Annual General Meeting and Interim Management Statement

Bellway p.l.c. Annual General Meeting and Interim Management Statement Friday 12 December 2014 Bellway p.l.c. is holding its Annual General Meeting today, at 12.00 noon andis issuing an Interim Management Statement relating to the 18 week period from1 August 2014 to 30 November 2014. Highlights - The reservation rate remains robust at 147 per week (2013 - 144 per week). - The Group has made a significant investment of £233 million (2013 - £121 million) on attractive land opportunities. - The operating margin is expected to be around 20% for the current financial year. - The Group is well placed to deliver further disciplined volume growth, slightly in excess of 10% for the year ending 31 July 2015, with further improvements in profitability and return on capital employed. Ted Ayres, Chief Executive, commented: "Demand for new housing is resilient across the country and continues to besupported by the availability of affordable, higher loan to value mortgages andin particular, the continuation of the Government's Help to Buy scheme.Further disciplined investment in land should mean that the Group is wellplaced to deliver continued volume growth, further improvements in return oncapital employed and another significant increase in profitability in thecurrent financial year." Market and current trading Trading has returned to a more normal seasonal pattern, with a slow-down in thesummer months, followed by an increase in the sales rate throughout autumn.Total reservations taken since 1 August have averaged 147 per week (2013 - 144per week), ahead of the same period last year. Whilst the private reservationrate has slowed, this is set against a particularly strong comparative, withthe opening months of the previous financial year benefiting from an initialsurge in activity which continued throughout the winter of 2013, following theintroduction of Help to Buy. The Mortgage Market Review, whilst improving longterm stability, has not had a detrimental effect on sales, with cancellationrates remaining low by historic standards at around 10.4% (2013 - 11.9%). Constraints in the sub-contract supply chain, especially around London, remaina substantial challenge for the industry, however, the Group's strong forwardsales position and the significant investment made in site construction shouldenable Bellway to achieve volume growth slightly in excess of 10% in thecurrent financial year. Subject to the achievement of construction programmes,the strength of the brought forward order book at 31 July 2014 is likely toresult in the rate of volume growth being weighted towards the first half ofthe financial year. The London market remains strong and the Group continues to experience highlevels of demand for its product, which remains affordable in the context ofthis region. Notwithstanding the requirement for new homes in the Capital, thesignificant growth in revenue recently experienced on certain Londondevelopments has now abated, resulting in a return to more sustainable marketconditions. Across the rest of the country, the pricing environment remains positive withthe strong demand ensuring that incentives continue to be used sparingly. Thishas resulted in the Group still achieving selling prices in line with, orslightly in excess of, initial acquisition expectations. These positive market conditions, together with strong control ofadministrative and construction costs, should result in continued operatingmargin progression. This will be enhanced this year as the gross margin oncompletions should benefit from historic revenue gains on London schemesacquired in recent years. As a consequence, the Group should be able toachieve an operating margin of around 20% for the year ending 31 July 2015. Land buying and financial position Bellway has continued to be successful in the land market having spent £233million on land and land creditors (2013 - £121 million) on opportunities thatmeet or exceed the Group's minimum acquisition criteria. Furthermore, theGroup has heads of terms agreed on a further 4,400 plots (2013 - 4,000 plots)with a value of £320 million (2013 - £220 million). The availability of goodquality land, a disciplined approach to investment and a focus on acquiringthose sites where an attractive return on capital can be achieved, shouldenable Bellway to continue to deliver its strategy of volume growth andgenerate long term value for shareholders. Bellway has recently renewed revolving credit facilities of £125 million,thereby providing committed bank funding on favourable terms for the next fiveyears and contributing to the Group's total bank facilities of £300 million.The controlled expenditure on land has resulted in net debt of £162 million (30November 2013 - net cash of £73 million [1]) and average net debt is expectedto remain at a similar level for the remainder of the year. Dividend The recommended final dividend of 36.0 pence per ordinary share (2013 - 21.0pence), if approved at today's AGM, will be paid to shareholders on 14 January2015. This will bring the total dividend for the year ended 31 July 2014 to52.0 pence (2013 - 30.0 pence), an increase of 73.3% and this represents acontinuation of the Group's policy of paying a regular and progressive dividendto its shareholders, balanced with ongoing capital growth. Outlook Plans are at an advanced stage to open a sixteenth division in the second halfof this financial year and this should enable the Group to continue itsdisciplined growth strategy. Market conditions with respect to both sales andland buying continue to be favourable and provided they remain unchanged,Bellway should be able to deliver significant earnings growth and ongoingimprovements in return on capital in the year ahead. A Trading Update will be issued on Tuesday 10 February 2015 following theconclusion of the six month trading period ending 31 January 2015. FOR FURTHER INFORMATION PLEASE CONTACT: TED AYRES, CHIEF EXECUTIVE AND KEITH ADEY, FINANCE DIRECTOR FROM 7:00 AMONWARDS ON 0191 217 0717. Certain statements in this announcement are forward-looking statements whichare based on Bellway p.l.c.'s expectations, intentions and projectionsregarding its future performance, anticipated events or trends and othermatters that are not historical facts. Such forward-looking statements can beidentified by the fact that they do not relate only to historical or currentfacts. Forward-looking statements sometimes use words such as 'aim','anticipate', 'target', 'expect', 'estimate', 'intend', 'plan', 'goal','believe', or other words of similar meaning. These statements are notguarantees of future performance and are subject to known and unknown risks,uncertainties and other factors that could cause actual results to differmaterially from those expressed or implied by such forward-looking statements.Given these risks and uncertainties, prospective investors are cautioned not toplace undue reliance on forward-looking statements. Forward-looking statementsspeak only as of the date of such statements and, except as required byapplicable law, Bellway p.l.c. undertakes no obligation to update or revisepublicly any forward-looking statements, whether as a result of newinformation, future events or otherwise. --------------------------[1] Restated following the introduction of IFRS 10 'Consolidated FinancialStatements' and IFRS 11 'Joint Arrangements'.