a higher margin,
allows our planning and technical teams to reduce the
risk associated with each development opportunity.
This frequently results in land with DPP being paid for
at the point of delivery, thereby enhancing the group’s
return on capital employed. in the period, we have
successfully obtained a DPP on 4,252 (2012 – 2,472)
plots which were previously included in the pipeline tier
of the land bank. Furthermore, the group acquired an
additional 2,755 (2012 – 2,304) plots with the benefit of
DPP directly into the land bank. Bellway has, therefore,
successfully added 7,007 (2012 – 4,776) plots with
implementable DPP into the land bank.
in addition to its land holdings of 32,991 plots, the
group has longer term strategic land holdings,
typically held under option. Within this section of
the land bank there are approximately 4,400 plots
(2012 – 3,900) which are currently allocated in emerging
plans, with 2,130 (2012 – 1,773) of these being the
subject of current planning applications. Furthermore,
the group had, at 31 July 2013, agreed terms for the
acquisition of a further 4,100 plots, of which 924 plots
have been acquired since the end of the year.
The group has been included on all of the
government’s re-tendered development partner
panels and our expertise in delivering complex
regeneration schemes should place Bellway in a strong
position to benefit from this land source at returns that
meet our minimum acquisition criteria.
Following the introduction of the government’s
National Planning Policy Framework, the group’s
planning teams have seen an improvement in the
consultation process with many local authorities. The
subsequent requirement to discharge numerous
pre-commencement conditions is, however, still
adding unnecessary delay to the opening of new
outlets to meet housing demand.
Opposite
The Lawns, Reading, Berkshire
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 12
performance
chIeF executIve’s OperAtINg revIew cONtINued
Customer care and training
Corporate responsibility
Quality of construction and customer care are key
priorities for the group. Every customer is requested
to complete a customer satisfaction survey and is
asked whether they would ‘Recommend Bellway to
a friend’. The group attained a positive reply from
94.8% (2012 – 93.8%) of respondents. These scores
are independently benchmarked against other major
national housebuilders and have helped the group to
retain its Home Builders Federation (‘HBF’) rating as a
5* housebuilder.
During the year, our site managers won 27 NHBC
sponsored ‘Pride in the Job’ awards, which is the
most the group has ever achieved. This is testament
to Bellway’s ongoing investment in training and the
quality of our construction staff.
The group operates a graduate recruitment scheme
to recruit high quality graduates into its teams and, in
the future, we anticipate a minimum of two graduates
per division. in addition, the group has 73 trade
apprentices working on its construction sites and this
figure will rise further as production activity increases.
Health and safety
The group’s health and safety record continues to
improve with the reportable incident rate, measured
in accordance with Health and Safety Executive (‘HSE’)
guidelines, decreasing by 12.7% compared with the
previous year. our site managers won three National
NHBC Health and Safety awards, with two of them
commended and one highly commended.
We have supported the HSE in their efforts to improve
dust suppression by issuing advice and instructions
to all of our sub-contractors and ensure compliance
during site inspections. Bellway remains committed to
further improvement in all areas of health and safety
to minimise the risk of injury on our sites.
existing divisions
New divisions
The group is focused upon and committed to
delivering and maintaining, high standards of
corporate governance and responsibility. The
operating divisions continue to work with external
advisers to ensure that house types meet the new
energy efficiency requirements of the current building
regulations and Code for Sustainable Homes 4
('Code 4'). in the period, the group has successfully
constructed 244 homes built to Code 4 and a further
543 homes incorporating photovoltaic (‘Pv’) panels
to meet renewable energy planning requirements.
The use of Pv panels will expand with the imminent
introduction of further new building regulations.
Outlook
The improved sales rate, influenced by the launch of
Help to Buy in april 2013, has resulted in the order
book at 31 July totalling 3,525 plots (2012 – 2,533),
representing an increase in value of 54% to £679.5
million (2012 – £441.2 million).
We are hopeful that the improved trading conditions
experienced over recent months will be maintained
in the current financial year. government support,
both through the extension of the Help to Buy equity
loan scheme to include Scotland, and the proposed
extension to include Wales, together with the recent
launch of the Help to Buy mortgage guarantee, should
continue to assist those potential purchasers requiring
a 95% loan to value mortgage.
Furthermore, in order to facilitate our growth plans,
two new divisions have opened, with effect from
1 august 2013, in manchester and in the Thames valley.
These have been planned over the last 12 months and,
as a consequence, the new divisions have acquired
sufficient land to contribute legal completions in the
current financial year.
The investment in these new divisions has increased
operational capacity to 7,500 homes and beyond per
annum and this, together with the strong order book
and growing customer demand, could enable the
group to achieve volume growth of up to 15% in the
current financial year. The attainment of this target will
be subject to market conditions remaining unchanged
and construction delivery times being achieved. as
a result of the strong order book at 31 July, the rate
of volume growth is expected to be more heavily
weighted to the first half of the current financial year.
Bellway has a strong balance sheet, low net bank
debt of £5.8 million and, with its increased operational
capacity, the group is well placed to deliver disciplined
volume growth, with a focus on return on capital,
over the coming years. This should allow Bellway
to deliver its aim of creating ongoing enhancement
in shareholder value by a combination of growth
in net asset value, together with a progressive
dividend policy.
Ted Ayres
Chief Executive
14 october 2013
Right
The asters,
Sunningdale, Berkshire
Bellway p.l.c. Annual Report and Accounts 2013 13
Bellway p.l.c.
annual Report and accounts 2013
VALuE Of ORdER BOOk
AT 31 JuLY 2013
£679.5m
+54%
OverviewPerformanceGovernanceAccountsOther Information
14
Right
interior at The Heath,
Warrington, Cheshire
Below
interior at Langroyd mews,
London Borough of Wandsworth
Bellway p.l.c. Annual Report and Accounts 2013 performance
cOrpOrAte respONsIbIlIty pOlIcy
15
Through sustainable construction we aim to create new
communities and lasting environments for people now
and in the future. using our skills, and in consultation
with our partners, we aim to enhance the environment
in which we are working and secure the advantages
that this offers to Bellway, its shareholders, employees
and customers.
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
are significant elements of sustained financial success.
at Bellway, the term Corporate Responsibility
describes how we manage the environmental, social
and economic effects of our business.
Through Bellway’s commitment to corporate
responsibility we:
engage and respond to stakeholders,
including shareholders, employees, customers,
government and communities that we affect,
thereby improving internal and external awareness.
comply with all relevant legislation as
a minimum standard.
work towards recognised good practice in
sustainability and corporate responsibility.
treat all employees fairly and invest in training for
the medium and long term to bring out the best
in our people.
provide a healthy and safe environment in which
to work through an effective health and safety
management system.
demonstrate continual improvement in our
approach to sustainable developments
(in both design and practice).
recognise and respond to the challenges and
opportunities that are presented by climate change.
invest in the communities we develop in a way that
contributes to local community needs.
manage our environmental footprint and aim to
enhance our performance in areas where we
operate, particularly in relation to energy and waste.
consider and respond to the social and
environmental effects of the homes we develop
and communities that we create.
The following structure has been put in place to
achieve these commitments:
the Chief Executive is responsible for this policy and
reports to the Board and external stakeholders on
performance in relation to all corporate responsibility
matters.
the Chief Executive is supported by the Corporate
Responsibility group which includes senior
employees from within the group who are
responsible for the development and review of this
policy. They in turn delegate to managers within
each of the divisions who are responsible for
implementation.
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 in relation to environmental
issues and health and safety, 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.
Above
Burying a time capsule with pupils from
Wallyford Primary School, Wallyford, East Lothian
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 16
performance
2013 cOrpOrAte respONsIbIlIty stAtemeNt
Introduction
The protection of the environment and working
with communities to develop new homes that are
both efficient and sustainable is fundamental to
the continued success of our business. Resource
management is one of the most important aspects
of our business. our customers and investors are
increasingly interested in how we adjust to changing
conditions. For Bellway, resource management is
about land use, consumption of materials and how
they are used and where they are sourced.
During the last 12 months we have closely examined
the environmental credentials of our supply chain
partners to ensure that every day decision-making
is not compromising our environmental aims
and obligations.
We work with hundreds of supply chain partners who
provide us with goods and services, ranging from
bricks and blocks to roof trusses and kitchen fittings.
in managing the environmental integrity of our supply
chain we require all suppliers to provide details of their
environmental credentials as a prerequisite of entering
into a contract with Bellway.
Supply chain
To achieve a more energy efficient home we focus on
the fabric of the materials that we use in construction,
concentrating on highly insulated walls, windows and
lofts. We then ensure that our homes are airtight and
use mechanical ventilation systems to maintain good
air quality and comfort. Where appropriate, we use
low-carbon and renewable technologies such as solar
panels, photovoltaic panels (‘Pv’), combined heat and
power plants and air and ground source heat pumps.
The selection of the appropriate materials is essential
in developing a sustainable building. For example, the
Thermalite aerated concrete blocks we use offer high
thermal insulation and contain up to 80% recycled
material (pulverised fuel ash). Thermalite was one of the
first blocks to receive a Certified Environmental Profile
and eco-points score from the Building Research
Establishment, achieving an ‘a’ rating in the green
guide to Specification. its manufacturers, Hanson,
employ a strict waste minimisation scheme that
ensures that all surplus materials used in its production
are recycled into the next mix, used in other products
or used as an aggregate bulk fill replacement in
road construction.
our principal supplier of bricks, ibstock, has achieved
BES 6001 accreditation across all of its manufacturing
sites and we recognise their policy for responsible
sourcing of construction products and demonstrating
that a building material has been produced in a way
that has minimised its environmental effect, and
is sustainable.
marley Eternit, our supplier of roof tiles was the
first roofing manufacturer in the uK to achieve an
independent carbon footprint certification for all of
its roofing products and certifies the total amount of
carbon dioxide (‘Co2’) and other greenhouse gases
emitted in the production and use of a product at
every stage throughout its lifecycle.
We purchase timber from a variety of suppliers and
in accordance with our timber procurement policy
we specify that all timber products must comply with
either FSC or PEFC credentials. in march 2013, a new
Eu regulation came into force which prohibits placing
timber on the Eu market if it was illegally harvested.
in accordance with these new guidelines we have put
in place procedures to ensure that all timber used by
Bellway has been harvested from legitimate sources.
Managing consumption
Throughout the year we have been monitoring our
consumption of gas, electricity, petrol, diesel and
the amount of waste we generate. With assistance
from the environmental consultancy, Trucost, we
have collated this data to ensure that we can report
our direct and indirect greenhouse gas emissions in
accordance with the regulations that came into effect
on 1 october 2013. Furthermore, the actions we have
taken enable us to set realistic targets for the future
which will help us to reduce our carbon footprint.
Climate change
The new homes we build are considerably more
energy efficient than older housing. New building
regulations introduced in 2010 require all new homes
to achieve a 25% reduction in carbon emissions
compared with the 2006 regulations. There will be
further changes to building regulations as the industry
moves towards building carbon neutral homes (Code
Level 6) by 2016. This year we completed 5,652 homes,
of these 28% were constructed to Code Level 3 and 4%
achieved Code Level 4.
as an example of our commitment to more energy
efficient properties, our development in east London,
So Stepney, includes a community heating system.
This comprises a combined heat and power unit
that provides a highly efficient heating system for
our residents and also generates electricity that is
returned to the national grid. This is one of the most
carbon efficient systems available and is well suited
to apartment schemes where the residents benefit
from lower energy costs and will always have hot water
‘on demand’. The system will be the responsibility
of the community heating scheme operator who
is contracted to maintain the system and provide
competitive rates for its energy against traditional
heating systems, thus ensuring that our customers
benefit from reduced energy bills.
Bellway p.l.c. Annual Report and Accounts 2013 17
also in east London in Hackney, we have entered
into a collaboration with the Peabody Trust as part
of their programme of estate renewal to create
Pembury Circus. This enabled us to share our skills in
regeneration to return a redundant site to residential
use and provide 149 private apartments, 40 shared
equity apartments and 79 apartments for rent. The
development was thoughtfully planned to provide
a range of on-site community facilities including a
crèche, community centre, gym and roof terrace.
Employment opportunities
apart from the obvious change to the built
environment, redevelopment can also provide
important employment opportunities. in east London
we are working in a consortium to regenerate
the ocean Estate in Stepney. arising from this
development and working with Tower Hamlets
Council, East Thames Housing and Skillsmatch,
the development by the consortium has provided
employment opportunities for 65 local people who
had been unemployed for several months or, in some
cases, years, with the east end of London’s biggest
housing regeneration scheme.
focus on customer satisfaction
We know that Bellway’s best advert is a satisfied
customer, which is why we devote so much time
to making sure that our homes match and exceed
our customers’ expectations. We continually review
our customer care procedures to ensure that we
are providing the best possible service. our efforts
have been rewarded this year as we have retained
our 5* rating awarded by the HBF and increased
our customer satisfaction score by reference to the
question ‘Would you recommend a Bellway home?’
to 94.8%. in addition, we are also very pleased to
report that we have received 27 NHBC Pride in the
Job Quality awards, which further reflects the skills
and dedication of our workforce.
at Roby Park in Liverpool we have provided homes
with air source heat pumps, which are designed to
heat homes using thermal energy from the outside air.
The heat pumps generate heat to warm radiators and
provide hot water and can lower fuel bills by up to £300
over the course of a year.
Pv panels are now more widely used throughout our
developments across the country. To help maintain
the affordability of our homes and to meet planning
obligations and Code for Sustainable Homes
requirements, we have entered into a partnership
with a renewable energy company to provide our
customers with free solar panels fitted in return for a
20 year roof lease. The initiative gives customers the
opportunity to generate their own electricity and thus
reduce their energy bills.
Land
Central to our business is the procurement of land
suitable for residential development. increasingly,
planning policy favours the use of brownfield sites,
particularly in urban areas. Here there is a greater
potential to affect neighbouring communities through
the construction process. Prior to us submitting a
planning application, we undertake a series of public
engagement events to present our plans to local
people. This consultation process enables us to
gauge opinion and make any revisions which improve
the balance between the demands of our business
in conjunction with providing for the needs of our
residents and their communities.
in the West midlands, in Coleshill, near Birmingham,
we are working in partnership with the Father
Hudson Society where we have plans to replace
existing buildings with a high quality scheme of
townhouses, retirement apartments and new office
accommodation. Specialist heritage architects have
been appointed to design the scheme, which includes
a bespoke design proposal to ensure that the new
development complements its surroundings and
enhances the conservation area.
in east London, in the Borough of Tower Hamlets,
in partnership with the housing association, Family
mosaic, we have redeveloped the former Festival of
Britain site to create New Festival Quarter. The site,
measuring 4.75 acres, has enabled us to provide 490
homes for open market sale, shared equity and rent,
close to Canary Wharf and several transport hubs. New
Festival Quarter is providing affordable housing as well
as being an important feature of Tower Hamlet’s wider
regeneration aspirations.
Right
Pembury Circus, London
Borough of Hackney
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 18
Bellway p.l.c.
annual Report and accounts 2013
19
performance
2013 cOrpOrAte respONsIbIlIty stAtemeNt cONtINued
Prioritising health and safety
Community and infrastructure support
The granting of planning permission triggers financial
support from Bellway to benefit the communities
adjacent to our developments. This year we have
provided £44.2 million which has been used to
support education initiatives, transport and highway
improvements, health facilities and open spaces. in
addition, our employees involve themselves in many
local charitable projects and Bellway has provided
a total of £77,699 to many charities throughout the
country, both large and small, including national
charities, such as the alzheimers Society, British
Heart Foundation, Cancer Research uK, Centrepoint,
groundwork, Help for Heroes, NSPCC, Princes Trust,
RSPB, Shelter and Woodland Trust.
Behaving responsibly and running a sustainable
business that considers and addresses the social,
economic and environmental issues that concern our
stakeholders makes eminently good business sense.
We remain committed to improving our environmental
credentials and will continue to report progress
annually. Further information can also be found
on our corporate responsibility website:
http://www.bellway.co.uk/corporate-responsibility.
The management of health and safety is a vitally
important part of our day-to-day operations and it
is our aim to create an accident free environment.
underpinning this aim is a comprehensive Health
and Safety Policy and associated health and safety
procedures and practices.
We take a proactive approach to managing health and
safety on our sites and this includes visits by our in-
house health and safety team who review procedures
and ensure that the requirements of our Health and
Safety Policy are being adhered to. NHBC safety
consultants also regularly visit our sites and undertake
health and safety audits. The ensuing reports are
reviewed by management and actions are taken to
remedy items of non-compliance and/or the sharing
of best practice.
our on-site induction process and regular tool box
talks help us to maintain the competency of our staff
and sub-contractors. 90% of our employees carry a
CSCS card. CSCS is the largest competence-based
scheme in the construction industry, covering 220 core
trades and also requires supervisors and operatives
to pass a mandatory health and safety test.
Protecting wildlife
in all development processes we take account of the
presence of existing biodiversity habitats and work
with local agencies to manage the requirements of
these natural areas. We ensure that, when necessary,
the appropriate level of care and attention is taken
to preserve or enhance these areas. an example
of this approach can be seen at Hinckley in
Leicestershire where, as part of constructing The
greens development, we have relocated and created
a new habitat for a colony of great crested newts.
We have also provided bat garages and installed bat
sensitive lighting at several developments throughout
the country.
Left
The RSPB’s Craig Hartley
receiving a donation of £5,000
from Bellway Sales manager
Paula murdoch
Opposite
Work in progress on a block
of flats
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 20
performance
Key perFOrmANce INdIcAtOrs (‘KpIs’) (NON-FINANcIAl)
We use these non-financial KPis to help us measure our performance against our corporate responsibility objectives. Financial
KPis are set out on pages 22 and 23 of this Report.
kPIs
Commercial
financial year ended 31 July
2009
2010
2011
2012
2013
Total number of homes sold
Number of homes sold to Registered Providers
4,380
980
4,595
943
4,922
1,079
5,226
5,652
868
958
Number of plots with detailed planning permission
19,260
17,602
18,086
17,636
18,991
Number of sites registered with the Considerate Constructors Scheme
Number of homes built to Lifetime Homes standards(1)
Environmental
Percentage of homes developed on brownfield sites
Number of homes per hectare
Number of EcoHomes with at least ‘very good’ rating
Number of homes built to Code Level 3
Number of homes built to Code Level 4(2)
Number of homes built with renewable energy technology
Percentage of homes built using timber frame
Number of homes built using thin joint technology(2)
measure of waste (number of 7m3 skips per home sold)
Number of active sites with a Biodiversity Plan in place(3)
Number of compliance breaches
Number of homes with energy efficient lighting(2)
Number of homes with rainwater harvesting(2)
Number of homes with waste recycling facilities(3)
56
–
84%
67
786
428
–
636
23%
–
3.60
–
0
–
–
–
89
690
80%
63
480
108
1,119
77%
59
693
1,186
1,371
36
128
798
69%
57
464
964
249
126
818
74%
53
422
1,566
244
–
1,653
15%
–
3.78
–
1
–
–
–
2,092
2,865
2,278
13%
126
3.44
–
1
3,973
224
–
89
5%
50
2.92
36
1
5,155
260
1,613
110
6%
0
3.02
39
1
5,301
152
1,897
114
Number of current sites with SuDS designed into the scheme
77
86
Number of trees planted(1)
Number of current sites with car clubs
Number of homes with access to a cycle store(2)
Number of sites within 500 metres of a transport node(3)
Employees
Employee turnover(4)
Number of site workers (including sub-contractors) accredited with CSCS cards
Number of graduates on training programme(5)
Number of apprentices employed (including via sub-contractors)
Number of NHBC Pride in the Job awards received
Health and Safety
–
5
–
–
8,484
8,843
6,894
8,485
7
–
–
6
2,278
–
9
2,079
206
16
2,813
154
65.2%
1,793
21.0%
3,489
13.8%
4,037
14.6%
3,622
17.5%
3,497
–
30
15
–
33
18
–
43
22
–
69
23
15
73
27
Rate of over three-day lost time accidents per 100,000 employees
973.24
945.18
767.90
761.18
664.75
Number of health and safety prosecutions
Creating community value
1
0
0
0
0
Financial contributions under section 106 agreements
£2.0m
£13.0m £30.9m
£39.4m £44.2m
man hours contributed to charitable initiatives(3)
Number of plots built to Secured by Design principles(3)
Number of work placements offered to local people in the last three years(3)
–
–
–
–
–
–
–
–
–
191
1,614
91
145
1,897
57
Stakeholder
Percentage of customers who would recommend Bellway to a friend (annualised)
Number of suppliers/contractors who have worked for Bellway for at least three years(1)
89%
–
86%
2,777
91%
2,916
94%
3,579
95%
3,436
(1) 2010 was the first year of reporting. (2) 2011 was the first year of reporting. (3) 2012 was the first year of reporting. (4) includes redundancies. (5) 2013 was the first year
of reporting.
Bellway p.l.c. Annual Report and Accounts 2013 21
recognise and respond to the challenges and
opportunities that are presented by climate change.
in addition to our key objectives, the group has
identified a number of specific priority areas upon
which we particularly focus:
consideration of environmental aspects in the
selection and procurement of land for development,
including implications for biodiversity and
sustainable development.
meeting and where possible, exceeding
government targets for the redevelopment of
brownfield land.
influencing the design of sites, housing, and fittings
to minimise the effects on both the natural and
built environment.
providing environmental benefits and minimising
nuisance arising from construction activities and
preventing pollution on development sites and
surrounding areas.
consideration of environmental issues within
our corporate functions and everyday business
decision-making processes.
The above statement will be balanced against
economic considerations.
performance
eNvIrONmeNtAl pOlIcy
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, not only
to limit the negative effects of our operations on the
environment, but also to enhance it, this statement
sets out our policies for managing the environmental
aspects across our business.
Key objectives are to:
minimise any deleterious effects on the environment
and where possible, seek environmental
enhancements, concentrating on areas where
there is most room for improvement.
aim to meet and, where practicable, exceed all
relevant environmental legislation and regulations.
improve our environmental performance.
set specific environmental objectives and
periodically review progress against these objectives
to ensure that Bellway’s environmental aims and
their importance are communicated throughout
the group, including to appropriate sub-contractors,
suppliers and other parties, and that a copy of this
policy statement is displayed in all Bellway sites
and offices.
consider the role that Bellway can play in helping
to contribute to the principles of sustainable
development within the uK.
Right
So Stepney, London Borough
of Stepney
Below
Links view, ainsdale, merseyside
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 22
performance
grOup FINANce dIrectOr’s revIew
” The group has delivered
further value for shareholders.”
keith Adey
Finance Director
Introduction
Bellway has delivered another strong set of results,
having achieved growth in volume, average selling
price and operating margin for the fourth successive
year. as a result of this solid trading performance,
operating profit has increased by 31.8% to £151.1 million
(2012 – £114.6 million) and operating margin has
been further enhanced by 220 basis points to 13.6%
(2012 – 11.4%). Basic earnings per ordinary share has
increased by 36.3% to 89.3p (2012 – 65.5p).
The group’s balance sheet is strong, with Bellway
ending the year with net bank debt of £5.8 million
(2012 – £40.6 million), representing gearing of only
0.5%, excluding the group’s £20 million preference
shares. The net asset value (‘Nav’) per share has grown
by 7.3% to 1,001p (2012 – 933p).
The growth in operating profit, together with the
group’s strong capital disciplines, has resulted in
return on capital employed (‘RoCE’) increasing to
12.3% (2012 – 10.1%).
This strong performance has allowed the Board to
propose a 50% increase in the total dividend per
ordinary share to 30.0p (2012 – 20.0p) for the financial
year ended 31 July 2013. This progressive dividend
policy, coupled with the continued growth in Nav
and a strong focus on RoCE, has enabled the group
to create further value for shareholders.
Group results
The following tables provide additional information
on the composition of homes sold and average
selling price, analysed between north, south,
private and social.
Homes sold (number)
Private
Social
Total
2013
2012
2013
2012
2013
2012
2,386
2,115
2,308 2,243
266
692
260 2,652
2,375
608 3,000
2,851
4,694 4,358
958
868 5,652 5,226
North
South
Group
total
average selling price (£000)
Private
Social
Total
2013
2012
2013
2012
2013
2012
173.0
159.9
79.1
82.1 163.5
151.4
242.9 238.4 139.9
133.6 219.1
216.0
207.3 200.3 123.0
118.2 193.0
186.6
North
South
Group
average
The increase in the average selling price is mainly
due to the continued evolution of product mix, with
the group maintaining a focus on apartments within
the London Boroughs, together with more traditional
two storey family housing outside London.
as a result of the increase in both the number of
legal completions and average selling price, housing
revenue has increased by 11.9% to £1,091.0 million
(2012 – £975.4 million). Non-housing revenue, which
principally comprises ground rent and commercial unit
sales, was £19.7 million (2012 – £28.8 million), with total
group revenue increasing by 10.6% to £1,110.7 million
(2012 – £1,004.2 million).
The gross margin has increased by 220 basis points to
18.3% (2012 – 16.1%), primarily as a consequence of the
proportion of legal completions from land acquired
since the downturn, at margins in excess of 20%,
increasing to 64% (2012 – 55%).
Strong cost control has ensured that administrative
expenses have remained at 4.7% of revenue
(2012 – 4.7%), whilst increasing in absolute terms,
to £52.2 million (2012 – £47.5 million), as a result of
further investment in divisional teams in order to
facilitate future growth.
overall, the group operating profit has increased
by 31.8% to £151.1 million (2012 – £114.6 million),
representing a 220 basis point improvement in
operating margin to 13.6% (2012 – 11.4%).
Bellway p.l.c. Annual Report and Accounts 2013
23
finance costs
Earnings per share
The net finance costs of the group have increased
slightly by £0.8 million to just under £10.2 million
(2012 – £9.3 million). Net bank finance expenses
decreased to £3.7 million (2012 – £4.7 million) and
the group’s notional interest on land acquired on
deferred terms increased by £1.7 million to £4.7 million
(2012 – £3.0 million). interest on the group’s £20 million
preference shares, repayable in april 2014, remains
at £1.9 million. The group had a £0.3 million
(2012 – £0.5 million) net expense in relation to the
pension scheme deficit and there was other net
interest income of £0.4 million (2012 – £0.8 million).
Taxation
The group incurred a tax charge of £32.4 million
(2012 – £26.0 million) at an effective tax rate of
23.0% (2012 – 24.7%) mainly reflecting a 1.6% drop
in the statutory tax rate. The effective rate is below
the group’s standard rate for the year of 23.7%
(2012 – 25.3%), largely due to an enhanced tax
deduction for land remediation relief.
The strong trading performance, together with the
relatively low finance cost and reducing tax rate, has
resulted in basic earnings per ordinary share (‘EPS’)
increasing by 36.3% to 89.3p (2012 – 65.5p). This is
Bellway’s fourth consecutive year of earnings growth
with EPS having trebled since July 2010.
dividend
The Board is proposing a 50.0% increase in the final
dividend to 21.0p (2012 – 14.0p) per ordinary share,
providing a total dividend for the year of 30.0p
(2012 – 20.0p) per ordinary share. The total dividend
is covered almost 3.0 times (2012 – 3.3 times) with the
reduction in dividend cover a reflection of the group’s
strong trading position and balance sheet strength.
Total group
revenue (£m)
operating margin
(%)
Profit before
taxation (£m)
1,110.7
1,004.2
886.1
768.3
683.8
13.6
11.4
6.7*
6.7
8.5
140.9
105.3
67.2
44.4
29.8*
2009
2010
2011
2012 2013
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
£1,110.7m
+10.6%
13.6%
+220bps
£140.9m
+33.8%
Earnings per
ordinary share (p)
Dividend per
ordinary share (p)
Return on capital
employed (%)
Net asset value per
ordinary share (p)
89.3
65.5
30.0
20.0
12.3
10.1
839
856
888
933
1,001
41.5
29.7
17.7*
9.0
10.0
12.5
7.0
4.0*
4.9
2009
2010
2011
2012 2013
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
2009
2010
2011
2012 2013
89.3p
+36.3%
*Pre-exceptional items.
30.0p
+50.0%
12.3%
+220bps
1,001p
+7.3%
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 24
performance
grOup FINANce dIrectOr’s revIew cONtINued
Balance sheet
There has been a controlled increase in inventories
from £1,399.8 million to £1,513.5 million with the group
increasing the value of its land holdings by 6.4% to
£907.3 million (2012 – £853.0 million). The group’s
investment in land holdings with a detailed planning
permission, increased by 13.8% to £782.5 million
(2012 – £687.6 million). This is as a result of a continued
drive to acquire land that is ready for development,
thereby ensuring Bellway is well positioned to meet
its growth aspirations.
The value of work in progress has increased by 11.6% to
£535.0 million (2012 – £479.5 million), largely in response
to an increase in production in order to satisfy a
strong order book, which stood at £679.5 million at
31 July 2013 (2012 – £441.2 million).
The group has increased its stock of show homes
to £52.8 million (2012 – £45.5 million). Whilst part-
exchange remains an important sales incentive,
the group reduced its holding of part-exchange
properties at 31 July 2013 to £18.4 million
(2012 – £21.9 million). The decrease follows an
improvement in the rate of onward sale of these
assets, with the average holding time being reduced
from 11 to 9 weeks.
The group holds 2,843 shared equity assets at a value
of £34.5 million (2012 – £35.1 million), representing
a significant discount to vacant possession value.
The use of shared equity products as a sales incentive
continued to be restricted and was used on only 3%
(2012 – 6%) of legal completions. With the exception
of the government’s Help to Buy scheme, Bellway
withdrew the use of shared equity products on
reservations in England with effect from 1 april 2013.
The group’s total investment in shared equity assets
represents less than 3% of net asset value, thereby
minimising the capital resource directed away from
investment in potential land opportunities.
The group started the year with net bank debt of
£40.6 million and generated £93.8 million of cash from
operations, having expended £300 million on land
and land creditors in the year. This, combined with
corporation tax and dividend payments of £28.8 million
and £28.0 million respectively, together with other net
outflows of £2.2 million, resulted in modest net bank
debt of £5.8 million at the end of the year.
The iaS 19 valuation of the Bellway p.l.c. 1972 Pension
Scheme at 31 July 2013 resulted in a reduction in
the deficit to £9.0 million (2012 – £11.5 million) with
the group having made regular cash contributions
totalling £1.2 million during the year.
Land creditors increased to £146.0 million (2012 –
£120.6 million) but remain modest in the context of the
balance sheet. The group tries to use its relatively low
cost of finance to its advantage by offering discounted
cash payments on legal completion to land vendors
where appropriate, although deferred terms are used
when this is a more cost effective method of financing.
Net assets attributable to shareholders increased by
£85.7 million to £1,218.8 million (2012 – £1,133.1 million),
equating to a 7.3% increase in Nav per share to 1,001p
(2012 – 933p).
Return on capital employed
This is a key metric used by the group during the land
acquisition process and for monitoring performance
thereafter and this has increased from 10.1% to 12.3%
in the year. This improvement is derived primarily
from the enhanced operating margin, together with a
disciplined approach to balance sheet management.
Bellway p.l.c. Annual Report and Accounts 2013 25
Capital management
Credit risk
The group is principally financed through the
proceeds of issued ordinary shares, re-invested profits,
bank borrowings less cash in hand and £20 million of
preference share capital. The preference shares will be
repaid in april 2014, and this will marginally reduce the
group’s cost of debt. The following table provides the
composition of the capital structure of the group:
The group’s credit risk is largely alleviated as the vast
majority of the group’s sales are made on completion
of a legal contract, at which point monies are
received in exchange for transfer of legal title. Those
completions where shared equity incentives are used
do represent some exposure to credit risk but this is
small, given the high number of counterparties.
Equity
Preference shares
Net bank debt
Capital employed
2013
£million
1,218.8
20.0
5.8
2012
£million
1,133.1
20.0
40.6
1,244.6
1,193.7
Interest rate risk
The group’s attitude to interest rate risk and forecast
debt 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.
in addition, the group often obtains deferred payment
terms in its contracts for land purchases.
Summary
The group has delivered further value for shareholders
during the year as a result of the growth in earnings
and Nav, combined with the proposed increase in
annual dividend.
The continued focus on RoCE, together with the
group’s balance sheet capacity for further investment,
should mean that the group is well positioned to
generate further value for shareholders.
keith Adey
Finance Director
14 october 2013
The group has a strong balance sheet and with bank
facilities of £300 million, Bellway is well positioned to
deliver further growth if market conditions will allow.
The group's banking facilities provide flexibility and
expire during the course of the following financial
years:
By 31 July 2014
By 31 July 2015
By 31 July 2016
By 31 July 2017
Total
£million
25
125
80
70
300
The Board remains satisfied with the level of the
group’s borrowing facilities and believes Bellway’s
balance sheet retains sufficient capacity to facilitate
future growth, subject to market conditions.
Treasury policy and liquidity risk
The group’s treasury policy has, as its principal
objective, the maintenance of flexible bank facilities in
order to meet anticipated borrowing requirements. an
internal cash forecasting system enables the group to
plan and assess its future treasury needs. Relationships
with banks and overall cash management are co-
ordinated centrally. The group is operating well within
its financial covenants and available bank facilities.
Short-term cash surpluses are placed on deposit at
competitive rates with high quality counterparties.
other than disclosed above, there are no financial
instruments or derivative contracts.
Opposite
Duchess Park, Dalkeith,
midlothian
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 26
performance
OperAtINg rIsK stAtemeNt
Risk is a natural constituent of any business and the management of risk is a key operating component of the group. The manner
in which this is carried out is highly 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, which are shown in the table below:
Area of risk
Land
Planning
Sales
description of risk and
how it has changed during the year
Mitigation of risk
The inability to source suitable land at satisfactory
margins would have a detrimental effect on
the group’s land bank and consequently, its future
success. During the year we have improved the
way we purchase land to speed up the negotiation
process. This reduces the risk of the market
changing during negotiations and reduces costs.
Delays and the complexity of the planning process
hamper and slow the group’s growth prospects.
Changes to planning legislation and government
housing strategy continue to present risks to
the group.
Ensuring that the effects of any diminution in the
size of the marketplace, 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.
Endeavour to ensure that a land bank with detailed planning
permission for at least three years’ construction programme is
in place on a rolling basis.
Thorough pre-purchase due diligence and viability assessments.
authorisation of land purchases in accordance with robust
group procedures.
Centralised and regional Planning Directors provide advice
and support to divisions to assist with progressing the process
for securing planning consent.
in consultation with Head office, local divisional management
determines product range and pricing strategy commensurate
with regional market conditions.
use of sales incentives, where appropriate, to encourage the selling
process, such as part-exchange and Express mover.
use of government-backed schemes to encourage home
ownership, where appropriate.
Ensuring that construction rates are managed to ensure stock
availability matches sales rates.
Construction
Ensuring that appropriately skilled personnel
are available and that suitable materials are also
available at the right price. This risk has increased
during the year as the labour market has become
more competitive and the lead time for the
provision of some materials has increased.
Environment
Housebuilding has a significant effect on the
environment and it is important that the effects of
the group’s developments are, as far as possible,
positive rather than negative.
Health and
Safety
it is important to ensure that the group has
adequate systems in place to mitigate, as far as
possible, the dangers to people inherent in the
construction process.
identifying training needs and allocating appropriate resources
to training.
Ensuring systems are in place for engaging, monitoring and
controlling work carried out by sub-contractors.
Ensuring competitive reward systems are in place.
Ensuring group purchasing arrangements are in place to secure
materials at competitive prices.
improving forward planning of the buying function to ensure
increased lead times do not affect availability of materials on-site.
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 page 21, or our website at www.bellway.co.uk, for
further information.
The Board considers health and safety issues at each
Board meeting.
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.
Bellway p.l.c. Annual Report and Accounts 2013 27
description of risk and
how it has changed during the year
Mitigation of risk
attracting and retaining the correct 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. The labour market has
become increasingly competitive during the year.
it is vital that the group has suitable information
systems in place to ensure that, as far as possible,
a smooth flow of information is transmitted
throughout the group and that the risk of system
loss is mitigated and supported by appropriate
contingency plans. During the year the group has
increased its investment in information systems to
improve information flow and system security.
The group offers competitive salary and benefits packages, and
keeps these under regular review.
Divisional training plans are in place.
Succession planning for key posts.
90% of site workers (including sub-contractors) are fully accredited
under CSCS.
graduate training programme.
group-wide systems are in operation which are centrally controlled
with an outsourced support function in place.
Area of risk
Personnel
Information
Technology
Asset
Protection
The way in which the group carries out its
operations can have a material effect on the
value of its assets.
Treasury
Management
Ensuring suitable financial resources, at appropriate
costs, are in place to meet group requirements and
optimise return on capital.
Legal and
Regulatory
Compliance
Disadvantageous contractual obligations,
regulatory fines or adverse publicity by failing to
comply with current laws and regulations or failing
to have appropriately worded contracts in place.
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.
Central negotiation and control of banking facilities to ensure
liquidity and debt levels are appropriate.
Facilities derived from various sources.
Careful management and monitoring of cash forecasts.
Central secretariat, human resources 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.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 28
governance
bOArd OF dIrectOrs
1 JOhN wAtsON
2 ted Ayres
4 peter JOhNsON
NON-executIve chAIrmAN
Date of Birth: 21 march 1954
John Watson, a Chartered Surveyor, joined
Bellway in 1978 and was later appointed
managing Director of the North East
division, a position which he held for
12 years. John joined the Board as
Technical Director in 1995 and became
Chief Executive on 1 November 1999.
on 31 January 2013 he stepped down as
Chief Executive to become non-executive
Chairman. John is a member of the
Nominations Committee.
7
1
4
6
5
2
9
8
3
seNIOr INdepeNdeNt
NON-executIve dIrectOr
Date of Birth: 17 april 1948
Peter Johnson, a Chartered accountant,
was appointed a non-executive director on
1 November 2003. Peter 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 a director
of Newcastle university Pension Trustees
(1971) Limited. He was, until 31 July 2013,
Honorary Treasurer of the university of
Newcastle upon Tyne. Peter became senior
independent non-executive director on
16 January 2009 and is Chairman of the
audit Committee and is also a member of
both the Board Committee on Executive
Directors’ Remuneration and the
Nomination Committee.
chIeF executIve
Date of Birth: 10 october 1962
Ted ayres joined Bellway in January 2002 as
a divisional managing Director, becoming
Southern Regional Chairman in 2006. Ted
was appointed to the Board as operations
Director on 1 august 2011, and succeeded
John Watson as Chief Executive on
1 February 2013. Ted is Chairman of the
Board Committee on Non-Executive
Directors’ Remuneration.
3 KeIth Adey
FINANce dIrectOr
Date of Birth: 13 may 1979
Keith adey, a Chartered accountant, was
appointed to the Board as Finance Director
on 1 February 2012. Keith joined the
Company in December 2008 as group
Chief accountant and prior to joining
Bellway he worked at KPmg and grainger
Plc. Keith is a member of the Board
Committee on Non-Executive
Directors’ Remuneration.
Bellway p.l.c. Annual Report and Accounts 2013 29
5 mIKe tOms
7 pAul hAmpdeN smIth
9 KevIN wrIghtsON
grOup cOmpANy secretAry
Date of Birth: 27 october 1954
Kevin Wrightson, a Chartered Secretary,
joined Bellway in 1990. Kevin has held senior
posts within the group, including that of
Deputy group Secretary, before his
appointment as group Company
Secretary on 1 august 2002.
NON-executIve dIrectOr
Date of Birth: 1 July 1953
mike Toms was appointed a non-executive
director on 1 February 2009. mike is
currently a non-executive director of
Birmingham airport Holdings Limited and
was formerly an executive director of Baa
plc and was non-executive Chairman of
Northern ireland Electricity plc. mike was
also a non-executive director of viridian
group PLC and uK Coal PLC. He is a
member of the Royal institution of
Chartered Surveyors (mRiCS) and a
member of the Royal Town Planning
institute (mRTPi). mike is Chairman of the
Board Committee on Executive Directors’
Remuneration, and a member of the audit
and Nomination Committees.
NON-executIve dIrectOr
Date of Birth: 1 December 1960
Paul Hampden Smith, a Chartered
accountant, was appointed a non-executive
director on 1 august 2013. Paul was group
Finance Director of Travis Perkins plc from
1996 until his retirement in February 2013,
having worked for Travis Perkins since 1988.
He is a non-executive director and
Chairman of the audit Committee of
Pendragon PLC. He was previously a
non-executive director and Chairman of the
audit Committee of Redrow plc. Paul is a
member of the audit and Nomination
Committees and is also a member of the
Board Committee on Executive
Directors’ Remuneration.
6 JOhN cuthbert Obe dl
8 deNIse JAgger
NON-executIve dIrectOr
Date of Birth: 9 February 1953
John Cuthbert, a Chartered accountant,
was appointed a non-executive director
on 1 November 2009. John worked in the
water industry from 1991 to 2010, when he
retired as managing Director of
Northumbrian Water group plc, having
formerly been managing Director of North
East Water plc and managing Director
of Essex and Suffolk Water plc. John is
Chairman of the Nomination Committee
and is also a member of the audit
Committee and the Board Committee
on Executive Directors’ Remuneration.
NON-executIve dIrectOr
Date of Birth: 7 September 1958
Denise Jagger, a solicitor, was appointed a
non-executive director on 1 august 2013.
Denise has been a partner at Eversheds LLP
since 2004, and is a non-executive director
of the British olympic association. Prior
to joining Eversheds she was Company
Secretary and general Counsel at aSDa
Wal-mart from 1993 to 2004. Denise’s
previous non-executive directorships
include Redrow plc and SCS upholstery plc.
Denise is a member of the audit and
Nomination Committees and also a
member of the Board Committee on
Executive Directors’ Remuneration.
AdvIsers
Group Company
Secretary and
Registered Office
Kevin 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 asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4Tu
financial Adviser
N m Rothschild & Sons
Limited
Stockbroker
Citigroup global markets
Limited
Bankers
Barclays Bank PLC
Lloyds Banking group plc
Auditor
KPmg audit Plc
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013
30
governance
chAIrmAN’s stAtemeNt ON cOrpOrAte gOverNANce
3. The first externally facilitated Board evaluation which
was carried out with the assistance of independent
audit Limited. The results of the evaluation were
positive and the Board is currently addressing a
number of areas which the evaluation highlighted
for attention, in particular:
the structure and provision of information for
Board meetings;
communication and reporting; and
succession planning.
We are pleased with the progress achieved so far
and i will report further in next year’s report.
Peter Johnson, the senior independent non-executive
director, retires from the Board on 31 January 2014
after ten years loyal service and i would like to thank
Peter, on behalf of the Board, for his significant
contribution since joining Bellway on 1 November
2003. Peter will be replaced as senior independent
non-executive director by John Cuthbert, who is also
Chairman of the Nomination Committee. Peter will
be replaced as Chairman of the audit Committee by
Paul Hampden Smith, who has held similar roles with
other companies.
The changes noted above will, i believe, ensure that
the Board continues to carry out its duties effectively.
The Board is giving appropriate consideration to the
requirements of the new uK Corporate governance
Code, which was introduced for accounting periods
commencing on or after 1 october 2012 and will report
on its progress in next year’s annual report.
The Board has already partially addressed some of the
matters raised in the new Code, particularly in relation
to the issue of diversity and more particularly to the
matters raised by Lord Davies of abersoch in his report
‘Women on Boards’. Women account for around 30%
of Bellway’s workforce and hold a number of key senior
positions across the group. The Board will continue to
promote the interests of women and all other aspects
of diversity, both at Board level and throughout its
operations for the long-term benefit of the group,
its investors and other stakeholders.
The Board has complied, as far as possible, with the
requirements of the new remuneration disclosure
regulations in this report, which is one year earlier
than necessary.
This is my first annual Report as Chairman and i am
very keen to encourage effective communication with
the Company’s shareholders and other stakeholders.
as part of this process, i am writing to our major
shareholders advising them of my availability should
they wish to discuss anything with me.
John Watson
Chairman
14 october 2013
John Watson
Chairman
i am pleased to confirm that the Company has
complied with the requirements of the uK Corporate
governance Code, published in June 2010, throughout
the financial year to 31 July 2013 and up to the date of
this Report.
as Chairman of the Board, i am responsible for
the leadership of the Board and ensuring that it
conducts itself in an effective manner. The Board has
agreed clearly defined roles for myself and the Chief
Executive and the non-executive directors challenge
management and contribute to the development
of strategy.
The Board, its committees and individual directors
are subject to annual performance evaluation
and all directors are subject to annual re-election
by shareholders.
appointments to the Board are always made on
merit, against objective criteria and the Board strongly
supports the principle of boardroom diversity in all its
aspects. During the year under review, the Board has
been particularly focused on a number of key areas:
1. The recruitment and selection of two new non-
executive directors, with Paul Hampden Smith and
Denise Jagger joining the Board with effect from
1 august 2013;
2. The transition of new management into their roles,
including, in particular, the appointment of Ted ayres
to the role of Chief Executive on 1 February 2013,
coinciding with my appointment as non-executive
Chairman on the same date;
Bellway p.l.c. Annual Report and Accounts 2013 31
governance
repOrt OF the dIrectOrs
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 2013.
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 3 and 4, the Chief Executive’s operating Review on pages 9 to 12, the Corporate Responsibility
Policy on page 15, the 2013 Corporate Responsibility Statement on pages 16 to 19, the Environmental Policy on page 21 and
the group Finance Director’s Review on pages 22 to 25. in addition, information in respect of the principal operating risks of the
business is set out in the operating Risk Statement on pages 26 and 27.
Results and dividends
The profit for the year attributable to equity holders of the parent company amounts to £108.6 million (2012 – £79.3 million).
The directors have proposed a final ordinary dividend for the year ended 31 July 2013 of 21.0p per share. This has not been
included within creditors as it was not approved before the end of the financial year. Dividends paid during the year comprise
a final dividend of 14.0p per share in respect of the year ended 31 July 2012, together with an interim dividend in respect of the
year ended 31 July 2013 of 9.0p per share.
The directors recommend payment of the final dividend on Wednesday 15 January 2014 to shareholders on the Register of
members at the close of business on Friday 13 December 2013.
directors
all the directors of the Company, who are shown on pages 28 and 29, served throughout the year, with the exception of Paul
Hampden Smith and Denise Jagger who were both appointed on 1 august 2013. Howard Dawe, who is not shown, was a
director up until the date of his retirement on 31 January 2013.
directors’ contracts
Details of the terms of appointment of all the directors are given in the Report of the Board on Directors’ Remuneration on
pages 44 and 45.
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 39 to 53.
Takeovers directive
The information for shareholders required pursuant to the relevant companies’ legislation which implements the Takeovers
Directive is disclosed in this Report and in the Shareholder information section on pages 91 and 92.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 32
governance
repOrt OF the dIrectOrs cONtINued
Notifiable shareholders’ interests
as at 31 July 2013 and at the date of this Report 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:
As at 31 July 2013
as at 14 october 2013
Blackrock inc
Fidelity international Ltd/FmR Corp
JP morgan Chase & Co
aXa Framlington investment management
Polaris Capital management LLC
Lloyds Banking group plc
Credit Suisse Securities (Europe) Limited
Legal & general group PLC
Corporate governance
Number of
shares with
voting rights
% total
voting
rights
Number of
shares with
voting rights
14,767,027
12.13
15,863,955
9,300,000
5,712,902
5,603,638
4,897,018
4,261,453
3,890,282
3,658,355
7.64
4.69
4.60
4.02
3.50
3.20
3.01
9,300,000
5,715,902
5,603,638
N/a
Below 3%
4,261,453
3,890,282
3,658,355
3.50
3.20
3.01
% total
voting
rights
13.03
7.64
4.69
4.60
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 39
to 53, describes how the Principles of good governance, which are set out in the uK Corporate governance Code, are applied
by the group.
Statement of compliance with the uk Corporate Governance Code
The Board considers that it has complied with the detailed provisions of the uK Corporate governance Code published in
June 2010 throughout the year to 31 July 2013 and up to the date of this Report. The uK Corporate governance Code is publicly
available, free of charge, from FRC publications, tel: 020 8247 1264, e-mail: cch@wolterskluwer.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 uK Corporate governance 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 remuneration of the directors, in the
Report of the Board on Directors’ Remuneration.
The Chairman’s Statement, the Chief Executive’s operating Review and the group Finance Director’s Review present a balanced
and comprehensive assessment of the group’s position and prospects.
The Board
at the date of this Report the Board consists of eight directors whose names, responsibilities and other details appear
on pages 28 and 29. Two of the directors are executive and six of the directors, including the Chairman, are non-executive.
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 resources and personnel 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 strategy and
management, structure and capital, financial reporting and controls, internal controls, contracts and agreements, communication,
Board membership and other appointments, remuneration, delegation of authority, corporate governance matters, policies
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, land acquisition, major projects, personnel, risk, health and safety, strategy, reporting
requirements, corporate governance, internal control and matters for decision. 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 responsibilities as directors.
Bellway p.l.c. Annual Report and Accounts 2013 33
The Company’s articles of association (‘articles’) require one-third of the directors to offer themselves for re-election each
year at the annual general meeting (‘agm’) and all directors to seek re-election at least every three years. The articles also
require new directors appointed since the last agm to offer themselves for re-election at the next agm. in addition, the uK
Corporate governance Code includes a provision that all directors should be subject to annual re-election. as a result, all of the
directors, with the exception of mr Johnson, retire from the Board and offer themselves for re-election at the forthcoming agm.
mr Johnson retires from the Board on 31 January 2014 and is therefore not retiring and seeking re-election at the agm. The
directors’ biographies are shown on pages 28 and 29. None of the executive directors hold external directorships.
Board effectiveness
The Chairman is responsible for leading the Board and ensuring it operates effectively. in this regard it pays due cognisance
to the FRC’s document entitled guidance on Board Effectiveness, dated march 2011. The directors possess an appropriate
balance of skills and experience to meet the requirements of the business.
During the year there were eight Board meetings, three audit Committee meetings, four meetings of the Board Committee
on Executive Directors’ Remuneration, two meetings of the Board Committee on Non-Executive Directors’ Remuneration and
four Nomination Committee meetings. The Board holds a meeting at least once a year dedicated almost entirely to strategy.
in addition, the Board aims to visit four divisions each year and last year visited the North East, Yorkshire, North West and
embryo manchester divisions, as well as receiving presentations at Board meetings from senior Head office and divisional
management. in addition, presentations are also given by external advisers and other third parties, where necessary.
There were no absences from any Board or Board Committee meetings by any director during the year.
The non-executive directors met three times during the year, including once without the Chairman present.
Training and development
The Board received appropriate training and updates on various matters relevant to its role, as and when required. Training
needs are reviewed as part of the performance evaluation process and on an ongoing basis.
The new non-executive directors have benefited from a Board induction programme which included meetings with a number
of the Company’s advisers, senior staff at both Head office and the divisions and also site visits.
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 Peter Johnson, who is available for shareholders to raise any queries
or concerns they may have. Following Peter’s retirement from the Board on 31 January 2014, John Cuthbert will succeed him
as senior independent non-executive director with effect from 1 February 2014.
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 or her independent judgement and decision-making. The Company
considers all of its non-executive directors, excluding the Chairman, to be independent, as defined in the uK Corporate
governance Code.
Whenever any director considers that he or she 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 Board conducted its first externally facilitated evaluation of the performance and effectiveness of the Board,
its Committees and individual directors. The evaluation was performed, utilising online questionnaires and telephone and face
to face interviews. it was facilitated by independent audit Limited, who have no other business connections with the group.
This process included the Chairman, acting on behalf of the Board, evaluating the performance of the other 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 their respective Chairman, evaluated their own performance. The outcome of this process was extremely
positive, with the Board concluding that its performance and that of its Committees were both satisfactory and effective,
that they were balanced and that the individual directors were working in a committed and effective manner. Following the
evaluation, the Board produced a number of action points, some of which have already been dealt with and others which it will
be addressing throughout the course of the next 12 months and will be reporting upon in next year’s report.
The Board Committees
The Board has formally constituted audit, Remuneration and Nomination Committees. The terms of reference for the audit and
Nomination Committees and the Board Committee on Executive Directors’ Remuneration are available either on request, at the
agm or on the group’s website: www.bellway.co.uk.
Audit Committee
The audit Committee comprises five independent non-executive directors, Peter Johnson (Chairman), mike Toms and John
Cuthbert, who were members of the Committee throughout the year, and Paul Hampden Smith and Denise Jagger who joined
the Committee on 1 august 2013. The Committee meets at least three times a year and met three times during the year under
review. Following Peter Johnson’s retirement from the Board on 31 January 2014 Paul Hampden Smith will become Chairman of the
Committee. its activities during the year related to routine matters including the review of risk, internal controls, auditor performance
and review of half year and annual accounts. The Committee met the auditor without management present on two occasions. in
addition, the Committee Chairman had regular contact with the Finance Director and the external auditor.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 34
governance
repOrt OF the dIrectOrs cONtINued
The Committee’s responsibilities include the following:
to monitor the integrity of the financial statements of the Company and any formal announcements relating to the Company’s
financial performance.
to review and make recommendations in relation to the half year and annual accounts prior to submission to the Board.
to assess the scope and effectiveness of the systems established by management to identify, assess, manage and monitor
financial and non-financial risks.
to review management’s reports on the effectiveness of systems for internal financial control, financial reporting and risk
management.
to consider the appointment/re-appointment of the external auditor and assess its independence each year.
to recommend the audit fee to the Board and pre-approve any fees above a certain level, in respect of non-audit services
provided by the external auditor and to develop and monitor the Company’s policy on the provision of non-audit services
by the external auditor and to ensure that the provision of non-audit services does not restrict the external auditor’s
independence or objectivity.
to agree the nature and scope of the external audit and review the quality control procedures and steps taken by the external
auditor to respond to changes in regulatory and other requirements.
to oversee the process for selecting the external auditor and make appropriate recommendations through the Board
to the shareholders to consider at the agm.
to consider annually whether there is a need for an internal audit function and make a recommendation to the Board.
to review the group’s procedures for handling allegations from ‘whistleblowers’.
to review annually the group’s compliance with its anti-Bribery Policy.
The Board believes that Peter Johnson and Paul Hampden Smith have recent relevant financial experience as Chartered
accountants. The group has a written independent auditor Policy in place which seeks to preserve the independence of its
auditor by defining those non-audit services the independent auditor 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. in respect of any material project with fees in excess of £200,000 where
the auditor is considered for the provision of services, this would be the subject of a competitive tendering process.
The Company’s independent auditor would not be engaged for any of the following non-audit related services:
bookkeeping or other services related to the accounting records or financial statements of the Company;
financial information system design and implementation;
appraisal or valuation services, fairness opinions, or contributions in kind reports;
actuarial services;
internal audit outsourcing services;
management functions or human resources;
broker or dealer, investment adviser or investment banking services;
legal services and expert services unrelated to the audit; and
any other service that is impermissible by regulation.
The Company's auditor, KPmg audit Plc, has advised that, due to an internal reorganisation, it has instigated an orderly
wind down of its audit business and transfer to KPmg LLP. The Board has therefore decided to put KPmg LLP forward to be
appointed as auditor and resolutions concerning its appointment and to authorise the directors to agree its remuneration will
be put to the forthcoming agm. Further information is provided in Shareholder information on page 87.
Board Committee on Executive directors’ Remuneration
The Board Committee on Executive Directors’ Remuneration comprises mike Toms (Chairman), Peter Johnson and John
Cuthbert, who were members of the Committee throughout the year, and Paul Hampden Smith and Denise Jagger who joined
the Committee on 1 august 2013.
The Committee meets at least twice a year and during the year it met on four occasions. its duties are to review and recommend
the basic salary, taxable benefits, terms and conditions of employment, including performance-related payments, long-term
incentive plans and other benefits of the executive directors and the Chairman. The Committee also reviews remuneration
policies for senior management below Board level. During the year, in addition to routine matters, the Committee dealt
with, inter-alia, arrangements for the introduction of the new performance share plan, the remuneration packages in respect
of the new management team and consideration of the new disclosure requirements for remuneration reports. The Report
of the Board on Directors’ Remuneration on pages 39 to 53 contains details of directors’ remuneration and the group’s policies
in relation to directors’ remuneration.
Bellway p.l.c. Annual Report and Accounts 2013 35
Board Committee on Non-Executive directors’ Remuneration
The Board Committee on Non-Executive Directors’ Remuneration comprises the executive directors and is chaired by the Chief
Executive. 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 two occasions to review the fees and terms of appointment of the non-executive directors.
Nomination Committee
The Nomination Committee comprises John Cuthbert, who was appointed Chairman of the Committee on 1 February 2013,
Peter Johnson, mike Toms and John Watson, who were all members of the Committee throughout the year, with the exception
of John Watson, who was appointed on 1 February 2013, replacing Howard Dawe, who was Chairman of the Committee until
his retirement from the Board on 31 January 2013. in addition, Paul Hampden Smith and Denise Jagger joined the Committee
on 1 august 2013. 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 four occasions. During the year, the Committee made
recommendations to the Board in relation to the re-appointment of non-executive directors whose letters of appointment
expired during the year and to the appointment of the two new non-executive directors, which took effect on 1 august 2013.
appointments to the Board are made on merit through a formal, rigorous and transparent process against objective criteria
recommended by the Committee, with due regard given to the benefits of diversity on the Board, in all its aspects. The two
non-executive directors were appointed following a rigorous selection process, involving the consideration of a long list which
was then reduced to a short list of five individuals (comprising three women and two men). The interview process involved the
whole Board and the group Company Secretary. The Committee was assisted in this process by The Zygos Partnership, which
has no other business relationship with the Company.
although the Board already includes a number of accountants, it was felt appropriate to recruit Paul Hampden Smith who has
significant recent relevant financial experience. He will become Chairman of the audit Committee when Peter Johnson retires
on 31 January 2014.
Denise Jagger is a solicitor by qualification but has an extensive commercial background and it was felt that this would augment
the skills and experience already available on 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.
The Committee also guides the whole Board in arranging orderly succession for appointments to the Board.
other committees of the Board are formed to perform certain specific functions as required from time to time.
directors’ remuneration
The principles and details of directors’ remuneration are detailed in the Report of the Board on Directors’ Remuneration
on pages 39 to 53.
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 37 and 54 respectively.
The audit Committee, whose role is detailed above, has meetings at least twice a year with the Company’s auditor, KPmg audit Plc.
Internal control
The Board is responsible for the group’s system of internal control and also for reviewing its effectiveness. The Board has
reviewed 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 reviews the effectiveness of the system of internal control and, in particular, it reviews the process for identifying
and evaluating the significant risks affecting the business and the policies and procedures by which these risks are managed
on an on-going basis.
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 26 and 27, are regularly assessed and cover all aspects of the business, and in particular land acquisition,
planning, construction, health and safety, information and reporting systems, sales, environmental issues, personnel, asset
protection, treasury management, taxation 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.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 36
governance
repOrt OF the dIrectOrs cONtINued
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 and on-going basis, to review the key risks inherent in the business,
the operation of the systems and controls necessary to manage such risks and their effectiveness and to satisfy itself that
all reasonable steps are being taken to mitigate these risks. The key areas of control are as follows:
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.
an established monitoring structure is in place, which provides short lines of communication and easy access to members
of the Board.
delegation of clearly defined responsibilities to the Regional Chairmen and divisional boards with clear procedures and
authority limits in place to provide and maintain effective controls across the group.
a comprehensive reporting system entailing annual budgets, regular forecasting and financial reporting.
a central treasury function operates at Head office.
regular meetings with divisional and regional management attended by members of the Board to review divisional
performance.
the acquisition of land and land interests is subject to review by management and, in certain circumstances, approval
by the Board to ensure that purchasing criteria are met.
regular reviews of site costs and revenues by senior Head office management which are reported to the Board.
regular visits to sites by in-house health and safety teams and external consultants to monitor health and safety standards
and performance.
a number of the group’s key functions are dealt with centrally. These include finance, banking and treasury, taxation, financial
services, pensions, insurance, information technology, legal, personnel and company secretarial.
The Company does not have a separate internal audit function and, as recommended by the uK Corporate governance
Code, the audit Committee considers annually whether there is a need for such an internal audit function and makes a
recommendation to the Board. During the year, having considered the robust systems and strong controls already present in
the group and as described above, the audit Committee recommended that no separate internal audit function was presently
required. The position will continue to be monitored by the audit Committee on behalf of the Board.
During the year, there were no significant internal control issues identified by the group’s internal control monitoring procedures,
as detailed above.
Whistleblowing arrangements
Throughout the year the group has operated 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. This facility is also available for employees to report any breaches of the Company’s
anti-Bribery Policy. 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. During the year the Chairman of the Board
Committee on Executive Directors’ Remuneration consulted with a number of major shareholders on matters concerning
executive remuneration.
Further information for shareholders is available under Shareholder information on page 87 to 93 and also on the group’s
website at www.bellway.co.uk.
Bellway p.l.c. Annual Report and Accounts 2013 37
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 61.
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 all 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, belief 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 good
employee relations using a variety of means appropriate to its own particular needs, with guidance when necessary from
Head office.
New employees, when eligible, are invited to join the Company’s pension and life assurance arrangements. in addition,
the group operates a savings related share option scheme. The Company also offers a private medical scheme, childcare
vouchers and personal accident insurance arrangements.
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, 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 15, the 2013 Corporate Responsibility Statement on pages 16 to 19, the Environmental Policy on page 21,
and in the Corporate Responsibility section of the group’s website www.bellway.co.uk, a copy of which is available from the
group Company Secretary at the Company’s registered office.
Health and safety at work
The group promotes all aspects of health and safety throughout its operations in the interests of employees, sub-contractors,
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 9 to 12, in the Corporate Responsibility Policy on page 15, in the
2013 Corporate Responsibility Statement on pages 16 to 19, and in the Corporate Responsibility section of the group’s website
www.bellway.co.uk.
donations
During the year the group made no political contributions but donated £77,699 (2012 – £45,875) for charitable purposes.
The Company made no political contributions or charitable donations during the year (2012 – £nil).
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.
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’s current policy concerning the payment of the majority of its materials suppliers
and sub-contractors is for payment to be made at the end of the month 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 2013 of £88.4 million
(2012 – £76.3 million) resulted in a creditor payment period of 23 days (2012 – 24 days). Land creditors due within one year were
£107.0 million (2012 – £89.1 million). including land creditors, the creditor payment period was 60 days (2012 – 52 days).
The parent company had no land or trade creditors at 31 July 2013 (2012 – £nil).
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 38
governance
repOrt OF the dIrectOrs cONtINued
Purchase of the Company’s own shares
The Company was given authority at the agm on 11 January 2013 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
forthcoming agm when shareholders will be asked to renew this authority for a further year.
directors’ and officers’ liability insurance and indemnification of directors
The Company carries appropriate insurance cover in respect of possible legal action being taken against its directors and
senior employees, 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 this Report.
disclosure of all relevant information to auditor
The directors who held office at the date of this Report confirm that, so far as they are each aware, there is no relevant audit
information of which the Company’s auditor is 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 auditor is aware
of that information.
Auditor
in accordance with section 489 of the Companies act 2006, a resolution for the appointment of KPmg LLP as auditor of the
Company is to be proposed at the forthcoming agm. See Shareholder information on page 87 for details on the change
of auditor.
AGM – special business
Seven resolutions will be proposed as special business at the agm to be held on Friday 13 December 2013. Explanatory notes
on these resolutions are set out in Shareholder information on pages 87 to 91.
By order of the Board
kevin Wrightson
group Company Secretary
14 october 2013
Bellway p.l.c. Annual Report and Accounts 2013 39
governance
repOrt OF the bOArd ON dIrectOrs’
remuNerAtION
Annual statement
dear Shareholder,
i am pleased to take this opportunity to introduce the Report of the Board on Directors’ Remuneration. in June 2013,
The Department of Business, innovation and Skills published regulations that change the way directors’ remuneration will be
reported and voted upon. The regulations do not take effect until next year’s report; however the Board has decided to disclose,
in advance, additional information which it believes will make this Report easier to understand, consistent, as far as possible, with
the requirements of the new regulations, and more helpful to shareholders.
Remuneration policy
The Board Committee on Executive Directors’ Remuneration (the ‘Committee’) reviews executive remuneration arrangements
to ensure they are effective in supporting the business strategy, are competitive and align the remuneration of the executives
with the interests of shareholders.
Remuneration paid in 2012/13
The basic salaries of the executive directors in 2012/13 were determined in July 2012 and were set out in last year’s report.
The total remuneration earned was determined in large part by the bonuses awarded for performance. Pages 3 and 4 of
the annual Report highlights the progress made by the Company which moved forward strongly throughout the year with
significant gains in sales, average selling price, margin, operating profit, dividend and Nav. importantly the year concluded
with a strong forward order book and a significant increase in plots available with detailed planning permission. operating
performance exceeded the expectations of the Board and investors at the start of the year.
This performance is reflected in the annual bonus earned by executive directors for the year under review. The increase
in operating profit of 31.8% was at the top of the target range and there was an improvement in all the non-financial target
measures (health and safety, customer care and land bank). as a result, the executive directors earned a full bonus of 120%
of basic salary.
Neither of the executive directors were granted awards under the existing Bellway p.l.c. 2004 Performance Share Plan (‘2004
PSP’) in 2010. The performance conditions were not achieved, and all the awards granted to other participants on 21 october
2010 under the 2004 PSP will lapse.
Implementation of the remuneration policy in 2013/14
For the current year, the Committee focused on two specific areas. The first was the review of basic salary increases for the
executive directors and the second related to the introduction of a new long-term incentive arrangement to replace the existing
incentive plan. The latter was undertaken with the benefit of consultation with major investors, in accordance with the
uK Corporate governance Code.
as disclosed last year, when the Chief Executive and Finance Director were appointed to the Board, their salaries were
positioned at levels significantly below those of their more experienced predecessors, but with a stated intention of raising
these towards competitive market levels, subject to good performance and increased experience in their roles. Ted ayres was
promoted to Chief Executive in February 2013 on a salary of £400,000 per annum and Keith adey’s salary throughout the year
was £225,000 per annum. These salaries are significantly below the levels at other comparable housebuilders and FTSE
250 companies. Their predecessors had retired on salaries of £560,300 in 2013 and £354,000 in 2012 respectively.
During the year, the Committee considered its approach to increasing salaries to market competitive levels and believes that
phasing the increases is appropriate. The Committee not only recognises the strong Company performance during the year but
also the steps taken to position the Company well for the future, including an increased level of land buying, the opening of new
divisions and changes to the management team. it therefore decided to award salary increases of 25% for Ted ayres and 27%
for Keith adey, bringing their salaries to £500,000 per annum and £285,000 per annum respectively from 1 august 2013. These
remain below market levels and subject to continued strong performance in their respective roles, the Committee envisages
making a further increase next year to bring salaries up to market levels in each case. Before doing so the Committee will seek
up-to-date independent advice on market levels of basic salary at other housebuilders and consider this in light of the relative
size, complexity and performance of the comparator companies.
The second major item considered by the Committee related to a new long-term incentive plan, to replace the existing 2004
PSP which reaches the end of its 10-year life in January 2014.
in determining an appropriate new long-term incentive for executives, the Committee has undertaken a full review of the
Company’s arrangements to ensure that this policy is appropriate, straightforward and reflects institutional investors’ views
and market practice.
Following this review, the Committee has concluded that the current policy for the annual bonus and performance share plan
remains appropriate for the Company and has determined that the new Bellway p.l.c. (2013) Performance Share Plan (‘2013 PSP’)
should incorporate the current terms of the 2004 PSP, albeit ensuring that it incorporates the latest best practice. There will
be a slight change in relation to the calculation of one of the Total Shareholder Return (‘TSR’) performance conditions, and these
are described later in the Report.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 40
governance
repOrt OF the bOArd ON dIrectOrs’
remuNerAtION cONtINued
a number of the shareholders who were consulted on the new 2013 PSP queried the need for the Company's current Share
matching Plan ('SmP'), which expires in 2018, to run alongside the PSP. The Committee believes that the plan has provided a
useful vehicle for the new directors to start to build shareholdings in the Company, but in response to the points raised during
the consultation, the Committee intends to discontinue the plan after the 2014 round of awards.
other than the changes to base salaries and a new performance share plan, the Committee is not proposing any other changes
to the remuneration policy for the 2013/14 financial year, which is set out on pages 41 to 46. During the year it will review
the metrics for the non-financial elements of the annual bonus to ensure that they remain aligned to the business strategy.
Conclusion
The Committee considers that there has been a robust link between performance delivered and payments to executives and
that the remuneration policy will both support and motivate the executive directors whilst aligning their remuneration to the
Company’s strategic objectives and to achieving long-term growth for shareholders.
The Committee seeks to maintain a good relationship with investors and will consult with major shareholders, the association
of British insurers (‘aBi’), and key advisory bodies ahead of any significant future changes to the remuneration policy. The
Board was pleased that the 2012 Report of the Board on Directors’ Remuneration received a 99% vote in favour at the last
agm. Shareholders are invited to approve the 2013 Report of the Board on Directors’ Remuneration which will be subject
to an advisory vote at the agm to be held on Friday 13 December 2013.
Mike Toms
Chairman of the Board Committee on Executive Directors’ Remuneration
14 october 2013
Bellway p.l.c. Annual Report and Accounts 2013 41
The Report of the Board on Directors’ Remuneration has been prepared pursuant to, and in accordance with Schedule 8 of the
Large and medium-Sized Companies and groups (accounts and Reports) Regulations 2008 and a resolution to approve this
Report will be proposed at the agm of the Company to be held on 13 December 2013.
The Board supports the focus on transparency in the new disclosure regulations for uK listed companies which are due to take
effect from october 2013. The Company has, therefore, decided to structure the Report to incorporate, voluntarily, as many of
the proposed features as practicable this year. accordingly, this Report has two sections – the Directors’ Remuneration Policy
and the annual Report on Remuneration.
The section on Directors’ Remuneration Policy, which will in future years (normally on a triennial basis) be subject to a binding
shareholder vote, includes:
a description of the group’s remuneration policy;
a description of how the conditions of other employees and the views of shareholders are taken into account in the
Committee’s deliberations about executive pay;
a future policy table which outlines the features of key elements of remuneration;
the terms of executive directors’ service contracts;
the group’s policy on exit payments; and
an outline of remuneration scenarios for executive directors at different performance levels.
The annual Report on Remuneration details the remuneration of directors in respect of the financial year under review.
dIRECTORS' REMuNERATION POLICY
The remuneration of the executive directors and the Chairman is determined by the Committee within a framework set by the
Board. as at the date of this Report, the Committee’s members are the non-executive directors and mike Toms is the Chairman.
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.
The Terms of Reference of the Committee are available on the group’s website www.bellway.co.uk. During the year, the group
Company Secretary provided advice on issues other than those relating to his own remuneration. The Committee also received
independent external advice from New Bridge Street (‘NBS’), a trading subsidiary of aon plc. NBS 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. NBS is also a member of the Remuneration Consultants group and abides by its Code of Conduct.
The Committee is satisfied that NBS is independent. The total fee paid to NBS for advice to the Committees during the year
was £65,560.
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. it also receives advice from the group
Company Secretary and NBS.
The remuneration policy has been developed taking into account the principles of the uK Corporate governance Code
published in 2012 and the views of the Company’s major shareholders.
Objectives of remuneration policy
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 a policy of paying a level of remuneration at around the mid-market level of a peer group of similar uK
housebuilding businesses, subject to experience and performance. The Committee uses this comparative approach to
benchmarking with caution, recognising the relatively low number of direct housebuilding comparators, their differing size and
the risk of an upward ratchet effect with any peer-based analysis.
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 stretching performance targets are achieved. There is both encouragement and an incentive for executives
to build a significant shareholding.
The structure of the performance conditions for annual bonus and long-term incentives has been designed to provide a strong
link to the Company’s performance, namely a focus on maximising profit in a sustainable fashion and generating superior
shareholder returns, thereby generating a strong alignment of interest between senior executives and shareholders. The
components of the non–financial elements of the bonus have been in place in, substantially, their present form for three years
and performance against the targets has now reached high levels. The Committee believes that it would be timely to review
them during the current year with a view to introducing possible changes from 2014/15.
in framing the Company’s remuneration policy for executive directors, the Committee has given full consideration to the best
practice provisions in the uK Corporate governance Code and aBi guidance.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 42
governance
repOrt OF the bOArd ON dIrectOrs’
remuNerAtION cONtINued
Consideration of employment conditions elsewhere in the Group
While the Company does not consult directly with employees when drawing up the executive remuneration policy,
in determining the elements of remuneration for the executive directors the Committee takes into consideration the pay
and conditions of employees throughout the group as a whole, paying particular attention to the levels of basic pay increase
awarded to the workforce generally. Normally the salaries of the directors are increased in accordance with the pay increase
awarded to the workforce and it is the intention of the Committee to revert to this practice when the executive directors' salaries
have reached mid-market levels. all employees, including the executive directors, can join the Company’s savings related share
option arrangements, have life assurance benefits and a significant proportion of employees benefit from health insurance,
a company car or car allowance. Following the introduction of auto-enrolment in october 2013, all employees now have access
to pension arrangements. The Committee is apprised regularly of any significant policy changes for the workforce generally
and management below Board level in particular.
Consideration of shareholder views
The Committee takes into account the views of shareholders. When any significant changes are proposed to the remuneration
policy, the Chairman of the Committee will consult with major shareholders in advance. During 2012/13 remuneration issues
generally were discussed with shareholders as part of the consultation on management succession. Shareholders have also
been consulted on the proposals for the new performance share plan described below.
Details of votes cast for and against the resolution to approve last year’s remuneration report are provided on page 53.
future policy table
This section of the Report describes the key components of the remuneration arrangements for each element of remuneration
for executive and non-executive directors:
Component and
link to strategy
salary
To be market competitive and
therefore assist in recruiting
and retaining high quality
executives. Reflects individual
role and experience.
Operation
Maximum opportunity
Salaries are reviewed in July each year and
changes take effect from 1 august.
They are determined by reference to
market levels of a peer group of similar uK
housebuilding businesses, taking account of
salaries at other companies of a similar size and
by taking account of individual performance and
experience.
No prescribed maximum.
increases normally in line
with the average for the
workforce generally, unless
due to promotion or role
change.
framework to assess
performance
The performance of the
executives and the Company
is kept under continuous review
by the Board.
Annual bonus
To reward achievement with
a combination of financial
and non-financial operational
based performance
targets in accordance with
Company KPis.
Salaries for 2013/14 are set
out in the annual Report on
Remuneration.
120% of basic
salary maximum.
Where salaries of new executive directors
are positioned below market levels, the
Committee’s policy is to progress these
over time as experience is gained, subject
to performance.
annual bonuses are payable in November
following the year end, subject to the
achievement of performance targets that were
set at the start of the year.
Bonuses are payable in cash and executives
have the opportunity to invest up to 25% of
their net cash bonus in Bellway shares with
the opportunity of receiving matching shares
(see below).
The Company operates a clawback mechanism
which allows the Company, in exceptional
circumstances, to clawback some or all of the
payments made under the variable components
of an individual’s remuneration.
The bonus is based on a
combination of financial and
non-financial objectives, with
financial performance accounting
for a majority of the overall bonus
opportunity.
The Committee determines
the choice of measure(s) and
their weighting for each year
to ensure alignment with the
Board’s priorities over the short
to medium-term.
Where non-financial
performance conditions are
used, in the event that the
financial performance criteria do
not meet threshold performance,
the Committee will not pay any
bonus under the non-financial
elements.
Details of the performance
targets set for 2013/14 are
set out in the annual Report
on Remuneration.
Bellway p.l.c. Annual Report and Accounts 2013
43
framework to assess
performance
PSP awards and SmP awards are
subject to stretching three-year
targets.
The awards are subject to relative
TSR conditions against relevant
comparator companies(1).
For future awards the Committee
may choose a financial measure
such as EPS, RoCE or Nav
in conjunction with or as an
alternative to TSR depending
on the medium to long-term
priorities of the group at the
time of grant.
if the Committee decides to
introduce a financial measure,
it will carry out prior consultation
with major shareholders.
Further details of the
performance metrics applying
to the awards for 2013/14 are
set out in the annual Report on
Remuneration.
Component and
link to strategy
long-term incentives
(performance share plan
(‘psp’) and matching share
plan (‘smp’))
To encourage long-term
value creation, aid retention,
encourage shareholding and
promote alignment of interests
with shareholders.
Operation
Maximum opportunity
The Company operates two types of long-term
incentive plan for executive directors, a PSP and
a SmP.
annual awards of nil cost options or conditional
awards will be made under the 2013 PSP to
the executive directors, at the discretion of
the Committee. awards vest three years after
grant, subject to the achievement of stretching
performance targets.
under the PSP, the normal
award limit to executive
directors is 100% of salary,
with the maximum value
per annum capped at 150%
of salary in exceptional
circumstances.
under the SmP, matching
shares of up to 2:1 equivalent
to bonus investment on a
gross of tax basis (maximum
of 25% of net cash bonus).
it is intended that no more
awards will be made under
this plan after the 2014 round
of awards.
under the SmP, the executive directors may
invest up to 25% of their net cash annual
bonus in Bellway shares, which must be held
for a minimum of three years. invested shares
are not subject to the risk of forfeiture and
executives will have full beneficial ownership
(including voting rights and dividends). in return
for investing in shares, an award of matching
shares of up to 2:1 is granted on a gross of tax
basis. These matching shares vest after three
years subject to the achievement of stretching
performance conditions.
The Company operates a clawback mechanism
which allows the Company, in exceptional
circumstances, to clawback some or all of the
payments made.
Pension contributions into the Company’s
group Self invested Personal Pension Plan
and/or a salary supplement in lieu of pension
contributions.
Comprises car or car allowance, life assurance
and health insurance.
pension
To provide a structure
and value that is market
competitive.
benefits
To provide a range and value
that is market competitive.
chairman and non-executive
directors
To set appropriate fees in
light of the time commitment,
responsibilities, wider market
and best practice.
20% of salary.
Not applicable.
Not applicable.
Not applicable.
The performance of the non-
executive directors is assessed
by the Chairman. The senior
independent non-executive
director reviews the performance
of the Chairman in conjunction
with the directors.
The Chairman’s fee is approved by the Board
on the recommendation of the Board Committee
on Executive Directors’ Remuneration.
Not applicable.
The remuneration of the non-executive directors
is determined by the Board Committee on
Non-Executive Directors’ Remuneration, which
comprises the executive directors.
Fee levels are reviewed annually taking into
account the time commitment and responsibilities
of the roles including membership or chairmanship
of Board Committees and the level of fees for
similar positions in comparable companies.
Non-executive directors are not entitled to any
benefits (with the exception of the Chairman
who receives health and life assurance benefits)
or pension. They do not participate in any bonus
or long-term incentive plans (with the exception
of the Chairman whose existing entitlement when
he moved from the role of Chief Executive under
the 2004 PSP will be maintained) and they are not
entitled to compensation on termination of their
arrangements, other than normal notice provisions
of three months’ given by either party.
Notes:
1. The Committee believes that relative TSR is an appropriate long-term performance metric as it generates an alignment of interest between executives and
institutional shareholders by providing a reward mechanism for delivering superior stock market performance. The TSR performance is independently
calculated for the Committee by the Company’s brokers.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 44
governance
repOrt OF the bOArd ON dIrectOrs’
remuNerAtION cONtINued
Approach to recruitment remuneration
in arriving at a total package and in considering quantum for each element of the package, the Committee will take into account
the skills and experience of the candidate, the market rate for a candidate of that experience as well as the importance of
securing the preferred candidate.
Element
Salary
General Policy
Specifics
at a level required to attract the most
appropriate candidate.
Discretion to pay lower basic salary with incremental increases as
new appointee becomes established in the role.
Pension and benefits
in line with Company policies.
Bonus
in line with existing schemes.
Long-term incentives
(PSP and SmP)
in line with Company policies and maximum limits
in the PSP/SmP rules.
Specific targets could be introduced for an individual within the
maximum individual limits of the annual bonus plan applicable
at the time. Pro-rating would be applied as appropriate for intra-
year joiners.
an award may be made in the year of joining or, alternatively, the
award can be delayed until the following year. Targets would be
the same as for other directors and grant levels consistent within
the permitted individual maximum under the rules of the plan.
other share awards(1)
The Committee may make an incentive award to
replace deferred or incentive pay forfeited by an
executive leaving a previous employer.
awards would, where possible, be consistent with the awards
forfeited in terms of vesting periods, expected value and
performance conditions.
Notes:
1. The Committee may make use of the flexibility provided in the Listing Rules to make such awards if deemed appropriate and/or arrangements outside the
Committee’s usual recruitment policy if the circumstances so demand in terms of replacing forfeited variable pay, securing the preferred candidate,
relocation expenses or for any other reason. Shareholder approval will be sought for any such arrangements as necessary.
Service contracts and loss of office payment policy
The executive directors have service contracts with a 12-month notice period from the Company and a 6-month notice period
from the executive.
The overriding principle for payments on loss of office will be to honour contractual remuneration entitlements. The Committee
would determine, on an equitable basis, the appropriate treatment of performance-linked elements of the package, taking
account of the circumstances, in accordance with the rules of each respective plan. Failure will not be rewarded.
Salary, pension and
benefits (after cessation
of employment)
‘Leaver’(1)
Nil.
departure on agreed terms(2)
Good leaver(3)
up to 12 months' basic salary, benefits and
pension.
apart from death, up to 12 months' basic
salary, benefits and pension, less any
period of notice worked.
annual bonus
No bonus payable.
Payments may be phased and subject to
offset against earnings from elsewhere
during the notice period.
Payments may be phased and subject to
offset against earnings from elsewhere
during the notice period.
The Company may pay in lieu of notice an
amount equivalent to 12 months' salary,
pension and benefits.
The Company may pay in lieu of notice an
amount equivalent to 12 months' salary,
pension and benefits.
For the proportion of the financial year
worked, bonus may be payable pro-rata at
the discretion of the Committee.
There will be no bonus payment in respect
of any period of notice not worked.
For the proportion of the financial year
worked, bonus may be payable pro rata at
the discretion of the Committee.
Bellway p.l.c. Annual Report and Accounts 2013 45
‘Leaver’(1)
departure on agreed terms(2)
Good leaver(3)
PSP and SmP
all awards, including
those which have vested
but are un-exercised will
lapse immediately upon
cessation of employment.
awards will lapse upon cessation of
employment, unless the Committee decides
otherwise in which case awards may vest.
awards may be exercised within 12 months
of the vesting date.
Where employment ends before the vesting
date awards may vest at the normal time
(other than by exception) to the extent
that the performance conditions have
been satisfied.
Where employment ends before the
vesting date, awards may be exercised
at the normal vesting time (other than
by exception) and only to the extent
that the performance conditions have
been satisfied.
The level of vested award will be reduced
pro-rata based upon the period of time
after the grant date and ending on the date
of cessation of employment relative to the
three-year performance period unless the
Committee, acting fairly and reasonably,
decides that such a scaling back is
inappropriate in any particular case.
The level of vested award will be reduced,
pro-rata, based upon the period of time
after the grant date and ending on the
date of cessation of employment relative
to the three-year performance period
unless the Committee, acting fairly and
reasonably, decides that such a scaling back
is inappropriate in any particular case.
Depending upon circumstances the
Committee may consider payments
in respect of an unfair dismissal award,
outplacement support and assistance with
legal fees.
Nil.
other payments
Nil.
Notes:
1. For example, normal resignation from the Company or termination for cause (e.g. disciplinary issues).
2. This may cover a range of circumstances such as business re-organisation, changes in reporting structure, change in requirement for the role, termination
as a result of a failure to be re-elected at an agm, etc.
3. Leaver for compassionate reasons such as death, injury, disability or retirement, with the agreement of the employer.
The details of the executive directors’ service contracts are as follows:
Executive director
E F ayres
K D adey
first appointed as a director
1 august 2011
1 February 2012
Current contract
commencement date
1 august 2011
1 February 2012
all non-executive directors have letters of appointment with the Company of no more than three years, subject to annual
re-appointment at the agm, with a three-month notice period by either side. The appointment letters for the Chairman and
non-executive directors provide that no compensation is payable on termination, other than fees accrued and expenses.
Non-executive director
first appointed as a director
Current letter of appointment
commencement date
Current letter of appointment
expiry date
J K Watson
P m Johnson
m R Toms
J a Cuthbert
P N Hampden Smith
D N Jagger
1 august 1995
1 November 2003
1 February 2009
1 November 2009
1 august 2013
1 august 2013
1 February 2013
1 November 2012
1 February 2012
1 November 2012
1 august 2013
1 august 2013
31 January 2016
31 January 2014
31 January 2015
31 october 2015
31 July 2016
31 July 2016
Peter Johnson will retire from the Board on 31 January 2014.
The executive directors may accept external appointments provided that such appointments do not, in any way, prejudice their
ability to perform their duties as executive directors of the Company. The extent to which any executive director is allowed
to retain any fees payable in respect of such appointments, or whether such fees are remitted to the Company, will be assessed
on a case-by-case basis. None of the executive directors currently hold any outside appointments.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 46
governance
repOrt OF the bOArd ON dIrectOrs’
remuNerAtION cONtINued
Illustrations of application of remuneration policy
The Company’s policy results in a significant portion of remuneration received by executive directors being dependent on the
group’s performance. The chart below illustrates how the total pay opportunities for the executive directors vary under three
performance scenarios: minimum, target and maximum. The chart is indicative as share price movement and dividend accrual
have been excluded.
2,025
39%
30%
1,250
26%
24%
625
100%
50%
31%
368
100%
2,000
1,500
0
0
0
£
1,000
500
0
Long-term share awards
Annual bonus (cash)
Fixed
1,166
39%
30%
31%
724
26%
24%
50%
Minimum
Target
Maximum
Minimum
Target
Maximum
Chief Executive
Finance Director
Chart labels show proportion of total package comprised of each element
Assumptions
minimum – fixed pay only (salary + benefits + pension/pay in lieu of pension); salary is actual for 2013/14, benefits are based
on actual benefits received in 2012/13 and pension/pay in lieu of pension is based on policy of 20% of salary.
Target – 50% of maximum bonus payout, 25% of bonus investment in SmP and 1 times match. PSP award of 100% of salary with
50% of the award vesting.
maximum – full bonus payout, 25% investment of bonus in SmP and 2 times match. PSP with a face value of 100% of salary and
full vesting.
Bellway p.l.c. Annual Report and Accounts 2013 47
ANNuAL REPORT ON REMuNERATION
Implementation of remuneration policy in 2013/14
This section sets out how the Company has implemented the remuneration policy for the 2013/14 financial year.
Base salaries
as stated in the section on Directors’ Remuneration Policy, on their promotions to Chief Executive and Finance Director,
their salaries were positioned significantly lower than their predecessors and market levels at the time. as indicated in last
year’s report, the Committee has decided to move salaries towards market levels in stages. The Committee believes that the
new executives have settled well into their roles. They have taken advantage of market conditions and government policy to
increase sales reservations, average selling price, legal completions and operating margin. The land bank has been increased
and actions have been taken to develop management below Board level. Both the Chief Executive and the Finance Director
have established sound relationships with investors and other stakeholders. Recognising both the strong group and personal
performance demonstrated during the year, it is intended that their salaries are increased to market levels in two instalments.
The second instalment on 1 august 2014 will be contingent upon continuing strong performance of both the business and the
executive over the year and on a current and independent review of the salaries of the executives of other housebuilders. For
2013/14, their salaries are as follows:
Chief Executive
£500,000 p.a.
Finance Director
£285,000 p.a.
Annual bonus
For the 2013/14 financial year, the bonus opportunity will be 120% of basic salary. The performance conditions relate
to a stretching target range of pre-exceptional operating profit (90%) and non-financial performance (30%), with non-financial
performance being assessed by reference to land bank management (10%), health and safety (10%) and customer care (10%).
The Committee considers that performance in relation to targets based on annual profitability and non-financial metrics provide
a good link to the long-term performance of the business. The focus on profitability is balanced by there being a meaningful
weighting of the overall bonus on a number of core non-financial performance measures which are considered to have a strong
link to short and long-term shareholder returns.
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 SmP. The Committee encourages the executives to take the opportunity provided by this scheme to build up
their own personal shareholdings.
Long-term incentive plans
The Company will make awards under the new 2013 PSP for which it is seeking shareholder approval at the agm on
13 December 2013. Performance shares with a face value of 100% of salary will be granted to the executive directors and group
Company Secretary. grants at lower levels, in percentage of salary terms, will be made to other selected senior employees.
The executives will also have the opportunity to invest up to 25% of their 2012/13 net bonus for a period of three years in the
SmP, for which they will receive a match of up to 2 times the level of investment on a gross of tax basis.
The 2013/14 PSP awards (and SmP awards to the extent they are made) will vest to executives after three years, subject to the
achievement of performance conditions, based around TSR, which measures the total return (share price growth and dividend)
on a notional investment in Bellway shares, compared to the return on the same notional investment in shares in a group of other
companies or an index.
The TSR condition will comprise two equal parts. Half the award will be based on performance relative to the Housebuilders’
index and half by reference to the FTSE 250 index, excluding investment trusts and companies in the financial services sector.
The Housebuilders’ index will comprise The Berkeley group plc, Taylor Wimpey plc, Barratt Developments PLC, Persimmon plc,
Bovis Homes group PLC, Redrow plc and Crest Nicholson Holdings plc.
Previously the TSR calculation has been based on the average TSR of the other housebuilders, with a requirement for Bellway’s
TSR to match this average (for 25% of an award to vest) rising to 100% vesting for Bellway’s TSR outperforming the average TSR
plus 7.5% per annum.
Having reviewed the basis for TSR performance measurement the Committee is proposing to change from using the average
TSR to using the median TSR as the reference point. This is because the median value is less influenced by the performance
of extreme outliers of the index and so represents a more robust and comparable benchmark.
The Committee has re-examined the 7.5% hurdle for out performance to establish whether this remains appropriately stretching
and is comfortable that, based on robust back-testing, this is broadly equivalent to upper quartile performance.
For the other half of the award, the TSR will be based on performance against the constituents of the FTSE 250 index, excluding
investment trusts and financial services companies, with a median to upper quartile vesting scale for between 25% and 100% of
the award to vest.
Regardless of TSR performance, no part of the TSR element of an award will vest unless the Committee is satisfied that there
has been an improvement in underlying financial performance over the performance period, taking into account, inter alia,
operating profit, operating margin, RoCE and Nav. The Committee will scale back the level of vesting indicated by the TSR
performance condition (potentially to zero) in circumstances where there has not been an improvement.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 48
governance
repOrt OF the bOArd ON dIrectOrs’
remuNerAtION cONtINued
matching shares will vest subject to the executive remaining employed, retention of the invested shares and also subject
to the same performance conditions as for performance shares.
Chairman and non-executive director fees
The Chairman’s fee level will increase from £180,000 to £185,000 p.a.
For 2013/14 the base fee for non-executive directors will remain at £51,500. Fees for chairing the audit Committee and the
Board Committee on Executive Directors’ Remuneration will rise from £3,000 to £5,000 and the additional fee for the senior
independent non-executive director will increase from £4,000 to £5,000.
Implementation of remuneration policy in 2012/13
The auditor is required to report on the information contained in the following part of this Report.
directors' emoluments
Salary and
fees
Taxable
benefits(1)
Pension
£
£
Non-executive Chairman
H C Dawe(3)
J K Watson(4)
124,500
90,000
1,333
403
Executive directors
J K Watson(4)
E F ayres(5)
K D adey
a m Leitch
280,250
350,000
225,000
–
Non-executive directors
58,500
54,500
51,500
P m Johnson
m R Toms
J a Cuthbert
Totals
Notes:
13,428
24,812
26,372
–
–
–
–
Payment
in lieu of
pension
£
–
–
84,075
12,250
annual
bonus
Sub-total
Long-term
incentives(2)
£
–
–
£
125,833
90,403
£
–
–
Total
2013
£
2012(6)
£
125,833
243,834
90,403
–
336,300
714,053
–
714,053 2,056,089
420,000
864,812
66,094
930,906
671,157
–
–
–
–
–
270,000
566,372
–
–
–
–
–
58,500
54,500
51,500
–
–
–
–
–
566,372
241,999
–
888,155
58,500
56,650
54,500
51,500
51,500
51,500
£
–
–
–
57,750
45,000
–
–
–
–
1,234,250
66,348
102,750
96,325
1,026,300
2,525,973
66,094
2,592,067 4,260,884
1. Taxable benefits include car or car allowance and health insurance.
2. This relates to the vesting of the 1996 ESoS award exercisable from 17 November 2007. Further details are set out in the notes to the directors’ share options
table on page 51.
3. Howard Dawe retired from the Board on 31 January 2013. The fee reflects his annual fee of £248,500, pro rated for his time in post.
4. John Watson held the position of Chief Executive until 31 January 2013 and from 1 February 2013 he was appointed non-executive Chairman. Salaries, fees,
benefits and pay in lieu of pension are pro rated to reflect his time in each post.
5. Ted ayres was an executive director throughout the year, holding the post of group operations Director until 31 January 2013 and from 1 February 2013,
he was appointed Chief Executive. The figures in the table reflect his aggregate remuneration for both roles held.
6. Following adoption of the new directors’ remuneration regulations the 2012 total figure now includes long-term incentive gains.
Bellway p.l.c. Annual Report and Accounts 2013
49
Annual bonus for the year ended 31 July 2013
The annual bonus is payable in November 2013 for performance during the year ended 31 July 2013. The performance
conditions for the 2012/13 bonus were operating profit (pre-exceptional items) (90%) and personal non-financial performance
(30%), with non-financial performance being assessed by reference to land bank management, health and safety and customer
care. Each of these elements accounts for a maximum bonus of 10% of salary. in the event, the Company achieved very
substantial improvement in operating profit, above City expectations and improved its performance in relation to each of the
non-financial measures. The actual bonus payment against operating profit was determined on the following basis:
Measure
Weighting
(% of salary)
Threshold
Target
Maximum
value
Actual
Payout
(% of maximum)
Payout
(% of salary)
operating profit
90%
£125 million
£135 million
£150 million
£151 million
100%
90%
The three non-financial metrics were not determined on a range of targets but related to specific individual performance targets
for each. Details are set out in the table below:
Non-financial measure
Objectives
Land bank
increase in the forward land bank of plots with detailed planning permission
in the year to 31 July 2013 to ensure the group’s revenue aspirations are not
frustrated by land shortages in future years.
The group exceeded its land bank target for the following financial year.
Health and safety
improvement in performance by reference to the rate of over 3 day lost time
accidents, taking account of the volume of activity.
Customer care
The group reduced its rate of over 3 day lost time accidents per 100,000
employees to 664.75 from 761.18 in 2012.
improvement in the group’s performance, taking account of the results of the
Company’s survey of buyers’ satisfaction ‘Would you recommend a Bellway
home?’
Score
maximum – 10% of salary
achieved – 10% of salary
maximum – 10% of salary
achieved – 10% of salary
maximum – 10% of salary
The group achieved a further improvement in its customer care score to 94.8%
from 93.8% in 2012.
achieved – 10% of salary
all the targets were achieved and the full bonus was payable in relation to each element. if the targets had not been achieved
then no bonus would have been payable. in the case of health and safety, no bonus is payable if a work related fatality occurs
on site.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 50
governance
repOrt OF the bOArd ON dIrectOrs’
remuNerAtION cONtINued
directors’ interests in the long-term incentive plans
The Chairman and executive directors have a potential future beneficial interest pursuant to the allocation of shares under the
PSP. The number of shares allocated in the Bellway Employee Share Trust (1992) ('Trust') in respect of each director, along with
the market price of the shares at the date of award, is shown below:
PSP
Fully paid ordinary 12.5 pence shares
Potential future beneficial interests
J K Watson
Totals
E F ayres
Totals
K D adey
Notes:
award date
29.10.2009(1)
21.10.2010(2)
24.10.2011(3)
24.10.2011(3)
13.11.2012(4)
13.11.2012(4)
awards held
at 1 august
2012
awarded
during
the year
awards
lapsed during
the year
awards
vested during
the year(5)
Awards held
at 31 July
2013
72,028
96,060
77,659
245,747
35,689
–
35,689
–
–
–
–
–
–
30,960
30,960
23,220
72,028
–
–
72,028
–
–
–
–
–
–
–
–
–
–
–
–
–
96,060
77,659
173,719
35,689
30,960
66,649
23,220
1. market value on award 715.00p. The performance period was 1 august 2009 – 31 July 2012. This award lapsed during the year due to failure to achieve the
performance conditions.
2. market value on award 549.50p. The performance period was 1 august 2010 – 31 July 2013. The performance conditions were not achieved and these awards
will lapse in full on 20 october 2013.
3. market value on award 700.50p. The performance period is 1 august 2011 – 31 July 2014.
4. on 13 November 2012 an award of performance shares under the 2004 PSP was made to Ted ayres and Keith adey. The awards were in the form of nil cost
options. The face value of awards granted were equal to 100% of their respective salaries which is in line with the Committee’s current grant policy. Ted ayres
was granted an award over 30,960 shares with a face value, on grant, of £300,000 and Keith adey’s award was over 23,220 shares with a face value, on grant,
of £225,000. The market value of a Bellway share on award was 976.50p, and the performance period is 1 august 2012 – 31 July 2015. The awards are subject
to a TSR performance condition, which is in two parts. Half is measured by reference to Bellway’s TSR against an index of the TSR of other housebuilders (the
‘Housebuilders’ index’). if Bellway’s TSR matches that of the Housebuilders’ index, 25% of the award vests. Full vesting would be achieved for 7.5% per
annum outperformance of the Housebuilders’ index. The companies comprising the Housebuilders’ index are Barratt Developments PLC, The Berkeley
group plc, Bovis Homes group PLC, Persimmon plc, Redrow plc and Taylor Wimpey plc. The other half is measured by reference to the companies in the
FTSE 250 index (excluding investment trusts and financial services). awards start to vest at 25% if Bellway’s TSR matches the median of the companies in the
index, increasing on a straight-line basis so that full vesting would be achieved if Bellway’s TSR reaches the upper quartile. Furthermore, no part of either
element of this award will vest unless the Committee is satisfied that there has been an improvement in underlying financial performance, taking into
account, inter alia, operating profit, operating margin, RoCE and Nav.
5. The performance conditions for previous awards are summarised below:
(a) For the awards made on 29 october 2009 and 21 october 2010 the performance criteria were not achieved.
(b) For the award made on 24 october 2011 the TSR performance condition was in two parts. Half was measured by reference to the Housebuilders’ index as
above, and the other half was measured by reference to the companies in the FTSE 250 index (excluding investment trusts and financial services) as above.
awards start to vest at 25% if Bellway’s TSR matches the median of the companies in the group, increasing on a straight-line basis so that full vesting would
be achieved if Bellway’s TSR reaches the upper quartile.
Regardless of TSR performance, no part of an award will vest unless the Committee is satisfied that the Company’s TSR over the performance period
is reflective of underlying financial performance, taking into account, inter alia, operating profit, operating margin, RoCE and Nav.
6. The market price of the ordinary shares at 31 July 2013 was 1,380.00p and the range during the year was 802.00p to 1,455.00p.
The executive directors have a potential beneficial interest in certain shares held in the Trust pursuant to the allocation of shares
under the SmP. The number of shares allocated in the Trust (as matching Shares) in respect of each director, along with the
market price of the shares at the date of award, is shown below:
SMP
Potential future
beneficial interests
E F ayres
K D adey
Notes:
Fully paid ordinary 12.5 pence shares
awards
held at
1 august
2012
investment
Shares
purchased
during the year
matching
Shares
awarded
during the year
matching
Shares
lapsed
during the year
matching
Shares
vested
during the year
Matching
Shares
held at
31 July 2013
–
–
3,721
1,489
15,504
6,204
–
–
–
–
15,504
6,204
award date
23.11.2012(1)
23.11.2012(1)
1. market value on award 967.50p. The performance period is 1 august 2012 – 31 July 2015. The vesting of the matching Shares is subject to the same
performance conditions as the PSP award made on 13 November 2012.
Bellway p.l.c. Annual Report and Accounts 2013 51
directors’ share options
Details of all directors’ interests in the various share option schemes are shown below:
Scheme
2003 SRSoS(e)
1996 ESoS(b)
1996 ESoS(b)
2005 ESoS(c)
2003 SRSoS(e)
2003 SRSoS(e)
1 august
2012
granted
during the
year
Exercised
during the
year
31 July
2013
Exercise
price (p)
Exercisable
from
Expiry
date
1,618
10,000
16,500
3,500
2,350
32,350
3,463
–
–
–
–
–
–
–
–
1,618
556.00
1 Feb 2015
31 July 2015
10,000
–
716.00
17 Nov 2007
17 Nov 2014
–
–
–
16,500
844.00
31 oct 2008
31 oct 2015
3,500
2,350
844.00
31 oct 2008
31 oct 2015
661.60
1 Feb 2015
31 July 2015
10,000
22,350
–
3,463
439.60
1 Feb 2016
31 July 2016
J K Watson
E F ayres
Totals
K D adey
Notes:
1. all of the above options were granted for nil consideration unless noted.
2. aggregate gross gains made by the directors on the exercise of the above options in the year were £66,094.00 (2012 – £70,659.87).
3. References to (b), (c) and (e) correspond with the summary of outstanding share options in note 19 on page 77.
4. The 1996 ESoS award exercisable from 17 November 2007 is subject to the achievement of either of the following objective performance conditions: (a) the
growth in earnings per share of the group in any three consecutive years will not be less than the growth in the Retail Price index plus 6% over the same
period; or (b) the growth in earnings per share of the group in any three consecutive years exceeding the mean average growth in earnings per share in the
same period of companies whose shares were formerly quoted in the ‘Building and Construction’ sector but whose shares are now quoted in the ‘Household
goods’ sector of the FTSE actuaries Shares indices. The 1996 ESoS and 2005 ESoS awards exercisable from 31 october 2008, are subject to a profit before
tax (‘PBT’) performance target at the operating division of Bellway Homes Limited where Ted ayres was a director at the time of the grant and during the
three year performance period. Full vesting occurs where actual PBT reaches the forecast PBT, within a 10% range, in each of the three financial years of the
performance period, with one-third vesting if the target is met in only one year and two-thirds vesting if the target is met in two of the three years.
if the target was not reached in any of the three years then the total award would lapse. The performance conditions have been met in full.
Statement of directors’ shareholdings and share interests
There is a policy for a minimum shareholding requirement for the executive directors, equivalent to 100% of basic salary. Within a
period of three months of appointment an executive director must acquire a minimum of 1,000 ordinary shares in the Company
and must retain at least 50% of any shares awarded under the PSP or SmP, after allowance for paying tax, until the requisite
number of shares has been accumulated. if personal circumstances make this difficult, the Committee would exercise discretion.
The directors’ interests (including family interests) in the ordinary share capital of the Company are set out below:
director
J K Watson
E F ayres
K D adey
P m Johnson
m R Toms
J a Cuthbert
Beneficially
owned at
31 July 2013
Beneficially
owned at
31 July 2012
outstanding and
unvested PSP
awards
outstanding and
unvested SmP
awards
outstanding and
unvested share
options
Share options
vested but
unexercised
Share options
exercised in the
year
403,384
16,292
2,489
4,300
1,500
6,000
403,384
10,105
1,000
4,300
1,500
6,000
173,719
66,649
23,220
N/a
N/a
N/a
N/a
15,504
6,204
N/a
N/a
N/a
1,618
2,350
3,463
N/a
N/a
N/a
–
–
20,000
10,000
–
N/a
N/a
N/a
–
N/a
N/a
N/a
There has been no change in any of the above interests between 31 July 2013 and the date of this Report. John Watson’s interest
in outstanding PSP awards will fall to 77,659 when the award over 96,060 shares made on 21 october 2010 lapses in full. Further
details are provided in the PSP table on page 50.
at the date of their appointment to the Board on 1 august 2013 as non-executive directors and at the date of this Report,
Paul Hampden Smith and Denise Jagger were interested in 4,620 and 500 fully paid ordinary 12.5p shares respectively.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 52
governance
repOrt OF the bOArd ON dIrectOrs’
remuNerAtION cONtINued
Performance graph and table
The graph below shows the TSR performance over the past five years of the Company, the FTSE 250 index and the bespoke
Housebuilders’ index (as defined in note 4 on page 50). The FTSE 250 index has been selected as the most appropriate
‘broad equity market index’ as the Company has been a constituent of the FTSE 250 index over this period, and the bespoke
Housebuilders’ index has been selected as this index is used for the Company’s long-term incentive plans.
Source: Datastream
400
350
300
250
200
150
100
50
0
363
315
194
156
150
93
125
119
115
145
144
142
179
173
141
31 July 2008
31 July 2009
31 July 2010
31 July 2011
31 July 2012
31 July 2013
Bellway
Housebuilders’ Index
FTSE 250 Index
This graph shows the value, by 31 July 2013, of £100 invested in Bellway p.l.c. on 31 July 2008 compared with the value of £100
invested in the FTSE 250 index and equally in each of the housebuilders currently contained in the FTSE 350 index (excluding
Bellway and Crest Nicholson, which re-listed in February 2013). The other points plotted are the values at intervening financial
year ends.
Chief Executive total remuneration
The table below sets out the total remuneration for the Chief Executive over the same five year period as for the chart above,
together with the annual bonus paid and the vesting percentage of long-term incentives, as a percentage of the maximum
(relating to the performance periods ending in that year).
Total remuneration (£000)
annual bonus paid (as % of maximum)
PSP vesting (as % of maximum)
Notes:
2009
1,312
20.3%
100.0%
2010
1,532
76.9%
48.3%
2011
1,899
100.0%
99.6%
2012
1,396
99.3%
0.0%
2013
1,243(1)
100.0%
0.0%
1. John Watson held the role of Chief Executive up to 31 January 2013 and Ted ayres was Chief Executive for the remainder of the financial year from 1 February
2013 to 31 July 2013. The total remuneration for the period as Chief Executive was £714,053 for John Watson and £528,500 for Ted ayres.
Bellway p.l.c. Annual Report and Accounts 2013 53
Percentage change in remuneration of the Chief Executive
The table below shows the percentage change over the prior year in respect of:
the Chief Executive’s remuneration (comprising salary, fees, taxable benefits and annual bonus) throughout the year.
all other employees’ total remuneration (comprising wages, salaries, taxable benefits and annual bonus) throughout the year.
Chief Executive(1)
all other employees
Notes:
2013
£000
1,082
71,810
2012
£000
1,219
66,542
% change
-11.1%
+7.9%
1. John Watson was Chief Executive throughout the financial year ended 31 July 2012 and for the period from 1 august 2012 to 31 January 2013. Ted ayres was
Chief Executive for the remainder of the financial year from 1 February 2013 to 31 July 2013. The figure in respect of the year to 31 July 2013 is the combined
pro-rated Chief Executive remuneration for both messrs Watson and ayres for the period they each were Chief Executive. The note to the previous table
shows their individual remuneration.
Importance of remuneration relative to dividends and corporation tax
The chart below shows the relative expenditure of the group in respect of employee remuneration, dividends and corporation
tax, together with the percentage change in each, for the financial years ended 31 July 2012 and 31 July 2013.
Employee costs
Dividends
Corporation tax
Statement of voting at AGM
2013
£000
72,892
36,518
32,355
2012
£000
67,761
24,280
26,026
% change
7.5%
50.4%
24.3%
at last year’s agm held on 13 January 2013, the Report of the Board on Directors’ Remuneration received the following votes
from shareholders:
votes cast in favour
votes cast against
Total votes cast
votes withheld
Votes % of votes cast
95,093,505
584,586
99.39%
0.61%
95,678,091
100.00%
2,600,394
This Report will be put to an advisory vote of the Company’s shareholders at the agm on 13 December 2013.
on behalf of the Board
Mike Toms
Chairman of the Board Committee on Executive Directors’ Remuneration
14 october 2013
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 54
governance
stAtemeNt OF dIrectOrs’ respONsIbIlItIes IN
respect OF the ANNuAl repOrt ANd AccOuNts
The directors are responsible for preparing the annual Report and accounts 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 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:
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
state whether they have been prepared in accordance with iFRSs as adopted by the Eu; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and
the parent company will continue in business.
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 group’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:
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
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.
keith Adey
Finance Director
14 october 2013
Bellway p.l.c. Annual Report and Accounts 2013 55
governance
INdepeNdeNt AudItOr’s repOrt
tO the members OF bellwAy p.l.c.
We have audited the financial statements of Bellway p.l.c. for the year ended 31 July 2013 set out on pages 56 to 85.
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 Chapter 3 of Part 16 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 auditor’s 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 auditor
as explained more fully in the Directors’ Responsibilities Statement set out on page 54, 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,
and express an opinion on, 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 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 Financial Reporting Council’s website at
www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
in our opinion:
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
2013 and of the group’s profit for the year then ended;
the group financial statements have been properly prepared in accordance with iFRSs as adopted by the Eu;
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
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:
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
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:
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
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
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
under the Listing Rules we are required to review:
the directors’ statement, set out on page 37, in relation to going concern;
the part of the Corporate governance Statement on pages 32 to 36 relating to the Company’s compliance with the nine
provisions of the uK Corporate governance Code specified for our review; and
certain elements of the report to shareholders by the Board on directors’ remuneration.
Mick 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
14 october 2013
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 56
Accounts
grOup INcOme stAtemeNt
for the year ended 31 July 2013
Revenue
Cost of sales
Gross profit
administrative expenses
Operating profit
Finance income
Finance expenses
Profit before taxation
income tax expense
Profit for the year *
* all attributable to equity holders of the parent.
There were no exceptional items in the current or prior period (note 5).
Earnings per ordinary share – Basic
Earnings per ordinary share – diluted
Notes
2013
£000
2012
£000
1
5
4
2
2
6
8
8
1,110,676
1,004,227
(907,380)
(842,124)
203,296
(52,227)
151,069
751
(10,893)
140,927
(32,355)
108,572
162,103
(47,472)
114,631
1,676
(11,023)
105,284
(26,026)
79,258
89.3p
88.9p
65.5p
65.2p
stAtemeNts OF cOmpreheNsIve INcOme
for the year ended 31 July 2013
Profit/(loss) for the period
Other comprehensive income/(expense)
actuarial gains/(losses) on defined benefit pension plans
income tax on other comprehensive (income)/expense
Other comprehensive income/(expense) for the
period, net of income tax
Notes
Group
2013
£000
108,572
group
2012
£000
79,258
Company
2013
£000
(1,900)
Company
2012
£000
(1,918)
25
6
1,558
(530)
(3,845)
676
1,028
(3,169)
–
–
–
–
–
–
Total comprehensive income/(expense) for the period *
109,600
76,089
(1,900)
(1,918)
* all attributable to equity holders of the parent.
Bellway p.l.c. Annual Report and Accounts 2013 57
Non-
controlling
interest
£000
Total
equity
£000
Accounts
stAtemeNts OF chANges IN equIty
at 31 July 2013
Issued
capital
Share
premium
Other
reserves
Retained
earnings
Total
Group
Notes
£000
£000
Balance at 1 August 2011
15,105
160,642
£000
1,492
£000
£000
896,135
1,073,374
(66)
1,073,308
Total comprehensive income
for the period
Profit for the period
other comprehensive expense *
Total comprehensive income
for the period
Transactions with shareholders
recorded directly in equity:
Dividends on equity shares
Shares issued
Credit in relation to share options
and tax thereon
Purchase of own shares
Total contributions by and
distributions to shareholders
–
–
–
–
75
–
–
75
–
–
–
–
2,113
–
–
2,113
–
–
–
–
–
–
–
–
79,258
(3,169)
79,258
(3,169)
76,089
76,089
(17,890)
(17,890)
–
2,188
719
719
(1,279)
(1,279)
(18,450)
(16,262)
–
–
–
–
–
–
–
–
79,258
(3,169)
76,089
(17,890)
2,188
719
(1,279)
(16,262)
7
19
25
20
Balance at 31 July 2012
15,180
162,755
1,492
953,774
1,133,201
(66)
1,133,135
Total comprehensive income
for the period
Profit for the period
other comprehensive income *
Total comprehensive income
for the period
Transactions with shareholders
recorded directly in equity:
Dividends on equity shares
Shares issued
Credit in relation to share options
and tax thereon
Total contributions by and
distributions to shareholders
–
–
–
–
41
–
41
–
–
–
–
2,377
–
2,377
–
–
–
–
–
–
–
108,572
108,572
1,028
1,028
109,600
109,600
(27,963)
(27,963)
–
2,418
1,648
1,648
(26,315)
(23,897)
–
–
–
–
–
–
–
108,572
1,028
109,600
(27,963)
2,418
1,648
(23,897)
7
19
25
Balance at 31 July 2013
15,221
165,132
1,492
1,037,059
1,218,904
(66) 1,218,838
* additional breakdown is provided in the Statements of Comprehensive income.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013
58
Accounts
stAtemeNts OF chANges IN equIty cONtINued
at 31 July 2013
Company
Balance at 1 August 2011
Total comprehensive expense
for the period
Loss for the period
other comprehensive income *
Total comprehensive expense
for the period
Transactions with shareholders
recorded directly in equity:
Dividends on equity shares
Shares issued
Credit in relation to share options
Purchase of own shares
Total contributions by and
distributions to shareholders
Issued
capital
Share
premium
Other
reserves
£000
£000
15,105
160,642
£000
2,145
Share-based
payment
reserve
£000
Retained
earnings
Total
equity
£000
£000
12,914
534,570
725,376
–
–
–
–
75
–
–
75
–
–
–
–
2,113
–
–
2,113
–
–
–
–
–
–
–
–
–
–
–
–
–
1,046
(1,918)
(1,918)
–
–
(1,918)
(1,918)
(17,890)
(17,890)
–
–
2,188
1,046
–
(1,279)
(1,279)
1,046
(19,169)
(15,935)
7
19
25
20
Balance at 31 July 2012
15,180
162,755
2,145
13,960
513,483
707,523
Total comprehensive expense
for the period
Loss for the period
other comprehensive income *
Total comprehensive expense
for the period
Transactions with shareholders
recorded directly in equity:
Dividends on equity shares
Shares issued
Credit in relation to share options
Total contributions by and
distributions to shareholders
–
–
–
–
41
–
41
–
–
–
–
2,377
–
2,377
–
–
–
–
–
–
–
–
–
–
–
–
1,021
(1,900)
(1,900)
–
–
(1,900)
(1,900)
(27,963)
(27,963)
–
–
2,418
1,021
1,021
(27,963)
(24,524)
7
19
25
Balance at 31 July 2013
15,221
165,132
2,145
14,981
483,620
681,099
* additional breakdown is provided in the Statements of Comprehensive income.
Bellway p.l.c. Annual Report and Accounts 2013
Accounts
bAlANce sheets
at 31 July 2013
ASSETS
Non-current assets
Property, plant and equipment
investment property
investments in subsidiaries and jointly controlled entities
other financial assets
Deferred tax assets
Current assets
inventories
Trade and other receivables
Cash and cash equivalents
Total assets
LIABILITIES
Non-current liabilities
interest bearing loans and borrowings
Retirement benefit obligations
Trade and other payables
Current liabilities
interest bearing loans and borrowings
Corporation tax payable
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
Non-controlling interest
Total equity
59
Notes
Group
2013
£000
group
2012
£000
Company
2013
£000
Company
2012
£000
9
10
11
14
12
13
15
22
16
25
17
16
17
19
11,328
7,697
–
34,484
3,238
56,747
11,407
9,748
–
–
–
–
–
31,184
30,163
35,080
3,241
59,476
–
–
–
–
31,184
30,163
1,513,527
1,399,843
57,166
24,215
1,594,908
1,651,655
71,133
21,413
1,492,389
1,551,865
–
622,054
48,727
670,781
701,965
–
9,042
45,062
54,104
50,000
18,305
310,408
378,713
432,817
20,000
11,501
37,867
69,368
–
–
–
–
62,000
20,000
14,820
272,542
349,362
418,730
–
866
20,866
20,866
1,218,838
1,133,135
681,099
15,221
165,132
1,492
–
1,037,059
1,218,904
15,180
162,755
1,492
–
953,774
1,133,201
(66)
(66)
15,221
165,132
2,145
14,981
483,620
681,099
–
–
649,499
48,745
698,244
728,407
20,000
–
–
20,000
–
–
884
884
20,884
707,523
15,180
162,755
2,145
13,960
513,483
707,523
–
1,218,838
1,133,135
681,099
707,523
approved by the Board of Directors on 14 october 2013 and signed on its behalf by:
John Watson
Director
keith Adey
Director
Registered number 1372603
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013
60
Accounts
cAsh FlOw stAtemeNts
for the year ended 31 July 2013
Cash flows from operating activities
Profit/(loss) for the year
Depreciation charge
Profit on sale of property, plant and equipment
Profit on sale of investment properties
Finance income
Finance expenses
Share-based payment expense
income tax expense
increase in inventories
Decrease/(increase) in trade and other receivables
increase/(decrease) in trade and other payables
cash from operations
interest paid
income tax 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 inflow/(outflow) from investing activities
Notes
9, 10
4
2
2
25
6
Cash flows from financing activities
Decrease 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 from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
7
22
Group
2013
£000
group
2012
£000
Company
2013
£000
Company
2012
£000
108,572
2,487
(76)
(578)
(751)
10,893
1,021
32,355
(113,684)
14,573
39,030
93,842
(5,922)
(28,770)
59,150
(1,956)
–
197
2,213
743
1,197
(32,000)
2,418
–
(27,963)
(57,545)
2,802
21,413
24,215
79,258
1,836
(213)
(35)
(1,676)
11,023
1,046
26,026
(129,263)
(10,617)
28,798
6,183
(7,001)
(22,317)
(23,135)
(4,551)
(1,106)
296
233
1,245
(3,883)
(18,000)
2,188
(1,279)
(17,890)
(34,981)
(61,999)
83,412
21,413
(1,900)
(1,918)
–
–
–
–
–
–
–
–
1,900
1,900
–
–
–
27,445
(18)
27,427
(1,900)
–
25,527
–
–
–
–
–
–
–
2,418
–
(27,963)
(25,545)
(18)
48,745
48,727
–
–
–
18,893
10
18,885
(1,900)
–
16,985
–
–
–
–
–
–
–
2,188
(1,279)
(17,890)
(16,981)
4
48,741
48,745
Bellway p.l.c. Annual Report and Accounts 2013 61
Accounts
AccOuNtINg pOlIcIes
Basis of preparation
Bellway p.l.c. (the 'Company') is a company incorporated in England and Wales.
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, which were approved for issue on 14 october 2013, 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 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 9 to 12. The financial position of the group, its cash flows, liquidity
position and borrowing facilities are described in the group Finance Director's Review on pages 22 to 25. Note 18 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. at 31 July 2013, net bank borrowings were £5.8 million having generated cash of £2.8 million during the year. The group
has operated within all of its banking covenants throughout the year. in addition, the group had bank facilities of £300 million,
expiring in tranches up to November 2016, with £270 million available for drawdown under such facilities at 31 July 2013.
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.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these
consolidated financial statements.
Effect of new standards and interpretations effective for the first time
The group has adopted iaS 1 ‘Presentation of Financial Statements’ (amendment) in the group’s financial statements for the
year ended 31 July 2013. This amendment requires the separate disclosure of the tax effect of each item of other comprehensive
income. The disclosures in these financial statements reflect this amendment.
The other standards and interpretations that are applicable for the first time in the group’s financial statements for the year
ended 31 July 2013, have no effect on these financial statements.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the
Company 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 these entities are included in the
consolidated financial statements from the date that control commences until the date that control ceases.
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.
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:
Plant, fixtures and fittings – 3 to 10 years.
Freehold buildings – 40 years.
Freehold land is not depreciated.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 62
Accounts
AccOuNtINg pOlIcIes cONtINued
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 depreciation and 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: 10 – 100 years.
Land is not depreciated.
Investments in subsidiaries
interests in subsidiary undertakings are valued at cost less impairment.
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 retained earnings, except for impairment losses and changes in future cash flows, which are
recognised directly in the income statement. 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.
a description of the valuation technique is given in note 14 on page 72.
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 figure 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.
Bellway p.l.c. Annual Report and Accounts 2013 63
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 16) 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.
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’s 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 account 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 housing sales and land is recognised when transactions have legally completed.
Incentives
Sales incentives, including NewBuy, 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 group of
providing the incentive.
Sales incentives also include shared equity schemes which are accounted for as other financial assets. Revenue is recognised at
the initial fair value of the 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.
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.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 64
Accounts
AccOuNtINg pOlIcIes cONtINued
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 statements of comprehensive
income ('SoCi'). Further details of the scheme and the valuation methods applied may be found in note 25 on page 79.
Defined contribution pension costs are charged to the income statement in the period for which contributions are payable.
Employee benefits – share-based payments
in accordance with iFRS 2 'Share-based Payment', 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, the cumulative expense recognised in relation to the relevant options is reversed.
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 SoCi as share-based payments are considered to be transactions with shareholders.
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 Company-sponsored ESoP trust are included in both the group financial statements and the Company’s
own 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 credited to cost of sales.
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.
Bellway p.l.c. Annual Report and Accounts 2013 65
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.
For both the years ended 31 July 2013 and 31 July 2012, 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
have been amended based on local management and the Board’s assessment of current market conditions. For the years
ended 31 July 2013 and 31 July 2012 no exceptional charge has resulted from the review.
Whilst management remain cautious, selling prices and volumes have stabilised. 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.
Other financial assets
The fair value of future anticipated cash receipts takes into account the directors’ view of future house price movements,
the expected timing of receipts and the likelihood that a purchaser defaults on a repayment. The directors revisit the future
anticipated cash receipts from the assets at the end of each reporting period as detailed in note 14 on page 72.
Standards and interpretations in issue but not yet effective
at the date of authorisation of these financial statements, the following relevant standards and amendments, which have not
been applied in these financial statements, were in issue and endorsed by the Eu but not yet effective:
iaS 19 ‘Employee Benefits’ (amendment). The amendment requires additional disclosures, the disaggregation of plan costs
and the removal of the corridor approach for the recognition of actuarial gains and losses. This is effective for the period
beginning on 1 august 2013.
iFRS 10 ‘Consolidated Financial Statements’. The standard provides a single control model for the inclusion of entities in
consolidated financial statements. This is effective for the period beginning on 1 august 2014.
iFRS 11 ‘Joint arrangements’. The standard requires the equity method to be used when consolidating jointly controlled
entities, and does not permit the use of the proportional method which is currently used by the group. The adoption of this
standard will result in presentational changes to the income statement and balance sheet and require adjusted comparative
information in the year of adoption. This is effective for the period beginning on 1 august 2014.
iFRS 12 ‘Disclosure of interests in other Entities’. The standard requires additional disclosures in relation to subsidiaries, joint
arrangements, associates and unconsolidated entities. This is effective for the period beginning on 1 august 2014.
iFRS 13 ‘Fair value measurement’. The standard defines fair value and provides a single iFRS framework for measuring fair
value. This is effective for the period beginning on 1 august 2013.
The Board anticipates that these standards and the amendment will be adopted in the group’s financial statements in the year
they become effective and that the adoption of these standards and the amendment will not have a significant effect on the
group’s financial statements.
of the other iFRSs that are available for early adoption, none are expected to have a material effect on the financial statements.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 66
Accounts
NOtes tO the AccOuNts
1 Segmental analysis
The Board regularly reviews the group’s performance and balance sheet position for its entire operations, which are entirely
based in its country of domicile, the uK, and receives financial information for the uK as a whole. as a consequence the group
has one reportable segment which is uK housebuilding.
as there continues to be only one reportable segment whose revenue, profits, expenses, assets, liabilities and cash flows
are measured and reported on a basis consistent with the group financial statements, no additional numerical disclosures
are necessary.
additional information on average selling prices and the unit sales split between north, south, private and social has been
included in the group Finance Director’s Review on pages 22 to 25. The Board does not, however, consider these categories to
be separate reportable segments as they review the entire operations as a whole, which are based in the uK, when assessing
performance and making decisions about the allocation of resources.
2 finance income and expenses
interest receivable on bank deposits
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 25)
Share-based payments (note 25)
2013
£000
309
442
751
3,983
4,682
299
29
1,900
10,893
2013
£000
71,599
7,870
2,238
1,021
82,728
2012
£000
715
961
1,676
5,388
3,022
455
258
1,900
11,023
2012
£000
66,577
7,105
2,120
1,046
76,848
The average number of persons employed by the group during the year was 1,733 (2012 – 1,555) comprising 578 (2012 – 534)
administrative and 1,155 (2012 – 1,021 ) production and others employed in housebuilding and associated trading activities.
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 39 to 53.
Key management personnel remuneration, including directors, comprised:
Salaries and fees
Taxable benefits
annual bonus – cash
Pension costs
Share-based payments
2013
£000
2,263
128
1,633
166
564
4,754
2012
£000
2,405
144
2,037
126
507
5,219
Key management personnel, as disclosed under iaS 24 'Related party disclosures', comprises the directors and other senior
operational management.
Bellway p.l.c. Annual Report and Accounts 2013 4 Operating profit
operating profit is stated after charging/(crediting):
Staff costs (note 3)
Profit on sale of property, plant and equipment
Depreciation of property, plant and equipment
Depreciation of investment property
Hire of plant and machinery
operating lease charges for land and buildings
auditor’s 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
67
2012
£000
76,848
(213)
1,796
40
8,660
1,233
30
196
43
4
2013
£000
82,728
(76)
2,071
416
9,331
1,138
30
196
53
4
amounts paid to the Company’s auditor and its 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 was performed at 31 July 2013 and the carrying value of land was compared to the net realisable
value. Net realisable value represents the estimated selling price (in the ordinary course of business) less all estimated costs of
completion and attributable overheads. Estimated selling prices were reviewed on a site-by-site basis and selling prices were
amended based on local management and the Board’s assessment of current market conditions. No exceptional land write-
downs or land write backs were required as a result of this review.
There were no exceptional items in the year ended 31 July 2012.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 68
Accounts
NOtes tO the AccOuNts cONtINued
6 Income tax expense
Current tax expense:
uK corporation tax
adjustments in respect of prior years
deferred tax expense:
origination and reversal of temporary differences
Reduction in tax rate
adjustments in respect of prior years
2013
£000
33,559
(1,304)
32,255
(210)
164
146
100
2012
£000
26,707
(1,406)
25,301
519
45
161
725
Total income tax expense in income statement
32,355
26,026
Reconciliation of effective tax rate:
Profit before taxation
Tax calculated at uK corporation tax rate
(Enhanced deductions)/non-deductible expenses
Reduction in tax rate
adjustments in respect of prior years – current tax
Effective tax rate and tax expense for the year
– deferred tax
2013
%
2013
£000
23.7
–
0.1
(0.9)
0.1
23.0
140,927
33,400
(51)
164
(1,304)
146
32,355
2012
%
25.3
0.6
–
(1.3)
0.1
24.7
2012
£000
105,284
26,637
589
45
(1,406)
161
26,026
The deferred tax assets held by the group at the start of the year that are expected to be realised after 31 march 2014 have been
revalued at the tax rate that will be effective when they are expected to be realised. at the year end a tax rate reduction to 21%,
effective from 1 april 2014, and 20%, effective from 1 april 2015, were substantively enacted.
The corporation tax rate reduced from 26% to 24% with effect from 1 april 2012, and to 23% with effect from 1 april 2013.
Further reductions to 21% and 20% will reduce the group’s current tax charge accordingly.
The effective income tax charge is 23.0% of profit before taxation (2012 – 24.7%) and compares favourably to the group’s
standard tax rate for the year of 23.7% (2012 – 25.3%). The lower effective tax rate in the current year is principally due to
finalisation of prior year corporation tax returns.
Deferred tax recognised directly in equity:
Credit/(charge) relating to equity-settled transactions
(Charge)/credit relating to actuarial movement on the defined benefit pension scheme
7 dividends on equity shares
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 July 2012 of 14.0p per share (2011 – 8.8p)
interim dividend for the year ended 31 July 2013 of 9.0p per share (2012 – 6.0p)
Dividends forfeited
2013
£000
627
(530)
2013
£000
17,017
10,952
(6)
27,963
2012
£000
(327)
676
2012
£000
10,613
7,283
(6)
17,890
Proposed final dividend for the year ended 31 July 2013 of 21.0p per share (2012 – 14.0p)
25,572
17,003
The 2013 proposed final dividend is subject to approval by shareholders at the annual general meeting on 13 December
2013 and, in accordance with iaS 10 'Events after the Reporting Period', has not been included as a liability in these financial
statements. at the record date for the final dividend for the year ended 31 July 2012, shares were held by the Trust (note 20)
on which dividends had been waived.
Bellway p.l.c. Annual Report and Accounts 2013
69
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:
Earnings
2013
£000
Weighted
average
number of
ordinary
shares
2013
Number
For basic earnings per ordinary share
108,572
121,572,688
Dilutive effect of options and awards
599,151
For diluted earnings per ordinary share
108,572
122,171,839
9 Property, plant and equipment
Group
Cost
at 1 august 2011
additions
Disposals
Transfer to inventories
at 1 august 2012
additions
Disposals
At 31 July 2013
depreciation
at 1 august 2011
Charge for year
on disposals
Transfer to inventories
at 1 august 2012
Charge for year
on disposals
At 31 July 2013
Net book value
At 31 July 2013
at 31 July 2012
at 31 July 2011
Earnings
per share
Earnings
2013
p
89.3
(0.4)
88.9
Weighted
average
number of
ordinary
shares
2012
Number
2012
£000
79,258
121,036,846
465,010
79,258
121,501,856
Land and
property
£000
6,244
1,401
–
(445)
7,200
–
–
7,200
1,237
145
–
(157)
1,225
166
–
1,391
5,809
5,975
5,007
Plant,
fixtures and
fittings
£000
15,061
3,150
(1,706)
–
16,505
2,113
(2,043)
16,575
11,045
1,651
(1,623)
–
11,073
1,905
(1,922)
11,056
5,519
5,432
4,016
Earnings
per share
2012
p
65.5
(0.3)
65.2
Total
£000
21,305
4,551
(1,706)
(445)
23,705
2,113
(2,043)
23,775
12,282
1,796
(1,623)
(157)
12,298
2,071
(1,922)
12,447
11,328
11,407
9,023
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013
70
Accounts
NOtes tO the AccOuNts cONtINued
10 Investment property
Group
Cost
at 1 august 2011
additions
Disposals
at 1 august 2012
Disposals
At 31 July 2013
depreciation
at 1 august 2011
Charge for year
at 1 august 2012
Charge for year
Disposals
At 31 July 2013
Net book value
At 31 July 2013
at 31 July 2012
at 31 July 2011
Total
£000
8,883
1,106
(198)
9,791
(1,685)
8,106
3
40
43
416
(50)
409
7,697
9,748
8,880
investment properties mainly represent properties where Bellway has retained an interest in a sold property comprising a
proportion of the cost of residential units constructed by the group, the units being sold under a shared ownership scheme.
They are valued under the cost model and are held at cost less accumulated depreciation and accumulated impairment
losses. a formal internal valuation of investment properties was carried out at the end of the financial year. The fair value of the
investment properties was assessed at £7.697 million (2012 – £10.615 million).
11 Investments in subsidiaries 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 2012
additions
At 31 July 2013
Shares in subsidiary
undertakings
£000
30,163
1,021
31,184
Bellway p.l.c. Annual Report and Accounts 2013 71
11 Investments in subsidiaries and proportionately consolidated jointly controlled entities
(continued)
principal subsidiary undertakings
a summary of the principal subsidiary undertakings is given in note 27 on page 85.
Jointly controlled entities
Name
Barking Riverside Limited
Country of incorporation
England and Wales
Percentage of shares owned
directly by Bellway p.l.c.
51%
The group and Company also own 25% – 50% of the ordinary share capital of several smaller proportionately consolidated
jointly controlled entities. all of these entities are incorporated 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
2013
£000
202
37,140
(7,256)
(40,830)
(10,744)
2,440
(2,502)
2012
£000
225
36,064
(7,264)
(39,707)
(10,682)
1,064
(1,681)
guarantees relating to the overdrafts of jointly controlled entities have been given by the Company (note 23).
12 deferred taxation
The following are the deferred tax assets/(liabilities) recognised by the group and the movements thereon during the current
and prior year:
Group
at 1 august 2011
income statement (charge)/credit
Credit to statement of comprehensive income
Charge to equity
at 31 July 2012
income statement (charge)/credit
Charge to statement of comprehensive income
Credit to equity
At 31 July 2013
Capital
allowances
£000
415
(208)
–
–
207
(158)
–
–
49
Retirement
benefit
obligations
£000
2,100
(131)
676
–
2,645
(306)
(530)
–
1,809
Share-based
payments
£000
1,168
(483)
–
(327)
358
303
–
627
1,288
other
temporary
differences
£000
(66)
97
–
–
31
61
–
–
92
Total
£000
3,617
(725)
676
(327)
3,241
(100)
(530)
627
3,238
There are no deferred tax balances in respect of the Company.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013
72
Accounts
NOtes tO the AccOuNts cONtINued
13 Inventories
Group
Land
Work in progress
Showhomes
Part-exchange properties
2013
£000
907,279
535,022
52,827
18,399
2012
£000
852,987
479,481
45,498
21,877
1,513,527
1,399,843
inventories of £880.8 million were expensed in the year (2012 – £817.8 million).
in the ordinary course of business inventories have been written back by a net £3.2 million (2012 – written down by £14.7 million)
in the year. There has been no exceptional write-down of inventories in the period (2012 – £nil) as outlined in note 5 on page 67.
Land with a carrying value of £53.2 million (2012 – £56.4 million) was used as security for land payables (note 17).
The directors consider all inventories to be essentially current in nature although the group’s operational cycle is such that
a proportion of inventories will not be realised within 12 months. it is not possible to determine with accuracy when specific
inventory will be realised as this is subject to a number of issues including consumer demand and planning permission delays.
The Company has no inventory.
14 Other financial assets
Group
at 1 august
additions
Redemptions
imputed interest
At 31 July
2013
£000
35,080
1,128
(1,849)
125
2012
£000
33,491
2,559
(857)
(113)
34,484
35,080
other financial assets carried at fair value are categorised as level 3 within the hierarchical classification of iFRS 7 Revised (as
defined within the standard).
other financial assets comprise loans, largely with non fixed repayment dates and variable repayment amounts, provided as part
of sales transactions that are secured by way of a second legal charge on the related property. The assets are recorded at fair
value, being the estimated amount receivable by the group, discounted to present day values.
The fair value of future anticipated cash receipts takes into account the directors’ view of future house price movements,
the expected timing of receipts and the likelihood that a purchaser defaults on a repayment. The directors revisit the future
anticipated cash receipts from the assets at the end of each reporting period.
The difference between the anticipated future receipt and the initial fair value is charged over the estimated deferred
term to cost of sales, with the financial asset increasing to its full expected cash settlement value on the anticipated receipt
date. The imputed interest credited (2012 – charged) to cost of sales for the year ended 31 July 2013 was £0.125 million
(2012 – £0.113 million).
Credit risk, which the directors currently consider to be largely mitigated through holding a second legal charge over the assets,
is accounted for in determining present values. The directors review the financial assets for impairment at the end of each
reporting period. There were no indicators of impairment at 31 July 2013 (2012 – nil). None of the other financial assets are past
their due dates (2012 – nil).
at initial recognition, the fair value of the assets is calculated using a discount rate, appropriate to the class of assets, which
reflects market conditions at the date of entering into the transaction. The directors consider at the end of each reporting period
whether the initial market discount rate still reflects up to date market conditions. if a revision is required, the fair value of the
asset is re-measured at the present value of the revised future cash flows using this revised discount rate; the difference between
this value and the carrying value of the asset is recorded against the carrying value of the asset and recognised directly in the
statements of comprehensive income.
The directors considered that there was no material difference between the initial market discount rate and the market discount
rate at 31 July 2013 or 31 July 2012 and accordingly have not recognised any movements directly within the statements of
comprehensive income to date.
The Company has no other financial assets.
Bellway p.l.c. Annual Report and Accounts 2013 73
15 Trade and other receivables
Current receivables
Trade receivables
other receivables
amounts owed by group undertakings
Prepayments and accrued income
Group
2013
£000
9,881
44,606
–
2,679
57,166
group
2012
£000
20,975
48,293
Company
2013
£000
Company
2012
£000
–
–
–
4
–
622,054
649,495
1,865
71,133
–
–
622,054
649,499
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 (2012 – nil).
other receivables due within one year include £11.956 million (2012 – £19.177 million) in relation to vaT recoverable.
16 Interest bearing loans and borrowings
Non-current liabilities
Preference shares (see note below)
Current liabilities
Bank loans
Preference shares (see note below)
Preference shares
Authorised, allotted, called up and fully paid
20,000,000 at 1 august 2012 and 31 July 2013
Group
2013
£000
–
–
Group
2013
£000
30,000
20,000
50,000
group
2012
£000
20,000
20,000
group
2012
£000
62,000
–
62,000
Company
2013
£000
–
–
Company
2013
£000
–
20,000
20,000
Company
2012
£000
20,000
20,000
Company
2012
£000
–
–
–
Group
2013
£000
group
2012
£000
Company
2013
£000
Company
2012
£000
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.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 74
Accounts
NOtes tO the AccOuNts cONtINued
17 Trade and other payables
Non-current liabilities
Land payables
other payables
accrued expenses and deferred income
Group
2013
£000
38,986
4,858
1,218
45,062
group
2012
£000
31,475
5,322
1,070
37,867
Company
2013
£000
Company
2012
£000
–
–
–
–
–
–
–
–
Land payables of £10.650 million (2012 – £21.367 million) are secured on the land to which they relate.
The carrying value of the land used for security is £9.421 million (2012 – £19.786 million).
Current liabilities
Trade payables
Land payables
Social security and other taxes
other payables
accrued expenses and deferred income
Payments on account
Group
2013
£000
88,423
107,033
2,918
26,413
49,512
36,109
group
2012
£000
76,291
89,116
2,634
23,879
47,691
32,931
310,408
272,542
Company
2013
£000
Company
2012
£000
–
–
–
121
745
–
866
–
–
–
138
746
–
884
Land payables of £45.513 million (2012 – £38.055 million) are secured on the land to which they relate.
The carrying value of the land used for security is £43.811 million (2012 – £36.605 million).
18 financial risk management
The group’s financial instruments comprise cash, preference shares, bank loans and overdrafts and various items such as trade
receivables, other financial assets 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 reinvested profits, bank borrowings, cash in hand, preference
shares and the management of working capital. From time to time, the trustees of the Bellway Employee Share Trust (1992)
(the 'Trust') also purchase shares for the future satisfaction of employee share options.
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 15). 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 17). 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.
Bellway p.l.c. Annual Report and Accounts 2013 75
18 financial risk management (continued)
Liquidity risk
The group finances its operations through a mixture of equity (comprising share capital, reserves and reinvested profits) 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.
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 LiBoR.
For the year ended 31 July 2013 it is estimated that an increase of 1% in interest rates applying for the full year would decrease
the group’s profit before taxation by £0.649 million (2012 – £0.199 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 'Financial instruments: Recognition
and measurement' 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 2013
at 31 July 2012
Balance at
31 July
£000
146,019
120,591
Total
contracted
cash payment
£000
150,551
126,783
Within one
year or on
demand
£000
108,403
90,088
1–2 years
2–5 years
£000
18,064
20,538
£000
21,442
14,862
more than
5 years
£000
2,642
1,295
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 2013
Bank loans – floating rates
Preference shares
Trade and other payables
at 31 July 2012
Balance at
31 July
£000
30,000
20,000
122,612
172,612
62,000
20,000
108,126
190,126
Total
contracted
cash payment
£000
Within one
year or on
demand
£000
1–2 years
2–5 years
more than
5 years
£000
£000
£000
30,015
21,900
122,612
174,527
62,230
23,800
108,126
194,156
30,015
21,900
117,754
169,669
62,230
1,900
102,804
166,934
–
–
–
–
–
21,900
–
21,900
–
–
–
–
–
–
–
–
–
–
4,858
4,858
–
–
5,322
5,322
The interest rates on the preference shares apply to the whole term of the relevant instruments.
The imputed interest rate on land payables reflects market interest rates available to the group on floating rate bank loans at the
time of acquiring the land.
at the year end, the group had £270.0 million (2012 – £238.0 million) of undrawn bank facilities available.
The Company’s only financial liabilities are preference shares as disclosed in the maturity profile above.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013
76
Accounts
NOtes tO the AccOuNts cONtINued
18 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 31 July 2013 and 31 July 2012 for both the group and the
Company are shown in note 22.
at 31 July 2013 the average interest rate earned on the temporary closing cash balance was 0.48% (2012 – 0.72%).
The carrying amount of these assets approximates their fair value.
fair values
Financial assets
The carrying values of financial assets is not materially different to their fair values.
Financial liabilities
a comparison of the book values and fair values of the group’s fixed rate preference shares and floating rate bank loans at
31 July is as follows:
Preference shares – fixed rate
Bank loans – floating rate
Book
value
2013
£000
20,000
30,000
fair
value
2013
£000
20,900
29,990
Book
value
2012
£000
20,000
62,000
Fair
value
2012
£000
21,600
60,417
The fair value of the fixed rate preference shares is based on quoted mid-market prices at 31 July 2013.
in aggregate, the fair values of the group’s other financial assets and liabilities are not materially different from their book value.
financial assets and liabilities by category
available-for-sale financial assets
Loans and receivables
Cash and cash equivalents
Financial liabilities at amortised cost
19 Issued capital
Group and Company
Allotted, called up and fully paid ordinary shares
at 1 august 2012
issued on exercise of options
at 31 July 2013
Group
2013
£000
34,484
54,487
24,215
group
2012
£000
35,080
69,268
21,413
(315,713)
(202,527)
(308,083)
(182,322)
2013
Number
000
121,451
321
121,772
2013
£000
15,180
41
15,221
Company
2013
£000
Company
2012
£000
–
–
48,727
(20,121)
28,606
2012
Number
000
120,848
603
121,451
–
4
48,745
(20,138)
28,611
2012
£000
15,105
75
15,180
Bellway p.l.c. Annual Report and Accounts 2013
77
19 Issued capital (continued)
Share options
at 31 July 2013 all outstanding options to purchase ordinary shares in Bellway p.l.c., in accordance with the terms of the
applicable schemes, were as follows:
Number
of shares
Exercise
price (p)
Dates from
which exercisable
Expiry
date
716.00
17 November 2007
to
16 November 2014
grant date
(a) Bellway p.l.c. (1995) Employee Share Option Scheme
17 November 2004
(b) Bellway p.l.c. (1996) Employee Share Option Scheme
24 october 2003
17 November 2004
31 october 2005
26,000
26,000
1,500
7,700
100,000
109,200
621.50
716.00
844.00
24 october 2006
17 November 2007
31 october 2008
to
to
to
to
to
23 october 2013
16 November 2014
30 october 2015
30 october 2015
6 February 2017
(c) Bellway p.l.c. (2005) Employee Share Option Scheme
31 october 2005
7 February 2007
31,600
844.00
31 october 2008
7,400
1,470.00
7 February 2010
(d) Bellway p.l.c. (2007) Employee Share Option Scheme
7 February 2007
39,000
14,600
14,600
(e) Bellway p.l.c. (2003) Savings Related Share Option Scheme
1,470.00
7 February 2010
to
6 February 2017
13 November 2008
11 November 2009
12 November 2010
12 November 2010
14 November 2011
14 November 2011
16 November 2012
16 November 2012
Total
336.00
661.60
439.60
439.60
556.00
556.00
805.60
805.60
1 February 2014
1 February 2015
1 February 2014
1 February 2016
1 February 2015
1 February 2017
1 February 2016
1 February 2018
to
to
to
to
to
to
to
to
31 July 2014
31 July 2015
31 July 2014
31 July 2016
31 July 2015
31 July 2017
31 July 2016
31 July 2018
229,404
11,985
117,926
56,088
283,247
46,650
115,131
18,640
879,071
1,067,871
Details of directors’ share options are contained within the Report of the Board on Directors’ Remuneration on pages 39 to 53.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013
78
Accounts
NOtes tO the AccOuNts cONtINued
20 Reserves
Own shares held
The group and Company holds shares within the Bellway Employee Share Trust (1992) (the ‘Trust’) for participants of
certain share-based payment schemes as outlined in note 25. During the period the Trust made no market purchase of shares
(2012 – 175,803 at an average price of 728p) and transferred nil (2012 – 241,887) shares to employees. The number of shares held
within the Trust, and on which dividends have been waived, at 31 July 2013 was 38,443 (2012 – 38,443). These shares are held
within the financial statements at a cost of £0.269 million (2012 – £0.269 million). The market value of these shares at 31 July 2013
was £0.531 million (2012 – £0.309 million).
Income statement
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 £1.900 million (2012 – £1.918 million).
21 Reconciliation of net cash flow to net (debt)/cash
Group
increase/(decrease) in net cash and cash equivalents
Decrease in bank borrowings
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 cash at 1 august
Net cash at 31 July
22 Analysis of net (debt)/cash
Group
Cash and cash equivalents
Bank loans
Preference shares
Net debt
Company
Cash and cash equivalents
Preference shares
Net cash
2013
£000
2,802
32,000
34,802
(60,587)
(25,785)
2013
£000
(18)
28,745
28,727
Cash
flows
£000
2,802
32,000
–
34,802
Cash
flows
£000
(18)
–
(18)
2012
£000
(61,999)
18,000
(43,999)
(16,588)
(60,587)
2012
£000
4
28,741
28,745
At 31 July
2013
£000
24,215
(30,000)
(20,000)
(25,785)
At 31 July
2013
£000
48,727
(20,000)
28,727
at 1 august
2012
£000
21,413
(62,000)
(20,000)
(60,587)
at 1 august
2012
£000
48,745
(20,000)
28,745
Bellway p.l.c. Annual Report and Accounts 2013 79
23 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 2013 there were bank overdrafts of £nil (2012 – £nil)
and loans of £30.0 million (2012 – £62.0 million). The Company has given performance and other trade guarantees on behalf
of subsidiary undertakings. The Company has guaranteed the overdrafts of jointly controlled entities up to a maximum of
£7.5 million (2012 – £7.5 million). it is the directors' expectation that the possibility of cash outflow on these liabilities is considered
minimal and no provision is required.
24 Commitments
Group
capital commitments
Contracted not provided
authorised not contracted
2013
£000
20
32
2012
£000
98
–
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
2013
£000
69
2,438
–
2,507
2012
£000
–
2,114
1,205
3,319
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 (2012 – £nil).
25 Employee benefits
(a) Retirement benefit obligations
The group sponsors the Bellway p.l.c. 1972 Pension Scheme (the 'Scheme') which has a funded defined benefit arrangement
which is closed to new members and to future service accrual. The last full actuarial valuation of the Scheme was carried out by a
qualified independent actuary as at 1 august 2011 and updated on an approximate basis to 31 July 2013.
The group also sponsors the Bellway plc 2008 group Self invested Personal Pension Plan ('gSiPP') which is a defined
contribution contract-based arrangement.
Contributions of £2.238 million (2012 – £2.120 million) were charged to the income statement for the gSiPP.
With regard to the Scheme, the regular contributions made by the employer over the financial year were £1.2 million (2012 – £nil).
The employer also paid special contributions amounting to £nil (2012 – £1.2 million). Expenses were paid in addition.
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 comprehensive income.
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 defined benefit obligation
Fair value of Scheme assets
Deficit in Scheme
2013
£000
(48,549)
39,507
(9,042)
2012
£000
(47,317)
35,816
(11,501)
as all actuarial gains and assets are recognised, the deficits shown above are those recognised in the balance sheet.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 80
Accounts
NOtes tO the AccOuNts cONtINued
25 Employee benefits (continued)
Best estimate of regular contributions to be paid to the Scheme for the year ended 31 July 2014
The best estimate of regular contributions to be paid to the Scheme for the year ending 31 July 2014 is £1.2 million
(2013 – £1.2 million).
Reconciliation of opening and closing balances of the present value of the defined benefit obligation:
Defined benefit obligation at start of year
interest cost
actuarial loss
Benefit paid, death in service insurance premiums and expenses
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 gains/(losses)
Contributions by employer
Benefit paid, death in service insurance premiums and expenses
Fair value of assets at end of year
Total expense recognised in the income statement:
interest on liabilities
Expected return on assets
Total expense
2013
£000
47,317
1,945
1,339
(2,052)
48,549
2013
£000
35,816
1,646
2,897
1,200
(2,052)
39,507
2013
£000
1,945
(1,646)
299
2012
£000
44,246
2,312
2,259
(1,500)
47,317
2012
£000
35,845
1,857
(1,586)
1,200
(1,500)
35,816
2012
£000
2,312
(1,857)
455
Total expense of £0.299 million (2012 – £0.455 million) is recognised within finance expenses.
Gains/(losses) recognised in the statement of comprehensive income:
Difference between expected and actual return on
Scheme assets:
Experience gains and losses arising on the
Scheme liabilities
Effects of changes in the demographic and financial
assumptions underlying the present value of the
Scheme liabilities
Total gain/(loss) recognised in statement
of comprehensive income
2013
£000
2012
£000
2013
%
2012
%
2,897
(1,586)
39
(543)
(1,378)
(1,716)
1,558
(3,845)
7
(0)
3
(3)
(4) of Scheme assets
of the present value
of Scheme liabilities
of the present value
of Scheme liabilities
of the present value
of Scheme liabilities
1
4
8
The cumulative amount of actuarial gains and losses recognised in the statement of comprehensive income since adoption of
iaS 19 'Employee Benefits' is a loss of £15.6 million.
Bellway p.l.c. Annual Report and Accounts 2013 25 Employee benefits (continued)
Assets
The fair value of the Scheme assets is:
Equities
Bonds
Cash
Total
81
2013
£000
23,810
12,929
2,768
39,507
2012
£000
20,675
12,182
2,959
35,816
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 2012
% per annum
Period
commencing
1 august 2011
% per annum
5.40
3.90
2.50
4.65
5.40
5.00
3.90
5.26
Actual return on the Scheme assets
The actual return on the Scheme assets over the year ended 31 July 2013 was 12.1% (31 July 2012 – 0.8%).
Assumptions
inflation
Salary increases
Rate of discount
allowance for pension in payment increases of RPi or 5% p.a. if less
allowance for revaluation of deferred pensions of CPi or 5% p.a. if less
allowance for commutation of pension for cash at retirement
2013
% per annum
2012
% per annum
3.55
4.05
4.60
3.55
2.85
2.85
3.35
4.20
2.85
2.15
50% of
maximum
50% of
maximum
The mortality assumptions adopted at 31 July 2013 are based on the SiPa tables and allow for future improvement in mortality.
The tables used imply the following life expectancies at age 65:
male retiring at age 65 in 2013
Female retiring at age 65 in 2013
male retiring at age 65 in 2033
Female retiring at age 65 in 2033
23.5 years
25.6 years
25.8 years
28.0 years
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 82
Accounts
NOtes tO the AccOuNts cONtINued
25 Employee benefits (continued)
Following the formal valuation of the Scheme by the Trustees in the year the mortality assumption has been revised from the
Pa00 tables using long cohort improvements to the SiPa base table with an allowance for future improvement in mortality.
The directors believe it is appropriate to use the same mortality assumption as used by the Trustees.
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
2013
£000
39,507
(48,549)
(9,042)
39
2,897
2012
£000
35,816
(47,317)
(11,501)
(543)
(1,586)
2011
£000
35,845
(44,246)
(8,401)
(72)
2,474
2010
£000
33,160
(41,896)
(8,736)
813
2,878
2009
£000
27,945
(39,870)
(11,925)
5,351
(3,997)
(1,378)
(1,716)
(1,641)
(1,800)
(1,001)
(b) Share-based payments
The group operates a long-term incentive plan ('LTiP'), a share matching plan ('SmP'), an annual bonus scheme, employee share
option schemes ('ESoS') and Savings Related Share option Schemes ('SRSoS'), all of which are detailed below.
awards under the LTiP and SmP have been made to executive directors and the group Company Secretary, with awards under
the annual bonus scheme also made to senior employees. The awards take the form of ordinary shares in the Company.
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 these schemes. 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 LTiP and the SmP is detailed under the long-term incentive scheme
section on pages 47, 48 and 50 within the Report of the Board on Directors’ Remuneration.
various small share option awards were made for years 2003 through to 2007 to employees, mainly at divisional management
level, under the term of the Deferred Bonus Plan (‘DBP’). These shares are held in the Bellway Employee Share Trust (1992)
normally for three years. The shares can then be transferred into the employee’s name.
Share-based payments have been valued by an external third party using various models detailed overleaf, 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.
Bellway p.l.c. Annual Report and Accounts 2013 25 Employee benefits (continued)
The number and weighted average exercise price of share-based payments is as follows:
LTIP, SMP and dBP
outstanding at the beginning of the year
granted during the year
Exercised during the year
Lapsed during the year
Forfeited during the year
outstanding at the end of the year
Exercisable at the end of the year
83
2013
Number of
options
330,064
108,962
–
(187,807)
–
251,219
2012
Number of
options
657,851
141,257
(241,887)
(190,736)
(36,421)
330,064
1,000
1,000
The options outstanding at 31 July 2013 have a weighted average contractual life of 1.7 years (2012 – 1.7 years). The weighted
average share price at the date of exercise for share options exercised during 2012 was 748.6p.
1995, 1996, 2005 and 2007 ESOS, and SRSOS
outstanding at the beginning of the year
granted during the year
Lapsed during the year
Forfeited during the year
Exercised during the year
outstanding at the end of the year
Exercisable at the end of the year
2013
Number of
options
1,359,551
139,180
(64,560)
(45,039)
(321,261)
1,067,871
2012
Number of
options
1,697,117
387,351
(80,751)
(41,500)
(602,666)
1,359,551
188,800
521,732
The options outstanding at 31 July 2013 have an exercise price in the range of 336.0p to 1,470.0p (2012 – 336.0p to 1,470.0p) and
have a weighted average contractual life of 2.0 years (2012 – 2.8 years). The weighted average share price at the date of exercise
for share options exercised during the year was 1,155.6p (2012 – 775.3p).
Valuation methodology
For the LTiP options granted prior to 24 october 2011, a monte Carlo simulation method was used which allows the group’s
performance, in terms of TSR, to be measured against its comparator companies. individual share price volatilities were
calculated for each of the comparator companies. a correlation assumption, appropriate to the building sector, was also used.
For LTiP and SmP options granted after 24 october 2011 half of the performance criteria is based on TSR against comparator
companies with the other half based on TSR measured against the FTSE 250 index (excluding investment trusts and financial
service companies). a simplified monte Carlo simulation method has been used to determine the group’s TSR performance
against the FTSE 250 index (excluding investment trusts and financial service companies).
in the case of the DBP, 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.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 84
Accounts
NOtes tO the AccOuNts cONtINued
25 Employee benefits (continued)
The fair value of services received in return for share options granted is measured by reference to the fair value of the share
options granted. The inputs into the models for the various grants in the current and previous year were as follows:
2013
November
2012
November
2012
November
2012
Scheme description
SMP
3 Year
SRSOS
5 Year
SRSOS
October
2012
LTIP
2012
November
2011
November
2011
3 Year
SRSoS
5 Year
SRSoS
october
2011
LTiP
grant date
Risk free interest rate
Exercise price
Share price at date of grant
Expected dividend yield
Expected life
23 Nov 12
16 Nov 12
16 Nov 12
13 Nov 12
14 Nov 11
14 Nov 11
24 oct 11
0.4%
–
967.5p
n/a
3 years
0.4%
805.6p
951.0p
3.00%
0.8%
805.6p
951.0p
3.00%
3 years
2 months
5 years
2 months
0.0%
–
969.0p
3.00%
3 years
0.8%
556.0p
713.5p
3.00%
1.3%
556.0p
713.5p
3.00%
3 years
2 months
5 years
2 months
0.0%
–
700.5p
3.00%
3 years
vesting date
Expected volatility
Fair value of option
23 Nov 15
1 feb 16
1 feb 18
13 Nov 15
1 Feb 15
1 Feb 17
24 oct 14
30%
535p
30%
215p
45%
336p
30%
501p
35%
704p
45%
133p
40%
267p
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 £1.021 million (2012 – £1.046 million) in relation to equity-settled share-based payment
transactions.
26 Related party transactions
The Board and certain members of senior management are related parties within the definition of iaS 24 ‘Related Party
Disclosures’. Summary information of the transactions with key management personnel is provided in note 3. Detailed disclosure
of individual remuneration of Board members is included in the Report of the Board on Directors’ Remuneration on pages 39
to 53. There is no difference between transactions with key management personnel of the Company and the group.
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 jointly controlled entities:
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 jointly controlled entities in respect of land purchases and management fees at
the year end
amounts owed by jointly controlled entities in respect of accounting, management fees, interest,
land purchases and infrastructure works
2013
£000
2,876
(1,588)
2012
£000
1,282
(3,376)
(180)
(726)
39,616
38,794
Bellway p.l.c. Annual Report and Accounts 2013 85
26 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
investments in subsidiaries and jointly controlled entities
2013
£000
2,421
2012
£000
2,184
(29,863)
(19,790)
622,054
31,184
649,495
30,163
The Company has suffered no expense in respect of bad or doubtful debts of subsidiary undertakings in the year (2012 – £nil).
27 Principal subsidiary undertakings
The directors set out below information relating to the major subsidiary undertakings (those that principally affect the profits
and assets of the group) of Bellway p.l.c. taking advantage of the exemption in section 410 of the Companies act 2006 not to
disclose all subsidiary undertakings. all of these companies are registered in England and Wales, are engaged in housebuilding
and associated activities, have coterminous year ends with the group, and 100% of their ordinary share capital is held by the
Company (unless otherwise stated).
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.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 86
Other Information
FIve yeAr recOrd
Income statement
Revenue
Operating profit
Exceptional items
Net finance expenses
Profit/(loss) before taxation
income tax (expense)/credit
Profit/(loss) for the year (all attributable to equity
holders of the parent)
Balance sheet
ASSETS
Non-current assets
Current assets
LIABILITIES
Non-current liabilities
Current liabilities
EQuITY
Total equity
Statistics
Number of homes sold
average price of new homes
gross margin
operating margin
Basic earnings/(loss) per ordinary share
Dividend per ordinary share
Return on capital employed
gearing (including preference shares)
Net assets per ordinary share
2009
£m
683.8
45.6*
(66.3)
(15.8)
(36.5)
9.1
(27.4)
2010
£m
768.3
51.3
–
(6.9)
44.4
(8.6)
35.8
43.8
1,306.2
(138.8)
(246.2)
52.3
1,340.2
(129.2)
(228.5)
2011
£m
886.1
75.2
–
(8.0)
67.2
(17.0)
50.2
55.1
1,415.9
(124.7)
(273.0)
2012
£m
2013
£m
1,004.2
114.6
–
(9.3)
105.3
(26.0)
1,110.7
151.1
–
(10.2)
140.9
(32.3)
79.3
108.6
59.4
1,492.4
56.7
1,594.9
(69.4)
(349.3)
(54.1)
(378.7)
965.0
1,034.8
1,073.3
1,133.1
1,218.8
4,380
£154.0k
12.7%
6.7%*
(23.9)p
9.0p
4.0%*
5.9%
839p
4,595
£163.2k
11.7%
6.7%
29.7p
10.0p
4.9%
–
856p
17,602
4,922
£175.6k
13.5%
8.5%
41.5p
12.5p
7.0%
1.5%
888p
5,226
£186.6k
16.1%
11.4%
65.5p
20.0p
10.1%
5.3%
933p
18,086
17,636
5,652
£193.0k
18.3%
13.6%
89.3p
30.0p
12.3%
2.1%
1,001p
18,991
Land portfolio – plots with detailed planning permission
19,260
Weighted average no. of ordinary shares
114,949,883
120,619,800
120,705,397
121,036,846
121,572,688
No. of ordinary shares in issue at end of year
115,006,480
120,831,922
120,848,131
121,450,797
121,772,058
* Pre-exceptional items.
Bellway p.l.c. Annual Report and Accounts 2013 87
Other Information
shArehOlder INFOrmAtION
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
Seven Resolutions will be proposed as special business at the forthcoming agm. The effect of these resolutions is as follows:
Resolutions 11 and 12 – Appointment of auditor and authority to agree remuneration
an auditor must be appointed at every agm at which accounts are presented to the shareholders. KPmg audit Plc has advised
the Company that, due to an internal reorganisation, it has decided to wind down its audit business and transfer it to KPmg LLP.
Consequently, KPmg audit Plc has notified the Company that it is not seeking reappointment at the agm and KPmg LLP has
advised its willingness to stand for appointment as the auditor of the Company at the forthcoming agm.
The statement of circumstances required from KPmg audit Plc under section 519 of the Companies act 2006 is reproduced
below:
"Statement to Bellway p.l.c. (no. 1372603) on ceasing to hold office as auditors pursuant to section 519 of the Companies
act 2006.
The circumstances connected with our ceasing to hold office are that our company, KPmg audit Plc, has instigated an orderly
wind down of business. KPmg LLP, an intermediate parent, will immediately be seeking appointment as statutory auditor. We
request that any correspondence in relation to this statement be sent to our registered office at 15 Canada Square, London,
E14 5gL marked for the attention of the audit Regulation Department.
Yours faithfully
KPmg audit Plc"
The Board recommends the appointment of KPmg LLP as auditor following recommendation by the audit Committee
which has considered the circumstances of the change of auditor and conducted an evaluation of the auditor’s effectiveness,
independence and objectivity. The Board is also seeking authority to agree the remuneration of the auditor.
Resolution 13 – Approval of new LTIP
The Company's main existing long-term incentive arrangement for the Company's executive directors and other selected
senior management is the Bellway p.l.c. (2004) Performance Share Plan (‘2004 PSP’). Since its approval by shareholders in
January 2004, the 2004 PSP has provided for annual share-based awards, ordinarily vesting three years from grant, subject
to continued service and also to the extent to which objective performance criteria are met over a three year measurement
period. The 2004 PSP reaches the end of its ten year life in January 2014. The Board Committee on Executive Directors’
Remuneration (the ‘Committee’) has recently undertaken a review of the 2004 Plan and has concluded that the directors should
seek shareholder authority for a replacement plan, the Bellway p.l.c. (2013) Performance Share Plan (‘2013 PSP’). The terms of the
2013 PSP have been designed to materially continue with the existing terms under the 2004 PSP but with appropriate changes
to bring the plan into line with prevailing best practice expectations. a summary of the principal terms of the 2013 PSP is set
out on pages 88 to 91. a copy of the draft rules of the 2013 PSP will be available for inspection at the registered office of the
Company and at the offices of New Bridge Street at 10 Devonshire Square, London EC2m 4YP during normal business hours on
any weekday (Saturdays and English public holidays excepted) from the date of publication of this notice up to and including the
date of the agm and at the place of the agm for at least 15 minutes prior to and during the agm.
Resolution 14 – 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
£5,073,836, which is equivalent to approximately one-third of the Company’s issued ordinary share capital as at 14 october
2013, and also gives the directors authority to allot, by way of rights issue only, ordinary shares up to an aggregate nominal
value of £10,147,672 which is equivalent to approximately two-thirds of the Company’s issued ordinary share capital as at
14 october 2013, such authority, if granted, to expire at the conclusion of the next agm of the Company. as at 14 october 2013
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 15 – 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 11 January 2013 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 £761,075,
being approximately equal to 5% of the issued ordinary share capital of the Company as at 14 october 2013.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 88
Other Information
shArehOlder INFOrmAtION cONtINued
Resolution 16 – 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 next 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.
at 14 october 2013 there were options outstanding over 1,067,871 ordinary shares, representing 0.87% of the Company's
issued ordinary share capital. if the authority given by this resolution were to be fully used, these would represent 0.79% of the
Company's issued ordinary share capital. There are no warrants outstanding. Details of any substantial shareholders holding
more than 10% of the Company's issued ordinary share capital are included in the Notifiable Shareholders' interests table on
page 32.
it should be noted that the 2014 redeemable preference shares are due to be redeemed on their redemption date of 6 april
2014 in accordance with the rights attaching to them, after which they will be cancelled.
Resolution 17 – Length of notice of meeting
Shareholder approval for general meetings of the Company, other than agms to be held on 14 days’ notice, given at the last
agm, expires at the conclusion of the forthcoming agm. There is no current intention to use this authority and the Company
will only consider using this authority where it is considered that this would be for the benefit of shareholders as a whole.
The directors propose, as a special resolution, that it should be renewed for a further year to expire on the date of the next agm.
Recommendation
The 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 recommend voting in favour of the resolutions as they intend to do in respect of their
own beneficial shareholdings.
Summary of the Principal Terms of the Bellway p.l.c. (2013) Performance Share Plan 2013
(the ‘2013 PSP’)
Operation
The Board Committee on Executive Directors’ Remuneration (the ‘Committee’) will supervise the operation of the 2013 PSP
(hereinafter the ‘Plan’).
Eligibility
any employee (including an executive director) of the Company and its subsidiaries will be eligible to participate in the Plan
at the discretion of the Committee. it is currently anticipated that participation in the Plan will be limited to the Company's
executive directors and selected senior management.
Grant of awards
The Committee may grant awards to acquire ordinary shares in the Company (‘shares’) within six weeks following the Company’s
announcement of its results for any period. The Committee may also grant awards within six weeks of shareholder approval of
the Plan or at any other time when the Committee considers there are sufficiently exceptional circumstances which justify the
granting of awards.
The Committee may grant awards as conditional share awards or nil (or nominal) cost options. The Committee may also decide
to grant cash-based awards of an equivalent value to share-based awards or to satisfy share-based awards in cash, although it
does not currently intend to do so.
an award may not be granted more than 10 years after shareholder approval of the Plan.
No payment is required for the grant of an award. awards are not transferable, except on death. awards are not pensionable.
Individual limit
an employee may not receive awards in any financial year over shares having a market value in excess of 150% of their annual
base salary in that financial year.
Performance conditions
The vesting of awards will be subject to performance conditions set by the Committee.
For the first awards granted under the Plan, one-half of each award will be subject to a performance condition based on the
Company's total shareholder return (‘TSR’) over three financial years commencing with the financial year in which the award
is granted (the ‘Performance Period’). TSR measures the total return on a notional investment, expressed as a percentage.
The Company's TSR will be compared to a comparator group of seven other housebuilders: Barratt Developments plc,
The Berkeley group plc, Bovis Homes plc, Crest Nicholson plc, Persimmon plc, Redrow plc and Taylor Wimpey plc (the
‘Housebuilder TSR Target’).
Bellway p.l.c. Annual Report and Accounts 2013 89
No part of the awards subject to the Housebuilder TSR Target will vest unless the Company's TSR performance out performs the
TSR of the median ranked company in the comparator group, with full vesting for out-performance of the median by an average
of 7.5% p.a. or more over the Performance Period as follows:
The Company’s TSR performance compared to the
median TSR performance of the Comparator Group
Percentage of the total number of shares subject to the
Housebuilder TSR Target that will vest (subject to financial
underpin – see below)
median TSR + 7.5% p.a.
100% (i.e. 50% of the total number of shares subject to the award)
Between median TSR and median TSR + 7.5% p.a.
median TSR
Between 25% and 100% on a straight-line basis (i.e. between 12.5%
and 50% of the total number of shares subject to the award)
25% (i.e. 12.5% of the total number of shares subject to the award)
Less than median TSR
0%
The other half of the first awards will be subject to a performance condition measuring the Company's TSR over the same
Performance Period relative to a comparator group comprising the constituents of the FTSE 250 (excluding investment trusts
and financial services companies) (the ‘FTSE 250 TSR Target’).
No part of the awards subject to the FTSE 250 TSR Target will vest unless the Company's TSR performance over the Performance
Period is at least equal to the median of a ranking of the TSR of each of the members of the comparator group, with full vesting
for performance of upper quartile or above as follows:
Rank of Company's TSR against the TSR of the
members of the comparator group
Percentage of the total number of shares subject to the fTSE
250 TSR Target that will vest (subject to financial underpin – see
below)
upper quartile or above
100% (i.e. 50% of the total number of shares subject to the award)
Between median and upper quartile
median
Below median
Between 25% and 100% (i.e. between 12.5% and 50% of the total
number of shares subject to the award)
25% (i.e. 12.5% of the total number of shares subject to the award)
0%
Regardless of TSR performance, no part of the award will vest unless the Committee is satisfied that there has been an
improvement in the underlying financial performance of the Company over the Performance Period, taking into account,
amongst others, operating profit, operating margin, return on capital employed and net asset value. To the extent that the
Committee determines that such financial underpin has not been satisfied, it may scale back the level of vesting that would
otherwise result under the above performance conditions to such extent as it considers appropriate, including to nil.
Three month averaging periods prior to the start and end of the Performance Period will apply, for the purposes of the
TSR calculations.
The Committee can set different performance conditions from that described above for future awards provided that, in the
reasonable opinion of the Committee, the new targets are not materially less challenging in the circumstances than the
condition described above.
The Committee may also vary the performance conditions applying to existing awards if an event has occurred which causes
the Committee to consider that it would be appropriate to amend the performance conditions, provided the Committee
considers the varied conditions are fair and reasonable and not materially less challenging than the original conditions would
have been but for the event in question.
Vesting of awards
awards normally vest three years after grant to the extent that the applicable performance conditions (see above) have been
satisfied and provided the participant is still employed in the Company's group. options granted to individuals who are
tax resident in the uK are then exercisable up until the day before the tenth anniversary of grant, unless they lapse earlier.
Longer vesting periods, or holding periods for vested awards, may be set for future awards.
dividend equivalents
The Committee may decide that participants will receive a payment (in cash and/or shares) on or shortly following the vesting
of their awards, of an amount equivalent to the reinvestment of dividends. alternatively, participants may have their awards
increased as if dividends were paid on the shares subject to their award and then reinvested in further shares.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 90
Other Information
shArehOlder INFOrmAtION cONtINued
Leaving employment
as a general rule, an award will lapse upon a participant ceasing to hold employment or be a director within the Company's
group. However, if a participant ceases to be an employee or a director because of injury or disability, retirement, redundancy,
his employing company or the business for which he works being sold out of the Company’s group or in other circumstances
at the discretion of the Committee, then his award will normally vest on the date when it would have vested if he had not ceased
such employment or office. The extent to which an award will vest in these situations will depend upon two factors: (i) the
extent to which the performance conditions have, in the opinion of the Committee, been satisfied over the original three year
performance measurement period, and (ii) pro rating of the award to reflect the reduced period of time between its grant and
vesting, although the Committee can decide not to pro rate an award if it regards it as inappropriate to do so in the particular
circumstances.
if a participant ceases to be an employee or director in the Company’s group for one of the ‘good leaver’ reasons specified
above, the Committee can decide that his award will vest when he leaves, subject to: (i) the performance conditions measured
at that time; and (ii) pro rating by reference to the time of cessation as described above.
if a participant ceases to be an employee or director in the Company's group by reason of death, then his award will normally
vest on the date of cessation. The extent to which an award will vest in these situations will depend upon two factors: (i) the
extent to which the performance conditions have been satisfied by reference to the date of cessation; and (ii) the pro rating
of the award to reflect the reduced period of time between its grant and vesting, although the Committee can decide not to
pro rate an award if it regards it as inappropriate to do so in the particular circumstances. alternatively, the Committee can
decide in exceptional circumstances that his award will vest on the date it would have vested had he not ceased employment
or office due to death, subject to: (i) the extent to which the performance conditions have, in the opinion of the Committee,
been satisfied over the original three year performance measurement period, and (ii) pro rating of the award to reflect the
reduced period of time between its grant and vesting, although the Committee can decide not to pro rate an award if it regards
it as inappropriate to do so in the particular circumstances.
Corporate events
in the event of a takeover or winding up of the Company (not being an internal corporate reorganisation) all awards will vest early
subject to: (i) the extent that the performance conditions have been satisfied at that time; and (ii) the pro rating of the awards
to reflect the reduced period of time between their grant and vesting, although the Committee can decide not to pro-rate an
award if it regards it as inappropriate to do so in the particular circumstances.
in the event of an internal corporate reorganisation awards will be replaced by equivalent new awards over shares in a
new holding company unless the Committee decides that awards should vest on the basis which would apply in the case
of a takeover.
if a demerger, special dividend or other similar event is proposed which, in the opinion of the Committee, would affect the
market price of shares to a material extent, then the Committee may decide that awards will vest on such basis as it decides.
Participants’ rights
awards of conditional shares and options will not confer any shareholder rights until the awards have vested or the options have
been exercised and the participants have received their shares.
Rights attaching to shares
any Shares allotted when an award vests or is exercised will rank equally with shares then in issue (except for rights arising by
reference to a record date prior to their allotment).
Variation of capital
in the event of any variation of the Company’s share capital or in the event of a demerger, payment of a special dividend or
similar event which materially affects the market price of the shares, the Committee may make such adjustment as it considers
appropriate to the number of shares subject to an award and/or the exercise price payable (if any).
Overall Plan limits
The Plan may operate over new issue shares, treasury shares or shares purchased in the market.
in any ten calendar year period, the Company may not issue (or grant rights to issue) more than:
(a)
10% of the issued ordinary share capital of the Company under the Plan and any other employee share plan adopted by the
Company; and
(b)
5% of the issued ordinary share capital of the Company under the Plan and any other executive share plan adopted by the
Company.
Treasury Shares will count as new issue shares for the purposes of these limits unless institutional investors decide that they need
not count.
Bellway p.l.c. Annual Report and Accounts 2013 91
Alterations to the Plan
The Committee may, at any time, amend the Plan in any respect, provided that the prior approval of shareholders is obtained for
any amendments that are to the advantage of participants in respect of the rules governing eligibility, limits on participation, the
overall limits on the issue of shares or the transfer of treasury shares, the basis for determining a participant's entitlement to, and
the terms of, the shares or cash to be acquired and the adjustment of awards.
The requirement to obtain the prior approval of shareholders will not, however, apply to any minor alteration made to benefit the
administration of the Plan, to take account of a change in legislation or to obtain or maintain favourable tax, exchange control or
regulatory treatment for participants or for any company in the Company's group. Shareholder approval will also not be required
for any amendments to any performance condition applying to an award.
Clawback
The Committee may decide within one year of the vesting of an award (or if later the date of publication of the first set of audited
financial statements covering the financial year in which the vesting took place) that the award will be subject to clawback where
there has been a material misstatement in the Company’s financial results, an error in assessing any applicable performance
condition or in the event of cessation of service resulting from gross misconduct which damages the reputation or performance
of the Company.
The clawback may be satisfied by way of a reduction in the amount of any future bonus, subsisting award, the vesting of any
subsisting vested award or future share awards and/or a requirement to make a cash payment.
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 2013 consisted of 121,772,058 ordinary shares
of 12.5p each (representing 43% of the Company’s total issued share capital) and 20,000,000 9.5% Cumulative Redeemable
Preference Shares 2014 of £1 each (representing 57% 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 note 16 to the accounts.
The rights and obligations attaching to the ordinary and preference shares in the Company are set out in the articles of
association (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 Bellway Employee Share Trust (1992) 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 page 33. in accordance with the uK Corporate governance Code all the directors are seeking
annual re-election by shareholders, apart from Peter Johnson, who retires from the Board on 31 January 2014.
Amendments to the Company’s Articles of Association
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 321,261 new ordinary shares were issued to satisfy awards made under the Company’s employee share schemes.
The directors have authority to allot shares within limits agreed by shareholders. Details of the renewal of this authority are set
out on page 87, and Resolutions 14 and 15 in the Notice of meeting of the agm to be held on 13 December 2013 on pages 94
and 95 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 88, and Resolution
16 in the Notice of meeting of the agm to be held on 13 December 2013 on page 95 seeks to renew this authority.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 92
Other Information
shArehOlder INFOrmAtION cONtINued
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 agreement between the Company 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 12 months salary, benefits and the
average amount of the last two years annual bonus payment.
financial calendar
announcement of results and ordinary dividends
Half year
Full year
ordinary share dividend payments
interim
Final
annual Report posted to shareholders
Final ordinary dividend – ex-dividend date
Final ordinary dividend – record date
agm
Final ordinary dividend – payment date
Preference share – final dividend and redemption date
Ordinary shareholders by size of holding at 31 July 2013
march
october
July
January
November
11 December 2013
13 December 2013
13 December 2013
15 January 2014
6 april 2014
0 – 2,000
2,001 – 10,000
10,001 – 50,000
50,001 and over
Total
Holdings
Shares
Number
1,685
400
151
215
%
68.75
16.32
6.16
8.77
Holding
1,082,054
1,719,555
3,649,426
115,321,023
2,451
100.00
121,772,058
%
0.89
1.41
3.00
94.70
100.00
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. The DRiP is provided by Capita asset Services, a trading name of Capita iRg Trustees Limited which is authorised and
regulated by the Financial Conduct authority. For more information please call 0871 664 0381 (calls to this number cost 10p per
minute plus network extras) or if calling from overseas +44 20 8639 3402. Lines are open from 9.00 am to 5.30 pm, monday to
Friday, (excluding Bank Holidays). alternatively you can e-mail shares@capita.co.uk or log on to www.capitashareportal.com
Non-sterling bank account
if you live outside the uK, or have a non-sterling bank account, Capita can provide you with a service that will convert your
sterling dividend into your local currency and send you the funds by currency draft, or pay them straight into your overseas bank
account. You can sign up for this service on the Share Portal (by clicking on 'your dividend options' and following the on screen
instructions) or by contacting the Customer Support Centre. For further information e-mail ips@capita.co.uk or call 0871 664
0385 (uK calls cost 10p per minute plus network extras), or from overseas call +44 20 8639 3405. Lines are open from 9.00 am
to 5.30 pm, monday to Friday (excluding Bank Holidays).
Bellway p.l.c. Annual Report and Accounts 2013
93
Share dealing service
The Company’s registrars, Capita asset Services, 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
telephone 0871 664 0454 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 investor.relations@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 asset Services, or to the Company directly.
Corporate Responsibility reporting
Further reporting on the Company’s Corporate Responsibility activities is available to view in the Corporate Responsibility
section of the group’s website www.bellway.co.uk.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 94
Other Information
NOtIce OF ANNuAl geNerAl meetINg
NoTiCE iS HEREBY givEN that the annual general meeting of the Company will be held at The Newcastle marriott Hotel
gosforth Park, High gosforth Park, Newcastle upon Tyne NE3 5HN on Friday 13 December 2013 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 2013 and the Directors’ Report and the auditor’s 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 2013 of 21.0p per ordinary 12.5p share, as recommended by the directors,
be declared.
3. THaT mr J K Watson be re-elected as a director of the Company.
4. THaT mr E F ayres be re-elected as a director of the Company.
5. THaT mr K D adey be re-elected as a director of the Company.
6. THaT mr m R Toms be re-elected as a director of the Company.
7. THaT mr J a Cuthbert be re-elected as a director of the Company.
8. THaT mr P N Hampden Smith be re-elected as a director of the Company.
9. THaT mrs D N Jagger be re-elected as a director of the Company.
10. THaT the Report of the Board on Directors’ Remuneration shown on pages 39 to 53 of the annual Report and accounts for
the year ended 31 July 2013 be approved.
Special Business
To consider and, if thought fit, pass the following resolutions which will be proposed as ordinary resolutions:
11. THaT KPmg LLP be appointed as the auditor 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.
12. THaT the directors are authorised to agree the remuneration of the auditor of the Company.
13. THaT the rules of the Bellway p.l.c. (2013) Performance Share Plan (the ‘2013 Plan’) a summary of which is set out under
Shareholder information on pages 88 to 91 of the annual Report and accounts for the year ended 31 July 2013 and produced
in draft to the meeting and, for the purposes of identification, initialled by the Chairman, be approved and the directors be
authorised to:
(a)
(b)
make such modifications to the 2013 Plan as they may consider appropriate to take account of the requirements of best
practice and for the implementation of the 2013 Plan and to adopt the 2013 Plan as so modified and to do all such other
acts and things as they may consider appropriate to implement the 2013 Plan; and
establish further plans based on the 2013 Plan but modified to take account of local tax, exchange control or securities
laws in overseas territories, provided that any shares made available under such further plans are treated as counting
against the limits on individual or overall participation in the 2013 Plan.
14. 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)
(b)
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 £5,073,836; and
allot equity securities (within the meaning of section 560 of the act) up to a maximum nominal amount of £10,147,672
(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)
(iii)
this authority shall expire at the conclusion of the next annual general meeting of the Company, 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
all unexercised authorities previously granted to the directors to allot shares and grant Rights be and are hereby
revoked.
Bellway p.l.c. Annual Report and Accounts 2013 95
To consider and, if thought fit, pass the following resolutions which will be proposed as special resolutions:
15. THaT,
(a)
subject to resolution 14 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 14 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 £761,075;
(b)
(c)
the power given by this resolution shall expire at the conclusion of the next annual general meeting of the Company
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
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).
16. 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:
(a)
(b)
(c)
(d)
(e)
the maximum number of ordinary shares hereby authorised to be purchased is 12,177,206, being approximately 10%
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;
the maximum price at which ordinary shares may be purchased is an amount equal to 105% of the average of the middle
market quotations derived from the London Stock Exchange 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;
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 the minimum price is £1 per share; and
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.
17. 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.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 96
Other Information
NOtIce OF ANNuAl geNerAl meetINg cONtINued
Notes:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
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.
a form of proxy is enclosed separately. Completion and return of the form of proxy will not preclude shareholders from attending in person and voting at
the meeting.
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.
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.
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 11 December 2013 (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.
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 per member 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 auditor 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.
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, The Registry, 34 Beckenham Road,
Beckenham, Kent BR3 4Tu. 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.
(ix)
(x) There will be available for inspection during the agm and for at least 15 minutes before it begins, 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 121,772,058 ordinary shares in issue and the total voting rights of the Company are therefore 121,772,058.
By order of the Board
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
14 october 2013
Bellway p.l.c. Annual Report and Accounts 2013 97
Other Information
glOssAry
Affordable Housing
Social rented and intermediate housing provided to specified eligible households whose needs are not met by the market, at a
cost low enough for them to afford, determined with regard to local incomes and local house prices.
Average Selling Price
Calculated by dividing the total price of homes sold by the number of homes sold.
Brownfield Sites
Land which has been previously used for other purposes.
Building Research Establishment (‘BRE’)
BRE carries out research, consultancy and testing for the construction and built environment sectors.
Cancellation Rate
The rate at which customers withdraw from a house purchase after paying the reservation fee, but before contracts are
exchanged, usually due to difficulties in obtaining mortgage finance. Reservation fees are refunded in line with the Consumer
Code for Home Builders.
Code for Sustainable Homes
a national standard for sustainable design and construction of new homes. The Code measures the ‘whole home’ as a complete
package, assessing its sustainability against nine categories: energy/Co2, water, materials, surface water run-off, waste,
pollution, health and well-being, management and ecology. Level 3 applies to newly-constructed affordable housing subject to
Homes and Communities agency (‘HCa’) grant policy and all homes built on HCa land from 1 april 2008. Level 3 differs from
Level 4 primarily in respect of the energy/Co2 levels. Level 3 seeks a 25% reduction in Co2 emissions compared with the 2006
Building Regulations requirements whereas Level 4 requires a 44% reduction.
Considerate Constructors Scheme
a national initiative by the construction industry, where companies and sites voluntarily register and agree to be monitored
against a Code of Considerate Practice, with a view to promoting best practice beyond statutory requirements.
Consumer Code for Home Builders
a voluntary code governing customer service and satisfaction, created by the NHBC in conjunction with mD insurance Services
Limited.
CSCS Cards
The CSCS card denotes achievement of a Construction Skills Certificate, demonstrating occupational competence in the
construction industry under the Construction Skills Certificate Scheme.
EcoHomes
an environmental rating scheme for uK homes.
fSC
The Forest Stewardship Council is an international, non-governmental organisation which promotes responsible management
of the world’s forests and certifies timber as having been produced from a forest which is managed in an environmentally
responsible and socially beneficial manner.
Green Guide
The green guide is part of BREEam (BRE Environmental assessment method) an accredited environmental rating scheme
for buildings.
HBf
Home Builders Federation. HBF is an industry body representing the home building industry in England and Wales. it represents
member interests on a national and regional level to create the best possible environment in which to deliver the homes the
country needs.
Help to Buy
The Help to Buy equity loan scheme is a government scheme which provides equity loans to both first-time buyers and home
movers on new-build homes worth up to £600,000. Buyers have to contribute at least 5% of the property price as a deposit, and
obtain a mortgage of up to 75% and the government provides a loan for up to 20% of the price.
The Help to Buy mortgage guarantee scheme helps people buy a home with a 5% deposit to get a 95% mortgage. The
government gives a guarantee to the lender of up to 15% of the value of the property.
Land Bank
a supply of plots owned with a detailed planning permission and pipeline plots.
Lifetime Homes
are ordinary homes incorporating 16 Design Criteria which add to the comfort and convenience of the home and support the
changing needs of individuals and families at different stages of life.
National Planning Policy framework
The National Planning Policy Framework sets out the government’s planning policies for England and how these are expected
to be applied. it provides a framework within which local people and their accountable councils can produce their own
distinctive local and neighbourhood plans, which reflect the needs and priorities of their communities.
NewBuy
NewBuy is the government backed ‘mortgage indemnity’ scheme that aims to help people with smaller deposits buy a new
build home. NewBuy overcomes this so called ‘deposit gap’ by allowing them to get a mortgage with a minimum 5% deposit.
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 98
Other Information
glOssAry cONtINued
NHBC
National House-Building Council. NHBC is the leading warranty, insurance provider and body responsible for setting standards
of construction for uK housebuilding for new and newly converted homes.
PEfC
The Programme for the Endorsement of Forest Certification is an international non-profit, non-governmental organisation which
promotes sustainable forest management and certifies timber as having been produced from a forest which is managed in an
environmentally responsible and socially beneficial manner.
Pipeline
Plots which are either owned or contracted, often conditionally, pending an implementable detailed planning permission.
Planning Consent/Permission
usually granted by the local planning authority, this permission allows a plot of land to be built on, change its use or, for an
existing building, be redeveloped or altered. Consent is either ‘outline’ when detailed plans are still to be approved, or ‘detailed’
when detailed plans have been approved.
Photovoltaic panels
Solar panel electricity systems, also known as solar photovoltaics (Pv), capture the sun’s energy using photovoltaic cells. These
cells don’t need direct sunlight to work – they can still generate some electricity on a cloudy day. The cells convert the sunlight
into electricity, which can be used to run household appliances and lighting. Pv cells are made from layers of semi-conducting
material, usually silicon. When light shines on the cell it creates an electric field across the layers. The stronger the sunshine, the
more electricity is produced.
Rainwater Harvesting
Rainwater harvesting is a system by which rainwater is collected from roofs, stored in underground tanks and then used in toilets
and for garden irrigation. Rainwater harvesting can reduce household water consumption by up to 50%.
Registered Providers
government funded organisations that provide affordable housing. These can be either non-profit making, such as housing
associations, trusts and co-operatives, or profit making, such as housebuilders. Working alongside local authorities, they provide
homes for people meeting the affordable homes criteria. as well as developing land and building homes, Registered Providers
also perform a landlord function by maintaining properties and collecting rent.
Royal Society for the Prevention of Accidents (‘RoSPA’)
RoSPa is a registered charity which promotes safety and the prevention of accidents at work, at leisure, on the road, in the home
and through safety education.
Safemark Certificate
NHBC’s Health & Safety Competence assessment Scheme.
Section 106 Planning Agreements
These are legally-binding agreements or planning obligations entered into between a landowner and a local planning authority,
under section 106 of the Town and Country Planning act 1990. These agreements are a way of delivering or addressing matters
that are necessary to make a development acceptable in planning terms. They are increasingly used to support the provision of
services and infrastructure, such as highways, recreational facilities, education, health and affordable housing.
Secured by design
is the official uK Police initiative supporting ‘designing out crime’ and focuses on crime prevention at the design, layout and
construction stages of homes and commercial premises and promotes the use of security standards for a wide range of
applications and products. For more information see www.securedbydesign.com.
Social Housing
Housing that is let at low rents and on a secure basis to people in housing need. it is generally provided by councils and not-for-
profit organisations such as housing associations.
Sustainability
Environmental sustainability has been defined as meeting the needs of the present without compromising the ability of future
generations to meet their needs.
Sustainable urban drainage Systems (‘SudS’)
Designed to reduce the environmental effects of surface water run-off, which has been a problem with conventional drainage
systems, particularly in new developments. SuDS replicate natural systems with minimal environmental effect, draining away
dirty and surface water through collection, storage and cleaning.
Total Shareholder Return (‘TSR’)
TSR measures the full returns earned by an investment over the period of ownership, including any dividend cashflows paid
during that period, and demonstrates how well a company has created value for shareholders.
Transport Node
a point at which residents are able to access a public transport facility with ease.
Thin Joint Technology
Thin joint technology uses autoclaved aerated concrete blocks with 2mm–3mm mortar joints. The blocks are produced to a high
degree of accuracy, and the thin layer mortar sets more rapidly than normal mortar, reducing the length of time before the wall
becomes stable. The advantages of this system of construction are high build quality, greater productivity, improved thermal
performance, air-tightness and waste reduction.
Bellway p.l.c. Annual Report and Accounts 2013 Other Information
NOtes
99
OverviewPerformanceGovernanceAccountsOther Information Bellway p.l.c. Annual Report and Accounts 2013 100
Other Information
NOtes cONtINued
Bellway p.l.c. Annual Report and Accounts 2013 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
Bellway Homes Limited
East Midlands
No. 3 Romulus Court
meridian East
meridian Business Park
Braunstone Town
Leicester LE19 1Yg
Tel: (0116) 282 0400
Fax: (0116) 282 0401
Essex
Bellway House
1 Rainsford Road
Chelmsford
Essex Cm1 2PZ
Tel: (01245) 259 989
Fax: (01245) 259 996
DX: 121935 Chelmsford 6
Manchester
The genesis Centre
garrett Field
Birchwood
Warrington
Cheshire Wa3 7BH
Tel: (01925) 882 900
North East
Bellway House, Kings Park
Kingsway North
Team valley, gateshead
Tyne and Wear
NE11 0JH
Tel: (0191) 482 8800
Fax: (0191) 491 4537
DX: 745710 gateshead 7
North London
Bellway House
Bury Street, Ruislip
middlesex Ha4 7SD
Tel: (01895) 671 100
Fax: (01895) 671 111
North West
Bellway House
2 alderman Road
Liverpool L24 9LR
Tel: (0151) 486 2900
Fax: (0151) 336 9393
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
Scotland
Bothwell House
Hamilton Business Park
Caird Street
Hamilton mL3 0Qa
Tel: (01698) 477 440
Fax: (01698) 477 441
DX: Ha13 Hamilton
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
Thames Valley
Regus office
400 Thames valley Park
Thames valley Park Drive
Reading
Berkshire Rg6 1PT
Tel: (0118) 965 3500
Wales
alexander House
Excelsior Road
Western avenue
Cardiff CF14 3aT
Tel: (029) 2054 4700
Fax: (029) 2054 4701
Designed and produced by Radley Yeldar www.ry.com
Bellway p.l.c. are committed to caring for the environment and looking for sustainable ways to minimise our impact on it.
Printed by Pureprint group who are a CarbonNeutral® printer certified to iSo 14001 environmental management system and
registered to EmaS the Eco management audit Scheme. Printed using vegetable oil based inks.
This report is printed on Lumi Silk which fibre source is virgin wood fibre from Finland and Brazil. The pulp is bleached using an
Elementary Chlorine Free (ECF) process.
FSC® – Forest Stewardship Council. This ensures that there is an audited chain of custody from the tree in the well-managed
forest through t o the finished document in the printing factory.
iSo 14001. a pattern of control for an environmental management system against which an organisation can be accredited by
a third party.
Wessex
Bellway House
Embankment Way
Castleman Business Centre
Ringwood
Hampshire BH24 1Eu
Tel: (01425) 477 666
Fax: (01425) 474 382
DX: 45710 Ringwood
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) 586 147
DX: 16815 Wetherby
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
B
e
l
l
w
a
y
p
.
l
.
c
.
A
n
n
u
a
l
R
e
p
o
r
t
a
n
d
A
c
c
o
u
n
t
s
2
0
1
3
Building homes,
Building value
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
www.bellway.co.uk
B
e
l
l
w
a
y
p
.
l
.
c
.
A
n
n
u
a
l
R
e
p
o
r
t
a
n
d
A
c
c
o
u
n
t
s
2
0
1
3