Interim Results Announcement

Bellway p.l.c. ('Bellway' or the 'Group'), the national housebuilder, announces today, Tuesday 25 March 2025, its Interim Results for the half year ended 31 January 2025.

Summary

Strong first half performance and well-positioned for multi-year growth

Jason Honeyman, Group Chief Executive, commented:

"Bellway has delivered a strong first half performance with good growth in volume output and profits. Underlying demand for our homes is healthy and we have been encouraged by the improvement in customer enquiries and reservations since the start of the new calendar year. 

The Group remains on track to deliver volume output of at least 8,500 homes (31 July 2024 - 7,654) in the full financial year and we currently expect to build the order book through the second half to support further growth in financial year 2026.

I am confident that, given our operational strengths and land bank depth, we remain very well-positioned to capitalise on the positive long-term fundamentals of the UK housebuilding industry, and Bellway will continue delivering the high-quality new homes the country needs."

First half performance in line with our expectations 

§ Growth in total housing completions of 11.9% to 4,577 homes (2024 - 4,092) at an average selling price of £310,581 (2024 - £309,278).

§ Underlying operating profit increased by 11.9% to £156.6m2,3 (2024 - £139.9m) and the underlying operating margin was in line with our expectations at 11.0%2,3 (2024 - 11.0%). 

§ The private reservation rate per outlet per week increased by 18.6% to 0.51 (2024 - 0.43), including a contribution from bulk sales of 0.06 (2024 - 0.03).

§ The interim dividend has increased to 21.0p per share (2024 - 16.0p) and underlying dividend cover for the full financial year is expected to be 2.5 times2,3.

§ We provided £9.4m (2024 - £16.8m) as an adjusting item for legacy building safety. This mainly comprises an adjusting finance expense, in line with previous guidance, of £7.3m (2024 - £9.4m).

High-quality land bank and strong balance sheet to support multi-year growth plans

§ Bellway's land bank comprised a total of 95,506 plots4 (2024 - 94,492 plots) and includes 48,533 owned and controlled plots (2024 - 49,365 plots), providing good visibility on outlet openings.

§ We contracted to purchase 5,246 owned and controlled plots (2024 - 1,237 plots) across 32 sites (2024 - 9 sites) during the period.

§ The Group traded from an average of 248 outlets (2024 - 243), an increase of 2.1% driven by our strong land bank and achieved despite the challenges in the planning system. 

§ Further expansion of our strategic land bank, which rose to 46,100 plots (2024 - 44,200 plots) and underpins our longer-term growth prospects for a relatively low initial capital outlay.

§ The Group has a well-capitalised balance sheet with modest net debt of £8.0m2 (2024 - net cash of £76.6m) and low adjusted gearing, inclusive of land creditors, of only 8.5%2 (2024 - 4.7%).

Encouraging recent trading and order book underpin FY25 targets 

§ In the seven weeks since 1 February, the private reservation rate per outlet per week was 0.76 (1 February to 17 March 2024 - 0.67).

§ The forward order book at 16 March 2025 comprised 5,582 homes (17 March 2024 - 5,063 homes) with a value of £1,581.0m2 (17 March 2024 - £1,344.1m).

§ The Group remains on track to deliver full year volume output of at least 8,500 homes (31 July 2024 - 7,654 homes) with output weighted towards the first half.

§ We continue to expect the full year average selling price to be around £310,000 (31 July 2024 - £307,909) and the underlying operating margin to approach 11.0%2,3 (31 July 2024 - 10.0%).

1 All figures relating to completions, order book, reservations, cancellations and average selling price exclude the Group's share of its joint ventures unless otherwise stated.

2 Bellway uses a range of statutory performance measures and alternatives performance measures when reviewing the performance of the Group against its strategy. Definitions of the alternative performance measures, and a reconciliation to statutory performance measures, are included in note 14.

3 Underlying refers to any statutory performance measure or alternative performance measure before net legacy building safety expense and exceptional items (note 2).

4 Includes the Group's share of land owned and controlled through joint venture partners comprising 873 plots (2024 - 927 plots).

5 As measured by the Home Builders' Federation using the eight-week NHBC Customer Satisfaction survey.

6 Comparatives are for the half year ended 31 January 2024 or as at 31 January 2024 ('2024') unless otherwise stated.

Analyst presentation, webcast and conference call

There will be an analyst presentation held at the offices of Deutsche Numis at 9.00am today. The presentation will be hosted by Jason Honeyman, Group Chief Executive and Shane Doherty, Chief Financial Officer.

A listen-only webcast and conference call will accompany the presentation. To join the webcast, go to the Bellway p.l.c. corporate website, www.bellwayplc.co.uk/investor-centre.

To join via the conference call, participants should dial +44 (0)33 0551 0200 and quote 'Bellway Interim Results' when prompted by the operator.

A playback facility will be available on our corporate website shortly after the presentation has finished.

For further information, please contact:

Bellway p.l.c.

Jason Honeyman, Group Chief Executive

Shane Doherty, Chief Financial Officer

Gavin Jago, Group Investor Relations Director

0191 217 0717

Media enquiries

Paul Lawler, Group Head of Communications

[email protected]

07813 392 669

Sodali & Co (Financial PR)

Justin Griffiths

Victoria Heslop

[email protected]

0207 250 1446

Chief Executive's Market and Operational Review

Market

Trading through the first half was ahead of the comparative period, driven by lower mortgage interest rates and an improvement in consumer confidence. While we did not experience a typical seasonal step-up in reservations during the autumn, trading was stable and followed by a notable increase in January 2025. Customer demand was further supported by good availability of mortgage finance, although affordability remains relatively constrained for those customers requiring higher loan-to-value mortgages.

The private reservation rate increased by 21.0% to 127 per week (2024 - 105), with this set against a weaker comparator period and partly driven by an increase in outlet numbers. The private reservation rate per outlet per week increased by 18.6% to 0.51 (2024 - 0.43), including a contribution of 0.06 from bulk sales (2024 - 0.03). The overall reservation rate, including social homes, rose by 14.3% to 160 per week (2024 - 140) and the cancellation rate reduced to a more normalised level of 14% (2024 - 16%).

The Group traded from an average of 248 outlets in the period (2024 - 243), in line with our expectations, with a closing position of 245 outlets at 31 January 2025 (2024 - 246). The 2.1% increase in average outlets was driven by our strong land bank and achieved despite challenges in the planning system. The Group's Ashberry brand is currently used on around 14% of our active outlets, and typically on larger sites alongside our core Bellway brand. Ashberry offers customers a choice of layouts and elevational treatments, from our standard house type range, and the use of dual branding on sites drives both enhanced sales rates and an improvement in RoCE.

Overall, headline pricing across our regions has remained firm, and our sales teams continue to use a range of targeted incentives to encourage further customer interest and secure reservations. The use of selling incentives has generally remained stable during the period, although there has been more limited use in regions where affordability remains good in the context of the local market and in areas with healthy employment levels.

High-quality land bank to support outlet opening programme and volume growth ambitions

Bellway has a high-quality land bank, with strength and depth to support our growth plans, and our experienced land teams have continued with a disciplined and targeted approach to land acquisition during the period.

The table below analyses the Group's land holdings:

The Group's owned and controlled land bank comprises 48,533 plots (2024 - 49,365 plots), including 31,133 plots (2024 - 29,765 plots) with an implementable detailed planning permission ('DPP') and 17,400 pipeline plots (2024 - 19,600 plots). This represents a land bank length of 6.0 years (2024 - 5.3 years) based on the last 12 months' legal completions.

During the first half the Group contracted to purchase 5,246 owned and controlled plots (2024 - 1,237 plots) across 32 sites (2024 - 9 sites) with a total contract value of £378.2m (2024 - £103.4m). We also have a healthy future pipeline of potential acquisitions, with Heads of Terms agreed on around 8,000 plots at 16 March 2025 and we expect overall plots contracted in financial year 2025 to be similar to volume output.

The Group was operating from 245 outlets as at 31 January 2025, having opened 17 new sales outlets in the period and as noted earlier, traded from an average of 248 (2024 - 243). We remain on track to open over 30 new outlets in the second half of the financial year and continue to expect to operate from an average of around 245 outlets for the full financial year (31 July 2024 - 245). 

Our investment in strategic land has continued, which has enhanced our overall land supply for a relatively low initial capital outlay, while also supporting our longer-term growth ambitions. In the first half we entered into option agreements to buy 11 sites (2024 - 10 sites), building upon our increased activity in the strategic land market in recent years. Bellway's strategic land portfolio now comprises 46,100 plots (2024 - 44,200 plots), and we expect to deliver a growing proportion of volume output from our strategically sourced land bank over the medium term. 

We welcome the Government's longer-term approach to increase the supply of new housing, including the reintroduction of mandatory housing targets and much-needed reforms to the planning system. While the full intended benefits of these reforms will take time to be realised, planning delays are beginning to ease, providing a supportive backdrop for our plans for multi-year volume growth.

Production and cost control

Overall build cost inflation was running in the low single digits through the first half. Given the industry-wide decline in construction activity since 2022 there are presently good levels of product availability across the Group and modest overall material cost inflation on new tenders. Bellway's experienced procurement teams continue to work closely with our wide range of supply chain partners to ensure we are prepared for our targeted increase in volume output in the current financial year and beyond.

The Group's outlet opening programme has provided good visibility on pipeline work for subcontractors and remains beneficial when negotiating new labour contracts and pricing. Requests for subcontract price increases remain low for most trades and typical minimum fixed price periods of 12 months are being secured. 

Bellway has robust cost controls and a consistent focus on margin protection. Furthermore, as the industry works towards building to the requirements of the Future Homes Standard, our Artisan Collection of standard house-types and centralised approach to design, procurement and site layout reviews will continue to help the Group maintain efficiency and mitigate cost pressures. The proportion of Artisan homes is expected to increase to around 80% of housing output (excluding apartments) in the current financial year (31 July 2024 - 70%).

We previously announced that, to support our volume growth ambitions and carbon reduction goals, the Group is targeting an increase in timber frame use to around 30% of housing output by 2030 (31 July 2024 - 12%). The planned growth in timber frame output will be achieved primarily by investing in our own proprietary timber frame manufacturing facility, 'Bellway Home Space'.

During the first half Bellway signed a long-term lease agreement for a 134,000 square foot industrial unit for 'Bellway Home Space' near Mansfield, Nottinghamshire. Fit out of the unit has recently commenced and delivery of computer driven robotic machinery for the facility is scheduled for summer 2025. A management team for our timber frame operations is in place, led by an experienced Managing Director and we expect to begin supplying our divisions with frames from the facility in early 2026. 

We are confident that our investment in timber frame in the years ahead will underpin the delivery of our strategic priorities, to drive long-term volume growth and an improvement in RoCE, and help meet the targets set out in our 'Better with Bellway' sustainability strategy. 

Recent trading

The improvement in trading in the first half combined with our robust outlet numbers, led to a strong increase in the forward order book compared to the prior year period. This comprised 4,726 homes (2024 - 3,970 homes) and increased in value by 29.5% to £1,311.5m2 (2024 - £1,012.5m) at 31 January 2025. 

Since the start of the new calendar year there has been sustained improvement in trading compared to autumn 2024, supported by robust underlying customer demand and a seasonal uplift. In the seven weeks since 1 February, the private reservation rate was 184 per week (1 February to 17 March 2024 - 163). This represented a private reservation rate per outlet per week of 0.76 (1 February to 17 March 2024 - 0.67), including a contribution from bulk sales of 0.10 (2024 - 0.01). The overall reservation rate rose by 10.2% to 227 per week (1 February to 17 March 2024 - 206).

Reflecting recent trading and volume output, the order book has risen from the level at 31 January 2025. The forward order book at 16 March 2025 comprised 5,582 homes (17 March 2024 - 5,063 homes) with a value of £1,581.0m2 (17 March 2024 - £1,344.1m). 

Outlook

Bellway's healthy forward order book and work-in-progress position leaves the Group firmly on track to deliver full year volume output of at least 8,500 homes (31 July 2024 - 7,654 homes) with output weighted towards the first half.

We have been encouraged by a pick-up in customer enquiries and reservation rates in the spring selling season. While we remain mindful of the sensitivity of customer demand to mortgage affordability and the evolving economic backdrop, we currently expect to build the order book through the second half. This will serve as a platform to drive further increases in output and, if market conditions remain stable, Bellway can deliver cumulative volume growth of 20% in the two years to 31 July 2026. 

Given the Group's operational strengths and land bank depth, Bellway remains very well-positioned to capitalise on the positive long-term fundamentals of the UK housebuilding industry, and deliver ongoing value creation for shareholders. 

Jason Honeyman

Group Chief Executive

24 March 2025

Financial review

Trading performance

The Group has delivered growth in housing revenue of 12.3% to £1,421.6m (2024 - £1,265.6m), which was supported by a strengthened order book at the start of the financial year. Other revenue was £7.8m (2024 - £7.5m) and comprises ancillary items including land and commercial sales, and management fee income earned on our joint venture schemes. Total revenue was 12.3% higher at £1,429.4m (2024 - £1,273.1m).

The table below shows the number and average selling price of homes completed in the period, analysed between private and social homes, and against the prior year period comparative:

Total housing completions increased by 11.9% to 4,577 homes (2024 - 4,092 homes) and overall private output rose by 17.5% to 3,617 homes (2024 - 3,078 homes). There was a modest 5.3% decline in social housing output to 960 homes (2024 - 1,014 homes) which resulted in the proportion of social completions decreasing to more normalised level of 21.0% of the total (2024 - 24.8%). We have good visibility on our near-term build programmes, and we expect a similar number of social housing completions in the second half of the current financial year.

The overall average selling price was in line with our expectations at £310,581 (2024 - £309,278). While there were some geographic and mix changes, underlying pricing and the level of incentives remained firm through the period, and we continue to expect the full year average selling price to be around £310,000 (31 July 2024 - £307,909). 

Underlying operating performance

Overall, underlying cost pressures have eased, although the effects of residual cost inflation, extended site durations and the use of customer incentives continue to be realised through the income statement. The Group's commercial disciplines and proactive management of site-based overheads helped to alleviate some of the margin pressures faced during the period and the underlying gross margin reduced slightly to 16.4%2,3 (2024 - 16.5%). Driven by higher revenues in the period, underlying gross profit increased by 11.1% to £233.8m2,3 (2024 - £210.5m). 

Other operating income and expenses, which net to a modest expense of £0.3m (2024 - £0.9m), relate to the running of our part-exchange programme. Part-exchange activity remained disciplined and was used for only 3.1% (2024 - 2.8%) of completions with a balance sheet investment at 31 January 2025 of £15.6m (2024 - £20.1m). The Group has strong controls around the use of part-exchange homes as a selling tool, and we have the financial capacity to increase its use, in a controlled manner, if market conditions require it. 

The administrative expense rose by 10.3% to £76.9m (2024 - £69.7m). The increase, which was in line with previous guidance, follows two years of broadly flat overheads and reflects the requirement to continue offering competitive reward packages to attract and retain talent to support our growth plans. It also includes the initial, pre-operational costs of our new proprietary timber frame manufacturing operations. We continue to expect full year underlying administrative expenses2,3 to rise by around 10% over the prior year (31 July 2024 - £141.8m).

The underlying operating margin for the half year was 11.0%2,3 (2024 - 11.0%). We currently expect there to be a modest reduction in the second half of the financial year, primarily due to reduced overhead absorption, given the weighting of housing revenues to the first half. For the full year and in line with previous guidance, we continue to anticipate the underlying operating margin to approach 11.0%2,3 (31 July 2024 - 10.0%). 

The Group will continue with a disciplined approach to land investment and cost management, and together with the support of stable conditions in the housing market, the Board is confident that an underlying operating margin in the mid-to high-teens2,3 is sustainable over the longer term.

Adjusting item: Net legacy building safety expense

Bellway has allocated and committed significant resource and funding to remediate its legacy apartments. As a result the Group is making good progress on addressing building safety issues.

In December 2024, following a period of industry-wide delays in obtaining building access licences, developers and the Government committed to working together to accelerate developer-led remediation. Our experienced site remediation teams remain focused on completing works as promptly and efficiently as possible.

In the first half, the Group has recognised a net adjusting charge of £9.4m (2024 - £16.8m) in relation to legacy building safety. The total adjusting expense includes a net adjusting expense of £2.1m through cost of sales, which relates to the refinement of overall cost estimates in relation to the SRT and associated review provision.

The adjusting finance expense in the period was £7.3m (2024 - £9.4m) and related to the unwinding of the discount on both the SRT and associated review provision and the structural defects provision. This is a technical interest unwind, which was in line with previous guidance. The adjusting finance expense is subject to a range of assumptions, and based on the 31 January 2025 forward looking discount rate, we currently anticipate an adjusting finance expense of around £7m in the second half of financial year 2025.

The total amount Bellway has set aside for legacy buildings in England, Scotland and Wales since 2017 is £665.1m. Demonstrating our ongoing commitment to deliver appropriate solutions for legacy buildings, the Group has spent £163.0m since the start of the remediation programme, with a remaining provision of £502.1m at 31 January 2025.

The Group's established and dedicated Building Safety division is being enlarged to ensure every effort is being made to accelerate progress with assessment and remediation. As at 31 January 2025, and including those buildings that have been awarded an application by the Building Safety Fund or ACM Funds, Bellway had a total of 159 buildings where work is complete or underway.

Bellway has the operational and financial resources to meet its commitments for legacy building safety and we expect to make further strong progress in the current financial year and beyond.

Net underlying finance expense

The modest rise in the net underlying finance expense to £5.8m2,3 (2024 - £4.3m) was primarily due to the higher interest rates charged on the increased land creditor balance in the period. This resulted in a higher non-cash interest charge on land acquired on deferred terms of £7.1m (2024 - £5.3m). The total underlying non-cash related net finance expense in the first half was £7.5m2,3 (2024 - £5.4m), and cash related net finance income was £1.7m (2024 - £1.1m).

Based on prevailing interest rates and in line with previous guidance, the net underlying interest expense2,3 in financial year 2025 is anticipated to be around £15m (31 July 2024 - £9.7m).

Profit for the period

Including our share of loss from joint ventures of £0.6m (2024 - £1.4m), which reflects upfront financing costs on a long-term scheme, underlying profit before taxation increased by 11.9% to £150.2m2,3 (2024 - £134.2m). Reported profit before taxation was £140.8m (2024 - £117.4m). 

The income tax expense was £40.4m (2024 - £33.4m), reflecting an effective tax rate of 28.7% (2024 - 28.4%). The effective tax rate reflects the standard rate of UK corporation tax of 25% and also includes the Residential Property Developer Tax ('RPDT'), which is charged at a rate of 4% of relevant taxable profits.

The underlying profit for the period rose by 11.7% to £107.1m2,3 (2024 - £95.9m) and underlying earnings per share was 90.3p2,3 (2024 - 80.6p). After considering the adjusting items, reported profit for the period was £100.4m (2024 - £84.0m). Basic earnings per share was 84.6p (2024 - 70.6p).

Strong balance sheet and financial position

Bellway's well-capitalised balance sheet principally comprises amounts invested in land and work-in-progress. Within total inventories of £4,764.3m (2024 - £4,542.4m), the carrying value of land was £2,538.2m (2024 - £2,438.2m), with the modest increase due to a normalisation of land buying activity and several pipeline sites receiving an implementable DPP during the period. While our work-in-progress also increased modestly to £2,064.2m (2024 - £1,953.8m), the balance was lower than the position of £2,123.9m at 31 July 2024. This movement since the start of the financial year reflects the increase in volume output together with our ongoing disciplined investment in site infrastructure and programme of outlet openings.

We have maintained financial resilience, and net debt at 31 January 2025 was low and in line with expectations at £8.0m2 (2024 - net cash of £76.6m). During the first half, expenditure on land, including payment of land creditors, was £302m (2024 - £257m), primarily comprising cash payments on contracts approved in previous financial years. Committed land obligations were £289.7m (2024 - £238.5m) and adjusted gearing, inclusive of land creditors, remains low at 8.5%2 (2024 - 4.7%). We remain focused on preserving Bellway's balance sheet strength and expect to end the current financial year maintaining a low level of adjusted gearing2.

Delivering value for shareholders

Net assets increased in the half year to £3,522.4m (31 July 2024 - £3,465.4m), with the improvement in profitability partly offset by cash dividend payments made in the period totalling £45.1m. As a result, NAV per share increased to 2,960p2 (31 July 2024 - 2,913p). Underlying post-tax return on equity was 6.1%2,3 (2024 - 5.6%) and underlying RoCE was 8.9%2,3 (2024 - 8.1%).

The Board remains confident that, with supportive market conditions, Bellway is in an excellent position to capitalise on future growth opportunities. Combined with our drive for greater cash generation and capital efficiency, we are well-placed to deliver multi-year growth in both asset turn and margin to deliver a sustained recovery in returns.

Shane Doherty

Chief Financial Officer

24 March 2025

'Better with Bellway'

Our responsible and sustainable approach to business

'Better with Bellway' is our approach to acting responsibly and delivering sustainable homes. The strategy encompasses issues around people and the environment, is central to the underlying operations of the Group and includes ambitious targets for eight priority areas. Some recent highlights from our three flagship priority areas of Carbon Reduction, Customers and Communities, and becoming an Employer of Choice are included below:

Carbon Reduction

To achieve a lower carbon footprint at Bellway, we have committed to a significant reduction in scope 1 to 3 greenhouse gas emissions by 2030. We have several research projects underway across the business to drive best practice for carbon reduction, and we have continued to make strong progress to meet our targets, which have been validated by the Science Based Targets initiative ('SBTi').

Our flagship research project is at the University of Salford where a Bellway 'Future Home' has been constructed in the 'Energy House 2.0' environmental chamber. In this controlled environment, a variety of innovative technologies are being tested, and the project is producing valuable data on the performance of these technologies and the fabric of the 'Future Home'. This is helping to inform how Bellway will build homes in the years ahead and achieve the requirements of the Future Homes Standard. 

The efforts of our colleagues and the work being carried across the research projects have been recognised through several industry awards, including 'Best Carbon Reduction Innovation or Practice' for the second year running at the 2024 Building Innovation Awards.

Customers and Communities

Bellway aims to provide a consistently high service and quality homes to all our customers, and the efforts under our Customer First programme have resulted in the Group retaining its position as a five-star5 homebuilder. This is awarded by the HBF using the NHBC's Customer Satisfaction survey, which asks customers whether they would recommend Bellway to a friend, when surveyed eight weeks after their moving date. 

Bellway's overall drive to deliver high-quality homes has also been reflected by 45 of our site managers winning NHBC Pride in the Job Awards during the year. This is the NHBC's flagship competition for build quality across the UK, with ten of our winners also receiving a Seal of Excellence Award; three of which went on to win Pride in the Job Regional Awards. 

Employer of Choice

Bellway is an 'Employer of Choice' in the industry by providing a safe, diverse and inclusive environment that our colleagues can thrive in, and we are very proud that this priority area of our 'Better with Bellway' strategy won the 'Best Staff Development Award' at the 2024 Housebuilder Awards. 

Bellway is a fully accredited Living Wage Employer, which covers both directly employed and subcontracted staff, and we have an ongoing programme of structured apprenticeships and graduate training to help address the current skills gap in the UK construction industry. Overall, these measures will help to achieve our aim of increasing the proportion of employees in 'earn and learn' positions and support the ongoing success of the business.

Further progress

The Group continues to make good headway towards the targets and KPIs set for the other priority areas within 'Better with Bellway', and we look forward to reporting further progress on our sustainability strategy with our Preliminary Results in October 2025. 

All our targets and KPIs, together with further background information, are published on our website at www.bellwayplc.co.uk/sustainability.

Jason Honeyman

Group Chief Executive

24 March 2025

Condensed Group Income Statement

Condensed Group Statement of Comprehensive Income

Condensed Group Statement of Changes in Equity

* An additional breakdown is provided in the Condensed Group Statement of Comprehensive Income.

Condensed Group Balance Sheet

Condensed Group Cash Flow Statement

Notes

Basis of preparation

Bellway p.l.c. (the 'Company') is a company incorporated in England and Wales.

These condensed consolidated interim financial statements, prepared to 31 January 2025, include the results of the Company, its subsidiaries and the Group's interest in joint arrangements (together referred to as the 'Group'). 

These condensed consolidated interim financial statements are unaudited and were authorised for issue by the Board on 24 March 2025.

a) Basis of preparation

This set of condensed consolidated interim financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the UK.

The comparative figures for the financial year ended 31 July 2024 are not the Group's statutory financial statements for that financial year as defined in section 434 of the Companies Act 2006. Those financial statements have been reported on by the Group's auditor and delivered to the Registrar of Companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The annual financial statements of the Group for financial year ending 31 July 2025 will be prepared in accordance with UK adopted International Accounting Standards ('IAS'). As required by the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, these condensed consolidated interim financial statements have been prepared applying the accounting policies and presentation that were applied in the preparation of the Group's published consolidated financial statements for the year ended 31 July 2024.

b) Going concern

The Group's activities are financed principally by a combination of ordinary shares and cash in hand less debt. At 31 January 2025, Bellway had net debt of £8.0 million2 (note 7), having cash inflows of £2.5 million (note 7) during the period, including £95.3 million of cash generated from operations.

The Group has operated within all its debt covenants throughout the period, and covenant compliance was considered as part of the going concern assessment. In addition, the Group had bank facilities of £400.0 million at 31 January 2025, expiring in tranches up to December 2028. Furthermore, in February 2021 the Group drew down a sterling US Private Placement ('USPP') for a total amount of £130.0 million, as part of its ordinary course of business financing arrangements, which has maturity dates in 2028 and 2031. In aggregate, the Group had committed debt lines of £530.0 million at 31 January 2025.

Including committed debt lines and cash, Bellway had access to total funds of £522.0 million, along with net current assets (excluding cash) of £3,886.5 million at 31 January 2025, providing the Group with appropriate liquidity to meet its current liabilities as they fall due.

The Group's internal forecasts have been regularly updated, incorporating our actual experience along with our expected future outturn. The latest available base forecast has been sensitised, setting out the Group's resilience to the principal risks and uncertainties in the most severe but plausible scenario. The sensitivity includes a recession due to economic uncertainty and a deterioration in customer confidence. This could lead to a reduction in both the total number of legal completions and the private average selling price, with overheads, land spend and construction spend reducing accordingly.

This sensitivity includes the following principal assumptions:

§ Private completions in H2 FY25 are supported by the forward order book. In the 12 months to 31 July 2026, private completions reduce by around 50% compared to the 12-month pre-stress peak in FY22. This is followed by a gradual recovery based on the lower base position.

Notes (continued)

Basis of preparation (continued)

b) Going concern (continued)

§ Private average selling price in H2 FY25 remains in line with internal forecasts due to the order book position. In the 12 months to 31 July 2026, the private average selling price reduces by 10% compared to the latest achieved pricing. This is followed by a gradual recovery based on the lower base position.

§ These assumptions reflect the Group's experience in the 2008-09 Global Financial Crisis.

A number of prudent mitigating actions were incorporated into the plausible but severe downside scenario, including:

§ Plots in the land bank only being replaced at the same rate that they are utilised.

§ Construction spend is reduced in line with housing revenue.

§ Dividends were reduced in line with earnings.

The sensitivity analysis was modelled over the period to 31 July 2026 for the going concern assessment. In addition to the scenario, several additional mitigating measures remain available to management that were not included in the scenario. These include withholding discretionary land spend and instead trading out of the substantial existing land holdings.

In the scenario, the Group had significant headroom in both its financial debt covenants and existing debt facilities and met its liabilities as they fall due. In relation to climate risks, and in particular the requirement of the Group to reduce carbon emissions, the going concern assessment is not considered to be materially affected by the Future Homes Standard.

The Directors consider that the Group is well placed to manage business and financial risks in the current economic environment. Consequently, the Directors are confident that the Group will have sufficient funds to continue to meet its liabilities as they fall due for the period to 31 July 2026, aligning with the first year end after the minimum 12 month assessment period, and have therefore prepared the condensed consolidated interim financial statements on a going concern basis.

c) Accounting policies

Effect of new accounting standards and amendments

The adoption of the new accounting standards and amendments effective for the first time in these condensed consolidated interim financial statements have not had a material effect on the Groups' equity or profit for the period.

d) Accounting estimates and judgements

While preparing these condensed consolidated interim financial statements, the Directors are required to make significant estimates and judgements that could have a significant effect on these financial statements when applying the Group's accounting policies.

When preparing these condensed consolidated interim financial statements, the major judgements in applying the Group's accounting policies and the major sources of estimation uncertainty were those applied in the Group's Annual Report and Accounts for the year ended 31 July 2024.

e) Seasonality

In common with the rest of the UK housebuilding industry, activity occurs throughout the year, but is subject to the two main house selling seasons of spring and autumn. As these seasons fall in separate half years, the Group's financial results are not usually subject to significant seasonal variations.

Notes (continued)

Performance for the period

1. Revenue

Segmental analysis

The Executive Board (the Chief Operating Decision Maker as defined in IFRS 8 'Operating Segments') regularly reviews the Group's performance and balance sheet position at both a consolidated and divisional level. Each division is an operating segment as defined by IFRS 8 in that the Executive Board assess performance and allocates resources at this level. All of the divisions have been aggregated in to one reporting segment on the basis that they share similar economic characteristics including:

§ National supply agreements are in place for key inputs including materials.

§ Debt is raised centrally and the cost of capital is the same at each division.

§ Sales demand at each division is subject to the same macroeconomic factors, such as mortgage availability and government policy.

Additional information on average selling prices and the unit sales split between private and social has been included in the Financial Review. The Board does not, however, consider these categories to be separate reportable segments as they review the entire operations at a consolidated and divisional level when assessing performance and making decisions about the allocation of resources.

Revenue from contracts with customers

An analysis of the Group's revenue is as follows:

Notes (continued)

2. Net legacy building safety expense and exceptional items

Profit before taxation has been arrived at after recognising the following items in the income statement:

The income tax rate applied to the total net legacy building safety expense and adjusting items in the income statement is the Group's standard rate of income tax, including both corporation tax and Residential Property Developer Tax ('RPDT'), of 29.0% (31 January 2024 - 29.0%, 31 July 2024 - 29.0%).

SRT and associated review

Bellway continues to act responsibly with regards to building and resident safety, and this is reflected by the significant resource and funding the Group has committed to remediate its legacy apartments.

In March 2023 the Group signed the SRT with MHCLG. Under the terms of the SRT, developers have agreed to identify and remediate life-critical fire safety defects in residential buildings over 11 metres in height that they have developed or refurbished since April 1992. The Group contractually committed to remediate its legacy buildings in both Wales and Scotland by signing the Pact with The Welsh Ministers (the 'Pact') in May 2023 and the Scottish Safer Buildings Accord in July 2023.

Signing the SRT has led to improved clarity on the standards required for internal and external remediation, including Publicly Available Specification ('PAS') 9980:2022, which is the code of practice for Fire Risk Appraisals of External Wall construction ('FRAEW'). Buildings are deemed to be assessed under the requirements of the SRT when a qualifying assessment has been approved by the MHCLG. This requires the completion of both a FRAEW and a Fire Safety Assessment ('FSA').

Notes (continued)

2. Net legacy building safety expense and exceptional items (continued)

In total, for the half year ended 31 January 2025 Bellway set aside a net exceptional pre-tax expense of £9.4 million (2024 - £16.8 million), in relation to the SRT and associated review. Of this expense, a net £3.0 million (2024 - £8.0 million) is recognised in cost of sales and an adjusting finance expense of £6.4 million (2024 - £8.8 million) in relation to the unwinding of the discount of the provision to present value. The net expense recognised in cost of sales includes an expense of £10.6 million (2024 - £10.3 million) relating to cost estimate increases, offset by £2.1 million (2024 - £7.8 million expense) following an increase (2024 - decrease) in discount rates during the period (note 6), provision releases of £5.3 million (2024 - £10.1 million), and one-off cost recoveries of £0.2 million (2024 - £nil).

The total amount Bellway has set aside in relation to the SRT and associated review since 2017 is £619.3 million (31 July 2024 - £609.7 million). Costs have been provided regardless of whether Bellway still retains ownership of the freehold interest in the building or whether warranty providers have a responsibility to carry out remedial works.

The provision has been calculated using cost estimates based on our extensive experience to date, using analysis of previously tendered works and prudent, professional estimates based on knowledge of known issues. In addition, on developments where full investigations have not yet been undertaken or cost reports obtained, costs to date on similar developments have been used to estimate the likely cost. We have also made assumptions with regards to the likely cost of resolving potential issues, that we have not yet been made aware of, on blocks constructed since 1992.

Cost estimates have been reviewed and updated in the period based on the latest scopes following surveys undertaken,

tendered works and progress with remediation.

The provision calculation uses the expected timings of cash outflows which are adjusted for future estimated cost inflation in accordance with the Build Cost Information Service ('BCIS') index, a leading provider of cost and price information to the construction industry. The provision is discounted back to a present value using UK gilt rates with maturities which reflect the expected timing of cash outflows. The unwinding of this discount is charged through the income statement as an adjusting finance expense. The majority of the cash outflow is expected to be over the next five years, although there will be some residual expenditure beyond this. The anticipated timing reflects the complex issues around remediation including identifying the works required, design and planning obligations, interpretation of the PAS 9980:2022, liaison and negotiations with building owners, appointment of contractors and time taken to obtain access licences. As at 31 January 2025, and including those buildings that have been awarded an application by the Building Safety Fund or ACM Funds, Bellway had a total of 159 buildings where work is complete or underway.

Total recoveries recognised since 2017 are £80.5 million (31 July 2024 - £80.3 million). Reimbursement assets of £0.1 million (2024 - £nil) remained outstanding at the period end.

Structural defects

During the year ended 31 July 2023 a structural defect relating to the reinforced concrete frame was identified at a historical high-rise apartment scheme in Greenwich, London. The current provision for the cost of the remediation work is £45.4 million (31 July 2024 - £45.6 million). This cost estimate is based on an expert third-party report and reflects management's expected scope of works.

In total, for the half year ended 31 January 2025 Bellway set aside an exceptional pre-tax expense of £nil (2024 - £nil), in relation to the structural defects. Of this, £0.9 million of net income (2024 - £0.6 million) is recognised in cost of sales which is offset by an adjusting finance expense of £0.9 million (2024 - £0.6 million) relating to the unwinding of the discount of the provision to present value. The amount recognised in cost of sales includes a credit of £0.8 million (2024 - £0.9 million) relating to provisions releases and £0.1 million (2024 - £0.3 million expense) following an increase (2024 - decrease) in discount rates during the period (note 6).

Notes (continued)

2. Net legacy building safety expense and exceptional items (continued)

The provision calculation uses the expected timings of cash outflows which are adjusted for future estimated cost inflation in accordance with the BCIS index. The provision is discounted back to a present value using UK gilt rates with maturities which reflect the expected timing of cash outflows. The unwinding of this discount is charged through the income statement as an adjusting finance expense.

The Group has carried out a review of other buildings constructed by, or on behalf of Bellway, where the same third parties responsible for the design of the frame in the Greenwich development have been involved. To date, no other similar design issues with reinforced concrete frames have been identified.

We are actively seeking recoveries in relation to the structural defect identified, but as these are not virtually certain at the balance sheet date, no reimbursement assets have been recognised.

The cash outflow is expected to be over the next three years.

Aborted transaction costs

During the previous financial year, the Group announced that it made an all-share offer to acquire Crest Nicholson Holdings plc. On 13 August 2024, the Board decided not to progress with this acquisition and recognised £nil (31 January 2024 - £nil, 31 July 2024 - £5.4 million) of costs associated with this aborted transaction as exceptional.

3. Earnings per ordinary share

Basic earnings per ordinary share is calculated by dividing profit for the period by the weighted average number of ordinary shares in issue during the six month period (excluding the weighted average number of ordinary shares held by the Bellway Employee Share Trust (1992) which are treated as cancelled).

Diluted earnings per ordinary share uses the same profit for the period 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. Diluted earnings per ordinary share is calculated by dividing earnings by the diluted weighted average number of ordinary shares.

Reconciliations of the profit for the period and weighted average number of shares used in the calculations are outlined below:

Notes (continued)

3. Earnings per ordinary share (continued)

Underlying basic and underlying diluted earnings per share exclude the effect of adjusting items and any associated net tax amounts. Reconciliations of these are outlined below:

Taxation

4. Taxation

The income tax expense includes both corporation tax and RPDT. This is calculated by applying the best estimate of the expected annual corporation tax rate and RPDT rate to the profit before taxation adjusted for non-taxable items and enhanced deductions.

The effective rate of taxation, including RPDT, for the period is 28.7% (31 January 2024 - 28.4%, 31 July 2024 - 29.0%). 

As part of the UK adoption of the Organisation for Economic Cooperation and Development ('OECD') Pillar Two rules, the UK government announced two new taxes, the Multinational Top-up Tax and the Domestic Top-up Tax which are designed to ensure corporations pay tax at a rate of at least 15%. The Domestic Top-up Tax applied to the Group from 1 August 2024. As the Group's current effective tax rate is in excess of 15%, it is expected the introduction of this tax will not affect Bellway. The Multinational Top-up Tax is not expected to affect Bellway. The Group applies the exception to recognising and disclosing information about deferred tax assets and liabilities relating to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023.

The carrying amount of the gross deferred tax assets are reviewed at each balance sheet date and are recognised to the extent that there will be sufficient taxable profits to allow the asset to be recovered.

The deferred tax assets/(liabilities) of the Group at 31 January 2025 were valued at the substantively enacted corporation tax and RPDT rates of 29.0% (31 January 2024 - 29.0%, 31 July 2024 - 29.0%). At 31 January 2025 the Group recognised a deferred tax asset of £0.8 million (31 January 2024 - deferred tax liability of £2.4 million, 31 July 2024 - deferred tax liability of £0.7 million).

Working capital

5. Inventories