Interim Management Statement

Bellway p.l.c. Interim Management Statement Thursday 5 June 2014 Bellway is today updating the market with regard to its current tradingposition by issuing an Interim Management Statement (IMS) in respect of theperiod from 1 February to 31 May 2014. Highlights * Strong sales performance with an 11% increase in the weekly reservation rate to 177 per week during the period (2013 - 160 per week). * Value of forward order book of homes due for completion beyond 31 July 2014, significantly ahead at £670 million (31 May 2013 - £380 million). * £400 million expended on land and land creditors since 1 August (2013 - £ 270 million), providing an excellent base for future growth. * Strong balance sheet maintained with net bank debt of only £47 million (31 May 2013 - £95 million). Ted Ayres, Chief Executive, commented: "The strong UK housing market and our disciplined approach to land investmentprovides a significant opportunity for ongoing volume growth. The Group has asubstantial balance sheet and operational capacity for further expansion. Landwith detailed planning permission is already in place to achieve next year'svolume growth aspirations. This strong position, together with a focus onimproving return on capital employed, ensures that Bellway remains well placedto deliver further enhancement to shareholder value." Market and current trading Demand for new homes remains robust, buoyed by growing consumer confidence anda strong supply of mortgage finance. Significant investment in land over recentyears has enabled Bellway to respond positively to these market conditions andaccordingly the Group has taken an average of 177 reservations per week since 1February (2013 - 160), an increase of 11% compared with the same period lastyear. The government's Help to Buy shared equity scheme continues to be an importantselling incentive, providing more widespread access to mortgage finance. TheGroup has taken 879 reservations using this incentive since 1 February. Demand from within the London boroughs, where the Group continues to offeraffordable product in the context of the local market, remains strong and morepronounced than elsewhere in the country. Customers' use of Help to Buymortgages in and around London is about one third of the rate in other regions. This continued strength of consumer demand, together with an acceleration ofconstruction programmes, means that the Board now expects the number of legalcompletions to increase by around 20% for the year ending 31 July 2014. The average selling price continues to improve due to changes in product andgeographic mix. Furthermore, the Group has benefited from modest net pricinggains, largely as a result of a reduction in the use of selling incentives,together with underlying selling price improvements on some new sites broughtto the market, primarily in and around London. As a consequence, the Board nowexpects the Group to achieve an average selling price slightly in excess of £210,000 for the current financial year. The favourable trading environment, a more efficient absorption of the overheadbase and an increasing proportion of completions from land acquired since thedownturn, should result in the Group achieving an operating margin of around17%. Provided market conditions remain unchanged, the Board expects to buildupon this further during the next financial year. Land buying and financial position The Group's strategy of volume growth is underpinned by employing strictcapital disciplines in respect of land acquisition. Whilst adopting thisapproach, the Group has spent £400 million on land and land creditors since 1August (2013 - £270 million) and has terms agreed on a further 4,900 plots.Furthermore, Bellway has all of its land requirements in place, with thebenefit of detailed planning permission, in order to meet next year's volumegrowth aspirations. Bellway continues to benefit from a low cost of bank debt and therefore usesbank finance to fund land acquisitions in instances where this is a more costeffective source of finance than land creditors. At 31 May, the Group had netbank debt of £47 million (31 May 2013 - £95 million), having redeemed its £20million 9.5% preference shares on 7 April 2014. Outlook The Group has all reservations in place to achieve the current year volumegrowth target. In addition, the strong trading performance has resulted in asubstantial forward order book, comprising reservations with a value of £670million (2013 - £380 million) due for completion beyond 31 July 2014. Thispositive position should ensure that Bellway is well placed to deliver furthervolume growth, subject to market conditions remaining unchanged and challengingconstruction targets being met. Beyond that, the Group's capacity from its 15 operating divisions, strongbalance sheet and significant consented land bank provides opportunity forongoing growth. This, together with a focus on improving return on capitalemployed, should lead to a further sustainable enhancement in shareholderreturn. 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.