Building for the future

Bellway p.l.c. Annual Report and Accounts 2020 Financial and Strategic Summary

3,213.2 662.6 Group revenue (£m) 2,957.7 Profit before taxation (£m) 641.1

2,225.4 m m £2,225.4 £236.7 236.7 (30.7%) (64.3%) 2018 2019 2020 2018 2019 2020

Average selling price (£) 284,937 291,968 293,054 Order book value as at 1,760.2 31 July (£m)(~) £293,054 1,301.1 1,223.9 +0.4% £1,760.2m 2018 2019 2020 +43.8% 2018 2019 2020

Plots contracted in the 12,962 13,113 Owned and controlled land 44,589 11,921 41,077 42,721 year (plots) bank (plots)

11,921 plots 44,589 plots (9.1%) 2018 2019 2020 +4.4% 2018 2019 2020

In this report

About Us Governance Accounts Other Information IFC Financial and 52 Board of Directors and 104 Group Income Statement 133 Five Year Record Strategic Summary Group General Counsel 104 Statements of 134 Alternative IFC In this report & Company Secretary Comprehensive Income Performance Measures 1 Who we are 54 Chairman’s Statement on 105 Statements of Changes 137 Glossary 2 Why Bellway Corporate Governance in Equity 139 Advisers and Group 56 Board Leadership and 107 Balance Sheets General Counsel & Strategic Report Company Purpose 108 Cash Flow Statements Company Secretary 4 Principal KPIs 58 Division of Responsibilities 109 Accounting Policies 140 Shareholder Analysis 5 Chairman’s Statement 60 Nomination 115 Notes to the Accounts 140 Financial Calendar 8 Our Marketplace Committee Report 10 COVID-19 -Our Journey 62 Audit Committee Report 12 Key Stakeholder 72 Remuneration Relationships Committee Report 16 Our Business Model 93 Directors’ Report 24 Strategy 97 Independent 26 Operating Review Auditor’s Report 32 Financial Review 36 Principal Risks 40 Risk Management 42 Going Concern and Long- Term Viability Statements Note: 43 Corporate Responsibility Unless otherwise stated all numbers throughout the Annual Report and Accounts exclude joint ventures. ~ Bellway uses a range of statutory performance measures and alternative For further details on our business please visit: 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 can be found on pages 134 to 136. www.bellwayplc.co.uk Throughout this report ‘~’ refers to alternative performance measures. About Us 1 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report …our people. …our shareholders. …our We are building value. building are We for almost 3,000 people. 3,000 almost for We are building careers careers building are We We are building building are We for the future of… future the for …our customers. customers. …our …our communities. ustainable homes. d sustainable an We are building quality quality building are We We build trust by working in a in working by trust build We sustainable and responsible way. and responsible sustainable Who we are we Who Why Bellway

Our homes We build high quality homes designed to complement Bellway London was launched in 2018 to provide the the style of existing local architecture in communities, London market with a modern and consistent identity meet local demand and enhance the area in which they that is recognisable across the capital. This covers all of are built. With a range that extends from one-bedroom our developments in London boroughs, with our main apartments to six-bedroom family homes, we offer an focus being outer London boroughs and commuter extensive choice from which customers can choose towns within the M25. Properties range from one- a property that meets their individual requirements. bedroom apartments to four-bedroom townhouses. We also provide homes to housing associations for social housing. Our people Our people are the key to our success and we aim to Our focus is to provide desirable, traditional family provide them with a rewarding and fulfilling career. housing across all our divisions and in addition provide apartments in the more affordable outer commuter Bellway has long had a reputation as a good employer, zones of London. taking an interest in its workforce and supporting career development. As a result, many employees have spent Our brands a large proportion of their working lives with us. Bellway and Ashberry are the main brands we use to sell However, we are not complacent and strive to be an our homes with Bellway being the most recognisable employer of choice. brand. Our Ashberry brand, which was launched a few years ago, is only offered on larger sites, with the Our customers purpose of providing two differentiated outlets and We pride ourselves on understanding the aspirations therefore offering greater customer choice. This has the of all of our customers, not just in the type of home advantage of improving sales rates, often more than can that suits their needs, but the environment in which be achieved through using two Bellway outlets, with a they want to live. All of our customers are treated to resultant improvement in return on capital employed the same high level of customer service. Our high (‘RoCE’). We will plot different house types and/or standard of service and build quality is endorsed by our elevations and offer different internal specifications for customers, with 9 out of 10 customers saying they would each brand, with little differentiation in standard of finish recommend Bellway to a friend buying a new home. or pricing. Our Customer First Committee drives improvements to quality and works to develop and share best practice across the Group to further enhance our service to customers.

Award Winning Homes 5 Star Rating from the Home Builders Federation Customer Satisfaction survey

Bellway p.l.c. 2 Annual Report and Accounts 2020 About Us 3 cale Bellway p.l.c. Bellway s t to No Mature divisions Newer divisions Annual Report and Accounts 2020 Accounts and Annual Report Our capacity for growth for capacity Our is in a robust these challenging times, Bellway Despite workforce. and dedicated with a motivated position, sheet, a balance ungeared a strong, from benefits It respond to and has the capability book order record underlying Our conditions. market evolving to with together on quality, and focus strength operational managing to approach and responsible a conservative the over well Group the will serve the business, term. longer Our business Our homebuilder. being a responsible to committed are We in an ethical and business our operate aim is to Our while at the same time building sustainable manner and sustainable developments desirable attractive, with in harmony live, to want which customers in communities. existing an have we homebuilders, largest of the UK’s one As the national housing in addressing play to important role in desirable homes building high quality shortage by build to stakeholders of with a range work We locations. whilst at the same time fulfil this role can we trust so that ethical responsible, in a socially business our operating way. and sustainable the covering 22 divisions from operate currently We and England, Scotland across main population centres local management allows divisional structure Our Wales. and, area specific demands in their to respond to teams land on acquire detailed local knowledge, their through exceed design and build homes that meet or which to to and contribute customers of our the expectations divisional teamsThe communities. local strong creating our and by Chairmen Regional our by supported are teams. specialist Group Principal KPIs

The Group has seven principal KPIs, which are Number of homes sold (homes) 10,307 10,892 shown below. Our secondary 7,522 performance measures, 7, 52 2 homes which support these KPIs, (30.9%) 2018 2019 2020 are shown on pages 18 to 22.

This KPI demonstrates how well the business model is able to support the Group’s strategy of delivering volume growth.

(1) (~) (1) (~) 22.1 Operating profit (£m) 652.9 674.9 Operating margin (%) 21.0

14.5 £321.7m 321.7 14.5% (52.3%) (650bps) 2018 2019 2020 2018 2019 2020

Operating profit is another measure of how efficiently the business is Operating margin demonstrates how efficiently the business is being operated and of the profitability of the Group’s core business. being operated. This KPI is one of the measures used to determine the directors’ annual bonus payment.

Return on capital employed (%)(1) (~) 27.2 Earnings per ordinary share (p) 423.4 437.8 24.7

% p 10.8 10.8 156.6 156.6 (1,390bps) (64.2%) 2018 2019 2020 2018 2019 2020

Return on capital employed (‘RoCE’) is a key indicator of how we Earnings per ordinary share (‘EPS’) is a useful measure of how are delivering our strategy of building shareholder value, which profitable Bellway is, year on year. is reliant on land acquisition and the subsequent performance of our developments.

Net asset value per ordinary 2,372 2,427 Total dividend per ordinary 143.0 150.4 share (p)(~) 2,079 share (p)

2,427p 50.0p 50.0 +2.3% 2018 2019 2020 (66.8%) 2018 2019 2020

The directors consider net asset value per ordinary share (‘NAV’) to be This is another useful indicator of how the directors are delivering the a useful proxy when reviewing whether shareholder value, on a share strategy of generating shareholder value, particularly when combined by share basis, has increased or decreased in the period. with NAV. Note that the 2020 final dividend figure is proposed.

Note: Link to remuneration – see pages 72 to 92. 1 Before exceptional items (note 3, page 115 to 116).

~ Bellway uses a range of statutory performance measures and alternative 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 can be found on pages 134 to 136. Throughout this report ‘~’ refers to alternative performance measures.

Bellway p.l.c. 4 Annual Report and Accounts 2020 Strategic Report 5 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report Resilience of our people of our Resilience who have those of efforts dedication and work, hard The have year the past over with, Bellway and for, worked the challenges of to positively respond to enabled us adapting in quickly and flexibility resilience Their COVID-19. andwell the Group served have working methods of new to the business in operation. kept undoubtedly have our express to like would I the Board, of behalf On hard their for contributed who have those all to gratitude of year this in support and ongoing commitment, work, challenges. unforeseen With its long-term and conservative and conservative With its long-term the business, to managing approach position, benefiting is in a robust Bellway sheet. balance a resilient from first Placing customers and quality build both prioritisation of continued Our being recognised the Group in resulted service customer Federation Builders the Home by homebuilder as a five-star our to testament a year, consecutive the fourth (‘HBF’) for aspect ofthis crucial in efforts significant and continued were managers site our the business. In addition, 44 of National obtaining on quality, focus their for recognised Awards Job’ the in Council (‘NHBC’) ‘Pride Building Home work. their of the high standard which underline the ‘lockdown’, during the business to the disruption Despite is gathering momentum initiative First’ ‘Customer internal our as a reputation upon our build us further will help and ahead. years the in leading national homebuilder Paul Hampden Smith Hampden Paul Chairman A swift and responsible approach to COVID-19 to approach responsible and swift A in resulted in March measures ‘lockdown’ of introduction The thewith reshaped, the business being quickly the priorities of working safe ensure to actions intended taking several Board the Group’s and preserve colleagues support our practices, sheet strength. and balance liquidity limited resuming of process the gradual began We a measured by followed May, in early activity construction the month. in later sales centres onsite of reopening enabled most of years recent over in IT Significant investment home, from effectively work to employees office-based our active all previously of the reopening supporting thereby June. the end of sales outlets by introduced, initially was land deals new on all moratorium A sheet and balance liquidity preserving of the intention with became clearer. conditions time as market such until value has enabled sales market the improving Subsequently, in a disciplined land buying activity recommence to Bellway and longer-term the recovery supporting thereby manner, return. of rates at attractive growth After reporting a strong set of Interim Results in March, in March, Results Interim set of a strong reporting After disruption, period of an unprecedented to led COVID-19 year full impact on our with a significant negative financial performance. approach and conservative with its long-term Nevertheless, position, is in a robust the business, Bellway managing to the can only sheet. Not balance a resilient benefiting from uncertainty, times of during value shareholder protect Group Bellway strength, with its underlying operational together but in its long-term investment continue to placed well is strategy. growth Introduction Chairman’s Statement Chairman’s Chairman’s Statement continued

Economic uncertainty remains but underlying Dividend payments resumed demand is strong Given the unprecedented uncertainty and the extent of As the country emerges from the initial extended national ‘Iockdown’ restrictions, which had a substantial downward ‘lockdown’ and adapts to ongoing restrictions at both effect on completions, the Board previously announced the a national and local level, there is substantial economic cancellation of the interim dividend, instead prioritising cash damage and an ongoing threat of a more widespread generation and the continued health of the balance sheet. resurgence in the virus. In addition, we are yet to see Since reopening sites, the sales market has remained resilient the extent to which unemployment will rise as the and the strong order book has enabled Bellway to continue unprecedented support offered by the Government’s its focus on cash collection. Recognising the dividend as Coronavirus Job Retention Scheme (‘CJRS’) ends and is an important component of shareholder returns, the Board replaced with the Job Support Scheme (‘JSS’). The Board also is therefore recommending the payment of a reduced final recognises the risk posed by the uncertain outcome of future dividend of 50.0p per share (2019 – 100.0p). This will continue trade deals with both the European Union and the rest of Bellway’s unbroken record of annual dividend payments, the world. which was also maintained throughout the global financial Notwithstanding this, there remains an imbalance between crisis of 2008 to 2009, while retaining the underlying strength the supply and demand of affordably priced, good quality of the Group’s balance sheet. housing, across many parts of the country. As a result of In light of the economic backdrop, the Board will keep this underlying requirement for new homes, customer the Company’s dividend policy under review. Subject to interest is strong and, for those with access to adequate unforeseen circumstances, however, the Board expects to deposits, affordability is good, supported by historically low increase the quantum of future dividend payments over interest rates. time, commensurate with the Group’s recovery in earnings. The lending institutions continue to process mortgages, but This approach will balance ongoing shareholder returns with there has been a considerable contraction in higher loan- growth, arising from opportunities in the land market. to- value lending, as banks have re-allocated their internal resources during ‘lockdown’. In that regard, Government Looking ahead stimuli, such as the current stamp duty holiday and the Despite these challenging times, Bellway is in a robust Help-to-Buy shared equity scheme are important, providing a position, with a motivated and dedicated workforce. valuable deposit contribution to those looking to access the It benefits from a strong, ungeared balance sheet, a record housing ladder. A continuation of these schemes not only order book and has the capability to respond to evolving encourages home ownership, helping the housing sector market conditions. Our underlying operational strength to boost output, but also creates employment and aids the and focus on quality, together with a conservative and wider economic recovery. responsible approach to managing the business, will serve the Group well over the longer-term.

Paul Hampden Smith Chairman

19 October 2020

Bellway p.l.c. 6 Annual Report and Accounts 2020 Strategic Report 7 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report 38 Graduate recruits 50% Female graduates January 2020 saw the first ever cohort of graduates join of graduates cohort the first ever 2020 saw January 38 graduates Programme. Graduate on our Bellway head disciplines from all joined the business across on gender focus to continues Bellway roles. site to office organisation; of the at all levels and diversity equality female were on the programme 50% of the graduates two-year The background. a BAME from were and 13.2% whilst field a in specialise to graduates allows programme to outside of this area of experience undertaking cycles of the business. knowledge well-rounded a generate that the has been such a success programme The the for underway well is already process recruitment 2021 intake. September Graduate Programme Graduate ...for our people Building for the future... the for Building Our Marketplace

Despite the challenges arising from COVID-19, conditions in the new build UK housing market remain positive, with strong demand for affordably priced homes, good access to affordable mortgage finan e and the continued availability of Help to Buy.

As highlighted in the Chairman’s Statement on page 6, in the sale of new homes, particularly for first-time buyers or conditions in the wider economy have changed as the purchasers in London where affordability is most constrained. country emerges from the initial extended COVID-19 Since the COVID-19 ‘lockdown’ commenced, the lending ‘lockdown’ and adapts to ongoing restrictions at both a institutions have continued to process mortgages, but there national and local level. There is substantial economic has been a considerable contraction in higher loan-to-value damage and an ongoing threat of a more widespread lending, as banks have re-allocated their internal resources resurgence in the virus. We are yet to see the extent to which during this period. unemployment will rise as the unprecedented support The Government announcement that the equity loan offered by the Government’s CJRS ends and is replaced with element of the Help to Buy scheme in England will be the JSS. In addition, a risk is posed by the uncertain outcome supported up to 31 March 2023, although with lower regional of future trade deals with both the European Union and the limits, provides certainty for the new build housing market rest of the world. and will greatly assist purchasers of new homes. Despite these headwinds, we believe that the market Help to Buy now accounts for 29% of all homes sold in the fundamentals for housebuilders remain positive, as set new build sector, and 35% of homes we sold in the year. out below. Undoubtedly, this has helped boost new build output, which The affordability of mortgages represents an increasing proportion of the overall market. Mortgage affordability is a crucial ingredient for a successful The continued success and extension of the Help to Buy and sustainable housing market. Access to affordable scheme supports market confidence which, coupled with finance assists potential purchasers in securing a new home. low interest rates, mean lenders are offering a range of Competition in the mortgage market and low interest rates competitive products to buyers. The Mortgage Market Review ensure new homes remain affordable. Average mortgage has resulted in a more sustainable mortgage market. repayments, as a percentage of income, have gradually fallen from a peak in 2007, following the downturn in the housing The stamp duty holiday market in 2008/09. The Government has temporarily increased the stamp duty threshold on which no tax is payable to £500,000 for property The chart at the bottom of the page demonstrates the sales in England and Northern Ireland, until 31 March 2021. affordability of houses in the UK. This will save buyers up to £15,000, if they are buying a The availability of mortgages property of £500,000 or less. Mortgage availability is an important component in a successful housing market. Following the introduction of the Government’s Help to Buy scheme in April 2013 for new build homes, the availability of 75% loan to value mortgage finance has increased significantly, thereby assisting in an increase

Affordability of houses in the UK

10 100% 9 90% 8 80% 7 70% 6 60% 5 50% 4 40% 3 30% 2 20%

House price: earnings 1 10% 0 0% 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Source: Halifax House price to earnings Mortgage repayments to earnings Mortgage repayments as a percentage of earnings

Bellway p.l.c. 8 Annual Report and Accounts 2020 Strategic Report 9 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report e between supply and demand for and demand for supply e between et remaining attractive and the planning and attractive et remaining support to deliver an increased supply of supply an increased deliver to support ong demand for new homes continues to be supportedto homes continues new ong demand for by the ongoing availability of Help to Buy, together with an together Buy, to Help of availability the ongoing by rates. interest low of environment The ongoing imbalanc The be ato homes continuing good quality priced, affordably the country. parts of many across feature Str land mark The to continuing the Group with favourable, environment or which meet opportunities value-enhancing identify margin gross both of respect in requirements our exceed and RoCE. Cross-party homes. new

• Summary of market backdrop of market Summary but COVID-19, to due uncertainty economic wider is There with: strong remain Bellway fundamentals for the market • • • caused uncertainty economic wider the is mindful of Bellway these sector- upon draw to but continues COVID-19, by its clear retaining conditions, market specific favourable growth. volume and disciplined long-term deliver to strategy and on quality focus the continued with together This, our benefit from to enables all stakeholders care, customer success.continued this consideration into take priorities strategic Group’s The backdrop. market the of synopsis Availability of labour and materials of labour Availability growth to constraint a remain availability and material Labour certainto be specific to tending pressures with the sector, in such as structural items of locations and supplies trades, a are pressures These and blocks. plastics, bricks timber, an industry-wide lack in housebuilding, the growth of result the cyclical and the long-term over training in investment of planning good forward a result, As the industry. of nature build periodstimes and extended lead-in disciplines, longer when planning be considered to all need years recent over enteringto Prior and sales programmes. construction that industry-wide build cost reported the Group ‘lockdown’, the operating on effect a moderating having were increases labour both inflation is negligible for cost currently margin, and materials. Further changes as a result of the revised NPPF, published in NPPF, the revised of as a result changes Further paper, white housing Government’s the and 2019, February such as ‘brownfield’ proposals which includes favourable housing need and a calculating method for a standard first, in plans, has resulted local publish ‘ambitious’ to requirement the UK, across locations demand in many an uplift in housing the in difficult circumstances in more it has resulted however, their reducing local authorities with many England north of target. housing 447 431 415 323

288 ed nted 267 Wales d Wales gra d an 241 ns issions 217 , Scotlan 2011 2012 2013 2014 2015 2016 2017 2018 2019 202 g perm 205 2010 ngland nnin n E Source: HBF New Housing Pipeline Report (Q1 2020 - Published August 2020) 500 450 400 350 300 250 200 150 100 Pla i Supply and planning permissions Land supply good buying provide to continues land market The is there as the ‘lockdown’, since opportunities, particularly the across liquidity reduced to due less competition generally values firm, supporting land remain prices House country. sell. to appetite vendors’ and hence planning a positive by land is supported of availability The which the chart below, in is evidenced This environment. in planning permissions granted of number a record shows years. recent over Wales and England, Scotland margins land at attractive of availability The high demand and in attractive of land in areas Acquiring financial and non- Group’s the with locations, in accordance the to factors the key is one of criteria, financial acquisition Bellway. of success the main in the UK, particularly land in for market The competitive. remains conurbations, planning system The homes is dependent new deliver to ability Group’s The the provide to the planning system, of the efficiency on and effective timely in a planning consents necessary the Group’s of the requirements meet to manner, targets. volume (‘NPPF’) system Framework Planning Policy National The thewith in parallel working 2012, in March introduced the planning on effect 2011, has had a positive Act Localism the number in an increase by is evidenced This environment. years. recent over planning permissions of Demand ability sector’s the to ongoing support provides Buy to Help for finance mortgage to access output, providing grow to the ongoing Additionally, with at least a 5% deposit. those homes that new ensures rates interest low of environment supporting further context, in a historical affordable remain underlying demand. the strong COVID-19 – Our Journey

COVID-19 has had a significant and unp ecedented effect on the world as a whole. We set out below an insight into Bellway’s efforts to support our employees, customers, suppliers, subcontractors and other stakeholders during this period.

Early warnings Closing our offices Stay home stay safe A phased and By mid-March we and sites The Group HR team cautious return were having regular Following the UK Prime developed a series of The construction industry management team Minister’s announcement information and tips for is a significant contributor meetings to prepare the on 23 March, we followed employees, starting with to the UK economy and Group. We implemented Government guidelines a Homeworking – ‘Work as such, the Government a rotation system to and closed our divisional Smart Work Safe’ guide. issued guidance stating minimise the number of and site offices with This was then followed that sites should continue staff in the office to ensure immediate effect. All onsite by a regular flow of to operate where their safety. construction activity guides on various topics they comply with the ceased by 27 March. throughout ‘lockdown’. Construction Leadership Communication Council’s Site Operating We assured employees is key Safeguarding careers Procedures and Public from the outset that they Throughout the Bellway was amongst Health England guidance. would be paid in full. pandemic we ensured our one of the few companies We responded by colleagues were provided who having put 75% of recommencing some with regular updates its staff on furlough still construction work, initially from our Chief Executive, continued to pay full on a phased basis, from including a dedicated basic salary from its own 4 May 2020. video message in April, resources, therefore not obtaining any CJRS and from Group HR and The little book of Group Technical teams. coping grant funding. PREVENT THE SPREAD OF CORONAVIRUS

Mary O’Neill & Charlotte Knight Keep a 2m Distance WASH YOUR HANDS FREQUENTLY

Your health, safety and general wellbeing is my priority and will remain so as we move through our recovery plans.

Jason Honeyman, one of the reassuring messages from our Group Chief Executive

Bellway p.l.c. 10 Annual Report and Accounts 2020 Strategic Report 11 Bellway p.l.c. Bellway

Annual Report and Accounts 2020 Accounts and Annual Report Looking Forward Looking Government monitor to continues Bellway of operations.guidelines on all aspects is ensuring the safety priority Our customers, employees, of all our suppliers and subcontractors.

I would like to take the opportunity to thank you you to thank the opportunity to take like would I such of efforts in the face extraordinary all for your circumstances. unusual and unprecedented Executive Chief Group Honeyman, Jason do our part in supporting do our the of the recovery with all employees and usefulupdated oncommunications to such as ‘Back topics Safe’ and ‘COVID Work’ procedures. working UK housing andUK economy. broader team HR Group Our provide to continued

We unfurloughed the unfurloughed We our of remainder in mid-May, workforce have to and continued home from working staff whilst possible where the highestensuring and safety of standards social distancing in both to and sites offices our Supporting theSupporting economy Mental wellbeing Mental the full dedicated We highlightto May month of mental of the importance Group with our wellbeing HR department providing with useful colleagues to and links guidance after looked they ensure and physical their both wellbeing. mental Key Stakeholder Relationships

Maintaining good relationships with our stakeholders is important to what we do.

The Board of Directors confirm that during the year under review, it has acted to promote the long-term success of the Company for the benefit of shareholders, whilst having due regard to the matters set out in section 172(1)(a) to (f) of the Companies Act 2006, being: (a) the likely consequences of any decision in the long term, (b) the interests of the Group’s employees, (c) the need to foster the Group’s business relationships with suppliers, customers and others, (d) the impact of the Group’s operations on the community and the environment, (e) the desirability of the Group maintaining a reputation for high standards of business conduct, and (f) the need to act fairly between members of the Group. On pages 12 to 15 we set out how we have engaged with various stakeholders during the year, the key issues raised and outcomes.

Customers

How we engage Outcomes We pride ourselves on our excellent customer service and place our We achieved 5 star homebuilder status in the national HBF awards customers first. Our reputation is built on trust and we help thousands for the fourth consecutive year. This reflects our commitment of people to buy their dream home every year. to delivering exceptional quality as standard to our customers, throughout our construction process, in the homes we create, and in Our highly trained and dedicated team of Sales Advisers engage our aftercare and customer service. and communicate with customers from the first time they contact us, throughout the sales process and ensure their moving-in day is a To be voted a 5 star homebuilder is an honour because it is memorable one. independently decided by our customers – more than 9 out of 10 of whom would recommend us to a friend. Once our customers have moved into their new home, our Customer Charter sets out the process of engagement to ensure the Our focus on customer service excellence has led to the launch after-sales experience continues to be a positive one. of our new ‘Customer First’ programme. The programme is being developed following extensive consultation with customers in order Our Sales Advisers receive feedback from customers throughout the to understand where we get things right and importantly where we process and we place significant emphasis on the HBF Customer can improve to meet and exceed their requirements. Satisfaction Survey. This annual survey allows our customers the opportunity to rate us on build quality, design, sales and We have created our new standard house type range, The Artisan customer care. Collection, which has been developed using feedback from our customers to create a new generation of properties which are suited We use a variety of different channels to allow customers to engage to homebuyers reflecting our expertise in delivering the highest with us via their preferred method. standard of modern living. We analyse how our customers engage with us through marketing At the start of FY20, Bellway launched on social media channels, data to ensure we are responding to their needs. giving customers the opportunity to engage with our brand and We drive engagement through social media channels to encourage share their experiences of buying a home from Bellway. customers to enter into discussion with our official accounts and share content about their experience.

Key issues raised • Customer service • Affordability and supply of housing • Sustainability and efficiency of homes • Quality of construction • Innovation • Legacy building and safety improvements • Help to Buy

Bellway p.l.c. 12 Annual Report and Accounts 2020 Strategic Report 13

Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report omer care omer y et conditions, including affordability, Help to Buy Buy to Help including affordability, et conditions, ecovery following the COVID-19 ‘lockdown’ the COVID-19 following ecovery ation policies vironment and sustainability vironment and the land market and Business ethics and corporate governance ethics and corporate Business Remuner mark General r Expected polic Dividend and cust Quality Public policy en The

Key issues raised issues Key • • • • • • • • We have provided additional information in announcements to cover cover to announcements in information additional provided have We demonstrated have we and these meetings during points raised year and full interim through financial position and performance our Annual Report. and our updates trading results, has the Group sentiment and shareholder understands Board The the last 12 months and the median in both TSR above delivered years. three standard through savings cost deliver to business continues The 2020. and Bellway type range house Shareholders will have the opportunity to ask questions in advance questions in advance ask to the opportunity will have Shareholders will the Board possible Where AGM. virtual door’ the ‘closed of AGM. the of the course during the meeting or before respond web-link. via a live AGM the to listen to will be able Shareholders Outcomes Outcomes policies new in several resulted have Groups Listening Employee Our working. flexible to relating being introduced by communications employee to made improvements have We consistent enable a more to strategy Group a centralised introducing partAs initiatives. Group-wide key for communication of level Head Group an experienced recruited have we this strategy of Communications.of reaction a positive has received wellbeing on employee focus Our aiders, health first mental of the introduction with employees from a positive campaigns, all having raising and awareness training during ‘lockdown’. impact, particularly awarded the Group and inclusion saw on diversity focus Our The Financial Times Diversity Leaders 2020 award, where we ranked ranked we where 2020 award, Leaders Times Diversity Financial The employee Following Europe. across 700 companies 286 out of and diversity implement several to is looking the Group feedback, across improvements further will help drive which inclusion groups diversity. and race on gender focusing the business, primarily andtrainees graduates, of the number has increased Group The new and grow develop to 42% the business by across apprentices in a ‘learning colleagues had 8.3% of we FY20 the end of At talent. position. and earning’ working ee communications ee benefits Shareholders Colleagues ersity and inclusion ersity Wellbeing Employ Flexible Div Employ

• • • • • Key issues raised Key How we engage we How shareholders our provide to need we company listed a publicly As instilto order the business in on information and balanced with fair be made.to decisions investment informed trust and allow shareholders with major meets team management executive Our year and full discuss interim to year a twice at least and analysts to investors to updates trading provide we and financial results the business. within them on progress update with institutional relationships external develop directors Executive we when – particularly and analysts investors prospective investors, via meetings and phone calls. the City to results release following and PR advisers its brokers from reports receives Board The and presentations results year and full interim updates, trading our regularly We and analysts. investors from feedback that provide the the positioning of understand to brokers with our communicate community. the investor to business where bodies representative shareholder of views the seek We and remuneration director of the areas on especially necessary, succession. Board possible. wherever shareholders ad hoc queries from to respond We top our to wrote Committee Audit the of the Chair year the During auditthe external of the outcome them of inform to 12 shareholders process. tender with meetings attend to is available Independent Director Senior Our shareholders. major basis. timely on a is updated website corporate Our How we engage we How the and have informed well are colleagues that our ensure We of the best interests in successfully operate to need they knowledge stakeholders. and other customers our Bellway, intraining and communications regular receive employees Our and advice. services procedures, policies, to changes to relation to use we which Groups Listening Employee quarterly promote We and processes improve to in order employees from gain feedback to the Board to reported are These the business. within procedures action. follow-up agree the be on to continues team HR Group dedicated our of focus The the business, talent across of and retention development attraction, workforce. our of the diversity and improving and divisional Board the to present management regularly Senior to important matters of the Board inform to help directors visits by employees. our Key Stakeholder Relationships continued

Partners

How we engage Our size means we can engage with our suppliers and subcontractors We have long-established relationships with housing association in order to work with them in helping achieve our goals and bring (‘HA’) partners across the country, ranging from large national and efficiencies to all parties where possible. regional organisations to small rural providers. Together we work to build communities and improve the affordability of housing for We regularly hold meetings and communicate with our suppliers local people. and subcontractors, passing on relevant information to each division as appropriate. Where there is new product information, this is Our local teams of specialist land buyers work directly with private communicated in a timely manner to each division. landowners, commercial vendors and the public sector to realise land opportunities. They can consider any site regardless of current Our Group Commercial team oversees the development of our planning status, and have direct access to substantial funds. relationships with and management of our supply chain. This allows for highly competitive offers to be arrived at quickly, The impact of COVID-19 on our supply chains and subcontractors subject to the appropriate approval process. has meant we have had to work closely with all of our partners to Through our divisional offices, we have extensive knowledge of local ensure the supply of trades and essential construction materials planning policies and frameworks and have proven expertise in to sites. guiding challenging sites through the planning system. We strive to maintain long-term working relationships with reputable In addition to acquiring land outright, we are also able to consider subcontractors to reduce health and safety risks and to ensure the joint venture and partnership agreements. availability and quality of materials and labour and further strengthen the long-term interests of our business. Effective partnerships with a range of public bodies and agencies Key issues raised is central to the success of Bellway’s business. We value the • COVID-19 opportunities that partnerships bring and the benefits these • Health and safety relationships deliver to the communities in which we build. • Efficiencies and environmental management • Land and planning • Affordable housing • Supply chain management

Outcomes Improving our relationship with suppliers by engaging with them regularly as we build on new developments. Increase in the use of the Artisan standard house type range has brought efficiencies through standardisation to supply chain and subcontractors. Improved health and safety and COVID-19 working practices have received positive feedback from subcontractors and suppliers.

Bellway p.l.c. 14 Annual Report and Accounts 2020 Strategic Report 15 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report engagement onmental issues ommunities and infrastructure y eform sity onmental issues e safety e an active participant in the Homes and Communitiesthe Homes participant in e an active Help to Buy to Help Fir planning issues Local Construction and envir r Leasehold Affordability and the supply of housing of the supply and Affordability Planning and community and skills Jobs Biodiver efficienc Home Envir c Impact on existing Charitable giving

• raised issues Key • • • Key issues raised Key • • • • • • • • • Agency’s Delivery Partner Panel (‘DPP3’). We have national coverage national coverage have We (‘DPP3’). Panel Partner Delivery Agency’s also a and are frameworks regional in all five representation through Panel. Development London the GLA of member through and directly Government to also engage and respond We organisations. trade industry of membership our policies, and local government national, regional to responded We meetto homes affordable changes and provide regulatory local needs. departments in government with relevant work to able are We enable more to in order Buy to such as Help programmes delivering homes. own their own to people local communities of the regeneration to contribute to able are We Authorities. with Local engagement proactive through We ar We Outcomes Outcomes which 22% of 7,522 was housing completions of number The to homes much needed affordable social housing, providing were the UK. throughout communities to queries relating local community to respond to able are We for consideration our whilst demonstrating planning applications the process. local issues as part of within local communities. skilled jobs provide to able are We charity our to and donated million has been raised £1.6 over date, To 2016. Aug since UK Research Cancer partner, engage in local fundraisingto continued have employees Our on an increase during FY20, being raised with £110,551 activities COVID-19. the impact of despite years previous Government and regulators Government Our communities Our communities Our relationship with national and local government, regulators and regulators with national and local government, relationship Our important as vitally bodies is representative housing industry key opportunities and risks for changes provide policies and regulatory business. our on has a significant influence policy and local government National collaboratively work to seek we business and our of the operation that bodies, ensuring statutory with local authorities and key to with regard and efficiently forward brought are developments local needs. (‘GLA’) Authority London the Greater with closely work we In London engage at a senior Councils, and elsewhere Borough and London Parliament, the Scottish and Assembly Welsh the with both level programmes. Buy to Help respective their on closely working within officials with senior level also engages at a strategic Bellway HM Government, Communities & Local Housing, of the Ministry issues of the pressing address to Cabinet Office The and Treasury post Grenfell, remediation safety fire housing delivery, accelerating the regeneration and opportunity widening home ownership communities. of with representation maintains national and regional Bellway public land and housing their on closely working England, Homes Government’s the in partner significant a are We agendas. investment on national presence our through and, programme Buy to Help this major of the efficient delivery to contribute we forums, initiative. policy How we engage we How How we engage we How we which in the local communities the impact on recognises Bellway to them with engagement seek actively we therefore and develop investment, through can bring we value the demonstrate we ensure homes. and secure safe of the provision and job creation undertake we application, a planning the submission of to Prior in the local community with consultation comprehensive the local authority. of engagement policy the public with accordance the proposed about communities informing involves frequently This public meetings and exhibitions. and attending development engage communitiesto and digital media utilise local PR activity We plans. our communicate to in order developments on proposed and act on feedback listen we the local authority, with In consultation and practicable. reasonable where received the local of views the that ensure to us allows process This as account into taken are and neighbouring landowners community and practicable. as is reasonable far Scheme on developments Constructors the Considerate operate We appropriate. where with Cancer charitable partnership a Group-wide have also We fundraising Our years. four which has been running for UK, Research supplierswith colleagues, 22 divisions our by is supported activity events fundraising various participating in and subcontractors year. the throughout in organisations with local community divisions also engage Our initiatives. community activities and supporting charitable fundraising to in order employees done by fundraising any matches Group The engagement. community encourage Our Business Model

The following timeline demonstrates how we create value from purchasing land to selling homes.

Selecting the Managing the Constructing right land planning process the right product

What we do What we do What we do • Land opportunities are identified • Our land bank is comprised of • We construct a wide range by our divisional and Group three tiers: of homes to suit a variety of land and planning teams using budgets and lifestyles. Our homes i) Owned or unconditionally their local knowledge and are built to a high standard in contracted land with DPP. contacts. A viability assessment compliance with specific building, and appraisal is prepared by the ii) Pipeline plots of land owned technical and health and safety division, which is assessed in or controlled pending DPP, regulations and other regulatory detail at divisional, regional and with development expected requirements, as well as to our then Group level, where the final to commence within the next own quality standards. decision is taken on whether to three years. • Our priority is the health and purchase the site. Board approval safety of our employees, may also be required depending iii) Strategic land, which is longer- subcontractors and visitors to any upon the value and nature of the term plots typically held of our locations. proposed acquisition. under option. • We strive to maintain long- • The number of large, long- • Our divisional and Group term working relationships with term sites that we own is strictly planning teams work closely reputable sub-contractors to controlled to avoid having with local authorities and reduce health and safety risks too much capital tied up or communities to obtain DPP to and to ensure the availability and concentrated in one location. construct homes which reflect local planning and vernacular quality of materials and labour. • We often secure land without requirements. The divisional and • We seek to ensure that we the benefit of an implementable Group planning teams progress have suitable building materials detailed planning permission a combination of medium-term available at competitive prices to (‘DPP’), typically brownfield sites ‘pipeline’ land and land from our enable us to construct homes to with an outline planning consent strategic land bank through the the high standards expected of us or on a ‘subject to planning’ basis. planning system. by our customers, within budget We use the expertise of our land and on time. and planning teams to obtain DPP For more information see page 19. which thereby reduces risks, adds • We closely monitor work-in- value and enables higher returns. progress to ensure that build rates are consistent with sales rates. • We aim to increase the number of homes sold through continued For more information see page 20. investment in land and in our divisional teams.

For more information see page 18.

Bellway p.l.c. 16 Annual Report and Accounts 2020 Strategic Report 17

). ). Bellway p.l.c. Bellway employees employees .9 million). o .3 million). Society and Society economy Environment Construction estment in yments to nationalyments to shareholders shareholders million of £123.1 (2019 – £178.9 million Earnings for million of £180.1 (2019 – £188.2 million Pa and subcontractors suppliers of £1.4 billion (2019 – £1.7 billion). Inv communities millionof £60.5 (2019 – £77 Pa and local government of £135.4 million (2019 – £210 t Dividends Annual Report and Accounts 2020 Accounts and Annual Report

Over the next Over few pages we explain our business model detail, in more including how this is aligned with our three corporate responsibility pillars. How we are building are we How the future for • • • • •

o continue attractingo continue ovide opportunities for opportunities for ovide pathways career ovide and information ovide business and we aim to we business and For more information see page 22. information more For We pr We We pr We and develop to employees structured delivering by grow for programmes training and apprentices graduates, Bellway new our through trainees training and relevant Academy were We employees. other for first our welcome pleased to on our of graduates cohort ever programme training graduate in With Us’ Built Careers ‘Great 2020. January pr We enable long-termto and progression development, planning. succession and promote to events organise lead to employees our encourage lifestyle. and balanced a healthy Our people are key to the success to key people are Our of our with a rewarding them provide and fulfilling career. aim t We and hiring top-quality and hiring top-quality our complement people to workforce. existing

• • • our people do we What • • Investing in Investing

with Bellway to the to with Bellway omer First Committee First omer omer care teams are are teams care omer ve earned a reputation for for earned a reputation ve work hard to retain our HBF 5 HBF our retain to hard work For more information see page 21. information more For star homebuilder status. homebuilder star We We Our cust Our within each division and located our by level at a Group supported Care. of Customer Head Cust Our future drive to continues and quality to improvements care. customer We ha We experience an excellent delivering throughout customers our to the home buying process and beyond. From the moment our customers the moment our From first engage new their into move they day to strive we home and beyond, customer an excellent provide a home deliver and to experience in. live to which people aspire

• • • What we do we What • • Delivering an customerexcellent experience Our Business Model continued

Selecting the right land

What we do and how we manage risk Where sites require planning consent it may take many Achieved Achieved Not months to progress a parcel of land through the planning Sufficient land bank of plots Achieved consent promotion process before we can start building with DPP and selling homes. We therefore require our land teams to purchase sufficient sites to ensure that we have the necessary Not achieved amount of land to meet our short-term volume growth targets as well as a pipeline of land for subsequent years. 2018 2019 2020 Alignment with our corporate responsibility pillars By building a significant number of quality homes on brownfield land we are contributing to the regeneration of areas in mainly urban locations.

(2)(~) (1) By paying section 106 and Community Infrastructure Levy Gross margin (%) 25.6 24.6 (‘CIL’) contributions we provide local authorities with revenue 19.0 for community investment. Local authorities benefit from additional revenue under the 19.0% New Homes Bonus. (560bps) 2018 2019 2020

For more information see pages 43 to 50.

The risks RoCE (%)(2)(~) 27.2 The inability to source suitable land that meets our financial 24.7 and non-financial acquisition criteria, including minimum gross margin and RoCE hurdle rates. There has been no 10.8 % 10.8 change to this risk during the year. (1,390bps) For more information see pages 36 to 39. 2018 2019 2020 How we measure our performance Acquiring high-quality sustainable sites in areas of strong customer demand that meet or exceed both our financial Note: and non-financial acquisition criteria is key to the success 1. Restated following the adoption of IFRS 15 ‘Revenue from contracts with customers’. of the business. Failure to have an adequate supply of land 2. Pre-exceptional. would put our ability to achieve our volume growth targets Link to remuneration – see pages 72 to 92. under pressure. We therefore link part of the executive directors’ bonuses to the delivery of a sufficient land bank to meet our growth aspirations. RoCE is a key indicator of how we are delivering our strategy of building shareholder value, which is reliant on land acquisition and the subsequent performance of our developments. Gross margin enables us to monitor the robustness of our land purchasing process and the level of profit on land purchases regularly review the pipeline to ensure that our land bank remains appropriate.

Bellway p.l.c. 18 Annual Report and Accounts 2020 Strategic Report 19 2020 2020 2020 2020 1,630 9,100 7,760 16,300 641 2019 2019 2019 2019 6,300 9,795 8,800 1 Bellway p.l.c. Bellway ,684 2018 2018 2018 2018 4,845 8,500 6 14,200 plots Annual Report and Accounts 2020 Accounts and Annual Report plots plots plots Number of plots in 'pipeline’ 'pipeline’ plots in of Number (plots) 16,300 0.0% plots in strategic of Number planning – positive land bank status (plots) 9,100 +3.4% Number of plots acquired plots acquired of Number with DPP (plots) 1,630 +154.3% from plots converted of Number (plots) medium-term ‘pipeline’ 7,760 (20.8%) s 2020 2020 18,400 28,289 2019 2019 6,800 26,421 1 ,900 2018 2018 11 26,877 esponsibility pillar plots plots Managing the planning process the planning Managing 28,289 +7.1% Number of plots in owned plots in owned of Number land bank and controlled with DPP (plots) 18,400 +9.5% Number of plots in strategic plots in strategic of Number land bank – longer-term interests (plots) For more information see pages 43 to 50. see pages 43 to information more For For more information see pages 36 to 39. see pages 36 to information more For These KPIs enable us to monitor the number of plots in each plots of the number monitor to enable us KPIs These helpto sufficient remain they ensure to land bank our of tier growth. volume of strategy our us deliver plots of number had an appropriate we year the the end of At strategy. our meet to tier in each land bank How we measure our performance our measure we How The risks The the planning in and cost complexity and increasing Delays duringthis risk has been no change in There process. year. the Alignment with our corporate r corporate with our Alignment the planning process as part of local residents with consult We locally. desire customers our the homes help us build to section through local communities to contributions make We the New of the provision through and payments 106 and CIL Bonus. Homes What we do and how we manage risk manage we do and how we What with relationships build collaborative teams planning Our that our so groups and interest residents local councils, inthe communities benefit developments completed on also rely We local needs. and reflect built are they which the such as planning process the to support Government the NPPF. of continuation Our Business Model continued

Constructing the right product

What we do and how we manage risk Experienced construction people, strong relationships with skilled subcontractors and consultants, together with Group NHBC health and safety 0.867 0.856 purchasing arrangements with suppliers and manufacturers, incident rate 0.714 are key to enabling us to deliver homes built to the right standard, at the right time and at the right price. Alignment with our corporate responsibility pillars 0.714 (16.6%) 2018 2019 2020 The health and safety of everyone who works on and visits any of our locations is paramount. Reducing waste on-site, in divisional offices and in sales centres delivers cost savings for the business and reduces the amount of waste sent to landfill. Number of NHBC Pride in the 49 Building strong long-term relationships with subcontractors, 44 Job Awards (awards) 42 consultants, and suppliers and manufacturers of materials generates benefits for us, those we do business with and the communities in which we operate. 44 awards +4.8% 2018 2019 2020

For more information see pages 43 to 50.

The risks • Shortage of building materials at competitive prices. Number of RIDDOR seven-day • Shortage of appropriately skilled construction people reportable incidents per 100,000 404.02 and subcontractors. site operatives (accidents) 324.87

• Significant health and safety risks inherent in the 203.12 construction process. 203.12 accidents There has been no change to these risks during the year. (37.5%) 2018 2019 2020 For more information see pages 36 to 39.

How we measure our performance The health and safety of our employees, subcontractors and visitors on site is paramount. Health and safety 12 performance is taken into account as part of the overall Number of NHBC Health and 11 assessment of the executive directors’ potential bonus Safety Awards (awards) payment. Improvements in health and safety performance are indicated by a lower NHBC health and safety incident rate and by a reduction in the RIDDOR seven-day reportable n/a due to COVID-19 incident rate per 100,000 site operatives. n/a 2018 2019 2020 The number of NHBC Pride in the Job Awards increased by two against last year and the NHBC Health and Safety Awards were cancelled due to the COVID-19 pandemic.

Bellway p.l.c. 20 Annual Report and Accounts 2020 Strategic Report 21 5 522 178 85.5 2020 2020 2020 2020 2020 7, 1,760.2 5 86.4 210 2019 2019 2019 2019 2019 0,892 1 1,223.9 Bellway p.l.c. Bellway 5 ,307 86.0 2018 200 2018 2018 2018 2018 1,301.1 10 (~) m Annual Report and Accounts 2020 Accounts and Annual Report homes % homes per week star £1,760.2 +43.8% Reservations rate (homes rate Reservations per week) 178 (15.2%) status (star) homebuilder HBF 5 No change (£m) July at 31 value book Order Customer satisfaction score (%) score satisfaction Customer 85.5 (90bps) homes sold (homes) of Number 7,52 2 (30.9%) Delivering an excellent customer experience customer Delivering an excellent For more information see pages 43 to 50. see pages 43 to information more For We have chosen the following KPIs as they demonstrate they as KPIs the following chosen have We growth volume of strategy our made in delivering progress include “Would These satisfaction. alongside customer which is Satisfaction and Overall a Friend” Recommend detailed KPIs. six more across as an average measured relevant the bonus matrix for part of an integral remains This directors. the executive including employees, Bellway from 0.5% by has increased a friend, score recommend Our, the on completed year the survey While year. the previous this date on who completed customers 2020, 30 September trend The surveys. their return to 2021 until 17 February have this during a minimal drop-off has shown years previous from will retain we that confident remain therefore we period and in March announced are the results when status 5 star our unable were we COVID-19 to due 2021. Understandably, the drop reflects which year this homes build as many to has value book the order however rate, the reservation in significantly. increased How we measure our performance our measure we How The risks The appropriately not which if risks, of a number are There experience. impact customer will negatively mitigated, the initiatives including management processes, risk Our reduce to seek project, First Customer our by being delivered these risks. all of the impact of as principal risks and so have regarded not risks are These table on pages 36 principal risk been included in our not year. the changed during not risks have These to 39. Alignment with our corporate responsibility pillars responsibility corporate with our Alignment building homes by efficiency energy improve to continue We than is required energy-efficient more on average, that are, regulations. building by on information contain folders handover Customer energy and centres local recycling travel, sustainable advice. efficiency What we do and how we manage risk manage we do and how we What all throughout members team motivated and well-trained Our and skills necessary the the business have within disciplines service. customer of the highest levels deliver to enthusiasm to being committed teams construction on our also rely We of. be proud to homes build quality Our Business Model continued

Investing in our people

What we do and how we manage risk Our skilled, professional and dedicated employees are 16.4 16.4 provided with the right level of training, support and Employees who have worked for 15.1 resources to succeed. We also rely on our dedicated Group the Group for 10 years or more (%) HR team, which focuses on the attraction, development and retention of diverse talent across the business. We ensure that the human rights of our employees and of those who work 16.4% with us are respected and protected, and we ensure that we +130bps provide a workplace and environment for our employees to 2018 2019 2020 succeed, which looks after their safety as well as their health and wellbeing. Alignment with our corporate responsibility pillars We have continued with our employee listening groups, 258 made further improvements in training and development and Number of graduates, trainees and apprentices (number) have improved parental leave. We have designated Diversity 182181 and Inclusion Champions in all operating divisions as well as mandatory diversity and inclusion training for all employees. 258 +42.0% 2018 2019 2020

For more information see pages 43 to 50.

The risks The inability to attract and retain appropriate people remains Training days per employee 5.1 a principal risk to the business. There has been a decrease 4.7 (days) 4.1 in this risk during the year due to the strengthening of the recruitment and engagement process. For more information see pages 36 to 39. 4.1 days (19.6%) How we measure our performance 2018 2019 2020 We use the following KPIs as indicators of how successful we have been during the year in managing and developing our people. We have increased the number of graduates and apprentices Employee turnover (%) 21.4 22.4 within the business, and continue to develop our staff 20.1 through increased levels of training. However, employee turnover in the first 12 months of employment still remains above where we would like it to be, and we are taking 20.1% steps to address this (see our strategy on page 25). We have (230bps) policies and training in place to protect the human rights of our employees and those who work for us. These are 2018 2019 2020 overseen by our Group HR team to ensure these policies are adhered to, and any concerns are reported through our whistleblowing hotline (see pages 47 and 71 for further information). The Board continues its focus on the number of women in its senior management team with an increase in female presence to 19.7% (2019 – 18.9%). Senior management gender 18.9 19.7 split (%) 13.8

19.7% +70bps 2018 2019 2020

Bellway p.l.c. 22 Annual Report and Accounts 2020 Strategic Report 23 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report Bellway Group Office Office Group Bellway 92 Employees

In August 2020 Bellway moved to our new purpose-built new our to moved 2020 Bellway August In upon in Newcastle House Woolsington Office, Group of in the history a significant milestone was This Tyne. for House Burn Seaton being based at after Bellway years. 30 nearly with sustainability developed was House Woolsington glass helps reflective at its heart. Solar wellbeing and staff to and proximity in the summer the building cool keep the management of to will contribute public transport carbon footprint. our space exercise and outdoor indoor benefit from Staff meetings and downtime. as a social hub for well as Academy Bellway brand-new our houses also facility The the to commitment our enhances which further of all colleagues. development New Group Office Group New ...for our people Building for the future... the for Building and the environment Strategy

Bellway’s strategy is to grow shareholder value through sustainable and disciplined volume growth, utilising the Group’s operational and balance sheet capacity, combined with a strong focus on RoCE.

To achieve our overall strategy we have identified the following seven key strategic priorities. The metrics we use to measure our performance are on pages 18 to 22.

• We are about to launch Strengthening a dedicated Bellway Volume growth Driving London website specifically the brand designed around the Overview down costs Overview unique requirements of the Delivering disciplined Overview London market. growth through our Bellway maintains its Providing an appropriate Our plans for 2020/21 national divisional structure, reputation for building selecting the right land product range on • We will remain focused on quality homes in desirable and managing the housing and apartment improving the service we locations at attainable prices. planning process despite developments, at prices By personally guiding our provide to our customers that are affordable for our which we are confident COVID-19 headwinds. customers through the customers and which are will have the added benefit buying process, we ensure of retaining our HBF 5 star How we performed in built efficiently and to a buying their new Bellway homebuilder status. 2019/20 high quality. home is a memorable • We will continue to • Prior to the onset of How we performed in experience, individual to develop and improve COVID-19, our land teams their needs. We work hard our communications with were successful in buying 2019/20 to ensure that a high level of prospective customers, compelling opportunities, in • We have made further customer service continues those who are in the buying good quality locations, with design improvements to throughout the completion process and those who own their efforts including the The Artisan Collection process and beyond. a Bellway home. acquisition of a small number of standard house types • As a result of the customer- of larger ‘anchor’ sites. and secured cost savings How we performed in focused project which is • With the onset of COVID-19, through standardisation and 2019/20 currently in progress, we aim the Board initially introduced procurement efficiencies and to become the market leader a moratorium on all new land improved build times. • We retained our HBF 5 star in customer service levels, contracts with the intention of • We have increased the homebuilder status. putting our customers at preserving liquidity until such use of technology to • We have embarked the heart of every aspect of time as market conditions improve benchmarking and on a Customer First our business. became clearer. secure savings. project to review and • The COVID-19 ‘lockdown’ • We continued to implement improve all aspects of the resulted in a rapid decline our BWY2020 cost- customer journey. in reservations. saving initiative. • We continue to review and • Sales demand began to • We have introduced detailed improve our website, recently resume, commensurate value-engineering reviews of making changes to expand with our gradual and our sites and best practice is the information available cautious programme of being shared across divisions. to our customers and to site reopenings. enhance the user experience. Our plans for 2020/21 • We continued to focus our land buying in areas of strong • We will continue to design customer demand and in and develop the introduction sustainable locations. of standard house types into The Artisan Collection. Our plans for 2020/21 • We will ensure the • We will maintain our current momentum from our disciplined growth strategy, BWY2020 initiative is whilst being mindful of maintained and new market conditions. cost-saving initiatives are • We will task newer divisions introduced, whilst improving with delivering ambitious standardisation and long-term growth plans. procurement efficiencies. • We will seek to purchase • We will continue to research land where possible with the and trial the use of innovative benefit of an existing DPP new products. consent or subject to such • We will train our divisions consent being granted prior on cost control and to acquisition. commercial fundamentals.

Bellway p.l.c. 24 Annual Report and Accounts 2020 Strategic Report 25 status angements. Bellway p.l.c. Bellway ve maintained ve maintained ve will maintain our current current will maintain our e of bank debt tranches debt bank e of investor relations activities. relations investor totalling £125 million, which £125 million, totalling expire to due otherwise were 2020. July 31 by eligible issuer Obtained ha We current other our banking arrangements. ha We investor current our activities. relations current will maintain our We banking arr We We extended the maturity the maturity extended We dat Covid the Government’s for Facility Financing Corporate continuing to subject (‘CCFF’), of the Bank with compliance criteria, eligibility England’s limit issuer with an undrawn £300 million. of

Our plans for 2020/21 plans for Our • • Maintaining a flexible structure capital Overview use a combination We facilitiescash, bank of us provide to and equity in finance to with access and flexiblea balanced to us enables This way. strategy growth our deliver the cashwhile managing of requirements flow the business, including to dividends delivering shareholders. our in performed we How 2019/20 • • • • Annual Report and Accounts 2020 Accounts and Annual Report

ve maintained RoCE maintained RoCE ve monitored closely ve will continue to maintainto will continue monitor to will continue ocus on balance sheetocus on balance ocus on balance sheetocus on balance We will continue to maintainto will continue We a f with particular management, capital- emphasis on large sites. intensive We assessment as a key RoCE when buying land. We work-in-progress. and control We have maintained our our maintained have We f ha We when assessment as a key buying land. ha We work-in- and controlled progress. management, with particular with particular management, capital- emphasis on large to and a drive sites intensive the through sales increase brand. Ashberry the use of

Our plans for 2020/21 plans for Our • • • Focus on return on return Focus on capital employed Overview assets that our Ensuring mostthe used in are deliver to way efficient returns. shareholder in performed we How 2019/20 • • •

ermined V by 2.3% to 2.3% by V o land and work work o land and ay continued to invest invest to continued ay wing the onset ofwing dividends of £123.1 million. £123.1 of dividends 2,427p. dividend is det The capital into land and work work land and capital into with in areas in progress without high demand, the RoCE compromising to requirements, and margin well is the Group that ensure growth. deliver to placed a short moratorium COVID-19, the with introduced, was preserving of intention time as until such liquidity became conditions market When construction clearer. the initial reopened, sites on completing was focus built largely were that homes into inventory convert to staff our train to cash and within COVID-19 work to how parameters. safe Paid NA Increased invest to will continue We capital int in a controlled in progress high of in areas manner thethat ensure to demand deliver to placed well is Group will be This growth. further without compromising done and margin gross our requirements. RoCE consideration careful following well as capital requirements, of operational the Group’s as further deliver to capability growth. volume long-term the final 2019/20 dividend is If dividendtotal the approved, earnings by by will be covered times. 3.1 Until the onset of COVID-19, COVID-19, the onset of Until Bellw Follo

• • • 2020/21 plans for Our • • How we performedwe How in 2019/20 • Overview earnings of Reinvestment attractive financially into whilst land opportunities, maintaining a focus ato has led on RoCE, value in substantial increase through shareholders for the of a combination and in NAV ongoing growth dividend payments. Value creation creation Value capital through and dividend growth ve continued with thewith continued ve ve continued to useto continued ve 160 Mentaltrained ve ve updated and updated ve to continued ve ocus on diversity and ocus on diversity will continue to invest invest to will continue will continue to promote promote to will continue train to will continue aduate recruitment recruitment aduate in the Bellway Academy, Academy, the Bellway in andtraining manager site graduate and apprenticeships programmes. training the benefit of employee employee the benefit of and groups listening employee first our conduct engagement survey. We Aiders First Health Mental Health out Mental and roll across training Awareness the Group. We We will continue to improve improve to will continue We the f the Group. inclusion across We We ha We Awards Employee Bellway apprenticeship, celebrating and long service graduate across achievements the Group. We ha We ha We groups. listening employee ha We across Aiders First Health the Group. We have launched a new launched a new have We gr with 38 programme graduates. new ha We divisional our refined management progression plan. and retention of focus our improve and inclusion across diversity the Group.

• • • • Our plans for 2020/21 plans for Our • • • • • • How we performed in performed we How 2019/20 Overview with people our Providing fulfilling and a rewarding tothem enabling career, potential full their achieve of high levels and deliver to contributing performance, the business. of the success Appointing the right people Operating Review

Despite the wider economic uncertainty, the fundamentals of the business are robust. Our strong balance sheet not only instils confidence in times of uncertainty, but it also provides substantial capacity for disciplined land and work-in- progress investment. Jason Honeyman Group Chief Executive

COVID-19 response Market backdrop Bellway reported a strong set of Interim Results for the half Bellway enjoyed a strong trading performance in the earlier year ended 31 January 2020, delivering further volume and part of the financial year. Reservations in the period from revenue growth, while making additional investment in land 1 August 2019, until the Prime Minister’s announcement to continue its long-term growth strategy. introducing widespread ‘lockdown’ restrictions on 23 March 2020, averaged 211 per week (1 August 2018 to 24 March As ‘lockdown’ restrictions were introduced across the 2019 – 201), a rise of 5% compared to the same period in the country, Bellway responded quickly and purposefully, taking prior year. Thereafter, the reservation rate rapidly declined as action to support and ensure the safety of our colleagues the country entered ‘lockdown’ and our sales presence was and maintain balance sheet strength. In doing so, the Board limited to telephone and online customer interactions. introduced measures including: Sales demand then began to resume, commensurate • Paying all employees full basic pay from our own with our gradual programme of site re-openings, which resources, without making a claim for grant monies under commenced on 18 May, following the easing of Government the Government’s CJRS; restrictions. In addition, the temporary stamp duty holiday, • Launching several internal wellbeing and mental health effective from 8 July, and the subsequent resurgence in campaigns to support employees during the pandemic; the second-hand market, have since helped to boost customer confidence. As a result, private sales demand • Closing all sites and sales centres by 27 March; continued to gather pace and reservations throughout the • Deferring discretionary land expenditure; typically quiet month of July averaged 140 per week (July 2019 – 162 per week), 13.6% below the same period last year. • Obtaining eligible issuer status for the Government’s Covid Upward momentum has continued and resulted in overall Corporate Financing Facility (‘CCFF’), subject to continuing average weekly sales rising by 30.6% to 239 per week in compliance with the Bank of England’s eligibility criteria, the first nine weeks of the new financial year (1 August to with an undrawn issuer limit of £300 million; 29 September 2019 – 183 per week). This performance has • Extending the maturity date of bank debt tranches totalling been achieved while still operating an appointment-only £125 million, which were otherwise due to expire by system in our sales centres in order to maintain safe social 31 July 2020; distancing, thereby protecting our customers and colleagues. • A voluntary 20% reduction in base salary and fees for all Overall, for the full year ended 31 July 2020, reservations Board members during April and May. The saving was averaged 178 per week (2019 – 210 per week), a decline of donated to various charities and a matching contribution 15.2%. Selling prices have remained firm, with no discernible was made by Bellway to its national charity partner, Cancer movement throughout the year. Research UK; and Lending institutions continue to process mortgages, • Postponing and then subsequently cancelling the payment although initially there were understandable delays with of the interim dividend to preserve liquidity. regards to obtaining valuations following the introduction of social distancing measures. In addition, there has been After working carefully and collaboratively with our supply a considerable reduction in the availability of higher loan- chain partners, and closely following Government guidelines, to-value mortgages, as banks have reallocated internal construction activity has recommenced across all our sites, resources since the start of ‘lockdown’, not least to deal with with strict social distancing measures in place. In addition, the increase in demand across the wider housing sector. all sales outlets reopened by the end of June and all Help-to-Buy has therefore been an important selling tool office-based employees had either returned to work on a in assisting the Group to maintain its reservation rate, with rotational basis or, given evolving Government guidance, 57% of customers accessing this scheme in the period since have continued to support our construction efforts via 23 March, an increase compared to the full year average of homeworking. Our approach has been carefully considered, 40% (2019 – 35%). with firm protocols and enhanced safety procedures to ensure the health and wellbeing of our colleagues.

Bellway p.l.c. 26 Annual Report and Accounts 2020 Strategic Report 27

Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report Safety is a core principle of how we do business andwe principle of how is a core Safety with and for works who of everyone wellbeing the the Company. for one priority is the number Bellway and subcontractors employees with all our work We promoted are practices working safe that ensure to utilising training, sites, and embedded on all of our inspections and and formal talks, informal toolbox the sharing of best practice. 0.714 rate incident safety and NHBC health Site Safety industry- Creating guidance safety leading and workers site our for partners construction Our Bellway London brand is intended to provide the provide to is intended brand London Bellway Our low-to-mid- output is generally our where market, London identity, with a modern and consistent rise apartments, have there While the Capital. across that is recognisable tradingthe in London, investment been opportunities for with challenging, more has remained there environment is particularly This less pronounced. demand generally overall Help- London the £600,000 to close properties the case for some for is a constraint affordability where cap, price to-Buy invested reduced has Board the a result, As purchasers. on opportunities focus to years recent over capital in London the Group. in elsewhere 2019 2019 240.1 339.4 292.0 5,692 5,200 10,892 otal otal T T

2020 2020 257.7 293.1 7,522 327.4 3,814 3,708 2019 2019 803 1,647 148.8 168.3 108.8 2,450 Social Social

526 2020 2020 1,671 1,145 112.4 172.2 153.4 2019 2019 409.1 4,397 333.5 8,442 264.0 4,045 Homes sold (number) Homes Average selling price (£000) price selling Average Private Private

2020 2020 3,182 281.8 394.0 2,669 The Group completed the sale of 7,522 new homes (2019 – new 7,522 the sale of completed Group The the period prior in which completed including 6,013 10,892), isThis 2019 – 5,620). March 24 to 2018 August (1 23 March to that effect the considerable to due a significant reduction has had on business operations. COVID-19 (2019 £293,054 was completions of selling price average The the proportion with year, the prior to comparable – £291,968), unchanged remaining social completions value lower of report to pleased are we at 22% (2019 – 22%). In addition, first-timeto sold were homes new our of a quarter that over using the housing ladder these accessing with 77% of buyers, scheme. Help-to-Buy the Government’s of as a result activity trading to the constraints from Aside good quality, for strong remained market the COVID-19, a division reported Manchester homes. Our priced affordably completeto still managing performance, resilient particularly despite year, the homes in 500 new of in excess the sale of Northern our Likewise, inactivity. period of the prolonged London, to close divisions, both Counties and Essex Home of selling prices average affordable with comparatively but delivered also respectively, and £299,000 £326,000 around each also the circumstances, given performances robust completions. 500 of in excess reporting 22 divisionswith presence, geographical widespread Our enabling is a strength, Wales and England, Scotland covering strong of land opportunities in areas pursue to the Group volatility. localised market to while limiting exposure demand, Group 5,851 Group 332.9 North Additional brands to support demand to brands Additional trades also Bellway brand, Bellway core our to In addition Group The brands. Ashberry and London the Bellway using supportto function its marketing centralised has recently all marketing across consistency with brand divisions cost- a more achieve to us allowing thereby channels, the Group. across resources of deployment effective South South Trading performance Trading selling price average and number the shows table below The geographically, analysed year, the in homes completed of and social homes: private between North Operating Review continued

Nonetheless, London remains an integral part of our Further costs arising from extended site durations, together business, accounting for 6% of completions (2019 – 9%), with with enhanced health and safety requirements relating to an overall average selling price of £449,466 (2019 – £499,617). social distancing measures, have led to an additional non- This reflects our focus on more affordable outer commuter exceptional charge of £18.9 million. These incremental site- zones, such as our developments at Poplar, Bexleyheath and based costs will continue to influence the operating margin Hornchurch, where demand is stronger. in the year ahead, but with production capacity currently around 85% to 90% and improving, we are hopeful that the Our Ashberry brand is only offered on larger sites, with the negative impact will gradually reduce, save for the risk of purpose of providing two differentiated outlets and therefore additional localised ‘lockdowns’. greater customer choice. This has the advantage of improving sales rates, often more than can be achieved through using Bellway has continued to progress a number of initiatives, two Bellway outlets, with a resultant improvement in return such as the roll-out of COINS, an industry-leading accounting on capital employed (‘RoCE’). Our Ashberry brand continues and valuation software solution, and our BWY2020 cost- to make an important contribution to output, accounting for saving programme, designed to reinforce a culture of cost 5.7% of completions (2019 – 5.2%). control, while improving processes across the business. The cost environment Going forward, the Board is continuing to prioritise several further cost control initiatives in order to help lessen potential Prior to entering ‘lockdown’, the Group reported that cost pressures in the future. Our centralised procurement industry-wide build cost increases were having a moderating team is working with supply chain partners in order to secure effect on the operating margin. These pressures were most future material availability at competitive rates. We are also pronounced in and around London and the South East, with working collaboratively with our divisional subcontractors, rising subcontract tender prices experienced across several with the intention of mitigating labour cost pressures, given trades and developments. the wider uncertainty in the economic environment. In addition, amendments to building regulations, effective Furthermore, our increased use of the ‘Artisan Collection’ from August 2019, resulted in design and material changes standard house type range will contribute to greater for new apartment blocks, particularly those over 18 metres efficiencies in the years ahead, as familiarity with working in height. This has had a further negative effect on site drawings reduces design fees and aids construction margins in the year, as projected whole site cost estimates rates. The house types have been well received by our were updated to reflect the additional costs associated with customers, with the range now plotted across 21,000 plots on ensuring that building envelopes fully comply with revised fire 164 developments. safety regulations. In some cases, the amended elevational designs required alterations to extant planning permissions. We will build upon all these initiatives, preserving quality, but This process has caused delays in site commencement dates with a renewed commercial focus, particularly in the areas which, in an environment where revenues have generally of groundwork engineering solutions, professional fees and been flat and subcontract prices have been rising, has layout optimisation. resulted in a further deterioration in site margins. Legacy building safety improvements The Group has consulted with the Government in respect of The Grenfell tragedy understandably increased the focus new building regulations that are now likely to be effective on fire safety across the industry and more specifically on for sites where construction commences in the new calendar apartment blocks, with subsequent Government guidance year. These evolving standards are intended to improve the setting out detailed processes to ensure adequate fire energy efficiency of new homes, whilst encouraging lower protection measures and limit combustibility in external wall carbon heating solutions. The estimated cost of achieving systems on buildings. these standards is likely to be £3,000 to £4,000 per plot, depending upon the outcome of the consultation. As a consequence, the document ‘Advice for Building Owners of Multi-storey, Multi-occupied Residential Buildings’ In relation to COVID-19, an incremental, exceptional charge was issued by the Ministry of Housing, Communities and of £14.5 million was recognised in relation to abnormal, non- Local Government (‘MHCLG’) in January 2020. This required productive site-based costs arising from the interruption that all buildings above 18 metres in height should be risk to construction activity, which would have ordinarily been assessed to determine whether the presence of potentially capitalised into work-in-progress. These costs were borne combustible materials could contribute to external fire during the period when developments were closed, with spread, in which case they may need to be replaced. the period of inactivity typically lasting between six weeks This consolidated advice note clarifies the Government’s and three months. This reflects the gradual roll-out of safe interpretation of the building regulations insofar as it is working practices across the Group, which was in line applicable to properties pre-dating its issuance. with the separate guidance applying to the jurisdictions of England, Scotland and Wales. The deployment of these safe working practices will help to mitigate the likelihood of incurring further significant non-productive site-based costs, notwithstanding the possible risk of an additional nationwide or localised ‘lockdown’. Total land bank 71,889 +5.2%

Bellway p.l.c. 28 Annual Report and Accounts 2020 Strategic Report 2019 29 42,721 26,421 68,321 16,300 25,600 2020 71,889 16,300 27,300 28,289 44,589 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report The total owned and controlled land bank represents represents land bank and controlled owned total The the with years), (2019 – 3.9 land supply forward years 5.9 duringcompletions in the reduction of a result increase with an (2019 – 26,421 plots) 28,289 plots are There year. the (‘DPP’) andimplementable detailed planning permission year’s the current meet to plots this includes all required position healthy This forecast. legal completion anticipated land in acquiring when be selective to the Group enables underlying a strong the support of with yet ahead, year the to in order has substantial resource sheet, Bellway balance land market. the opportunities in high-return further, target immediate the Group’s that meets in land as investing well As land strategic in our invest to continued also have we needs, an additional buy to agreements option into bank, entering a result, As the country. throughout (2019 – 29 sites) 15 sites plots 27,300 comprises now land bank strategic the Group’s future of source a useful long-term providing (2019 – 25,600), land supply. agenda First Customer and our Quality the Bellway that ensure to hard work to continue We approach trust. Our can customers which our is one brand throughout service excellent of a culture nurture to is meetto turn, enables us which, in the organisation high- of the delivery with expectations customers’ our homes. quality as a recognised been have to proud therefore are We Satisfaction Customer the HBF’s in homebuilder five-star the In addition, year. consecutive the fourth for survey again were Managers Site our by achieved high standards NHBC individuals receiving with 44 committed recognised, their to testament (2019 – 42), a Awards Job’ the in ‘Pride Group The product. building a high-quality to dedication of range an extended on improving focus to also continues (‘CQRs’), scores Review metrics, such as Construction Quality (2019 – 75.2%). year the in 80.2% to improved which have that regard, do, and in to is more there that recognise We initiative, First’ ‘Customer that our report to pleased are we is gathering year, the financial of half the first launched in the importance re-emphasise to purpose is The momentum. our all individuals across to experience customer’s every of to aim is In doing so, our role. their whatever organisation, instilling confidence journey, the customer improve further the from and service, quality of level and a consistent aftercare post-completion our to through visit, initial site customer timely more include clearer, Initiatives provision. and more the buying process throughout communications are We roles. different of a range across training widespread care customer online in our investment also making further service. aftercare manage our better to in order system Owned and controlled plots Owned and controlled implementable detailedwith DPP: plots planning permission land bank Total Pipeline: plots pending an implementablePipeline: plots DPP plots and controlled owned Total land holdings Strategic The table below analyses the Group’s land holdings: the Group’s analyses table below The Prior to the onset of COVID-19, our land teams were were teams land our COVID-19, the onset of to Prior opportunities, in good in buying compelling successful ofthe acquisition including efforts their with locations, quality carefully to was purpose The sites. larger of a small number in established divisions and in areas the land supply extend profile risk the overall without increasing with high demand, business. the of introduced initially the Board COVID-19, the onset of With the intentionwith land contracts, on all new a moratorium conditions time as market until such liquidity preserving of suspended indefinitely or also aborted It became clearer. of charge in an exceptional land deals, resulting several financialthe expected that it assessed where million, £9.9 and capital outlay the required insufficient given were returns market. wider the in profile risk the evolving the future to with regards is still uncertainty there While has allowed sales rate the strengthening outlook, economic securing activity, its land buying resume cautiously to Bellway the introduction good locations since in an additional 14 sites 2020. July until 31 measures ‘lockdown’ of exchanged Bellway 2020, July ended 31 year the for Overall, 68 across plots), (2019 – 13,113 11,921 plots acquire to contracts and spread wide geographical with a (2019 – 93 sites), sites million). £762.4 million (2019 – £782.0 of value contract total a plots, the contracted of selling price average expected The slightly £280,000, is under acquisition, time of the assessed at the period. in achieved selling price the average than lower that ensure to is this land buying approach of intention The product, an affordable customers our sales outlets offer future mitigateto should help This on Help-to-Buy. with less reliance arise that may on sales rates effect downward potential any year. calendar the new rules change in the Help-to-Buy as still the Board this land buying approach, Notwithstanding the current in selling price average the overall that expects £290,000. will be around year financial A considered approach to land buying to approach considered A As previously reported, Bellway has identified a number has identified a number Bellway reported, previously As regulation building given were which developments, of the building where construction, time of the at approval this most recent with comply fully not used may materials developer, a responsible As guidance. Government of assessments site-by-site further undertaken have we reviewing apartment schemes, legacy of portfolio our building individually. each of the specific circumstances we process, is a complex legal liability While ascertaining safety any whether determine to these reviews used have the current reflect to in order needed are improvements has made an Bellway this evaluation, of a result As guidance. charge an exceptional recognised and additional provision help buildingto its commitment million as part of £46.8 of required. are works remedial fire where owners and this proactive adopting that by understand We disruption be some could there approach responsible undertaken. are works as remediation customers to affected. all customers to apologise therefore We that ensure to its efforts has renewed Bellway Going forward, up- the most with comply apartment schemes fully all future building regulations. of interpretation to-date Operating Review continued

Homes sold on a leasehold basis Attracting talent for the longer term During the year, the Competition and Markets Authority Our colleagues have shown great resilience throughout the (‘CMA’) commenced an investigation into the provision of pandemic, quickly adapting to new methods of working, leasehold housing and has since reported its initial findings in while balancing the challenges of family life with ongoing relation to potential contraventions of consumer protection professional commitments. Our significant investment in IT law concerning ground rents and mis-selling of leasehold systems over recent years has enabled the Group to respond properties. The CMA has not launched an enforcement effectively to remote working requirements and in doing so, action against Bellway, but the Group does retain assets revise previously established routines. with a cost of £3.0 million in relation to houses that were Throughout ‘lockdown’, we have supported our colleagues historically sold on a leasehold basis. While the terms of these with full basic pay from our own resources, without making leases do not include onerous ground rent doubling clauses, a grant claim using the Government’s CJRS. In addition, we the market demand for bulk freehold portfolio disposals have introduced several support initiatives, including flexible in relation to houses is now severely limited. The Board working, to help balance work and family responsibilities and therefore considers that these assets are impaired and has we intend to evolve these further in the year ahead. recognised a charge of £3.0 million during the year. Bellway is also committed to becoming a more diverse In line with Government guidance, Bellway has not sold and inclusive employer, enabling individuals with different houses on a leasehold basis since January 2018. experiences and from varied backgrounds to succeed in their A safe working environment career. Through our employee ‘listening groups’, we continue to gain feedback from our colleagues, with this contributing Ensuring the health and safety of our colleagues and site to the development of several initiatives intended to widen visitors remains a priority for Bellway, with additional focus both gender and race diversity. We have launched our first during the year as a result of the increased risk profile arising ever employee engagement survey and the initial feedback from COVID-19. is very positive. We look forward to reviewing the full results in With the initial reopening of construction sites in May, the first half of the new financial year. and after considering guidance from Government and the We also have a focus on ensuring that Bellway has the Construction Leadership Council, our working practices right skills to grow in the future. In that regard, the number adapted considerably to address the issues posed by the of apprentices, graduates and trainees across our business pandemic. Measures such as enhanced training procedures, has risen by 42% to 258 (2019 – 182), with the result that 8.3% the introduction of site marshalls, a restriction in the number of the workforce (2019 – 6.1%) are now employed in these of workers allowed on site, additional sanitising stations, crucial developmental roles and are therefore able to benefit prominent signage and clearly marked-out access and egress from the investment in our new Bellway Training Academy. routes were amongst several introduced to ensure safe The rise has been bolstered by the successful introduction social distancing and help prevent the spread of the virus. of our two-year graduate programme ‘Great Careers Built The Board recognises the potential requirement to adjust With Us’, launched in January. This year’s annual intake working practices on a regional basis as localised ‘lockdown’ included 38 new graduates across a range of disciplines measures continue to evolve. and had an equal gender split, with 13.2% from ethnic The importance of good mental health amongst our minority backgrounds. workforce has also grown in prominence since the onset In response to reduced output and the suspension of of COVID-19. Recognising the prevalence of mental health divisional expansion plans, Bellway has undertaken a concerns in the wider construction sector, Bellway has measured and responsible workforce rationalisation enhanced its efforts in this important area, building upon programme. Notwithstanding this, the Group continues to the initiatives already in place. As a result, we have trained adopt a long-term approach, retaining both the skills and an additional 160 Mental Health First Aiders in the year and workforce to respond positively as the market recovers. have deployed widespread training courses and awareness campaigns to promote good mental and physical health. A sustainable approach to building new homes More widely within the business, our internal health and Bellway is committed to being a responsible homebuilder, safety team continue to work alongside the NHBC to help operating in an ethical and sustainable manner for all its promote high standards and safe working practices across stakeholders, including customers, employees, shareholders, all our sites. This year’s NHBC Health and Safety Awards were suppliers and local communities. cancelled due to the pandemic, but we continue to use Energy efficiency and carbon reduction remain a focus for several KPIs to monitor onsite performance. In that regard, the business. Notwithstanding this, although there was a we have again reduced the time from lost accidents, with a significant reduction in total output, scope 1 and 2 carbon further reduction in the seven-day reportable incident rate. emissions increased to 2.8 tonnes per legal completion (2019 – 2.4 tonnes). This is primarily a reflection of continued carbon production from offices, owned part-exchange properties and showhomes during the ‘lockdown’ period. We expect to improve on this measure in the year ahead as output begins to rise.

Bellway p.l.c. 30 Annual Report and Accounts 2020 Strategic Report 31 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report Recent trading Recent to contributed completions of the number in reduction The order substantial forward with a year the ending the Group with a homes) 6,588 homes (2019 – 4,878 book, comprising the first In million (2019 – £1,223.9 million). £1,760.2 of value robust, been has trading year, financial new the of weeks nine to 30.6% rising by reservations weekly average with overall week). 2019 – 183 per 29 September to August (1 week 239 per modestly were year the new the start of at numbers Site demand arising from 271). Pent-up ahead at 276 (2019 – with together inactivity, lockdown period of the prolonged and holiday the stamp duty through support Government this reassuringly to contributed have Help-to-Buy, of provision performance. strong at 4 October book the order start, this positive of a result As million £1,869.6 to 42.5% rising by strengthened, further was 6,624 and comprises million) 2019 – £1,311.6 (29 September growth This homes). 2019 – 5,190 homes (29 September of number the higher notwithstanding has been achieved period. trading this short in recorded completions Outlook sales position offers forward strong exceptionally The some operational ahead, providing year the for resilience the in cash generation to with regards visibility and certainty will depend upon year the full months. Output for coming be affected which could sales demand, of the continuation the and risks such as rising unemployment sector-wide by and Help- the stamp duty changes in both forthcoming posed by the risk also recognises Board The rules. to-Buy the with both deals trade future of outcome the uncertain world. the of the rest and Union European 90% ofto running at 85% currently productivity, Nevertheless, is continuing 2019, July ended 31 year the in output achieved widespread a further of the risk to Subject improve. to the complete to the Group this should enable ‘lockdown’, 2021. July ending 31 year the homes for 9,000 around sale of work-in-progress in and investment book order strong The heavily will be more that completions mean to is likely the casethan is period trading half the first towards weighted year. typical in a the fundamentals uncertainty, economic wider the Despite only sheet not balance strong Our robust. the business are of but it also provides uncertainty, times of in instils confidence work-in-progress disciplined land and for substantial capacity homes in new shortage of is a structural There investment. with Bellway, recovery, the period of and beyond the UK and focus strength operational approach, its long-term of record track long its continue to set well is on quality growth. delivering Honeyman Jason Executive Chief Group 2020 19 October Charitable donations £537,000 +5.2% We are committed to continuing our support for local and support for our continuing to committed are We which in the communities as well national charities, as develop. we national (‘CRUK’), our UK Research Cancer support for Our and despite than ever, important is more partner, charity were and business partners colleagues our COVID-19, (2019 – CRUK to £328,000 and donate raise to still able ato years the past four donations over total taking £495,000), million. £1.6 noteworthy charities for fundraising employee match to continue We those scheme for giving a payroll and offer choice their of charitable donationstotal, In participate. to wish who which £237,000 of (2019 – £755,000), £537,000 to amounted subcontractors employees, by raised was (2019 – £392,000) and suppliers. the during reduced were donations that recognise We events which charitable fundraising period, during ‘lockdown’ activity our resume to hope we and curtailed, frequently were ahead. year the in levels previous to Charitable support We are taking positive actions such as sourcing our our as sourcing actions such taking positive are We Energy Renewable possible, from where electricity, office upon our building suppliers, (‘REGO’) Origin of Guarantee construction- sourcing commenced we when year, last work In doing suppliers. REGO from electricity compound site oftonnes 1,800 a further has saved this that estimate we so, trialling a generator been has also Bellway year. the carbon in this whether determine to panels with photovoltaic fitted carbon savings cost-effective further can deliver technology to connected yet not which are sites those construction on Grid. the National sources sustainable is from Bellway by purchased timber All Stewardship Forest that all supplies have mandate we and Forest of the Endorsement for Programme or Council (‘FSC’) Bellway a result, As certification. timber Certification (‘PEFC’) Foundation’s Wildlife World the in the highest rank holds 2019. Scorecard Timber (‘WWF’) waste construction of the proportion reduce to efforts Our being waste of with 99.1% also continued, landfill have to sent derived used as refuse or recycling to diverted on site, reused fuel (2019 – 98.4%). a has undertaken stages, Bellway while in its early Lastly, the single-use plastic in the impact of understand to review usage in will reduce we that the intention with business, years. future Financial Review

Beyond the present uncertainty, industry fundamentals remain positive, with continued underlying demand for affordably priced new homes.

Keith Adey Group Finance Director

Operating performance The impact of COVID-19 has been significant and ended Other operating income and expenses, which net to an Bellway’s track record of ten consecutive years of revenue expense of £3.1 million (2019 – £5.6 million), relate to the growth. As a result, housing revenue fell by 30.7% to cost of running our part-exchange programme, with activity £2,204.4 million (2019 – £3,180.1 million), principally driven by initially suspended as transactions in the wider housing a 30.9% reduction in the number of housing completions, market declined substantially with the onset of ‘lockdown’ which fell to 7,522 (2019 – 10,892). The average selling price restrictions. of completions was £293,054 (2019 – £291,968), comparable The pre-exceptional administrative expense reduced to the prior year, with the proportion of lower value social significantly to £97.4 million(1) (2019 – £109.7 million), primarily completions remaining unchanged at 22% (2019 – 22%). reflecting a cessation of payments arising under the staff and Other revenue, which includes land, commercial and ground divisional management incentive schemes. As a proportion rent sales, reduced to £21.0 million (2019 – £33.1 million), of revenue, administrative expenses were 4.4%(1) (~) (2019 – with the prior year benefitting from additional land sales. 3.4%), with this run rate expected to continue at a similar level Together with the reduction in housing revenue, total in the new financial year. revenue decreased by 30.7% to £2,225.4 million (2019 – Overall, pre-exceptional operating profit reduced by 52.3% £3,213.2 million). to £321.7 million(1) (~) (2019 – £674.9 million) and the pre- Gross profit, before considering exceptional items, fell to exceptional operating margin was 14.5%(1) (~) (2019 – 21.0%). £422.2 million (1) (~) (2019 – £790.2 million) representing a gross margin of 19.0%(1) (~) (2019 – 24.6%). The decline was mainly driven by the reduced volume output and less efficient absorption of site overheads and selling costs. There was also a non-exceptional charge of £18.9 million in relation to site extensions and enhanced health and safety requirements due to COVID-19. Costs associated with extended site durations are expected to be ongoing, resulting in lower anticipated future site margins and this will continue to influence the operating margin in the year ahead. The Group did not benefit from any grant income under the Group revenue (£m) 3,213.2 CJRS, instead supporting colleagues on full basic pay from its 2,957.7 own resources throughout the pandemic. 2,225.4 The costs of rising subcontract tender prices across a variety £2,225.4m of trades and several developments, particularly in and around London and the South East, together with costs (30.7%) associated with complying with revised building regulations 2018 2019 2020 in relation to fire safety and expected new carbon reduction targets, had a further negative effect on the gross margin. Gross profit is also stated after a charge of £3.0 million in relation to the impairment of ground rents assets relating to houses historically sold on a leasehold basis. Profit before taxation (£m) 641.1 662.6

m £236.7 236.7 (64.3%) 2018 2019 2020

Bellway p.l.c. 32 Annual Report and Accounts 2020 Strategic Report 33

14.5 50.0 2020 2020 21.0 2019 2019 150.4 (2019 – Bellway p.l.c. Bellway 43.0 22.1 2018 2018 (~) 1 (2019 – £165.4 million). (2019 – £165.4 million). (1)(~) Annual Report and Accounts 2020 Accounts and Annual Report (~) p % (2019 – 3.3%). (~) (2019 – £201.2 million), representing an ungeared an ungeared representing (2019 – £201.2 million), (~) Total dividend per ordinary ordinary dividend per Total share (p) 50.0 (66.8%) Operating margin (%) margin Operating 14.5 (650bps) Net finance expense finance Net million £13.4 was expense net finance The Profitability 64.3% by fell items, taxation, post exceptional before Profit tax corporation The million). £236.7 million (2019 – £662.6 to an reflecting million), million (2019 – £124.0 £43.8 was charge 18.5% (2019 – 18.7%). of tax rate effective share per 156.6p to 64.2% by fell share Basic earnings per (2019 – 437.8p). cash and financial position Net net cash ofwith sheet, balance has a strong Bellway £1.4 million Notional interest on land acquired on deferred terms on deferred land acquired on interest Notional million). £6.9 million (2019 – £7.8 to million £0.9 by decreased The Group has committed bank facilities of £545 million. facilities of bank has committed Group The the has extended Bellway ‘lockdown’, the start of Since were which £125 million, totalling tranches of date maturity 2021. July to year, the financial in expire to due otherwise of liquidity the ongoing ensure to help extensions These relationships the good, long-term and evidence the Group banking partners. its UK-based with each of has that Bellway within its bank comfortably has operated Group The year. the during covenants (2019 – £96.7 million), representing very modest adjusted very representing (2019 – £96.7 million), 11.4% gearing of position (2019 – ungeared). Committed land obligations Committed position (2019 – ungeared). million), million (2019 – £297.9 at £343.6 low remain year. financial next the within with £226.5 million due at £342.2 million stood net debt Including land creditors, £14.4 million) and principally includes bank interest and interest bank includes and principally £14.4 million) terms. on deferred on land acquired interest notional monies, on drawn which includes interest interest, Bank to decreased costs, and refinancing fees commitment a reflecting principally million (2019 – £6.3 million), £6.0 which debt, bank net in LIBOR and average reduction £55.4 million to decreased 321.7 2020 2020 156.6 2019 2019 437.8 674.9 52.9 2018 2018 423.4 6 (1) m ) p ofit (£m 156.6 (64.2%) Earnings per ordinary share (p) share ordinary Earnings per Operating pr Operating £321.7 (52.3%) Link to remuneration – see pages 72 to 92. to – see pages 72 remuneration to Link Exceptional items Exceptional costs COVID-19 costs related COVID-19 exceptional total incurred Group The non- abnormal, £14.5 million of £25.8 million, comprising of the interruption arising from costs site-based productive been ordinarily have would which activity, in construction impairment In addition, an work-in-progress. capitalised into in relation also recognised was million £9.9 of charge suspended land deals, indefinitely or aborted several to insufficient given were financial returns the expected where of charge A market. wider the in profile risk the evolving measured a to in relation incurred also was £1.4 million in response enacted programme rationalisation workforce divisionalthe suspension of output and reduced to plans. expansion improvements building safety Legacy further undertaken have we developer, a responsible As apartment schemes legacy of portfolio our assessments of required are improvements safety any whether determine to guidance. Government the most recent with comply to of charge an exceptional has incurred Bellway a result, As to so has put aside a provision million and in doing £46.8 thosethat notwithstanding properties, certain help remediate certification building regulations secured developments area, complex is a highly This construction. time of the at ofthe cost of in respect with judgements and estimates within those properties of the extent and works, rectification evolve. to likely guidance, Government the latest of the scope but parties, third from recoveries is also pursuing Group The on been recognised not an asset has certain, not these are as sheet. the balance consideration, into items these exceptional taking After million £249.1 to 63.1% by reduced profit operating reported million). (2019 – £674.9 Financial Review continued

Bellway has also been confirmed as an eligible issuer A robust balance sheet provides strength for the CCFF, subject to continuing compliance with the and flexibility Bank of England’s eligibility criteria, with an issuer limit of £300 million. This remains undrawn, but available as a The balance sheet principally comprises amounts invested prudent back-up facility in the unlikely event that it is needed, in land and work-in-progress, with total inventories rising by providing Bellway with access to total funds of £846.4 million. 11.1% to £3,863.0 million (2019 – £3,477.6 million). The carrying This robust overall position ensures that the Group can value of land rose to £2,216.2 million (2019 – £2,004.4 million) respond positively should there be a further prolonged reflecting the lower number of completions in the period. period of economic disruption. Work-in-progress rose by 15.2% to £1,496.1 million (2019 – £1,298.2 million) and was 67.9% (2019 – 40.8%) as a proportion Notwithstanding the significant period of inactivity when the of housing revenue. Again, the increase reflects the lower ability to collect completion monies was severely curtailed, number of completions in the second half of the financial Bellway remained cash generative, producing £55.8 million year, but this strong investment should help benefit the first from operations in the year (2019 – £419.1 million). half of the year ending 31 July 2021. Taxation payments were £107.7 million (2019 – £119.3 million) The Group had a modest retirement benefit asset of and represented 45.5% of profit before taxation (2019 – 18.0%). £1.3 million (2019 – £2.8 million) at 31 July reflecting an The disproportionately high cash outflow follows a one-off ongoing commitment to fund this future, long term obligation. change in legislation accelerating the timing of quarterly payments. Dividend payments were £123.1 million (2019 – Following the final dividend payment of 100.0p per share in £178.9 million), with the reduction a consequence of the respect of the year ended 31 July 2019, the net asset value cancelled interim dividend which was withdrawn in order to rose by 2.5% to £2,994.0 million (2019 – £2,921.2 million), (~) preserve liquidity. representing a net asset value per share of 2,427p (2019 – 2,372p). The liquidity position has further improved since the year end as the Group continues to convert its strong order book As a result of the reduction in profitability and reduced asset (1) (~) (1) (~) into cash. As a result, the net cash balance at 4 October was turn, RoCE reduced to 10.8% (2019 – 24.7%), or 9.8% £61.2 million(~). (2019 – 22.1%) when including land creditors as part of the capital base. Post-tax return on equity was 6.5%(~) (2019 – The Directors remain of the view that the Group’s financing 19.8%). arrangements and balance sheet strength provide sufficient liquidity and covenant headroom for at least the next twelve Beyond the present uncertainty, industry fundamentals months. They have therefore prepared the consolidated remain positive, with continued underlying demand for financial statements on a going concern basis. affordably priced new homes. The evolving economic landscape will provide challenges in the future, but the strength of our balance sheet and flexible capital structure ensures Bellway remains well positioned to respond positively and position itself for a return to growth.

Keith Adey Group Finance Director

19 October 2020

Note: 1 Before exceptional items (note 3, page 115 to 116). ~ Bellway uses a range of statutory performance measures and alternative 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 can be found on pages 134 to 136. Throughout this report ‘~’ refers to alternative performance measures.

Bellway p.l.c. 34 Annual Report and Accounts 2020 Strategic Report 35 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report £260,000 interior and home of Value During the year Bellway gave away a dream home at a dream away gave Bellway year During the Tyne, upon Newcastle development, the Moorfields Saturday Ant and Dec’s on a deserving family to Takeaway. Night support to a charity Williams founded and Simon Petra loss the devastating and siblings after parents grieving were They in 2017. Leigh Darcey daughter baby of their were friend and a family by the prize for nominated from being plucked after surprised on the show the audience. three-bedroom furnished a fully given were couple The be to ever which is the biggest individual prize home show. on the ITV away given Ant and Dec’s Saturday Night Takeaway Night Saturday Ant and Dec’s ...for our communities Building for the future... the for Building Principal Risks The Board has completed its assessment of the Group’s emerging and principal risks.

The following ten principal risks to our business have been identifi d:

Risk and Strategic KPIs Mitigation description relevance Land

Inability to source • Insufficient land would affect • Land bank • Budgeting and forecasting of growth suitable land at our volume growth targets. (with DPP). targets to ensure land bank supports appropriate gross • Failure to buy land at the • Number of strategic target. margins and RoCE. right margin would have homes sold. • Targeted approach to land a detrimental effect on • RoCE. acquisitions, with pre-purchase future returns. due diligence and viabilities on all • Gross margin. proposed land purchases. • EPS. • Authorisation of all land purchases in No change accordance with Group procedures and our Approvals Matrix. Planning

Delays and complexity in • Failure to obtain planning • EPS. • Group and divisional planning the planning process. within appropriate • RoCE. specialists provide advice and timescales would have a support to the divisions to assist with • Number of plots detrimental impact on our securing planning permissions. acquired directly in growth prospects and have land bank with an • Management of immediate, medium- an adverse effect on returns. implementable DPP. term and strategic land to maintain an No change appropriate balance of land in terms • Number of plots of quantity and location. converted from medium-term pipeline to land with DPP. • Number of plots in our pipeline land bank. • Number of plots identified in our strategic land bank with a positive planning status. Construction resources

Shortages of both • Failure to secure • Number of • Systems are in place to select, appropriately skilled required and appropriate homes sold. appoint, monitor, manage and subcontractors and resources causes delays • Customer build long-term relationships with our building materials at in construction, impacting satisfaction subcontractors and suppliers. competitive prices. the ability to deliver volume score. • Competitive rates and prompt growth targets. • Employee payment for our subcontractors. • Pricing pressure would turnover. • Group-wide purchasing impact returns. • EPS. arrangements are in place. No change • Continued review and monitoring of supplier and subcontractor performance and suppliers.

Bellway p.l.c. 36 Annual Report and Accounts 2020 Strategic Report 37 Bellway p.l.c. Bellway oring of key business key oring of ocess. d considers health andd considers visits to sites by senior senior by sites to visits sales incentives, such as sales incentives, schemes government-backed ontinue to monitor business monitor to ontinue Annual Report and Accounts 2020 Accounts and Annual Report oduct range and pricing strategy and pricing strategy oduct range Use of Use encourage to part-exchange, the selling pr of Use home ownership. encourage to c We Ongoing monit Ongoing action of metrics and development plans as necessary. Pr based on regional determined conditions. market robust and build a performance with a solid business future-proof financial controls. and sound strategy The Boar The meeting. issues at every safety Regular our of management (independent to consultants and external divisions) standards and safety health monitor healththe against and performance policies and procedures. and safety

• • • • • • Mitigation •

of of RIDDOR of ations rate. ard ard ety benchmark. ety order book. order Reserv Customer EPS. RoCE. Number homes sold. Forw satisfaction score. Safety Awards. Safety Number lost seven-day time accidents 100,000 per operatives. site NHBC health and saf and NHBC Health

• • • • • • KPIs • • • these external

to the moral to

The impact of The factors would be on the be on would factors sell houses andto ability apartments and on returns. In addition theobligation and act into requirement manner, a responsible individual any to injuries our while at one of would business locations and construction delay in criminal result could civil prosecution, litigation and damage. reputational

• Strategic Strategic relevance •

ety

vailability.

ernment ertainty over post- over ertainty onomic factors, Mortgage a Mortgage Gov housing policy. Unc agreements. BREXIT Ec house especially inflation andprice rates. interest ealth and saf

There is an increase in this in is an increase There the economic given risk about brought uncertainty pandemic. by the COVID-19 • • • External environment External of a number are There that factors external to ability affect our could sales, includinggenerate but not limited to: • No change No H significant are There health and safety risks inherent in the construction process. Risk and Risk description Principal Risks continued

Risk and Strategic KPIs Mitigation description relevance Human resources

Inability to attract and • Failure to attract and retain • Employee turnover. • Continued development of the retain appropriate people with appropriate • Number of Group HR team and implementation people. skills will affect our ability graduates of our people strategy. to perform and deliver our and apprentices. • Centralised recruitment support and volume growth target. • Number of people employee engagement activities. who have worked • Monitoring and review of staff for the Group for 10 turnover and feedback from There is a decrease years or more. exit interviews. in this risk due to the strengthening of recruitment • Training days • Competitive salary and benefits and engagement processes per employee. packages which are regularly during the period. • Senior reviewed and benchmarked. management • Succession plans in place and key gender split. person dependencies identified and mitigated. • Increased level of training provided to employees. • Graduate, apprentice and site manager programmes in place. IT and security

Failure to have suitable • Poor performance of our • EPS. • Group-wide systems are in operation systems in place and systems would affect which are centrally controlled with an appropriate back-up, operational efficiency, outsourced support function in place. contingency plans and profitability and our • Continued investment in systems. security policies. control environment. • Regular review and testing of our security measures, contingency plans and IT security policies. • Group-wide Security Committee No change in place. Legal and regulatory compliance

Failure to comply • Lack of appropriate • Volume growth. • In-house expertise from Group with legislation and procedures and compliance • EPS. Company Secretary, Legal, Health regulatory would result in delays and Safety and Technical functions • Number of requirements. in land development, who advise and support divisions on homes sold. construction and sales compliance and regulatory matters. • RoCE. completions plus possible • Consultation with Government re-work to sites, all of which • Gross margin. agencies, specialist external legal could have a detrimental advisers and subject matter experts No change impact on profitability and (e.g. fire safety consultants) including reputation, potentially ongoing co-operation with the CMA. leading to financial penalties • Strengthened Group-wide and other regulatory policies, guidance and training consequences. for key regulatory matters, • Changes may occur as supported by reporting and a result of the MHCLG’s whistleblowing procedures. Building Safety Programme • Continual monitoring and review of and the work being changes to legislation and regulation, carried out by the CMA including any supporting guidance and Government on and advice notes. leasehold reform. • Continual liaison with the HBF on regulation and compliance matters.

Bellway p.l.c. 38 Annual Report and Accounts 2020 Strategic Report 39 new and new Bellway p.l.c. Bellway ead of Sustainability Sustainability ead of review of the design and of review review of liquidity and liquidity of review enance of business resilience business resilience of enance working practices and practices working Annual Report and Accounts 2020 Accounts and Annual Report estment in energy-saving estment in energy-saving geted spend on land and WIP, with WIP, and land on spend geted ong balance sheet as at 31 July July sheet as at 31 ong balance ocurement of materials (e.g. timber) timber) (e.g. materials of ocurement arrangements implementedarrangements staff, for and sites offices across with and customers subcontractors monitor to appointed Marshalls social distancing. evolving requirements as part of our our as part of requirements evolving compliance legal and regulatory the Future including framework, Standard. Homes climateto assess risks relating to and performance change, monitor improvement. drive and sites, offices for measures REGOto transition including electricity. certified sustainable sources. from increase to homes new of features efficiency. energy Str facilities bank 2020 and committed has Group The £545 million. of as an eligiblealso been confirmed CCFF the Government’s for issuer £300 millionwith a limit of facility undrawn). (currently Regular Tar stages latter the on homes in a focus production. of Maint Safe Continual monitoring of Continual monitoring H Dedicated Inv Pr Regular level. at a Group cashflow in IT investment by plans supported homeworking. enable robust to

• • • • • • • • Mitigation • • gin.

ofit.

gin. value per per value of ee turnover. ee ations rate. der book value. book der with DPP). completed home. completed EPS. Number RoCE. mar Gross Or Land bank ( mar Operating per Dividend share. ordinary pr Operating asset Net share. ordinary Employ Reserv Greenhouse gas emissions. Carbon emissions per homes sold.

• • • • • • • • • • • KPIs • • •

the supply chain the supply high loan-to- to reputation reputation to

ysical impacts of ysical ernment imposed onomic uncertainty onomic uncertainty e is an increased focus e is an increased Lack of Lack Gov restrictions/guidance social Maintaining in Issues value mortgages value distancing practices staff/ of high levels or absence subcontractor     – Damage is not the Group if be following to perceived guidelines and Government acting responsibly. climate change (such as change (such climate could weather) extreme within disruptions to lead chain and the supply build programmes. ec The – – Ther ph The COVID-19, about by brought the factors to in addition construction affects below, which and sales activity the impact ultimately liquidity. Group’s – on the actions taken by by taken the actions on businesses in response change andclimate to made. the disclosures reporting improve to Failure in lineand performance regulations with new socialand heightened lead could expectations financial penalties andto damage. reputational

• • Strategic Strategic relevance • •

Risk Risk New New Emerging risks Emerging but strategy, our of the achievement to be significant to the potential that have risks emerging of a number faces Group The management risk established our as part of considered are These defined and assessed. be fully cannot which at present change climate both from risk The warranted. when principal risks to and elevated regularly the Board discussed by framework, business. facing our a principal risk to year the 2020 financial in early risk an emerging from has been elevated and COVID-19 performance. COVID-19 Ongoing uncertainty of the impact over on the Group’s COVID-19 and financial operational description changeClimate to evolve Failure and business practices in response operations to climate change including physical impacts, reporting and social requirements expectations. Risk and Risk Risk Management

Our established framework for managing risks has • Ensure there is a consistent approach for the identification, continued to be in place across the business throughout this assessment, control, monitoring, follow-up and reporting financial year, with responsibility to implement the Board’s of risks. policies on risk management and internal control sitting • Develop and implement action plans to ensure that with management. risks are mitigated where required, are within our agreed Our risk management objectives continue to be: risk appetite and that improvements are made to our control environment. • Assess emerging and principal risks against an agreed appetite for risk, which is regularly reviewed. • Ensure the approach to risk management meets the needs of the business, senior management and all • Improve the balance of risk and return through developing key stakeholders. and maintaining a proactive, risk-aware culture. Risk management framework

The Board Audit Committee • Overall responsibility for risk management. • Oversee risk management framework, policy • Review, challenge and approve the risk and processes. management framework and corresponding • Review routine risk reports and utilise risk policy, processes and annual risk plan. information to review and approve assurance • Review and agree risk appetite. plans and priorities. • Conduct a robust assessment of the emerging and • Provide assurance over risk management to principal risks facing the Company. the Board. • Review and challenge risk reports. • Monitor the progress of risk mitigating actions and recommendations.

Executive Management Head of Risk • Review, challenge and approve the risk • Design and implement the risk management management framework and corresponding framework and corresponding policy policy and processes. and processes. • Review and challenge risk information against • Facilitate and implement the risk management stated business objectives. framework, policy and processes. • Approve risk treatments and actions. • Undertake risk management activities and • Approve risk reports for the Board. produce reports in accordance with risk management policy. • Review and agree risk appetite.

Key Reports to Directs and monitors

Risk management roles and responsibilities In all businesses, responsibility for managing risk sits with every employee. In undertaking their roles, employees are assisting in identifying, assessing and managing risks. Specific roles and responsibilities, as set out in our risk management framework and corresponding policy, are set out in the diagram below:

Risk management process

Identify Evaluate Treat Action Report all business areas severity of risks to bring within mitigate risks monitor risks and risk appetite (where needed) report progress of mitigation

Bellway p.l.c. 40 Annual Report and Accounts 2020 Strategic Report 41 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report Management of financial risk of financial Management financial the Group’s with associated main risks The as been identified have year the held during instruments and housing market risk rate risk, interest risk, liquidity credit these risks and managing for is responsible Board The risk. unchanged remained which have the policies adopted, set out below. and are year the during risk Credit the as mitigated is largely risk credit to exposure Group’s The made on completion sales are the Group’s of majority vast received are which point monies at a legal contract, of is no specific There title. legal of transfer for in exchange the home sales as of in respect risk credit of concentration customers. of a number over is spread exposure the amounts receivables, and other trade of In respect at amortised measured sheet are balance the in presented which losses credit expected for less a loss allowance cost the risk of weighting an average the basis of assessed on are this purpose, a For the accounts). to 15 note default (see of becomes the Group if occurred have to default is determined cash all contractual receive will not that it evidence of aware includes receivables and other Trade due. that are flows England Homes due from million) £12.4 million (2019 – £39.3 England is Homes As scheme. Buy to the Help to relating of the risk considers the Group agency, Government a UK be minimal.to default period or the reporting during exceeded were limits credit No losses any anticipate does not the Group and subsequently these counterparties. by non-performance from beto risk credit to exposure the Group’s considers Board The the industry in size, its of an entity and normal for acceptable which it operates. in risk Liquidity equity of a mixture through its operations finances Group The and profit) and reinvested capital, reserves share (comprising and borrowings). facilities overdraft bank (comprising debt existing monitoring by risk its liquidity manages Group The based requirements against forecast facilities and cash flows cash forecast. rolling three-year on a has, as its principal objective, Policy Treasury Group’s The meetto facilities in order bank flexible of the maintenance banking Group’s The requirements. borrowing anticipated are the accounts to 18 outlined in note arrangements and liquidity flexibility of terms in be adequate to considered with Relationships needs. cash flow its medium-term for co-ordinated cash management are banks and overall within its financial well is operating Group The centrally. facilities. bank and available covenants on deposit at placed are cash surpluses Short-term than Other counterparties. with high-quality rates competitive or no financial instruments are there those disclosed, the considers therefore Board The contracts. derivative be mitigated. to risk liquidity Group’s on secured are payables certain land payables, to In relation the accounts). to 16 note land asset held (see the respective financial assets of other is held against any security other No the Group.

Capital management to capital base maintain a strong to is policy Board’s The the business in order of development the future underpin its finances Group The shareholders. to value deliver to cash borrowings, bank profits, reinvested through operations capital. working of the management in hand and consideration careful following dividend is determined The operational the Group’s as well as capital requirements, of the If growth. volume long-term further deliver to capability will be covered dividend total the final dividend is approved, times). times (2019 – 2.9 3.1 earnings by by Financial risk management risk Financial loans cash, bank comprise financial instruments Group’s The receivables trade such as items various and and overdrafts its operations. from directly that arise payables trade and financial towards policy the Group’s of main objective The cash the Group’s on maximise returns to instruments is capital requirements working the Group’s manage balances, ongoing operations. the Group’s and finance Risk management process management Risk potential our all of detailing is maintained, register risk A financial, operational, strategic, between risks, categorised management risk The risks. and reputational compliance the business are of all aspects ensure to set up are processes and execution business to through strategy from considered, specialist business areas. including any part of basis as on a regular is reviewed register risk The the regular in resulting process, the management reporting required any and each risk, its severity assessment of based on is determined risk of severity The mitigating actions. likelihood. impact and assessing risk system a defined scoring management,to principal risks is reported of summary A which is mainly, the Board, and Committee Audit the beto risks considered of comprised exclusively, but not is summary This mitigation. after appetite risk our outside of systematically the Board with year, the throughout reviewed which changes any account into taking the risks, considering occurred. have may determines the Board Committee, Audit the via year, a Once management is appropriately risk of the system whether that confirm directors The effectively. designed and operating the principal assessment of a robust conducted have they the Company. risks facing management and internal on risk information More controls is included within the Audit Committee Report on Report Committee Audit the within is included controls 71. to pages 62 Risk Management continued

Interest rate risk The viability assessment is based on the Group’s current Interest rate risk reflects the Group’s exposure to fluctuations position and the potential effect of the principal risks in interest rates. The risk arises because the Group’s overdraft facing the Group, which are summarised on pages 36 to and floating rate bank loans bear interest based on LIBOR. 39. The principal risks that have been incorporated into a combination of the various scenarios include: The Group’s attitude to interest rate risk and forecast debt is influenced by the existing and forecast conditions prevailing Risk Relevance to scenarios at the time that each new interest-bearing instrument is External environment – A reduction in private entered into. This will determine, amongst other things, the including housing demand, completions and private ASP term and whether a fixed or floating interest rate is obtained. mortgage availability and due to a decline in demand. government housing policy. During the year ended 31 July 2020, it is estimated that an increase of 1% in interest rates applying to the full year Health and safety A nationwide COVID-19 would have decreased the Group’s profit before taxation by ‘lockdown’ on a similar basis £0.5 million (2019 – £1.7 million). to that experienced in H2 of FY20. Housing market risk The Group is affected by movements in UK house prices. The most severe but plausible downside scenario is a severe These in turn are affected by factors such as credit availability, recession. It includes the following principal assumptions: employment levels, interest rates, consumer confidence and • Private completions in H1 FY21 are supported by the strong supply of land with planning. forward order book, but still fall to 75% of that achieved in While it is not possible for the Group to fully mitigate housing H1 of FY20. In the 12 months to 31 January 2022, private market risk on a national macroeconomic basis, the Group completions reduce by around 50% compared to the does continually monitor its geographical spread within pre-COVID-19 ‘lockdown’ peak. This is followed by a the UK, seeking to balance investment in areas offering gradual recovery based on the lower base position. the best immediate returns with a long-term spread of its • Private average selling price in H1 FY21 remains in line with operations throughout the UK to minimise the effect of local internal forecasts due to the strong order book position. microeconomic fluctuations. In the 12 months to 31 January 2022, private average selling price reduces by 10% compared to the latest achieved Going concern statement pricing. This is followed by a gradual recovery based on the After conducting a full review, the Directors have a lower base position. reasonable expectation that the Group has adequate resources to fund its operations for at least the next • These assumptions reflect the Group’s experience in the 12 months. For this reason, they continue to adopt the going 2008/09 global financial crisis. concern basis in preparing the accounts as discussed further A number of prudent mitigating actions were incorporated on page 96. into the plausible but severe downside scenario, including: Viability statement • Plots in the land bank being replaced at the same rate that In accordance with provision 31 of the UK Corporate they are utilised. Governance Code, the Directors have assessed the viability • Construction spend is reduced in line with of the Group over a period of three years, which is longer housing revenue. than required by the going concern assumption. The three- year period is consistent with the Group’s detailed bottom-up None of the mitigating actions included within the scenarios forecasts which assess future profitability and cash flows. would hamper the long-term growth aspirations of the Group. The Group’s internal forecasts have been regularly updated, In addition to the various scenarios, several additional as usual, since the COVID-19 ‘lockdown’, incorporating our mitigating measures remain available to management actual experience along with our expected future outturn. that were not included in the scenarios. These include These incorporate lower sales volumes and slower build withholding discretionary land spend and instead trading rates as we continue to prioritise the health and safety of our out of the substantial existing land holdings, further reducing colleagues and site visitors as a result of the increased risk construction spend in recognition of the strong carried profile arising from COVID-19. Furthermore, the base forecast forward work-in-progress position at 31 July 2020, and takes into consideration changes to both the Help to Buy reducing or cancelling future dividend payments. scheme, with effect from April 2021, and the expiry of the The output of this review considered the profitability, cash stamp duty holiday, in March 2021. flows and funding requirements of the Group over a period of three years. The assessment included an assumption that existing banking facilities remained in place, but were not renewed at the end of their term. In all the scenarios, the Group had significant headroom in both its financial bank covenants and existing bank facilities, did not utilise the CCFF and met its liabilities as they fall due. Based on the results of this review, the directors have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over this three-year period.

Bellway p.l.c. 42 Annual Report and Accounts 2020 Strategic Report 43

Bellway p.l.c. Bellway ship with Cancer with Cancer ship Annual Report and Accounts 2020 Accounts and Annual Report office waste diversion diversion waste office o reduce our carbon emissions our o reduce waste construction our o increase ved a reduced RIDDOR seven-day RIDDOR seven-day a reduced ved ved our HBF 5 star homebuilder status homebuilder 5 star HBF our ved For more information see pages 46 to 47. see pages 46 to information more For 49. see pages 48 to information more For For more information see pages 44 to 45. see pages 44 to information more For above 54%. above partner Continued our total 4-year our UK, increasing Research million, £1.6 to total and donation fundraising target 5-year our achieving to way our on well £2 million. of Achie site 100,000 per incident rate reportable the fourth (2019 – 324.87), 203.12 of operatives this rate. reduced have we in a row year Continued t Continued the introduction through employee per supplied into energy additional green of the business. our Maintained t Continued – 98.4%). (2019 99.1% to rate diversion Achie running. year the fourth for

Society and Economy Development, Economic Charities, Customers, Stakeholders and Safety, Health Employees, • • the Carbon to contribute to continue We and Change’ (‘CDP’) ‘Climate Project’s Disclosure for scores latest our and programmes ‘Forests’ the CDP with in line – C’, ‘Awareness were both global average. programme Environment Environment Emissions, Carbon and Ecology, Biodiversity Water Transport, Energy, • • Construction and Research Planning, Procurement, Waste Management, Site Development, • • For full detailsFor our CR of activity visit www.bellwayplc.co.uk/ corporate-responsibility

1 target target missed 6 into 2020/21 targets are multi-year multi-year are targets ogress will continue and progress

6 targets targets achieved Progress has continued on our overall CR agenda and overall on our has continued Progress the set for were that targets the 13 public against specifically the to highlighted are achievements Some key year. 2019/20 on our can be found performance our right and full details of 2020/21the coming for targets with our along website, CR www.bellwayplc.co.uk/corporate-responsibility year: that still targets multi-year six are targets, 13 public our Of targets six while a further run to at least 12 months have develop to target, final The year. the during achieved were the COVID-19 by delayed was a schools engagement pack, in 2020/21. be completed will now pandemic and Our key achievements in 2019/20 achievements key Our We continue to operate our Corporate Responsibility Responsibility Corporate our operate to continue We environment, of pillars core three the (‘CR’) activities under that ensures This and economy. and society construction, groups stakeholder diverse our of the interests consider we and economic social, environmental positive and make business. our across contributions via a CR level at a Group CR programme our operate We Director. Finance the Group led by Committee, Steering to meets quarterly functional heads of group focused This the activities across assess, discuss and manage CR-related and KPIs. targets relevant as monitoring well business, as Bellway’s aim to operate the to operate aim Bellway’s in a responsiblebusiness and goesethical manner hand in commitmenthand with our high-quality to delivering locations, homes in desirable ongoing the helping to address in the UK.housing shortage the reducedNotwithstanding completions due to the this year our growth ‘lockdown’, COVID-19 the past fiover has e years homes and sustainable delivered the UK, as well across communities long-term beneas providing ts to our customers, employees, and supply chain. shareholders Corporate Responsibility Corporate Corporate Responsibility continued

Environment Climate change, protection of the environment and waste continue to represent significant challenges th t we as a company, and society as a whole, continues to face. They remain at the core of our CR activities and we aim to minimise our impacts through our sustainable approach to development.

Our targets Examples of recent measures include the provision of bat boxes, relocation of badger sets, migration of protected species to new habitats and the construction of on-site and off-site ponds for both drainage and to support and promote biodiversity. In total, 224 of our developments had Sustainable Urban Drainage Systems implemented (2019 – 255), 186 active 1 3 0 sites had a biodiversity plan in place (2019 – 150) and we target targets are targets planted over 12,700 trees (2019 – 17,676). achieved multi-year missed Waste Energy We will assess the use of single-use plastic in our Our energy consumption continues to be a lesser financial offices, construction processes and supply chain impact for our business compared to land, labour and to understand where we can reduce or eliminate materials. However, as a responsible business we have usage by 2021. a duty to minimise usage where possible and to look for greener options. In previous years we have focused on Water introducing energy-saving initiatives in our site compounds, We will seek to reduce water consumption with our telehandler fleet and in our showhomes. We are across all households to 115 litres per person per also undertaking a trial of a generator fitted with photovoltaic day by 2022. panels to understand the carbon and costs benefits of this type of hybrid technology. Carbon We continue to design our new homes to be energy-efficient, We will aim to reduce our direct carbon emission allowing our customers to benefit from reduced running intensity (scope 1 & 2) from our construction costs as well as reducing the operating carbon footprint of operations, offices and business mileage by 10% their new home. On average, the Dwelling Emission Rate by 2022/23 (measured by CO2e per home sold; (a measure of energy efficiency) of new Bellway homes this 2017/18 as a base year). year was 4.7% better than required by the relevant building regulations (2019 – 4.5%). All new homes benefit from energy- Supply chain efficient lighting along with double glazing and energy- We will maintain 100% timber sourced from efficient ‘white goods’. We also included renewable energy sustainable sources and maintain our score in technology in 28% of our new homes (2019 – 36%), further the WWF Timber scorecard as 3. helping customers to reduce their energy consumption, bills and carbon emissions. Biodiversity and ecology Streamlined Energy and Carbon Reporting Housebuilding can be an intrusive process. We continue to (‘SECR’) disclosure for the period 1 August 2019 build a proportion of our new homes on brownfield sites, with – 31 July 2020 36% built on such land this year (2019 – 43%). This type of We have reported on the emission sources required under the redevelopment can help to improve the local environment, Companies Act 2006 (Strategic Report and Directors’ Reports) as well as having a positive effect on the local community, Regulations 2013 and the Companies (Directors’ Report) and helping to increase local employment and create green Limited Liability Partnerships (Energy and Carbon Report) spaces. Greenfield sites are also developed and it is in these Regulations 2018 (SECR), apart from the exclusions noted below. areas that our impact is potentially greater. We aim, wherever possible, to mitigate these impacts as we create sustainable Methodology and attractive places to live. New sites continue to undergo We have used the operational control approach to determine a risk assessment in which biodiversity and ecology issues our organisational boundary for emissions purposes and will be included where necessary. Environmental impact calculated these emissions based on the UK Government’s assessments are carried out if required and issues such as Environmental Reporting Guidelines (2013) and emission biodiversity mitigation, enhancement and offsetting will factors from the 2019 GHG Conversion Factors for Company be included where necessary and in agreement with the Reporting. Scope 2 emissions have been reported using both planning authority. the location-based method of calculation and, to account for our use of renewable electricity, the market-based method

Bellway p.l.c. 44 Annual Report and Accounts 2020 Strategic Report 2.4 2.4 8.8 8.6 2019 45 5,155 5,518 2,354 2,642 25,715 26,078 20,560 20,560 107,006,160 109,622,315 Bellway p.l.c. Bellway 7 6.7 2.9 2.8 2020 1,799 1,932 4,877 4,097 21,769 16,892 16,892 20,989 88,061,917 92,663,081 Annual Report and Accounts 2020 Accounts and Annual Report

the ongoing decarbonisation of the UK electricity mix and electricity UK the decarbonisation of the ongoing Guarantee Energy (Renewable REGO of use increasing our has electricity’ ‘green use of Our supplies. electricity Origin) of inthe atmosphere entering carbon from of tonnes 1,753 saved supplies, REGO our the benefit of and discounting year the past total Overall, 11.6%. by 2 emissions fell location-based Scope 18.4% although by fell 1 and 2 emissions (market-based) Scope shutdown), COVID-19 to (due fall in completions the 30.9% with tonnes 2.8 to 16.7% by home sold metric rose carbon per our static, largely numbers with employee However, (2019 – 2.4). 22.1% fallen by have employee emissions per market-based our inthe reduction with in line broadly (2019 - 8.6), tonnes 6.7 to emissions. absolute on certain reported have we SECR) time (under the first For total our and and business mileage) 3 emissions (waste Scope due 26.9% by emissions fell Waste use. underlying energy mileagewhile business sites, of shutdown temporary the to then furloughed at first were as staff 23.6% by emissions fell socialto adhere to technology meeting remote adopted 17.7%, by fell use (market-based) energy distancing. Underlying the impact remove to the location-based method while using 15.5%. was the fall electricity’, ‘green of which year the Phase 2 during ESOS undertook we In addition that initiatives efficiency energy potential of a range delivered any, which, if determine to year the coming will be assessed in thethe business. During into introduction applicable for are technology installing energy-saving continued have we year efficient more the use of and maintained compounds in new beto LED lighting continues fleet. telehandler engines in our been issued has guidance and new installed in showhomes and in homes under heating in showhomes the use of on usage. energy minimise unnecessary to construction been externally the 2018/19 and 2019/20 emissions have Both level’ assurance a ‘reasonable to Energy Zeco by verified standard. verification the ISO-14064-3 using (4) (2) (3) (1) (4) (3) (2) e) 2 of sites where fuel is where sites of om part-exchange properties due properties om part-exchange conditioning units in office buildings due units in office conditioning e-based combined heat and power units heat and power e-based combined alent as per the meaning given in section 93(2) of the Climate Change Act 2008. Act Change the Climate in section 93(2) of the meaning given alent as per eported using the market-based method to account for electricity supplies purchased under REGO contracts. REGO under purchased supplies electricity for account to method the market-based using eported the for account which does not used electricity total the location-based method for using eported es where gas and electricity usage is included gas and electricity where es verage number of employees during the year. the during employees of number verage zero carbon nature of electricity supplies purchased under REGO contracts. REGO under supplies purchased electricity of carbon nature zero Carbon dioxide equiv Carbon dioxide 2 emissions r Scope the a Based on 2 emissions r Scope  for which we do not have operational control. operational have do not we which for share Bellway’s contractors. groundworks our by provided lift usage. on fork based usage is estimated the of offic Divisional using a usage is estimated Bellway’s charges. within landlord derived figure space floor occupied of metre square per kWh billing in place. with utility divisional offices other from Emissions from sit Emissions from fuel usage on a small number Diesel Gas and electricity fr Gas and electricity and reporting in accurately difficulty and immateriality to this data. recording air Emissions from in data collection. and difficulty immateriality to

3. Notes: 1. 2. 4. Scope 2 – Electricity purchased for our own use (market-based) own our for purchased 2 – Electricity Scope on-site and in company cars on Group business) on Group cars and in company on-site Greenhouse Gas Emissions (‘GHG’) (tonnes of CO of Gas Emissions (‘GHG’) (tonnes Greenhouse used and petrol facilities (including diesel of fuel and operation 1 – Combustion of Scope An element of carbon estimation is undertaken in the in carbon estimation is undertaken An element of areas: following • • Performance has had an impact on emissions as construction COVID-19 early to through March late shut from and divisional offices sites activity site with reduced 17.8% by 1 emissions fell Scope May. 20.5% by fell 2 emissions (market-based) Scope driver. the key shutdown, – COVID-19 reasons of a combination through • • for calculation. Our underlying energy use figure has been use figure energy underlying Our calculation. for generators fuel used in on-site and includes in kWh reported mileage undertaken as business well as vehicles and company kWhto data has been converted This vehicles. in company Reporting Company for Factors the GHG Conversion using car new average for figures Transport and Department for (2019) fuel consumption. we which those include all sources emission reported The which the following of the exception with for, responsible are this report: from excluded were • Total scope 1 and 2 GHG emissions (location-based) scope Total Energy consumption used to calculate above emissions (kWh) above calculate to used consumption Energy employee Bellway per (location-based) GHG intensity GHG intensity (location-based) per Bellway home sold Bellway per (location-based) GHG intensity Scope 3 – Emissions from employee business travel in non-company vehicles in non-company travel business employee 3 – Emissions from Scope GHG intensity (market-based) per Bellway employee Bellway per (market-based) GHG intensity waste of 3 – Disposal Scope GHG intensity (market-based) per Bellway home sold Bellway per (market-based) GHG intensity Energy consumption used to calculate above emissions (kWh) above calculate to used consumption Energy Total scope 1 and 2 GHG emissions (market-based) scope Total used facilities (including diesel and petrol of fuel and operation of 1 – Combustion Scope business) on Group cars and in company on-site use (location-based) own our for purchased 2 – Electricity Scope Corporate Responsibility continued

Construction As the fourth largest housebuilder in the UK, Bellway is well placed to deliver the much needed new homes to address the country’s ongoing housing shortage. Working in partnership with local authorities, communities, suppliers and subcontractors, we create attractive new developments that leave a positive legacy for residents and wider society.

Our targets Communities At Bellway our aim is not just to build new houses, it is to create attractive and sustainable communities in which people want to put down roots and live for many years to come. Successful developments must meet the needs of 2 2 0 not just potential residents, but also of existing neighbouring targets targets are targets communities. Therefore we consult on new developments achieved multi-year missed through tailored engagement with local communities and stakeholders, and where appropriate, incorporating feedback Waste into our plans to ensure local people have the opportunity to We will maintain the proportion of waste help shape developments within their community. diverted from landfill on construction sites at 98% or above. This year we completed our assessment work on the potential benefits of the ‘Building for Life 12’ design standards, Waste using The Priory development in Thringstone as a pilot. We will aim to reduce the quantity of waste we The feedback from residents has been positive around generate (excluding groundworks waste) per the design and desirability of the development, and the home under construction by 2021. process has provided insight for our teams around certain ‘placemaking’ aspects of development design. However, Sustainable construction the merits of a universal use of Building for Life 12 remain We will complete research into six sustainable unproven and we feel that opportunities afforded by our construction methods and products, undertake ‘Artisan’ house type programme offer a more consistent way trials at a division level and implement successful to deliver improved urban design. outcomes across the Group by 2021. As we build new homes, our investment in local communities and economies extends beyond the developments we Customer and quality create. Through the planning process, we provide investment We will deliver quality homes and customer via section 106, affordable housing and community satisfaction and maintain a recommend score of infrastructure levy contributions. This provides additional at least 90% in the HBF new home buyers’ investment in education, healthcare facilities, sports facilities, survey, equating to a five-star rating. transport infrastructure improvements and the creation of recreational space, and in the past year we contributed £60.5 million (2019 – £77.3 million). Our construction activities also deliver employment opportunities across the country and we estimate that between 19,700 and 23,400 direct, indirect and induced jobs were supported by Bellway in the past year.

Bellway p.l.c. 46 Annual Report and Accounts 2020 Strategic Report 47 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report +4.8% NHBC Pride in the Job Awards Job in the NHBC Pride 44 awards Quality customers our on providing ourselves pride we Bellway At attentionThis a high standard. to homes built with quality inthe NHBC Pride in has again been recognised quality to who have managers site which recognise Awards Job the year This in housebuilding. the highest standards achieved Pride collected managers site Ashberry and 44 Bellway technical their (2019 – 42), recognising awards Job the in skills. qualities and organisational leadership knowledge, the NHBC in benchmarked homes is also our of quality The the past and in measure, inspection’ per items ‘reportable our below (2019 – 0.19), 0.24 was performance our year 0.3. of target internal Bellway’s zero tolerance approach to bribery and corruption bribery to approach tolerance zero Bellway’s the all of to extends It the Board. by has been adopted policy and our transactions business dealings and Group’s all of expected standards the set out and procedures with Group and for work who Those employees. our of and compliance enforcing for responsible management are functions. Office via Group carried out additional checks are any of enables concerns procedure whistleblowing Our in confidence. reported be to wrongdoing year the made during reports of a small number were There short of fell employees a few of the behaviour sadly where disciplinary them, and appropriate of required the standards taken. was action Our subcontractors and suppliers are an integral part of what part of an integral are and suppliers subcontractors Our long-term develop to aim is Our a success. Bellway makes delivering to the best route this is believe we as partnerships expect. customers our standards the high construction function a central be managed by to continues Procurement supply and our teams individual divisional by supported £1.4 billion (2019 – £1.7 billion), was year this chain spend economy the UK in in a £1.2 billion investment resulting housebuilders’ 90% of that estimating the HBF (based on that a the UK). Given in chain spend remains supply via our chain spend is supply our of significant proportion localto a significant boost this has delivered divisions, and communities. companies on and subcontractors audit suppliers to continue We issues, safety issues, including environmental of a range with Working supply. of and security and quality matters, specificto local businesses and companies smaller many suppliers our paying to committed are we sites, development a and remain terms within agreed and subcontractors Code. Payment the Prompt to signatory servitude and forced slavery, of form any tolerate do not We chain supply in our trafficking human or labour compulsory reflects Policy Anti-Slavery Our business. our part of in any or website, on our view to available and is this commitment Statement Trafficking and Human Slavery latest with our along all require We taken. being the actions which sets out they that confirm to subcontractors and applicable suppliers that or policies in place modern slavery own their have either to training receive staff Relevant policy. Bellway’s adopt they is activity and compliance slavery signs of them identify help year. the throughout monitored Supply chain Supply Waste to is housebuilder aims as a responsible our of One constructionthe use in we resources the manage effectively waste where and produce, we waste the minimising process, only landfill. Not avoid to recycling or reusing is unavoidable, a business it also delivers the environment, to beneficial this is savings. and efficiency cost through benefit as little ensure to diversion waste on focus our continue We our year the current landfill. For as possible enters waste have we year the sixth (2019 – 98.4%), 99.1% was rate diversion maintaining rates of target our achieving rate, our improved some small for the potential remains There above. at 98% or targeted will be which divisions, in certain improvements in 2021. the amount of on reducing work also continued have We has been on rubblethe focus year This generate. we waste into look to possible, instructed where with divisions, waste, for on-site waste and demolition crushing rubble, aggregate reduce to target Our foundation. and pavement in road reuse the metricwith 2021 is ongoing by home built’ per ‘waste is work so more tonnes), (2019 – 10.97 tonnes at 11.18 currently tonnes. 9.31 of target the reach to required Corporate Responsibility continued

Society and economy The UK housebuilding industry is a key component of the national economy, with investment in new homes helping to drive economic prosperity. As the UK’s fourth largest housebuilder, we are well placed to help address the current housing shortage while delivering a range of bene ts to our stakeholders.

Our targets Economy The importance of housebuilding to the social and economic sustainability of the UK should not be underestimated. According to an assessment by the HBF, housebuilding contributed £38 billion in economic output, supported almost 3 1 1 700,000 direct and indirect jobs and contributed £2.7 billion in targets target is target tax revenues to central and local government in 2017(1). achieved multi-year missed We have estimated Bellway’s own role in this industry-wide Health and safety economic contribution, again using the HBF’s, Lichfield’s and Maintain a safe working environment at our sites other publicly available metrics: and in our offices by: • £782.5 million in estimated gross value added generated by • Maintaining RIDDOR rates at 2018 levels our construction activities. or below. • 19,700 – 23,400 direct, indirect and induced jobs supported. • Delivering ‘slips, trips and falls’ and ‘working • £135.4 million contribution to public finances. from ladders’ safety briefings at 100% of sites with the aim of reducing accident trends in this • £69.2 million in New Homes Bonus and council tax area compared to 2019. payments to local authorities. Health and wellbeing Customers We will train 75 Mental Health First Aiders by Delivering a quality home with exceptional service will July 2020. always be our principle aim at Bellway. The pre and post sales experience is central to buyer satisfaction and we strive Employee development to provide the best possible experience for each and every We will increase the number of graduates, customer, reinforcing our reputation as a high-quality national trainees and apprentices in the business homebuilder. Our continued focus in this area has seen us compared to 2019, helping to address the retain our 5 star home builder status from the HBF for the industry-wide issue of skills shortages. fourth year running (2019 – 5 star), meaning that at least 9 out of 10 of our customers would recommend Bellway to a friend. Community engagement We will develop a schools engagement pack Affordability for primary and secondary schools for use by With the recognised ongoing shortage of new homes in the divisions by July 2020. UK, we are seeing falling home ownership levels amongst the younger generation with affordability often seen as Charitable giving a significant obstacle to getting onto the first rung of the We will extend our partnership with Cancer property ladder. Supporting the affordability of new homes is Research UK for a further two years and aim to therefore vital to the continued success of our business, the increase our fundraising and donation total housing market as a whole and therefore the UK economy. across the combined five-year period to at least In the past year the average selling price for a Bellway home £2 million by July 2021. was £293,054 (2019 – £291,968). As part of our developments, we continue to build a comprehensive range of houses and apartments to give customers the choice of a new home meeting their needs and budget, be they first-time buyers, those looking to move as their families grow or those looking to downsize as their circumstances change. While 6% of our new homes were sold to unassisted first-time buyers (2019 – 7%), 35% were sold

Bellway p.l.c. 48 Annual Report and Accounts 2020 Strategic Report 49 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report Safety the do business and we how principle of is a core Safety the is with Bellway and for works who everyone of wellbeing with all our work We the Company. for priority one number working that safe ensure to and subcontractors employees sites, our and embedded on all of promoted are practices inspections formal and talks, informal toolbox training, utilising the COVID-19 Given best practice. the sharing of and unable were Awards and Safety the NHBC Health pandemic, and social distancing closures as site year, this place take to place. take to judging and accurate fair prevented RIDDOR seven- our has seen on safety focus continued Our 100,000 incidents per 203.12 to fall incident rate reportable day that in a row year the fourth (2019 – 324.87), operatives site also consistently We this rate. reduced successfully have we the NHBC health and on average the industry outperform (2019 – 0.856). 0.714 of score a achieving incident rate, safety Bellway continues to work to become a more diverse and diverse a more become to work to continues Bellway named Financial were we year this and organisation inclusive 700 286 out of ranking 2020, Leaders Times Diversity groups listening employee Our Europe. across companies suggestions being of with a range meet to continued have for patterns working including the Company, by adopted incorporating practices working flexible more sales advisers, to employees all new visit inductions for and site hours’ ‘core the business. In addition, our of understanding gain a better on mental health, has focused wellbeing on employee work year. the in trained Aiders First Health with 160 Mental the business has had on that COVID-19 the impact With in business activity the reduction months, the past few over in a and resulted business model our of a review to had led being put at riskthe business across roles of small number around by roles reduce to expect we Overall redundancy. of and natural consultations fall following this may although 170, the new in early be complete to this expect we attrition and employee our year the past this, over Despite year. financial when (2019 – 22.4%), 17.2% 20.8% to has fallen rate turnover the redundancies. the impact of removing ensuringto committed are we employer a responsible As fairness, considerationwith treated people are our that all of policies and provide of a range operate we and and respect, allto provided equal opportunities are ensure to training including modern employees, and prospective existing policies are These training. and inclusion and diversity slavery to concerns any report may and staff website, on our listed via procedure SpeakUp our through or HR department our an independent provider. RIDDOR 203.12 (37.5%) ‘The Economic Footprint of House Building in England and Wales’ (July 2018), prepared for the HBF by Lichfields. by the HBF for prepared 2018), (July Wales’ in England and Building House of Footprint Economic ‘The

1 Employees high-quality delivering for reputation continued Our depends upon service customer homes and exceptional we year the past In and subcontractors. employees our people (2019 – 2,980). 3,119 of an average employed directly via with Bellway work who thousands the in factor we When to jobs connected in derived or and suppliers, subcontractors and 23,400 19,700 that between estimate we operations, our in a role whom play all of Bellway, by supported people are the business. of success the continuing Bellway the industry, skills shortage in the continuing With of the number has increased and future the for is investing an – 183), 258 (2019 to trainees and graduates apprentices, member be an active to continue we 42%, and of increase workforce our 5% of maintaining over 5% Club’, ‘The of two-year new Our roles. in developmental employed launched With Us’ Built Careers ‘Great Programme Graduate a range across working graduates with 38 new year, this disciplines.of to those customers requiring additional help from the various various the additional help from requiring customers those to – 36%), important government schemes (2019 Buy to Help support home ownership. to mechanisms buyers first-time to sold were homes our 27% of total, In families individuals and 2,041 (2019 – 30%), representing the property on step first their get to helped whom Bellway (2019 – 3,258). ladder and diverse mixed balanced, create to drive our part of As affordable incorporate to continued have we communities, our 22% of year this and developments housing into housing providers affordable to sold new homes were (2019 – 22%). Corporate Responsibility continued

Charitable engagement Looking forward This year we have continued our support for local and In the coming year work will continue on our existing and national charities, as well as the communities in which we new targets, and more details on our 2020 performance can develop. This is the right approach for a responsible company be found on our website: www.bellwayplc.co.uk/corporate- to take and our aim to support those sections of society responsibility. less fortunate than ourselves remains a key aspect of our Some of our key objectives for the coming year are approach to CR. outlined below: We continued our support for Cancer Research UK (‘CRUK’), • Continue work on reducing carbon emissions by 10% our national charity partner, as we work towards our by 2023. target of £2 million in fundraising and donations by 2021. Our support for CRUK is more important than ever, with the • Fit electric vehicle charging points as standard in 50% of charity forecasting a £150 million fall in income as a result of new homes by 2023. COVID-19, funds that would normally have been spent on research into cures for cancer. The COVID-19 ‘lockdown’ • Reduce employee business mileage by 10% through severely impacted on our employees’, opportunities to remote meeting technology and a working from fundraise in the second half of the year, and as a result home policy. £140,134 was raised by employees, subcontractors and • Retain our HBF ‘5 star homebuilder, status’. suppliers (2019 – £283,841). When combined with Bellway’s ‘double matching’ of employee fundraising, the total raised • Implement an employee engagement survey and achieve this year was £239,820. To support CRUK in this difficult time a 60% response rate. Bellway has made an additional donation of £88,673 to the • Increase our fundraising and donation total for CRUK to at charity, lifting the full year total to £328,493 (2019 – £494,812). least £2 million. This brings the total raised over the life of our four-year partnership to £1,603,672. 2020 has been another successful year in terms of CR performance, notwithstanding the additional challenges that We also support our employees when they undertake the COVID-19 pandemic has brought. We remain committed personal fundraising for charities close to their hearts to operating our business in a responsible and sustainable with matched funding from the Company, and this year way, meeting the needs of our customers and shareholders employees have raised an additional £110,551, slightly up on while also delivering benefits to our wider stakeholder groups. last year despite the COVID-19 ‘lockdown’ (2019 – £107,895). Non-financial information statement Our divisions have also continued to support charities and community groups local to their operating area, with some The table below identifies the pages of this Annual Report specific focus on the NHS, local food banks and other where we discuss the information required to comply charities supporting communities during the pandemic. with the Non-Financial Reporting Regulations set out in In total, across all our charitable activities, Bellway, our sections 414CA and 414CB of the Companies Act 2006. employees, subcontractors and suppliers have raised and Relevant policies are available on our website, together with donated a total of £537,338 to good causes this year (2019 – our Economic and Social Impact report. £754,793), of which £237,338 was raised by our employees, subcontractors and suppliers (2019 – £391,736). Non-financial information Pages Environmental matters 44 to 45 Employees 13, 17, 22 and 49 Social matters 48 to 49 Human rights 22, 47 and 49 Anti-bribery and corruption 47 Risks 36 to 42 Business model 16 to 22 Non-financial KPIs IFC, 18 to 22

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

Jason Honeyman Group Chief Executive

19 October 2020

Bellway p.l.c. 50 Annual Report and Accounts 2020 Governance 51 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report

osition, Succession and Evaluation and Succession osition, uneration Report uneration ependent Auditor’s Report Auditor’s ependent airman’s Statement on Corporate Governance dit, Risk and Internal Control ard Leadership and Company Purpose d Company Secretary Company d rectors’ Report vision of Responsibilities of vision Ind Rem Di Di Comp Au Board of Directors and Group General Counsel an Ch Bo

97 60 93 56 58 72 Contents 52 54 62 Governance Board of Directors and Group General Counsel & Company Secretary

Denise Jagger Paul Hampden Smith Senior Independent Chairman Non‑Executive Director

N* R A N R

Appointed to the Board on 1 August 2013. Appointed to the Board on 1 August 2013. Background and experience Background and experience Paul, a Chartered Accountant, was appointed as Chairman Denise, a solicitor, was appointed as a non-executive director on 12 December 2018, having previously been a non- on 1 August 2013 and became senior independent non- executive director since 1 August 2013, and Audit Chair since executive director on 1 November 2018. Until 30 April 2020, 1 February 2014 until his appointment as Chairman. Paul was Denise was a consultant at Eversheds-Sutherland LLP , Group Finance Director of Travis Perkins plc from 1996 until having been a partner from 2004 to April 2019. Previously she his retirement in February 2013, having worked for Travis was Company Secretary and General Counsel at ASDA Perkins since 1988. He was previously senior independent Group plc, and prior to this she worked in corporate finance non-executive director and Chairman of the Audit Committee with Slaughter and May. Denise’s previous non-executive of Clipper Logistics plc and a non-executive director and directorships include Redrow plc and SCS Upholstery plc. Chairman of the Audit Committee of Pendragon PLC and Redrow plc. Other appointments CLS Holdings plc – non-executive director, Chair of Other appointments the Remuneration Committee and a member of the Grafton Group plc – senior independent non-executive Audit Committee. director, Chairman of the Audit & Risk Committee and a Pool Reinsurance Limited – non-executive director and member of the Nomination and Remuneration Committees. Chair of Remuneration Committee and Nominations and Delapre Abbey Preservation Trust – Treasurer and Chair of the Conflicts Committee. Finance Committee. University of York – Chairman and pro Chancellor. Cumberland Lodge, Windsor Great Park – Chairman of the St Giles Trust – Chairman. Audit Committee. Chairman of Dallington Lawn Tennis Club.

Jason Honeyman Keith Adey Group Chief Executive Group Finance Director

NR* NR

Appointed to the Board on 1 September 2017. Appointed to the Board on 1 February 2012. Background and experience Background and experience Jason commenced employment with the Group in January Keith, a Chartered Accountant, joined Bellway in December 2005 as Managing Director of the Thames Gateway division, 2008 as Group Chief Accountant, becoming Group Finance becoming Southern Regional Chairman in December 2011. Director on 1 February 2012. Prior to joining Bellway he Jason joined the Board as Chief Operating Officer and was worked at KPMG and Grainger plc. promoted to Group Chief Executive on 1 August 2018.

Bellway p.l.c. 52 Annual Report and Accounts 2020 Governance 53

Bellway p.l.c. Bellway R

N

A* Ian McHoul Ian Independent Director Non-Executive Annual Report and Accounts 2020 Accounts and Annual Report ee ee on Non-Executive ation Committee es Committee Chair es Committee ectors’ Remuneration ectors’ Audit Committee Audit Committ Nomination Remuner Committ Board Dir Denot

R A N NR Other appointments Other plc – Chairman. Group Vitec The director, independent non-executive Britvic plc – senior the of and member Committee Audit the Chairman of Committees. and Remuneration Nomination and director – non-executive P.L.C. Brewery, & Co’s Young Committee. Audit the Chairman of Key: * Appointed to the Board on 1 February 2018. on 1 February the Board to Appointed and experience Background as a non- the Board to appointed was an accountant, Ian, as 2018, and appointed on 1 February director executive 2018. on 12 December Committee Audit the Chairman of the Inntrepreneur of Director & Strategy Finance was He at then served 1998 and to 1995 from Limited Pub Company as Finance 2008, first to 1998 plc from & Newcastle Scottish Finance as Group and later Courage Scottish of Director he 2017 to 2008 plc. From & Newcastle Scottish of Director plc. Wheeler Amec Foster of Officer Financial Chief was plc Foods Premier of director also a non-executive was He April 2013. to 2004 July from

R*

N

A Simon Scougall Counsel General Group Secretary & Company Jill Caseberry Independent Director Non-Executive Appointed to the Board on 1 October 2017. 2017. on 1 October the Board to Appointed Background and experience Background Counsel & General Group appointed was Simon, a solicitor, 2016. Simon joined Bellway in February Secretary Company the Group within positions 2011 and has held senior in March 20 has over He Director. Commercial Group that of including either working sector, the housebuilding in experience years’ practice. clients in private for in-house or Appointed on 1 February 2016. on 1 February Appointed Halfords Group plc – non-executive director, Remuneration Remuneration director, plc – non-executive Group Halfords andAudit the of and a member Chair Committee Committees. Nominations of and a member director plc – non-executive C&C Group Committee. the Remuneration – non-executive Limited Company Brewery Austell St. and Nomination Audit, the of and a member director Committees. Remuneration Other appointments Other Background and experience Background director as a non-executive the Board to appointed was Jill and sales, marketing Jill has extensive 2017. on 1 October blue- of a number across management experience general Foods. Premier and PepsiCo including Mars, chip companies Chairman’s Statement on Corporate Governance

The COVID-19 pandemic has had an unprecedented impact across the construction sector, the wider economy and our communities. At the height of the pandemic 75% of the Company’s workforce were furloughed on 100% pay and no Government support has been claimed under Paul Hampden Smith the Coronavirus Job Retention Scheme. Chairman

Dear Shareholder COVID-19 Charitable giving The COVID-19 pandemic has had an unprecedented impact As a responsible business we are proud to support both across the construction sector, the wider economy and our the local communities where we build and less fortunate communities. At the height of the pandemic 75% of the sections of society. During the year the Company gave away Company’s workforce were furloughed on 100% pay and no the life-changing prize of a fully furnished three-bedroom Government support has been claimed under the CJRS. The home to a deserving family with the help of Ant and Dec’s Board was pleased to safely welcome employees back to Saturday Night Takeaway. The home on the Moorfields work from early May 2020. In recognition of the challenges development was given to the Williams family in recognition faced by the Company during this time the Board made the of their charitable work establishing ‘Darcey’s Dream – My decision to take a 20% pay cut for two months. More details Family and Siblings Matter’ after the devastating loss of their on the Company’s response to COVID-19 can be found on baby daughter in 2017. The charity offers a range of support pages 10 to 11. services and counselling for bereaved families, with a special Diversity focus on siblings. The Board is committed to making appointments on merit Whilst the show aired there was a 112% increase in hits to against objective criteria and the Board strongly supports the website and the Board were delighted with the positive the principle of boardroom diversity in all its aspects. I am response from staff and the sense of pride they felt in working pleased to report that women continue to make up 33% for Bellway. of our Board. The Board also recognises the importance The Company continues to support its national charity of diversity beyond gender diversity and is aware of the partner Cancer Research UK and has raised £1.6 million recommendations of the Parker Review and these will be over the last four years towards the £2 million target by taken into consideration with any future Board appointments. August 2021. More details on the Company’s contribution to Our Board Diversity Policy is available to view on our website. charitable causes can be found on page 50. The Board continues to focus on gender diversity at all levels of the Company and 2020 saw the launch of Bellway’s first Board effectiveness and evaluation Graduate Programme. Across all disciplines, 38 graduates In line with the UK Corporate Governance Code, we joined the Company, of which 50% were women and 13% undertake a formal and rigorous annual evaluation of our were from a BAME background. own performance and that of our Committees and individual directors. We operate a three-year cycle of Chairman’s, Group Training General Counsel and Company Secretary’s and externally As part of the Company’s risk culture and focus on Health facilitated reviews. Bellway’s last externally facilitated and Safety the Board is committed to ensuring the workforce evaluation took place in 2017, and for 2020 we appointed are provided with sufficient training and development to Trusted Advisors Partnership (‘TAP’), a specialist consultancy ensure they maintain the required levels of competence. which has no other business or connection to the Group or During the COVID-19 pandemic the delivery of training individual directors, to facilitate the evaluation. was moved online with 29,832 hours of training being completed in April and May 2020, including NHBC webinar training. In addition, the Site Management Programme, Apprenticeships and Pilot Leadership and Management Programme have continued to operate. More details on the Company’s employee programmes can be found on page 22.

Bellway p.l.c. 54 Annual Report and Accounts 2020 Governance 55 Bellway p.l.c. Bellway Progress Strategy is discussed at every is discussed at every Strategy meeting and at our Board work This day. annual strategy priority top be a to continues the Board. for survey employee first The launched successfully was and Results 2020. August in action points for proposed the to will be put approval year. the in later Board has beenteam The with an additional restructured and a new resource of level hasAudit and Risk of Head been appointed. a standing agenda Now report item with a separate of Head the Group from Care. Customer Annual Report and Accounts 2020 Accounts and Annual Report Board evaluation 2018/19 update evaluation Board Action on focus to Continue priority. top as a strategy survey employee Introduce the Board. to with feedback Risk for resource Additional Audit. and Internal of visibility Improved complaints. customer We also consulted with a number of shareholders on our on our shareholders of number with a also consulted We updates regular receives Board The Policy. Remuneration on views and analysts’ investors’ on advisers our from the Company. progress with our up-to-date also kept are Shareholders and Annual Report the through year the throughout fullthe for Exchange the Stock to announcements keep To updates. trading and results year and half year an additional provided we informed the shareholders the the impact of around year this update trading pandemic. COVID-19 to AGM, the at questions for is available whole Board The attend.to invited are investors private which institutional and 98% of over AGM the last that at report to I am pleased to put the resolutions of cast in favour were cast votes the the Board. by shareholders and I Director Independent Non-Executive Senior The and with current discuss issues to available always are when as and and institutions, shareholders prospective updated is regularly whole Board the In addition, required. and views and investor meetings on shareholder at Board the Group and Executive Chief the Group activities by Director. Finance on our is available shareholders for information Further www.bellwayplc.co.uk. at website Smith Hampden Paul Chairman 2020 19 October ely attendance and observation at the at observation and attendance ely d and Chairman’s questionnaires and the and questionnaires d and Chairman’s cess to Board and Committee papers and minutes to and minutes papers Committee and Board to cess Board and Committee meetings was not possible due to possible due not was meetings and Committee Board held were virtual meetings individual restrictions, COVID-19 and director Board and non-executive with each executive Secretary. Company Counsel & General the Group with Chairman’s and SID’s concluding memo from the internal memo from concluding and SID’s Chairman’s the from report the concluding with together 2019 review, in 2017. evaluation last external Ac and its the Board how of understanding TAP’s enhance operate. Committees Whilst unfortunat Main Boar Main

The Company encourages active dialogue with its dialogue active encourages Company The the directors and and institutional shareholders, private institutional and prospective existing both with communicate basis and as requested. on a regular shareholders interest has been increased there COVID-19 of a result As the During the Company. in institutional investors from virtual presentations hosted directors executive our year and shareholders, analysts institutional investors, by attended team management the senior of members with other being present. Shareholder engagement Shareholder I am pleased to confirm that the Board considers that it has considers the Board that confirm to I am pleased of the detailed provisions with year the throughout complied free Code is available, The 2018. July the Code published in Council, online at Reporting the Financial from charge, of 2300. 020 7492 telephoning by or www.frc.org.uk Compliance with the UK Corporate Governance Governance Corporate with the UK Compliance ‘Code’) Code (the TAP reviewed the Board and its Committees’ effectiveness to effectiveness and its Committees’ the Board reviewed TAP fulfil its duties considering: and performance. capability structure, a. Board the support to discussion and review Board of b. Quality strategy. sustainable growth Bellway’s of delivery constituted well is p.l.c Board the Bellway that found was It capable, and engaged experienced, of with a cohort their fulfil to willing able and directors non-executive the Board interest; of conflict any without responsibilities, chaired. well is also the Board and well, operate Committees open and for and allows respectful is constructive, Board The honest discussion and debate. improving further to nuances identified certain report Their the on focusing including performance, the Board’s for pipeline and ensuring an effective strategy term long- An action plan has been put in place succession. executive targets has also set Board The challenges. these address to emerging the rapidly to time allocating more around focused the and succession director ESG agenda, non-executive management. executive senior of development continued Board year’s in last improvement for highlighted areas The totable the set out in made are and progress evaluation the right. • • Having been provided with a comprehensive briefing by briefing by with a comprehensive been provided Having and Company Counsel General and Group the Chairman in March process evaluation an conducted TAP Secretary, involving: 2020, • Board Leadership and Company Purpose Corporate Governance Report

Left to Right: Ian McHoul Denise Jagger Simon Scougall Jason Honeyman Paul Hampden Smith Jill Caseberry Keith Adey

Board of Directors

Audit Nomination Remuneration Board Committee on Committee Committee Committee Non-Executive Directors’ Remuneration

see pages 62 to 71. see pages 60 to 61. see pages 72 to 92. see page 59.

Executive Directors

Group General Counsel Head Office Senior Regional Chairmen and Company Secretary Management Team

Divisional Boards

Bellway p.l.c. 56 Annual Report and Accounts 2020 Governance 57 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report ving executive directors and directors ving executive ategy agreed by the Board. by agreed ategy ormance of management. of ormance ommittees. with the non-executive directors without directors the non-executive with opriate levels of executive executive of levels opriate of financial information and financial controls financial information of ective implementation of Board decisions. Board of implementation ective challenging management. o the development of strategy. of the development o or the Group’s investor relations activities. relations investor the Group’s or the activities of the Regional Chairmen the Regional the activities of the Group including treasury and tax. and treasury including the Group the Chairman informed of all important matters. of the Chairman informed with the Chairman, providing coherent leadership coherent the Chairman, providing with ailable to shareholders. to ailable the annual appraisal of the Chairman. of the annual appraisal the executive directors and the senior the senior and directors the executive ving land purchases within specified limits. within ving land purchases seeing the purchase of strategic land. strategic of the purchase seeing and sales and marketing the health and safety, seeing departments. and risk IT the CR, finance, seeing seeing Group operations. seeing Group companies. subsidiary the activities of seeing plans.seeing divisional expansion eloping budgets and financial plans. viewing the Group’s organisational structure and structure organisational the Group’s viewing ectors and the Group General Counsel and General the Group and ectors Company Secretary. Company Ensuring integrity appr Determining Appointing and remo planning. succession c Serving on Board of the Group, including representing the Group to the Group representing including Group, the of financial shareholders, government, suppliers, customers, the and the community the media, institutions, employees, public. general Over Over departments. technical and the financial strategy and implementing Devising policies of Dev f Responsible Over the Chairman, executive for as a sounding board Acting dir Being av Leading meetings Holding the Chairman present. Constructively t Contributing the perf Scrutinising robust. are management risk of and ensuring systems Counsel and Company General and Group director remuneration. Secretary Implementing the str Implementing Leading the of running the day-to-day in team management business. Group’s the eff Ensuring Re changes as appropriate. recommending Supervising their overseeing management, and divisional senior planning. and succession development Over Over Appro Over Together Keeping

• • • • • Director Finance Group • • • • Director Independent Non-Executive Senior • • • directors Non-executive • • • • • • Group Chief Executive Group • • • • • • • • • • y complies with thewith complies y e communication with shareholders. e communication d’s agenda. d’s ectors receive accurate, timely and timely accurate, receive ectors ective conduct of Board meetings and Board of conduct ective the views of shareholders are communicated are shareholders of views the the evaluation of the performance of the Board, its the Board, of the performance of the evaluation the Board and ensuring its effectiveness. the Board aging constructive relations between the executive the executive between relations aging constructive ving land purchases over specified limits in over ving land purchases orporate governance throughout the Group and the Group throughout governance orporate seeing the induction of any new directors and the and directors new any the induction of seeing conjunction with the wider Board. wider the with conjunction Encour General the Group and directors and non-executive Secretary. Counsel and Company Appro committees and individual directors. committees Over directors. existing of development that Ensuring whole. as a the Board to clear information. clear Ensuring effectiv the eff Ensuring the and all directors of contribution the effective facilitating Secretary. Counsel & Company General Group Leading Ensuring that the Compan that Ensuring Leading the Boar Setting the dir Ensuring Promoting the highest standards of integrity, probity probity integrity, of standards the highest Promoting and c thethat including ensuring level at Board particularly top. the is set from tone cultural correct Code and Governance Corporate the UK of requirements governance. of the highest standards to adheres

• • • • • • • • • • • Chairman • Leadership six directors of consists the Board this report of the date At on details appear and other whose names, responsibilities executive are the directors of two 53. Currently to pages 52 non-executive. are and four the necessary that aims, ensures the strategic sets Board The in are people and materials) (including finances, resources and also these objectives meet to the Company for place the Company’s defines It performance. management reviews itsto that its obligations and ensures and standards values and met. understood are shareholders which structure the following has put in place Board The the Group of leadership entrepreneurial provide to it allows a through matters operational for authority delegate to and which enable controls, prudent and effective of framework be assessed and managed. to risk The Board acknowledges the importance of, and isthe importance acknowledges Board The and maintaining a the principle of, achieving to committed a and in promoting governance corporate of high standard the Group. within culture positive good governance, of the Principles applied have We the Supporting and Principles the Main including both explanations the Code. Further with complying by Principles, Principles and Supporting Principles the Main how of the and in below set out been applied are have Report. Remuneration Statement about applying the Principles ofPrinciples applying the about Statement vernance good go Division of Responsibilities

Group General Counsel & Company Secretary Board activity during the year • Supporting the Chairman and Group Chief Executive in The Board meets formally and informally during the year to fulfilling their duties. consider strategy, performance, risk, major land acquisitions, potential conflicts of interest and reports from senior • Keeping the Board regularly updated on corporate employees and external advisers. governance, legal, commercial and HR matters. One meeting a year is devoted entirely to the consideration • Responsible for legal compliance throughout the Group of strategy where the Board agrees the way forward and including ensuring policies and procedures are maintained ensures that the necessary financial, human, land and other and updated on a regular basis. resources are in place to meet its objectives. Areas focussed • Providing support to the Board and committees. on during the strategy day were the seven key strategic priorities of: • Overseeing the legal, company secretarial, HR and Group Office land and planning departments. 1. Strengthening the brand. • Managing the Group’s external legal panel. 2. Volume growth. Board effectiveness 3. Driving down costs. All directors have access to the advice and services of the 4. Appointing the right people. Group General Counsel and Company Secretary and his 5. Focus on return on capital employed. department. All of the directors may take independent professional advice at the Group’s expense where they judge 6. Value creation through capital and dividend growth. it necessary to discharge their responsibilities as directors. 7. Maintaining a flexible capital structure. In accordance with the Code, all of the directors will retire from the Board and offer themselves for re-election or Each year we hold separate annual conferences for the election at the forthcoming AGM. None of the executive divisional Managing Directors, Finance Directors, Sales directors hold external directorships. Directors, Technical Directors and Commercial Directors and Planning Managers which are attended by the The Board, its committees and the individual directors executive directors or members of the Group Office senior are subject to annual performance evaluation and all management team. directors are subject to annual re-election by shareholders. The Board regularly reviews the directors’ other interests and We also host informal Board dinners where senior appointments to ensure that there are no conflicts of interest. management meet members of the Board. The Chairman meets with executive management and individual directors The Chairman is responsible for leading the Board and on a regular basis outside of Board meetings. This process ensuring it operates effectively. The directors possess an allows for two-way discussion enabling the Chairman appropriate balance of skills and experience to meet the to act as necessary to deal with any issues relating to requirements of the business. Board effectiveness. During the year there were seven full Board meetings, The executive directors and Group General Counsel & including one meeting dedicated almost entirely to strategy. Company Secretary regularly visited the divisions during Additionally, four formal and several informal Board meetings the year and the Chairman also visited some divisions and were arranged in respect of the COVID-19 pandemic. met separately with the Regional Chairmen. The Board also received presentations from the Regional Chairmen and The number of committee meetings are set out in each certain Group function heads on the opportunities and committee report. There were no absences from any Board challenges they face. or committee meetings. Each non-executive director separately visits at least one The non-executive directors formally met twice during the division during the year, independent of the executive year, including once without the Chairman present. directors, and reports their key findings and observations at The non-executive directors meet to review the performance the next Board meeting. of management and they also meet without the Chairman The meetings with operational management ensured that being present to appraise his performance. This latter meeting the Board’s standards and values for integrity and honesty are is chaired by the Senior Independent Non-Executive Director. disseminated. Each of our divisions has its own management Conflicts of interest team and staff who manage and take pride in the success of their own operational business within the strategy set by Pursuant to the provisions of the Companies Act 2006 the Board. In this way we create a culture that motivates and relating to conflicts of interest, the Board has put in place a rewards our colleagues. We promote a supportive culture register to deal with the notification, authorisation, recording that enables our employees to develop their talents and skills. and monitoring of directors’ interests and these procedures have operated throughout the year. The Board has adopted a schedule of matters that are specifically reserved for its decision, which includes strategy and management, structure and capital, financial reporting and controls, internal controls covering both financial and operational areas of the business, land acquisition above specified limits, contracts and agreements, communication, Board membership and other appointments, remuneration, delegation of authority, corporate governance matters, Group policies and other miscellaneous items.

Bellway p.l.c. 58 Annual Report and Accounts 2020 Governance 59 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report The Board committees Board The and Nomination Audit, constituted has formally Board The these for reference of terms The Committees. Remuneration the Group from on request either available are committees on our or AGM the at Secretary, Counsel & Company General www.bellwayplc.co.uk. website: certain perform to formed are the Board of committees Other when required. specific functions as and committees Board the each of carried out by work The the committee of the reports is described in year the during which follow. chair on Non-Executive Committee Board s’ Remuneration Director Directors’ on Non-Executive Committee Board The and is directors the executive comprises Remuneration Executive. Chief the Group by chaired it met on year Last year. a meets at least once committee This appointment of terms and the fees review to one occasion the Chairman) (excluding directors the non-executive of Counsel & General the Group from advice and received consultants remuneration and external Secretary Company when required. Training and development Training onupdates and training appropriate receives Board The and responsibilities. its role to relevant matters various the performance as part of reviewed needs are Training basis. and on an ongoing process evaluation needstraining no specific evaluation year’s this Following identified. were sessionstraining external attend directors Non-executive of and members non-executives for designed specifically when required. as and committees Board independence and balance Board are Executive Chief and Group Chairman of roles The ensuring responsibilities of division clear with a separate, the head of at and authority responsibility of a balance the Group. directors, its non-executive all of considers Company The thebe independent, as defined in to the Chairman, including has, directors the independent non-executive Code. Each of management and has no of independently times, acted at all or his of the exercise affect materially would that relationship independent judgement and decision-making. her is Denise director independent non-executive senior The queries or any raise may whom shareholders with Jagger, have. may they concerns she is interested that he or considers director any Whenever is or the Group which to arrangement or contract in any such No the Board. to is given due notice a party, be may year. the arisen during have instances reports on health and safety matters on health and safety reports reports on KPIs from the Group the Group from on KPIs reports recommendations from the from recommendations of reports from the Group Chief Executive, Group Group Executive, Chief the Group from reports of valuation. val of tax strategy. of val val of preliminary announcement, interim results and results interim announcement, preliminary of val val of revised terms of reference for for reference of terms revised of val expenditure. IT major of val programme. insurance the Group’s of val Trafficking and Human Slavery the Group’s of val 2018/19. for Accounts and Annual Report the of val val of the updated Group Anti-Bribery and Anti-Bribery Group the updated of val val of major land purchases. major of val agreements. facility bank of val and internal control. and internal ommending the final dividend for 2018/19. dividend for the final ommending eiving presentations from Finance, HR, IT, Land, HR, IT, Finance, from eiving presentations eiving presentations from three of the four Regional Regional the four of three from eiving presentations ategy. trading updates. trading Rec Appro Board committees. Board Appro 2019. for Statement Appro Appro Appro Policy. Corruption Appro Appro Appro Rec the divisions under of the performance Chairmen on responsibility. their Rec Head Technical and Sales and Marketing Procurement, departments. Office Considering regular Executive. Chief the Group from Appro e Board Appro Risk of Consideration Scrutiny Counsel & Company General Group Director, Finance meeting. management at each Board and senior Secretary Str Considering regular Executive. Chief committees. Board

• • • • • • • • • • • • • • • • • • • In addition, it has a series of matters that are dealt with at dealt are that matters it has a series of In addition, and an operational both meetings including Board regular acquisitions, land major a financial review, review, a strategic HR, reporting risk, health and safety, projects, major control and internal governance corporate requirements, issues). whistleblowing (including any Office, Group from and reports presentations also receive We advisers and external and divisional management regional the from a report takes also Board The year. the throughout on legal, Secretary Counsel & Company General Group at each matters governance and corporate HR, commercial meeting. Board updates receive the directors meetings Board In between Counsel & General the Group or the Chairman from significant matters any them of advise to Secretary Company its performance. or the Group affecting included: the Board carried out by work the year the During • Nomination Committee Report Composition, Succession and Evaluation

The Committee’s focus during the year was to develop, with support from the executive management and Group Human Resources, the succession plan for those Paul Hampden immediately below Board level. Smith Chairman of the Nomination Committee

Membership and meeting attendance Responsibilities and terms of reference

Number of The main areas of the Nomination Committee’s (the meetings ‘Committee’) responsibilities are: Date appointed to attended during Director the Committee the year • To review the structure, size and composition of the Paul Hampden 1 August 2013, appointed 2/2 Board, in accordance with the Board’s Diversity Policy, Smith (Chairman) Committee Chairman on and recommend to the Board any changes it considers 1 November 2018 appropriate. This encompasses membership of the Board committees and the reappointment, if appropriate, of non- Denise Jagger 1 August 2013 2/2 executive directors at the end of their term of office. Jill Caseberry 1 October 2017 2/2 • To consider succession planning not only within the Ian McHoul 1 February 2018 2/2 Board but also immediately below Board level and ensure appropriate plans are in place. Main focus in 2019/20 • To identify candidates to fill Board vacancies and nominate • To monitor the effectiveness of the recent appointments these to the Board for approval. Appointments to the Board and role changes at Board level, including my role as are made on merit using a formal, rigorous and transparent Chairman of the Board. process against objective criteria recommended by • To continue to develop, with support from the executive the Committee. These criteria take into account the management and Group Human Resources, the skills, knowledge and experience of existing members succession plan for those immediately below Board level. of the Board and the importance of diversity, in all its aspects, within the Board. The Committee is aware of • To increase the focus on diversity and inclusion throughout the recommendations of the Parker Review and will take the Group. these into consideration when making future Board Focus areas for 2020/21 appointments. The appointment of a non-executive director is for a specified term and reappointment is not • To continue our work to improve diversity within the automatic, rather it is made on the recommendation of Group, taking into account the recommendations from the the Committee. Parker Review. • To carry out an annual performance evaluation of • To continue to develop, with support from the executive the Committee and review the results of the Board management and Group Human Resources, the performance evaluation in relation to the composition of succession plan for those immediately below Board level. the Board. The Committee meets at least twice a year and operates under its own terms of reference. These have been agreed by the Board and are available at www.bellwayplc.co.uk/ investor-centre/governance/committees. The members of the Committee are shown in the table to the left.

Bellway p.l.c. 60 Annual Report and Accounts 2020 Governance

6 % <1 61 Total

6 No. Total

% 33 Bellway p.l.c. Bellway Female

2 No. Female

% 67 Male Annual Report and Accounts 2020 Accounts and Annual Report

4 No. 139 80 34 20 173 Male 1,889 70 821 30 2,710 94 2,032 70 857 30 2,889 100 Paul Hampden Smith Hampden Paul Chairman 2020 19 October Total Other employees Other Senior managers Senior Board of directors of Board Focus in 2020/21 Focus Graduate the 2020 Bellway of success the on Building the attracting on has started work Programme, Recruitment this of part As 2021 intake. the September for best graduates recruit to the opportunity taking are we selection recruitment possible. where candidates and BAME female and person job descriptions and create will review We include (b) inclusive, more them (a) make to specifications into females more attract to language neutral gender the such as barriers, certain remove the business and (c) the of regardless hold a driving licence to requirement applicants potential discouraged have which may role, with disabilities. into women more recruit to will run a national campaign We Group. the side of the construction newsletter staff studies in our case a series of running are We their progressing who are employees on female focusing the business. within careers profile and employee Director as at the Group split in the gender table shows following The 2020: July 31 iversity and iversity Working Policy Working Policy year the Committee continued to develop, develop, to continued the Committee year with the Regional Chairmen and Managing Chairmen and the Regional with cessful launch of the Bellway Graduate Recruitment Recruitment Graduate the Bellway launch of cessful , diversity and inclusion e-learning has been issued and inclusion e-learning , diversity – Flexible – Flexible – Equality oup HR Director is a member of the HBF Equality, Equality, the HBF of is a member oup HR Director ve introduced Personal Protective Equipment (‘PPE’) Equipment Protective Personal introduced ve ve been working with www.workingmums.co.uk. www.workingmums.co.uk. with working been ve the Group recruitment panel to include partnersto panel recruitment the Group ollowing policies have been updated: policies have ollowing er the success of the flexi-time trial the initiative has the initiative trial the flexi-time of the success er eparation for the launch of the first Bellway Employee Employee Bellway the first the launch of for eparation Diversity and Inclusion Group that was formed to formed was that and Inclusion Group Diversity to is doing the housebuilding industry what understand and inclusion. diversity improve the Also during We ha We high-vis jackets, namely females, designed for specifically trousers. blouses and Gr The management and the executive with support from those plan for the succession Resources, Human Group to will look exercise This level. Board below immediately possible. where inclusion and diversity promote We ha We Working plans and retention progression their develop to Directors within each division, promoting employees the key for possible. where diversity Aft and at Group staff all office-based out for been rolled divisional offices. of Use diversity. on improving focus with a particular and senior professional advertise to this site will use We and come to women more encourage to in order roles Bellway. for work Pr f The Equality training the mandatory part of and forms employees to their on commencing undertake must employee a new trainingthis completed have employees of 99.6% role. new them. to this being issued of months three within D at least one Each division has nominated NCFE completing All champions are Inclusion Champion. qualification. and Diversity 2 Equality Level the employee every gave survey The Engagement Survey. Bellway. for working on feedback provide to opportunity The suc The across the Group join 38 graduates saw Programme all disciplines.

• • • • • • •

• • • • Activities in 2019/20 Activities the has been on year the during focus Committee’s The within and diversity engagement improve to action plan the Group. • Audit Committee Report Audit, Risk and Internal Control

I consider the Committee to be effective and provide a robust and independent oversight over the financial reporting, internal control and risk and external audit activities of the Group.

Ian McHoul Chairman of the Audit Committee

Membership and meeting attendance I am pleased to provide you with our Audit Committee Report to provide you with an update of the work undertaken by the Number of meetings Audit Committee (the ‘Committee’) during the period. Date appointed to attended during Director the Committee the year The Committee supports the Board in achieving its governance framework, with its principal activities focused Ian McHoul 1 February 2018, 5/5 on the integrity of financial reporting, the quality and (Chairman) appointed Committee effectiveness of internal controls, risk management and Chairman on 12 reviewing the performance of the external auditor. December 2018 Denise Jagger 1 August 2013 5/5 Committee membership and meetings Jill Caseberry 1 October 2017 5/5 The Committee currently comprises three independent non- executive directors shown in the table to the left. I believe Main focus in 2019/20 that between us we have an appropriate and relevant combination of experience and knowledge. • Financial reporting. I am currently Chair of the Audit Committee of both Britvic plc • Internal control and risk management. and Youngs & Co.’s Brewery P.L.C. and was Chief Financial • Audit effectiveness. Officer of Amec Foster Wheeler plc until 2017. The Board considers that I have recent and relevant financial experience • Exceptional items including COVID-19. as required by the Code. As part of the effectiveness review • External audit tender. the Nomination Committee has also confirmed that it is confident that the collective and broad experience of the Focus areas for 2020/21 Committee members enables them to act effectively as an audit committee. • Financial reporting. Further information on the experience and knowledge of the • Internal control and risk management. Committee members is included in the directors’ biographies • Audit effectiveness. on pages 52 and 53. • Oversee transition to new external auditor. The terms of reference require the Committee to meet at least three times a year. During the year there were two additional meetings as part of the external audit tender process, and all members of the Committee attended each meeting. The Chairman, Group Chief Executive, Group Finance Director, Group General Counsel and Company Secretary, Group Financial Controller and Group Head of Risk and Audit attend meetings by invitation. The Committee is supported by the Deputy Group Company Secretary who acts as secretary to the Committee. Representatives of KPMG LLP (‘KPMG’) attended all of the meetings during the year, with the exception of those relating to the external auditor appointment, and also met the Committee independently of management. No significant concerns were raised during these discussions. I also had further discussions, independently of each other, with the Group Finance Director, Group Head of Risk and Audit and KPMG, and reported relevant information to other members of the Committee. Following the external audit tender process, Ernst & Young LLP (‘EY’) were present at the March 2020 and October 2020 meetings to ensure a smooth transition from KPMG.

Bellway p.l.c. 62 Annual Report and Accounts 2020 Governance 63 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report ed the findings of the performance the findings of ed ed a paper produced by management by produced ed a paper eived a Risk and Internal Audit update. Audit and Internal a Risk eived the appointment of the Board to ommended viewed and approved the Slavery and Human the Slavery and approved viewed viewed a paper setting out the external auditthe external setting out a paper viewed management by produced a paper viewed Trafficking Statement 2019. Statement Trafficking the Committee. of evaluation and the Group of auditor external the new as EY beginning on year the financial for Company 2020. August 1 tender process and correspondence that will be that and correspondence process tender parties. various to issued in relation assessment setting out management’s safety with fire risks associated potential to whether and will be performed that work and were and disclosures provisions appropriate the Group, of the financial statements included in note. liability the contingent including re thewith associated risk the Brexit considering chain. supply re rec consider rec re consider

• • • • • • • COVID-19 has impacted the key judgement and accounting judgement and the key has impacted COVID-19 taken the approach of a review has included This areas. treatment the values, land valuations, site to with regards the Group that the presumption and items exceptional of a going concern. remains during occasions met on five the Committee In addition, the October at activities undertaken The year. the financial activities in the Committee’s 2020 meeting concluded ended year the for financial reporting the Group’s to relation 2020. July 31 these at the Committee by main activities performed The described below: meetings are ed and challenged management about wed senior members of the proposed the proposed of members senior wed eived a paper on significant judgemental a paper eived viewed and concluded that the 2019 Annual the 2019 that and concluded viewed in appear to statement viability the draft viewed one-off notable which analysed a paper viewed viewed the final draft of the 2019 Annual Report Annual Report the 2019 of draft the final viewed rec re consider intervie firms participatingtwo the of teams audit external process. in the tender re re balanced a fair, presented Accounts and Report the Group’s assessment of and understandable reports considering after position and prospects CommitteeThe auditor. the external from and Annual Report the 2019 recommended approval. for the Board to Accounts re Accounts. and Annual Report the 2019 management and provided by prepared areas assumptions. their to challenge appropriate year. the during profit that affected items and Accounts, together with a report produced by by produced with a report together Accounts, and on areas findings both their detailed which KPMG and judgements/matters financial reporting key of audit focus. of areas other Measures Performance Alternative the use of or appropriate are they whether and (‘APMs’) relevant. be more would measures GAAP whether

The Committee: The • • • • • Activities Committee: The • • December 2019 December meetings) (two Meeting date Meeting 2019 October Main activities during the year during the activities Main with contact has been in regular Committee The how consider to COVID-19 of the onset management since Responsibilities and terms of reference and terms Responsibilities terms the Committee’s of version comprehensive A at website the Group’s on is available reference of www.bellwayplc.co.uk/investor-centre/governance/ committees. Detailed papers are prepared and circulated in advance in advance and circulated prepared are Detailed papers and KPMG, management both by meetings Committee of to and decisions discussions informed allowing thereby place. take Audit Committee Report continued

Main activities during the year continued Meeting date Activities

January 2020 The Committee:

• received a risk management update from the • assessed the performance of the external auditor, Group Head of Risk and Audit and reviewed the including obtaining an update from KPMG in Risk Management Policy. relation to the general annual Audit Quality Review (‘AQR’) findings the firm had received • received an update on the Internal Audit activities compared to their peers and understanding the undertaken in the previous calendar year and effect, if any, this had on the Bellway audit. provided feedback on the proposed 2020 Internal Audit plan. • reviewed the Independent Auditor Policy. • reviewed the terms of reference of the Committee, • held a private meeting with KPMG. number of meetings and skills and experience of the Committee. • reviewed the Group’s policies and procedures in relation to Whistleblowing, Anti-Bribery and Corruption, Anti-Slavery and Data Protection.

March 2020 The Committee:

• received a paper on significant judgemental • received a Risk and Internal Audit update. areas prepared by management and provided • reviewed changes to the Independent appropriate challenge to their assumptions. Auditor Policy. • reviewed the final draft of the 2020 • reviewed a new policy in relation to the Interim Announcement. recruitment of staff from the external auditor. • reviewed KPMG’s audit plan, including the • held a private meeting with KPMG. proposed Group, subsidiary and divisional materiality for the 2020 audit.

October 2020 The Committee:

• reviewed and challenged papers produced • reviewed a paper which analysed notable items, by management in relation to the impact the both exceptional and non-exceptional, that COVID-19 pandemic has had on key judgements affected profit during the year and provided and accounting areas. These included a review of challenge of the treatment of these. the approach taken with regards to site valuations, • considered and challenged management land values, the treatment of exceptional items about the use of APMs and whether they are and the presumption that the Group remains a appropriate or whether GAAP measures would be going concern. more relevant. • reviewed the final draft of the 2020 Annual Report • considered a paper produced by management and Accounts, together with a report produced by setting out management’s assessment in relation KPMG which detailed their findings both on areas to potential risks associated with legacy building of key financial reporting judgements/matters and safety improvements and work that will be other areas of audit focus. performed and whether appropriate provisions • reviewed and concluded that the 2020 Annual and disclosures were included in the financial Report and Accounts presented a fair, balanced statements of the Group, including the contingent and understandable assessment of the Group’s liability note. position and prospects after considering reports • reviewed and approved the Slavery and Human from the external auditor. The Committee Trafficking Statement 2020. recommended the 2020 Annual Report and Accounts to the Board for approval. • received a Risk and Internal Audit update. • reviewed the draft viability statement to appear • considered the findings of the performance in the 2020 Annual Report and Accounts, evaluation of the Committee. together with the supporting assumptions and financial forecasts. • received a report from KPMG on the outcomes of the Kingman, Brydon and CMA consultations into • received a paper on significant judgemental the audit market. areas prepared by management and provided appropriate challenge to their assumptions, • held a private meeting with KPMG. including what is exceptional.

Bellway p.l.c. 64 Annual Report and Accounts 2020 Governance 65 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report y building safety improvement provision (new); and (new); provision improvement safety building y eptional items (new). items eptional Legac Exc

In addition, the Committee considers the carrying value value the carrying considers the Committee In addition, a significant financial the Company by investments of matter. reporting the action and considered the matters sets out table below The to in relation year the during the Committee by performed issues. judgements and financial reporting these key • • Action performed by the Committee performed by Action The Committee understands the Group’s revenue and gross profit recognition recognition profit and gross revenue the Group’s understands Committee The and controls. systems the related and policy management setting by produced paper a reviewed the Committee year the During periods. reporting this around with and adherence policy recognition the revenue out profit gross surrounding controls and systems the existing outlined Management these controls, discussed Committee The process. valuation the and recognition appropriate. where challenging management undertaken have they work the the Committee to explained auditor external The gross recognition, revenue surrounding and controls the systems to in relation the of an explanation and provided process valuation the and recognition profit a summary also reviewed Committee The performed. testing detailed substantive the design, testing work their findings from their KPMG explaining by prepared and controls systems the Group’s of effectiveness implementation and operating process. valuation the and recognition revenue to pertaining COVID-19, to due sites construction of the ‘lockdown’ during year, the current In been expensed have WIP to be capitalised in normally would that costs certain details Further revenue. housing and other of profit the gross within and included section. expense the exceptional within included are the Committee auditor, external the management and with enquiries Following to in place controls and internal systems appropriate are there that concluded thethat and and costs, selling prices actual and forecast both assess and quantify applied in and has been properly is appropriate policy recognition profit Group’s these financial statements. or development and work work and development or ecognition; ern (new); Going conc Cost of sales r Cost of land held f Carrying amount of in progress;

Cost of sales recognition (Group) Cost of sales recognition considered Matters sales of of cost Pre-exceptional on £1,803.2 million has been recognised sales Cost of revenue. housing and other housing sales is recognised completed for whole site/phase the latest based on the site/ of as part which is derived margin, valuations These process. valuation phase the life throughout frequently updated are actual both and include site/phase the of and land costs prices, selling and forecast and costs forecast The costs. construction inherently and are estimates are revenues changes in potential to due uncertain conditions. market Key financial judgements, issues or or financial judgements, issues Key reporting matter significant financial • Financial reporting Financial matters reporting financial and key Significant financial key the believe they that confirmed Committee The are: the Group for judgements and issues reporting • • Audit Committee Report continued

Key financial judgements, issues or Action performed by the Committee significant financial reporting matter Carrying amount of land held for development and work in progress (Group)

Matters considered Land and work in progress are the most The Committee understands the Group’s methodology in reviewing the carrying significant assets on the Group’s balance value of the Group’s land and work in progress and the surrounding controls. sheet and at 31 July 2020 had a book Management provided a summary of the work undertaken which was considered value of £3,712.3 million. The carrying by the Committee. value of land and work in progress is The external auditor explained to the Committee the work they performed affected by the profit recognition policy in relation to the carrying value of the Group’s land and work in progress. of the Group, as set out to the left. This included the procedures identified in relation to profit recognition and a In addition, all inventory is held at the review of the latest site/phase valuation for all sites/phases active during the year lower of cost and net realisable value, and those that are yet to commence production. which is determined by the whole site/ phase margin as set out in the ‘profit Following enquiry with management and the external auditor, the Committee recognition’ column. The risk is that for concluded that there are appropriate systems and internal controls in place to any site/phase, currently trading or not, assess the carrying value of the Group’s land and work in progress, and that the that the whole site/phase margin may be carrying value of these assets in the financial statements is appropriate. negative resulting in a net realisable value that is below cost. Divisional management In the current year, impairments have been recognised in relation to certain land review all sites/phases to ensure any with balances. These are considered within the exceptional expense section. a forecast negative whole site/phase margin have an appropriate provision, and this has been reassessed at regular intervals during the year. Going concern (Group)

Matters considered The financial statements have been The Committee reviewed a paper produced by management setting out prepared on a going concern basis. If the detailed forecasts and adverse scenarios against the base case. These were then financial statements were not prepared compared against the Group’s banking facilities to show the expected headroom on this basis, significant adjustments and bank covenant compliance. and presentational changes would be Following a review of this paper and challenge of both management and the required to the balance sheet. external auditor, the Committee concluded that the going concern basis of preparation continues to be appropriate in the context of the Group’s expected funding and liquidity position. Further details in relation to the Group’s going concern and viability assessment can be found on pages 42 and 96.

Bellway p.l.c. 66 Annual Report and Accounts 2020 Governance 67 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report The Committee reviewed a paper setting out the latest building regulation and building regulation the latest setting out a paper reviewed Committee The 37 requirements the IAS safety, fire of area the complex in guidance Government that the developments to this applies and how a provision, recognising for cladding and/ replacement require that may of aware currently management are works. safety fire related or the of estimates year, the during the provision the utilisation of set out paper The during statement the income in recognised the expense and provision remaining year. the the externalwith management and and enquiry this paper of a review Following the held in provision related the fire that concluded the Committee auditor, sheet is appropriate. balance treated has been provision the additional fire of the recognition year, the current In section. expense the exceptional within is considered This item. as an exceptional the of value the carrying comparing a paper reviewed Committee The net assets. associated their to the Company by held investments the externalwith management and and enquiry this paper of a review Following investments of value the carrying that concluded the Committee auditor, is appropriate. Action performed by the Committee by performed Action to in relation policy accounting the Group understands Committee The separatethe to 1 relating IAS of requirements the accounting items, exceptional Company the FRC with together expense or income of items material of disclosure 2020). 20 May (updated COVID-19 to in relation Guidance above the management using by produced a paper reviewed Committee The or exceptional as either items certain of treatment the which set out frameworks, established were principles consistent ensured Committee The non-exceptional. reached the conclusions with agreed auditor external the that and applied, and process. the reporting in early thejudgements made in the to consideration careful gave Committee The as a Accounts and Report Annual the ensuring items, exceptional of disclosure measures GAAP of the presentation including view, a balanced whole provides APMs. and the Committee auditor, external the management and with enquiries Following that and items disclosed as exceptional are items the appropriate that concluded appropriate. are the financial statements in disclosures the associated The carrying value of investments (Company) of investments value carrying The considered Matters and ventures in joint Investments is a significant subsidiaries (‘investments’) sheet balance the Company’s asset on value 2020 had a carrying July and at 31 held at are million. Investments £37.8 of surrounds risk The less impairment. cost an impairment whether about the matter uncertainty the inherent given is required cash flows future in forecasting involved an investment. of Legacy building and safety improvement provisions (Group) provisions improvement and safety building Legacy considered Matters improvement building and safety Legacy were million £70.3 totalling provisions at sheet as the balance in recognised 2020. July 31 Exceptional items (Group) items Exceptional considered Matters million £72.6 of expense An exceptional year. the in has been recognised thewhich, in those are items Exceptional size by material are the Board, opinion of that such significance and of nature or the on disclosure separate require they statement. the income of face Key financial judgements, issues or issues or financial judgements, Key financial reporting matter significant Audit Committee Report continued

Viability statement 2020 Annual Report and Accounts: fair, balanced In accordance with provision 31 of the Code and the FRC and understandable guidance on Risk Management, Internal Control and Related Group Risk and Audit provided a paper to the Committee Financial and Business Reporting, the Committee challenged to assist them in concluding whether the 2020 Annual management on the assumptions, methodology and Report and Accounts is fair, balanced and understandable. timespan that the viability statement covers. This independent review of the Annual Report and Accounts ensured the various components satisfied the requirements A paper by management was considered by the Committee when read as a whole. which set out the resilience of the Group to the emerging and principal risks and uncertainties to various adverse In addition, the Committee performed a comprehensive sensitivities. These scenarios included a second ‘lockdown’ review of the Annual Report and Accounts considering items due to COVID-19, a reduction in both the total number of such as: legal completions and private average selling price, with overheads, land spend and construction spend reducing accordingly. The results were then compared to the Group’s financing facilities to ensure sufficient headroom exists. The paper concluded that the viability statement and going concern basis of preparation is appropriate. This was then recommended to the Board for approval.

Fair Balanced Understandable

• Provide a comprehensive review of • Provide a balanced view of the • The Annual Report and Accounts are the Group’s strategy and activities performance and position of the understandable and have consistent during the year which is consistent entity, with both significant positive messaging throughout. with the business model. and negative points disclosed.

• The narrative section is both consistent • The key accounting judgements • There are clear links between the throughout and also with the financial considered by the Committee are strategy and KPIs. results and performance. appropriately disclosed and are consistent with those considered by KPMG.

• Market conditions are clearly • The KPIs and APMs have remained described, and the emerging and consistent and there has been no principal risks and uncertainties are change in the methodology. both accurate and complete.

• All material transactions and issues faced by the Group are included within the financial statements and disclosed where required.

Bellway p.l.c. 68 Annual Report and Accounts 2020 Governance 69 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report d meetings are held to review review to held d meetings are the Group’s key functions are dealt with dealt functions are key the Group’s valuations are produced periodically throughout throughout periodically produced are valuations ehensive monitoring and reporting system is system reporting and monitoring ehensive visits to sites by in-house health and safety teams in-house health and safety by sites to visits al treasury function operates at Head Office at Head function operates treasury al and external consultants to monitor health and safety health and safety monitor to consultants and external and performance. standards a number of a number a compr boar divisional monthly Regional the by attended are which performance, divisional divisional certain attend directors executive The Chairmen. this and year, the basis during meetings on a regular board divisions. to visits with main Board is supplemented site/phase the actual and of with a summary a site/phase, of the life a divisional level at produced and revenues costs forecast andteam the divisional management by review to prior team. Office Head regular a centr the Group for is obtained financing the optimum ensuring whole. as a IT, taxation, pensions, insurance, include These centrally. secretarial and company compliance legal, HR, regulatory approach a consistent ensures centralisation This functions. these manage to skills of range the appropriate and specialised areas. in place including annual budgets, monthly forecasting forecasting monthly annual budgets, including in place variance incorporating and management reporting, divisional by is produced This commentary. and analysis Chairmen the Regional by management and reviewed also are Summaries Office. at Head and function heads directors. the executive to provided

• • • • • made by are recommendations control any Where where and considered, these are auditors, the external the strengthen further to implemented are relevant environment. control which, in part, and audit function has a risk Group The and Risk of Head Group The audit reviews. internal performs the Group both line into reporting has a direct Audit Internal and the Risk year the During and myself. Director Finance audit reviews, internal of a number function undertook Audit Group The functions. within relevant utilising specialists from awith the Committee provided Audit and Risk of Head with recommendations together the findings of summary register A environment. the control enhance further to against progress which monitors is maintained centrally they ensure to enhancements and control system any and timely and in a appropriately implemented are manner. controlled • eed a list of key risks which affect the which affect risks key eed a list of land and land interests is initiated by by is initiated land and land interests oup mitigate those risks. oup mitigate Group, that are reviewed throughout the year and has year the throughout reviewed that are Group, by taken the measures which to the extent considered the Gr the appropriate by divisional management and reviewed Office Head to submission to Chairman prior Regional minimum must achieve All land acquisitions approval. for approval to subject and are criteria financial acquisition circumstances, and in certain directors the executive by the Board. by approval the Board has agr the Board of the acquisition

• Internal control and risk management and risk control Internal assessing and reviewing for is responsible Committee The systems management and risk controls internal the Group’s is Board The the Board. to these on guidance and providing of the system of the effectiveness reviewing for responsible controls. internal has been the Group for register the risk year the Throughout includes review This management. by and updated reviewed likelihood, their risks, assessing of the completeness ensuring environment the control of the effectiveness impact and their the risks. mitigate to the of a full review with the Board, by is considered Risk the business at least throughout taking place register risk management process risk and control internal The annually. loss, and or misstatement material of the risk reduces only completely. this risk eliminate does not the Group, facing and principal risks emerging The on pages Report the Strategic described in which are all aspects of and cover reviewed regularly are 39, to 36 planning, including land acquisition, operations Bellway’s and legal and sales, HR, IT health and safety, construction, compliance. regulatory as a new pandemic emerged the COVID-19 2020, In Spring of the business as a result to caused disruption This risk. affected which adversely restrictions imposed government of number A operations. the Group’s aspects of various the as set out in this risk reduce to taken were actions section on page 39. principal risks and uncertainties statement. viability the into been factored have These and is, on a systematic the Board of role continuing The and principal emerging the key review to ongoing basis, the systems of the operation the business, in risks inherent their manage such risks and to necessary and controls are steps all reasonable that itself satisfy to and effectiveness, these risks. mitigate to taken being as follows: are control of areas key The • Audit Committee Report continued

External audit During the year, the Committee: Audit effectiveness • agreed the audit tender process, request for proposal and a The external auditor of the Group is KPMG. Their performance detailed scorecard for assessing the tenders. is regularly reviewed by both management and the • selected and invited three firms to invite to join the tender Committee, and this is done formally on an annual basis. process, although one declined. The Committee considered a paper produced by • interviewed key members of the proposed external management which used the FRC guidance note titled ‘Audit audit teams. Quality’ as the basis. • made a recommendation to the Board on the appointment This review consisted of: of the replacement external auditors. • considering the robustness and appropriateness of KPMG’s Following the conclusion of the audit tender process, the approach to auditing the significant risk areas facing Board approved the appointment of EY as the Company’s the Group. external auditor for the financial year commencing 1 August • considering whether KPMG’s materiality proposal for the 2020, although this is subject to shareholder approval at 2018/19 financial year, which was the most up-to-date the Annual General Meeting to be held on 11 December information held at the date of the review, was set at an 2020. Should shareholder approval be received, EY will appropriate level for the component parts of the Group. be appointed as external auditors at the conclusion of that meeting. • discussions with management who were involved in the financial reporting processes. From the start of the 2020 audit cycle, EY have sat alongside KPMG and have attended key meetings throughout the audit • an understanding of the findings of the Audit Quality process to ensure a smooth transition. Review (‘AQR’) team of the FRC following their inspection of audit firms including KPMG. This included understanding The Committee confirms that the Company is complying whether any of the findings would have affected the with the provisions of The Statutory Audit Services for Bellway audit. Large Companies Market Investigation (Mandatory Use of Competitive Tender Processes and Audit Committee • an understanding of the AQR and internal KPMG quality Responsibilities) Order 2014. review findings, specifically in relation to the engagement partner, John Pass. Auditor independence and non-audit fees • considering KPMG’s independence, objectivity and The Independent Auditor Policy, which seeks to preserve professional scepticism. the independence of the external auditor by defining those non-audit services which the external auditor may and may • reviewing the performance of KPMG against their audit not provide, was reviewed during the year and was updated strategy for the 2018/19 financial year, the most recent to bring it in line with latest guidance. fully completed audit cycle, and their interaction with the Committee during the process. Any engagement with the external auditor needs to be approved, in advance, by the Audit Committee. • considering where KPMG have added value and demonstrated proactivity. The Group’s external auditor is not engaged for any non- audit related services such as: As part of this review a few areas of improvement were identified which have been fed back to KPMG who have • tax compliance and other tax services. incorporated them into their audit for the year ended • bookkeeping or other services related to the accounting 31 July 2020. records or financial statements of the Group. Following this review, the Committee recommended to the • financial information system design and implementation. Board, which is in turn recommending to the shareholders, that KPMG be reappointed as the auditor of the Group. • appraisal or valuation services, fairness opinions, or contributions in kind reports. Audit tender • actuarial services. KPMG has been the auditor of the Group since 1979 when Bellway was listed and the audit has not been tendered in the • internal audit outsourcing services. intervening period. In line with the Order of the Competition • management functions or human resources. and Markets Authority in relation to FTSE 350 companies, the Company undertook a formal tender process for the • broker or dealer, investment adviser or investment appointment of a new external auditor. The FRC’s guidance banking services. note ‘Audit Tenders: Notes on Best Practice’ (February 2017) • legal services and expert services unrelated to the audit. was considered throughout this process. • technical accounting advice. • assistance on FTSE matters. • any other service that is impermissible by regulation.

Bellway p.l.c. 70 Annual Report and Accounts 2020 Governance 71 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report Ian McHoul Ian Committee Audit the Chairman of 2020 19 October Other legislative requirements legislative Other Whistleblowing at all publicised well is Policy Whistleblowing Group’s The the of and members all employees locations and allows the either to in confidence concerns raise to chain supply Deputy Secretary, Counsel & Company General Group an independent alternatively, or, Secretary Company Group and members employees encourages Group The party. third in an open concerns any raise to chain supply the of to be in relation could concerns These way. and honest of breaches in financial reporting, wrongdoing possible such as matters other or policies and procedures, Group laundering, modern slavery bullying, money harassment, discrimination. or and confidentially investigated are reports whistleblowing All the and independent personnel senior, by investigated the Board. to reported findings are to changes minor approved the Committee year the During Policy. Whistleblowing the Act Bribery and Policy and Corruption Anti-Bribery Group’s The and the Group throughout circulated are procedures intranet. are included on the Group’s Audit Committee assessment Committee Audit the assessed both the Committee year the During itsthat of whole and as a the Committee of performance was that utilising a questionnaire both individual members, via an independent, externally and facilitated internally improvement of areas major assessment. No facilitated identified. were the Committee I consider these results, of a review Following and independent a robust and provide be effective to and control internal the financial reporting, over oversight CommitteeThe the Group. of audit activities and external risk skills and set of and complementary has an appropriate the aforementioned. deliver to that enables it experience For an analysis of fees paid to KPMG see note 4 to 4 KPMG see note to paid fees of an analysis For the accounts. audit external the to year the for fees non-audit of ratio The on at least an confirmation written 0:1. KPMG provides was fee CommitteeThe independent. remain they that annual basis at each auditor the external to paid all fees monitors meeting. Committee which introduced was policy a formal year the During employees of recruitment the on restrictions includes certain auditor. the external from issues no independence are there confirms Committee The these policies have that and auditor the external to in relation year. the throughout to been adhered Remuneration Report Remuneration Committee Report

The Committee continues to operate a remuneration structure… which it considers closely aligns management interests with those of shareholders.

Jill Caseberry Chair of the Remuneration Committee

Annual Statement Performance and reward in 2019/20 Dear Shareholder The Committee continues to operate a remuneration structure based on the three core elements of basic salary, I am pleased to present the Report of the Remuneration annual cash bonus and a share-based long-term incentive Committee (the ‘Committee’). This report consists of this plan, which it considers closely aligns management interests Annual Statement and the Annual Report on Remuneration with those of shareholders. for the 2019/20 financial year, which will be subject to a single advisory shareholder vote at the forthcoming AGM. The financial performance in the year was significantly affected by the COVID-19 pandemic. The number of In addition, given this has been the third year of operating housing completions fell by 30.9% to 7,522 (2019 – 10,892), under the 2017 Directors’ Remuneration Policy, the Policy is pre-exceptional operating profit fell to £321.7 million (2019 also included and is to be presented as a resolution to our – £674.9 million). Basic earnings per share fell by 64.2.% to shareholders at the 2020 AGM (resolution 3). The Committee 156.6p per share (2019 – 437.8p) and pre-exceptional RoCE decided that it would not be appropriate to be undertaking reduced to 10.8% (2019 – 24.7%). this review in 2020 whilst our Company and you, our shareholders, have other more urgent issues to deal with In light of the COVID-19 crisis and its extraordinary impact on due to the COVID-19 pandemic. We will however undertake the business and the wider economy, the Board of Directors a review in 2021 taking into account developments in market agreed to a voluntary, temporary 20% reduction in basic practice and corporate governance best practice, including salary and fees effective from 1 April until 31 May 2020, which post-cessation shareholding requirements and bonus deferral was donated to various charities. The Company match- during 2021, with an updated Policy being presented at the funded the donations with a contribution to its national 2021 AGM. charity partner, Cancer Research UK, whose important work and fundraising capacity has been adversely impacted by the The proposals in relation to the Policy renewal are: COVID-19 pandemic. • We will seek approval for a renewal of the current Policy With the negative impact that COVID-19 has had on the for 12 months, making minimal changes limited to the financial performance of the business there will be no bonus introduction of a new bonus metric relating to employee in respect of the year. The long-term incentive plan awards engagement and a slight adjustment to the other granted in November 2017 will vest at 47.7% of the maximum metric ratings. award based on performance over the three financial years • We will make changes to directors’ pensions so that to 31 July 2020. These shares are required to be held for a new appointments participate at the rate available to further two years following vesting. The Committee considers the Company’s wider workforce and our Group Chief that these outcomes are reflective of the overall business Executive and Group Finance Director’s benefit level will fall performance, recognising both the negative impact of the to that rate at the end of 2022. pandemic on the business over the past year, along with the relative outperformance of our peers over the last three years. • All other changes, including the introduction of formal bonus deferral, the extension of our current post- employment shareholding guidelines and a review of the performance measures and targets we use in our incentive plans will take place in conjunction with consulting with you next year.

Bellway p.l.c. 72 Annual Report and Accounts 2020 Governance 73 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report executive for salary is 150% of level award normal PSP The the against TSR performance relative by measured directors, this level considers Committee The groups. peer two same long- on incentivising focus a strong provides award of is price share the if However, sustained performance. term, made were which awards at the price below significantly consider grant, time of the will, at the Committee year, last back. the grant scale to be appropriate would it whether Concluding remarks changes in best monitor to continues Committee The the policy, ensure to governance and corporate practice appropriate. remain disclosures and our it is operated how have we the approach of supportive are you hope We will support times and these unprecedented during taken the at the policy and this report approving the resolutions AGM. 2020 the coming over shareholders with will be engaging We to be presented to policy an updated prepare we as year questions any have you If AGM. the 2021 at shareholders topics, remuneration-related discuss any to like would or Counsel & General the Group through me please contact Secretary. Company Jill Caseberry Committee the Remuneration of Chair 2020 19 October

There will be no increases to the directors’ salaries in 2020/21 the directors’ to increases will be no There thewith line in remain will also and pension and benefits for the pension rates noted, previously As provision. current the at workforce the those of with will be aligned the directors 2022. end of How we will implement the remuneration remuneration implement the will we How policy in 2020/21 be based mainly to will continue 2020/21 annual bonus The of with a bonus opportunity on financial performance, remaining The profit. based on operating salary 85.2% of thewill be based on salary 34.8% of of bonus opportunity and land bank of year as last measures same strategic an time by the first for and supplemented care, customer will measure new This engagement measure. employee will be and salary basic 6% of of a bonus opportunity attract engagement the annual employee of the results based on andthe land bank of a re-weighting will be There survey. respectively salary 16.8% and 12% of to metrics care customer and metric. Health the employee the inclusion of allow to the of as part account into taken will be performance safety which payment the bonus assessment of overall Committee’s making a final determination. before year it does every the of a requirement whilst not year, disclosed last we As the Committee informed Executive Chief the Group policy, (after his 2019 and 2020 bonuses 25% of will invest that he which shares in Bellway tax and national insurance) income purchased Jason years. three a minimum of for will keep he hasJason 2020. using his 2019 bonus in March shares 2,687 above FY21 for all bonus he receives invest to also agreed in insurance) tax and national paying (after salary 90% of shares. Bellway to in relation discretion exercise did not Committee The year. the during arrangements remuneration Directors’ setswhich it in the manner that believes Committee The and is aligned executives to is clear this policy and operates risksto with regard it operated We culture. corporate our to the providing the business and marketplace, in inherent which manner in a earn rewards to executives for opportunity targets. against clear delivered value the to is proportionate Remuneration Report continued

Remuneration at a glance How remuneration links to our strategy (see pages 24 and 25 for details of our performance).

Strategic objective Link to remuneration Metric Performance against metric Volume growth and driving Annual bonus Operating profit Not achieved down costs Volume growth and focus Annual bonus Sufficient land bank of plots with DPP Not achieved on RoCE Strengthening the brand Annual bonus Achieve 5 star homebuilder status Achieved Strengthening the brand Annual bonus Customer satisfaction score Not achieved Appointing the right people Underpin to annual bonus Overall health and safety performance Achieved Value creation through capital Long-term incentive plan Relative TSR against two Partly achieved and dividend growth comparator groups How our executive directors were paid during 2019/20

Chief £1,091 Executive 78% 22%

Group £000 Finance 67% 36% £740 Director

0 £200 £400 £600 £800 £1,200 £000

Fixed pay Annual bonus(1) Long-term share awards Impact of share price fall on LTIP

1. No annual bonus payable.

Bonus outcomes – see page 76 The 2019/20 bonus was based on financial and strategic targets. Whilst the strategic measures were achieved in part, given that the threshold operating profit target was not met, there will be no payment under these metrics.

Strategic Weighting Threshold Maximum value Payment Payment objective (% of salary) (39% pays out) (100% pays out) Actual(1)(2) (% of maximum) (% of salary) Operating profit £620 £680 £322.7 (pre-exceptional) 85% million million million Nil% Nil%

Strategic objectives and performance against target Score Land bank The land bank of plots with DPP (available for completion in the following financial Not achieved – Nil% of year) fell below the base target. salary awarded. Customer care We retained our 5 star homebuilder status. Achieved in full – Nil% of salary awarded. The Group’s customer satisfaction score in 2020 was 85.5% compared with the base Not achieved – Nil% of of 86.4%. salary awarded. We achieved a 80.2% score for our eight-week ‘standard of finish’ target compared Not achieved – Nil% of with the base of 82.6%. salary awarded. Note: 1. For operating profit and land bank bonus purposes, targets and outcomes include joint ventures. 2. Pre-exceptional.

LTIP outcomes – see page 77 The PSP awards granted in 2017/18 were based on a three-year TSR performance for the period to 31 July 2020.

Metric Performance condition Threshold target Stretch target Actual % vesting 50% of Relative TSR against an index of peer housebuilders –3.7% TSR 18.8% TSR 0.2% 18.9% awards (median) (median Bellway +22.5%) TSR 50% of Relative TSR against the FTSE 250 (excluding Rank 79 Rank 40 Rank 62 28.8% awards financial services companies and investment trusts) (median) (upper Bellway quartile) Total 47.7%

Bellway p.l.c. 74 Annual Report and Accounts 2020 Governance

7/7 7/7 7/7 7/7 75 Number of meetings of Number Bellway p.l.c. Bellway attended during the year attended during the

Annual Report and Accounts 2020 Accounts and Annual Report 1 August 2013 August 1 1 August 2013 August 1 1 February 2018 1 February Date appointed to the Committee Date 1 October 2017 (appointed as Committee Chair on 13 December 2017) on 13 December Chair Committee as 2017 (appointed 1 October COVID-19 and reflect on executive remuneration on executive and reflect COVID-19 targets for the 2021/22 year. the 2021/22 for targets targets for the 2020/21 year. the 2020/21 for targets view of the Directors’ Remuneration Policy for approval at the 2021 AGM. the 2021 at approval for Policy Remuneration the Directors’ of view ve the 2019/20 Remuneration Report. the 2019/20 Remuneration ve ve the 2018/19 Remuneration Report. Remuneration the 2018/19 ve

e awards under the long-term incentive scheme. incentive the long-term under e awards e awards under the long-term incentive scheme. incentive the long-term under e awards view remuneration policies for senior management below Board level and the wider workforce. wider the and level Board management below senior policies for remuneration view view and determine the remuneration packages for the executive directors and the Group General Counsel & Company Counsel & Company General the Group and directors the executive packages for the remuneration and determine view view and determine the remuneration packages for the executive directors and the Group General Counsel and Company Counsel and Company General the Group and directors the executive packages for the remuneration and determine view workforce. wider the and level Board management below senior policies for remuneration view Re Conduct a re Approve the bonus payments and long-term incentive awards vesting levels for the 2019/20 year. the 2019/20 for levels vesting awards incentive and long-term the bonus payments Approve Appro the bonus Set Mak Re level. Board management below of tier the first and Secretary, Re level. Board management below of tier the first and Secretary, Re of impact Consider Approve the bonus payments and long-term incentive awards vesting levels for the 2018/19 year. the 2018/19 for levels vesting awards incentive and long-term the bonus payments Approve Appro the bonus Set Mak

Director (Chair) Jill Caseberry The Committee met seven times during the year and details of the Committee members and their attendance are set out in the set out in are attendance their and members the Committee and details of year the times during met seven Committee The table below. and meeting attendance Membership Annual Report on Remuneration Annual Report activity and membership Committee Paul Hampden Smith Hampden Paul Denise Jagger Denise McHoul Ian to prepared been which have reference of terms its to reference by is conducted the Committee of operation The at available and are and best practice requirements governance and corporate regulatory statutory, with relevant comply www.bellwayplc.co.uk/investor-centre/governance/committees. be decided.to the matters in than as shareholders, other financial interest, a personal have members the Committee of None the business. in running involvement and no day-to-day cross-directorships arising from interest of no conflicts are There January on 1 process tender a competitive following advisers as independent external Ferry Korn appointed Committee The the Board and Committee the Remuneration to than other the Company to services other any provide do not Ferry Korn 2019. and abide Consultants Group the Remuneration of members are They Remuneration. Directors’ on Non-Executive Committee advice for Ferry Korn to paid fee total The independent. are Ferry that Korn is satisfied Committee The Conduct. its Code of by the previous to and £25,182 Ferry Korn to £41,043 of (2019 – £66,225 consisting £78,052 was year the during committees the to Counsel & Company General the Group from received advice from also benefited Committee The Bridge Street). New adviser, remuneration. his own to those relating than on issues other Secretary on Non- Committee the Board by is determined the Chairman) from (apart directors the non-executive of remuneration The General the Group from advice also receives It directors. the executive which comprises Remuneration, Directors’ Executive Ferry. and Korn Secretary Counsel and Company • this report. part of following the in contained the information on report to is required auditor The 2020 July ended 31 year the for and fees Salary the impact Following £400,427. of a salary received Adey and Keith £689,000 of a salary received Honeyman Jason 2019/20, For which 2020, April until 31 May 1 from effective fees and salary of a 20% reduction agreed the Board pandemic, the COVID-19 of partner, its national charity to a contribution with the donations match-funded Company The charities. various to donated were pandemic. the by impacted has been adversely capacity and fundraising work whose important UK, Research Cancer Implementation of remuneration policy in 2019/20 policy Implementation of remuneration • • • • • 2020/21 for areas Focus • • • • • • • Main focus in 2019/20 focus Main • Remuneration Report continued

Annual bonus for the year ended 31 July 2020 The annual bonus is payable in November 2020 for performance during the year ended 31 July 2020. The performance targets for the 2019/20 bonus comprised operating profit and two strategic targets. The actual bonus payment against operating profit was determined on the following basis:

Strategic Weighting Threshold Maximum value Payment Payment objective (% of salary) (39% pays out) (100% pays out) Actual(1)(4) (% of maximum) (% of salary) Operating profit 85% £620 £680 £322.7 Nil% Nil% (pre-exceptional) million million million The threshold profit target was not met meaning there was no payout under the operating profit element. In addition, as this threshold was not met no bonus was payable under the strategic elements. The basis for payment of the actual bonus against the two strategic measures is set out below:

Strategic pillar Objectives and performance against target Opportunity and score Land bank Level of land bank plots with detailed planning permission (‘DPP’) (available for Maximum – completion in the following financial year) to ensure our growth aspirations are not 15% of salary frustrated by land shortages in future years. A threshold payment of 10% of salary would be triggered for a threshold number of plots with DPP, with an additional 1% payment for further improved performance, up to a maximum of 15% of salary. The land bank targets are commercially sensitive and will be disclosed one year in arrears.(2) The land bank of plots with DPP (available for completion in the following financial Not achieved– Nil% year) fell below the base target. of salary awarded Customer care Achievement of 5 star homebuilder status (as measured by the HBF). Maximum – 7.5% of salary We retained our 5 star homebuilder status. Achieved in full – Nil% of salary awarded(3) Overall customer satisfaction score (as measured by NHBC): No deterioration of the Maximum – previous year’s customer satisfaction score would result in a minimum payment 6.25% of salary of 3.25% of salary, with an additional bonus opportunity of 1% of salary for each additional 0.5% improvement in the score up to a maximum of 6.25% of salary. The Group’s customer satisfaction score in 2020 was 85.5% compared with the base Not achieved – Nil% of 86.4%. of salary awarded Eight-week survey ‘standard of finish’ score (as measured by NHBC): Threshold target Maximum – of 82.6% would result in a payment of 3.25% of salary, with the maximum payment of 6.25% of salary 6.25% of salary for a score of 84.1%. The Group’s eight-week survey ‘standard of finish’ score in 2020 was 80.2% and below Not achieved – Nil% the threshold target of 82.6%. of salary awarded Note: 1. For operating profit and land bank bonus purposes, targets and outcomes include joint ventures. 2. The 2018/19 base target was set at 11,675 plots with a maximum target of 11,925 plots. The actual performance achieved was 12,033 plots. . 3. Although the 5 star homebuilder status was achieved, no bonus is awarded under the strategic measures where the threshold target for operating profit is not met. 4. Pre-exceptional. Health and safety performance is taken into account by the Committee as part of its overall assessment of the bonus payment, and the Committee has discretion to reduce the overall bonus payment if it considers that health and safety standards have been unsatisfactory. The Committee is satisfied with the health and safety standards over the year with an improved RIDDOR seven-day reportable incident rate per 100,000 site operatives of 203.12 (2019 – 324.87); the fourth year in a row we have reduced this rate. Bellway also continues to outperform the industry average on the NHBC health and safety incident rate, and have improved the score this year to 0.714 (2019 – 0.856).

Bellway p.l.c. 76 Annual Report and Accounts 2020 Governance

(1) 77 £000 18.9% 47.7% 28.8% vesting value at % vesting % Estimated

2727 237 237 Bellway p.l.c. Bellway £000 TSR 0.2% Actual Dividend equivalent Bellway Bellway Bellway Rank 62 Rank

(1)

(67) (67)

£000 Annual Report and Accounts 2020 Accounts and Annual Report change (upper Share price Share +22.5%) quartile) Rank 40Rank (median 18.8% TSR 18.8%

8,030 8,030 TSR number of number Guaranteed –3.7% shares to vest to shares Rank 79 Rank (median) (median)

Threshold targetThreshold target Stretch 47.74 47.74 Vesting Vesting (% of max) (% of

at grant Number of shares shares of

580580 16,822 16,822 £000 Value on award Value e of £26.19, being the average share price for the last quarter of the financial year i.e. 1 May – 31 July 2020 as a proxy for the share price at vesting. The estimated value value estimated The vesting. at price the share for 2020 as a proxy July – 31 i.e. 1 May year the financial of the last quarter for price share the average being £26.19, e of Performance condition Performance Relative TSR against an index of peer housebuilders peer of an index TSR against Relative Berkeley The PLC, Developments Barratt comprising Nicholson Crest PLC, Group Homes plc, Bovis Group Taylor and plc plc, Redrow plc, Persimmon Holdings an award this part of 25% of plc (‘Index’): Wimpey fullto pro-rata, the median, increasing at vests p.a.). (+7.5% median +22.5% at vesting Relative TSR against the FTSE 250 (excluding financial (excluding 250 FTSE the against TSR Relative 25% of trusts): investment and companies services pro- median, increasing at vests an award this part of quartile. the upper at vesting full to rata,

Based on a share pric Based on a share shares. dividend equivalent of value the includes vesting at 

Keith Adey Keith Jason Honeyman Jason Notes: 1. Director Director of awards of Metric 50% Long-term incentives vesting in respect of performance period ended 31 July 2020 July ended 31 period of performance in respect vesting incentives Long-term applicableThe 2020. July 31 to the period for performance TSR three-year based on a were in 2017/18 granted awards PSP The as follows: will be percentages vesting 50% awards of Regardless of TSR performance, no part of an award will vest unless the Committee is satisfied that there has been an there that is satisfied the Committee unless vest will an award no part of TSR performance, of Regardless period.the performance over the Group of the underlying financial performance in improvement the warranted that no circumstances were there had been met and considered this underpin that agreed Committee The two-year a to will be subject and 2020, in November vest to expected are awards the following a result, As discretion. of exercise 2022. November tax, until pay to than be sold, other not may shares whereby holding period post-vesting Total Remuneration Report continued

Single figure of total remuneration (audited)

Salary and Taxable Pension(6) Annual Sub-total Long-term Other Total Total fixed Total variable fees(4) benefits(5) bonus incentives(7) items(8) remuneration remuneration £ £ £ £ £ £ £ £ £ £ Non-executive Chairman Paul Hampden 2020 213,962 ––– 213,962 –– 213,962 213,962 – Smith(1) 2019 162,837 ––– 162,837 –– 162,837 162,837 – Executive directors Jason Honeyman(2) 2020 666,034 44,905 137,800 – 848,739 237,426 4,500 1,090,665 848,739 241,926 2019 530,000 32,424 106,000 406,351 1,074,775 145,285 – 1,220,060 668,424 551,636 Keith Adey 2020 387,079 33,200 80,085 – 500,364 237,426 2,250 740,040 500,364 239,676 2019 392,575 32,424 78,515 300,987 804,501 227,367 3,748 1,035,616 503,514 532,102 Non-executive directors Denise Jagger(3) 2020 67,232 ––– 67,232 –– 67,232 67,232 – 2019 65,700 ––– 65,700 –– 65,700 65,700 – Jill Caseberry 2020 67,232 ––– 67,232 –– 67,232 67,232 – 2019 68,200 ––– 68,200 –– 68,200 68,200 – Ian McHoul 2020 67,232 ––– 67,232 –– 67,232 67,232 – 2019 64,423 ––– 64,423 –– 64,423 64,423 – Total 2020 1,468,771 78,105 217,885 - 1,764,761 474,852 6,750 2,246,363 1,764,761 481,602 2019 1,283,735 64,848 184,515 707,338 2,240,436 372,652 3,748 2,616,836 1,533,098 1,083,738 Notes: 1. Paul Hampden Smith became Chairman on 12 December 2018. Prior to that date he was a non-executive director and the Audit Committee Chairman. His remuneration for 2018/19 therefore reflects his two roles during the year. His remuneration as Chairman during the 2018/19 year was paid at a rate of £217,000 p.a. 2. Jason Honeyman was promoted to the role of Group Chief Executive with effect from 1 August 2018, with a phased increase to his salary implemented in 2019/20. 3. Denise Jagger became senior independent non-executive director on 1 November 2018 and received an additional fee from that date. 4. The 2019/20 salary and fees reflects the 20% reduction for April and May agreed by the Board due to the negative impact of the COVID-19 pandemic. 5. Taxable benefits include car allowance and health insurance and £11,705 for Jason Honeyman which relates to hotel and travel costs. 6. Pension includes both payments in lieu of pension of £207,885 and contributions to a defined contribution scheme of £10,000. 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. 7. The value of long-term incentives in 2020 reflects the vesting of the November 2017 PSP awards, which will be exercisable in 2020/21, including additional shares in lieu of dividends accrued from the date of grant to the date of vesting. The value shown is based on a share price of £26.19, being the average share price for the last quarter of the financial year i.e. 1 May – 31 July 2020 as a proxy for the share price at vesting. The 2019 figures for Jason Honeyman and Keith Adey have been adjusted to reflect the actual share prices at the dates of vesting, which took place after the publication of last year’s report. 8. Other items refer to the discount on the awards, during the year stated, under the Group’s all-employee savings-related share option scheme.

Directors’ share-based rewards and options (audited) Details all directors’ interests in the Company share-based reward schemes are shown. Jason Honeyman

Scheme Awards/ Granted/ Exercised Lapsed during Awards/ Exercise Date of Exercisable/ options awarded during during the year the year options price/market grant/award capable of held at the year held at price at date vesting from 1 August 2019 31 July 2020 of award (p) PSP(1),(6) 13,143 – (4,018) (9,125) – 2,351.0 09.11.2016 09.11.2019 PSP(2),(6) 16,822 – – – 16,822 3,450.0 10.11.2017 10.11.2020 PSP(3) 28,909 – – – 28,909 2,750.0 22.10.2018 22.10.2021 PSP(4) – 30,667 – – 30,667 3,370.0 16.10.2019 16.10.2022 2013 SRSOS(6) – 712 – – 712 2,528.0 03.12.2019 01.02.2023 Totals 58,874 31,379 (4,018) (9,125) 77,110

Bellway p.l.c. 78 Annual Report and Accounts 2020 Governance

– 79 1,099 the year capable of exercised in exercised Exercisable/ Exercisable/ vesting from vesting Share options Share

712 977 Bellway p.l.c. Bellway Date of Date grant/award Outstanding share options share and unvested and unvested

N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 1,378.0 17.11.2014 01.02.2020 Exercise Exercise 2,351.0 09.11.2016 09.11.2019 2,414.4 03.12.2018 01.02.2024 2,750.0 22.10.2018 22.10.2021 Annual Report and Accounts 2020 Accounts and Annual Report 3,370.0 16.10.2019 16.10.2022 2,528.0 03.12.2019 01.02.2023 3,450.0 10.11.2017 10.11.2020 of award (p) award of price at dateprice price/market PSP awards Outstanding and unvested and unvested

– –

– – 621 356 held at options 21,413 17,823 16,822 57,035 Awards/ 1,250 12,548 16,586 76,398 64,853 56,058 owned at owned 31 July 2020 July 31 Beneficially Beneficially 31 July 2019 July 31

– – – – – –

the year the Yes target of target Lapsed during salary met? salary Shareholding Shareholding 200% of basic 200% of

In progress

– – – – – (1,099) (1)(2) (6,288) (14,281) 80 444 Exercised Exercised N/A N/A N/A N/A N/A N/A N/A N/A % basic shares during the year the during salary held salary directors in directors by executive executive by

– – – – – 356

– (3) 17,823 the year the Granted/ 470 2.462 21,707 15,842 69,762 owned at owned awarded during awarded

Beneficially Beneficially

– – 31 July 2020 July 31 621 1,099 held at 21,413 options 16,822 Awards/ 60,524 18,179 (7,387) (14,281) 20,569 1 August 2019 August 1 wned by partner. wned by (6) (6),(7) (6) eholding is based on salaries as at 31 July 2020, these do not reflect the agreed 20% reduction in salaries due to COVID-19 which applied in April and May 2020. April and May which applied in COVID-19 to in salaries due 20% reduction the agreed reflect these do not 2020, July eholding is based on salaries as at 31 ober 2019, awards of performance shares under the PSP were made to Jason Honeyman and Keith Adey, equal to 150% of their respective salaries at the date of grant. The faceThe grant. of the date salaries at respective their 150% of to equal Adey, and Keith Honeyman Jason to made were the PSP under shares performance of awards 2019, ober et price of the ordinary shares at 31 July 2020 was 2,546p and the closing range during the year was 1,879p to 4,310p. to 1,879p was year the during the closing range 2,546p and was 2020 July at 31 shares the ordinary of et price ormance period for the awards granted in November 2017 finished on 31 July 2020. Details of the vesting of these awards which will take place after this Report is published are set is published are this Report after place take will which these awards of vesting the Details of 2020. July 2017 finished on 31 in November granted the awards period for ormance to also subject are these awards and 1 above, set out in note condition TSR performance the same to subject are awards The 2021. July 2018 – 31 August period is 1 ormance ormance period was 1 August 2016 – 31 July 2019. The TSR performance condition was in two parts. Half was measured by reference to the median of a group of UK housebuilders UK of a group the median of to reference by measured was parts. Half two in was condition TSR performance The 2019. July 2016 – 31 August 1 was period ormance e directors are required to accumulate a minimum shareholding equivalent to 200% of basic salary. Jason Honeyman joined the Board in September 2017 so has not yet had yet 2017 so has not in September the Board joined Honeyman Jason basic salary. 200% of to equivalent a minimum shareholding accumulate to required are e directors details of the 2013 SRSOS are shown in the summary of outstanding share options in note 25 to the accounts. to 25 in note options outstanding share of the summary in shown the 2013 SRSOS are details of oss gain made by Keith Adey on the exercise of his 2013 SRSOS awards in 2020 was £7,264. £7,264. was in 2020 awards his 2013 SRSOS of the exercise on Adey Keith oss gain made by the above awards set out in notes 1–4 were granted for nil consideration. for granted were 1–4 set out in notes awards the above

e has been no change in any of the above interests between 31 July 2020 and the date of this report. this report. of the date 2020 and July 31 between interests the above of e has been no change in any value of long-term incentive plans for the executive directors which were exercised in the year and those which will become exercisable in 2019/20 are shown in the single figure of the single figure in shown in 2019/20 are exercisable will become which those and year the in exercised were which directors the executive plans for incentive long-term of value (4) (2) (3) (1) sufficient time to build the target shareholding from vesting share awards. Jason informed the Committee that he will spend 25% of his 2018/19 and 2019/20 bonuses buying Bellway shares shares buying Bellway his 2018/19 and 2019/20 bonuses will spend 25% of that he the Committee informed Jason awards. share vesting from shareholding target the build to time sufficient all bonus he invest to has also agreed Jason his 2018/19 bonus 25% of to in relation the shares purchased Honeyman Jason 2020 26 March On years. three at least then hold for will that he shares. in Bellway tax and national insurance) paying (after salary 90% of above in FY21 receives % shar The o Includes shares Ther Executiv The The on page 78. table remuneration total mark The out in full under the heading ‘Long-term incentives vesting in respect of performance period ended 31 July 2020’ above. 2020’ July period ended 31 performance of in respect vesting incentives the heading ‘Long-term out in full under perf The provisions. clawback 16 Oct On TSR performance the same to subject are awards The 2022. July 2019 – 31 August period is 1 performance The respectively. and £600,635 £1,033,478 were these awards of on grant values options. nil cost of the form in were awards The provisions. clawback to also subject are these awards and 1 above, set out in note condition All of Further gr The The perf The plc (‘Housebuilders’ Wimpey Taylor plc and plc, Redrow plc, Persimmon Nicholson Holdings Crest PLC, Group Homes plc, Bovis Group Berkeley The PLC, Developments Barratt comprising outperformance annum per 7.5% for be achieved would vesting Full vest. would the awards 25% of that group, in the companies the median of that of TSR matched Bellway’s If Index’). trusts). and investment companies financial services (excluding the FTSE 250 Index in the companies to reference by measured was half other The total). the median (22.5% in of Bellway’s if be achieved would vesting that full basis so on a straight-line increasing the group, in the companies the median of TSR matches Bellway’s at 25% if vest to start would Awards the underlying in has been an improvement there that is satisfied the Committee unless vest will an award no part of TSR performance, of Regardless quartile. upper the TSR reached these awards of so 30.57% 61.14%, at the second at 0% and vested was condition the performance part of first The period. the performance over the Company of financial performance 914 shares). Adey: K / shares 584 Honeyman: (J vesting the shares of the participants in respect to also delivered were shares equivalents Dividend vested. perf The

2. 4. Notes: 1. 3. Honeyman Jason Director Statement of directors’ shareholdings and share interests (audited) interests and share shareholdings of directors’ Statement set out below: 2020 are July at 31 the Company capital of share the ordinary in interests) (including family interests directors’ The 8. (audited) loss of office for Payments year. the 2019/20 financial during office loss of of respect been made in have payments No 9. (audited) past directors to Payments during payments any received past director no other reports, in previous as reported Ayres, Ted to made than payments Other year. the 6. 7. 3. 4. 5. 2. Notes: 1. PSP

Keith Adey Keith Scheme 2013 SRSOS PSP Keith Adey Keith PSP 2013 SRSOS Totals PSP 2013 SRSOS Paul Hampden Smith Hampden Paul Denise Jagger Denise Jill Caseberry Ian McHoul Ian Remuneration Report continued

The following section of this report is not required to be audited. Implementation of remuneration policy in 2020/21 This section sets out how the Company will implement the remuneration policy for the 2020/21 financial year. Full details of how each element will operate are set out in the remuneration policy table later in this report. The Committee has taken into account the remuneration and related policies for the rest of the workforce generally when setting the 2020/21 targets for the executives. Basic salaries The Committee agreed that there shall be no salary increases for the financial year beginning 1 August 2020. Annual bonus For the 2020/21 financial year, the bonus opportunity will continue to be limited to 120% of basic salary. The performance conditions relate to a stretching target of adjusted (pre-exceptional) operating profit (with a maximum payment of 85.2% of basic salary achievable) and the following strategic performance measures which provide a maximum bonus opportunity of 34.8% of basic salary. A new metric based on employee engagement will be introduced under the strategic portion, under which up to 6% of salary can be earned (the customer care weighting has been reduced to accommodate this change).

Strategic measure Objectives Score Land bank Increase in the land bank of plots with DPP (available for completion in the following financial Maximum – year) in the year to 31 July 2021 to ensure our growth aspirations are not frustrated by land 16.8% of salary shortages in future years. Customer care This will be in two parts: Maximum – 12% of salary • 7.2% of salary for achieving 5 star homebuilder status (as measured by the HBF). • 4.8% of salary linked to customer satisfaction score. The customer satisfaction score element is assessed using the average of six key indicators, as measured by the NHBC. This measure is used as it reflects the metrics by which the performance of each division is managed by the executives. Employee Targets relating to the annual employee engagement survey. Maximum – 6% of salary In the event that the threshold profit criterion is not met, no bonus will be payable under the strategic targets. Health and safety performance will be taken into account as part of the Committee’s overall assessment of the bonus payment. The Committee would have discretion if, for example, health and safety standards have been unsatisfactory, or there has been a major safety failure, to reduce the overall bonus payment and could, in exceptional cases, reduce the overall bonus payment to nil. Maintaining a strong health and safety record remains a critical objective and this bonus structure allows for health and safety to have a greater influence on annual bonus outcomes. The actual annual bonus performance targets are considered to be commercially sensitive at this time, and the Committee will disclose these retrospectively in next year’s annual report on remuneration, provided they are no longer commercially sensitive. Long-term incentives The Company anticipates making a grant under the PSP in October 2020 with a face value equivalent up to 150% of salary to the executive directors. 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 award 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 financial services companies and investment trusts). McCarthy & Stone has been added to the housebuilders group. Regardless of the vesting outcome the Committee may adjust the level of vesting (including to nil) to such extent as it considers appropriate to ensure the level of vesting is a true reflection of the overall performance of the Company over the performance period.

Bellway p.l.c. 80 Annual Report and Accounts 2020 Governance

£ 81 target Stretch uly 600 Fee from from Fee 223 quartile 2020 596 31 J +7.5% p.a. +7.5% 1 August 2020 August 1

691 % % uly 0% 221,340 0% 58,200 0% 11,350 Bellway p.l.c. Bellway 253 680 2019 target 31 J increase Median Median Median Upper Threshold

uly

633 261 658 £ 2018 31 J Annual Report and Accounts 2020 Accounts and Annual Report 11,350 58,200 Fee from from Fee 221,340 666 1 August 2019 August 1 uly 241 2017 31 J 688 FTSE 250 Index 419 uly 205 484 2016 31 J uly s’ Index 466 204 585 2015 31 J 31 builder House 174 284 ly July 2014 340 31 Bellway 163 ly July 252 319 2013 31 ers)

144 eut uly 118 2012 151 31 J on R urn (Thoms r ret 119 116 127 2011 ly 31 July lde Performance condition Performance Developments PLC, The Berkeley Group plc, Crest Nicholson Holdings plc, Nicholson Holdings plc, Crest Group Berkeley The PLC, Developments Vistry and plc Wimpey Taylor plc, plc, Redrow plc, Persimmon & Stone McCarthy anthis part of of 25% PLC): Group Homes called Bovis (previously PLC Group p.a. at median +7.5% vesting full to pro-rata, the median, increasing at vests award investment trusts): 25% of this part of an award vests at median, increasing pro pro at median, increasing vests an award of this part 25% of trusts): investment quartile. the upper at vesting full to -rata, uly 2010 31 J

100

200 500 300 400 600 700

) based e (r £ eturn r r holde e ar h s Total otal shareho T Source: Datastream Performance graph and table graph Performance the bespoke and Index the FTSE 250 the Company, of years ten the past over TSR performance the shows below graph The the most appropriate as has been selected FTSE 250 Index The 1 on page 78). defined in note (as Index Housebuilders’ bespoke The this period. over the FTSE 250 Index of has been a constituent the Company as index’ market equity ‘broad plans. incentive long-term the Company’s been used for have these companies as has been selected Index Housebuilders’ £100 of value the with 2010 compared July on 31 in Bellway £100 invested of 2020, July at 31 value, the shows graph This the are points plotted other The housebuilders. the other in each of equally and £100 invested 250 Index the FTSE in invested ends. year financial at intervening values Chairman and non-executive director fees from 1 August 2020 August 1 from fees director Chairman and non-executive 50% of awards50% of Barratt comprising housebuilders peer of TSR against a group Relative 50% of awards50% of and companies financial services the FTSE 250 (excluding TSR against Relative Non-executive Chairman fee Non-executive Metric Non-executive director fee director Non-executive Senior independent Non-Executive Director, Audit and Remuneration Committee and Remuneration Audit Director, independent Non-Executive Senior fees Chair There were no increases in fees for the Chairman and non-executive directors. directors. the Chairman and non-executive for in fees no increases were There the excludes This £500,000. of fees director annual limit on non-executive an specify Association Articles of Company’s The Chairs. Committee to and Director Independent Non-Executive the Senior to payable the Chairman and additional fees for fees limit. this amend to is required approval Shareholder Remuneration Report continued

Group Chief Executive total remuneration The table below sets out the total remuneration for the Group Chief Executive over the same ten-year period as for the chart overleaf, 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).

2011 2012 2013 2014 2015 2016 2017 2018(3) 2019(4) 2020(5) Total remuneration 1,899 1,396 1,243(1) 1,450 1,960 2,785 3,468 1,737 1,220(2) 1,091 (£000) Annual bonus paid 100.0% 99.3% 100.0% 91.6% 88.8% 95.8% 93.8% 0.0% 76.7% 0.0% (as % of maximum) PSP vesting (as a % 99.6% 0.0% 0.0% 50.0% 50.0% 100.0% 100.0% 99.8% 30.6% 47.7% of maximum) Notes: 1. John Watson held the role of Group Chief Executive up until 31 January 2013 and Ted Ayres was Group Chief Executive for the remainder of the financial year from 1 February 2013 to 31 July 2013. The total remuneration for the period as Group Chief Executive was £714,053 for John Watson and £528,500 for Ted Ayres. 2. Restated as per footnote 7 to the table on page 78. 3. Ted Ayres was absent during the 2017/18 financial year due to ill health and so the figures shown are lower than would normally be expected if he had been at work during the year. 4. Jason Honeyman was appointed as Group Chief Executive on 1 August 2018. 5. The value of long-term incentives in 2020 reflects the vesting of the November 2017 PSP awards, which will be exercisable in 2020/21, including additional shares in lieu of dividends accrued from the date of grant to the date of vesting. The value shown is based on a share price of £26.19, being the average share price for the last quarter of the financial year i.e. 1 May – 31 July 2020 as a proxy for the shares at vesting.

Percentage change in remuneration of directors compared to workforce The table below shows the percentage change in base salary, benefits and bonus between FY19 and FY20 in respect of the directors of the Company and the average for all other employees. Over time, the percentage change over five years will eventually be disclosed.

% Change in salary/ fees % Change in Benefits % Change in Bonus FY19-FY20(2) FY19-FY20 FY19-FY20(3) All other employees +2 Nil -100 J Honeyman (Group Chief Executive)(1) +25.6 +38.5 -100 K Adey (Group Finance Director) -1.4 +2.4 -100 P Hampden Smith (Chair)(4) +31.4 n/a n/a D Jagger (INED) +2.3 n/a n/a J Caseberry (INED) -1.4 n/a n/a I McHoul (INED) +4.4 n/a n/a 1. Upon appointment as Group Chief Executive, the Board had agreed a salary increase for Jason Honeyman to be implemented for the financial year beginning August 2019. Details of Jason’s benefits are included in note 5 to the table on page 78. 2. The comparative figures used for the Board are the actual salary and fees paid as per the Single figure of remuneration table on page 78, this also reflects the 20% reduction in salary and fees in April and May 2020 due to the COVID-19 pandemic. 3. No bonus award was made in the current financial year. 4. Paul Hampden Smith was appointed Chairman on 12 December 2018 and as such his 2018/19 total fees cover both the period he was a non-executive director and also the period he was Chairman. The Chairman’s fee increased by 2% with effect from 1 August 2019.

CEO pay ratio We are publishing our CEO pay ratio figures for the current year. Over time, ten-years ratios will eventually be disclosed.

Upper quartile Median Lower quartile Pay Total pay Salary Pay Total pay Salary Pay Total pay Salary ratio and benefits component ratio and benefits component ratio and benefits component Financial year Method £ £ £ £ £ £ 2018/19 A 19:1 62,168 50,200 28:1 42,845 22,647 40:1 29,858 23,305 2019/20 A 18:1 60,675 24,400 27:1 40,415 22,000 43:1 25,580 25,200 The pay ratios have been calculated as at 31 July 2020 using Option A of the Regulations, that is, the full-time equivalent pay and benefits for all of our employees to identify those employees on the quartiles. Employee benefits include company car, car allowance, private medical, employer pension contributions and share option gains. With the exception of the annual bonus, all other payments are included on a cash basis. The annual bonus element for the Group Chief Executive and all other employees is the bonus earned during the 2019/20 financial year which is usually paid in November 2020. The annual bonus earned by employees during the year will not be known until after the date of this report, therefore management’s best estimates have been used.

Bellway p.l.c. 82 Annual Report and Accounts 2020 Governance

% of 83 % charge votes cast votes

Actual 0.05% Actual Actual 0.08% Actual £m

2019 77.3 -21.7 167.1 -5.4 185.1 -66.7 Bellway p.l.c. Bellway 6,227 of votes votes of Number ember 2019) 10 December

Remuneration Report Remuneration (advisory vote at AGM on AGM at vote (advisory £m 61.7 2020 60.5 158.1

% of Annual Report and Accounts 2020 Accounts and Annual Report votes cast votes

of votes votes of Number ember 2017) 13 December 578,001 (binding vote at AGM on AGM at vote (binding 2,206,550 2.549 1,301,042 1.388 84,362,645 97.451 92,413,256 98.612 86,569,195 100.000 93,714,298 100.000 Directors’ Remuneration Policy Remuneration Directors’ (3) payments figures are calculated from invoices received for these payments. these payments. for received invoices from calculated are figures payments (1) es shown are the interim and final dividends paid or payable for the relevant financial year less forfeited dividends (see note 6 to the accounts). to 6 note dividends (see less forfeited year financial the relevant for payable and final dividends paid or the interim are es shown (2) ee costs are calculated as wages and salaries, bonus and taxable benefits (including the directors). benefits (including taxable and salaries, bonus and wages as calculated are ee costs The section 106 and CIL The Employ dividend figur The

For Statement of voting at AGMs AGMs at voting of Statement table below: the set out in are remuneration directors’ regarding resolutions to in relation AGMs at proxy cast by votes The Limit of 5% in any ten years under all executive share plans share all executive under years ten 5% in any Limit of 3. awards satisfy to Trust held in limits/shares Dilution the some of made under awards satisfy to shares holds market-purchased ‘Trust’) (1992) (the Trust Share Employee Bellway The current the Company’s is It 43,809 shares. held Trust the 2020 July 31 At schemes. share and employee executive Company’s bonus plans (to the deferred made under Awards the PSP. made under awards satisfy to issue shares use new to intention issued SRSOS uses new The shares. using market-purchased must be satisfied eligible) not are directors the executive which was: 2020 July the position as at 31 on dilution limits and guidance the IA with comply plans share Company’s The shares. 2. plans all share under years ten 10% in any Limit of Notes: 1. Employee costs Employee Importance of remuneration relative to dividends and section 106 and CIL payments CIL section 106 and dividends and to relative of remuneration Importance 106 and section dividends remuneration, employee of in respect the Group of expenditure relative the shows table below The 2020. July 2019 and 31 July ended 31 years the financial each, for change in the percentage with together payments, and CIL consider they as costs employee to as comparators payments and section 106 and CIL chosen dividends have directors The to generates the Group the returns to employees its of the remuneration of importance the relative these demonstrate that payments. and CIL section 106 through communities developing to it makes the contribution and shareholders Section 106 and CIL payments Section 106 and CIL Dividends Against Total votes cast (excluding votes withheld) votes cast (excluding votes Total Votes withheld Votes Jill Caseberry Committee the Remuneration of Chair 2020 19 October On behalf of the Board of behalf On The main shareholders were consulted with respect to the approach to rolling over the current policy for a further year, with minimal year, a further for policy the current over rolling to the approach to respect with consulted were main shareholders The that agreed was it received the feedback of a result As AGM. the 2021 tabled at being policy and updated with a full review changes, 2022. the end of by workforce the with be aligned would pensions rate the directors’ that state would this policy and a Report the Remuneration on vote an advisory will have shareholders the Company’s 2020, on 11 December AGM the At and understand taken have we the approach of supportive are you I hope Policy. Remuneration the Directors’ on vote binding taken. have we the decisions for the rationale Remuneration Report continued

Directors’ Remuneration Policy This part of the remuneration report, the Directors’ Remuneration Policy, has been prepared in accordance with The Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013. The overall remuneration policy has been developed in compliance with the principles of the 2018 UK Corporate Governance Code, UK institutional investor guidance and the Listing Rules. The remuneration policy set out on the following pages is submitted to shareholders for approval at the AGM on 11 December 2020. It is the Company’s current intention that this Policy will only apply for one year, with a new policy being presented to shareholders at the AGM in December 2021. Summary of changes

Summary of changes Pension The new policy requires that the rate of pension for current incumbents will be aligned with the rate applicable to the wider workforce at the end of 2022. The recruitment policy also specifies that any new director would be appointed with a pension rate in line with the wider workforce. Malus and clawback The provisions were updated in 2019 to include scenarios of corporate failure and reputational damage and these are now formally included in the policy.

Policy principles The Directors’ Remuneration Policy is aligned with the principles within the 2018 UK Corporate Governance Code and these principles are taken into account in its implementation:

Principles Considerations within the Policy Clarity: remuneration arrangements should We clearly communicate our approach to remuneration in this report and be transparent and promote effective in all communications with shareholders whilst providing transparency in engagement with shareholders and the our rationale. This also allows straightforward engagement with the wider workforce. workforce. Simplicity: remuneration structures should We have structured the Remuneration Policy to be as simple as possible, within avoid complexity and their rationale and the confines of ensuring arrangements are in line with the business strategy, operation should be easy to understand. have a robust link between pay and performance and are designed with consideration of investor expectations. Risk: remuneration arrangements should We mitigate against these risks through a carefully designed policy which ensure reputational and other risks from includes a balance between financial and non-financial bonus metrics, a excessive rewards, and behavioural risks that Performance Share Plan which is based on long-term performance, deferral of can arise from target-based incentive plans, are a portion of the annual bonus into shares, and shareholding requirements. The identified and mitigated. Committee also has the ability to apply discretion and clawback provisions if incentive payment levels are inappropriate. Predictability: the range of possible values of We carefully consider the range of likely performance outcomes for incentive rewards to individual directors and any other plans when setting performance target ranges and at the time of assessment limits or discretions should be identified and would use discretion where necessary if the formulaic result is considered explained at the time of approving the policy. inappropriate. Proportionality: the link between individual The opportunity under incentive plans is determined based on a proportion of awards, the delivery of strategy and the long- salary with the quantum determined to ensure that there is an appropriate link term performance of the company should between pay and performance. be clear. Outcomes should not reward poor The performance conditions applying to the incentives are aligned with the performance. Company’s strategy and are reviewed on an annual basis to consider whether they are working effectively. There are provisions to override the formula-driven outcome of incentive plans and clawback provisions to ensure that there is not reward for poor performance. Alignment to culture: incentive schemes The annual bonus is based on both financial and non-financial metrics should drive behaviours consistent with aligned with the strategy incentivising the profitability of the company whilst company purpose, values and strategy. maintaining a focus on our customers and the quality of our service.

Bellway p.l.c. 84 Annual Report and Accounts 2020 Governance 85 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report Choice of performance measures and approaches to target-setting to and approaches measures of performance Choice and KPIs the Company’s with aligned plan are incentive the annual bonus and long-term used in measures performance The the business strategy. and land care Customer performance. short-term of barometer is an appropriate profit the annual bonus, operating For very is record health and safety metrics and maintaining a strong and employee growth future of important drivers are bank metric based on a new employees, our of the importance Recognising the Group. base and employee our to important year. this introduced will be engagement, employee an alignment of metric as it generates performance long-term is an appropriate TSR that relative believes Committee The stock superior delivering mechanism for a reward providing by and institutional shareholders executives between interest brokers. the Company’s by the Committee for calculated is independently TSR performance The performance. market points, reference and external internal account taking into but achievable, be stretching to set plans are incentive for Targets consensus. and market forecasts including internal Incentive plan discretions Incentive thethe rules part of As rules. respective their with in accordance the annual bonus plan and PSP will operate Committee The these plans, and of and administration an efficient operation both for required which are discretions holds certain Committee Annual the in be explained relevant, where would, the discretions use of Any practice. market with standard consistent are shareholders. major the Company’s with consultation the subject of be as appropriate, and may, on Remuneration Report The time period over which clawback/malus will apply to bonuses in respect of bonus years commencing and PSP awards awards and PSP commencing years bonus of bonuses in respect to will apply which clawback/malus time period over The as relevant. award, PSP of vesting bonus or of payment of anniversary third the time before 2018 is at any August 1 after granted Clawback/malus Consideration of employment conditions elsewhere in the Group elsewhere conditions of employment Consideration employee our policy, remuneration the executive up when drawing employees with directly consult do not we Whilst the In determining the Board. to reported which are issues raise to employees for an opportunity provide groups listening of and conditions the pay consideration into takes the Committee directors executive the for remuneration elements of the to awarded increase basic pay of the levels to attention particular whole, paying as a the Group throughout employees generally. workforce have arrangements, option share savings-related the Group’s can join directors, the executive including All eligible employees, health benefit from employees of significant proportion A pension arrangements. to access benefits and have assurance life bonus scheme. in a discretionary participate to eligible and are allowance car or car a company insurance, management below and generally workforce the changes for significant policy any of is apprised regularly Committee The in particular. level Board Decision-making process Decision-making process implemented. it is and how Policy Remuneration Directors’ the of the determination for is responsible Committee The and proposals develop to advisers external with management and works the Committee this responsibility In addressing that the detail and ensures it, analyse to presented information of the source considers Committee The recommendations. of conflicts are there where verified is independently when making decisions. Information independent judgement is exercised being discussed. is remuneration their when and no individual is present interest Objectives of remuneration policy of remuneration Objectives will promote that packages in place remuneration competitive has the Company that ensure to is the Committee aim of The its the Group, shareholders, of interests the overall in directors executive motivate and the Company of success the long-term and its customers. employees housebuilding UK similar of group that at a peer with comparable remuneration of a level paying of has a policy Committee The and performance. experience to businesses, subject direct few the relatively caution, recognising with benchmarking to approach this comparative uses Committee The analysis. peer-based with any effect ratchet upward an of the risk and size differing their housebuilding comparators, (annual remuneration elements of the performance-related that ensure to designed the package has been of structure The package, but remuneration total potential an executive’s of a significant proportion constitute incentives) bonus and long-term achieved. are targets performance stretching if receivable only are a provide to been designed has incentives and long-term annual bonus for conditions the performance of structure The superior producing in a sustainable fashion and on maximising profit a focus namely performance, the Group’s to link strong two- The and shareholders. executives senior between interest alignment of a strong generating thereby returns, shareholder reinforces good leavers) to also applies plan (which incentive the long-term to which applies holding period post-vesting year that alignment. Remuneration Report continued

Policy table This section of the report describes the key components of each element of the remuneration arrangements for executive and non-executive directors.

Component and Operation Maximum opportunity Framework to link to strategy assess performance Salary

To be market Salaries are normally reviewed in July No prescribed maximum. In addition to the reviews by competitive and each year and changes normally take the Chairman, as part of the Increases are normally in therefore assist effect from 1 August. They are typically annual Board evaluation, the line with the average for the in recruiting, determined by reference to market performance of the executives workforce generally. retaining and levels of a peer group of similar UK and the Company is kept motivating high- housebuilding businesses, taking Increases may be under continuous review by quality executives. account of salaries at other companies below or above this e.g. the Board. Reflects individual of a similar size, and by taking due to promotion, change in role and account of the role, performance, responsibility or experience, experience and experience of the individual, role change or a significant Company performance, salary change in the size, value and/ increases throughout the rest of the or complexity of the Company. business and economic conditions. Salaries are set out Where salaries of new executive in the Annual Report directors are positioned below market on Remuneration. levels, the Committee’s policy is to progress these over time, with increases potentially higher than for the general workforce, as experience is gained, subject to performance. Pension

To provide a Pension contributions into the Up to 20% of salary. Not applicable. structure and Company’s Group Self Invested The rate for current Directors value that is Personal Pension Plan and/ will be aligned with that of the market competitive or a salary supplement in lieu of workforce at the end of 2022. pension contributions. Benefits

To provide a range Typically comprises car or car Not applicable. Not applicable. and value that is allowance, life assurance and health market competitive 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.

Bellway p.l.c. 86 Annual Report and Accounts 2020 Governance 87 Bellway p.l.c. Bellway Not applicable. Not e assess performanc financial of a combination objectives, and strategic with financial performance of a majority for accounting bonus opportunity. the overall determines Committee The and measure(s) of the choice year each for weighting their with alignment ensure to priorities and the Board’s the over strategy Company term. medium to short at payout of level The financial metrics for threshold than 40% of be more will not non- for varies maximum, and financial metrics. place take will vesting Full exceeding equalling or for the to maximum, subject underpin. health and safety has Committee The the adjust to discretion ensure to outcome payment the individual’s it reflects the overall and/or contribution the Company of performance period. the performance over the performance Details of set used are measures Annual Report the out in on Remuneration. Annual Report and Accounts 2020 Accounts and Annual Report Not applicable. Not Maximum opportunityMaximum to Framework maximum. basic salary 120% of be based on bonus may The ement of results; results; ement of material corporate failure; or or failure; corporate onduct by onduct by in assessing a material misstat material error misc gross the case of in the case of in damage. reputational  condition; performance  the individual;

Executive directors are required to required are directors Executive a minimum shareholding accumulate basic salary. 200% of to equivalent months of three Within a period of director appointment an executive 1,000 a minimum of must acquire the Company in shares ordinary any at least 50% of and must retain the PSP, under awarded shares tax, until paying for allowance after has shares of number the requisite been accumulated. make circumstances personal If would the Committee this difficult, discretion. exercise (ii) (iii) (iv) Operation payable normally Annual bonuses are the following in cash in November the to subject July, end on 31 year targets performance of achievement the the start of set at were that year. financial a recovery operates Company The the which allows mechanism some or clawback to Company made under the payments all of an of components variable the the in remuneration, individual’s circumstances: following (i) (v)

shareholders. shareholders. To align executive align executive To interests directors’ with those of Share ownership guideline for executive directors executive guideline for ownership Share Annual bonus reward To with achievement a combination financial andof non-financial operational-based performance in targets with accordance KPIs. Group Component andComponent to strategy link Remuneration Report continued

Component and Operation Maximum opportunity Framework to link to strategy assess performance Long-term incentives (‘PSP’)

To encourage The Company operates a PSP as its 150% of basic salary. PSP awards are subject to long-term primary long-term incentive. stretching three-year targets. value creation, Annual awards of nil-cost options or The current awards are aid retention, conditional awards may be made subject to relative TSR encourage under the PSP to the executive conditions against relevant shareholding and directors, at the discretion of comparator companies. promote alignment the Committee. of interests 25% will vest at threshold with shareholders. Awards normally vest three years after with full vesting taking grant, subject to the achievement of place for equalling or stretching performance targets. exceeding maximum. Dividend equivalents (in cash or For future awards the shares) may be payable, and will only Committee may choose accrue during the vesting and holding a financial measure, such period on awards that ultimately vest. as EPS, RoCE or NAV, in conjunction with or as an The Company operates recovery alternative to TSR, depending and withholding mechanisms which on the medium to long-term allow the Company, in exceptional priorities of the Group at the circumstances, to clawback some time of grant. or all of the payments made, or recover unvested awards, in the If the Committee decides following circumstances: to introduce a financial measure, it will carry out (i) material misstatement of results; prior consultation with (ii) error in assessing a major shareholders. performance condition; The Committee has discretion (iii) gross misconduct by to adjust the vesting outcome the individual; in exceptional circumstances to ensure it is a true reflection (iv) in the case of corporate failure; or of the overall performance (v) in the case of material of the Company over the reputational damage. performance period. A minimum holding period of two Further details of the years applies to awards post vesting. performance metrics applying to the awards are set out in the Annual Report on Remuneration. All-employee share schemes

To encourage The executive directors can participate Subject to prevailing Not applicable. employees to in any HMRC-approved all-employee HMRC limits. build a stake plans operated by the Company. in the future of the Company.

Bellway p.l.c. 88 Annual Report and Accounts 2020 Governance 89 Bellway p.l.c. Bellway e assess performanc The performance of the of performance The is directors non-executive the Chairman. assessed by independent non- senior The reviews director executive the of the performance with Chairman in conjunction the directors. Annual Report and Accounts 2020 Accounts and Annual Report Maximum opportunityMaximum to Framework Not applicable. Not Operation by is determined fee Chairman’s The Committee. the Remuneration the non- of remuneration The is determined directors executive on Committee the Board by Directors’ Non-Executive which comprises Remuneration, directors. the executive reviewed normally are levels Fee time the account taking into annually, of and responsibilities commitment or including membership the roles committees Board chairmanship of similar for fees of the level and companies. positions in comparable not are directors Non-executive benefits or any to entitled normally in participate do not They pension. incentive long-term bonus or any to entitled not are they plans and their of termination on compensation than normal other arrangements, months three of provisions notice party. either by given and other accommodation Travel, in incurred expenses related will be paid the role carrying out including any the Company by with taxation associated personal such expenses. For the avoidance of doubt, under this Directors’ Remuneration Policy, authority is given to the Company to honour any any honour to the Company to is given authority Policy, Remuneration this Directors’ under doubt, of the avoidance For at in force policy remuneration the approved with that is consistent directors former or with current into entered commitments been disclosed previously as have approved, was policy the current made before if made (or, was the commitment time the any Details of Company. the of a director not was individual the relevant when time the made at was or shareholders), to arise. they as on Remuneration Annual Report the will be set out in directors former to made payments Chairman and non-executive directors Chairman and non-executive appropriate set To thefees in light of time commitment, responsibilities, and market wider best practice. Component andComponent to strategy link Remuneration Report continued

Approach to recruitment remuneration In arriving at a total package and in considering the 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 Discretion to pay lower basic salary with incremental increases, most appropriate candidate. potentially higher than for the general workforce, as new appointee becomes established in the role. Pension and benefits In accordance with Company Additional benefits in relation to recruitment may be provided policies. where considered appropriate, for example, relocation expenses or allowances, legal fees and other recruitment-related costs may be payable. Any new director’s pension contributions will be in line with the wider workforce. The current employer pension contribution rate is between 5% and 10% of salary. Bonus In accordance with existing Depending on the timing of recruitment, bespoke targets could be schemes. 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. Long-term incentives In accordance with Company An award may be made in the year of joining or, alternatively, the (PSP) policies and maximum limits in award can be delayed until the following year. the PSP rules. 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 and this policy. Buyout of The Committee may make Awards would, where possible, be consistent with the awards forfeited remuneration an award in cash or shares to forfeited in terms of the vehicle, structure, vesting periods, expected replace deferred or incentive value and performance conditions. 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). Service contracts and loss of office payment policy The details of the executive directors’ service contracts are as follows:

Executive director First appointed as a Current contract Notice period from Notice period from director commencement date employer executive Jason Honeyman 1 September 2017 1 August 2018 6 months 6 months Keith Adey 1 February 2012 1 February 2012 12 months 6 months 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. Neither of the executive directors currently holds any outside appointments. All non-executive directors have letters of appointment with the Company for no more than three years, subject to annual reappointment at the AGM, with a three-month notice period by either side. The appointment letters for the Chairman and non-executive directors provide that no compensation is payable on termination, other than fees accrued and expenses.

Non-executive director First appointed Current letter Current letter of as a director of appointment appointment commencement date Paul Hampden Smith 1 August 2013 12 December 2018 12 December 2021 Denise Jagger 1 August 2013 1 August 2019 31 July 2022 Jill Caseberry 1 October 2017 1 October 2017 30 September 2023 Ian McHoul 1 February 2018 1 February 2018 31 January 2021

Bellway p.l.c. 90 Annual Report and Accounts 2020 Governance 91

Bellway p.l.c. Bellway (3) Annual Report and Accounts 2020 Accounts and Annual Report The Company may pay for for pay may Company The and assistance support outplacement with legal fees. Awards may be exercised within be exercised may Awards date. vesting the 12 months of ends before employment Where be may awards date, vesting the time vesting the normal at exercised and only exception) than by (other the performance that extent the to been satisfied. have conditions will be award vested of level The based upon pro-rata, reduced, the grant time after the period of ofthe date and ending on date to relative employment, of cessation period performance three-year the acting fairly the Committee, unless that such a decides and reasonably, in any is inappropriate scaling back case. particular For the proportion of the financial of the proportion For be payable bonus may worked, year at performance, to subject pro-rata, the Committee. of the discretion Apart from death, the Company may may the Company death, Apart from basic salary, 12 months’ to up pay period less any benefits and pension, worked. notice of be phased and may Payments alternative offsetting against to subject the during elsewhere from income period. notice in lieu pay may Company The an amount equivalent notice of pension salary, 12 months’ to and benefits. Good leaver (2) Depending upon circumstances, the Depending upon circumstances, in payments consider may Committee dismissal award, an unfair of respect and assistance support outplacement with legal fees. Awards will lapse upon cessation ofwill lapse upon cessation Awards the Committee unless employment, which case in decides otherwise, vest. may awards the ends before employment Where the at vest may awards date, vesting exception) than by time (other normal the performance that extent the to been satisfied. have conditions will be award vested of level The based upon pro-rata, reduced, the grant time after the period of ofthe date and ending on date to relative employment, of cessation period performance three-year the acting fairly the Committee, unless that such a decides and reasonably, in any is inappropriate scaling back case. particular year worked, bonus may be payable be payable bonus may worked, year performance, to subject pro-rata, the Committee. of the discretion at will be no bonus payment There notice period of any of in respect worked. not Up to 12 months’ basic salary, benefits basic salary, 12 months’ to Up and pension. be phased and may Payments alternative offsetting against to subject the during elsewhere from income period. notice in lieu pay may Company The an amount equivalent notice of pension salary, 12 months’ to and benefits. Departure on agreed terms on agreed Departure (1) Nil. All awards, All awards, thoseincluding which have but are vested will unexercised lapse immediately upon cessation employment. of No bonus payable.No the financial of proportion the For Nil. Bad leaver y cover a range of circumstances such as business reorganisation, changes in reporting structure, change in requirements for the role, termination as a result of a failure to beto a failure of as a result termination the role, for change in requirements structure, changes in reporting such as business reorganisation, circumstances of a range cover y ver for compassionate reasons such as death, injury, disability or retirement, with the agreement of the employer. of the agreement with retirement, or disability such as death, injury, reasons compassionate for ver example, normal resignation from the Company or termination for cause (e.g. disciplinary issues). disciplinary cause (e.g. for termination or the Company from normal resignation example, For ma This Lea re-elected at an AGM, etc. AGM, at an re-elected

Other payments Other PSP (and SMP awards awards SMP (and PSP in 2014granted before) or Annual bonus 2. Notes: 1. 3. Element pension and Salary, cessation benefits (after employment) of The overriding principle for payments on loss of office will be to honour contractual remuneration entitlements. The CommitteeThe entitlements. remuneration contractual honour to will be office on loss of payments principle for overriding The taking the package, elements of performance-linked of treatment appropriate the an equitable basis, on determine, would be rewarded. will not plan. Failure respective each the rules of with accordance in the circumstances, of account the by be reimbursed may the director by incurred legal expenses of costs claims. Reasonable statutory pay may Company The adviser. the professional to payment making direct by Company Remuneration Report continued

Illustrations of application of current remuneration policy The remuneration policy results in a significant portion of remuneration received by executive directors being dependent on the Group’s performance. The chart below illustrates how the total pay opportunities for the executive directors vary under three performance scenarios: minimum, target and maximum. The chart is indicative, as share price movement and dividend accrual have been excluded unless otherwise noted.

Group Chief Executive Group Finance Director

872 1,802 2,732 3,249 514 1,054 1,595 1,895 3,500

3,000

2,500 48%

38% 2,000

£00 0 29% 1,500 48% 30% 25% 38% 23% 1,000 28% 30% 25% 23% 500 100% 48% 32% 27% 100% 49% 32% 27% 0 Minimum Target Maximum Maximum Minimum Target Maximum Maximum with share with share price growth price growth

Fixed pay Annual bonus Long-term share awards

Notes: 1. Chart labels show proportion of total package comprised of each element. 2. Assumptions: • Minimum: fixed pay only (salary + benefits + pension/pay in lieu of pension). Salary is based on actual for 2020/21, benefits are based on the value of actual benefits received in 2019/20 and pension/pay in lieu of pension is based on policy of 20% of salary applicable in 2020/21. • Target: fixed pay plus 50% of maximum bonus payment plus PSP award of 150% of salary with 50% of the award vesting. • Maximum: fixed pay plus 100% of maximum bonus payment plus PSP award of 150% of salary with 100% of the award vesting. • Maximum with share price increase: the Maximum scenario with the impact of a 50% increase in share price on the PSP illustrated.

Bellway p.l.c. 92 Annual Report and Accounts 2020 Governance 93 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report The directors have proposed a final proposed have The directors ended year the for dividend ordinary share. per 50.0p of 2020 July 31 52 to 53 to 52 Articles the 58 and in 79 Report the Strategic 31 of 132 Report the Strategic 44 and 45 of Report the Strategic 12 of Report the Strategic 45 of 71 Report the Strategic 41 of Report the Strategic 42 of Page number Page

Simon Scougall General Group Counsel & Company Secretary Company Directors’ indemnities and directors’ and officers’ liability insurance liability and officers’ indemnities and directors’ Directors’ officers against its directors, taken possible legal action being of in respect cover insurance carries appropriate Company The parties, third to against liability protection with further and officers the directors Articles provide The employees. and senior as in force remains provision indemnity third-party qualifying 2006. Such Act the Companies set out in the conditions to subject this report. of the date at Results and dividends Results million). £192.9 million (2019 – £538.6 to amounts company the parent of holders equity to attributable year the for profit The has This 100.0p). – (2019 share per 50.0p of 2020 July 31 ended year the for dividend ordinary final a proposed have directors The directors The year. the financial the end of before shareholders by approved not was as it within creditors been included not the close of at Members of the Register on shareholders to 2020 January 8 the final dividend on Friday of payment recommend 2020. 27 November business on Friday 2019. July ended 31 year the of respect in share per 100.0p dividend of the final comprise year the paid during Dividends pandemic. the COVID-19 the global impact of to 2020 due July ended 31 year the to paid in respect was dividend interim No Directors Topic The directors of Bellway p.l.c. present their report in accordance with section 415 of the Companies Act 2006. Act the Companies with section 415 of in accordance report their p.l.c. present Bellway of directors The are whose shares company listed publicly and is a UK companies of group the Bellway of the holding company p.l.c. is Bellway subsidiaries all other this and and Limited Homes is Bellway company trading main The Exchange. Stock the London on traded the accounts. to 27 in note listed are the Group of and joint arrangements but Report, the Directors’ on in be reported to which is required can be found information where table sets out following The repetition. avoid to here cross-referenced is simply and Accounts, and Annual Report the in has been included elsewhere directors of Appointment and replacement interests Directors’ developments Future undertakings Group issues Environmental s172 statement/reporting gas emissions Greenhouse Whistleblowing management risk Financial Going concern Directors’ Report Directors’ Report continued

Major interests in shares As at 31 July 2020 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 2020 As at 14 October 2020 Number of % total Number of % total shares with voting rights shares with voting rights voting rights voting rights Standard Life Aberdeen plc 7,219,186 5.86 n/a n/a Dimensional Fund Advisors LP 6,148,373 4.99 6,148,373 4.99 Polaris Capital Management, LLC 4,956,926 4.02 4,956,926 4.02 Credit Suisse Securities (Europe) Ltd 3,890,282 3.38 3,890,282 3.38 Post balance sheet events There were no post balance sheet events. 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 that the Group considers to be critical to the performance of the business. Takeovers directive and change of control The Company is party to a number of banking agreements that may be terminable in the event of a change of control of the Company. On a change of control any outstanding options and awards granted under the Group’s share schemes would become exercisable, subject to any performance conditions being met. Share capital The Company’s total issued share capital, as at 31 July 2020, consisted of 123,345,834 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 General Counsel and 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 compliance with the Company’s Share Dealing Code, Company approval is required for directors, certain employees and those persons closely associated with them 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 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. Amendments to the Articles The Company may amend its Articles by passing a special resolution at a general meeting of its shareholders. Powers of the Board The business and affairs of the Company are managed by the directors, who may exercise all such powers of the Company as are, not by law or by the Articles, required to be exercised by the Company in general meetings. Subject to the provisions of the Articles, all powers of the directors are exercised at meetings of the directors which have been validly convened and at which a quorum is present. Allotment of shares During the year, 178,006 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, including the resolutions which seek to renew this authority, are set out in the Notice of Meeting of the AGM, to be held on Friday 11 December 2020.

Bellway p.l.c. 94 Annual Report and Accounts 2020 Governance 95 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report Disclosure of all relevant information to the auditor to information of all relevant Disclosure audit is no relevant there each aware, are they as that, so far confirm this report of the date at who held office directors The to she ought that he or the steps all taken has that each director and is unaware auditor the Company’s which of information the Company’s that establish to and audit information relevant any of aware herself or himself make to as a director taken have of the provisions with in accordance and should be interpreted is given confirmation This that information. of is aware auditor 2006. Act the Companies section 418 of AGM – special business AGM on notes Explanatory 2020. 11 December be held on Friday to AGM the as special business at will be proposed Six resolutions AGM. the of Meeting of the Notice set out in are these resolutions Auditor Auditor supervisedwas process tender The auditors. new the appointment of for process tender a commenced the Company In 2019, auditor. the replacement the appointment of on the Board to who made a recommendation Committee, Audit the by LLP Young Ernst & appointment of the proposed approved the Board process, tender the formal of the conclusion Following by approval to subject appointment remains The 2020. August 1 commencing year financial the for Auditor the Company’s as the be passed, the resolution and should 2020, 11 December be held on Friday to Meeting Annual General the at shareholders that meeting. of the conclusion from effect take will appointment as will resign and Meeting Annual General the 2019 at shareholders by auditors the external as reappointed were KPMG LLP Meeting. Annual General the 2020 of the conclusion following auditor We promote all aspects of health and safety throughout our operations in the interests of employees, subcontractors, suppliers, subcontractors, employees, of the interests in operations our throughout health and safety aspects of all promote We meeting and are at each Board considered are issues and safety Health and premises. sites our to visitors and customers receives Board The www.bellwayplc.co.uk/corporate-responsibility. at website and on our Report the Strategic in addressed obligations. regulatory the Company’s and the directors’ on both specialist advisers from training and advice external Health and safety at work at and safety Health People provide disclosures following The Report. the Strategic throughout is described people perform that our important role The them.with engage we people and how our treat we on how additional information and practices procedures the Group, throughout and apply, develop to policy is our It equal opportunities employer. an are We employment who seek those or employees, our all of to provided are that equal opportunities ensure to designed which are status, race, parental marital status, nationality, ethnic origin, gender, disability, age, colour, their of irrespective the Group, with orientation. sexual or belief religion, promotion, employment, for Selection and equally. fairly treated are temporary, part-time, full-time or whether All employees, and supported are All employees and ability. aptitude the basis of is on employment their affecting matters other or training the maximise to utilised fully are workforce the of talents and resources the and full potential their to develop to encouraged plan.training an annual through and monitored at each division is planned Training the organisation. of efficiency who become persons (and disabled persons needs of employment the to consideration full and fair give to policy is our It disabled persons. to with regard legislation current any with comply to and the Group) by employed whilst disabled team. management and senior the directors by recognised is with employees good communications of importance The using a relations each division maintains good employee basis and on a regular employees our of all to is issued newsletter A Office. Head from when necessary with guidance needs, particular its own to means appropriate of variety operate we In addition, pension arrangements. the Group’s into entered automatically when eligible, are employees, All new assurance life also provide We in place. bonus arrangements discretionary scheme and have option share a savings-related vouchers. childcare and offer on seniority) scheme (depending medical a private offer employees, our all of to cover The Going Concern Statement, Long-Term Viability Statement and the Statement of Directors’ Responsibilities in respect of the of in respect Responsibilities Directors’ of the Statement and Statement Viability Long-Term Statement, Going Concern The on pages 42, 42 and 96 respectively. shown are Statements and Financial Annual Report auditor, Company’s the with year a twice at least 71, has meetings to is detailed on pages 62 whose role Committee, Audit The KPMG LLP. Listing Rules the Company. to that apply LR9.8.4 by required no disclosures are There and audit Accountability Purchase of the Company’s own shares own of the Company’s Purchase this of the date at As shares. ordinary its own purchase to 2019 on 11 December AGM the at authority given was Company The AGM. the forthcoming end of the at expire will authority This Company. the by been made have purchases no market report, set out are year a further for this authority renew to which seeks the resolution including this authority of the renewal Details of AGM. the of Meeting of the Notice in Directors’ Report continued

Statement of Directors’ responsibilities in respect of the Annual Report and the Financial Statements The directors are responsible for preparing the Annual Report 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 International Financial Reporting Standards as adopted by the European Union (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, relevant and reliable. • State whether they have been prepared in accordance with IFRSs as adopted by the EU. • Assess the Group and parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern. • Use the going concern basis of accounting unless they either intend to liquidate the Group or the parent company or to cease operations, or have no realistic alternative but to do so. 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 are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and 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 the Financial Statements 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. • the Strategic Report includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face. We consider the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s position and performance, business model and strategy. By order of the Board

Simon Scougall Group General Counsel & Company Secretary

19 October 2020

Bellway p.l.c. 96 Annual Report and Accounts 2020 Governance 97 vs 2019 vs

Bellway p.l.c. Bellway Going concern £21 million (2019: £31 million) profit normalised group of 4.1% profit tax (2019: 4.7% group before tax) before group 100% (2019: 100%) of tax before profit on sales recognition Cost of and carrying sites current land held for amount of work and development in progress of Recoverability company’s parent in investment subsidiaries and by amounts owed undertakings Group New: Annual Report and Accounts 2020 Accounts and Annual Report Overview financial Group Materiality: whole statements as a Coverage audit matters Key risks Recurring driven Event We were first appointed as auditor by the Company before before the Company by as auditor appointed first were We is for engagement uninterrupted total period of The 1979. have We 2020. July ended 31 years than 40 financial more remain we and under, ethical responsibilities fulfilled our ethicalwith, UK in accordance the Group independent of as applied Ethical Standard the FRC including requirements non-audit services entities. No public interest listed to provided. were that standard by prohibited e a true and fair view of the of view true and fair e a ve been prepared in accordance in accordance been prepared ve ements have been properly been properly ements have y financial statements have been have financial statements y the financial statements ha the financial statements 2006 and,Act the Companies of the requirements with the Article 4 of financial statements, the Group as regards Regulation. IAS state of the Group’s and of the parent Company’s affairs Company’s the parent and of the Group’s of state year the for profit the Group’s 2020 and of as at 31July then ended; Compan the parent the financial statements giv the financial statements financial stat the Group by as adopted IFRSs with in accordance prepared properly of the provisions with the EU and as applied in accordance and 2006; Act the Companies prepared in accordance with International Financialwith International in accordance prepared Union European the by as adopted Standards Reporting the EU); by as adopted (IFRSs

Basis for opinion Basis for with International audit in accordance our conducted We (UK)”) and applicable (UK) (“ISAs Auditing on Standards believe We described below. are responsibilities Our law. is a sufficient obtained have we the audit evidence that audit opinion is opinion. Our our basis for and appropriate the audit committee. to report with our consistent • • 1. Our opinion is unmodified 1. Our p.l.c. Bellway of the financial statements audited have We which 2020 July ended 31 year the for (“the Company”) of Statements Statement, Income the Group comprise in Equity, Changes of Statements Income, Comprehensive notes, related the and Statements Sheets, Cash Flow Balance policies.the accounting including opinion: In our • • Independent Auditor’s Report to the Members of Bellway p.l.c. Independent of Bellway to the Members Report Auditor’s Independent Report Auditor’s Independent Auditor’s Report continued

2. Key audit matters: our assessment of risks of material misstatement Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. We summarise below the key audit matters, in decreasing order of audit significance, in arriving at our audit opinion above, together with our key audit procedures to address those matters and, as required for public interest entities, our results from those procedures. These matters were addressed, and our results are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial statements as a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on these matters.

The risk Our response Group: Cost of sales Subjective estimate: Our procedures included: recognition and carrying The cost of sales recognised is based upon • Tests of details: For all sites with unit sales during the amount of land held for an allocation of whole site costs to each year, comparing the gross profit margin recognised to the development and work in plot when it is legally completed. Cost of latest site valuation and determining whether variances progress sales is subject to estimation uncertainty as are supported by changes in site valuations and post year Land held for development it is reliant on the Group’s estimate of future end sales; and work in progress selling prices and associated build costs, both • Tests of details: For a sample of undeveloped land sites, (£3,837 million; 2019: £3,428 of which are uncertain and can vary with corroborating explanations received from divisional million) market conditions. Further, the future market management as to their status by assessing underlying uncertainties surrounding the impacts of Cost of sales planning and legal documents and quantity surveyor COVID-19 may influence market conditions. assessments where applicable; (£1,803 million; 2019: £2,423 The assessment of recoverability of million) • Tests of details: For a sample of sites, assessing the the carrying amount of land held for accuracy of inputs in to the valuations such as sales price Refer to page 65 (Audit development and work in progress is also forecasts to actual selling prices after the year end and Committee Report), pages 110 dependent on these same estimates. cost forecasts to latest assessments and external evidence and 114 (accounting policies) The level of uncertainty from COVID-19 such as purchase and variation orders; and note 14 on page 122 impacting the Group’s assessments of the (financial disclosures). • Tests of details: For a sample of sites which, due to their future economic environment may influence size and/or complexity, we considered at higher risk of the Group’s estimates of net realisable value. misstatement comparing the period end carrying amount The effect of these matters is that, as part recorded to that determined by divisional management of our risk assessment, we determined and performing a comparison to the actual costs incurred that the cost of sales estimate of £1,803 to verify that any abnormal costs or build variances million and carrying amount of land held incurred, including those related to COVID 19 disruption, for development and work in progress have been appropriately identified and accounted for in of £3,837 million have a high degree of the period; estimation uncertainty, with a potential range • Tests of details: Identifying low and negative margin sites of reasonable outcomes greater than our and assessing the completeness and accuracy of related materiality for the financial statements as a net realisable value provisions recorded, particularly in whole, and possibly many times that amount. light of market conditions due to COVID 19; The financial statements accounting policies note discloses the sensitivity estimated by the • Historical comparisons: For all sites that have been legally Group. completed during the year performing a retrospective review to compare the budgeted gross profit margin with the margin actually achieved, and corroborating the reasons for significant variances; • Historical comparisons: Comparing budgeted and latest site valuations to assess the Group’s ability to accurately forecast, and corroborating the reasons for significant variances; and • Assessing transparency: Assessing the adequacy of the group’s disclosures about the degree of estimation involved in calculating cost of sales and carrying amount of land and work in progress. Our results • We found the carrying amount of land and work in progress to be acceptable (2019 result: acceptable). • We found the level of cost of sales recognised to be acceptable (2019 result: acceptable).

Bellway p.l.c. 98 Annual Report and Accounts 2020 Governance 99 Bellway p.l.c. Bellway er the level of available available of the level er Assessing the audit work the audit Assessing Annual Report and Accounts 2020 Accounts and Annual Report ey reactive measures the Group could the Group measures reactive ey : 1 Comparing the carrying amount of detail: Comparing ound the group’s assessment of the recoverability the recoverability of assessment the group’s ound ssessing subsidiary audits: ssessing subsidiary performed by the subsidiary audit teams on all of those on all of teams audit the subsidiary by performed work,that of the results subsidiaries and considering and net assets, including profits those subsidiaries’ on the ability therefore the assets and of the liquidity assessing the receivable. of the repayment fund to the subsidiary of 100% of investments with the relevant subsidiaries’ subsidiaries’ the relevant with investments 100% of net assets, their whether identify to sheet balance draft minimum recoverable their of being an approximation carrying amount and their of in excess were amount, historically those subsidiaries have whether assessing amounts owed 100% of Assessing making. been profit- the to with reference identify, to undertakings Group by have they whether sheet, balance draft debtors’ relevant the of coverage therefore and value net asset a positive those debtor whether as assessing well as owed, debt been profit-making. historically have companies by in subsidiaries and amounts owed the investment of (2019: acceptable). be acceptable to undertakings Group financial resources and headroom over debt covenants covenants debt over headroom and financial resources taking financial forecasts the Group’s by indicated unrealistic) possible (but not reasonably of account the rapidly arise from that could effects adverse situation; COVID-19 changing and uncertain whether and scenario a downside of the event in take control. the Group’s in fully were those measures We f We Tests of Tests A Considering sensitivities ov Considering sensitivities the k Considering

Our response Our Our results: Our • • • • detail: of Tests and projections the cash flow of the integrity Testing assumptions the key of the appropriateness challenging the of knowledge our to reference by therein used by and assumptions the projections Assessing business. end year and post conditions market general to reference and cash flows. trading transparency: Assessing the matters of and accuracy the completeness Assessing to with reference disclosure the going concern in covered procedures. the above audit findings from our disclosure the going concern found We results: Our (2019 be acceptable to uncertainty material without any acceptable). result: Our procedures included: procedures Our • Our procedures included: procedures Our assessment: Funding the by financing secured committed of the level Assessing the to reference end by year the as at and following Group loan agreements. Group’s Historical comparisons: the cash flow of the reasonableness assessed We forecast to the actual results comparing by projections for the reasons and corroborating years, in previous results variances. significant analysis Sensitivity y audit. osts or delays in build delays osts or gage availability; ernment regulation and policy; ernment regulation osion of customer or supplier supplier or customer osion of ertainty in macro political and economic macro in ertainty Increases in build c in Increases Changes in gov in mort Reductions Unc and factors; er The confidence, programmes;

The risk Low risk, high value: risk, high Low Company’s the parent carrying amount of The 7% in subsidiaries represents investments assets andtotal the Company’s (2019: 6%) of by the amounts owed carrying amount of 83% (2019: 85%) undertakings represents Group Their assets. total Company’s the parent of significant of at a high risk is not recoverability judgement. significant to subject or misstatement of the context in materiality their to due However, this is financial statements, Company the parent the greatest that had the areas be to considered Compan parent overall on our effect • • • of reduction in a rapid result which could financial resources. available those not or whether was audit our for risk The a materialto amounted they that such were risks cast significant doubt have that may uncertainty concern. as a going continue to the ability about have would that fact then been such, they Had been disclosed. have to been required Disclosure quality Disclosure the Board how explain financial statements The to that it is appropriate judgement a has formed for preparation basis of the going concern adopt Company. and parent the Group of judgement is based on an evaluation That Company’s and the Group’s to risks the inherent those risks might affect business model and how resources financial and Company’s the Group’s a period of over operations continue to ability or the of approval of the date from year at least a financial statements. the affect adversely to most likely risk The financial available and Company’s Group’s the impact of was period this over resources whole leading as a the economy on Covid-19 and cash in revenue a significant decrease to inflows. but realistic also less predictable are There such as impacts, order second • • Company: Recoverability Recoverability Company: company’s parent of in subsidiaries investment by and amounts owed undertakings Group subsidiariesin Investment million; 2019: £41.4 (£37.8 million) Group by Amounts owed undertakings million; 2019:(£432.8 £546.5 million) page 110to Refer policy) (accounting and pages 121 and 123 (financial disclosures). In the prior year, we reported a Key Audit Matter in respect of the impact of uncertainties due to the UK exiting the European the European exiting the UK to due uncertainties the impact of of in respect Matter Audit a Key reported we year, the prior In the relative preparation, own the Group’s including report, year the prior since developments of a result As audit. on our Union carrying and sites on current sales recognition of the cost to including in relation work, audit on our this matter of significance nowe Accordingly, has reduced. audit matter, a key which remains in progress work and development land held for amount of audit matter. this a key consider longer Going concern page 66 (Auditto Refer and Report) Committee page 109 (accounting policy) Independent Auditor’s Report continued

3. Our application of materiality and an overview Normalised profit Group materiality of the scope of our audit before tax £21 million (2019 – £31 million) £513.4 million Materiality for the group financial statements as a whole (2019 – £662.6 million) £21 million was set at £21.0 million, determined with reference to a Whole financial statements materiality benchmark of normalised group profit before tax, normalised (2019 – £31 million) by averaging over the last three years due to the impact of COVID-19, of £513.4 million, of which it represents £20.79 million 4.1% (2019: 4.7% of group profit before tax). We revised Range of materiality at ten components our evaluation of materiality as the audit progressed by (£0.001 million – £20.79 million) reassessing the amount and percentage of the benchmark (2019 – £0.001 million compared with that selected at the planning stage. This was to £27.0 million) a result of the impact of COVID-19 and the decrease in the £1.05 million forecast benchmark. Misstatements reported to the audit committee Materiality for the parent company financial statements as a Profit before tax (2019 – £1.55 million) Group materiality whole was set at £5.4 million (2019: £10.6 million), determined with reference to a benchmark of company total assets, of which it represents 1.0% (2019: 1.7%). We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding £1.05 million (2019: £1.55 million), in addition to other Group revenue Group profit before tax identified misstatements that warranted reporting on qualitative grounds. Of the Group’s nine (2019: nine) reporting components, we subjected nine (2019: nine) to full scope audits for Group purposes. 100% 100% The components within the scope of our work accounted (2019 - 100%) (2019 - 100%) for the percentages illustrated opposite. 100 100 For the three (2019: three) residual components, we 100 100 performed analysis at an aggregated group level to re- examine our assessment that there were no significant risks of material misstatement within these. The Group team approved component materialities ranging from £0.001 million to £20.79 million (2019: £0.001 million Group total assets Group profit before to £27.0 million), having regard to the mix of size and risk exceptional items and tax profile of the Group across the components. The work on all of the components (2019: all components), including the audit of the parent Company, was performed by the Group team. The Group team performed procedures on the items excluded from normalised group profit before tax. 100% 100% (2019 - 100%) (2019 - 100%)

100 100 100 100

Full scope for Group audit purposes 2020 Residual Components 2020 Full scope for Group audit purposes 2019 Residual Components 2019

Bellway p.l.c. 100 Annual Report and Accounts 2020 Governance 101

Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report the annual report describing the work of the of work the describing the annual report isks disclosures describing these risks and describing isks disclosures ors’ confirmation within the Long-Term Viability Viability the Long-Term within confirmation ors’ Viability the Long-Term in explanation ors’ ate governance statement has not been prepared been prepared has not statement governance ate ve identified material inconsistencies between the between inconsistencies identified material ve a corpor the company. by we ha we the section of matters address appropriately does not Committee Audit or Committee; Audit the to us by communicated the direct carried out a robust have they that on page 42 Statement the and principal risks facing the emerging assessment of its business threaten would that those including Group, and liquidity; solvency performance, model, future R the Principal the direct of the prospects assessed have they how of Statement so and done have they period what over the Group, and be appropriate, to period that considered they why a reasonable have they whether to as statement their in continue to will be able the Group that expectation the fall due over they and meet its liabilities as operation disclosures related including any assessment, their period of qualifications necessary any to attention drawing assumptions. or financial statements during our acquired we knowledge that consider they that statement the directors’ audit and as a taken and financial statements the annual report and provides and understandable balanced whole is fair, the assess to shareholders for necessary the information business model and position and performance, Group’s or strategy; explaining how they are being managed and mitigated; and being managed and mitigated; are they how explaining

We are required to report to you if the Corporate Governance Governance the Corporate if you to report to required are We the from disclose a departure properly does not Statement Code specified Governance Corporate the UK of provisions review. our for the Listing Rules by these respects. in report to nothing have We • Directors’ remuneration report report remuneration Directors’ Report Remuneration Directors’ the of the part opinion In our in accordance prepared been properly has be audited to 2006. Act the Companies with principal risks and and emerging of Disclosures viability longer-term financial during our acquired we the knowledge Based on draw add or to material nothing have we audit, statements to: in relation to attention • • the Long- review to required are we Rules the Listing Under in report to nothing have We Statement. Viability Term this respect. the context in these matters assessing to is limited work Our financial our during acquired the knowledge only of or events all future predict cannot we As audit. statements in outcomes result may and as subsequent events conditions at reasonable were that with judgments inconsistent that are report to anything of the absence made, were they time the and the Group’s to as a guarantee is not these statements on viability. longer-term Company’s disclosures governance Corporate if: you to report to required are We • • • the information given in those reports for the for those reports in given the information in been prepared have those reports ed statement under the Listing Rules set out onthe Listing Rules under ed statement ve anything material to add or draw attention to attention draw add or to material anything ve ve not identified material misstatements in the in misstatements identified material not ve ormation in the Annual Report ormation in the We have nothing to report on the other on the other report to nothing have We inf financial year is consistent with the financial statements; and the financial statements; with is consistent year financial 2006. Act the Companies with accordance in our opinion opinion in our opinion in our we ha we report; the directors’ and report strategic the relat knowledge. audit our with inconsistent materially is 42 page we ha we the accounting in statement the directors’ to in relation the going the use of on the financial statements policies in uncertaintieswith no material accounting basis of concern and the Group over cast significant doubt that may at least of a period that basis for of use Company’s the financial of approval of the date months from twelve or statements;

• • The directors are responsible for the other information the other for responsible are directors The the financialwith together Annual Report the in presented doesthe financial statements opinion on Our statements. do not we and, accordingly, information the other cover not below, stated as explicitly except an audit opinion or, express thereon. conclusion assurance of form any and, information the other read to is responsibility Our financial based on our whether, in doing so, consider is materially therein the information work, audit statements our or the financial statements with inconsistent or misstated not have we work that on Based solely audit knowledge. information. the other in misstatements identified material report and directors’ report Strategic information: the other on work on our Based solely • We have nothing to report in these respects. in report to nothing have We 5. • 4. We have nothing to report on going concern on report to nothing have We 4. the on financial statements the prepared have Directors The the liquidate to intend do not they basis as going concern and as operations, their cease to or the Group or Company Group’s the and the Company’s that concluded have they also have They this is realistic. that financial position means that could uncertainties no material are there that concluded as a continue to ability their over doubt cast significant have of approval of the date from year at least a for going concern period”). (“the going concern the financial statements of the appropriateness on conclude to is responsibility Our been a material there had and, conclusions the Directors’ to reference make to going concern, to related uncertainty all predict cannot we as However, this audit report. that in may events and as subsequent conditions or events future thatwith judgements inconsistent that are in outcomes result the absence made, were they time the at reasonable were report this auditor’s in uncertainty a material to reference of will the Company and the Group that a guarantee is not in operation. continue (see audit matter as a key identified going concern We described in our work the Based on this report). section 2 of to report to required are we audit matter, that key to response if: you • Independent Auditor’s Report continued

Based solely on our work on the other information 7. Respective responsibilities described above: Directors’ responsibilities • with respect to the Corporate Governance Statement As explained more fully in their statement set out on page disclosures about internal control and risk management 96, the directors are responsible for: the preparation of the systems in relation to financial reporting processes and financial statements including being satisfied that they give a about share capital structures: true and fair view; such internal control as they determine is — we have not identified material misstatements therein; necessary to enable the preparation of financial statements and that are free from material misstatement, whether due to fraud or error; assessing the Group and parent Company’s — the information therein is consistent with the financial ability to continue as a going concern, disclosing, as statements; and applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend • in our opinion, the Corporate Governance Statement to liquidate the Group or the parent Company or to cease has been prepared in accordance with relevant rules of operations, or have no realistic alternative but to do so. the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority. Auditor’s responsibilities 6. We have nothing to report on the other matters Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from on which we are required to report by exception material misstatement, whether due to fraud or other Under the Companies Act 2006, we are required to report to irregularities (see below), or error, and to issue our opinion in you if, in our opinion: an auditor’s report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted • adequate accounting records have not been kept by the in accordance with ISAs (UK) will always detect a material parent Company, or returns adequate for our audit have not misstatement when it exists. Misstatements can arise from been received from branches not visited by us; or fraud, other irregularities or error and are considered material • the parent Company financial statements and the part of if, individually or in aggregate, they could reasonably be the Directors’ Remuneration Report to be audited are not in expected to influence the economic decisions of users taken agreement with the accounting records and returns; or on the basis of the financial statements. • certain disclosures of directors’ remuneration specified by A fuller description of our responsibilities is provided on the law are not made; or FRC’s website at www.frc.org.uk/auditorsresponsibilities. • we have not received all the information and explanations Irregularities – ability to detect we require for our audit. We identified areas of laws and regulations that could We have nothing to report in these respects. reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, through discussion with the directors and other management (as required by auditing standards), and from inspection of the Group’s regulatory and legal correspondence and discussed with the directors and other management the policies and procedures regarding compliance with laws and regulations. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. The potential effect of these laws and regulations on the financial statements varies considerably. Firstly, the Group is subject to laws and regulations that directly affect the financial statements including financial reporting legislation (including related companies legislation), distributable profits legislation, and taxation legislation and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.

Bellway p.l.c. 102 Annual Report and Accounts 2020 Governance 103 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report

we our responsibilities our we The purpose of our audit work and to whom we whom and to work audit of our purpose The o for and on behalf of KPMG LLP, Statutory Auditor Auditor Statutory KPMG LLP, of and on behalf for Accountants Chartered House Quayside 110 Quayside Tyne upon Newcastle NE1 3DX 2020 19 October Johnathan Pass (Senior Statutory Auditor) Auditor) Statutory (Senior Pass Johnathan This report is made solely to the Company’s members, Company’s the to is made solely report This the 16 of Part 3 of with Chapter in accordance as a body, has been undertaken work audit 2006. Our Act Companies those members the Company’s to might state we that so report them in an auditor’s to state to required are we matters by permitted the fullest extent To purpose. no other and for anyone to assume responsibility or accept do not we law, as a members, the Company’s and the Company than other we the opinions for or this report, for work, audit our for body, formed. have 8. Secondly, the group is subject to many other laws and laws other many to is subject the group Secondly, non-compliance of the consequences where regulations the in disclosures or on amounts effect material a have could ofthe imposition through instance for financial statements, those as areas the following identified We litigation. fines or and health and safety such an effect: have to most likely anti- anti- bribery, legislation, construction relevant other aspects of and certain law laundering, employment money the Group’s of the nature legislation recognising company the limit standards Auditing form. activities and its legal with non- compliance identify to audit procedures required and the directors of enquiry to and regulations these laws and legal regulatory and inspection of management other we procedures, these Through any. if correspondence, and compliance non- suspected actual or of became aware the related on procedures our as part of effect the considered suspected identified actual or The items. financial statement to audit our to significant sufficiently not was non-compliance audit matter. being identified as a key response in our result is an there an audit, limitations of the inherent to Owing some detected have not may we that risk unavoidable even financial statements, the in misstatements material audit our planned and performed properly have we though the example, For with auditing standards. in accordance and regulations with laws non-compliance removed further in reflected transactions and the events is from (irregularities) limited the inherently the less likely the financial statements, identify would auditing standards by required procedures a higher remained there audit, with any it. In addition, as involve may these as irregularities, of non-detection of risk omissions, misrepresentations, intentional forgery, collusion, responsible not are We controls. internal of the override or to be expected and cannot non-compliance preventing for and regulations. with all laws non-compliance detect Group Income Statement for the year ended 31 July 2020

2020 2020 2020 2019 Pre-exceptional Exceptional Total Total items items (note 3) Note £m £m £m £m Revenue 1, 2 2,225.4 – 2,225.4 3,213.2 Cost of sales (1,803.2) (71.9) (1,875.1) (2,423.0) Gross profit 422.2 (71.9) 350.3 790.2 Other operating income 153.0 – 153.0 169.9 Other operating expenses (156.1) – (156.1) (175.5) Administrative expenses (97.4) (0.7) (98.1) (109.7) Operating profit 4 321.7 (72.6) 249.1 674.9 Finance income 6 0.2 – 0.2 0.6 Finance expenses 6 (13.6) – (13.6) (15.0) Share of result of joint ventures 12 1.0 – 1.0 2.1 Profit before taxation 309.3 (72.6) 236.7 662.6 Income tax expense 7 (57.6) 13.8 (43.8) (124.0) Profit for the year* 251.7 (58.8) 192.9 538.6

Earnings per ordinary share – Basic 9 156.6p 437.8p Earnings per ordinary share – Diluted 9 156.1p 436.4p

Statements of Comprehensive Income for the year ended 31 July 2020 Group Group Company Company 2020 2019 2020 2019 Note £m £m £m £m Profit for the period 192.9 538.6 0.9 181.8

Other comprehensive (expense)/income Items that will not be recycled to the income statement: Remeasurement (losses)/gains on defined benefit pension plans 25 (1.8) 1.3 – – Income tax on other comprehensive expense/(income) 7 0.3 (0.2) – – Other comprehensive (expense)/income for the period, net of income tax (1.5) 1.1 – – Total comprehensive income for the period* 191.4 539.7 0.9 181.8

* All attributable to equity holders of the parent.

Bellway p.l.c. 104 Annual Report and Accounts 2020 Accounts

1.1 1.7 2.1 1.8 £m 2.7 Total Total equity 105

– – 1.1 1.7 1.8 £m (1.5) (1.5) (0.5) (0.5) Bellway p.l.c. Bellway 191.4 191.4 (177.7) (175.6) (123.1) (123.1) (121.3) (118.6) 192.9 192.9 539.7 539.7 (178.9) (178.9) 538.6 538.6 earnings Retained

– – – – – – – – – – – – – – – 1.5 2,346.6 2,557.1 1.5 2,708.6 2,921.2 £m 1.5 2,778.7 2,994.0 Other Other Annual Report and Accounts 2020 Accounts and Annual Report reserves

– – – – – – – – – – – – – – – £m 20.0 20.0 20.0 Capital reserve redemption redemption

– – – – – – – – – – – 2.1 2.1 £m 2.6 2.6 Share Share premium

– – – – – – – – – – – – – 0.1 0.1 £m 15.3 173.7 15.3 175.8 15.4 178.4 Issued capital 8 8 19 19 20 Note 7, 25 7, 7, 25 7, down is provided in the Statements of Comprehensive Income. Comprehensive of the Statements in is provided down An additional break

Balance at 1 August 2018 August at 1 Balance * Group Statements of Changes in Equity of Changes Statements 2020 31 July at Total comprehensive income comprehensive Total for the period the period for Profit Other comprehensive income* comprehensive Other Total comprehensive income comprehensive Total for the period Transactions with shareholders with shareholders Transactions in equity: directly recorded shares on equity Dividends Purchase of own shares own of Purchase Shares issued Shares Credit in relation to share options share to in relation Credit thereon tax and Total contributions by and by contributions Total shareholders to distributions Balance at 31 July 2019 July at 31 Balance Total comprehensive income for for income comprehensive Total the period the period for Profit Other comprehensive expense* comprehensive Other Total comprehensive income comprehensive Total for the period Transactions with shareholders with shareholders Transactions in equity: directly recorded shares on equity Dividends Shares issued Shares Credit in relation to share options share to in relation Credit thereon tax and Total contributions by and by contributions Total shareholders to distributions Balance at 31 July 2020 July at 31 Balance Statements of Changes in Equity continued at 31 July 2020

Issued Share Capital Other Retained Total capital premium redemption reserves earnings equity reserve Company Note £m £m £m £m £m £m Balance at 1 August 2018 15.3 173.7 20.0 2.1 423.1 634.2

Total comprehensive income for the period Profit for the period – – – – 181.8 181.8 Other comprehensive income* – – – – – – Total comprehensive income for the period – – – – 181.8 181.8

Transactions with shareholders recorded directly in equity: Dividends on equity shares 8 – – – – (178.9) (178.9) Purchase of own shares 20 – – – – (0.5) (0.5) Shares issued 19 – 2.1 – – – 2.1 Credit in relation to share options 25 – – – – 1.7 1.7 Total contributions by and distributions to shareholders – 2.1 – – (177.7) (175.6)

Balance at 31 July 2019 15.3 175.8 20.0 2.1 427.2 640.4

Total comprehensive income for the period Profit for the period – – – – 0.9 0.9 Other comprehensive income* – – – – – – Total comprehensive income for the period – – – – 0.9 0.9

Transactions with shareholders recorded directly in equity: Dividends on equity shares 8 – – – – (123.1) (123.1) Shares issued 19 0.1 2.6 – – – 2.7 Credit in relation to share options 25 – – – – 2.1 2.1 Total contributions by and distributions to shareholders 0.1 2.6 – – (121.0) (118.3)

Balance at 31 July 2020 15.4 178.4 20.0 2.1 307.1 523.0

* An additional breakdown is provided in the Statements of Comprehensive Income.

Bellway p.l.c. 106 Annual Report and Accounts 2020 Accounts

– – – – – – – – – – – – 2.1 £m 0.3 0.3 0.3 2019 15.3 41.4 41.4 52.8 20.0 175.8 427.2 107 640.7 546.5 599.3 640.4 640.4 Company

– – – – – – – – – – – – £m 2.1 0.3 0.3 0.3 Bellway p.l.c. Bellway 2020 15.4 37.8 37.8 52.7 20.0 307.1 178.4 523.0 523.3 523.0 485.5 432.8 Company

– – – – 1.5 £m 0.7 2.2 2.8 2019 15.3 97.2 29.8 83.2 49.9 99.4 20.0 66.3 127.9 175.8 201.2 Group 968.7 Annual Report and Accounts 2020 Accounts and Annual Report 869.3 803.0 3,477.6 2,921.2 2,921.2 2,708.6 3,806.7 3,889.9

– – £m 1.3 1.5 1.5 0.5 2.6 2020 51.4 15.4 70.3 36.7 50.0 20.0 99.3 69.9 60.8 131.2 Group 178.4 133.8 955.8 834.0 2,778.7 1,089.6 3,863.0 2,994.0 2,994.0 4,083.6 3,984.3 11 17 12 12 15 13 14 13 10 16 16 19 25 22 20 Note

Adey irector Keith Keith D

ASSETS assets Non-current plant and equipment Property, Parent Company Income Company Statement Parent the Company for Statement Income 2006, a separate Act the Companies section 408 of of the provisions with In accordance million (2019 – £181.8 million). £0.9 was year the for profit Company’s The been presented. has not Balance Sheets 2020 31 July at Investment property Investment Investments in subsidiaries Investments Financial assets and equity accounted joint arrangements joint accounted assets and equity Financial Deferred tax assets Deferred Retirement benefit assets Retirement Current assets Current Inventories Trade and other receivables and other Trade Cash and cash equivalents Total assets Total LIABILITIES liabilities Non-current payables and other Trade Deferred tax liabilities Deferred Current liabilities Current loans and borrowings Interest-bearing Corporation tax payable Corporation Trade and other payables and other Trade Provisions Total liabilities Total Net assets Net EQUITY capital Issued Share premium Share Capital redemption reserve Capital redemption Other reserves Other Retained earnings Retained Total equity Total Paul Hampden Smith Hampden Paul Approved by the Board of Directors on 19 October 2020 and signed on its behalf by: 2020 and signed on its behalf on 19 October Directors of the Board by Approved Registered number 1372603 number Registered Director Cash Flow Statements for the year ended 31 July 2020

Group Group Company Company 2020 2019 2020 2019 Note £m £m £m £m Cash flows from operating activities Profit for the year 192.9 538.6 0.9 181.8 Depreciation charge 10 6.3 5.8 – – Investment impairment 12 – – 5.7 – Finance income 6 (0.2) (0.6) – – Finance expenses 6 13.6 15.0 – – Share-based payment expense 25 2.1 1.7 – – Share of post tax result of joint ventures 12 (1.0) (2.1) – – Income tax expense 7 43.8 124.0 – – Increase in inventories (385.0) (206.0) – – Decrease/(increase) in trade and other receivables 58.0 (11.9) 113.7 (4.5) Increase/(decrease) in trade and other payables 55.0 (45.4) – – Increase in provisions 70.3 – – – Cash from operations 55.8 419.1 120.3 177.3

Interest paid (6.0) (7.9) – – Income tax paid (107.7) (119.3) – – Net cash (outflow)/inflow from operating activities (57.9) 291.9 120.3 177.3

Cash flows from investing activities Acquisition of property, plant and equipment (8.3) (5.1) – – Proceeds from sale of property, plant and equipment 0.1 0.1 – – Increase in loans to joint ventures 12 (9.9) (5.7) – – Repayment of loans by joint ventures 12 – 1.4 – – Interest received 0.3 0.4 – – Net cash outflow from investing activities (17.8) (8.9) – –

Cash flows from financing activities Increase in bank borrowings 50.0 – – – Payment of lease liabilities (3.7) (3.5) – – Proceeds from the issue of share capital on exercise of share options 2.7 2.1 2.7 2.1 Purchase of own shares – (0.5) – (0.5) Dividends paid 8 (123.1) (178.9) (123.1) (178.9) Net cash outflow from financing activities (74.1) (180.8) (120.4) (177.3)

Net (decrease)/increase in cash and cash equivalents (149.8) 102.2 (0.1) – Cash and cash equivalents at beginning of year 201.2 99.0 52.8 52.8 Cash and cash equivalents at end of year 22 51.4 201.2 52.7 52.8

Bellway p.l.c. 108 Annual Report and Accounts 2020 Accounts 109 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report tions reflect the Group’s experience in the 2008/09 global financial crisis. the 2008/09 in experience the Group’s tions reflect ate average selling price in H1 FY21 remains in line with internal forecasts due to the strong order book position. In the position. In book order the strong to due forecasts with internal line in remains in H1 FY21 selling price average ate ate completions in H1 FY21 are supported by the strong forward order book, but still fall to 75% of that achieved in H1 that achieved 75% of to book, but still fall order forward the strong by supported are in H1 FY21 completions ate 12 months to 31 January 2022, private average selling price reduces by 10% compared to the latest achieved pricing. This isThis pricing. achieved the latest to 10% compared by reduces selling price average 2022, private January 31 to 12 months base position. the lower based on recovery a gradual by followed Priv Priv the pre-COVID-19 to 50% compared around by reduce completions 2022, private January 31 to the 12 months In FY20. of base position. the lower based on recovery a gradual by is followed This peak. ‘lockdown’ These assump These A number of prudent mitigating actions were incorporated into the plausible but severe downside scenario, including: scenario, downside the plausible but severe into incorporated were prudent mitigating actions of number A utilised. are they that the same rate at replaced being the land bank in – Plots with housing revenue. in line – Construction spend is reduced assessment. viability the directors’ as used for 2024, July 31 to the period modelled over were analyses the sensitivity All of not were that management to available remain additional mitigating measures several scenarios, various the to In addition the substantial existing of out trading land spend and instead withholding discretionary include These the scenarios. included in position at work-in-progress carried forward the strong of spend in recognition construction reducing land holdings, further payments. dividend future cancelling or and reducing 2020, July 31 facilities, did not bank existing and covenants its financial bank in both had significant headroom the Group the scenarios, In all due. fell they met its liabilities as and the CCFF utilise economic the current manage business and financial risks in to placed well is the Group that consider directors The to sufficient funds will have company and parent the Group that confident are the directors Consequently, environment. these financial statements of approval of date the months from twelve at least fall due for they meet its liabilities as to continue basis. on a going concern the financial statements prepared therefore and have – – Going concern and position, are performance development, its future affect to likely the factors with together business activities, Group’s The position and liquidity its cash flows, the Group, financial position of The 31. to on pages 26 Review the Operating set out in Risk The on page 93. Report the Director’s 34 and to on pages 32 Review the Financial described in facilities are borrowing its capital, financial risk, and managing for policies and processes the Group’s 42 sets out to pages 40 section on Management risk. and housing market rate interest liquidity, credit, to its exposure less cash in hand. borrowings and bank shares ordinary of a combination by principally financed activities are Group’s The which year, the 21) during note million (see £199.8 cash of consumed 22) having (note £1.4 million was net cash 2020, July 31 At throughout within all its banking covenants has operated Group The operations. cash from £55.8 million of account into takes Furthermore, 2023. December to up tranches in expiring million, £545.0 facilities of has bank the Group In addition, year. the to subject (‘CCFF’), Facility Financing Corporate Covid the Government’s for as an eligible issuer has been confirmed the Group undrawn, remains This million. £300.0 limit of with an issuer criteria, eligibility England’s of the Bank with compliance continuing a maximum 2021 for until 22 March down drawn be initially that can currently facility back-up as a prudent but available thereafter. 364 days of duration million £3,027.1 of net cash) assets (excluding with net current along £846.4 million, funds of total to has access therefore Bellway fall due. they as liabilities meet its current to liquidity with appropriate the Group providing 2020, July at 31 our incorporating ‘lockdown’, the COVID-19 as usual, since updated, been regularly have forecasts internal Group’s The has been sensitised, setting forecast base most up-to-date The outturn. future expected with our along actual experience sensitivities include aThese scenarios. adverse various in the principal risks and uncertainties to resilience the Group’s out in customer and a deterioration uncertainty economic to due a recession and separately COVID-19, to due ‘lockdown’ second with selling price, average and private legal completions of number total the in both a reduction to lead could This confidence. accordingly. spend reducing and construction land spend overheads, principal assumptions: the following includes It recession. is a severe scenario but plausible downside most severe The – Basis of preparation Wales. England and in incorporated a company is ‘Company’) p.l.c. (the Bellway the directors by and approved prepared been have statements financial the Group and financial statements the Company Both prepared been have and IFRSs’) (‘Adopted EU the by adopted as Standards Reporting Financial International with accordance in value. fair their at stated which are loss or profit through value at fair assets recognised for basis except cost the historical on for approved were which financial statements, the Group with together here financial statements the Company publishing On to 2006 not Act the Companies in section 408 of the exemption of advantage taking is the Company 2020, issue on 19 October these financial statements. a part of that form notes and related statement its individual income present judgements, estimates make to management requires IFRSs Adopted with conformity in statements financial of preparation The and expenses. assets and liabilities, income amounts of and reported policies of the application that affect and assumptions beto believed that are factors other various and experience based on historical are assumptions and associated estimates The of values the carrying the judgements about making of the basis which form of results the the circumstances, under reasonable estimates. these from differ may results Actual sources. other from apparent readily not that are assets and liabilities Accounting Policies Accounting Policies continued

Going concern continued The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these consolidated financial statements. Effect of new standards and interpretations effective for the first time The Group has adopted the following interpretation and amendments for the first time in these financial statements: – IFRIC 23 ‘Uncertainty over Income Tax Treatments’. – Amendments to IAS 19 ‘Employee Benefits’. – Amendments to IAS 28 ‘Investments in Associates and Joint Ventures’. – Annual Improvements to IFRS Standards 2015-2017 Cycle. The adoption of these has not had a material effect on the Group’s profit for the year or equity. 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. The Company controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. 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. Joint arrangements are those entities over whose activities the Group has joint control, established by contractual agreement. A joint arrangement can take two forms: (i) Joint venture – These entities are consolidated using the equity method of accounting. (ii) Joint operation – The Group’s share of the assets, liabilities and transactions of such entities are accounted for directly as if they were assets, liabilities and transactions of the Group. 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 being 10 to 100 years. Land is not depreciated. Investments in subsidiaries Interests in subsidiary undertakings are valued in the Company financial statements 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. A 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.

Bellway p.l.c. 110 Annual Report and Accounts 2020 Accounts 111 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report the instrument will or may be settled in the Company’s own equity instruments, it is either a non-derivative that a non-derivative instruments, it is either equity own the Company’s settled in be may will or the instrument include no contractual obligations upon the Company (or Group as the case may be) to deliver cash or other other cash or deliver to be) the case may as Group (or the Company obligations upon include no contractual where where they potentially that are conditions under party with another financial liabilities financial assets or exchange to financial assets or and Group); (or the Company to unfavourable  will that is a derivative instruments or equity own the Company’s of number variable a deliver to includes no obligation its own of number a fixed financial assets for other cash or of amount a fixed exchanging the Company’s be settled by instruments. equity

Grants and costs construction to contribute they that the extent to sheet the balance in in progress work within included are Grants the over statement the income to credited are Grants income. site to contribute they that the extent to income within deferred relate. they which to the developments of life (b) the instrument so Where classified as a financial liability. issue are of the proceeds met, this definition is not that the extent To called-up for these financial statements in presented the amounts shares, own the Company’s of the legal form takes classified those shares. to amounts in relation exclude premium capital and share share Classification of equity instruments and financial liabilities issued by the Group instruments and financial liabilities issued by Classification of equity conditions: two following the meet they that the extent to only as equity treated are the Group instruments issued by Equity (a) Dividends the shareholders. by approved are they which the period in in as a liability recognised are shares on equity Dividends paid.when recognised dividends are Interim Payments on account Payments the income to released and are on receipt as a liability recorded are at amortised cost, measured on account, Payments policy. recognition revenue the Group’s with in accordance is recognised when revenue statement A provision is recognised when the Group has a present legal or constructive obligation as a result of a past transaction or or transaction past a of obligation as a result constructive legal or has a present the Group when is recognised provision A best the directors at measured are that obligation. Provisions settle to will be required the Group that and it is probable event, value the present to discounted and are sheet date the balance the obligation at settle to required the expenditure of estimate is material. the effect where Provisions Trade and other payables and other Trade on payables Trade value. nominal their at stated and are interest-bearing not are terms on normal payables and other Trade payments. future all expected of value the fair at initially recorded are land purchases, to in relation most notably terms, deferred expenses. finance to settlement and charged to the period amortised over is value nominal to discount The Interest-bearing loans and borrowings Interest-bearing at and subsequently initial recognition of the date at value fair their at stated are loans and borrowings Interest-bearing amortised cost. Cash and cash equivalents are defined as cash balances in hand and in the bank (including short-term cash deposits). deposits). cash short-term (including the bank in hand and in defined as cash balances are Cash and cash equivalents aAs its cash management policy. on demand, as part of repayable are which facilities, overdraft utilises bank Group The statement. the cash flow within cash equivalents net cash and of included as a component are overdrafts bank consequence, Cash and cash equivalents Trade and other receivables are stated at their fair value at the date of initial recognition and subsequently at amortised cost less at amortised cost subsequently and initial recognition of the date at value fair their at stated are receivables and other Trade impairment. for allowances and can it is probable amount if the estimated based on is recognised events on future which is contingent Consideration the in recognised are consideration the contingent of value the fair to subsequent changes Any measured. be reliably statement. income Trade and other receivables and other Trade Inventories continued Inventories value the in impairment out for carried are reviews Regular at cost. initially capitalised are land of in respect purchased Options period elapsedthe consider reviews impairment The value. loss of reflect to accordingly made provisions and these options of the Further, date. the review at been exercised has not contract the option that given the option of purchase of the date since time the remaining whether over concerns any of taking account the option, of life the remaining consider impairment reviews within is included exercise of date the at the option of carrying cost The the option. of exercise a successful allow will available exercise. the option of as a result land purchased of the cost deposits non-refundable or land of the purchase through either planning consent, benefit of the without in land Investments out for carried are reviews Regular at cost. included initially are planning consent, to subject contracts paid on land purchase reviews impairment The element. irrecoverable any reflect to made and provision these investments of values the impairment in thereof. value the and planning consent achieving of the likelihood the land and assess of value use the existing consider Accounting Policies continued

Revenue recognition (a) Private housing sales and land sales: Revenue is recognised in the income statement at a point in time when the performance obligation, being the transfer of a completed dwelling to a customer, has been satisfied. This is when legal title is transferred. (b) Social housing: Where a contract with a Registered Provider transfers both land and social housing on legal completion (‘turnkey and plot sale contracts’ which typically represents around one third of social housing revenue), there is one performance obligation and revenue is recognised in the income statement at a point in time when the homes are build complete and all material contractual obligations have been fulfilled. This is when legal title is transferred. Where a contract with a Registered Provider transfers legal title of land once foundations are in place (“design and build” contracts’ which typically represents around two thirds of social housing revenue) and separately transfers the social housing when they are build complete, there is a judgement as to whether the sale of land is a separate performance obligation for the purposes of revenue recognition and consequentially whether revenue should be recognised over time or on a point-in- time basis for the social housing units. Based on the contractual terms, notably those that enable the Group to retain control over the land, the Group has determined that these contracts include one performance obligation which is appropriately recognised at a point in time, when the homes are build complete and all material contractual obligations have been fulfilled. The directors recognise that there is evolving guidance in relation to the wider application of IFRS 15 – ‘Revenue from Contracts with Customers’. Insofar as it is relevant, they will continue to consider the appropriateness of the Group’s accounting policy, specifically with reference to any changes in the underlying contractual terms of these agreements. Revenue is measured at the fair value of consideration received or receivable, net of incentives. Incentives Sales incentives are substantially cash in nature. Cash incentives are recognised as a reduction in housebuild revenue by the cost to the Group of providing the incentive. 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. The original sale of private housing is recognised, as above, at the fair value of the part-exchange property plus the cash received or receivable. The fair value of the part-exchange property is equal to the amount assessed by external valuers. The onward sale of a part-exchange property is recognised at the fair value of consideration received or receivable. As it is not considered a principal activity of the Group, the income and expenses associated with this are recognised in other operating income and other operating expenses. Income is recognised in the income statement at a point in time when the performance obligations have been satisfied. This is when legal title is transferred. 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. 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 net defined benefit scheme asset or liability is the fair value of scheme assets less the present value of the defined benefit obligation at the balance sheet date. 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’). Net interest income/(cost) is calculated on the defined benefit asset/(liability) for the period by applying the discount rate used to measure the defined benefit liability at the start of the year. Return on plan assets in excess of the amounts included in the net interest cost are recognised in the SOCI. Further details of the scheme and the valuation methods applied may be found in note 25. Defined contribution pension costs are charged to the income statement in the period for which contributions are payable. Bellway p.l.c. 112 Annual Report and Accounts 2020 Accounts 113 Bellway p.l.c. Bellway Annual Report and Accounts 2020 Accounts and Annual Report Management considers the following to be major sources of estimation that have been made in these financial statements: been made in have that estimation of sources be major to the following considers Management in progress work and development land held for Carrying amount of (in selling price the estimated represents value realisable Net value. and net realisable cost of the lower carried at are Inventories in progress work site/phase of Valuations and overheads. completion of costs less all estimated business) of course the ordinary are revenues anticipated of and estimates a site/phase complete to cost the of and estimates intervals carried out at regular are the judgement in estimating employ to is required Management be determined. to profit enable a development to required to applied was a 10% increase If be required. which may impairment provisions and in assessing any a site/phase of profitability and land in progress work of value the carrying on effect a material have not would this provision, net realisable the inventories end. year the at development held for Exceptional items are those which, in the opinion of the Board, are material by size or nature and of such significance that they they that such significance of and nature or size by material are the Board, the opinion of which, in those are items Exceptional statement.the income of the face on disclosure separate require and judgements estimates Accounting Exceptional items Exceptional Finance income and expenses income Finance deposits. on bank receivable includes interest income Finance land purchases for payments the deferred of discounting The borrowings. on bank includes interest expenses Finance expenses. finance to this is also charged amount and payable interest a notional produces Leases the Group’s using discounted lease payments, the remaining of value the present at measured is initially lease liability The with periods together the contract, of period non-cancellable the comprises term lease The rate. borrowing incremental the Subsequently, that option. exercise to certain is reasonably the Group where the lease extend to an option by covered the it by and reducing the lease liability, on interest reflect to the carrying amount increasing by is measured lease liability an will exercise it whether changes its assessment of the Group when is remeasured lease liability The made. lease payments option.termination or extension initial plus any the lease liability, of the initial measurement comprising at cost, measured initially assets are Right-of-use right-of-use assets are Subsequently, lease incentives. less any obligations, asset retirement of and an estimate costs direct certain for adjusted impairment losses, and are accumulated and any depreciation accumulated less any at cost, measured the lease. the length of basis over on a straight-line is calculated Depreciation liability. the lease of remeasurements value. low asset is of the underlying which leases and leases for short-term for exemptions apply to has elected Group The lease. the relevant of term the basis over on a straight-line statement the income to charged are these leases, payments For on shown sheet and lease liabilities are the balance plant and equipment on in property, presented assets are Right-of-use the the length of depending on liabilities liabilities and non-current in current payables and other trade sheet in the balance term. lease Own shares held by ESOP trust ESOP held by Own shares the Company’s and statements financial the Group included in both trust are ESOP the Company-sponsored of Transactions equity. to directly charged trust are the by the Company in shares of purchase The financial statements. own Employee benefits – share-based payments benefits – share-based Employee in increase a corresponding with expense as an employee is recognised granted options share equity-settled of value fair The does not vesting amended if is only the charge and granted are the options date the at as is measured value fair The equity. the of terms the to used according pricing models are option Various being met. not conditions non-market to due place take the employees which period during the over is spread value fair The granted. were options the which scheme under option number the actual reflect to is adjusted expense as an amount recognised The the options. to entitled unconditionally become the cumulative be satisfied, will not conditions that non-market it is expected if date, sheet the balance At vest. that options of is reversed. options the relevant to in relation recognised expense thentax base is The tax base. the relevant on asset is recognised tax a deferred payments, share-based to With respect thetax arising on Deferred statement. the income in recognised expense payment share-based the cumulative to compared has been statement the income in recognised expense payment share-based the cumulative tax base over the of excess with shareholders. transactions be to considered are payments the SOCI as share-based outside in equity directly recognised in its individual financial its subsidiaries it recognises, of employees to shares its own over options grants the Company Where charge payment share-based the equity-settled to equivalent in its subsidiaries investment of the cost in an increase statements, in equity. being recognised credit the corresponding with statements, financial in its consolidated recognised Accounting Policies continued

For both the years ended 31 July 2020 and 31 July 2019, 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/ phase-by-phase basis and have been amended based on local management’s and the Board’s assessment of current market conditions. For the year ended 31 July 2019, no exceptional charge resulted from the review. For the year ended 31 July 2020, an exceptional item has been recognised related to the impairment of work in progress and land held for development; further detail is given in note 3. Cost of sales recognition Cost of sales is recognised for completed house sales as an allocation of the latest whole site/phase gross margin which is an output of the site/phase valuation. These valuations, which are updated at frequent intervals throughout the life of the site/ phase, 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. This is a key estimate made in the financial statements. To determine the amount of cost of sales that the Group is able to recognise on its sites/phases in the year, the Group needs to allocate site/phase-wide costs between all plots, both those sold in the current year, and those plots to be sold in future periods. It is also necessary to estimate costs to complete on such sites/phases. In making these assessments certain estimates are made. In addition, the Group makes estimates in relation to future sales prices on the site/phase. The Group has a number of internal controls to assess and review the reasonableness of estimates made. If housing gross margin decreased by 200 basis points, it is estimated that the quantum of housing cost of sales would increase by around 2.5%. Conversely, if housing gross margin increased by 200 basis points it is estimated that the quantum of housing cost of sales would decrease by around 2.5%. Legacy building safety improvements The legacy building safety improvements provision has been set up to carry out remedial corrective works on a small number of schemes. Management has estimated the cost of the corrective works for the current anticipated scope, but this is inherently uncertain as the improvement works are at an early stage on most affected sites. If costs in the provision are understated by 10%, operating profit in the period would reduce by around 3%. Judgements While preparing these financial statements, the major judgements which the directors consider could have a significant effect on the financial statements when applying the Group’s accounting policies are: • whether each site that could form part of the legacy building safety improvements provision satisfies the accounting requirements of a provision at the balance sheet date. This is a highly complex area with judgements in respect of the extent of those properties within the scope of Bellway’s legacy building safety improvement provision and the provision could be extended should the latest interpretation of government guidance further evolve. • whether items should be treated as exceptional or not, the value of such items is not considered to be an area of judgement. The directors assessed each possible exceptional item against a framework incorporating the Group’s accounting policy, the accounting requirements of IAS 1 ‘Presentation of Financial Statements’ relating to the separate disclosure of material items of income or expense and the FRC Company Guidance in relation to COVID-19 (updated 20 May 2020). Further details are included in note 3. The directors considered other items when reviewing areas of the business that could give rise to a COVID-19 related exceptional item and concluded that neither of the following items satisfied all of the requirements of an exceptional item: i) Extended site durations, together with enhanced health and safety requirements relating to social distancing measures – In addition to the costs set out in note 3, further costs arising from extended site durations, together with enhanced health and safety requirements relating to social distancing measures, have led to an additional cost of £18.9 million in the year. These incremental site-based costs will continue to influence the operating margin in the year ahead, but with production capacity currently around 85% to 95% and improving, we are hopeful that the negative impact will gradually reduce, save for the risk of additional localised ‘lockdowns’. ii) Furloughed costs for non-site-based employees – Following our decision on 23 March to close sites, the Group furloughed around 75% of its workforce, with this principally comprising directly employed site tradespeople, site managers and sales advisers. We have paid these employees full basic salary throughout April and May, and although eligible Bellway has not applied for a grant using the CJRS. The expense to the Group relating to those furloughed employees, whose cost is not capitalised to a site, was considered in the review of possible exceptional items. • Going concern – see earlier section on page 109. Standards and interpretations in issue but not yet effective At the date of authorisation of these financial statements there were a number of standards and interpretations which were in issue and endorsed by the EU but not yet effective. These have not been applied in these financial statements and are not expected to have a material effect when adopted.

Bellway p.l.c. 114 Annual Report and Accounts 2020 Accounts

– – – – – – – £m £m £m £m 2019 2019 2019 2019 33.1 115 364.5 3,180.1 3,180.1 3,180.1 1,931.8 3,213.2 2,815.6 1,248.3

£m £m £m £m 1.4 Bellway p.l.c. Bellway 9.9 2020 2020 2020 2020 21.0 14.5 72.6 25.8 46.8 46.8 256.3 955.8 1,948.1 1,248.6 2,225.4 2,204.4 2,204.4 2,204.4 Annual Report and Accounts 2020 Accounts and Annual Report o the same macroeconomic factors, such as mortgage availability and availability as mortgage such factors, the same macroeconomic o agreements are in place for key inputs including materials. key for in place are agreements aised centrally and the cost of capital is the same at each division. the same capital is of cost the and aised centrally Debt is r Debt t division is subject Sales demand at each policy. government National supply National

Non-housebuilding revenue Non-housebuilding North/South (b) COVID-19 related exceptional items exceptional related COVID-19 contracts land Aborted (a) 3. Exceptional items 3. Exceptional they that such significance of and nature or size by material are the Board, the opinion of which, in those are items Exceptional understandto the financial statements of the users allow to statement the income of the face on disclosure separate require 2020 has been July ended 31 year the for profit decisions. Operating informed more and make the Group of the performance statement: the income in expenses exceptional the following recognising at after arrived North Total revenue Total as follows: can be analysed housebuilding revenue Group’s The Private/social (a) Social housebuilding revenue Total South activity construction to the interruption arising from costs site-based Abnormal, non-productive (b) during ‘lockdown’ costs Restructuring (c) expense exceptional related COVID-19 Total items exceptional Other improvements building safety Legacy (a) expense exceptional Other expense exceptional Total Private Housebuilding revenue Housebuilding Total housebuilding revenue Total 2. Revenue from contracts with customers contracts from 2. Revenue is as follows: revenue the Group’s of An analysis Additional information on average selling prices and the unit sales split between north, south, private and social has been and social north, south, private the unit sales split between and selling prices on average information Additional be separate to these categories consider however, does not, Board The 31. to 26 on pages Review the Operating included in andwhen assessing performance level and divisional at a consolidated operations the entire segments as it reviews reportable resources. the allocation of making decisions about • • 1. Segmental analysis1. Segmental reviews regularly segments’) 8 ‘Operating as defined in IFRS Maker Decision Operating Chief (the Board executive The Each division is an and divisional level. a consolidated at both sheet position balance and performance the Group’s this at resources and allocates assess performance Board the executive that IFRS 8 in by segment as defined operating economic similar share they that the basis segment on one reporting to in been aggregated the divisions have All of level. including: characteristics • Notes to the Accounts the to Notes Notes to the Accounts continued

Exceptional items continued £71.9 million of the total exceptional expense is recognised within cost of sales and £0.7 million, relating to a proportion of the restructuring costs, is included within administrative expenses. The income tax rate applied to the total exceptional expense in the income statement is the Group’s standard rate of corporation tax, 19.0%. COVID-19 related exceptional items The COVID-19 pandemic materially affected the performance of the Group in several ways including delays to sales and incremental construction costs which do not meet the definition of an exceptional item. In addition, costs were incurred that meet the Group’s definition of an exceptional item and it is necessary to show these items separately in order to provide additional useful information to the primary users of the financial statements about the performance of Bellway and to allow comparability across reporting periods. This is consistent with how management has monitored the performance of the Group during this period. A total COVID-19 related exceptional expense of £25.8 million has been recognised in the income statement: (a) Aborted land contracts – A full review of inventories has been performed and land impairments have been made where the cost exceeds the expected net realisable value. Net realisable value represents the estimated selling price (in the ordinary course of business) less all estimated costs of completion and selling overheads. As a result of this review, the Group has impaired historic costs, including option fees, site investigation costs and planning fees relating to several land deals which have been aborted or indefinitely suspended due to the Board’s assessment that conditions in the land market have evolved since the onset of COVID-19. Accordingly, there is likely to be no future revenue associated with these sites and this review has therefore resulted in a land impairment of £9.9 million. The treatment of aborted land costs is consistent with the impairment recognised during the global financial crisis in 2008 and 2009. (b) Abnormal, non-productive site-based costs arising from the interruption to construction activity during ‘lockdown’ – Following the Prime Minister’s announcement on 23 March 2020, the Board took the decision to suspend construction activity. During the ‘lockdown’ period, the Group continued to incur costs which would have ordinarily been capitalised into work-in- progress. These costs include abnormal amounts of wasted site-based labour, materials and other production costs which did not contribute to bringing the inventory into its current location or condition during the aforementioned period of interruption and accordingly, they have been expensed to the income statement. The charge of £14.5 million includes £10.0 million in relation to directly employed site-based staff, with the remaining amount of £4.5 million mainly relating to equipment hire and additional site security during the ‘lockdown’ period. The Group did not access the CJRS government grant. The Group has since gradually recommenced production on a phased basis and has therefore subsequently capitalised site costs in line with its site reopening programme. These costs were borne during the period when developments were closed, with the period of inactivity typically lasting between six weeks and three months. This reflects the gradual roll-out of safe working practices across the Group, which was in line with the separate guidance applying to the jurisdictions of England, Scotland and Wales. The deployment of these safe working practices will help to mitigate the likelihood of incurring further significant non-productive site-based costs, notwithstanding the possible risk of an additional nationwide or localised ‘lockdowns’. (c) Restructuring costs – The Group has undertaken a modest workforce rationalisation programme in response to reduced output and the suspension of divisional expansion plans. The items included in the COVID-19 related exceptional expense are not material individually but are on an aggregated basis. The directors believe it is most appropriate to consider these costs on an aggregated basis as they relate to the same event, and presenting them on another basis could provide obscured information to the primary users of the financial statements. Other exceptional items (a) Legacy building safety improvements – The Grenfell tragedy understandably increased the focus on fire safety across the industry and more specifically on apartment blocks, with subsequent government guidance setting out detailed processes to ensure adequate fire protection measures and limit combustibility in external wall systems on buildings. As a consequence, the document ‘Advice for Building Owners of Multi-storey, Multi-occupied Residential Buildings’ was issued by the Ministry of Housing, Communities and Local Government (‘MHCLG’) in January 2020. This clarified that all buildings above 18 metres in height should be risk assessed to determine whether the presence of potentially combustible materials could contribute to external fire spread, in which case they may need to be replaced. This consolidated advice note clarifies the Government’s interpretation of the building regulations insofar as it is applicable to properties pre-dating its issuance. As previously reported, Bellway has identified a number of developments, which obtained building regulation approval at the time of construction, where the building materials used may not fully comply with this most recent government guidance. Notwithstanding the complexities in assessing legal liability, as a responsible developer, we have undertaken further assessments of our portfolio of legacy apartment schemes to determine whether any safety improvements are required in order to reflect the current guidance. As a result of this evaluation, Bellway has made an additional exceptional provision of £46.8 million as part of its commitment to help building owners remediate affected properties. This is a highly complex area with judgements and estimates in respect of the cost of rectification works and the extent of those properties within the scope of the latest government guidance which are likely to evolve. The Group is also pursuing recoveries from third parties, but as these are not virtually certain, no assets have been recognised on the balance sheet.

Bellway p.l.c. 116 Annual Report and Accounts 2020 Accounts

7 1.6 1.0 1.9 £m £m £m 30 5.8 0.2 0.2 3.0 6.3 6.0 195 2019 2019 2019 2019 16.5 14.9 £000 117 164.1 188.2 188.2

– 8 35 0.1 2.1 £m £m £m 1.0 0.2 2.9 6.2 6.3 4.2 221 Bellway p.l.c. Bellway 2020 2020 2020 2020 £000 13.6 16.6 180.1 180.1 155.2

Annual Report and Accounts 2020 Accounts and Annual Report property, plant and equipment property, to the Company’s auditor and their associates in respect of services to the Company, other than the audit ofthan other the Company, to services of in respect associates their and auditor Company’s the to eceivable by the auditor and its associates in respect of: in respect and its associates auditor the by eceivable financial statements of subsidiaries pursuant to legislation to pursuant subsidiaries of financial statements plant and machinery costs (note 5) (note costs Staff of Depreciation of Hire Pension scheme audit Pension Audit of these financial statements these of Audit of Audit Auditor’s remuneration Auditor’s

Operating profit is stated after charging: after is stated profit Operating 4. Operating profit 4. Operating Amounts paid 25) (note payments Share-based Wages and salaries Wages Social security 25) (note costs Pension – 1,023) (2019 1,085 comprising (2019 – 2,980) 3,119 was year the during the Group by employed persons of number average The activities.trading in housebuilding and associated employed and others (2019 – 1,957) production and 2,034 administrative and the Company of employees the only are Secretary Counsel & Company General the Group and directors executive The 92. to on pages 72 Report Remuneration the Directors’ disclosed in are directors the executive the emoluments of comprised: including directors, remuneration, management personnel Key 5. Employee information 5. Employee comprised: including directors, costs, employment Group the Company’s financial statements, have not been disclosed as the information is required instead to be disclosed on ato instead is required the information as been disclosed not have financial statements, the Company’s ventures joint of financial statements of the audit for the auditor to amounts paid of proportion relevant The basis. consolidated million). million (2019 – £0.020 is £0.018 the to relate expenses operating and all other properties part-exchange the sale of to relates income operating All other sell. to less costs properties the part-exchange of value fair associated

Amounts r Share-based payments Share-based senior and other the directors comprises disclosures’, party ‘Related 24 IAS under as disclosed management personnel, Key management. operational Pension costs Pension Salaries and fees Annual cash bonus Taxable benefits Taxable Notes to the Accounts continued

6. Finance income and expenses 2020 2019 £m £m Interest receivable on bank deposits 0.2 0.4 Interest on fair value through profit or loss – 0.1 Other interest receivable – 0.1 Finance income 0.2 0.6

Interest payable on bank loans and overdrafts 6.2 6.7 Interest on deferred term land payables 6.9 7.8 Interest payable on leases 0.5 0.5 Finance expenses 13.6 15.0

7. Income tax expense 2020 2019 £m £m Current tax expense: UK corporation tax 43.4 126.2 Adjustments in respect of prior years (0.2) (2.1) 43.2 124.1 Deferred tax expense/(income): Origination and reversal of temporary differences 0.3 (0.1) Increase in tax rate 0.2 – Adjustments in respect of prior years 0.1 – 0.6 (0.1) Total income tax expense in income statement 43.8 124.0

2020 2020 2019 2019 % £000 % £000 Reconciliation of effective tax rate: Profit before taxation 236.7 662.6 Tax calculated at UK corporation tax rate 19.0 45.0 19.0 125.9 Non-taxable income and enhanced deductions (0.5) (1.1) – 0.2 Adjustments in respect of prior years – current tax – (0.2) (0.3) (2.1) – deferred tax – 0.1 – – Effective tax rate and tax expense for the year 18.5 43.8 18.7 124.0

The deferred tax assets/(liabilities) held by the Group are valued at the substantively enacted corporation tax rate that will be effective when they are expected to be realised. The planned reduction of the corporation tax rate to 17% was repealed in March 2020; therefore the deferred tax assets/(liabilities) held by the Group have been revalued at 19%. The effective tax expense is 18.5% of profit before taxation (2019 – 18.7%) and compares favourably to the Group’s standard tax rate for the year of 19.0% (2019 – 19.0%). 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. 2020 2019 £m £m Deferred tax recognised directly in equity: Credit/(charge) relating to remeasurements on the defined benefit pension scheme 0.3 (0.2) Charge relating to equity-settled transactions (0.3) –

Bellway p.l.c. 118 Annual Report and Accounts 2020 Accounts

p £m (1.4) 2019 2019 62.1 123.1 share 116.8 119 178.9 Earnings per Earnings per

– £m 2019 Bellway p.l.c. Bellway 61.7 2020 123.1 123.1 shares average average Number ordinary ordinary Weighted Weighted 398,943 number of number

£m 2019 538.6 123,012,723 437.8 538.6 123,411,666 436.4 Annual Report and Accounts 2020 Accounts and Annual Report Earnings

p 2020 (0.5) share share 156.1 156.1 156.6 Earnings per Earnings per

2020 shares average Number ordinary Weighted Weighted 390,245 number of number

£m 2020 192.9 123,205,211 192.9 123,595,456 Earnings

Interim dividend for the year ended 31 July 2020 of nil per share (2019 – 50.4p) share nil per 2020 of July ended 31 year the dividend for Interim on 11 December Meeting Annual General the at shareholders by approval to is subject final dividend 2020 proposed The these financial in been included as a liability has not Period’, the Reporting after ‘Events 10 IAS with 2020 and, in accordance Employee the Bellway held by were shares 2019, July 31 ended year the final dividend for the for date the record At statements. 20). note (see waived which dividends had been on ‘Trust’) (1992) (the Trust Share dividend. the proposed to sufficient in comparison are reserves distributable of level The For basic earnings per ordinary share ordinary basic earnings per For (2019 – 100.0p) share per 50.0p 2020 of July ended 31 year the final dividend for Proposed Amounts recognised as distributions to equity holders in the year: in the holders to equity as distributions Amounts recognised (2018 – 95.0p) share per 100.0p 2019 of July ended 31 year the dividend for Final 8. Dividends on equity shares equity on 8. Dividends 9. Earnings per ordinary share ordinary Earnings per 9. in issue shares ordinary of number average weighted the dividing earnings by by is calculated share ordinary Basic earnings per as cancelled). treated which are Trust the held by shares ordinary of number average weighted the (excluding year the during of number average weighted The the basic calculation. as figure the same earnings uses share ordinary earnings per Diluted schemes share employee under allocated options outstanding share of effect the dilutive reflect to has been adjusted shares the dividing earnings by by is calculated share ordinary earnings per Diluted price. the option exceeds value the market where shares. ordinary of number average weighted diluted outlined below: the calculations are used in shares of number average weighted the earnings and of Reconciliations For diluted earnings per ordinary share ordinary earnings per diluted For Dilutive effect of options and awards options of effect Dilutive Notes to the Accounts continued

10. Property, plant and equipment Land and Plant, fixtures Right-of-use Total property and fittings assets Group £m £m £m £m Cost At 1 August 2018 9.6 15.8 – 25.4 Opening right-of-use asset recognised on adoption of IFRS 16 – – 14.2 14.2 Additions 1.6 3.6 3.3 8.5 Disposals – (1.8) (0.2) (2.0) At 1 August 2019 11.2 17.6 17.3 46.1 Additions 6.8 1.5 5.5 13.8 Disposals – (1.0) (0.8) (1.8) Transfer to inventories (0.5) – – (0.5) At 31 July 2020 17.5 18.1 22.0 57.6

Depreciation At 1 August 2018 2.4 9.9 – 12.3 Charge for year 0.3 2.1 3.4 5.8 On disposals – (1.7) (0.1) (1.8) At 1 August 2019 2.7 10.3 3.3 16.3 Charge for year 0.4 2.4 3.5 6.3 On disposals – (0.9) (0.7) (1.6) Transfer to inventories (0.1) – – (0.1) At 31 July 2020 3.0 11.8 6.1 20.9

Net book value At 31 July 2020 14.5 6.3 15.9 36.7 At 31 July 2019 8.5 7.3 14.0 29.8 At 31 July 2018 7.2 5.9 – 13.1

On 1 August 2018 the Group adopted IFRS 16 ‘Leases’ which requires lessees to recognise a lease liability and a ‘right-of-use asset’ for virtually all lease contracts. The Company has no property, plant and equipment. 11. Investment property Total Group £m Cost At 1 August 2018 and 1 August 2019 0.4 Disposals – At 31 July 2020 0.4

Depreciation At 1 August 2018 and 1 August 2019 0.4 On disposals – At 31 July 2020 0.4

Net book value At 31 July 2020 – At 31 July 2018 and 31 July 2019 –

Investment properties represent homes which have been sold under a shared ownership scheme and where Bellway has retained an equity stake. 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 £nil (2019 – £nil). The Company has no investment properties.

Bellway p.l.c. 120 Annual Report and Accounts 2020 Accounts

– – – 2.1 £m £m £m (0.1) (1.4) 2.1 4.3 (6.7) 5.7 (3.3) 2.2 2019 2019 2019 8.9 41.4 41.4 57.6 121 (50.0) 43.5 49.9 49.9 Company

– – – – – £m £m £m 1.0 1.0 5.3 9.9 1.0

2020 Bellway p.l.c. Bellway 4.3 (3.0) (3.3) 2020 2020 37.8 37.8 37.8 37.8 60.8

49.9 (71.0) 79.3 79.3 Company

– £m 4.3 2019 45.6 49.9 49.9 49.9 49.9 Group Annual Report and Accounts 2020 Accounts and Annual Report

– £m 5.3 2020 55.5 60.8 60.8 Group The subsidiary undertakings and joint arrangements in which the Group has interests are incorporated in England and in England incorporated are has interests the Group which in arrangements undertakings and joint subsidiary The 39 subsidiaries and 7 joint is made up of Group The housebuilding. to is related activity principal their In each case Wales. 27. included in note details are Further arrangements. £5.7 million (2019 – £nil) by impaired were the Company undertakings in subsidiary 2020, July 31 ended year the During the share-based is offset by movement This the Group. across dormant companies several dissolve to an exercise following million (2019 – £1.7 million). £2.1 of charge payment and is Bellway by be controlled to is considered the company a business, rights of voting the 100% of owns Bellway Where as a subsidiary. treated classified as joint are Limited Developments and Leebell Limited Developments Cramlington LP, Solihull Partnership North the entities. of the liabilities and fund the assets benefit of the economic all of substantially have the shareholders as operations has rights the Group as ventures classified as joint are LLP Regeneration and Lambeth LLP Residential Fradley LLP, Road Ponton the individual assets and liabilities. than rather the arrangements net assets of the to is as follows: year the financial assets during and related ventures joint accounted the equity on both movement The

Interest in joint ventures – equity ventures in joint Interest Financial assets and equity accounted joint arrangements joint accounted equity Financial assets and ventures joint to assets – loan Financial At the end of the year the the end of At made up as follows: are and income/(expenses) net assets/(liabilities) ventures’ the joint of share Group’s The Share of result of Share Increase in loans Increase loans of Repayment At the start of the year the the start of At

Current assets Current

Interest in subsidiary undertakings’ shares at cost shares undertakings’ in subsidiary Interest liabilities Current Subsidiary undertakings Subsidiary 12. Financial assets and equity accounted joint arrangements, and investments in subsidiaries and investments arrangements, joint accounted equity assets and 12. Financial ventures: and joint assets in subsidiaries financial or investments the following have and Company Group The Non-current liabilities Non-current Revenue Costs Share of net assets/(liabilities) of joint ventures joint of net assets/(liabilities) of Share Operating profit Operating Interest ventures joint of result of Share Guarantees relating to the overdrafts of the joint arrangements have been given by the Company (see note 23). note (see the Company by been given have the joint arrangements of the overdrafts to relating Guarantees financial assets as immaterial. venture joint for the loss allowance losses and credit assessed expected has Group The Notes to the Accounts continued

13. Deferred taxation The following are the deferred tax assets/(liabilities) recognised by the Group and the movements thereon during the current and prior year: Capital Retirement Share-based Inventory Other Total allowances benefit assets payments temporary differences Group £m £m £m £m £m £m At 1 August 2018 – (0.2) 1.1 – (2.3) (1.4) Income statement (charge)/credit (0.1) (0.1) (0.4) – 0.7 0.1 Charge to statement of comprehensive income – (0.2) – – – (0.2)

At 31 July 2019 (0.1) (0.5) 0.7 – (1.6) (1.5) Reclassification – – – (1.6) 1.6 – Income statement (charge)/credit (0.4) (0.1) 0.1 (0.2) – (0.6) Credit to statement of comprehensive income – 0.3 – – – 0.3 Charge to equity – – (0.3) – – (0.3) At 31 July 2020 (0.5) (0.3) 0.5 (1.8) – (2.1)

The following is an analysis of the deferred tax balances for financial reporting purposes: 2020 2019 £m £m Share-based payments 0.5 0.7 Deferred tax assets 0.5 0.7

Capital allowances (0.5) (0.1) Retirement benefit assets (0.3) (0.5) Inventory (1.8) – Other temporary differences – (1.6) Deferred tax liabilities (2.6) (2.2)

Net deferred tax liability (2.1) (1.5)

The carrying amount of the deferred tax asset is reviewed at each balance sheet date and is recognised to the extent that there will be sufficient taxable profits to allow the asset to be recovered. There are no deferred tax balances in respect of the Company. 14. Inventories 2020 2019 Group £m £m Land 2,216.2 2,004.4 Work in progress 1,496.1 1,298.2 Showhomes 124.6 125.5 Part-exchange properties 26.1 49.5 3,863.0 3,477.6

Inventories of £1,780.7 million were expensed in the year (2019 – £2,376.1 million), including exceptional land and work in progress impairments of £24.4 million (see note 3). In the ordinary course of business, inventories have been written off by a net £3.5 million in the year (2019 – net write-back of £1.0 million). Land with a carrying value of £242.7 million (2019 – £172.3 million) was used as security for land payables (see note 16). Land includes £1,743.3 million (2019 – £1,630.6 million) which is owned or unconditionally contracted by the Group and where there is an implementable detailed planning permission. 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 factors including consumer demand and planning permission delays. The Company has no inventory.

Bellway p.l.c. 122 Annual Report and Accounts 2020 Accounts

– – – – – – – – – – – – £m £m £m 0.3 0.3 2019 2019 2019 546.5 546.5 123 Company Company Company

– – – – – – – – – – – – £m £m £m 0.3 0.3 Bellway p.l.c. Bellway 2020 2020 2020 432.8 432.8 Company Company Company

– 5.1 £m £m £m 7.9 3.0 6.9 11.9 2019 2019 2019 61.0 97.2 85.3 59.0 110.0 127.9 212.6 136.8 Group Group Group 328.6 Annual Report and Accounts 2020 Accounts and Annual Report 803.0

– £m £m £m 5.1 5.0 3.0 12.1 14.1 2020 2020 2020 117.1 32.5 32.3 69.9 92.4 131.2 Group Group Group 273.0 222.0 226.5 834.0

Trade payables Trade Trade receivables Trade Land payables 15. Trade and other receivables and other Trade 15. receivables Current 16. Trade and other payables payables and other Trade 16. liabilities Non-current Other receivables Other Land payables Lease liabilities Lease Amounts owed by Group undertakings Group by Amounts owed Social security and other taxes and other Social security Prepayments and accrued income and accrued Prepayments Other payables Other Land payables of £82.0 million (2019 – £57.7 million) are secured on the land to which they relate. they which to the land on secured are million) (2019 – £57.7 million £82.0 of Land payables – £55.5 million). million (2019 is £80.6 security the land used for of value carrying The liabilities Current Lease liabilities Lease The Group assesses the ageing of trade receivables in accordance with the policy on page 41. None of the trade receivables are are receivables trade the of on page 41. None the policy with in accordance receivables trade the ageing of assesses Group The risk. as low all rated therefore es (2019 - nil), and are due dat their past recoverable. VAT to in relation million) includes £14.5 million (2019 – £28.0 receivables Other as immaterial. receivables and other trade for the loss allowance losses and credit has assessed expected Group The undertakings Group by amounts owed for loss allowance the losses and credit expected has assessed Company The as immaterial. Accrued expenses Accrued Payments on account Payments Land payables of £165.6 million (2019 – £120.5 million) are secured on the land to which they relate. they which to the land on secured are million) million (2019 – £120.5 £165.6 of Land payables million (2019 – £116.8 million). is £162.1 security the land used for of value carrying The are in advance liabilities. Deposits received contract which are in advance deposits received comprises on account Payments is recognised. the revenue satisfied and obligations are performance the associated 18 months before to up held for typically approximate The year. the current in as revenue been recognised 2019 have July liabilities as at 31 the contract of majority The million (2019 – 2020 is £1,760.2 July at 31 unsatisfied that are obligations the performance to allocated value transaction year. financial the next during as revenue be recognised to which is expected of the majority £1,223.9 million), Notes to the Accounts continued

17. Provisions Legacy building safety improvements Group £m At 1 August 2019 – Transfer from accrued expenses 41.0 Additions (note 3) 46.8 Utilised (17.5) At 31 July 2020 70.3

The Group has established a provision for the cost of performing fire remedial works on a small number of legacy developments. These estimates may change over time as further information is assessed, building works progress and the interpretation of fire safety regulations further evolve. The majority of the provision is expected to be utilised within three years, however, the timing is uncertain so the provision has not been discounted. This is a highly complex area with judgements and estimates in respect of the cost of rectification works and the extent of those properties within the scope of Bellway’s legacy building safety improvement provision could be extended should the latest interpretation of government guidance further evolve (note 23). The Company has no provisions. 18. Financial instruments Land purchased on deferred terms The Group sometimes acquires land on deferred payment terms. In accordance with IFRS 9 ‘Financial Instruments’ the 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: Balance Total Within 1 1–2 years 2–5 years More than at 31 July contracted year or on 5 years cash payment demand £m £m £m £m £m £m At 31 July 2020 343.6 350.0 228.3 98.4 23.3 – At 31 July 2019 297.9 305.2 214.6 51.9 31.0 7.7

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: Balance Total Within 1 1–2 years 2–5 years More than at 31 July contracted year or on 5 years cash payment demand £m £m £m £m £m £m Trade and other payables (excluding lease liabilities) 285.1 285.1 285.1 – – – Bank loans – floating rates 50.0 50.1 50.1 – – – Lease liabilities 17.1 19.3 3.4 3.1 6.1 6.7 At 31 July 2020 352.2 354.5 338.6 3.1 6.1 6.7

Trade and other payables (excluding lease liabilities) 340.6 340.6 340.6 – – – Lease liabilities 14.9 18.2 3.3 3.2 5.7 6.0 At 31 July 2019 355.5 358.8 343.9 3.2 5.7 6.0

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 £495.0 million (2019 – £575.0 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 amount of cash and cash equivalents for the years ended 31 July 2020 and 31 July 2019 for both the Group and the Company are shown in note 22. At 31 July 2020 the average interest rate earned on the temporary closing cash balance, excluding joint ventures, was 0.06% (2019 – 0.61%).

Bellway p.l.c. 124 Annual Report and Accounts 2020 Accounts

– – – – – – – – £m £m £m £m 17.1 (0.3) 2019 2019 2019 2019 67.1 2020 £000 52.8 50.0 546.5 599.0 125 640.4 640.4 At 31 July 31 At Company Company Company

– – – – – – – – £m £m £m £m 0.5 0.5 000 188 2019 Bellway p.l.c. Bellway (0.3) 2020 2020 2020 52.7 523.0 523.0 485.2 Interest 432.8 Number 123,168 15.3 122,980 15.3 Company Company Company

– – – £m £m £m £m 0.1 £m (0.1) (0.1) 2019 2019 2019 2020 50.0 175.0 155.0 201.2 165.6 195.0 Group Group Group 575.0 (281.5) Annual Report and Accounts 2020 Accounts and Annual Report (648.3) 2,921.2 2,921.2 Disposals

– – – £m £m £m £m 5.5 000 178 New 2020 2020 2020 2020 51.4 50.0 leases 175.0 Group Group Group 125.0 120.3 195.0 545.0 (524.1) (695.8) Number 123,168 15.3 2,994.0 2,994.0 123,346 15.4

£m flows 50.0 Net cash Net

– £m 2019 14.9 46.3 14.9 (3.7) 5.5 At 1 August 1 At Allotted, called up and fully paid 12.5p ordinary shares paid 12.5p ordinary called up and fully Allotted, year start of At Group and Company Group 19. Issued capital Issued 19. Equity By 31 July 2020 July 31 By There were no liabilities arising from financing activities within the Company. the Company. within financing activities no liabilities arising from were There facilities Bank the following of the course during which expire million) (2019 – £575.0 million £545.0 facilities of has bank Group The years: financial Bank borrowings Bank Group Loans and receivables Loans 18. Financial instruments continued instruments 18. Financial values Fair values. fair their approximate and liabilities reasonably financial assets of values carrying The category assets and liabilities by Financial Issued on exercise of options of on exercise Issued Net bank debt bank Net By 31 July 2021 July 31 By Lease liabilities Lease Cash and cash equivalents At end of year end of At Capital employed By 31 July 2022 July 31 By Financial liabilities at amortised cost liabilities at amortised Financial The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per per vote one to entitled time and are to time from dividends as declared receive to entitled are shares ordinary of holders The the Company. at meetings of share Risks section on page 41. Management the Risk set out in financial instruments are to the risks relating Details of By 31 July 2023 July 31 By Reconciliation of liabilities arising from financing activities from liabilities arising of Reconciliation By 31 July 2024 July 31 By Capital management less cash in borrowings and bank profits reinvested shares, issued ordinary of the proceeds through financed is Group The capital structure: the table analyses following The hand. 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. These are held within retained earnings. During the period no shares were purchased by the Trust (2019 – 20,000 shares) and the Trust transferred 20,820 (2019 – 20,911) shares to employees and directors. The number of shares held within the Trust and on which dividends have been waived, at 31 July 2020 was 43,809 (2019 – 64,629). These shares are held within the financial statements at a cost of £1.0 million (2019 – £1.3 million). The market value of these shares at 31 July 2020 was £1.1 million (2019 – £1.9 million). Capital redemption reserve 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, was transferred to a capital redemption reserve on the same date. 21. Reconciliation of net cash flow to net cash 2020 2019 Group £m £m (Decrease)/increase in net cash and cash equivalents (149.8) 102.2 Increase in bank borrowings (50.0) – (Decrease)/increase in net cash from cash flows (199.8) 102.2 Net cash at 1 August 201.2 99.0 Net cash at 31 July 1.4 201.2

2020 2019 Company £m £m Decrease in net cash and cash equivalents (0.1) – Decrease in net cash from cash flows (0.1) – Net cash at 1 August 52.8 52.8 Net cash at 31 July 52.7 52.8

22. Analysis of net cash At 1 August Cash At 31 July 2019 flows 2020 Group £m £m £m Cash and cash equivalents 201.2 (149.8) 51.4 Bank loans – (50.0) (50.0) Net cash 201.2 (199.8) 1.4

At 1 August Cash At 31 July 2019 flows 2020 Company £m £m £m Cash and cash equivalents 52.8 (0.1) 52.7 Net cash 52.8 (0.1) 52.7

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 2020 there were bank overdrafts of £nil (2019 – £nil) and loans of £50.0m (2019 – £nil). The Company has guaranteed the overdrafts of joint arrangements up to a maximum of £0.3 million (2019 – £0.3 million). It is the directors’ expectation that the possibility of cash outflow on these liabilities is considered minimal and no provision is required. Legacy building safety improvements The Grenfell tragedy understandably increased the focus on fire safety across the industry and more specifically on apartment blocks, with subsequent Government guidance setting out detailed processes to ensure adequate fire protection measures and limit combustibility in external wall systems on buildings. As previously reported, Bellway has identified a number of developments, which obtained building regulation approval at the time of construction, where the building materials used may not fully comply with this most recent Government guidance. Notwithstanding the complexities in assessing legal liability, as a responsible developer, we have undertaken further assessments of our portfolio of legacy apartment schemes to determine whether any safety improvements are required in order to reflect the current guidance. As a result of this evaluation, Bellway has made an additional provision of £46.8 million in order to help building owners remediate affected properties, resulting in total outstanding remediation costs of £70.3 million (note 17).

Bellway p.l.c. 126 Annual Report and Accounts 2020 Accounts

– £m 6.4 2019 127

– £m 1.4 Bellway p.l.c. Bellway 2020 Annual Report and Accounts 2020 Accounts and Annual Report The Scheme’s defined benefit obligation is calculated using a discount rate set with reference to corporate corporate to with reference set rate using a discount defined benefit obligation is calculated Scheme’s The assets, such as in growth invested assets are the Scheme’s of a significant proportion yields. However, bond and risk volatility but create the long-term bonds in corporate outperform to be expected would that equities, the short-term. in the effect limit to in place 5% p.a. increase a 3% or either caps of are there the liabilities. However, increasing of higher inflation. defined benefit obligation. the Scheme’s also increasing in life expectancy Description omote, and to improve understanding of the good administration of work-based pension schemes; work-based of the good administration of understanding improve to and omote, otect the benefits of members of occupational pension schemes; occupational of members the benefits of otect educe the risk of situations arising which may lead to compensation being payable from the Pension Protection Fund, and Fund, Protection the Pension from being payable compensation to lead which may situations arising of the risk educe maximise employer compliance with employer duties and the employment safeguards introduced by the Pensions Act 2008. Act Pensions the by introduced safeguards employment the and duties employer with compliance employer maximise to to to pr to pr to r to

Inflation risk inflation with higher inflation, to benefit obligation is linked defined the Scheme’s of significant proportion A expectancyLife increase with any the member, of the life a pension for provide to liabilities are the Scheme’s of majority The Asset volatility Asset Risk the most significant are: risks, of a number to the Group Scheme exposes The Risk • • • Company £nil (2019 – £nil). were the Company of commitments The 25. Employee benefits 25. Employee benefit assets Retirement (a) benefit arrangementwhich has a funded defined ‘Scheme’) Scheme (the Pension p.l.c. 1972 the Bellway sponsors Group The Self p.l.c. 2008 Group the Bellway also sponsors Group The accrual. service future to and members new to which is closed arrangement. contract-based which is a defined contribution Plan (‘GSIPP’) Pension Personal Invested the GSIPP. for statement the income to charged were million) £6.2 million (2019 – £6.0 Contributions of liabilities. the assets and from been excluded have Defined contributions Trustees of Role Trustees the of role The the members. or the Company either by appointed who are Trustees, the Scheme is managed by The impartially and honestly, responsibly act prudently, to trust deed and rules, the Scheme with line the Scheme in manage to is of the level the employer with agree to are Trustees the of main responsibilities The all beneficiaries. of the interests and in the Scheme so invested assets are the Scheme’s decide how to paid, these are sure make to the Scheme and to contributions the Scheme of and administration keeping benefits, record of the payment that oversee to meet its liabilities, and to is able trust deed and rules and legislation. the Scheme with complies Funding of cost expected the current of in excess a level to (i.e. funded prudently that pension schemes are legislation requires UK as at a qualified independent actuary carried out by was Scheme the of valuation last full actuarial The benefits). providing 2020. July 31 to basis on an approximate 2017 and updated July 31 With to regard the Scheme, contributions regular made the the by over were £nil financial employer year (2019 – £nil). The paidemployer the fund. by incurred expenses for million) – £0.4 million (2019 the pension fund £0.3 (2019 – £nil) and reimbursed no special contributions 2021. July ending 31 year the during contributions no regular make to expected is Group The Regulation defined benefit UK to in relation objectives statutory whose key Regulator the Pensions by is regulated pensions market UK The plans are: • Contracted not provided not Contracted contracted not Authorised 24. Commitments Capital commitments Group 23. Contingent liabilities continued 23. Contingent those of the extent and works rectification of the cost of in respect judgements and estimates with area complex is a highly This latestthe should be extended could provision improvement building safety legacy Bellway’s of the scope within properties is there parties, but as third from recoveries is also pursuing Group The evolve. further guidance government of interpretation sheet. balance the on been recognised has not an asset collectability, their to with regards no certainty Notes to the Accounts continued

25. Employee benefits continued Movements in net defined benefit assets Defined benefit obligation Fair value of Scheme assets Net defined benefit asset 2020 2019 2020 2019 2020 2019 £m £m £m £m £m £m Balance at 1 August (62.3) (52.7) 65.1 54.0 2.8 1.3 Included in the income statement Interest (expense)/income (1.3) (1.4) 1.3 1.4 – – Past service costs – (0.2) – – – (0.2) (1.3) (1.6) 1.3 1.4 – (0.2) Included in other comprehensive (expense)/income Remeasurement (loss)/gain arising from: – Change in demographic and financial assumptions (5.4) (4.1) – – (5.4) (4.1) – Recognition of insurance policies annuities – (7.1) – 7.1 – – – Experience adjustments (0.2) (0.1) – – (0.2) (0.1) Return on plan assets excluding interest income – – 3.8 5.5 3.8 5.5 (5.6) (11.3) 3.8 12.6 (1.8) 1.3 Other Contributions paid by the employer – – 0.3 0.4 0.3 0.4 Benefits paid 2.6 3.3 (2.6) (3.3) – – 2.6 3.3 (2.3) (2.9) 0.3 0.4 Balance at 31 July (66.6) (62.3) 67.9 65.1 1.3 2.8

The weighted average duration of the defined benefit obligation at the end of the reporting period is 18 years (2019 – 18 years). During the prior year assets and liabilities of £7.1 million relating to insurance policies annuities held by the Scheme on behalf of the members were recognised. Scheme assets The fair value of the Scheme assets is: 2020 2019 £m £m Diversified growth fund 28.6 29.4 Equity instruments 2.8 2.8 Corporate bonds 4.9 5.0 Liability-driven instruments 23.6 20.6 Insurance policies annuities 8.0 7.1 Cash and cash equivalents – 0.2 Total 67.9 65.1

All of the Scheme assets, with the exception of cash and cash equivalents, are considered to be level 2. Diversified growth funds are pooled funds invested across a diversified range of assets with the aim of giving long-term investment growth with lower short-term volatility than equities. Actuarial assumptions The following are the principal actuarial assumptions at the reporting date: 2020 2019 % per annum % per annum Discount rate 1.50 2.10 Future salary increases 3.40 2.80 Allowance for pension in payment increases of RPI or 5% p.a. if less 2.80 3.10 Allowance for deferred pension increases of CPI or 5% p.a. if less 2.35 2.30 Allowance for commutation of pension for cash at retirement 50% of maximum 50% of maximum

Bellway p.l.c. 128 Annual Report and Accounts 2020 Accounts

2019 1,845 129 121,129 (95,471) (10,339) 272,289 256,970 26.1 years 26.1 24.2 years 24.2 22.9 years 22.9 24.6 years 24.6 Number of options of Number Bellway p.l.c. Bellway

2020 4,016 (45,710) (60,565) 103,676 272,289 269,690 +0.10% p.a.+0.10% p.a.+0.10% 1.7 by Decrease p.a.+0.10% 0.1 by Increase 1.4 by Increase Number of options of Number Annual Report and Accounts 2020 Accounts and Annual Report Change in assumption Change in liabilities (%) +1 year life expectancy life year +1 3.8 by Increase

Lapsed during the year the Lapsed during year the of the end at Exercisable years). – 1.3 (2019 years 1.3 of life contractual average weighted a have 2020 July outstanding at 31 options The 2,904.5p). – (2019 3,316.5p was year the during exercised options share for exercise of date the at price share average weighted The Outstanding at the beginning of the year the of the beginning Outstanding at Male retiring in 2040 in retiring Male in 2040 retiring Female Sensitivities table summarises following The above. set out the assumptions to benefit obligation is sensitive the defined calculation of The used: were assumptions different period if the reporting the end of the defined benefit obligation at on the effect year the during Granted year the during Exercised year the of the end Outstanding at Female retiring in 2020 retiring Female rate Discount increases salary Future Inflation – RPI Mortality these assumptions. carried out using valuation as a full as accurate not are analysis the sensitivity calculations for The the as changes in some of occur, to is unlikely which in practice in isolation, change is considered Each assumption correlated. are assumptions payments Share-based (b) plans (‘DBP’), an bonus plan (‘SMP’), and deferred matching a share plan (‘LTIP’), incentive a long-term operates Group The detailed below. which are all of Schemes (‘SRSOS’), Option Share Related scheme and Savings option share employee Secretary, Counsel and Company General the Group directors, executive to been made have and SMP the LTIP under Awards shares ordinary of the form take awards The employees. senior to also made the DBP under with awards employees, and senior the Company. in which provides scheme discretionary an approved Scheme (‘2014 ESOS’) is Option Share Employee p.l.c. (2014) Bellway The that no intention the current is, however, It directors. and executive employees to shares ordinary over options of the grant for three after vest to will be available Awards this scheme. under options be granted should the Company of directors executive this scheme. under had been granted 2020 no options July at 31 As targets. performance objective to subject years, directors. the executive including all employees to offered the SRSOS are issued under Options scheme section on incentive the long-term is detailed under the LTIP to in relation conditions the performance An outline of no awards are there 2014 and since the SMP been made under have awards No Report. the Remuneration within 79 to pages 77 2020. July as at 31 the SMP outstanding under based on publicly models detailed below, various using party third an external by valued been have payments Share-based determining method of the most appropriate be to consider the directors which the grant, time of the data at market available value. fair their is as follows: payments share-based of price exercise average weighted and number The DBP SMP, LTIP, Assumption Male retiring in 2020 in retiring Male 25. Employee benefits continued 25. Employee in mortality. improvement future for tables and allow the S3PxA based on 2020 are July at 31 adopted assumptions mortality The at age 65: expectancies life the following imply tables used The Notes to the Accounts continued

25. Employee benefits continued SRSOS 2020 2019 Number of options Number of options Outstanding at the beginning of the year 464,841 466,441 Granted during the year 195,607 203,168 Forfeited during the year (68,972) (91,766) Exercised during the year (153,116) (113,002) Outstanding at the end of the year 438,360 464,841

Exercisable at the end of the year 2,626 721

The options outstanding at 31 July 2020 have an exercise price in the range of 1,378.0p to 2,934.4p (2019 – 1,378.0p to 2,934.4p) and have a weighted average contractual life of 2.4 years (2019 – 2.2 years). The weighted average share price at the date of exercise for share options exercised during the year was 3,838.9p (2019 – 2,919.6p). Valuation methodology For LTIP options, 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, there are no market-related performance conditions and awards will be eligible to vest upon reaching a date set out in the Deed of the award. As dividends are not reinvested, the fair value of these awards is equal to the share price at the date of the grant. 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: 2020 2019 October December December December December October November November December December 2019 2019 2019 2019 2019 2018 2018 2018 2018 2018 Scheme LTIP LTIP DBP 3-Year 5-Year LTIP LTIP DBP 3 Year 5 Year description SRSOS SRSOS SRSOS SRSOS Grant date 16-Oct-19 11-Dec-19 11-Dec-19 03-Dec-19 03-Dec-19 22-Oct-18 22-Nov-18 22-Nov-18 03-Dec-18 03-Dec-18 Risk-free 0.0% 0.0% 0.0% 0.6% 0.6% 0.0% 0.0% 0.0% 0.8% 0.9% interest rate Exercise – – – 2,528.0p 2,528.0p – – – 2,414.4p 2,414.4p price Share price 3,370.0p 3,401.0p 3,401.0p 3,315.0p 3,315.0p 2,763.0p 2,877.0p 2,877.0p 2,561.0p 2,561.0p at date of grant Expected 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% dividend yield Expected life 3 years 3 years 3 years 3 years 5 years 3 years 3 years 3 years 3 years 5 years 2 months 2 months 2 months 2 months Vesting date 16-Oct-22 11-Dec-22 11-Dec-22 01-Feb-23 01-Feb-25 22-Oct-21 22-Nov-21 22-Nov-21 01-Feb-22 01-Feb-24 Expected 25% 25% 25% 25% 30% 30% 30% 30% 30% 30% volatility Fair value 1,656.5p 1,486.5p 2,700.0p 663.0p 729.0p 1,264.0p 1,392.5p 2,621.0p 407.0p 430.0p 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 £2.1 million (2019 – £1.7 million) in relation to equity-settled share-based payment transactions.

Bellway p.l.c. 130 Annual Report and Accounts 2020 Accounts

£m £m (4.5) 2019 2019 41.4 28.2 50.9 131 183.9 (179.4) 546.5

£m £m Bellway p.l.c. Bellway (4.5) 2020 2020 10.5 31.6 37.8 62.8 432.8 (124.2) Annual Report and Accounts 2020 Accounts and Annual Report Amounts paid in the year by subsidiaries on behalf of the Company in respect of dividends, financedividends, of respect in Company the of behalf on subsidiaries by year the in paid Amounts investments subsidiaries on disposal of from and receivable purchases, and share expenses Amounts received in the year from subsidiaries for share options exercised by subsidiary subsidiary by exercised options share subsidiaries for from year the in Amounts received and dividends received y employees compan Invoiced to joint arrangements in respect of accounting, management fees, interest on loans, interest fees, management accounting, of in respect joint arrangements to Invoiced works land purchases and infrastructure 26. Related party transactions party 26. Related Party ‘Related 24 IAS the definition of within parties related management are senior of members and certain Board The Detailed disclosure 5. in note is provided management personnel with key transactions the of information Summary Disclosures’. 92. to on pages 72 Report the Remuneration is included in members Board of individual remuneration of and are on consolidation been eliminated parties, have related which are subsidiaries, fellow between Transactions disclosed. not Group with its joint arrangements: transactions party related the following into entered the Group year the During Amounts owed to joint arrangements in respect of land purchases and management fees at fees and management land purchases of in respect joint arrangements to Amounts owed end the year The Company has suffered no expense in respect of bad or doubtful debts of subsidiary undertakings in the year (2019 – £nil), year the undertakings in subsidiary of debts doubtful bad or of in respect no expense has suffered Company The entities. dormant Group winding up several undertakings on Group from amounts owed million of £1.1 but impaired Amounts owed by subsidiaries in respect of dividends and shares issued net of amounts paid issued net of dividends and shares of subsidiaries in respect by Amounts owed Company the on behalf of ventures in subsidiaries and joint Investments Amounts owed by joint arrangements in respect of accounting, management fees, interest, interest, management fees, accounting, of in respect joint arrangements by Amounts owed works land purchases and infrastructure Company with its subsidiaries and joint arrangements: transactions party related the following into entered the Company year the During Notes to the Accounts continued

27. Group undertakings The directors set out below information relating to the Group undertakings as at 31 July 2020. All of these companies are registered in England and Wales. They are engaged in housebuilding and associated activities, have coterminous year ends with the Group, 100% of their ordinary share capital is held by the Company and the registered address is the same as the Company (unless otherwise stated).

Subsidiaries – trading Bellway Homes Limited Bellway (Services) Limited Bellway Housing Trust Limited Litrose Investments Limited Bellway Properties Limited Subsidiaries – dormant^ Ashberry Homes Limited Heron Electrical Contractors Limitedˆˆˆˆ Bellway (Builders) Limited Homes2Let Limited Bellway City Solutions Limited J. T. B. (Chapel Farm) Estates Limited Bellway Financial Services Limited J. T. B. Estates Limited Bellway Homes (Anglia) Limited John T. Bell & Sons (1976) Limited Bellway Homes (Hertfordshire) Limited Nixons Kitchens Limited Bellway Homes (North Solihull) Limited Seaton GR SPV 11 Limited Bellway Homes (North Solihull G P Limited) Seaton GR SPV 12 Limited Bellway London Limited Seaton GR SPV 13 Limited Bellway Marine Limited Seaton GR SPV 14 Limited Bellway Trustee Company Limited Seaton Fourteen Limitedˆˆˆˆ Bellway Urban Renewals (Contracts) Limitedˆˆˆ Seaton Ten Limitedˆˆˆˆ Bellway Urban Renewals Limitedˆˆˆ Seaton Thirteen Limited Bulldog Premium Growth I Limited Seaton Twelve Limited D.F.W. Golding (Southern) Limitedˆˆˆˆ Telvec Investments Limitedˆˆˆ D.F.W. Golding Limited Terraces Limited George Blackett Limited Tyneside Land & Property Company Limited Joint arrangements Other entities Cramlington Developments Limited (50% owned, HBF Insurance PCC Limited3 year end of 30 June)^^/1 MI New Home Insurance PCC Limited3 Fradley Residential LLP (50% owned)^^ Leebell Developments Limited (50% owned, year end of 30 June)^^/1 Notes: ^ Dormant. North Solihull (GP) Limited (25% owned, ^^ These shares are held indirectly. ^/^^/2 year end of 31 March) ^^^ Dissolved on 29 September 2020. North Solihull Partnership LP (49.8% owned, ^^^^ Dissolved on 6 October 2020. year end of 31 March)^^/2 1 Registered address is Persimmon House, Fulford, York, YO19 4FE. ^^ Ponton Road LLP (50% owned) 2 Registered address is Council House, Manor Square, Solihull, West Midlands, B91 3QB. Lambeth Regeneration LLP (50% owned)^^ 3 Registered address is Mill Court, La Charroterie, St Peter Port, Guernsey, GY1 4EY.

Bellway p.l.c. 132 Annual Report and Accounts 2020 Accounts

* * * * – £m 1.0 2020 (13.4) 99.3 99.3 8.3% 7,522 (57.6) 11.2% 133 251.7 321.7 15.7% 50.0p 19.0% 10.8% 14.5% (133.8) 309.3 (955.8) 156.6p 2,427p 2,225.4 28,289 2,994.0 £293.1k 3,984.3 123,205,211 123,345,834

– 2.1 £m 2019 Bellway p.l.c. Bellway 83.2 24.6% 24.6%

–

** ** 1.8 £m 2018 59.0 Annual Report and Accounts 2020 Accounts and Annual Report

–

£m 0.4 2017 454.1 519.9 538.6 560.7 641.1 662.6 * *

–

£m (11.1) (11.3) (13.6) (14.4) (0.3) 2016 33.3 48.0 (95.0) (106.6) (121.2) (124.0) (96.2) (118.4) (84.9) (99.4) 8,721 9,644 10,307 10,892 (757.6) (837.6) (902.5) (869.3) 385.6 480.6 492.0 571.6 652.9 674.9 28.2%28.2% 27.6% 27.6% 27.2% 27.2% 24.7% 24.7% 22.0% 22.3% 22.1% 21.0% 22.0% 22.3% 22.1% 21.0% 1,522p 1,785p 2,079p 2,372p 1,867.0 2,191.3 2,557.1 2,921.2 108.0p 122.0p 143.0p 150.4p 328.7p 370.6p 423.4p 437.8p 25.7%ˆ 25.9%ˆ 25.6% 25.7%ˆ 25.9%ˆ 25.6% 2,687.5 3,099.3 3,485.5 3,806.7 2,240.7 2,558.6 2,957.7 3,213.2 24,879 25,655 26,877 26,421 £252.8k £260.4k £284.9k £292.0k 122,558,261 122,511,626 122,779,199 123,012,723 122,685,986 122,797,958 122,980,266 123,167,828

(~) (~) (~) (~) (~) (~) ed due to the adoption of IFRS 15 ‘Revenue from contracts with customers’. contracts from IFRS 15 ‘Revenue of the adoption to ed due ed before exceptional item. exceptional ed before t restated following the adoption of IFRS 15 ‘Revenue from contracts with customers’. contracts from IFRS 15 ‘Revenue of the adoption following t restated Restat No APM Stat

Income statement Income Five Year Record Year Five Income tax expense Income Net finance expenses finance Net Share of results of joint ventures joint of results of Share taxation before Profit sheet Balance ASSETS assets Non-current Profit for the year (all attributable to equity holders attributable to equity (all year the for Profit of the parent) ** ^ Notes: ~ * Gross margin Gross Pre-exceptional operating margin operating Pre-exceptional Land portfolio – plots with implementable DPP with implementable – plots Land portfolio Operating margin Operating on capital employed Return share ordinary per value asset Net Gearing Revenue Current assets Current Weighted average number of ordinary shares shares ordinary of number average Weighted Basic earnings per ordinary share ordinary Basic earnings per Operating profit profit Operating LIABILITIES liabilities Non-current Number of ordinary shares in issue at end of year in issue at end of shares ordinary of Number Dividend per ordinary share ordinary per Dividend Current liabilities Current Pre-exceptional return on capital employed return Pre-exceptional EQUITY equity Total Statistics homes sold of Number

Average price of new homes new of price Average Pre-exceptional gross margin gross Pre-exceptional Alternative Performance Measures

Bellway uses a variety of alternative performance measures (‘APMs’) which, although financial measures of either historical or future performance, financial position or cash flows, are not defined or specified by IFRSs. The directors use a combination of APMs and IFRS measures when reviewing the performance, position and cash of the Group. The APMs used by the Group are defined below: • Pre-exceptional gross profit and pre-exceptional operating profit – Both of these measures are reconciled to total gross profit and total operating profit on the face of the consolidated income statement. The directors consider that the removal of exceptional items provides a better understanding of the underlying performance of the Group. • Pre-exceptional gross profit margin – Pre-exceptional gross profit margin is the pre-exceptional gross profit divided by total revenue. The directors consider this to be an important indicator of the underlying trading performance of the Group. • Administrative expenses as a percentage of revenue – This is calculated as the total administrative overheads divided by total revenue. The directors consider this to be an important indicator of how efficiently the Group is managing its administrative overhead base. • Pre-exceptional operating profit margin – Pre-exceptional operating profit margin is the pre-exceptional operating profit divided by total revenue. The directors consider this to be an important indicator of the operating performance of the Group. • Net finance expense – This is finance expenses less finance income. The directors consider this to be an important measure when assessing whether the Group is using the most cost-effective source of finance. • Dividend cover – This is calculated as earnings per ordinary share for the period divided by the dividend per ordinary share relating to that period. At the half year the dividend per ordinary share is the proposed interim ordinary dividend, and for the full year it is the interim dividend paid plus the proposed final dividend. The directors consider this an important indicator of the proportion of earnings paid to shareholders and reinvested in the business. • Capital invested in land, net of land creditors, and work in progress – This is calculated as shown in the table below. The directors consider this as an indicator of the net investment by the Group in the period to achieve future growth. 2020 2019 Mvt 2019 2018 Mvt Per balance sheet £m £m £m £m £m £m Land 2,216.2 2,004.4 211.8 2,004.4 2,011.9 (7.5) Work in progress 1,496.1 1,298.2 197.9 1,298.2 1,115.1 183.1 Increase in capital invested in land and work in progress in the year 409.7 175.6 Land creditors (343.6) (297.9) (45.7) (297.9) (365.4) 67.5 Increase in capital invested in land, net of land creditors, and work in progress in the year 364.0 243.1

• Net asset value per ordinary share (‘NAV’) – This is calculated as total net assets divided by the number of ordinary shares in issue at the end of each period (see note 19). The directors consider this to be a proxy when reviewing whether value, on a share by share basis, has increased or decreased in the period. • Capital employed – Capital employed is defined as the total of equity and net bank debt. Equity is not adjusted where the Group has net cash. The directors consider this to be an important indicator of the operating efficiency and performance of the Group. • Pre-exceptional return on capital employed (‘RoCE’) – This is calculated as pre-exceptional operating profit divided by the average capital employed. Average capital employed is calculated based on opening, half year and closing capital employed. The calculation is shown in the table below. The directors consider this to be an important indicator of whether the Group is achieving a sufficient return on its investments. 2020 2020 2020 2019 2019 2019 Capital Land Capital Capital Land Capital employed creditors employed employed creditors employed including land including land creditors creditors £m £m £m £m £m £m Pre-exceptional operating profit 321.7 321.7 674.9 674.9 Capital employed/land creditors: Opening 2,921.2 297.9 3,219.1 2,557.1 365.4 2,922.5 Half year 3.038.9 274.9 3,313.8 2,720.4 294.5 3,014.9 Closing 2,994.0 343.6 3,337.6 2,921.2 297.9 3,219.1 Average 2,984.7 305.5 3,290.2 2,732.9 319.3 3,052.2

Return on capital employed 10.8% 9.8% 24.7% 22.1%

Bellway p.l.c. 134 Annual Report and Accounts 2020 • Return on capital employed (‘RoCE’) – This is calculated as operating profit divided by the average capital employed. Average capital employed is calculated based on opening, half year and closing capital employed. The calculation is shown in the table below. The directors consider this to be an important indicator of whether the Group is achieving a sufficient return on its investments. 2020 2020 2020 2019 2019 2019 Capital Land Capital Capital Land Capital employed creditors employed employed creditors employed including land including land creditors creditors £m £m £m £m £m £m Operating profit 249.1 249.1 674.9 674.9 Capital employed/land creditors: Opening 2,921.2 297.9 3,219.1 2,557.1 365.4 2,922.5 Half year 3,038.9 274.9 3,313.8 2,720.4 294.5 3,014.9 Closing 2,994.0 343.6 3.337.6 2,921.2 297.9 3,219.1 Average 2,984.7 305.5 3,290.2 2,732.9 319.3 3,052.2

Return on capital employed 8.3% 7.6% 24.7% 22.1%

• Post tax return on equity – This is calculated as profit for the year divided by the average of the opening, half year and closing net assets. The directors consider this to be a good indicator of the operating efficiency of the Group. 2020 2019 £m £m Profit for the year 192.9 538.6 Net assets: Opening 2,921.2 2,557.1 Other information Half year 3,038.9 2,693.8 Closing 2,994.0 2,921.2 Average 2,984.7 2,724.0

Post tax return on equity 6.5% 19.8%

• Total growth in value per ordinary share – The directors use this as a proxy for the increase in shareholder value since 31 July 2017. Net asset value per ordinary share: At 31 July 2020 2,427p At 31 July 2017 1,785p Net asset value growth per ordinary share 642.0p Dividend paid per ordinary share: Year ended 31 July 2020 100.0p Year ended 31 July 2019 145.4p Year ended 31 July 2018 132.5p Cumulative dividends paid per ordinary share 377.9p Total growth in value per ordinary share 1,019.9p

• Annualised accounting return in NAV and dividends paid since 31 July 2017 – This is calculated as the annualised increase in net asset value per ordinary share plus cumulative ordinary dividends paid per ordinary share since 31 July 2017 (as detailed above) divided by the net asset value per ordinary share at 31 July 2017. The directors use this as a proxy for the increase in shareholder value since 31 July 2017. Net asset growth per ordinary share 642.0p Dividend paid per ordinary share 377.9p Total growth in value per ordinary share 1,019.9p Net asset value per ordinary share at 31 July 2017 1,785p Total value per ordinary share 2,804.9p Annualised accounting return = (2,804.9/1,785.0)^(1/3) – 1 16.3%

Bellway p.l.c. Annual Report and Accounts 2020 135 Alternative Performance Measures continued

• Net cash – This is the cash and cash equivalents less bank debt. The directors consider this to be a good indicator of the financing position of the Group. This is reconciled in note 21. • Average net debt – This is calculated by averaging the net debt/cash position at 1 August and each month end during the year. The directors consider this to be a good indicator of the financing position of the Group throughout the year. • Cash generated from operations before investment in land, net of land creditors, and work in progress – This is calculated as shown in the table below. The directors consider this as an indicator of whether the Group is generating cash before investing in land and work in progress to achieve future growth. 2020 2019 £m £m Cash from operations 55.8 419.1 Add: increase in capital invested in land, net of land creditors, and work in progress (as described above) 364.0 243.1 Cash generated from operations before investment in land, net of land creditors, and work in progress 419.8 662.2

• Gearing – This is calculated as net bank debt divided by total equity. The directors consider this to be a good indicator of the financial stability of the Group. • Adjusted gearing – This is calculated as the total of net bank debt/cash and land creditors divided by total equity. The directors believe that land creditors are a source of long-term finance so this provides an alternative indicator of the financial stability of the Group. • Order book – This is calculated as the total expected sales value of current reservations that have not legally completed. The directors consider this to be an important indicator of the likely future operating performance of the Group.

Bellway p.l.c. 136 Annual Report and Accounts 2020 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. It is generally provided by councils and not-for-profit organisations such as housing associations. Average Selling Price Calculated by dividing the total price of homes sold by the number of homes sold. Brownfield 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. Community Infrastructure Levy (‘CIL’) The CIL is a tool for local authorities in England and Wales to help deliver infrastructure to support the development of the area. COVID-19 COVID-19 is a disease caused by a new strain of coronavirus. ‘CO’ stands for corona, ‘VI’ for virus, and ‘D’ for disease. Formerly, this disease was referred to as ‘2019 novel coronavirus’ or ‘2019-nCoV’. COVID-19 has been characterised as a pandemic by the World Health Organization. Earnings per Share (‘EPS’) Profit attributable to ordinary equity shareholders divided by the weighted average number of ordinary shares in issue during the financial year, excluding the weighted average number of ordinary shares held by the Bellway Employee Trust (1992) which are treated as cancelled. Other information Furlough A furlough is a temporary leave of employees due to special needs of a company or employer, which may be due to economic conditions of a specific employer or in society as a whole. A UK-wide furlough was implemented in first half of 2020 due to the COVID-19 pandemic. Whilst there was a government funded furlough scheme which paid 80% of an employees salary, Bellway did not apply for this and continued to pay the 75% of the workforce which it furloughed a full basic salary from its own reserves. Home Builders Federation (‘HBF’) The HBF is an industry body representing the homebuilding 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 in England. Buyers have to contribute at least 5% of the property price as a deposit and obtain a mortgage of up to 75% (60% in London) and the government provides a loan for up to 20% (40% in London) of the price. Land Bank The land bank is comprised of three tiers: i) owned or unconditionally contracted land with an implementable detailed planning permission (‘DPP’); ii) medium-term ‘pipeline’ land owned or controlled by the Group, pending an implementable DPP; iii) strategic long-term plots which currently have a positive planning status and are typically held under option. Mortgage Market Review (‘MMR’) The MMR was a comprehensive review of the mortgage market which introduced reforms to deliver a mortgage market that is sustainable and works better for consumers. National Planning Policy Framework (‘NPPF’) The NPPF 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. National House Building Council (‘NHBC’) The 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 2020 137 Glossary continued

New Homes Bonus (‘NHB’) The NHB was introduced in 2011 by the coalition government with the aim of encouraging local authorities in England to grant planning permissions for the building of new houses in return for additional revenue. Under the scheme, the government has been matching the council tax raised on each new home built in England. Pipeline Plots which are either owned or contracted by the Group, 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. 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 to the Health and Safety Executive. 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. The 5% Club Members of The 5% Club aspire to achieve 5% of their workforce in ‘earn and learn’ positions (including apprentices, sponsored students and graduates on formalised training schemes) within 5 years of joining.

See also Alternative Performance Measures section on pages 134 to 136.

Bellway p.l.c. 138 Annual Report and Accounts 2020 Advisers and Group General Counsel & Company Secretary

Group General Counsel & Company Secretary and Registered Office Simon Scougall Bellway p.l.c. Woolsington House Woolsington Newcastle Upon Tyne NE13 8BF Registered number 1372603 Registrars, Transfer Office and Shareholder Queries Link Asset Services The Registry 34 Beckenham Road Beckenham Kent BR3 4TU E-mail: [email protected] Tel +44 (0) 371 664 0300 Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom are charged at the applicable international rate. Lines are open 9.00am – 5.30pm Monday to Friday excluding bank holidays in England and Wales Financial Adviser Citigroup Global Markets Limited Stockbrokers

Citigroup Global Markets Limited Other information Numis Securities Limited Bankers Barclays Bank PLC Lloyds Banking Group plc National Westminster Bank plc Auditor KPMG LLP Solicitor Slaughter and May

Bellway p.l.c. Annual Report and Accounts 2020 139 Shareholder Analysis

Shareholders by size of holding at 31 July 2020 Holdings Shares Number % Holding % 0 – 2,000 1,913 69 1,005,576 1 2,001 – 10,000 416 15 1,842,839 1 10,001 – 50,000 183 7 4,434,381 4 50,001 and over 251 9 116,063,038 94 Total 2,763 100 123,345,834 100

Shareholders by type at 31 July 2020 Holdings Shares Number % Holding % Private shareholders 1,567 57 2,553,670 2 Investment trusts 8 <1 556 <1 Pension funds 1 <1 1,792 <1 Nominee companies 1,083 39 108,293,259 88 Limited companies 37 1 207,884 <1 Bank and bank nominees 39 1 11,815,816 10 Other institutions 28 1 472,857 <1 Total 2,763 100 123,345,834 100

Financial Calendar

Final 2019/20 dividend – ex-dividend date 26 November 2020 Final 2019/20 dividend – record date 27 November 2020 AGM 11 December 2020 DRIP election date for final 2019/20 dividend 15 December 2020 Final 2019/19 dividend – payment date 8 January 2020 Trading update 9 February 2021 Announcement of 2020/21 half year results 24 March 2021

Bellway p.l.c. 140 Annual Report and Accounts 2020 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 L&S Printing Company Ltd who are certified to ISO 14001 environmental management system. Printed using vegetable oil based inks. This report is printed on Chorus Lux Silk which contains material sourced from responsibly managed forests, certified in accordance with the FSC™ (Forest Stewardship Council™). 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. Bellway p.l.c. Woolsington House, Woolsington Newcastle upon Tyne, NE13 8BF Tel: (0191) 217 0717 www.bellwayplc.co.uk