Bellway Annual Report 2014

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FY2014 Annual Report · Bellway

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Annual Report and Accounts

2014

BUILDING HOMES,
BUILDING VALUE

Contents

For further details on our business
please visit:
www.bellway.co.uk

About Us
01 About Us
02 Financial Highlights
03 Operational Highlights

Strategic Report
06 Chairman’s Statement
08 Group Strategy
10 Business Model
22 Chief Executive’s Operating Review
26 Group Finance Director’s Review
29 Risk Management Process
30 Risk Statement
33 Corporate Responsibility

Governance
36 Board of Directors
37 Advisers
38 Chairman’s Statement on Corporate Governance
40 Corporate Governance Report
45 Report of the Board on Directors’ Remuneration
62 Report of the Directors
66 Statement of Directors’ Responsibilities in respect

of the Annual Report and Accounts
Independent Auditor’s Report to the Members
of Bellway p.l.c.

Accounts
70 Group Income Statement
70 Statements of Comprehensive Income
71 Statements of Changes in Equity
73 Balance Sheets
74 Cash Flow Statements
75 Accounting Policies
80 Notes to the Accounts

Other Information
99 Five Year Record
100 Shareholder Information
105 Notice of Annual General Meeting
108 Glossary
110 Notes
IBC Principal Offices

Cover:
Cromwell Fields,
Great Waldingfield, Suffolk

Bellway p.l.c.
Annual Report and Accounts 2014

About Us

INTRODUCTION

FROM ITS ORIGINS NEARLY 70 YEARS AGO AS A FAMILY-OWNED
HOUSEBUILDING BUSINESS IN NEWCASTLE UPON TYNE, BELLWAY HAS
GROWN TO BECOME ONE OF THE UK’S LARGEST HOUSEBUILDING GROUPS,
WITH REVENUE IN 2013/14 OF £1.486 BILLION, HAVING BUILT AND SOLD OVER
130,000 HOMES SINCE INCORPORATION.
Bellway has its headquarters in Newcastle upon Tyne and operates from 15 divisions throughout
the UK. The Group constructs and sells high quality homes to suit a variety of budgets, from
apartments up to five-bedroom family homes, including the provision of social housing
throughout the country. We directly employ over 2,000 employees and indirectly engage over
5,500 other workers via sub-contract arrangements.
The Group’s operations are located in the main population centres in the UK (excluding Northern
Ireland), as shown in the chart below. The northern region covers Scotland, the north east and
north west of England, Yorkshire and the Midlands. In the south, our business incorporates
divisions in the south east and south west of England, London and Wales. The number of homes
sold and average selling price for each region is shown on page 23.

Our office locations
1. Head Office
2. East Midlands
3. Essex
4. Manchester
5. North East
6. North London
7. North West
8. Northern Home Counties
9. Scotland
10. South East
11. Thames Gateway
12. Thames Valley
13. Wales
14. Wessex
15. West Midlands
16. Yorkshire

Bellway p.l.c. Annual Report and Accounts 2014About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 11202

Financial
Highlights

Total Group revenue
(£m)

1,486.4

+33.8%

Operating proﬁt
(£m)

256.1

+69.5%

Operating margin
(%)

17.2

+360bps

768.3

886.1

1,004.2

1,110.7

1,486.4

51.3

75.2

114.6

151.1

256.1

6.7

8.5

11.4

13.6

17.2

2010

2011

2012

2013

2014

2010

2011

2012

2013

2014

2010

2011

2012

2013

2014

Proﬁt before taxation
(£m)

Earnings per ordinary share
(p)

Total dividend per ordinary
share (p)

245.9

+74.5%

157.0

+75.8%

52.0

+73.3%

Category

Scope 1 – Fuel and gas which includes
diesel and petrol used on-site and in cars on
Group business

Scope 2 – Electricity

Total emissions

Emissions intensity:

tCO2e per Bellway home construction

tCO2e per Bellway employee(2)

Notes:

Total emissions
(tonnes of carbon dioxide
equivalent (tCO2e))(1)

9,335

3,509

12,844

1.87

6.56

The Group has a balanced workforce in terms of experience
with an average age of 44 (2013 – 44).

1. tCO2e has the meaning given in section 93(2) of the Climate Change Act 2008.

2. Based on the average number of employees during the year.

SOCIAL AND COMMUNITY INTERESTS

Behaving responsibly and operating 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 be found
on our corporate responsibility website: www.bellway.co.uk/
corporate-responsibility.

Below:
Hampton Grange,
Bromley, Kent

Methodology
Bellway has used the DEFRA Environmental Reporting
Guidelines to collate data, and to convert energy
consumption into emissions has used the 2013 Government
Greenhouse Gas Conversion Factors for Company Reporting.
The following sources of emissions were excluded from
this report:
1.

Gas and electricity from part-exchange properties due
to immateriality and difficulty in accurately reporting and
recording this data.

2. Emissions from combined heat and power units which
are operated at sites, due to difficulty in acquiring
this data.

Further information on Bellway’s approach to corporate
responsibility is available on its website at www.bellway.co.uk/
corporate-responsibility.

Bellway p.l.c. Annual Report and Accounts 2014About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 11234

Corporate
Responsibility continued

The following structure has been put
in place to achieve these commitments.
To maintain focus on corporate
responsibility, the Chief Executive is
responsible for ensuring the policy is
adhered to and reports to the Board
and external stakeholders on our
performance and progress. In this,
the Chief Executive is supported by
an in-house corporate responsibility
group which includes senior employees
from a cross-section of disciplines who
are responsible for the development
and review of 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.

CORPORATE
RESPONSIBILITY POLICY

Through sustainable construction
we aim to create new communities
and lasting environments. Using our
knowledge and skills, and in consultation
with our partners, we aim to enhance
the environment in which we work.
Bellway believes that its reputation
is critical to the creation of long-term
value for its shareholders and we
recognise that financial success is
reinforced by our behaviour beyond
the balance sheet.
Through Bellway’s commitment
to corporate responsibility we:
• engage with a wide range of

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 sustainable sourcing
and use of construction materials.
• treat all employees fairly and invest
in training for the medium and long
term to realise their potential.

• provide a healthy and safe

environment in which to work
through an effective health and
safety management system.
• recognise and respond to the

challenges and opportunities that
are presented by climate change.
• invest in the communities in which

we develop in a way that contributes
to local community needs.

Above:
Bellway employees ‘Ramped up the Red’
for the British Heart Foundation

Opposite:
Pupils from Runnymede St Edward’s School
helping with tree planting at our site at
Bellefield, West Derby, Liverpool

Bellway p.l.c. Annual Report and Accounts 2014Strategic Report35

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 these considerations
will be balanced against any associated
cost we will:
• manage our environmental footprint

and aim to enhance our performance
in areas where we operate, particularly
in relation to energy and waste.

• minimise any harmful 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.

• 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.

• recognise and respond to the

challenges and opportunities that are
presented by climate change.

Approval of the Strategic Report
The Strategic Report was approved by
the Board of Directors and signed on
its behalf by

Ted Ayres
Chief Executive
13 October 2014

• give consideration to environmental

aspects in the selection and
procurement of land for development,
including implications for biodiversity
and sustainable development.
• try to meet and where possible,

exceed government targets for the
redevelopment of brownfield land.
• seek to influence the design of sites,
housing and appliances to minimise
the effects on both the natural and
built environment.

• endeavour to provide environmental

benefits and minimise nuisance
arising from construction activities and
preventing pollution on development
sites and surrounding areas.

• give consideration to environmental
issues within our corporate functions
and everyday business decision-
making processes.

Bellway p.l.c. Annual Report and Accounts 2014About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 11236

Board of
Directors

JOHN WATSON

JOHN CUTHBERT OBE DL

PAUL HAMPDEN SMITH

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
Nomination Committee.

TED AYRES

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.

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.

Senior independent
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 became senior
independent non-executive director
on 1 February 2014. He is Chairman of
the Nomination Committee and is also
a member of the Audit Committee
and the Board Committee on
Executive Directors’ Remuneration.

MIKE TOMS

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.
He 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’). He 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, and senior
independent non-executive director
and Chairman of the Audit Committee
of Clipper Logistics plc. He was
previously a non-executive director
and Chairman of the Audit Committee
of Redrow plc. He is Chairman of the
Audit Committee and is also a member
of the Nomination Committee and the
Board Committee on Executive
Directors’ Remuneration.

DENISE JAGGER

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
terrorism risk reinsurer, Pool Re, sits
on the Council of the University of
York and is a Trustee of St Giles Trust.
Prior to joining Eversheds she was
Company Secretary and General
Counsel at ASDA Group plc, later
part of Wal-Mart from 1993 to 2004.
Denise’s previous non-executive
directorships include The British
Olympic Association, 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.

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.

GovernanceBellway p.l.c. Annual Report and Accounts 201437

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

Stockbrokers
Citigroup Global Markets Limited
Numis Securities Limited

Bankers
Barclays Bank PLC
Lloyds Banking Group plc

Auditor
KPMG LLP

About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 112 Bellway p.l.c. Annual Report and Accounts 201438

Chairman’s Statement on
Corporate Governance

INTRODUCTION

As Chairman, 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 the Chief Executive
and myself, 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.
The Board considers strategy,
performance and risk at each Board
meeting. In addition, the executive
directors meet regularly with the
regional chairmen and divisional boards,
which gives an appropriate level of
oversight and direction to the business.

BOARD EFFECTIVENESS

During the year under review, the
Board has been particularly focused
on the following:
1. The continued development of
the executive directors and the
induction of the two new non-
executive directors into their roles.

2. The areas highlighted for

improvement in last year’s first
externally facilitated Board
evaluation, were:
i)

the structure of
Board meetings;

ii) the provision of information

for Board meetings;

iii) communication and reporting;

and

iv) succession planning.

As a result, there is now a more forward
looking agenda at Board meetings
and improvements have been made in
management information provided to
the Board, including the introduction
of interim Board papers. We have
enhanced the level of communication
with external shareholders. Further work
has been carried out on succession
planning at and below Board level.
Progress on these matters is ongoing.

BOARD EVALUATION

This year’s Board evaluation was again
externally facilitated and concluded
that the Board was well run and
continued to be operating effectively.
The following areas were highlighted for
further development and improvement:
i) CSR performance and reporting;
strategy for the management
ii)
of employees;

iii) review of KPIs used by the Group

to measure performance.
These matters are already being
addressed and progress will be
reported on in next year’s report.

BOARD COMMITTEES

The roles of the Board Committees and
their work during the year are described
in greater detail below in the reports of
the Committee Chairmen.
Last year the Board Committee on
Executive Directors’ Remuneration
acting on behalf of the Board
substantially restructured its report
in advance of the new remuneration
regulations, and has fully complied
with them in this year’s report.
The Nomination Committee has
been instrumental in the formulation
of succession planning strategies,
particularly below Board level.

THE BOARD IS
COMMITTED TO
HIGH STANDARDS
OF CORPORATE
GOVERNANCE ...
FOR THE BENEFIT OF
ITS SHAREHOLDERS
AND OTHER
STAKEHOLDERS.”

John Watson
Chairman

GovernanceBellway p.l.c. Annual Report and Accounts 2014

STAKEHOLDER ENGAGEMENT

The Board is committed to high
standards of corporate governance
throughout all areas of the Group’s
operations for the benefit of its
shareholders and other stakeholders.
As stated in last year’s Annual Report,
I am still very keen to encourage
effective communication with the
Company’s shareholders and other
stakeholders, and am available
to discuss matters relevant to the
Company with interested parties. As was
the case last year, I am writing to our
major shareholders, advising them that
I am available to discuss any matters
which they wish to raise with me.

John Watson
Chairman
13 October 2014

The Audit Committee, aside from its
responsibilities in respect of the interim
and annual reports also dealt with
issues in relation to audit materiality, the
Group’s IT strategy and programme
and the effect of both on the Group’s
control environment. It also dealt
with issues in relation to the Group’s
whistleblowing procedures and Bribery
Act compliance.

COMPLIANCE WITH
THE UK CORPORATE
GOVERNANCE CODE

In last year’s report I said that I would
provide an update this year on the
Group’s approach to the requirements
of the revised UK Corporate
Governance Code which was published
in September 2012 and which first
applied to the Group in the financial
year to 31 July 2014. I am pleased
to confirm that the Board considers
that it has complied with the detailed
provisions of the Code throughout the
year and up to the date of this report.
The Corporate Governance Code
published in September 2012
introduced additional guidance for Audit
Committees, in particular in relation
to the rotation of auditors and I would
confirm that it is the Board’s current
intention to put the external audit
contract out to tender within the next
six years, subject to annual performance
reviews by the Audit Committee.
In September 2014, the Financial
Reporting Council issued a new UK
Corporate Governance Code which is
effective from 1 October 2014 and will
first apply to the Group in the financial
year commencing 1 August 2015. I will
be providing an update on the Group’s
compliance in relation to the 2014 Code
in next year’s report.

DIVERSITY

The Board is committed to always
making appointments on merit,
against objective criteria, and the Board
strongly supports the principle of
boardroom diversity in all its aspects.
The Company’s female employees
make up 28% of the total workforce,
while 14% of the Board and 15% of its
senior management are women. It
is interesting to note that the female
profile of our graduates matches
exactly the female profile of the whole
workforce at 28% but exceeds the
female management profile of 15%.
Paul Hampden Smith and Denise
Jagger joined the Board as non-
executive directors on 1 August 2013
and have made a significant
contribution to the work of the
Board throughout the year.

HEALTH AND SAFETY

The Board, as ever, is keen to promote
high standards of performance
in relation to health and safety
throughout Bellway for the benefit of
all who work at, or visit, our offices
and developments. At the beginning
of the year, the Board established
performance targets and objectives
for health and safety and I am
pleased to say that these were all
satisfactorily achieved.
Similar targets and objectives have been
set for 2014/15 and we will be working
hard to replicate last year’s performance.
This demonstrates the Board’s
commitment to raising levels of health
and safety performance in Bellway on
an ongoing basis.

About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 112 Bellway p.l.c. Annual Report and Accounts 201440

Corporate Governance Report

CORPORATE GOVERNANCE

Introduction
The Board acknowledges the importance of, and is committed to the principle of, achieving and maintaining a high standard
of corporate governance. This report, together with the Report of the Board on Directors’ Remuneration, as detailed on pages
45 to 61, 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, revised
in September 2012, throughout the year to 31 July 2014 and up to the date of this report. It has also complied with the
edition of the Code published in June 2010, as compliance with this edition of the Code is still required by the Listing Rules.
The UK Corporate Governance Code is publicly available, free of charge, from the Financial Reporting Council, online at
www.frc.org.uk or by telephoning 020 7492 2300.

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 Board
At the date of this report the Board consists of seven directors whose names, responsibilities and other details appear on
page 36. Two of the directors are executive and five 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.
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
retire from the Board and offer themselves for re-election at the forthcoming AGM. The directors’ biographies are shown on
page 36. 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 seven Board meetings, three Audit Committee meetings, four meetings of the Board Committee
on Executive Directors’ Remuneration, one meeting of the Board Committee on Non-Executive Directors’ Remuneration and
two Nomination Committee meetings. 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 London, Scotland, Thames Valley
and Wessex divisions, as well as receiving presentations at Board meetings from senior Head Office, regional 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, with the exception that
Mr Toms was unable to attend one Board meeting and one meeting of each of the Audit and Nomination Committees and of
the Board Committee on Executive Directors’ Remuneration.
The non-executive directors met twice during the year, including once without the Chairman present.

GovernanceBellway p.l.c. Annual Report and Accounts 201441

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 personnel at Head Office, regional chairmen and divisional management, as well as 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 John Cuthbert, who is available for shareholders to raise any queries or
concerns they may have. Each of the non-executive directors, excluding the Chairman, has, at all times, acted independently
of management and has no relationship which would materially affect the exercise of his 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
This year’s evaluation of the performance and effectiveness of the Board, its Committees and individual directors, was again
externally facilitated by Independent Audit Limited, which has no other business connections with the Group. The evaluation
was conducted using online questionnaires and follow-up telephone calls.
This process also 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 evaluation concluded that, overall, the Board and its Committees are performing well. Good progress has been made
on actions from last year’s evaluation so that there is now a more forward looking agenda at Board meetings and there have
been improvements in management information to the Board, information provided to external stakeholders and work on
succession planning, particularly below Board level and this work continues. The main areas of improvement identified by this
year’s evaluation were that the Board will be looking to improve on the Group’s CSR performance and reporting. In addition
the Group is looking to develop further its strategy in relation to employee management. Furthermore work will continue to
develop KPIs in relation to business performance and to further improve the quality of Board information.

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.bellwaycorporate.com. Other Committees of the Board are formed to perform
certain specific functions as required from time to time.

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 one occasion to review the fees and terms of appointment of the
non-executive directors.

NOMINATION COMMITTEE REPORT

The Nomination Committee comprises John Cuthbert (Chairman), Mike Toms, Paul Hampden Smith, Denise Jagger and
John Watson, who were all members of the Committee throughout the year. Peter Johnson was a member of the Committee
until his retirement from the Board on 31 January 2014. 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 two occasions. During the year, the Committee made
recommendations to the Board in relation to the structure of below Board succession planning. It also reviewed the quality
of the recruitment and induction process for the two new non-executive directors.
Appointments to the Board are made on merit using 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 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.

John Cuthbert
Chairman of the Nomination Committee
13 October 2014

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Corporate Governance Report
continued

AUDIT COMMITTEE REPORT

Committee membership
The Audit Committee comprises four independent non-executive directors, Paul Hampden Smith (Chairman), Mike Toms,
John Cuthbert and Denise Jagger, who were members of the Committee throughout the year. Peter Johnson was Chairman
of the Committee until his retirement from the Board on 31 January 2014.
The directors’ biographies on page 36 detail the Committee members’ previous experience. The Board considers that Paul
Hampden Smith has recent relevant financial experience and is confident that the collective experience of the members
enables them to act effectively as an Audit Committee.

Meetings during the year
The Committee meets at least three times per year and met three times during the year under review. Details of Committee
members’ attendance is given on page 40.
The Committee met the external auditor without management present on two occasions. In addition, the Committee
Chairman had regular contact with the Finance Director and the external auditor.

Responsibilities and terms of reference
The key responsibilities of the Committee include the following:
• to monitor the integrity of the financial statements of the Group and any formal announcements relating to the Group’s

financial performance and position.

• to review and make recommendations in relation to the half year and annual financial statements prior to submission to the

Board for approval.

• 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.

• to develop and monitor the Group’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 Committee’s terms of reference are available on the Group’s website at www.bellwaycorporate.com/corporateGovernance.
The work of the Committee during the year is described below.

Financial reporting
The Committee reviewed the draft Annual Report and Accounts, interim results, preliminary results announcement and reports
from the external auditor, KPMG LLP, on the outcome of their audit during the year.
During the year, and up to the date of this report, the Committee considered the key accounting issues in relation to the
financial statements to be:
• profit recognition; and
• the carrying value of the Group’s land and work in progress.
These were discussed with the external auditor and are described in more detail below.
• Profit recognition – gross profit of £316.4 million (2013 – £203.3 million) has been recognised on housing and other revenue.
Gross profit is recognised for completed house sales based on the latest whole site/phase gross margin, which is an output
of the site valuation. These valuations, which are updated at frequent intervals throughout the life of each site, use actual and
forecast selling prices, land costs and construction costs and are sensitive to future movements in both the estimated cost to
complete and expected selling prices. Forecast selling prices are inherently uncertain due to changes in market conditions.

The Committee understand the Group’s gross profit recognition policy and the related systems and controls.

GovernanceBellway p.l.c. Annual Report and Accounts 201443

Financial reporting continued
The external auditor explained to the Committee the work they performed in relation to profit recognition, including testing
controls over monitoring and updating site selling price and construction cost forecasts, including how the work of suitably
qualified surveyors employed by the Group is incorporated into site valuations, and the authorisation and recording of costs.
The external auditor has identified higher risk active sites based on a number of risk indicators and performed a comparison
of estimated total revenue and costs throughout the life of these sites to assess the historical accuracy of management’s
forecasting processes.

The Committee believes, following enquiry of management and the external auditor, that appropriate internal controls are
in place to assess the forecast selling prices and costs to complete, and that the Group’s gross profit recognition policy is
appropriate and has been properly applied in these financial statements.

• Carrying value of the Group’s land and work in progress – inventories of £1,822.7 million (2013 – £1,513.5 million) are the
largest asset on the Group’s balance sheet – see note 13 for further detail. Inventory is held at the lower of cost and net
realisable value. To determine the net realisable value the whole site gross margin is forecast as detailed above. The risk is
that for any site, currently trading or not, the net realisable value may be below cost. Management ensure that any site with
negative margins has an appropriate provision, with this being re-assessed during the year.

The external auditor explained to the Committee the work they performed in relation to the carrying value of the Group’s

land and work in progress, which includes the procedures identified above in relation to profit recognition.

The Committee believes, following enquiries with management and the external auditor, that appropriate internal controls
are in place to assess the carrying value of the Group’s land and work in progress, and the carrying value of these assets in
the financial statements is appropriate.

External audit
KPMG LLP is the Group’s external auditor and presented a detailed audit plan to the Committee in March 2014 which included
an assessment of the key risks. For the year ended 31 July 2014, the primary risks identified were the valuation of inventories and
margin recognition due to the inherent judgement required.
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 is 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 Group’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 Group;
• 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.
In addition KPMG LLP provides the Committee with written confirmation, on an annual basis, that it remains independent.
For an analysis of fees paid to KPMG LLP see note 4 on page 81. The non-audit fees are for tax compliance and ad hoc tax
advisory work and an audit of the Group’s final salary pension scheme, which is closed to future accrual.
The Committee considered the re-appointment of KPMG LLP following its review of the external auditor’s performance and
has recommended to the Board that the external auditor should be re-appointed at the forthcoming AGM. The review included
discussions with management and the auditor, an assessment of how the auditor had performed in relation to the audit plan,
the independence of the auditor and the presentations made to the Committee during the year. The current auditor has been
in place and the audit has not been tendered since the Company was listed in 1979, with the lead audit partner having been the
subject of rotation in accordance with Auditing Practices Board Ethical Standard 3. Nick Plumb this year commenced his five-
year term as lead audit partner. It is the Company’s current intention to put the external audit contract out to tender within the
next six years, subject to the annual performance reviews carried out by the Committee.

Other matters
During the year, the Committee considered the FRC guidance on audit materiality, the Group’s IT strategy, IT programme and
their effect on the Group’s control environment. It also approved the appointment of a new external provider for the Group’s
whistleblowing helpline, revised its own terms of reference and reviewed the Group’s procedures for ensuring compliance
with the Bribery Act 2010.

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Corporate Governance Report
continued

Internal control
The Board is responsible for the Group’s system of internal control and also for reviewing its effectiveness, following guidance
from the Committee. 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
Group’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 also 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 ongoing 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 principal risks, which are described in the Strategic Report
on pages 30 to 32, are regularly assessed and cover all aspects of the business and in particular, land acquisition, planning,
construction, health and safety, sales and personnel. In addition, there is a responsibility to mitigate risk by the provision of
adequate insurance cover and by management reporting on material changes in the business or external environment
affecting the risk profile.
There is a system of regular reporting to the Board which provides for appropriate details and assurances on the assessment
and control of risks.
The continuing role of the Board is, on a systematic and ongoing 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, which are reviewed throughout the year, and has considered

the extent to which the measures taken by the Group mitigate those risks.

• The acquisition of land and land interests is initiated by divisional management and reviewed by the regional chairmen prior
to submission to Head Office for approval. All land acquisitions must achieve minimum financial acquisition criteria and are
subject to approval by the executive directors and in certain circumstances, approval by the Board.

• A comprehensive monitoring and reporting system is in place entailing annual budgets, monthly forecasting and
management reporting, including variance analysis and commentary. This is produced by divisional management
and reviewed by the regional chairmen and function heads at Head Office. Summaries are also provided to the
executive directors.

• Monthly divisional board meetings are held to review divisional performance, which are attended by the regional chairmen.
The executive directors attend certain divisional board meetings on a regular basis during the year, and this is supplemented
with main Board visits to divisions.

• Site valuations are produced periodically throughout the life of a site, with the actual and forecast costs and revenues

produced at a divisional level prior to review by the divisional management team and Head Office team.

• Regular visits to sites by in-house health and safety teams and external consultants to monitor health and safety standards

and performance.

• A central treasury function operates at Head Office ensuring the optimum financing is obtained for the Group as a whole.
• A number of the Group’s key functions are dealt with centrally. These include taxation, pensions, insurance, information

technology, legal, personnel and company secretarial functions. This centralisation ensures a consistent approach and the
appropriate range of skills to manage these specialised areas.

The Group 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 at
both divisional and Head Office levels, 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.

Paul Hampden Smith
Chairman of the Audit Committee
13 October 2014

GovernanceBellway p.l.c. Annual Report and Accounts 201445

Report of the Board on
Directors’ Remuneration

ANNUAL STATEMENT

Dear shareholder,
This is my second report under the new regulations for the reporting of directors’ remuneration, following early adoption
last year.
This report, which has been prepared pursuant to, and in accordance with the Companies Act 2006 Large and Medium-Sized
Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013, has three sections – this Annual Statement,
the Directors’ Remuneration Policy and the Annual Report on Remuneration.
The Directors’ Remuneration Policy, which will be subject to a binding shareholder vote (normally on a triennial basis), provides
details of the remuneration policy for directors for 2014/15 onwards. The Annual Report on Remuneration, which together with
the Annual Statement will be subject to an annual advisory shareholder vote, details the remuneration of directors in respect of
the financial year under review and how the policy will be operated for 2014/15 onwards.

Remuneration paid in 2013/14
The Committee considers that the remuneration paid to executive directors fairly reflects both Company and individual
performance during the financial year. As set out in last year’s report and reflecting the Committee’s policy to set salary levels,
from appointment, significantly below market levels for quoted housebuilders but move them to mid-market over time, the
Committee agreed to increase the basic salaries of the executive directors in two instalments to bring their salaries in line with
those of their predecessors and peer companies. The first instalment was made from 1 August 2013, and as explained below,
the second instalment was made from 1 August 2014.
The basic salaries of the executive directors in 2013/14 were determined in July 2013 after consultation with shareholders and
were set out in last year’s report. Total remuneration was determined in large part by bonuses awarded for performance. As set
out on pages 22 to 25 of this report, the Group performed extremely strongly in the year as management took full advantage
of favourable market conditions to increase sales, average selling price, margin, operating profit, dividend and NAV while
maintaining a strong balance sheet. Looking forward, the Group concluded the year with a record order book supported by
a healthy increase in plots available with detailed planning permission. Two additional operating divisions were opened and
management changes were made to support future development. Overall, operating performance substantially exceeded the
expectation of the Board and investors at the start of the year.
This performance is reflected in the annual bonus earned by the executive directors. The profit related element of the bonus
required increases in operating profit but in the event the increase of 69.5% was above the top of the target range and this
element of the bonus was earned in full. In relation to the non-financial elements of the bonus the targets for land bank
and health and safety were met, but the customer care score, while remaining high, fell just below the threshold for bonus
payment. As a result the directors earned a total bonus of 110% out of a maximum of 120% of salary.
In 2011, Ted Ayres had been granted an award of 35,689 shares under the Bellway p.l.c. (2004) Performance Share
Plan. The performance condition in relation to half of these shares was met in 2013/14 and these shares will vest on
24 October 2014. Keith Adey was not a director at the time of the grant and so was not granted any shares in 2011
under this plan.

Implementation of the remuneration policy in 2014/15
The Committee has consulted with and taken into account the views of its major shareholders, the Association of British
Insurers (‘ABI’) and Institutional Shareholder Services Inc. (‘ISS’) during the year on the proposed remuneration policy, in
particular in relation to the salary increases for the executive directors, changes to the non-financial annual bonus performance
measures and long-term incentive provision.
Under the direction of the executive directors, the Group has continued its strong performance during the year as described
above. As a result, as disclosed last year and as discussed with a number of the Company’s major investors, the Committee has
completed the second stage of base salary increases. With effect from 1 August 2014, the Chief Executive’s salary was increased
from £500,000 to £600,000 while the Finance Director’s salary was increased from £285,000 to £350,000. In reaching
these decisions, the Company was mindful of the salary levels paid by competing housebuilders and was informed by a
benchmarking analysis undertaken by the Committee’s advisers, New Bridge Street. The Committee considers that the new
base salaries now reflect market levels for quoted UK housebuilders and, as such, future increases to base salaries are normally
expected to increase in line with the general workforce.
While the maximum annual bonus potential remains at 120% of salary, with 90% of salary based on operating profit and 30%
of salary based on non-financial performance measures, the Committee has made some changes to the way the non-financial
performance measures operate. Therefore, for 2014/15 onwards, rather than placing 10% of salary each on land bank, health
and safety and customer care targets, a greater emphasis will be placed on land bank management reflecting the importance
of this metric in determining future profitability. In addition, sliding scale targets have been introduced rather than the simple
on/off measures operated in prior years, and the approach to measuring health and safety and customer care has been refined.

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Report of the Board on
Directors’ Remuneration continued

Finally, in response to feedback from a number of the Company’s shareholders and in the interests of simplicity, 2014 will be
the last year in which the Committee will grant awards under the Share Matching Plan (‘SMP’). Performance Share Plan (‘PSP’)
award levels from 2015 onwards will be set at 130% of salary, with the increase reflecting the Committee’s estimate of the likely
value of SMP awards forgone. The Committee believes that this change will improve the alignment of executive remuneration
with the interests of shareholders. As the PSP permits the grant of awards to an individual in any year of up to 150% of salary,
no amendments to the PSP rules are required. In addition and consistent with emerging best practice in this area, a two-year
minimum holding period will be introduced whereby executive directors will be expected to retain shares which vest under
long-term incentive awards (net of any shares required to be sold to settle the relevant taxes) for a period of at least two years
from vesting.

Conclusion
The Committee has continued to consult with its major shareholders and advisory bodies over directors’ remuneration and
considers that the remuneration policy it is asking shareholders to approve at this year’s AGM will reward directors appropriately
for improvements in Company performance which are aligned with the Company’s strategy of improving shareholder returns.
I am pleased to report that over 98% of our shareholders voted in favour of last year’s Report of the Board on Directors’
Remuneration.
At this year’s AGM on 12 December 2014 there will be two votes on directors’ remuneration. The first will be a binding
vote on the remuneration policy and the second will be an advisory vote on the Annual Statement and Annual Report on
Remuneration. Both votes will require a majority vote in favour to pass. Further information on these resolutions is set out
on page 100.

Mike Toms
Chairman of the Board Committee on Executive Directors’ Remuneration
13 October 2014

GovernanceBellway p.l.c. Annual Report and Accounts 201447

DIRECTORS’ REMUNERATION POLICY

The remuneration policy has been developed taking into account the principles of the UK Corporate Governance Code
published in 2014, the views of the Company’s major shareholders and the ABI/IMA guidelines on remuneration.

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 Group, 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.
The structure of the performance conditions for annual bonus and long-term incentives has been designed to provide a
strong link to the Group’s performance, namely a focus on maximising profit in a sustainable fashion and producing superior
shareholder returns, thereby generating a strong alignment of interest between senior executives and shareholders.

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 general pay
increase awarded to the workforce, and it is the intention of the Committee to revert to this practice now that the executive
directors’ salaries have reached mid-market levels. All employees, including the executive directors, can join the Group’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 during the year, 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 2013/14 the Committee
consulted with major shareholders, the ABI and ISS on the proposed salary increases for the executive directors to bring them
in line with their peers, the proposed changes to the non-financial annual bonus performance measures and long-term
incentive provision going forward.

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Report of the Board on
Directors’ Remuneration continued

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 which, subject to shareholder approval, will operate from the 2014 AGM:

COMPONENT AND
LINK TO STRATEGY

OPERATION

MAXIMUM
OPPORTUNITY

FRAMEWORK TO ASSESS
PERFORMANCE

SALARY

To be market
competitive and
therefore assist in
recruiting, retaining
and motivating high
quality executives.
Reflects individual
role and experience.

Salaries are normally reviewed in July each year
and changes normally 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.

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 BONUS

To reward
achievement with
a combination of
financial and
non-financial
operational based
performance targets
in accordance with
Group KPIs.

Annual bonuses are normally payable in November
following the year end on 31 July, subject to the
achievement of performance targets that were set
at the start of the year on 1 August.

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.

No prescribed
maximum.
Increases normally in
line with the average
for the workforce
generally.
Increases may be
below or above this
e.g. due to promotion
or role change or a
significant change in
the size and scope of
the Company.

Salaries for 2014/15
are set out in the
Annual Report
on Remuneration.

120% of basic
salary maximum.

LONG-TERM
INCENTIVES
(PERFORMANCE
SHARE PLAN (‘PSP’))

To encourage
long-term value
creation, aid
retention, encourage
shareholding and
promote alignment
of interests
with shareholders.

The Company operates a PSP as its primary
long-term incentive.

150% of basic salary.

Annual awards of nil cost options or conditional
awards may be made under the PSP to the executive
directors, at the discretion of the Committee.
Awards normally vest three years after grant, subject
to the achievement of stretching
performance targets.

Dividend equivalents (in cash or shares) may
be payable.

The Company operates a clawback mechanism
which allows the Company, in exceptional
circumstances, to clawback some or all of the
payments made.

A post-vesting minimum holding period of two years
will apply to awards granted from 2014 onwards.

In addition to the reviews by the
Chairman, as part of the annual
Board evaluation, the
performance of the executives
and the Company is kept under
continuous review by the Board.

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.

Details of the performance
targets for the forthcoming year
are set out in the Annual Report
on Remuneration.

PSP awards are subject to
stretching three-year targets.
The current 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 2014/15 are
set out in the Annual Report
on Remuneration.

GovernanceBellway p.l.c. Annual Report and Accounts 201449

COMPONENT AND
LINK TO STRATEGY

OPERATION

MAXIMUM
OPPORTUNITY

FRAMEWORK TO ASSESS
PERFORMANCE

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.

Pension contributions into the Company’s Group
Self Invested Personal Pension Plan and/or a salary
supplement in lieu of pension contributions.

20% of salary.

Not applicable.

Comprises car or car allowance, life assurance and
health insurance. Other benefits may be provided
where appropriate.

Any expenses incurred in carrying out duties will be
fully reimbursed by the Company including any
personal taxation associated with such expenses.

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 determined by 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 normally 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 normally 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’s outstanding PSP awards which he
retained when he left his role as Chief Executive)
and they are not entitled to compensation on
termination of their arrangements, other than
normal notice provisions of three months given
by either party.

Travel, accommodation and other related expenses
incurred in carrying out the role will be paid by the
Company including any personal taxation
associated with such expenses.

Not applicable.

SHARE OWNERSHIP
GUIDELINE FOR
EXECUTIVE
DIRECTORS

To align executive
directors’ interests
with those
of shareholders.

Executive directors are required to accumulate a
minimum shareholding 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 in respect of awards granted
in 2014 or before), 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.

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.

2. The executive directors may also participate in any all-employee plan operated by the Company up to prevailing HMRC limits.

3. For the avoidance of doubt, in approving this Directors’ Remuneration Policy, authority is given to the Company to honour any commitments entered into with current

or former directors (such as in connection with the unvested SMP awards and the final SMP award to be granted in 2014, notwithstanding that the SMP will not form part
of the Company’s policy going forward). Details of any payments made to former directors will be set out in the Annual Report on Remuneration as they arise.

About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 112 Bellway p.l.c. Annual Report and Accounts 201450

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 and the market rate for a candidate of that experience as well as the
importance of securing the preferred candidate.

ELEMENT

GENERAL POLICY

DETAIL

Salary

At a level required to attract the most
appropriate candidate.

Pension and benefits

In accordance with Company policies.

Bonus

In accordance with existing schemes.

Long-term incentives
(‘PSP’)

In accordance with Company policies and maximum
limits in the PSP rules.

Other share awards

The Committee may make an incentive award to
replace deferred or incentive pay forfeited by an
executive leaving a previous employer (and, if required,
by relying on the flexibility provided in the Listing Rules
to grant such replacement awards).

Discretion to pay lower basic salary with incremental
increases as new appointee becomes established in
the role.

Additional benefits in relation to recruitment may be
provided where considered appropriate. For example,
relocation expenses or allowances, legal fees and
other recruitment related costs may be payable.

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 normally be the same
as for other directors and grant levels consistent
within the permitted individual maximum under
the rules of the plan.

Awards would, where possible, be consistent with the
awards forfeited in terms of vesting periods, expected
value and performance conditions.

GovernanceBellway p.l.c. Annual Report and Accounts 201451

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 six-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.

ELEMENT

LEAVER(1)

DEPARTURE ON AGREED TERMS(2)

GOOD LEAVER(3)

Nil.

Salary, pension and
benefits (after
cessation
of employment)

Annual bonus

No bonus payable.

PSP (and SMP awards
granted to the current
executive directors in
2014 or before)

All awards, including
those which have
vested but are
unexercised will lapse
immediately upon
cessation
of employment.

Other payments

Nil.

Up to 12 months’ basic salary, benefits
and pension.

Payments may be phased and subject to
offset against alternative income from
elsewhere during the notice period.

The Company may pay in lieu of notice an
amount equivalent to 12 months’ salary,
pension and benefits.

Apart from death, up to 12 months’ basic
salary, benefits and pension, less any
period of notice worked.

Payments may be phased and subject to
offset against alternative income from
elsewhere during the notice period.

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.

Awards will lapse upon cessation of
employment, unless the Committee
decides otherwise, in which case awards
may vest.

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.

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.

For the proportion of the financial year
worked, bonus may be payable pro-rata
at the discretion of the Committee.

Awards may be exercised within
12 months of the vesting date.

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 Company may pay for outplacement
support and assistance with legal fees.

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 reorganisation, 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.

About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 112 Bellway p.l.c. Annual Report and Accounts 201452

Report of the Board on
Directors’ Remuneration continued

The details of the executive directors’ service contracts are as follows:

Executive director

E F Ayres

K D Adey

First appointed
as a director

Current contract
commencement date

1 August 2011

1 February 2012

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.
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

J K Watson

M R Toms

J A Cuthbert

P N Hampden Smith

D N Jagger

First appointed as a
director

Current letter of
appointment
commencement date

Current letter of
appointment expiry date

1 August 1995

1 February 2013

31 January 2016

1 February 2009

1 February 2012

31 January 2015

1 November 2009

1 November 2012

31 October 2015

1 August 2013

31 July 2016

GovernanceBellway p.l.c. Annual Report and Accounts 201453

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, which has been based on the simplified long-term
incentive policy from 2015 onwards (i.e. PSP awards at 130% of salary with the SMP no longer operated), is indicative as share
price movement and dividend accrual have been excluded.

2,500

2,000

1,500

0
0
0
£

1,000

500

Note:

2,255

34%

32%

1,505

26%

24%

755

100%

50%

34%

Long-term share awards

Annual bonus (cash)

Fixed

885

26%

24%

50%

447

100%

1,322

34%

32%

34%

Minimum

Target

Maximum

Minimum

Target

Maximum

Chief Executive

Finance Director

1. 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 2014/15, benefits are
based on actual benefits received in 2013/14 and pension/pay in lieu of pension is based on policy of 20% of salary.
Target – 50% of maximum bonus payout. PSP award of 130% of salary with 50% of the award vesting.
Maximum – full bonus payout. PSP with a face value of 130% of salary and full vesting.

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Report of the Board on
Directors’ Remuneration continued

ANNUAL REPORT ON REMUNERATION

The Board Committee on Executive Directors’ Remuneration
The Board Committee on Executive Directors’ Remuneration comprises Mike Toms (Chairman), John Cuthbert, Paul Hampden
Smith and Denise Jagger, who were members of the Committee throughout the year. Peter Johnson was a member of the
Committee until his retirement from the Board on 31 January 2014.
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 recently appointed executive directors;
• consideration of the new disclosure requirements for remuneration reports;
• recommendations regarding changes to the Company’s Savings Related Share Option Scheme, which is open to all

employees, and the replacement of an executive share option scheme which expires in 2015, with a similar scheme which
may be used to reward employees below Board level.

The remuneration of the executive directors and the Chairman is determined by the Committee within a framework set by
the Board. 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.bellwaycorporate.com/
corporateGovernance. 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’), part 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 £62,128.
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.

IMPLEMENTATION OF REMUNERATION POLICY IN 2014/15

This section sets out how the Company has implemented the remuneration policy for the 2014/15 financial year.

Basic salaries
The Chief Executive was appointed as a director in 2011, and as Chief Executive in 2013, and the Finance Director was
appointed in 2012. As disclosed in previous years’ reports, their starting salaries were lower than their predecessors and
mid-market levels amongst peer housebuilding companies and the Committee stated its intention to raise these salaries
in incremental stages to market levels, subject to satisfactory performance. The first stage of these increases was put in
place from 1 August 2013. The Committee has carried out an independent review of executive directors’ salaries in peer
housebuilding companies and following the continuing strong performance of both the business and each of the executives
during the year, the Committee has decided that it is appropriate to award the second and final instalment to bring the
executives’ salaries to market levels. Accordingly, from 1 August 2014, the Chief Executive’s salary was increased to £600,000
p.a. and the Finance Director’s salary was increased to £350,000 p.a.

GovernanceBellway p.l.c. Annual Report and Accounts 201455

Annual bonus
For the 2014/15 financial year the bonus opportunity will continue to be limited to 120% of basic salary. The performance
conditions relate to a stretching target of pre-exceptional operating profit (90%) and non-financial performance (30%),
with non-financial performance being assessed by reference to land bank management (15%), health and safety (7.5%) and
customer care (7.5%). 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 and that the split between financial
and non-financial performance targets provides an appropriate balance between long and short-term shareholder returns.
The non-financial measures have been changed from previous years, both in relation to their proportions (previously each
non-financial measure equated to 10% of the bonus opportunity) and different assessment performance criteria will be used
to assess performance for health and safety and customer care. For health and safety, the Committee has decided to move
from a seven-day lost time accident measure to the NHBC safety score which is an independent measure based on regular
inspections of each site. The customer care element will be measured by taking the proportion of unsatisfied customers from
those which are satisfied, to produce a net assessment of customer satisfaction score (indifferent customers are ignored for
the purposes of the calculation). For each non-financial element, rather than the binary on/off targets operated in prior years,
sliding scale targets have been introduced, whereby a proportion of the bonus will be payable if a base threshold is achieved,
with further bonus paid on a sliding scale for improvements in performance up to the maximum bonus opportunity. In the
event that the threshold profit criterion is not met, no bonus will be payable under the non-financial elements.

Long-term incentives
It is envisaged that the Company will grant awards under the PSP in November 2014 with a face value of 100% of salary to
the executive directors. In addition, the executives may invest up to 25% of their net 2013/14 annual bonus into the SMP for
a period of three years, in return for which they will receive a match of up to two times the level of investment on a gross of
tax basis. The 2014/15 PSP awards and any SMP awards will vest to executives after three years, subject to the achievement
of performance conditions, based around TSR, which measures the total return 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. This will be the
last time that the Company invites management to participate in the SMP.
Consistent with last year, the PSP and SMP awards granted in 2014/15 will be subject to a relative TSR condition with 50% of
awards measured against a group of housebuilders and the other 50% against the constituents of the FTSE 250 (excluding
investment trusts and financial services sector companies).
From 2015/16 onwards, reflecting the likely value of the SMP awards forgone, PSP awards for executive directors will be set
at 130% of salary (previously PSP awards were limited to 100% of salary with the ability to earn up to a further 60% of salary
under the SMP). Awards will vest subject to the achievement of an underpin which requires an improvement in the underlying
financial performance of the Company over the performance period.
In addition to the above, the Committee has decided that for future PSP and any 2014 SMP awards, it will introduce a two-year
minimum holding period for any shares which vest after allowing for tax. This will increase the alignment of directors’ interests
with the longer-term interests of shareholders.

Chairman and non-executive director fees
Following a review of time commitment and relevant market data, the Chairman’s fee was increased from £185,000 to
£195,000 p.a. with effect from 1 August 2014.
For 2014/15, the base fee for non-executive directors will increase by 3% from £51,500 to £53,045. This is in line with the
average pay awards for the workforce generally. The fees for chairing the Audit Committee and the Board Committee on
Executive Directors’ Remuneration will also increase by 3% from £5,000 to £5,150. Reflecting the responsibilities of the role and
relevant market data, the additional fee for the senior independent non-executive director is to increase from £5,000 to £7,725.

About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 112 Bellway p.l.c. Annual Report and Accounts 201456

Report of the Board on
Directors’ Remuneration continued

IMPLEMENTATION OF REMUNERATION POLICY IN 2013/14

The auditor is required to report on the information contained in the following part of this report.

Single figure of total remuneration

Non-executive Chairman

J K Watson(4)

Executive directors

J K Watson(4)

E F Ayres(5)

K D Adey

Non-executive directors

P M Johnson(6)

M R Toms

J A Cuthbert

P N Hampden Smith(7)

D N Jagger(7)

Former directors

H C Dawe(8)

Totals

Notes:

2013

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

2014

Annual
bonus
£

Sub-total

Long-term
incentives(3)
£

Total

Salary
and fees
£

Taxable
benefits(1)
£

90,000

185,000

403

698

Pension(2)

–

90,403

185,698

–

90,403

185,698

714,053

575,974

280,250

13,428

84,075

336,300

714,053

–

350,000

500,000

225,000

285,000

58,500

30,750

54,500

56,500

51,500

54,000

–

54,000

–

51,500

–

24,812

34,972

26,372

27,129

–

124,500

–

1,234,250

1,216,750

1,333

–

66,348

62,799

–

575,974

70,000

420,000

864,812

66,094

930,906

100,000

550,000

1,184,972

264,691

1,449,663

45,000

57,000

270,000

566,372

313,500

682,629

–

58,500

30,750

54,500

56,500

51,500

54,000

–

54,000

–

51,500

125,833

–

566,372

682,629

58,500

30,750

54,500

56,500

51,500

54,000

–

54,000

–

51,500

125,833

–

199,075

1,026,300

2,525,973

66,094

2,592,067

157,000

863,500 2,300,049

840,665

3,140,714

1. Taxable benefits include car or car allowance and health insurance.

2. Pension includes payments in lieu of pension of £29,831 and contributions to a defined contribution scheme of £127,169. None of the directors are members of the Group’s

defined benefit scheme and both of the executive directors are members of a defined contribution scheme.

3. The value of long-term incentives in 2014 reflects the partial vesting of the 2011 PSP awards (see the section on long-term incentives vesting in respect of performance period

ended 31 July 2014 below).

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

payments in lieu of pension for 2013 are pro-rated to reflect his time in each post.

5. Ted Ayres was an executive director throughout the 2013 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 for the year ended 31 July 2013 reflect his aggregate remuneration for both roles held.

6. Peter Johnson retired from the Board on 31 January 2014. The fee reflects his annual fee of £61,500 pro-rated for his time in post.

7. Paul Hampden Smith and Denise Jagger joined the Board from 1 August 2013.

8. Howard Dawe retired from the Board on 31 January 2013. The fee reflects his annual fee of £248,500 and taxable benefits, pro-rated for his time in post.

GovernanceBellway p.l.c. Annual Report and Accounts 2014

Annual bonus for the year ended 31 July 2014
The annual bonus is payable in November 2014 for performance during the year ended 31 July 2014. The performance
conditions for the 2013/14 bonus were operating profit (pre-exceptional items) (90%) and 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 accounted for a maximum bonus of 10% of salary.

The actual bonus payment against operating profit was determined on the following basis:

Measure

Operating profit

Weighting
(% of salary)

Threshold

Target

Maximum
value

Actual

90%

£170.0
million

£185.0
million

£195.0
million

£256.1
million

Payout
(% of
maximum)

Payout
(% of salary)

100%

90%

As can be seen from this table, the actual operating profit exceeded the top of the range set by the Committee at the start of
the year. This was the result of both a favourable business environment and of the success of the management in exploiting this
environment by acquiring land and constructing and selling more homes at higher prices.
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

Health and safety

Customer care

Increase in the forward land bank of plots with detailed planning
permission in the year to 31 July 2014 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.

Improvement in performance by reference to the rate of over
seven-day lost time accidents, taking account of the volume
of activity.

Score

Maximum – 10% of salary

Achieved – 10% of salary

Maximum – 10% of salary

The Group reduced its rate of over seven-day lost time accidents
per 100,000 employees to 447.09 from 486.51 in 2013.

Achieved – 10% of salary

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?’

The Group experienced a slight reduction in its customer care
score to 93.8% from 94.8% in 2013.

Maximum – 10% of salary

Not achieved – no payment

The land bank and health and safety targets were achieved and the full bonus was payable in relation to both these elements.
If the targets had not been achieved then no bonus would have been payable. In the case of health and safety, no bonus would
have been payable if a work related fatality had occurred on one of the Group’s sites. The customer care performance score
remained very high but the target was missed, albeit by a small margin, so no bonus was payable in respect of this element.
Overall, the Committee is satisfied that the resulting bonus payout of 110% of salary (out of 120%) is reflective of the
Company’s strong performance during the year.

Long-term incentives vesting in respect of performance period ended 31 July 2014
The PSP award granted on 24 October 2011 which will partially vest on 24 October 2014, was based on the three-year
performance period to 31 July 2014. The applicable vesting percentages will be as follows:

Metric

Performance
condition

50% of awards Relative TSR against a Housebuilders’ Index:

25% of this part of an award vests at the Index,
increasing, pro-rata, to full vesting at Index + 7.5% p.a.

50% of awards Relative TSR against the FTSE 250 (excluding investment

trusts and financial services sector companies):
25% of this part of an award vests at median,
increasing, pro-rata, to full vesting at the upper quartile.

Threshold
target

Stretch
target

161.2%
TSR
(Index)

183.6% TSR
(Index +
7.5% p.a.)

49.7%
TSR
(median)

87.3%
TSR
(upper quartile)

Actual

% Vesting

123.2%
Bellway TSR

50%

Total

50%
(out of 100%)

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Report of the Board on
Directors’ Remuneration continued

Long-term incentives vesting in respect of performance period ended 31 July 2014 continued
An underpin, which was deemed to have been met, also applied to the 2011 PSP awards. 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 performance, taking into account, inter alia, operating profit, operating margin, ROCE and NAV. Based on the above,
the following awards are expected to vest on 24 October 2014.

J K Watson

E F Ayres

Note:

Number of
shares at grant

Number of
shares vested

Number of
shares lapsed

Dividends on
vested shares

Total Estimated value
at vesting(1)
(£000)

77,659

35,689

38,829

17,844

38,830

17,845

N/A

38,829

17,844

576.0

264.7

1. Based on the average share price for the last quarter of the financial year i.e. 1 May – 31 July 2014 as a proxy for the share price at vesting.

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 12.5p shares

Potential future beneficial interests

Award date

Awards held at 1
August 2013

Awarded during
the year

Awards lapsed
during the year

Awards vested
during the year

Awards held at
31 July 2014

J K Watson

Totals

E F Ayres

Totals

K D Adey

Totals

Notes:

21.10.2010(1)(5)

24.10.2011(2)(5)

13.11.2012(3)(5)

18.12.2013(4)

13.11.2012(3)(5)

18.12.2013(4)

96,060

77,659

173,719

35,689

30,960

–

66,649

23,220

–

23,220

–

34,506

–

19,668

(96,060)

–

(96,060)

–

77,659

35,689

30,960

34,506

101,155

23,220

19,668

42,888

1. 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 lapsed in full on

20 October 2013.

2. Market value on award 700.50p. The performance period was 1 August 2011 – 31 July 2014.

3. Market value on award 976.50p. The performance period is 1 August 2012 – 31 July 2015.

4. On 18 December 2013 awards of performance shares under the 2013 PSP were 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 prevailing grant policy. Ted Ayres was granted an award over
34,506 shares with a face value, on grant, of £500,000 and Keith Adey’s award was over 19,668 shares with a face value, on grant, of £285,000. The market value of a Bellway
share on award was 1,449.00p, and the performance period is 1 August 2013 – 31 July 2016. The awards are subject to a TSR performance condition, which is in two parts.
Half is measured by reference to Bellway’s TSR against the TSR of UK housebuilders. If Bellway’s TSR matches the median of the housebuilder group, 25% of this part of an
award vests. Full vesting for this part of an award would be achieved for 22.5% outperformance of the median. The housebuilder group is comprised of Barratt Developments
PLC, The Berkeley Group plc, Bovis Homes Group PLC, Crest Nicholson Holdings 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% for this part of an award 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. These awards are also subject to clawback provisions.

5. The performance conditions for previous awards are summarised below:

(a) For the awards made on 21 October 2010, the performance criteria were not achieved.

(b) For the awards made on 24 October 2011 and 13 November 2012, the TSR performance condition was in two parts. Half was measured by reference to the Housebuilders’
Index as above (excluding Crest Nicholson Holdings plc which was re-listed in February 2013). If Bellway’s TSR matches that of the Housebuilders’ Index (excluding Crest
Nicholson Holdings plc), 25% of the award vests. Full vesting would be achieved for 7.5% per annum outperformance of the Housebuilders’ Index. 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 2014 was 1,511.00p and the range during the year was 1,258.00p to 1,691.00p.

GovernanceBellway p.l.c. Annual Report and Accounts 2014

Directors’ interests in the long-term incentive plans continued
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

Fully paid ordinary 12.5p shares

Potential future beneficial interests

Award date

Awards held at
1 August 2013

Matching
Shares awarded
during the year

Matching
Shares lapsed
during the year

Matching
Shares vested
during the year

Matching
Shares held at
31 July 2014

Investment
Shares
purchased
during the year

E F Ayres

Totals

K D Adey

Totals

Notes:

23.11.2012(1)

28.11.2013(2)

23.11.2012(1)

28.11.2013(2)

15,504

–

15,504

6,204

–

6,204

–

14,501

–

9,320

–

15,504

14,501

30,005

6,204

9,320

15,524

–

3,843

–

2,470

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.

2. Market value on award 1,448.00p. The performance period is 1 August 2013 – 31 July 2016. The vesting of the Matching Shares is subject to the same performance conditions

as the PSP award made on 18 December 2013.

Directors’ share options
Details of all directors’ interests in the various share option schemes are shown below:

Scheme

1 August 2013

Granted during
the year

Exercised
during the year

31 July 2014

Exercise price
(p)

Exercisable
from

Expiry date

2003 SRSOS(e)

1996 ESOS(b)

2005 ESOS(c)

2003 SRSOS(e)

1,618

16,500

3,500

2,350

22,350

3,463

–

16,500

–

16,500

–

1,618

–

3,500

2,350

5,850

3,463

556.00

1 Feb 2015

31 July 2015

844.00 31 Oct 2008

31 Oct 2015

844.00 31 Oct 2008

31 Oct 2015

661.60

1 Feb 2015

31 July 2015

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.

2. Aggregate gross gains made by the directors on the exercise of the above options in the year were £132,379.50 (2013 – £66,094.00).

3. References to (b), (c) and (e) correspond with the summary of outstanding share options in note 19 on page 91.

4. The 1996 ESOS and 2005 ESOS awards, exercisable from 31 October 2008, were 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 was met in only one year and two-thirds
vesting if the target was 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.

About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 112 Bellway p.l.c. Annual Report and Accounts 201460

Report of the Board on
Directors’ Remuneration continued

Statement of directors’ shareholdings and share interests
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

M R Toms

J A Cuthbert

P N Hampden Smith

D N Jagger

Notes:

Beneficially
owned at
31 July 2014

Beneficially
owned at
31 July 2013

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

24,359

4,959

1,500

6,000

8,196

500

16,292

2,489

1,500

6,000

–

77,659

101,155

42,888

N/A

–

30,005

15,524

N/A

1,618

2,350

3,463

N/A

–

3,500

16,500

–

N/A

–

N/A

1. There has been no change in any of the above interests between 31 July 2014 and the date of this report. John Watson’s and Ted Ayres’ interests in outstanding PSP awards and
potentially, in shares beneficially owned, will change when the awards over 77,659 and 35,689 shares respectively made on 24 October 2011, partially vest on 24 October 2014.
Further details are provided in the PSP table on page 58.

2. A share ownership guideline is in place requiring executive directors to build up a holding of 100% of their basic salary. The current executives have not met this guideline given

their relatively short time in post.

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 58). 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.

400

350

300

250

200

150

100

246

208

202

263

227

222

128

152

100

151

118

115

31 July 2009

31 July 2010

31 July 2011

31 July 2012

31 July 2013

31 July 2014

Bellway

Housebuilders’ Index

FTSE 250 Index

This graph shows the value, by 31 July 2014, of £100 invested in Bellway p.l.c. on 31 July 2009 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.

GovernanceBellway p.l.c. Annual Report and Accounts 201461

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 percentage of annual bonus paid and the vesting 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)

Note:

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%

2014

1,450

91.6%

50.0%

1. John Watson held the role of Chief Executive up until 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.

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 base salary, benefits and
annual bonus compared to the average increase across all employees.

Salary

Benefits

Annual bonus

Note:

Chief Executive(1)

All other employees

Chief Executive(1)

All other employees

Chief Executive(1)

All other employees

% change

+14

+35

-5

+39

1. John Watson was Chief Executive 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 figures for the Chief Executive in respect of the year to 31 July 2013 are based on the combined pro-rated figures for both Messrs Watson and Ayres for the period they
each were Chief Executive.

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 2013 and 31 July 2014.

Employee costs

Dividends

Corporation tax

2014
£000

84,619

63,525

54,513

2013
£000

72,892

36,518

32,355

%
change

16.1

74.0

68.5

Statement of voting at AGM
At last year’s AGM held on 13 December 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

86,473,565

1,422,563

87,896,128

4,778,655

98.38

1.62

100.00

N/A

This report will be put to an advisory vote of the Company’s shareholders at the AGM on 12 December 2014.
On behalf of the Board

Mike Toms
Chairman of the Board Committee on Executive Directors’ Remuneration
13 October 2014

About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 112 Bellway p.l.c. Annual Report and Accounts 2014

Report of the Directors

Bellway p.l.c. is the holding company of the Bellway Group of companies and is a UK publicly listed company whose shares
are traded on the London Stock Exchange. The main trading company is Bellway Homes Limited and this and the other
subsidiaries which principally generate the profits and hold the net assets of the Group are listed at note 27 to the accounts.

RESULTS AND DIVIDENDS

The profit for the year attributable to equity holders of the parent company amounts to £191.4 million (2013 – £108.6 million).
The directors have proposed a final ordinary dividend for the year ended 31 July 2014 of 36.0p 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 21.0p per share in respect of the year ended 31 July 2013, together with an interim dividend in respect of the
year ended 31 July 2014 of 16.0p per share.
The directors recommend payment of the final dividend on Wednesday 14 January 2015 to shareholders on the Register
of Members at the close of business on Friday 12 December 2014.

DIRECTORS

All the directors of the Company, who are shown on pages 36 and 37, served throughout the year. Peter Johnson,
who is not shown, was a director up until the date of his retirement on 31 January 2014.

DIRECTORS’ CONTRACTS

Details of the terms of appointment of all the directors are given in the Report of the Board on Directors’ Remuneration
on page 52.

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 45 to 61.

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 102 and 103.

NOTIFIABLE SHAREHOLDERS’ INTERESTS

As at 31 July 2014 and as at the date of this report, the Company had been notified under DTR 5 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 2014

As at 13 October 2014

Number of shares
with voting rights

% total
voting rights

Number of shares
with voting rights

% total
voting rights

Blackrock Inc

Fidelity International Ltd/FMR Corp

Standard Life Investment Limited

JP Morgan Chase & Co

AXA Framlington Investment Management

Credit Suisse Securities (Europe) Limited

ACCOUNTABILITY AND AUDIT

11,174,895

9,300,000

8,570,757

5,715,902

5,603,638

3,890,282

9.15

7.62

7.01

4.68

4.59

3.19

11,174,895

9,300,000

8,570,757

5,715,902

5,603,638

3,890,282

9.15

7.62

7.01

4.68

4.59

3.19

The Statement on Going Concern and the Statement of Directors’ Responsibilities in respect of the Annual Report and
Accounts are shown on pages 64 and 66 respectively.
The Audit Committee, whose role is detailed on pages 42 to 44, has meetings at least twice a year with the Company’s auditor,
KPMG LLP.

GovernanceBellway p.l.c. Annual Report and Accounts 201463

CAPITAL MANAGEMENT

The Group is financed through the proceeds of issued ordinary shares, re-invested profits, and bank borrowings less cash in
hand. Bellway repaid the £20 million 9.5% preference shares at par in April 2014, thereby marginally reducing the Group’s cost
of debt. The following table analyses the Group’s capital structure:

Equity

Preference shares

Net bank debt

Capital employed

2014
£million

1,366.1

–

2013
£million

1,218.8

20.0

5.8

1,366.1

1,244.6

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 2015

By 31 July 2016

By 31 July 2017

By 31 July 2018

By 31 July 2019

Total

£million

125

–

300

The Group is in advanced negotiations to renew that element of the facilities which expire by 31 July 2015.

FINANCIAL RISK MANAGEMENT

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.

Credit risk
The Group’s credit risk is largely mitigated 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.

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.

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 material 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. Furthermore the Group signed up to the Prompt Payment Code during
the year. Trade creditors due within one year at 31 July 2014 of £106.8 million (2013 – £88.4 million) resulted in a creditor
payment period of 22 days (2013 – 23 days). Land creditors due within one year were £186.4 million (2013 – £107.0 million).
Including land creditors, the creditor payment period was 67 days (2013 – 60 days).

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 report, confidentially, 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.

About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 112 Bellway p.l.c. Annual Report and Accounts 201464

Report of the Directors
continued

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 and shareholder advisory
bodies on matters concerning executive remuneration.
Further information for shareholders is available under Shareholder Information on page 100 to 104 and also on the Group’s
website at www.bellwaycorporate.com.

GOING CONCERN

After conducting a full review, the directors have a reasonable expectation that the Group has adequate resources to fund its
operations for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the accounts
as discussed further on page 75.

EMPLOYEES

Bellway 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 Bellway, 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.
All new employees, when eligible, are automatically entered into the Group’s pension arrangements. In addition, the Group
operates a savings related share option scheme. The Group also provides life assurance cover to all staff and 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, which is available on the Group’s website, along with the Group’s
other corporate responsibility policies. Environmental issues are addressed in the Corporate Responsibility section of the
Strategic Report on page 35, and on the Group’s website at www.bellway.co.uk/corporate-responsibility.

CARBON REPORTING

The Group’s carbon reporting is set out in the Strategic Report on page 33.

GovernanceBellway p.l.c. Annual Report and Accounts 201465

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 Strategic Report and on the Group’s website at www.bellway.co.uk/corporate-responsibility.

INFORMATION ON THOSE THIRD PARTIES WITH WHICH THE COMPANY HAS CONTRACTS OR
ARRANGEMENTS ESSENTIAL TO ITS BUSINESS

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. There are no other arrangements which the Group considers to be
critical to the performance of the business.

PURCHASE OF THE COMPANY’S OWN SHARES

The Company was given authority at the AGM on 13 December 2013 to purchase its own ordinary and preference shares.
As at the date of this report, no market purchases of ordinary shares have been made by the Company. All of the 20 million
preference shares were however redeemed on 7 April 2014 at their normal redemption date and have been cancelled.
This authority will expire at the end of the forthcoming AGM when shareholders will be asked to renew this authority in relation
to its ordinary shares 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. 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 THE 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 that each director has taken all the steps that he or she ought to
have taken as a director to make himself or herself aware of any relevant audit information and to establish that the Company’s
auditor is aware of that information. This confirmation is given and should be interpreted in accordance with the provisions of
section 418 of the Companies Act 2006.

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.

AGM – SPECIAL BUSINESS

Five resolutions will be proposed as special business at the AGM to be held on Friday 12 December 2014. Explanatory notes
on these resolutions are set out in Shareholder Information on pages 100 to 101.

DIRECTORS’ RESPONSIBILITY

The directors are responsible for preparing the Annual Report and Accounts in accordance with applicable law and regulations.
The directors consider that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable, and that
it provides the information necessary for shareholders to assess the Company’s performance, business model and strategy.
Further details are provided on page 66.

By order of the Board

Kevin Wrightson
Group Company Secretary
13 October 2014

About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 112 Bellway p.l.c. Annual Report and Accounts 2014
66

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 Strategic Report, Directors’ Report,
Directors’ Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.

Responsibility statement of the directors in respect of the Annual Report and Accounts
We confirm that to the best of our knowledge:
• 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 Strategic Report includes a fair review of the development and performance of the business and the position of the

Company 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
13 October 2014

GovernanceBellway p.l.c. Annual Report and Accounts 201467

Independent Auditor’s
Report to the Members of
Bellway p.l.c.

Opinions and conclusions arising from our audit.
1 OUR OPINION ON THE FINANCIAL STATEMENTS IS UNMODIFIED

We have audited the financial statements of Bellway p.l.c. for the year ended 31 July 2014 set out on pages 70 to 98.

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 2014 and of the Group’s profit for the year then ended;

• the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards

as adopted by the European Union (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.

2 OUR ASSESSMENT OF RISKS OF MATERIAL MISSTATEMENT

In arriving at our audit opinion above on the financial statements the risk of material misstatement that had the greatest
effect on our audit was as follows:
Profit recognition on current sites and the carrying amount of land held for development and work in progress
(gross profit £316.4 million; Land held for development and work in progress £1,758.3 million).
Refer to pages 42 to 44 (Audit Committee Report), pages 76 and 79 (Accounting Policies) and note 13 on page 86
(financial disclosures).
The risk – Profit recognition on current sites and net realisable value of land held for development and work in progress are
both reliant on the Group’s estimation of future selling prices and build costs, both of which are uncertain. Sales prices have
inherent uncertainty due to changes in market conditions. Build costs, and in particular sub-contractor costs, can vary with
market conditions and may also be incorrectly estimated due to unforeseen events during construction.
Gross profit is recognised for legally complete house sales based on the latest whole site gross margin which is an output of the
site valuations. These valuations use actual and forecast selling prices and build costs and are sensitive to future movements in
both the estimated cost to complete and expected selling prices.
Land held for development and work in progress are held at the lower of cost and net realisable value (i.e. the forecast selling
price less the remaining costs to build and sell). An assessment of the net realisable value of land held for development
and work in progress is carried out at each balance sheet date and is dependent on the Group’s estimates of future
selling prices and build costs, together with the likelihood of receiving planning permission for land held for development.
Planning permission is dependent on local and national policies, and without planning permission sites cannot be developed.
A change in the Group’s estimate of sales price and build cost could have a material impact on the carrying value of Land held
for development and Work in progress and the level of profit recognition in the Group’s financial statements.
Our response – Our audit procedures included, among others:
• Inspecting a sample of land additions to evaluate the terms of the deal and checking to the amounts recorded in the financial
statements, including re-performing the calculation of fair value for a sample of land acquired on deferred payment terms;
• Testing the Group’s controls over the authorisation and recording of costs, including agreeing a sample of costs incurred to
date from site valuations to invoice and/or payment, including checking that they relate to the site against which they have
been allocated;

• We attended a selection of site valuation meetings, where incurred costs and revenues were reviewed against budgets,

and estimates of future cost and selling prices were discussed, challenged and updated, to check that senior operational,
commercial and financial management were effectively challenging the forecast margins utilised to recognise profit;

• We used a variety of quantitative and qualitative factors to select those sites with a higher risk of material misstatement and

conducted detailed site reviews for these sites to understand the associated risks and ascertain whether these risks had been
factored into the site valuations. The site reviews included the following procedures, among others, where relevant, i) making
inquiries of management, including senior operational, commercial and financial management, about their assessment
of risks for these sites; ii) reviewing site plans to gain an understanding of progress made and problems arising on the site;
and iii) comparing actual and budgeted unit sales and average selling prices to date to identify potential build or sale issues.

About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 112 Bellway p.l.c. Annual Report and Accounts 201468

Independent Auditor’s
Report to the Members of
Bellway p.l.c. continued

2 OUR ASSESSMENT OF RISKS OF MATERIAL MISSTATEMENT (CONTINUED)

• For a sample of sites we performed a comparison of estimated and actual revenue and costs across the period from the initial
assessment of a site’s viability (conducted prior to acquiring land for development) to July 2014 in order to assess the Group’s
ability to forecast accurately;

• On a site by site basis, we compared the gross margin recognised in the financial statements with the latest site valuations

to determine whether the margin recognised was appropriate;

• We developed an expectation, based on our attendance at site valuation meetings, our detailed site reviews, and other
procedures, including enquiries of management and reviews of divisional board reports, of sites to be included in the
Group’s net realisable value provision. We obtained the Group’s net realisable value provision and compared land held for
development and work in progress sites included to our expectations and, with reference to site valuations, determined
whether amounts included had been calculated appropriately for these sites;

• Assessing the adequacy of the Group’s disclosures in relation to areas of judgement and estimation in relation to

these balances.

3 OUR APPLICATION OF MATERIALITY AND AN OVERVIEW OF THE SCOPE OF OUR AUDIT

Materiality for the Group financial statements as a whole was set at £15 million. This has been determined with reference to a
benchmark of revenue, of which it represents 1.0%, which we consider to be one of the principal considerations for members
of the company in assessing the financial performance of the Group.
We agreed with the Audit Committee to report to it all corrected and uncorrected misstatements we identified through our
audit with a value in excess of £0.5 million, in addition to other audit misstatements below that threshold that we believe
warranted reporting on qualitative grounds.
The Group audit team performed an audit of the Group’s main trading subsidiary. The audit covered 100% of total Group
revenue, 100% of total Group profit before taxation, and 95% of total Group assets. For the other subsidiary companies and
jointly controlled entities, we performed analytical procedures at the aggregated Group level to corroborate our conclusion
that there are no significant risks of material misstatement within these.
The audit undertaken for Group reporting purposes at the Group’s main trading subsidiary was performed to a materiality
level of £8.75 million, as set by the Group audit team.

4 OUR OPINION ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006

IS UNMODIFIED

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;

• the information given in the Strategic Report and Report of the Directors’ for the financial year for which the financial

statements are prepared is consistent with the financial statements; and

• information given in the Corporate Governance Report set out on pages 40 to 44 with respect to internal control and risk
management systems in relation to financial reporting processes and about share capital structures as described in the
Report of the Directors’ is consistent with the financial statements.

GovernanceBellway p.l.c. Annual Report and Accounts 201469

5 WE HAVE NOTHING TO REPORT IN RESPECT OF THE MATTERS ON WHICH WE ARE

REQUIRED TO REPORT BY EXCEPTION

Under ISAs (UK and Ireland) we are required to report to you if, based on the knowledge we acquired during our audit,
we have identified other information in the Annual Report that contains a material inconsistency with either that knowledge
or the financial statements, a material misstatement of fact, or that is otherwise misleading.
In particular, we are required to report to you if:
• we have identified material inconsistencies between the knowledge we acquired during our audit and the directors’ statement
that they consider that the Annual Report and financial statements taken as a whole is fair, balanced and understandable and
provides the information necessary for shareholders to assess the Group’s performance, business model and strategy; or

• the Audit Committee’s report does not appropriately address matters communicated by us to the Audit Committee.

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; or
• a Corporate Governance Statement has not been prepared by the Company.

Under the Listing Rules we are required to review:
• the directors’ statement, set out on page 64, in relation to going concern; and
• the part of the Corporate Governance Report on pages 40 to 44 relating to the Company’s compliance with the nine

provisions of the 2010 UK Corporate Governance Code specified for our review.

We have nothing to report in respect of the above responsibilities.

Scope of report and responsibilities
As explained more fully in the Directors’ Responsibilities Statement set out on page 66, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. 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.
This report is made solely to the Company’s members as a body and is subject to important explanations and disclaimers
regarding our responsibilities, published on our website at www.kpmg.com/uk/auditscopeukco2013a, which are incorporated
into this report as if set out in full and should be read to provide an understanding of the purpose of this report, the work we
have undertaken and the basis of our opinions.

Nick Plumb (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
Quayside House, 110 Quayside, Newcastle upon Tyne NE1 3DX
13 October 2014

About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 112 Bellway p.l.c. Annual Report and Accounts 201470

Group Income Statement

for the year ended 31 July 2014

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

2014
£000

2013
£000

1,486,394

1,110,676

(1,170,027)

(907,380)

316,367

(60,241)

256,126

807

(10,996)

245,937

(54,513)

191,424

203,296

(52,227)

151,069

751

(10,893)

140,927

(32,355)

108,572

157.0p

156.3p

89.3p

88.9p

Statements of Comprehensive Income

for the year ended 31 July 2014

Profit/(loss) for the period

191,424

108,572

(1,310)

(1,900)

Notes

Group
2014
£000

Group
2013
£000

Company
2014
£000

Company
2013
£000

Other comprehensive (expense)/income

Items that will not be recycled to the income statement:

Remeasurement (losses)/gains on defined benefit pension
plans

Income tax on other comprehensive expense/(income)

Other comprehensive (expense)/income for the period,
net of income tax

(1,052)

210

1,558

(530)

(842)

1,028

–

Total comprehensive income/(expense) for the period*

190,582

109,600

(1,310)

(1,900)

* All attributable to equity holders of the parent.

AccountsBellway p.l.c. Annual Report and Accounts 201471

Non-
controlling
interest
£000

Total
equity

£000

Statements of Changes
in Equity

at 31 July 2014

Issued
capital

Share
premium

Group

Notes

£000

Balance at 1 August 2012

15,180

162,755

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

–

2,377

–

2,377

Balance at 31 July 2013

15,221

165,132

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

Purchase of own shares

Redemption of preference
shares

Credit in relation to share
options and tax thereon

Total contributions by
and distributions to
shareholders

–

1,813

–

Capital
redemption
reserve
£000

–

20,000

–

Other
reserves

Retained
earnings

Total

£000

1,492

–

953,774

1,133,201

(66)

1,133,135

108,572

1,028

109,600

(27,963)

–

2,418

1,648

(26,315)

(23,897)

–

108,572

1,028

109,600

(27,963)

2,418

1,648

(23,897)

1,492

1,037,059

1,218,904

(66)

1,218,838

–

191,424

(842)

190,582

(45,102)

–

(764)

1,865

(764)

(20,000)

–

645

(65,221)

(43,356)

–

191,424

(842)

190,582

(45,102)

1,865

(764)

–

645

(43,356)

1,813

20,000

Balance at 31 July 2014

15,273

166,945

20,000

1,492

1,162,420 1,366,130

(66) 1,366,064

* Additional breakdown is provided in the Statements of Comprehensive Income.

Bellway p.l.c. Annual Report and Accounts 2014About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 112

Statements of Changes
in Equity continued

at 31 July 2014

Company

Balance at 1 August 2012

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

Issued
capital

Share
premium

Notes

£000

15,180

162,755

–

2,377

–

2,377

Balance at 31 July 2013

15,221

165,132

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

Purchase of own shares

Redemption of preference shares

Credit in relation to share options

Total contributions by and
distributions to shareholders

–

1,813

–

1,813

20,000

Capital
redemption
reserve
£000

–

20,000

–

Other
reserves

Retained
earnings

Total
equity

£000

2,145

£000

527,443

707,523

–

(1,900)

–

(1,900)

(27,963)

–

1,021

2,418

1,021

(26,942)

(24,524)

2,145

498,601

681,099

–

(1,310)

–

(1,310)

(45,102)

–

(764)

(20,000)

923

1,865

(764)

–

923

(64,943)

(43,078)

Balance at 31 July 2014

15,273

166,945

20,000

2,145

432,348

636,711

* Additional breakdown is provided in the Statements of Comprehensive Income.

AccountsBellway p.l.c. Annual Report and Accounts 2014

Balance Sheets

at 31 July 2014

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

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

Capital redemption reserve

Other reserves

Retained earnings

Total equity attributable to equity holders of the parent

Non-controlling interest

Total equity

Notes

Group
2014
£000

Group
2013
£000

Company
2014
£000

Company
2013
£000

12,493

6,371

–

32,186

2,762

53,812

11,328

7,697

–

32,107

31,184

34,484

3,238

56,747

–

32,107

31,184

1,822,682

1,513,527

72,876

35,136

57,166

24,215

1,930,694

1,594,908

1,984,506

1,651,655

–

556,142

48,748

604,890

636,997

7,932

67,725

75,657

30,000

29,752

483,033

542,785

618,442

9,042

45,062

54,104

50,000

18,305

310,408

378,713

432,817

–

286

–

622,054

48,727

670,781

701,965

–

20,000

–

866

20,866

1,366,064

1,218,838

636,711

681,099

15,273

166,945

20,000

1,492

15,221

165,132

–

1,492

1,162,420

1,037,059

1,366,130

1,218,904

(66)

15,273

166,945

20,000

2,145

432,348

636,711

–

15,221

165,132

–

2,145

498,601

681,099

–

1,366,064

1,218,838

636,711

681,099

Approved by the Board of Directors on 13 October 2014 and signed on its behalf by:

John Watson
Director

Keith Adey
Director

Registered number 1372603

Bellway p.l.c. Annual Report and Accounts 2014About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 112

Cash Flow Statements

for the year ended 31 July 2014

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

(Increase)/decrease in trade and other receivables

Increase/(decrease) in trade and other payables

Cash from operations

Interest paid

Income tax paid

Net cash inflow from operating activities

Cash flows from investing activities

Acquisition of property, plant and equipment

Proceeds from sale of property, plant and equipment

Proceeds from sale of investment properties

Interest received

Net cash (outflow)/inflow from investing activities

Cash flows from financing activities

Decrease in bank borrowings

Redemption of preference shares

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

Notes

9, 10

Group
2014
£000

Group
2013
£000

Company
2014
£000

Company
2013
£000

191,424

2,998

(154)

(95)

(807)

10,996

923

54,513

108,572

2,487

(76)

(578)

(751)

10,893

1,021

32,355

(309,155)

(113,684)

(13,405)

187,676

124,914

(5,480)

(42,658)

76,776

14,573

39,030

93,842

(5,922)

(28,770)

59,150

(3,855)

(1,956)

296

904

801

(1,854)

197

2,213

743

1,197

–

(32,000)

(1,310)

(1,900)

–

1,305

1,900

–

65,912

65,926

–

27,445

(18)

27,427

(1,904)

(1,900)

–

64,022

25,527

–

(20,000)

–

(20,000)

1,865

(764)

(45,102)

(64,001)

10,921

24,215

35,136

2,418

–

(27,963)

(57,545)

2,802

21,413

24,215

1,865

(764)

(45,102)

(64,001)

48,727

48,748

2,418

–

(27,963)

(25,545)

(18)

48,745

48,727

AccountsBellway p.l.c. Annual Report and Accounts 2014Accounting 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 13 October 2014,
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 22 to 25. 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 26 to 27. 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, liquidity, interest rate and housing market risk.
The Group’s activities are financed principally by a combination of ordinary shares and bank borrowings less cash in hand.
At 31 July 2014, net cash was £5.1 million having generated cash of £10.9 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 £300.0 million, expiring
in tranches up to November 2018, with £270.0 million available for drawdown under such facilities at 31 July 2014.
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 adopted the following standard and amendment during the current financial year:
• 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. For the current period the profit
before taxation is £0.2 million lower than it would have been prior to the adoption of this amendment and net assets are
unchanged. The comparative period has not been restated as the adoption of this amendment reduces the profit before
taxation by less than £0.2 million and net assets are unchanged.

• IFRS 13 ‘Fair Value Measurement’. The standard defines fair value and provides a single IFRS framework for measuring
fair value. The adoption of this standard has not had a material effect on the Group’s profit for the period or equity.
The other standards and interpretations that are applicable for the first time in the Group’s financial statements for the
year ended 31 July 2014 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.

Bellway p.l.c. Annual Report and Accounts 2014About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 11276

Accounting Policies
continued

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.

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 to 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 86.

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.

AccountsBellway p.l.c. Annual Report and Accounts 201477

INTEREST-BEARING LOANS AND BORROWINGS
Interest-bearing loans and borrowings are stated at their fair value at the date of initial recognition and subsequently at
amortised cost.

TRADE AND OTHER PAYABLES

Trade payables on normal terms are not interest-bearing and are stated at their nominal value. Trade payables on deferred
terms, most notably in relation to land purchases, are recorded initially at their fair value. The discount to nominal value is
amortised over the period to settlement and charged to finance expenses.

SHARE CAPITAL

I. Preference share capital
Preference share capital was redeemed on 7 April 2014.

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.

Bellway p.l.c. Annual Report and Accounts 2014About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 11278

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

The defined benefit scheme liability is the present value of the defined benefit obligation at the balance sheet date less
the fair value of scheme assets. The calculation is performed by a qualified actuary using the projected unit credit method.
All remeasurement gains and losses are recognised immediately in the Statement of Comprehensive Income (‘SOCI’).
Under IAS 19R, the net interest cost is calculated on the net defined benefit liability with the difference between actual and
expected returns on scheme assets recognised in full within the SOCI. Further details of the scheme and the valuation methods
applied may be found in note 25 on page 93.
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.

AccountsBellway p.l.c. Annual Report and Accounts 201479

EXCEPTIONAL ITEMS
Exceptional items are those which, in the opinion of the Board, are material by size or nature, non-recurring, and of such
significance that they require separate disclosure on the face of the income statement.

ACCOUNTING ESTIMATES AND JUDGEMENTS

Management considers the key estimates and judgements made in the financial statements to be related to:

Valuation of work in progress and land held for development
Inventories are carried at the lower of cost and net realisable value. 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 2014 and 31 July 2013, 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 2014 and 31 July 2013 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.

Gross profit recognition
Gross profit is recognised for completed house sales based on the latest whole site gross margin which is an output of the site
valuation. These valuations, which are updated at frequent intervals throughout the life of the site, use actual and forecast selling
prices, land costs and construction costs and are sensitive to future movements in both the estimated cost to complete and
expected selling prices. Forecast selling prices are inherently uncertain due to changes in market conditions.

STANDARDS AND INTERPRETATIONS IN ISSUE BUT NOT YET EFFECTIVE

At the date of authorisation of these financial statements, the following relevant standards, which have not been applied in
these financial statements, were in issue and endorsed by the EU but not yet effective:
• 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.

The Board anticipates that these standards will be adopted in the Group’s financial statements in the year they become
effective and that the adoption of these standards 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.

Bellway p.l.c. Annual Report and Accounts 2014About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 11280

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 Chief Executive’s Operating Review on page 23. 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)

2014
£000

502

305

807

3,403

5,700

358

230

1,305

10,996

2014
£000

83,208

8,718

2,858

923

95,707

2013
£000

309

442

751

3,983

4,682

299

1,900

10,893

2013
£000

71,599

7,870

2,238

1,021

82,728

The average number of persons employed by the Group during the year was 1,959 (2013 – 1,733) comprising 628 (2013 – 578)
administrative and 1,331 (2013 – 1,155) 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 45 to 61.
Key management personnel remuneration, including directors, comprised:

Salaries and fees

Taxable benefits

Annual bonus – cash

Pension costs

Share-based payments

2014
£000

2,054

130

1,641

183

449

4,457

2013
£000

2,263

128

1,633

166

564

4,754

Key management personnel, as disclosed under IAS 24 ‘Related Party Disclosures’, comprises the directors and other senior
operational management.

AccountsBellway p.l.c. Annual Report and Accounts 20144 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 auditor and its associates in respect of:

Audit of financial statements of subsidiaries pursuant to legislation

Other services relating to taxation

Pension scheme audit

2014
£000

2013
£000

95,707

82,728

(154)

2,481

517

10,495

1,182

153

(76)

2,071

416

9,331

1,138

196

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 2014 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 and costs to complete 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 2013.

Bellway p.l.c. Annual Report and Accounts 2014About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 11282

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

2014
£000

2013
£000

54,152

(47)

54,105

464

–

(56)

408

33,559

(1,304)

32,255

(210)

164

146

100

Total income tax expense in income statement

54,513

32,355

2014
%

2014
£000

2013
%

2013
£000

Reconciliation of effective tax rate:

Profit before taxation

Tax calculated at UK corporation tax rate

Enhanced deductions

Reduction in tax rate

Adjustments in respect of prior years – current tax

– deferred tax

22.3

(0.1)

–

245,937

54,844

(228)

–

(47)

(56)

Effective tax rate and tax expense for the year

22.2

54,513

23.7

–

0.1

(0.9)

0.1

23.0

140,927

33,400

(51)

164

(1,304)

146

32,355

The deferred tax assets held by the Group at the start of the year that are expected to be realised after 31 March 2015 are valued
at the tax rate that will be effective when they are expected to be realised. At the year end a tax rate reduction to 20%, effective
from 1 April 2015, was substantively enacted.
The corporation tax rate reduced from 24% to 23% with effect from 1 April 2013, and to 21% with effect from 1 April 2014.
A further reduction to 20%, effective from 1 April 2015, will reduce the Group’s current tax charge accordingly.
The effective income tax expense is 22.2% of profit before taxation (2013 – 23.0%) and compares favourably to the Group’s
standard tax rate for the year of 22.3% (2013 – 23.7%). The lower effective tax rate in the current year is principally due to
enhanced tax deductions received by the Group in relation to land remediation relief.

Deferred tax recognised directly in equity:

(Charge)/credit relating to equity-settled transactions

Credit/(charge) relating to remeasurements 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 2013 of 21.0p per share (2012 – 14.0p)

Interim dividend for the year ended 31 July 2014 of 16.0p per share (2013 – 9.0p)

Dividends forfeited

2014
£000

(278)

210

2013
£000

627

(530)

2014
£000

2013
£000

25,566

19,543

(7)

45,102

17,017

10,952

(6)

27,963

Proposed final dividend for the year ended 31 July 2014 of 36.0p per share (2013 – 21.0p)

43,989

25,572

The 2014 proposed final dividend is subject to approval by shareholders at the Annual General Meeting on 12 December 2014
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 2013 shares were held by the Trust (note 20)
on which dividends had been waived.

AccountsBellway p.l.c. Annual Report and Accounts 2014

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. 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

2014
£000

Weighted
average
number of
ordinary
shares
2014
Number

For basic earnings per ordinary share

191,424

121,919,049

Dilutive effect of options and awards

535,130

For diluted earnings per ordinary share

191,424

122,454,179

9 PROPERTY, PLANT AND EQUIPMENT

Group

Cost

At 1 August 2012

Additions

Disposals

At 1 August 2013

Additions

Disposals

At 31 July 2014

Depreciation

At 1 August 2012

Charge for year

On disposals

At 1 August 2013

Charge for year

On disposals

At 31 July 2014

Net book value

At 31 July 2014

At 31 July 2013

At 31 July 2012

The Company has no property, plant and equipment.

Earnings
per share

Earnings

2014
p

157.0

(0.7)

156.3

Weighted
average
number of
ordinary
shares
2013
Number

2013
£000

108,572

121,572,688

599,151

108,572

122,171,839

Land and
property

£000

Plant,
fixtures and
fittings
£000

7,200

–

7,200

793

–

7,993

1,225

166

–

1,391

166

–

1,557

6,436

5,809

5,975

16,505

2,113

(2,043)

16,575

2,995

(2,344)

17,226

11,073

1,905

(1,922)

11,056

2,315

(2,202)

11,169

6,057

5,519

5,432

Earnings
per share

2013
p

89.3

(0.4)

88.9

Total

£000

23,705

2,113

(2,043)

23,775

3,788

(2,344)

25,219

12,298

2,071

(1,922)

12,447

2,481

(2,202)

12,726

12,493

11,328

11,407

Bellway p.l.c. Annual Report and Accounts 2014About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 112

Notes to the Accounts
continued

10 INVESTMENT PROPERTY

Group

Cost

At 1 August 2012

Disposals

At 1 August 2013

Disposals

At 31 July 2014

Depreciation

At 1 August 2012

Charge for year

On disposals

At 1 August 2013

Charge for year

At 31 July 2014

Net book value

At 31 July 2014

At 31 July 2013

At 31 July 2012

Total
£000

9,791

(1,685)

8,106

(809)

7,297

416

(50)

409

517

926

6,371

7,697

9,748

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 £7.450 million (2013 – £7.697 million).
Investment properties are held at cost and categorised as level 3 within the hierarchical classification of IFRS 7 Revised (as
defined within the standard). The fair value is calculated on the same basis as other financial assets (see notes 14 and 18).
The Company has no investment properties.

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 2013

Additions

At 31 July 2014

Shares in subsidiary
undertakings
£000

31,184

923

32,107

AccountsBellway p.l.c. Annual Report and Accounts 201485

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 98.

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

2014
£000

253

38,661

(7,474)

(41,721)

(10,281)

5,793

(5,330)

2013
£000

202

37,140

(7,256)

(40,830)

(10,744)

2,440

(2,502)

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 recognised by the Group and the movements thereon during the current and
prior year:

Group

At 1 August 2012

Income statement (charge)/credit

Charge to statement of comprehensive income

Credit to equity

At 31 July 2013

Income statement (charge)/credit

Credit to statement of comprehensive income

Charge to equity

At 31 July 2014

Capital
allowances

£000

207

(158)

–

(8)

–

Retirement
benefit
obligations
£000

2,645

(306)

(530)

–

1,809

(432)

210

–

1,587

Share-based
payments

£000

358

303

–

627

1,288

(40)

–

(278)

970

Other
temporary
differences
£000

–

164

Total

£000

3,241

(100)

(530)

627

3,238

(408)

210

(278)

2,762

There are no deferred tax balances in respect of the Company.

Bellway p.l.c. Annual Report and Accounts 2014About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 112

Notes to the Accounts
continued

13 INVENTORIES

Group

Land

Work in progress

Showhomes

Part-exchange properties

2014
£000

1,122,402

635,865

52,850

11,565

2013
£000

907,279

535,022

52,827

18,399

1,822,682

1,513,527

Inventories of £1,141.5 million were expensed in the year (2013 – £880.8 million).
In the ordinary course of business inventories have been written back by a net £11.8 million (2013 – £3.2 million) in the year.
There has been no exceptional write-down of inventories in the period (2013 – £nil) as outlined in note 5 on page 81.
Land with a carrying value of £66.4 million (2013 – £53.2 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

2014
£000

34,484

(2,526)

156

32,186

2013
£000

35,080

1,128

(1,849)

125

34,484

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 significant unobservable inputs
including 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.
At 31 July 2014 the estimated fair value of these assets included an allowance for low single-digit price inflation.
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 to cost of sales for the year ended 31 July 2014 was £0.156 million (2013 – £0.125 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 2014 (2013 – nil). None of the other financial assets are past
their due dates (2013 – 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 Statement 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 2014 or 31 July 2013 and accordingly have not recognised any movements directly within the Statement of
Comprehensive Income to date.
The Company has no other financial assets.

AccountsBellway p.l.c. Annual Report and Accounts 2014

15 TRADE AND OTHER RECEIVABLES

Current receivables

Trade receivables

Other receivables

Amounts owed by Group undertakings

Prepayments and accrued income

Group
2014
£000

20,998

49,284

–

2,594

72,876

Group
2013
£000

9,881

44,606

Company
2014
£000

Company
2013
£000

–

556,107

622,054

2,679

57,166

–

556,142

622,054

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 (2013 – nil).
Other receivables due within one year include £16.440 million (2013 – £11.956 million) in relation to VAT recoverable.

16 INTEREST-BEARING LOANS AND BORROWINGS

Current liabilities

Bank loans

Preference shares (see note below)

Preference shares

Allotted, called up and fully paid

20,000,000 £1 shares at 31 July 2013

Group
2014
£000

30,000

–

30,000

Group
2013
£000

30,000

20,000

50,000

Company
2014
£000

–

Company
2013
£000

–

20,000

Group
2014
£000

Group
2013
£000

Company
2014
£000

Company
2013
£000

–

20,000

–

20,000

With regard to the 9.5% cumulative redeemable preference shares 2014 of £1 each, which were redeemed on 7 April 2014,
the following rights were attached:
(a) The holders were 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 were 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 was neither less than the nominal value nor more than twice the nominal value of the
shares. All shares still in issue were redeemed at par on 7 April 2014.

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 was neither less than the nominal value nor more than twice the nominal value of the shares.

(d) The preference shareholders had no ordinary voting rights except in circumstances where the fixed dividend on the

preference shares was six months in arrears or where the business of a general meeting included 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 7 April 2014.

Bellway p.l.c. Annual Report and Accounts 2014About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 11288

Notes to the Accounts
continued

17 TRADE AND OTHER PAYABLES

Non-current liabilities

Land payables

Other payables

Accrued expenses and deferred income

Group
2014
£000

61,546

4,800

1,379

67,725

Group
2013
£000

38,986

4,858

1,218

45,062

Company
2014
£000

Company
2013
£000

–

Land payables of £8.053 million (2013 – £10.650 million) are secured on the land to which they relate.
The carrying value of the land used for security is £7.023 million (2013 – £9.421 million).

Current liabilities

Trade payables

Land payables

Social security and other taxes

Other payables

Accrued expenses and deferred income

Payments on account

Group
2014
£000

106,822

186,441

3,410

30,498

62,832

93,030

Group
2013
£000

88,423

107,033

2,918

26,413

49,512

36,109

483,033

310,408

Company
2014
£000

Company
2013
£000

–

286

–

286

–

121

745

–

866

Land payables of £61.067 million (2013 – £45.513 million) are secured on the land to which they relate.
The carrying value of the land used for security is £59.377 million (2013 – £43.811 million).

18 FINANCIAL RISK MANAGEMENT

The Group’s financial instruments comprise cash, 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, other receivables and amounts owed by Group undertakings following the
repayment of the preference shares on 7 April 2014.

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 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, interest rate
risk and housing market 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.

AccountsBellway p.l.c. Annual Report and Accounts 201489

18 FINANCIAL RISK MANAGEMENT (CONTINUED)

Liquidity risk
The Group finances its operations through a mixture of equity (comprising share capital, reserves and reinvested profit) 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 in the Report of the Directors 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 2014 it is estimated that an increase of 1% in interest rates applying for the full year would increase
the Group’s profit before taxation by £0.122 million (2013 – decrease profit before taxation by £0.649 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.
At 31 July 2014 it is estimated that if forecast UK house price inflation had been 1% lower, and all other variables were held
constant, the Group’s house price linked financial instruments, which are solely available for sale financial assets, would
decrease in value, excluding the effects of taxation, by £3.0 million (2013 – £3.0 million) with a corresponding reduction in both
the result for the year and equity.
Adjustments to the house price inflation assumption in the fair value model would have an effect on the fair value of the assets.
Additionally, whilst not easily assessable in advance, changes to house price inflation levels may affect the likelihood of these
assets being redeemed, further affecting their fair value.

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 initially recorded at fair value, being the price paid for the land
discounted to present day, and subsequently at amortised cost. 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 2014

At 31 July 2013

Balance at
31 July

£000

247,987

146,019

Total
contracted
cash payment
£000

253,826

150,551

Within one
year or on
demand
£000

188,114

108,403

1 – 2 years

2 – 5 years

£000

41,973

18,064

£000

23,739

21,442

More than
5 years

£000

–

2,642

Bellway p.l.c. Annual Report and Accounts 2014About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 112

Notes to the Accounts
continued

18 FINANCIAL RISK MANAGEMENT (CONTINUED)

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

Trade and other payables

At 31 July 2014

Bank loans – floating rates

Preference shares

Trade and other payables

At 31 July 2013

Balance at
31 July

£000

30,000

145,530

175,530

30,000

20,000

122,612

172,612

Total
contracted
cash payment
£000

Within one
year or on
demand
£000

30,087

145,530

175,617

30,015

21,900

122,612

174,527

30,087

140,730

170,817

30,015

21,900

117,754

169,669

1 – 2 years

2 – 5 years

More than
5 years

£000

–

£000

–

4,800

–

4,858

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 (2013 – £270.0 million) of undrawn bank facilities available.

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 2014 and 31 July 2013 for both the Group and the
Company are shown in note 22.
At 31 July 2014 the average interest rate earned on the temporary closing cash balance was 0.51% (2013 – 0.48%).
The carrying amount of these assets approximates their fair value.

Fair values
The carrying values of financial assets and liabilities reasonably approximate their fair values.

Financial assets and liabilities by category

Available for sale financial assets

Loans and receivables

Cash and cash equivalents

Financial liabilities at amortised cost

Group
2014
£000

32,186

70,282

35,136

(420,107)

(282,503)

Group
2013
£000

34,484

54,487

24,215

(315,713)

(202,527)

Company
2014
£000

–

556,142

48,748

(286)

Company
2013
£000

–

622,054

48,727

(20,121)

604,604

650,660

AccountsBellway p.l.c. Annual Report and Accounts 2014

19 ISSUED CAPITAL

Group and Company

Allotted, called up and fully paid ordinary shares

At start of year

Issued on exercise of options

At end of year

2014
Number
000

121,772

419

122,191

2014

£000

15,221

15,273

2013
Number
000

121,451

321

121,772

2013

£000

15,180

15,221

Share options
At 31 July 2014 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

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

17 November 2004

31 October 2005

11,700

4,600

56,000

60,600

31 October 2005

7 February 2007

24,100

844.00

31 October 2008

7,400

1,470.00

7 February 2010

31,500

716.00

844.00

17 November 2007

31 October 2008

16 November 2014

30 October 2015

6 February 2017

(d) Bellway p.l.c. (2007) Employee Share Option Scheme

7 February 2007

14,600

1,470.00

7 February 2010

6 February 2017

(e) Bellway p.l.c. (2003) Savings Related Share Option Scheme

14,600

11 November 2009

12 November 2010

14 November 2011

16 November 2012

15 November 2013

Total

11,750

54,426

262,680

42,607

107,180

17,896

661.60

439.60

556.00

805.60

1 February 2015

1 February 2016

1 February 2015

1 February 2017

1 February 2016

1 February 2018

86,618

1,218.40

1 February 2017

30,025

1,218.40

1 February 2019

613,182

731,582

31 July 2015

31 July 2016

31 July 2015

31 July 2017

31 July 2016

31 July 2018

31 July 2017

31 July 2019

Details of directors’ share options are contained within the Report of the Board on Directors’ Remuneration on pages 45 to 61.

Bellway p.l.c. Annual Report and Accounts 2014About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 112

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 a market purchase of 50,000
(2013 – nil) shares at an average price of 1,529.7p (2013 – nil) and transferred nil (2013 – nil) shares to employees. The number
of shares held within the Trust, and on which dividends have been waived, at 31 July 2014 was 88,443 (2013 – 38,443).
These shares are held within the financial statements at a cost of £1.033 million (2013 – £0.269 million). The market value
of these shares at 31 July 2014 was £1.336 million (2013 – £0.531 million).

Redemption of preference shares
On 7 April 2014 the Company redeemed 20,000,000 £1 preference shares, being all of the preference shares in issue.
An amount of £20 million, equivalent to the nominal value of the shares redeemed, has been transferred to a capital
redemption reserve during the year.

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 £1.310 million (2013 – £1.900 million).

21 RECONCILIATION OF NET CASH FLOW TO NET CASH/(DEBT)

Group

Increase in net cash and cash equivalents

Decrease in bank borrowings

Decrease in preference shares

Decrease in net debt from cash flows

Net debt at 1 August

Net cash/(debt) at 31 July

Company

Increase/(decrease) in net cash and cash equivalents

Decrease in preference shares

Increase/(decrease) in net cash from cash flows

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)/cash

Company

Cash and cash equivalents

Preference shares

Net cash

2014
£000

10,921

–

20,000

30,921

(25,785)

5,136

2014
£000

20,000

20,021

28,727

48,748

Cash
flows
£000

10,921

–

20,000

30,921

Cash
flows
£000

20,000

20,021

2013
£000

2,802

32,000

–

34,802

(60,587)

(25,785)

2013
£000

(18)

–

(18)

28,745

28,727

At 31 July
2014
£000

35,136

(30,000)

–

5,136

At 31 July
2014
£000

48,748

–

48,748

At 1 August
2013
£000

24,215

(30,000)

(20,000)

(25,785)

At 1 August
2013
£000

48,727

(20,000)

28,727

AccountsBellway p.l.c. Annual Report and Accounts 2014

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 2014 there were bank overdrafts of
£nil (2013 – £nil) and loans of £30.0 million (2013 – £30.0 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 £7.1 million (2013 – £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

2014
£000

372

–

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

2014
£000

–

2,397

1,031

3,428

2013
£000

2,438

–

2,507

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 (2013 – £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 Group also sponsors the Bellway plc 2008 Group Self
Invested Personal Pension Plan (‘GSIPP’) which is a defined contribution contract-based arrangement.
Contributions of £2.858 million (2013 – £2.238 million) were charged to the income statement for the GSIPP.
Defined contributions have been excluded from the assets and liabilities.

Role of Trustees
The Scheme is managed by the Trustees, who are appointed by either the Company or the members. The role of the Trustees
is to manage the Scheme in line with the Scheme trust deed and rules, to act prudently, responsibly and honestly, impartially
and in the interests of all beneficiaries. The main responsibilities of the Trustees are to agree with the employer the level of
contributions to the Scheme and to make sure these are paid, to decide how the Scheme’s assets are invested so the Scheme
is able to meet its liabilities, and to oversee that the payment of benefits, record keeping and administration of the Scheme
complies with the Scheme trust deed and rules and legislation.

Funding
UK legislation requires that pension schemes are funded prudently (i.e. to a level in excess of the current expected cost of
providing benefits). 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 2014. A full actuarial valuation as at 1 August 2014 is underway.
With regard to the Scheme, regular contributions made by the employer over the financial year were £1.2 million
(2013 – £1.2 million). The employer also paid special contributions amounting to £1.32 million (2013 – £nil).
Expenses were paid in addition.
The Group paid a special contribution of £3.2 million in August 2014 and expects to pay no regular contributions to the
Scheme during the year ending 31 July 2015, subject to the results of the full actuarial valuation as at 1 August 2014.

Bellway p.l.c. Annual Report and Accounts 2014About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 11294

Notes to the Accounts
continued

25 EMPLOYEE BENEFITS (CONTINUED)

Regulation
The UK pensions market is regulated by the Pensions Regulator whose key statutory objectives in relation to UK defined benefit
plans are:
• to protect the benefits of members of occupational pension schemes;
• to promote, and to improve understanding of the good administration of work-based pension schemes;
• to reduce the risk of situations arising which may lead to compensation being payable from the Pension Protection Fund; and
• to maximise employer compliance with employer duties and the employment safeguards introduced by the Pensions

Act 2008.

Risk
The Scheme exposes the Group to a number of risks, the most significant are:

RISK

Asset volatility

Inflation risk

Life expectancy

DESCRIPTION

The Scheme’s defined benefit obligation is calculated using a discount rate set with reference to
corporate bond yields. However, a significant proportion of the Scheme’s assets are invested in
growth assets, such as equities, that would be expected to outperform corporate bonds in the
long-term but create volatility and risk in the short-term.

A significant proportion of the Scheme’s defined benefit obligation is linked to inflation, with
higher inflation increasing the liabilities. However, there are caps of either a 3% p.a. or 5% p.a.
increase in place to limit the effect of higher inflation.

The majority of the Scheme’s liabilities are to provide a pension for the life of the member,
with any increase in life expectancy also increasing the Scheme’s defined benefit obligation.

Movements in net defined benefit obligations

Balance at 1 August

Included in the income statement

Interest (cost)/income

Included in other comprehensive
(expense)/income

Remeasurement (loss)/gain arising from:

– Difference between expected and actual

return on Scheme assets

– Change in demographic and financial

assumptions

– Experience adjustments

Return on plan assets excluding interest
income

Other

Contributions paid by the employer

Benefits paid

Defined benefit obligation

Fair value of Scheme assets

Net defined benefit liability

2014
£000

2013
£000

2014
£000

(48,549)

(47,317)

39,507

(2,191)

(1,945)

1,833

2013
£000

35,816

1,646

2014
£000

2013
£000

(9,042)

(11,501)

(358)

(299)

–

(1,558)

(1,378)

–

(1,468)

(1,339)

–

1,844

–

2,052

–

416

2,520

(1,844)

676

42,432

2,897

–

2,897

–

2,897

1,200

(2,052)

(852)

39,507

(1,558)

(1,378)

416

(1,052)

2,520

–

2,520

(7,932)

–

1,558

1,200

–

1,200

(9,042)

Balance at 31 July

(50,364)

(48,549)

AccountsBellway p.l.c. Annual Report and Accounts 2014

25 EMPLOYEE BENEFITS (CONTINUED)

The weighted average duration of the defined benefit obligation at the end of the reporting period is 17 years (2013 – 18 years).

Scheme assets
The fair value of the Scheme assets is:

Equity instruments – quoted

Corporate bonds

Government bonds

Cash and cash equivalents

Total

2014
£000

24,166

12,703

1,786

3,777

42,432

2013
£000

23,810

11,179

1,750

2,768

39,507

Equity instruments and government bonds have quoted prices in active markets. Other plan assets are not quoted in active
markets. All government bonds are issued by European governments and are AAA rated.

Actuarial assumptions
The following are the principal actuarial assumptions at the reporting date:

Discount rate

Future salary increases

Allowance for pension in payment increases of RPI or 5% p.a. if less

Allowance for deferred pension increases of CPI or 5% p.a. if less

Allowance for commutation of pension for cash at retirement

2014
% per annum

2013
% per annum

4.20

3.90

3.40

2.40

4.60

4.05

3.55

2.85

50% of
maximum

The mortality assumptions adopted at 31 July 2014 are based on the SIPxA 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 2014
Female retiring at age 65 in 2014
Male retiring at age 65 in 2034
Female retiring at age 65 in 2034

23.4 years
25.7 years
25.6 years
28.0 years

Sensitivities
The calculation of the defined benefit obligation is sensitive to the assumptions set out above. The following table summarises
the effect on the defined benefit obligation at the end of the reporting period if different assumptions were used:

Assumption

Discount rate

Future salary increases

Inflation – RPI

Mortality

Change in assumption

Change in liabilities (%)

-0.25% p.a.

+0.25% p.a.

+1 year life expectancy

Increase by 4.3%

Increase by 0.8%

Increase by 3.7%

Increase by 2.6%

The calculations for the sensitivity analysis are not as accurate as a full valuation carried out using these assumptions.
Each assumption change is considered in isolation, which in practice is unlikely to occur, as changes in some of the
assumptions are correlated.

Bellway p.l.c. Annual Report and Accounts 2014About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 11296

Notes to the Accounts
continued

25 EMPLOYEE BENEFITS (CONTINUED)

(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 55 and 58 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.
The number and weighted average exercise price of share-based payments is as follows:

LTIP, SMP and annual bonus

Outstanding at the beginning of the year

Granted during the year

Lapsed during the year

Outstanding at the end of the year

Exercisable at the end of the year

2014
Number of
options

251,219

114,812

(71,629)

294,402

2013
Number of
options

330,064

108,962

(187,807)

251,219

–

1,000

The options outstanding at 31 July 2014 have a weighted average contractual life of 1.5 years (2013 – 1.7 years).

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

2014
Number of
options

2013
Number of
options

1,067,871

1,359,551

123,050

(39,019)

(1,000)

(419,320)

139,180

(64,560)

(45,039)

(321,261)

731,582

1,067,871

118,400

188,800

The options outstanding at 31 July 2014 have an exercise price in the range of 439.6p to 1,470.0p (2013 – 336.0p to 1,470.0p)
and have a weighted average contractual life of 1.9 years (2013 – 2.0 years). The weighted average share price at the date of
exercise for share options exercised during the year was 1,570.2p (2013 – 1,155.6p).

AccountsBellway p.l.c. Annual Report and Accounts 201497

25 EMPLOYEE BENEFITS (CONTINUED)

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.
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:

2014

2013

November
2013

December
2013

November
2012

Scheme description

SMP

3 Year
SRSOS

5 Year
SRSOS

LTIP

SMP

3 Year
SRSOS

5 Year
SRSOS

LTIP

Grant date

28 Nov 13

15 Nov 13

17 Dec 13

23 Nov 12

16 Nov 12

13 Nov 12

Risk free interest rate

0.9%

1.7%

Exercise price

–

1,218.4p

0.0%

–

0.4%

–

Share price at date of grant

1,446.0p

1,406.0p

1,472.0p

967.5p

Expected dividend yield

n/a

3.00%

3 years

n/a

3 years

3 years
2 months

5 years
2 months

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

28 Nov 16

1 Feb 17

1 Feb 19

17 Dec 16

23 Nov 15

1 Feb 16

1 Feb 18

13 Nov 15

30%

735p

30%

315p

35%

409p

30%

708p

30%

535p

30%

215p

45%

336p

30%

501p

Expected life

Vesting date

Expected volatility

Fair value of option

The expected volatility for all models was determined by considering the volatility levels historically for the Group.
Volatility levels for more recent years were considered to have more relevance than earlier years for the period reviewed.
The Group recognised total expenses of £0.923 million (2013 – £1.021 million) in relation to equity-settled share-based
payment transactions.

Bellway p.l.c. Annual Report and Accounts 2014About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 11298

Notes to the Accounts
continued

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 45 to 61. 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

2014
£000

1,529

(5,234)

2013
£000

2,876

(1,588)

(5,291)

(180)

44,194

39,616

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 shares issued

Amounts paid in the year by subsidiaries on behalf of the Company in respect of dividends, finance
expenses, preference share redemption and share purchases

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

2014
£000

1,831

2013
£000

2,421

(67,778)

(29,863)

556,107

32,107

622,054

31,184

The Company has suffered no expense in respect of bad or doubtful debts of subsidiary undertakings in the year (2013 – £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.

AccountsBellway p.l.c. Annual Report and Accounts 2014

Other Information

Five Year Record

Income statement

Revenue

Operating profit

Net finance expenses

Profit before taxation

Income tax expense

Profit 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

2010
£m

2011
£m

2012
£m

2013
£m

2014
£m

768.3

886.1

1,004.2

1,110.7

1,486.4

51.3

(6.9)

44.4

(8.6)

35.8

52.3

1,340.2

(129.2)

(228.5)

75.2

(8.0)

67.2

(17.0)

50.2

55.1

1,415.9

(124.7)

(273.0)

114.6

(9.3)

105.3

(26.0)

151.1

(10.2)

140.9

(32.3)

256.1

(10.2)

245.9

(54.5)

79.3

108.6

191.4

59.4

1,492.4

(69.4)

(349.3)

56.7

1,594.9

(54.1)

(378.7)

53.8

1,930.7

(75.6)

(542.8)

1,034.8

1,073.3

1,133.1

1,218.8

1,366.1

Statistics

Number of homes sold

Average price of new homes

Gross margin

Operating margin

Basic earnings per ordinary share

Dividend per ordinary share

Return on capital employed

Gearing (including preference shares)

Net assets per ordinary share

Land portfolio – plots with detailed planning permission

4,595

£163.2k

4,922

£175.6k

5,226

£186.6k

11.7%

6.7%

29.7p

10.0p

4.9%

–

856p

17,602

13.5%

8.5%

41.5p

12.5p

7.0%

1.5%

888p

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

6,851

£213.2k

21.3%

17.2%

157.0p

52.0p

19.6%

–

1,118p

19,434

Weighted average no. of ordinary shares

120,619,800

120,705,397

121,036,846

121,572,688

121,919,049

No. of ordinary shares in issue at end of year

120,831,922

120,848,131

121,450,797

121,772,058

122,191,378

About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 112 Bellway p.l.c. Annual Report and Accounts 2014100

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.

Remuneration
Two separate resolutions on directors’ remuneration are now required under company law. These are briefly explained below.

Resolution 2 – To approve the Directors’ Remuneration Policy
This is a new ordinary resolution which is required under section 439A of the Companies Act 2006 to approve the Directors’
Remuneration Policy set out on pages 47 to 53. If the policy is approved, this is a binding vote and the policy will be in place for
three years, commencing at the conclusion of the AGM. The Company can only make payments to its directors in accordance
with the approved policy unless a separate shareholder approval is obtained for the payment.

Resolution 3 – To approve the Report of the Board on Directors’ Remuneration
This is an ordinary resolution, which is advisory only and seeks shareholder approval to the Report of the Board on Directors’
Remuneration, excluding the Directors’ Remuneration Policy which is subject to a separate and binding shareholder vote
as explained above.

Special Business
Five resolutions will be proposed as special business at the forthcoming AGM. The effect of these resolutions is as follows:

Resolution 14 – Approval of the Rules of the 2014 Employee Share Option Scheme
The Company considers share-based incentives as a vital tool in helping to align the interests of directors and employees
with shareholders. Accordingly, share incentives with benefits linked to stretching performance targets have always formed
a significant proportion of the total remuneration for senior employees (including executive directors).
The existing Bellway p.l.c. (2005) Employee Share Option Scheme was approved by shareholders in January 2005 and is
due to expire in January 2015. Accordingly, Resolution 14, which is an ordinary resolution, seeks to adopt the new Scheme
under substantively the same terms as the Existing Scheme, including amendments to reflect subsequent developments
and changes in tax legislation. The Scheme will be operated by the Board Committee on Executive Directors’ Remuneration.
A summary of the Scheme is set out below and a copy of the draft rules of the Scheme may be inspected at the registered
office of the Company and at Bond Dickinson LLP, 4 More London Riverside, London SE1 2AU during usual business hours
on weekdays (public holidays excepted) until the date of the meeting and also at the place of the AGM for at least 15 minutes
prior to and during, the meeting. There is no present intention to grant options under this Scheme to executive directors.

Resolution 15 – 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 £5,091,453, which is equivalent to approximately one-third of the Company’s issued ordinary share capital as at
13 October 2014 and also gives the directors authority to allot, by way of rights issue only, ordinary shares up to an
aggregate nominal value of £10,182,907 which is equivalent to approximately two-thirds of the Company’s issued ordinary
share capital, as at 13 October 2014, such authority, if granted, to expire at the conclusion of the next AGM of the Company.
As at 13 October 2014, 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 16 – 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 13 December 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 £763,718
being approximately equal to 5% of the issued ordinary share capital of the Company as at 13 October 2014.

Other InformationBellway p.l.c. Annual Report and Accounts 2014101

Resolution 17 – 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 used during the year to redeem all of the 20 million preference shares at par on
their normal redemption date, following which the shares were cancelled. 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 13 October 2014 there were options outstanding over 1,022,482 ordinary shares, representing 0.84% of the Company’s
issued ordinary share capital. If the authority given by this resolution were to be fully used, these would represent 0.93%
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 62.

Resolution 18 – 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. (2014) EMPLOYEE SHARE OPTION
SCHEME (THE ‘SCHEME’)

General
The Scheme provides for the grant of options over ordinary shares in the Company on a discretionary basis to eligible
employees and directors, and is intended to replace the Bellway p.l.c. (2005) Employee Share Option Scheme (the ‘Existing
Scheme’) under which no further options can be granted after 14 January 2015.
The Scheme is intended to satisfy the requirements of Parts 2 to 6 of Schedule 4 to the Income Tax (Earnings and Pensions
Act 2003) and thus entitle participants to benefit from certain tax advantages that would otherwise not be available when
options are exercised. The maximum value of ordinary shares over which any participant can have outstanding options is
limited to £30,000 (see further below under the heading, ‘Scheme limits’).

2. Eligibility

All employees and full-time directors of the Company or its participating subsidiaries will be eligible to participate in the
Scheme. Actual participation will take place at the discretion of the Board Committee on Executive Directors’ Remuneration
(the ‘Committee’). There is no present intention to grant options under this Scheme to executive directors.

3. Grant of options

Options may be granted under the Scheme at any time during the period of 42 days, commencing on the date of
announcement of the Company’s annual or half-yearly results for any year. In the case of an employee or director first
becoming eligible to participate in the Scheme, options may be granted in the period of 28 days following that date,
and, exceptionally, at the absolute discretion of the Committee, during any other 42-day period.
Options may not be granted under the Scheme more than ten years after the date of approval of the Schemes.
Options may not be transferred.

4. Performance targets

The Committee shall, when options are granted, be entitled to specify objective conditions (performance targets)
that are required to be met in order that the options may be exercised.

5. Exercise, lapse and exchange of options

Options will, provided that any performance targets specified at the time of their grant have been met, normally be
exercisable during the period commencing three years after, and ending ten years after, their grant. Options will normally
lapse on termination of a participant’s employment. However, exercise will be permitted for a limited period (irrespective
of the period for which the options have been held) following the termination of a participant’s employment where this
takes place for ‘good leaver’ reasons. Exercise will also be permitted following a takeover of, or other similar corporate
event affecting, the Company. There are also provisions for the exchange of options in specified circumstances.

About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 112 Bellway p.l.c. Annual Report and Accounts 2014

102

Shareholder Information
continued

6. Exercise price

The price at which participants may acquire ordinary shares on exercise of options will be not less than their middle market
price quoted on the London Stock Exchange at the close of dealings on the day immediately preceding the date of their
grant or the average of such prices over a period of five successive Dealing Days ending on that immediately preceding
Dealing Day.

7. Scheme limits

No option may be granted to a participant if the aggregate price at which he or she can acquire the ordinary shares the
subject of that option and any other option granted to him or her under the Scheme and any other equivalent company
share option plan established by the Company or any associated company (including the Existing Scheme), would exceed
£30,000. Any options which have already been exercised, or have lapsed or been surrendered, are ignored in calculating
this limit. Options may not be granted if this would cause the total number of ordinary shares which can be issued by
the Company to satisfy the exercise of those options to exceed 5% of the total issued share capital of the Company on
the date of intended grant. This limit takes account of ordinary shares that have been or may be issued pursuant to rights
granted within the previous ten years under any discretionary employee share scheme (including the Scheme and the
Existing Scheme) established by the Company, and is increased to 10% to take account of ordinary shares issued pursuant
to rights granted within the previous ten years under all employee share schemes established by the Company.

8. Adjustments

The number of shares comprised within an option and/or its exercise price may be adjusted if any capitalisation issue
or rights issue, or any consolidation, sub-division or reduction of the Company’s share capital, takes place.

9. Amendments

The rules of the Scheme may be amended by the Committee. If any proposed amendment would be to the advantage
of participants generally (and, in particular, if the proposed amendment relates to the eligibility of participants under the
Scheme, limitations on the number of ordinary shares over which options may be granted or adjustments to options),
the prior approval of shareholders will be required unless the amendment is minor or is made either to obtain or maintain
favourable tax treatment or to comply with, or take account of, any existing or proposed legislation.

10. General

The Company will apply for admission to dealing on the London Stock Exchange for ordinary shares which are to be
allotted and issued to a participant following the exercise of options. Those ordinary shares will rank pari passu with all
other issued ordinary shares, except for any rights determined by reference to a date preceding the date on which the
option is exercised.
Benefits provided under the Scheme are not pensionable.

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 share capital as at 31 July 2014 consisted of 122,191,378 ordinary shares of 12.5p each.
Further details of the issued capital of the Company can be found in note 19 to the accounts. The rights and obligations
attaching to the ordinary 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 Corporate Governance Report on page 40. In accordance with the UK Corporate Governance Code all the directors are
seeking annual re-election by shareholders.

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.

Other InformationBellway p.l.c. Annual Report and Accounts 2014

103

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 419,320 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 100, and Resolutions 15 and 16 in the Notice of Meeting of the AGM to be held on 12 December
2014 on pages 105 and 106 seek to renew this authority.

Purchase of own shares
The Company has not purchased any of its own ordinary shares during the year, but redeemed all of the 20,000,000
preference shares at their normal redemption date. 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 101, and Resolution 17 in
the Notice of Meeting of the AGM to be held on 12 December 2014 on page 106 seeks to renew this authority.

Significant agreements – change of control provisions
The Company is party to a number of banking agreements which may be terminable in the event of a change of control
of the Company.

Agreements for compensation for loss of office following a change of control
The service 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

March

October

July

January

November

11 December 2014

12 December 2014

14 January 2015

ORDINARY SHAREHOLDERS BY SIZE OF HOLDING AT 31 JULY 2014

0 – 2,000

2,001 – 10,000

10,001 – 50,000

50,001 and over

Total

Holdings

Number

1,918

446

193

237

68.65

15.96

6.91

8.48

Holding

1,198,293

1,920,620

4,872,338

114,200,127

2,794

100.00

122,191,378

0.98

1.57

3.99

93.46

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 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.

About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 112 Bellway p.l.c. Annual Report and Accounts 2014104

Shareholder Information
continued

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 register 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 am to 5.30 pm, Monday to Friday (excluding bank holidays).

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.
This 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 by providing proof of ownership.
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 on the Group’s website
at www.bellway.co.uk/corporate-responsibility.

Other InformationBellway p.l.c. Annual Report and Accounts 2014Notice of Annual
General Meeting

NOTICE IS HEREBY GIVEN that the Annual General Meeting of the Company will be held at the Jesmond Dene House Hotel,
Jesmond Dene Road, Newcastle upon Tyne, NE2 2EY on Friday 12 December 2014 at 12 noon for the following purposes:

ORDINARY BUSINESS

105

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 2014 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.
THAT the Directors’ Remuneration Policy set out in the Report of the Board on Directors’ Remuneration shown on pages
47 to 53 of the Annual Report and Accounts for the year ended 31 July 2014 be approved.
THAT the Report of the Board on Directors’ Remuneration, except for the Directors’ Remuneration Policy, shown on pages
45 to 61 of the Annual Report and Accounts for the year ended 31 July 2014 be approved.

4. THAT a final dividend for the year ended 31 July 2014 of 36.0p per ordinary 12.5p share, as recommended by the directors,

be declared.

5. THAT Mr J K Watson be re-elected as a director of the Company.
6. THAT Mr E F Ayres be re-elected as a director of the Company.
7. THAT Mr K D Adey be re-elected as a director of the Company.
8. THAT Mr M R Toms be re-elected as a director of the Company.
9. THAT Mr J A Cuthbert be re-elected as a director of the Company.
10. THAT Mr P N Hampden Smith be re-elected as a director of the Company.
11. THAT Mrs D N Jagger be re-elected as a director of the Company.
12. 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.
13. THAT the directors are authorised to agree the remuneration of the auditor of the Company.

SPECIAL BUSINESS

To consider and if thought fit, pass the following resolutions which will be proposed as ordinary resolutions:
14. THAT the rules of the Bellway p.l.c. (2014) Employee Share Option Scheme be approved.
15. THAT the directors be generally and unconditionally authorised pursuant to and in accordance with section 551 of the

Companies Act 2006 (‘the Act’) to exercise all the powers of the Company to:
(a) allot shares in the Company and to grant rights to subscribe for, or to convert any security into, shares in the Company

(‘Rights’) up to a maximum nominal amount of £5,091,453; and

(b) allot equity securities (within the meaning of section 560 of the Act) up to a maximum nominal amount of £10,182,907
(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:
this authority shall expire at the conclusion of the next Annual General Meeting of the Company, but may be
(i)
previously revoked or varied by an ordinary resolution of the Company; and

(ii) this authority shall permit and enable the Company to make offers or agreements before the expiry of this authority
which would or might require shares to be allotted or Rights to be granted after such expiry and the directors shall
be entitled to allot shares and grant Rights pursuant to any such offers or agreements as if this authority had not
expired; and

(iii) all unexercised authorities previously granted to the directors to allot shares and grant Rights be and are

hereby revoked.

About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 112 Bellway p.l.c. Annual Report and Accounts 2014

106

Notice of Annual
General Meeting continued

To consider and, if thought fit, pass the following resolutions which will be proposed as special resolutions:
16. THAT,

(a) subject to Resolution 15 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)

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

(ii) the allotment to any person or persons (otherwise than pursuant to paragraph (i) above) of equity securities up to

an aggregate nominal amount of £763,718;

(b) 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

(c) for the purposes of this resolution, ‘pre-emptive offer’ means a rights issue, open offer or other offer of equity securities
open for acceptance for a fixed period, by the directors to ordinary shareholders of the Company on the Register on a
fixed record date in proportion (as nearly as may be) to their then holdings of such equity securities (but subject to such
exclusions or other arrangements as the directors may deem necessary or expedient to deal with legal or practical
problems under the laws of, or the requirements of, any regulatory body or any stock exchange in any overseas
territory or fractional entitlements or any other matter whatsoever).

17. 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 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) the maximum number of ordinary shares hereby authorised to be purchased is 12,219,488, being approximately

10% of the ordinary shares in issue;

(b) 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 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.

18. 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.

Other InformationBellway p.l.c. Annual Report and Accounts 2014

107

Notes:

(i)

A member entitled to attend and vote at the meeting convened by the above notice may appoint one or more proxies to attend and speak and vote instead of him/her,
provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that member. A proxy need not be a member of the Company.

(ii) A form of proxy is enclosed separately. Completion and return of the form of proxy will not preclude shareholders from attending in person and voting at the meeting.

(iii)

(iv)

(v)

(vi)

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 10 December 2014 (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.

(ix)

Except as provided above, members who wish to communicate with the Company in relation to the AGM should do so in writing either to the Group Company Secretary
at the registered office address or to the Company’s registrar, Capita Asset Services, 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.

(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 and the draft rules
of the 2014 ESOS.

(xi) A copy of this notice and the other information required by section 311A of the Companies Act 2006 can be found at www.bellwaycorporate.com.

(xii) As at the date of this notice there are 122,194,880 ordinary shares in issue and the total voting rights of the Company are therefore 122,194,880.

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
13 October 2014

About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 112 Bellway p.l.c. Annual Report and Accounts 2014108

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.

Cancellation Rate
The rate at which customers withdraw from a house purchase after paying the reservation fee, but before contracts are
exchanged, usually due to difficulties in obtaining mortgage finance. Reservation fees are refunded in accordance with the
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.

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.

HBF
Home Builders Federation. 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
new homes.

Help to Buy
The Help to Buy equity loan scheme is a government scheme which provides equity loans to both first-time buyers and
home movers on newly constructed homes 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 to buy a home with a 5% deposit to obtain a 95% mortgage.
The government gives a guarantee to the lender of up to 15% of the value of the property.

Land Bank
Our land bank is comprised of three components: i) land with an implementable detailed planning permission (‘DPP’);
ii) medium-term ‘pipeline’ land, pending an implementable DPP; iii) strategic long-term land which we have an interest in,
which may often have the benefit of a positive planning status in approved or emerging local plans.

Mortgage Market Review (‘MMR’)
The MMR was a comprehensive review of the mortgage market which set out the case for reforming the mortgage market
to ensure it is sustainable and works better for consumers.

National Planning Policy Framework (‘NPPF’)
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.

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.

Bellway p.l.c. Annual Report and Accounts 2014109

Pipeline
Plots which are either owned or contracted, often conditionally, pending an implementable detailed planning permission.

Planning Permission
Usually granted by the local planning authority, this permission allows a plot of land to be built on, change its use or, for
an existing building, be redeveloped or altered. Permission 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.

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.

RIDDOR
RIDDOR refers to the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 2013. The regulations require
an employer to report any absence by an employee of seven days or more caused by an accident at work.

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.

Site/phase
A site is a concise area of land on which homes are being constructed. Larger sites may be divided into a number of phases
which are developed at different times.

Social Housing
Housing that is let at low rents and on a secure basis to people in housing need. It is generally provided by councils and
not-for-profit organisations such as housing associations.

Sustainability
Environmental sustainability has been defined as meeting the needs of the present without compromising the ability of future
generations to meet their needs.

About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 112 Bellway p.l.c. Annual Report and Accounts 2014110

Notes

Other InformationBellway p.l.c. Annual Report and Accounts 2014111

About Us01 – 05Strategic Report06 – 35Governance36 – 69Accounts70 – 98Other Information99 – 112 Bellway p.l.c. Annual Report and Accounts 2014112

Notes continued

Other InformationBellway p.l.c. Annual Report and Accounts 2014BELLWAY 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
St Andrew’s House
Caldecotte Lake Drive
Caldecotte
Milton Keynes MK7 8LE
Tel: (01908) 364 200
Fax: (01908) 364 201
DX 100007 Bletchley

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
Pacific House
Imperial Way
Reading
Berkshire RG2 OTD
Tel: (01189) 338 020
Fax: (01189) 313 929

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 Taylor Bloxham Group who are certified to ISO 14001 environmental management system.
Printed using vegetable oil based inks.

This report is printed on Regency Satin which contains material sourced from responsibly managed forests, certified in
accordance with the FSC(r) (Forest Stewardship Council) and also contains 10% recovered fibre, diverting waste from landfill.
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 to 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) 476 774
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

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