Preliminary Results

About this update from Bellway P.l.c.

[{"type":"text","content":"\n \n Bellway p.l.c. ('Bellway' or the 'Group'), the national housebuilder, announces today, Tuesday 15 October 2024, its Preliminary Results for the year ended 31 July 2024. \n   \n Summary \n   \n Resilient performance and well-positioned for strong multi-year growth  \n   \n   \n \n \n \n \n   \n \n \n Year ended \n 31 July \n 2024 \n \n \n Year ended \n 31 July \n 2023 \n \n \n Movement \n \n \n \n \n Housing completions \n \n \n 7,654 \n \n \n 10,945 \n \n \n (30.1%) \n \n \n \n \n Revenue \n \n \n £2,380.2m \n \n \n £3,406.6m \n \n \n (30.1%) \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Underlying performance measures: \n \n \n \n \n \n \n \n \n \n \n \n \n \n Gross profit (underlying) \n \n \n £381.1m 2,3 \n \n \n £687.3m 2,3 \n \n \n (44.6%) \n \n \n \n \n Gross margin (underlying) \n \n \n 16.0% 2,3 \n \n \n 20.2% 2,3 \n \n \n (420 bps) \n \n \n \n \n Operating profit (underlying) \n \n \n £238.1m 2,3 \n \n \n £543.9m 2,3 \n \n \n (56.2%) \n \n \n \n \n Operating margin (underlying) \n \n \n 10.0% 2,3 \n \n \n 16.0% 2,3 \n \n \n (600 bps) \n \n \n \n \n Profit before taxation (underlying) \n \n \n £226.1m 2,3 \n \n \n £532.6m 2,3 \n \n \n (57.5%) \n \n \n \n \n Earnings per share (underlying) \n \n \n 135.2p 2,3 \n \n \n 328.1p 2,3 \n \n \n (58.8%) \n \n \n \n \n RoCE (underlying) \n \n \n 6.9% 2,3 \n \n \n 15.8% 2,3 \n \n \n (890 bps) \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Statutory and other measures: \n \n \n \n \n \n \n \n \n \n \n \n \n \n Adjusting items (pre-tax) \n \n \n £42.4m \n \n \n £49.6m \n \n \n (14.5%) \n \n \n \n \n Profit before taxation \n \n \n £183.7m \n \n \n £483.0m \n \n \n (62.0%) \n \n \n \n \n Earnings per share \n \n \n 109.8p \n \n \n 297.7p \n \n \n (63.1%) \n \n \n \n \n Proposed total dividend per share \n \n \n 54.0p \n \n \n 140.0p \n \n \n (61.4%) \n \n \n \n \n Net asset value per share \n \n \n 2,913p 2 \n \n \n 2,871p 2 \n \n \n +1.5% \n \n \n \n \n Net (debt)/cash \n \n \n (£10.5m) 2 \n \n \n £232.0m 2 \n \n \n (104.5%) \n \n \n \n \n Land bank (total plots) \n \n \n 95,292 4 \n \n \n 98,164 4 \n \n \n (2.9%) \n \n \n \n \n   \n   \n Jason Honeyman, Group Chief Executive, commented: \n   \n \"Bellway has delivered another resilient performance despite the challenging operating conditions during the year.  While a lower order book at the beginning of the financial year drove the reduction in the number of housing completions, customer demand through the second half benefitted from a moderation in mortgage interest rates which has eased affordability pressures and supported an increase in reservations. \n   \n The combination of these improving trading conditions and our strong outlet opening programme has generated a healthy increase in the year end order book.  As a result, we are well-placed to deliver a material increase in volume output in financial year 2025.  \n   \n We welcome the new Government's plans to reform the planning system, which in time is expected to unlock land supply and support an increase in new housing across the country.  Against this improving backdrop and if market conditions remain stable, our operational strength and robust balance sheet, combined with the depth and quality of our land bank, provide an excellent platform for Bellway to deliver strong multi-year growth and to continue creating long-term value for all our stakeholders.\" \n   \n Financial performance in line with our expectations \n § Total housing completions of 7,654 homes (2023 - 10,945), at an overall average selling price of £307,909 (2023 - £310,306). \n § Total revenue reduced by 30.1% to £2,380.2 million (2023 - £3,406.6 million), due to the lower starting forward order book and challenging trading conditions, particularly in the first half of the financial year. \n § Customer confidence gradually improved throughout the year, driven by a moderation of both mortgage interest rates and consumer price inflation, and an increase in wages.  Combined with an increase in outlet numbers, this led to a 13.8% rise in the private reservation rate to an average of 124 per week (2023 - 109).  \n § The private reservation rate per outlet per week increased by 10.9% to 0.51 (2023 - 0.46).  The private reservation rate per outlet per week in the second half of the financial year increased to 0.58 (six months to 31 July 2023 - 0.53) compared to 0.43 in the first half (six months to 31 January 2023 - 0.38), driven by the improving trading backdrop and a seasonal uplift through the spring. \n § The underlying operating margin was in line with previous guidance at 10.0% 2,3 (2023 - 16.0%), with the reduction reflecting the effect of lower volume output, cost inflation and the use of targeted sales incentives, together with higher site-based overheads due to the slower sales market since the summer of 2022. \n § Underlying profit before taxation was £226.1 million 2,3 (2023 - £532.6 million) and in line with our expectations. \n § Adjusting items relating to net expenses associated with legacy building safety of £37.0 million (2023 - £49.6 million) and aborted transaction costs of £5.4 million (2023 - £nil), resulted in reported profit before tax of £183.7 million (2023 - £483.0 million). \n § Underlying RoCE was lower at 6.9% 2,3 (2023 - 15.8%) due to the decrease in both asset turn and the underlying operating margin.  The Group has a strong platform from which to increase volume output, and the Board expects this to support an improvement in RoCE from the current financial year. \n \n High-quality land bank to support outlet opening programme and volume growth ambitions \n § The Group has a high-quality land bank which comprises 95,292 plots 4 (2023 - 98,164 plots).  \n § Bellway's owned and controlled land bank of 48,887 plots (2023 - 53,629 plots) remains healthy and provides good visibility with regards to outlet openings in the current financial year and beyond. \n § The Group traded from an average of 245 outlets (2023 - 238), an increase of 2.9%, driven by the strength of our land bank and targeted approach to land acquisition, and was achieved despite the delays in the planning system. \n § Our site teams successfully opened 80 new sales outlets during the year, and in financial year 2025 we currently expect to open around 50 new sales outlets and maintain the average number at around 245.  \n § Overall, during financial year 2024, the Group contracted to purchase 4,621 owned and controlled plots (2023 - 4,715 plots) across 27 sites (2023 - 35 sites) with a total contract value of £344.8 million (2023 - £378.2 million). \n § The improving economic outlook in terms of both lower interest rates and house price stability has supported an increase in our activity in the shorter-term land market in recent months, with Heads of Terms agreed on around 8,100 plots at 29 September 2024. \n § Building on the expansion of our strategic land bank in recent years, the Group entered into option agreements for 35 sites (2023 - 19 sites), which has enhanced our longer-term growth prospects and overall land supply for a relatively low initial capital outlay. \n § Bellway's strategic land bank comprises 45,500 plots (2023 - 43,600 plots), providing the Group with an excellent platform for growth in the years ahead, with this further supported by the new Government's proposed reforms to the planning system.  \n \n Robust and well-capitalised balance sheet    \n § Bellway has a strong balance sheet, with low year-end net debt, in line with expectations, at £10.5 million 2 (2023 - net cash of £232.0 million), and modest adjusted gearing, inclusive of land creditors, of 6.8% 2 (2023 - 4.0%). \n § The Group has access to significant levels of committed debt finance, totalling £530 million, and this provides ongoing financial resilience while supporting land investment and our growth ambitions.  We expect to end the current financial year maintaining a low level of adjusted gearing 2 . \n § The proposed total dividend per share is 54.0p (2023 - 140.0p) which reflects reduced underlying earnings, and is in line with the Board's previously stated policy of underlying dividend cover of 2.5 times 2,3 .  \n   \n 'Better with Bellway' - our responsible and sustainable approach to business \n § The efforts of our colleagues in delivering our 'Better with Bellway' sustainability strategy have been reflected through multiple industry awards, including 'Large Housebuilder of the Year' and 'Best Staff Development Award' at the 2023 Housebuilder Awards. \n § The Group's flagship 'Future Homes' research project into carbon reduction at the University of Salford has also won several accolades, including 'Best Sustainability Initiative' at the 2023 Housebuilder Awards and 'Major Project of the Year' at the 2023 National Sustainability Awards. \n § Supported by several initiatives across the business, strong progress has been made in lowering our carbon footprint as we continue reducing the Group's emissions.  This includes the Group's scope 1 and scope 2 carbon emissions, which have reduced by 44.7% since our base year of 2019, and we are in an excellent position to meet our goal of a 46% reduction significantly ahead of the 2030 target.  \n § Timber frame construction offers a proven range of operational, financial and environmental benefits.  Following successful trials across the Group in recent years, Bellway is targeting an increase in timber frame usage, to around 30% of housing output by 2030, and this will be delivered, in part, through 'Bellway Home Space', our new proprietary timber frame production facility.  \n § Our ongoing focus on providing high-quality homes and service for our customers has resulted in Bellway retaining its position as a five-star 5 homebuilder for the eighth consecutive year. \n § Bellway remains fully committed to acting responsibly with regards to building safety, and we continue to make good progress on assessing and remediating legacy properties through our dedicated Building Safety division.  Since the start of our remediation programme, the Group has spent £146.3 million on legacy building safety issues. \n § An additional net £37.0 million has been recognised in relation to legacy building safety issues, as an adjusting item.  This includes an additional £15.3 million for structural defects in relation to an isolated design issue with the reinforced concrete frame of an apartment scheme in London, identified in financial year 2023. \n   \n Encouraging recent trading and improving outlook \n § The combination of the improvement in trading and growth in outlet numbers led to a strong increase in the forward order book in financial year 2024.  This comprised 5,144 homes (2023 - 4,411 homes) and increased in value by 18.4% to £1,412.9 million 2 (2023 - £1,193.5 million) at 31 July 2024. \n § Since the start of the new financial year, customer demand has remained robust and has been supported by an overall reduction in mortgage rates over the summer.  \n § In the nine weeks since 1 August, and against a weak comparative, the private reservation rate increased by 48.5% to 147 per week (1 August to 1 October 2023 - 99), representing a private reservation rate per outlet per week of 0.59 (1 August to 1 October 2023 - 0.41).  \n § The private reservation rate includes bulk investor sales, on attractive financial terms, totalling 232 homes (1 August to 1 October 2023 - 71 homes) and representing a contribution of 0.10 to the private reservation rate (1 August to 1 October 2023 - 0.03). \n § Reflecting recent trading and volume output, the forward order book at 29 September 2024 remained at a healthy level, comprised 5,109 homes (1 October 2023 - 4,636 homes) and had a value of £1,427.9 million 2 (1 October 2023 - £1,232.3 million). \n § The strength of the Group's forward order book, outlet opening programme and work-in-progress position provides Bellway with an excellent platform to deliver a material increase in volume output in financial year 2025.  \n § If market conditions remain stable, the Group is targeting to deliver completions of at least 8,500 homes in the current financial year (2024 - 7,654 homes), and as was the case in financial year 2024, volume output is expected to be weighted towards the first half (half year ended 31 January 2024 - 53.5%). \n § We are aiming to retain a healthy forward order book at the end of the current financial year (2024 - 5,144 homes) to serve as a platform for further growth in volume output in financial year 2026.  \n § Overall, pricing has remained firm across our regions, and in financial year 2025 we currently expect the average selling price to be around £310,000 (2024 - £307,909), and the underlying operating margin to approach 11.0% 2,3 (2024 - 10.0%).  \n § The combination of Bellway's operational and financial strength leaves the Group very well-placed to deliver long-term sustainable growth and ongoing value creation for shareholders.   \n   \n 1     All figures relating to completions, order book, reservations, cancellations, and average selling price exclude the Group's share of its joint ventures, unless otherwise stated. \n 2      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, are included in note 14. \n 3     Underlying refers to any statutory performance measure or alternative performance measure before net legacy building safety expense and exceptional items (note 3). \n 4      Includes the Group's share of land owned and controlled through joint venture partners comprising 905 plots (2023 - 935 plots). \n 5       As measured by the Home Builders' Federation using the eight-week NHBC Customer Satisfaction survey. \n 6       Comparatives are for the year ended 31 July 2023 or as at 31 July 2023 ('2023') unless otherwise stated. \n     \n Results presentation, webcast and conference call \n   \n A presentation to investors and analysts will be held at the offices of Deutsche Numis at 9.00am today. \n   \n A listen-only webcast and conference call will accompany the presentation. To join the webcast, go to the Bellway p.l.c. corporate website, www.bellwayplc.co.uk/investor-centre . \n   \n To join via the conference call, participants should dial +44 (0)33 0551 0200 and quote 'Bellway Full Year Results' when prompted by the operator. \n   \n A playback facility will be available on our corporate website shortly after the presentation has finished. \n   \n For further information, please contact: \n   \n Jason Honeyman, Group Chief Executive \n Keith Adey, Group Finance Director \n Gavin Jago, Group Investor Relations Director \n   \n Tel: +44 (0) 191 217 0717 \n \n \n   \n Chair's Statement \n   \n Introduction \n Bellway has successfully navigated a period of challenging trading conditions since the summer of 2022, and we are encouraged that the housing market outlook is now improving.  On behalf of the Board, I would like to thank our colleagues, subcontractors and supply chain partners, who have shown continued resourcefulness and commitment to providing high-quality homes and service for our customers. \n   \n The hard work and dedication of our teams has been recognised through several industry accolades, including 'Large Housebuilder of the Year' at the 2023 Housebuilder Awards.  I am also delighted that Bellway has been awarded five-star 5 homebuilder status by the HBF for the eighth consecutive year.      \n   \n Strategic priorities \n The Group has a clear focus on maintaining financial and operational strength to enable ongoing value creation for shareholders through the delivery of our strategic priorities.  Further details of these priorities are set out below: \n   \n § Deliver long-term volume growth; \n § Drive a long-term improvement in RoCE; and \n § Operate responsibly and sustainably through our 'Better with Bellway' strategy. \n   \n Long-term volume growth \n The Group is encouraged by the improving economic outlook in terms of both lower interest rates and house price stability.  We also welcome the new Government's focus on addressing the ongoing shortfall of housing and its recognition of the importance of housebuilding to drive sustained economic growth.  Bellway supports the Government's plans to reform the planning system to drive a marked increase in the supply of new homes across the country.  \n   \n Given this improving backdrop and the combination of our strong land bank, healthy forward order book and work-in-progress position, the Board is confident that the Group has an excellent platform to build on its proven track record of organic volume growth in the current financial year and beyond.  Bellway's balance sheet strength will enable future investment to further support our plans for multi-year volume growth.  \n   \n Bellway has a strong operational structure, currently with 20 trading divisions, which have capacity for material organic volume growth.  The Group also has the potential to scale up this structure, and given a mature division can typically deliver annual volume output of around 650 completions in a stable market, we have scope to significantly increase overall volume output in the years ahead.  The long-term fundamentals of the UK housebuilding industry remain positive and Bellway will continue to play an important role in meeting the growing need for new homes across the country. \n   \n Long-term improvement in RoCE \n The Group is focused on driving both profitable growth and a long-term improvement in RoCE, given the positive compounding effect on shareholder value that this can create.  \n   \n While lower profitability in financial year 2024 led to a reduction in underlying RoCE to 6.9% 2,3 (2023 - 15.8%), we are pleased that the significant industry headwinds faced in the last two years, including affordability pressures and cost inflation, are receding from the previous elevated levels.  Given the improving market backdrop and the strength of our order book and outlet opening programme, we have a strong platform from which to begin a recovery in RoCE from the current financial year.    \n   \n To help sustain this recovery, and in addition to our ongoing management of costs, we expect to deliver additional volume output from our strategic land bank in the years ahead.  Supported by the Government's plans to reform the planning system and unlock land supply, our strategic land bank will underpin our long-term volume growth aspirations and, in turn, help to improve asset turn and margin.  \n   \n We are also increasing the use of timber frame construction across the Group, which can improve build efficiencies and asset turn, as well as reducing carbon emissions in the supply chain.  As part of this strategy, we are planning to open our own timber frame production facility, 'Bellway Home Space', to help meet our target of growing timber frame construction to around 30% of housing output by 2030.  \n   \n These areas of focus, together with an improvement in operating margin, can support a recovery in underlying RoCE and, combined with our ongoing investment in land with compelling financial returns, the Board remains optimistic that Bellway is well-placed to deliver a normalised underlying RoCE of up to 20% 2,3 over the longer-term. \n \n   \n 'Better with Bellway' \n 'Better with Bellway' is the Group's strategy and long-term commitment with regards to acting responsibly and sustainably.  The strategy outlines ambitious targets in respect of our three flagship areas of Carbon Reduction, Customers and Communities, and becoming an Employer of Choice. \n   \n Supported by several research projects underway across the business, strong headway has been made in laying the foundations for a lower carbon footprint as we work towards a significant reduction in the Group's emissions by 2030.  The Group's scope 1 and scope 2 carbon emissions have reduced by 14.1% compared to the prior year and by 44.7% since our base year of 2019, and we are in an excellent position to meet our goal of a 46% reduction by 2030 significantly ahead of target.  \n   \n Reflecting our focus on build quality and customer service, we are proud to have retained our position as a five-star 5 homebuilder for the eighth consecutive year.  There has also been an excellent response to our most recent employee engagement survey and, despite the ongoing challenges in the market during the year, 87% of colleagues (2023 - 89%) said they would recommend Bellway as 'a great place to work'. \n   \n In addition to the flagship priority areas, the 'Better with Bellway' strategy includes targets in respect of biodiversity, resource efficiency, charitable engagement, sustainability throughout the supply chain and building quality homes, safely.  Through a range of initiatives, we have embedded 'Better with Bellway' across the Group's operations, and we are proud that the efforts of our colleagues have been recognised through several industry awards.  More details are set out later in this report and are also available on our website at www.bellwayplc.co.uk/sustainability . \n   \n In relation to building safety, our ongoing focus on this serious matter is reflected by the proactive approach to assessing and remediating schemes through our dedicated Building Safety division, and the Group is making every effort to further accelerate progress in this area.  \n   \n Since the start of our remediation programme, the Group has spent £146.3 million on legacy building safety issues.  Notwithstanding the ongoing complexities with regards to building safety, Bellway is focused on completing works as promptly and efficiently as possible, and we expect to continue making strong progress with our programme of remediation in the current financial year.    \n   \n Delivering value creation for shareholders \n The successful delivery against our strategic priorities will ensure the Group continues to generate long-term value for shareholders, and the Board believes this is best gauged through increasing NAV per share and supplemented by regular dividends.  Over the last decade, Bellway has delivered a strong annualised accounting return in NAV and dividends paid of 13.6% 2 .  \n   \n In the year ended 31 July 2024, NAV per share rose modestly to 2,913p 2 (2023 - 2,871p), with the effect of lower volume output and earnings offset by the benefits of our value-driven approach to capital allocation.  This included the positive effect of the final tranche of the £100 million share buyback, which completed in October 2023, and £131.7 million of dividend payments made during the year. \n   \n The Board has recommended a final dividend for financial year 2024 of 38.0p per share (2023 - 95.0p).  This brings the total proposed dividend to 54.0p per share (2023 - 140.0p) and, if approved, the overall dividend will be covered 2.5 times 2,3 by underlying earnings (2023 - 2.3 times), in line with the Board's previously stated policy.  \n   \n Looking ahead, the strength of our land bank and balance sheet provides the Group with optionality, and the reinvestment of capital into compelling land opportunities will continue to be balanced with future shareholder returns.  \n   \n Board changes \n Simon Scougall has recently joined the Board in the newly created executive role of Chief Commercial Officer.  Simon has held a number of senior positions within Bellway over the past 13 years, including Group General Counsel and Company Secretary, and joined the Board on 1 August 2024.  We look forward to working with Simon in the years ahead as he continues to support the Group in the delivery of our strategy. \n   \n Cecily Davis joined the Board on 1 May 2024 as an independent Non-Executive Director.  Cecily's expertise as an engineering, procurement and construction lawyer combined with her experience as a Non-Executive Director and strong commitment to the improvement of ESG in the construction sector, has further strengthened the Board.  \n   \n As previously announced and following a successful career that has spanned over 15 years with Bellway, Keith Adey, Group Finance Director, is to step down from his role on 1 December 2024.  Keith will remain on the Board as an Executive Director until 21 March 2025. On behalf of the Board and everyone at Bellway, I want to place on record our sincere gratitude  for Keith's significant and highly valued contribution to Bellway's growth and sustainability strategy, and for his dedicated service over the years. \n   \n Following a thorough recruitment process for Keith's successor, and as announced on 11 October 2024, Shane Doherty will join the Board as our new Chief Financial Officer on 2 December 2024.  Shane brings a wealth of financial and sector experience to Bellway, having most recently held the same position at Cairn Homes plc, and we look forward to welcoming him to the Group. \n   \n Future long-term success \n Bellway has an experienced leadership team with operational strength-in-depth across the organisation.  Given these qualities and our robust balance sheet, I am confident that the Group is well-positioned to capitalise on future growth opportunities, deliver against our strategic priorities and create a positive outcome for our stakeholders over the long term . \n   \n   \n John Tutte \n Chair \n 14 October 2024 \n   \n \n \n   \n Chief Executive's Market and Operational Review \n   \n Market \n Customer confidence gradually improved throughout the year, driven by a moderation of both mortgage interest rates and consumer price inflation, and an increase in wages.  Trading patterns were less volatile than the prior financial year when rapid changes in borrowing rates led to significant variations in customer demand.  We have been encouraged by the improvement in affordability during the year and the relative stability in mortgage interest rates since January 2024.  Overall, this led to a reduction in the cancellation rate to a normalised level of 14% (2023 - 18%).  \n   \n The private reservation rate was 13.8% higher than the prior year at an average of 124 per week (2023 - 109), with the improvement driven by stronger demand and an increase in outlet numbers.  The private reservation rate per outlet per week increased by 10.9% to 0.51 (2023 - 0.46) including a small contribution from bulk investor sales of 0.02 (2023 - 0.01).  The private reservation rate per outlet per week in the second half of the financial year increased to 0.58 (six months to 31 July 2023 - 0.53) compared to 0.43 in the first half (six months to 31 January 2023 - 0.38), reflecting the improving trading backdrop and a seasonal uplift through the spring. \n   \n The overall reservation rate, including social homes, rose by 3.2% to 161 per week (2023 - 156).  The more modest rate of increase reflects the planned reduction in social housing completions, in both financial years 2024 and 2025, compared to the elevated level achieved in financial year 2023.  This is in line with expectations and follows a period in which the Group accelerated the construction of social homes as part of a wider programme of cash generation and maintaining financial resilience when trading conditions became challenging in late summer 2022. \n   \n The Group traded from an average of 245 outlets during the year (2023 - 238), in line with our expectations, with a closing position of 250 outlets at 31 July 2024 (2023 - 240).  The 2.9% increase in average outlets was driven by the strength of our land bank and targeted approach to land acquisition and was achieved despite the ongoing delays in the planning system.  \n   \n Bellway's focus on traditional two-storey family housing attracts a wide range of customers and, notwithstanding variations in mortgage rates during the year, demand for our high-quality new homes was supported by good availability, in general, of mortgage finance.  The availability of mortgage products and affordability does, however, remain relatively constrained for those customers requiring higher loan-to-value mortgages, although we have seen continuing demand from first-time buyers, which accounted for around 36% of private reservations (2023 - 34%).  We have continued to see relatively healthy levels of underlying demand from second-time buyers, which accounted for around 60% of private reservations (2023 - 64%).  Sales to investors have remained low and represented around 4% of private reservations (2023 - 2%), with the increase partly reflecting the modest rise in bulk investor sales during the year.   \n   \n Overall, headline pricing across our regions has remained firm, and our sales teams continue to use a range of targeted incentives to encourage further customer interest and secure reservations.  The use of selling incentives has generally remained stable during the year, although there has been more limited use in regions where affordability remains good in the context of the local market and in areas with healthy employment levels.  \n   \n High-quality land bank to support outlet opening programme and volume growth ambitions  \n Bellway has a high-quality land bank with strength and depth to support our growth plans, and our experienced land teams have continued with a disciplined and targeted approach to land acquisition during the year.  Our approach to investment and rigorous approval process remains focused on securing land interests which offer compelling financial returns and where possible, have flexibility in the contract terms.  \n   \n There is well-established Group-wide oversight for land approval at Bellway which ensures we focus our investment resource in the areas where investment returns are supported by strong demand.  As part of this process, all sites are reviewed by our divisional teams, a Regional Chair, and again by the Group's Head Office land acquisition team, prior to entering into contract, in order to assess and optimise the margin.  This process also includes a review of layouts, product offering and biodiversity solutions, to ensure we are offering a sustainable and attractive product to our customers.  \n   \n Given the cyclical nature of the housebuilding industry, maintaining Bellway's financial strength forms the foundation of our capital allocation policy, and enables the Group to swiftly respond to attractive land opportunities when they arise.  Our land bank was enhanced by a period of front-footed investment prior to financial year 2023 and will help the Group to achieve its strategic priority of long-term volume growth. \n \n   \n The table below analyses the Group's land holdings: \n   \n \n \n \n \n   \n \n \n 2024 \n \n \n 2023 \n \n \n \n \n   \n \n \n Plots \n \n \n Plots \n \n \n \n \n DPP:  plots with implementable detailed planning permission \n \n \n 30,787 \n \n \n 32,229 \n \n \n \n \n Pipeline:  plots pending an implementable DPP \n \n \n 18,100 \n \n \n 21,400 \n \n \n \n \n   \n Bellway owned and controlled plots \n \n \n   \n 48,887 \n \n \n   \n 53,629 \n \n \n \n \n Bellway share of land owned and controlled by joint ventures \n \n \n 905 \n \n \n 935 \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Total owned and controlled plots \n \n \n 49,792 \n \n \n 54,564 \n \n \n \n \n Strategic land holdings \n \n \n 45,500 \n \n \n 43,600 \n \n \n \n \n   \n Total land bank 4 \n \n \n   \n 95,292 \n \n \n   \n 98,164 \n \n \n \n \n   \n Reflecting ongoing planning delays, volume output and the reduced level of land buying during the year, Bellway's owned and controlled land bank has decreased, yet remains healthy at 48,887 plots (2023 - 53,629 plots).  This represents a land bank length of 6.4 years (2023 - 4.9 years) when based on the last 12 months' legal completions.  \n   \n Within our land bank we have 30,787 plots (2023 - 32,229 plots) with an implementable detailed planning permission ('DPP') and our pipeline land bank comprises 18,100 plots (2023 - 21,400 plots).  The reduction in the number of pipeline plots reflects our lower land buying activity and several pipeline sites receiving an implementable DPP in the year.    \n   \n As noted earlier, the Group operated from an average of 245 outlets in the year (2023 - 238) with 250 active outlets at 31 July 2024 (2023 - 240).  We have good visibility on the expected timing of near-term planning decisions, and we currently expect to open around 50 new outlets in financial year 2025 (2024 - 80).  The Group is well-positioned to maintain the average number of outlets at around 245 during the year to 31 July 2025, with the outcome also dependent on sales rates and therefore the number of outlets closing during the year.  \n   \n The improving economic outlook in terms of both lower interest rates and house price stability has supported an increase in our activity in the shorter-term land market, notably since the start of calendar year 2024.  Overall, during financial year 2024, the Group has contracted to purchase 4,621 owned and controlled plots (2023 - 4,715 plots) across 27 sites (2023 - 35 sites) with a total contract value of £344.8 million (2023 - £378.2 million).  We have also continued to rebuild our future pipeline of potential acquisitions, with Heads of Terms agreed on around 8,100 plots at 29 September 2024.  \n   \n The planning system has remained fraught with delays.  The Competition and Markets Authority ('CMA') published the results of its wide-ranging market study into the housebuilding sector in England, Scotland and Wales in February 2024, concluding that the UK's complex and unpredictable planning system was primarily responsible for the persistent under delivery of new homes.  The report highlighted that local authority planning departments are typically under resourced, and several do not have up to date local plans, clear targets or strong incentives to deliver the number of homes needed in their areas.  This has been exacerbated by the dilution of housing targets by the previous Government in late 2023 and, as a result, planning permissions granted for housing are currently at a 10-year low. \n   \n Against this backdrop, we welcome the new Government's clear plan to reform the planning system and its longer-term approach to increase the supply of new housing, which includes the reintroduction of mandatory housing targets.  While the Government's reforms will take some time to ease planning delays and unlock land supply, our land teams are focused on progressing an increasing number of planning applications from our high-quality land bank.  Overall, we remain well-placed to deliver further increases in outlet numbers by the end of financial year 2026 and beyond to support our volume growth ambitions. \n   \n Strategic land investment to further support our long-term growth ambitions \n Bellway's investment in strategic land has continued during the year, which has enhanced our overall land supply for a relatively low initial capital outlay.  The Group's longer-term land opportunities are primarily sourced through option agreements by the Group's dedicated strategic land function, with commercial terms that will reflect future market values and conditions, while also allowing for prevailing planning policy requirements at the time of acquisition.  Strategic land can also generate margin enhancement, in some instances, due to option agreements prescribing that land values will typically be agreed at a discount to open market cost, once planning permission has been obtained.  \n   \n The Group entered into option agreements for 35 sites (2023 - 19 sites) in the year, building upon our increased activity in the strategic land market in recent years.  As at 31 July 2024 the strategic land holdings comprised 45,500 plots (2023 - 43,600 plots) and has grown by 77.7% in the last five years (31 July 2019 - 25,600 plots).  \n   \n The Group's experienced strategic land team is focused on promoting and delivering sustainable sites through the planning system, and is adept at navigating emerging planning policies and other legislative changes.  Given our increased focus on strategic land and the proposed positive planning changes under the new Government, we expect to deliver a growing proportion of volume output from our strategically sourced land bank over the medium term.  \n \n Overall, the Group's ongoing investment in strategic land continues to provide balance sheet efficiency and financial flexibility through the use of option and promotion agreements, while also supporting our longer-term growth prospects, with plots usually expected to obtain planning permission over a period of five years or more. \n   \n Production and cost control \n Build cost inflation has continued to moderate with the easing of cost increases driven by the combined effect of lower levels of construction activity and the fall in energy costs since their peak in late 2022.   \n   \n The industry-wide decline in construction activity has reduced the demand for building materials, and there is currently limited overall material cost inflation on new tenders.  There are presently good levels of product availability across the Group and our experienced procurement teams continue to work closely with our wide range of supply chain partners on demand planning, to ensure we are prepared for our targeted increase in volume output from the current financial year. \n   \n Bellway has well-established relationships with its subcontract partners and together with our strong commercial disciplines, the Group's subcontract labour costs continue to be closely managed.  As construction output has declined across the country, requests for subcontract price increases remain low for most trades.  The Group's outlet opening programme has provided good visibility on pipeline work for subcontractors and remains beneficial when negotiating new labour contracts and pricing, with minimum fixed price periods of 12 months secured for most trades.  \n   \n Our subcontractors are also becoming increasingly familiar with our Artisan Collection house-types, which continue to drive a range of other benefits across the Group, including improved site layouts.  The proportion of Artisan homes within Group housing completions rose to 57% of total output in financial year 2024 (2023 - 45%), and we expect further growth in the current year.  \n   \n To improve productivity and response times on site, we have also introduced a new site-based quality management and compliance system across the Group.  The system, Field View, is a mobile application which significantly reduces the need for office-based administrative work, thereby allowing construction teams to spend more of their time to drive on-site quality improvements.  Digitalised forms and quality inspections, including those for key construction stages, health and safety, and fire stopping, can be completed on mobile tablets, while inspecting plots.  Field View is also being used to monitor all key build stages to drive further efficiencies in the management of construction programmes.  \n   \n Bellway has robust cost controls and an ongoing focus on margin protection.  During the year, and as a part of our programme of continuous improvement, we have completed training sessions for all commercial colleagues at our Bellway Academy to promote and reinforce our strong commercial culture, while maintaining the high-quality of our homes.  We have also completed a series of build cost review meetings to enable inter-divisional benchmarking across live developments and Artisan house-types.  These meetings are scheduled to continue on a regular basis in order to share best practice and help drive the business towards improved consistency. \n   \n Looking ahead, as the industry works towards building to the requirements of the Future Homes Standard, our Artisan Collection standard house-types and centralised approach to design, procurement and site layout reviews will continue to help the Group maintain efficiency and mitigate cost pressures. \n   \n 'Bellway Home Space' - expanding the use of timber frame construction across the Group \n As part of our long-term growth strategy, we are increasing the use of sustainably sourced timber frame construction across the Group.  Timber frame construction offers a proven range of operational, financial and environmental benefits, and we have been expanding its use, on a trial basis, in several Bellway divisions in recent years, in addition to its long-established use in our two Scottish divisions.  \n   \n As a modern method of construction ('MMC'), the use of timber frame in housebuilding is of growing importance in the UK, and the Government is supporting the increased use of MMC as part of its plans to increase the supply of high-quality, sustainable new housing. \n   \n We expect to generate a range of benefits from the use of timber frame in the years ahead and this has been corroborated from our onsite trials.  These include faster build speed, reduced waste and improved construction quality, as off-site manufacturing can drive higher levels of quality control and consistency compared to traditional construction methods.  In turn, these build efficiencies should support improvements in the Group's asset turn, together with strengthening customer care scores.  Compared to other mainstream building materials, timber requires minimal processing and has very low relative levels of embodied carbon.  \n   \n To support our volume growth ambitions and carbon reduction goals, Bellway is targeting an increase in timber frame use to around 30% of housing output by 2030 (2024 - 12%).  The planned growth in timber frame output will be achieved primarily by investing in our own proprietary timber frame manufacturing facility, 'Bellway Home Space'.  In addition, we will continue to work with the UK's leading timber frame manufacturers for the supply and installation of timber frame homes to Bellway sites across the Group. \n \n   \n The Group has recently taken possession of a 134,000 square foot industrial unit for 'Bellway Home Space' under a long-term lease agreement.  The facility, chosen for its transport links, is located within a strong logistics network near Mansfield, Nottinghamshire, and the Group has appointed an experienced Managing Director to run its timber frame operations.  In order to drive efficiencies and quality, the facility will operate using computer driven robotic machinery which will be supplied by a leading, well-established manufacturer. \n   \n 'Bellway Home Space' will have the capability to manufacture open-panel systems, together with pre-insulated closed-panel systems, where both insulation and the inner sheath are assembled within the factory environment, further improving thermal efficiency and reducing on-site waste.  We currently expect to produce our first homes from the facility in mid-2026, with a gradual increase to full capacity of up to 3,000 homes per annum by 2030.  All management, manufacturing and materials control will be undertaken by Bellway, ensuring the Group benefits from its overall investment in the factory and machinery, while also providing the opportunity to innovate product and control costs. \n   \n The full benefits of timber frame construction will require some operational changes to the business, including the redesign of our Artisan house-types to accommodate the requirements of timber frame and the Future Homes Standard.  We expect this process to complete by the end of calendar year 2025. \n   \n Overall, we are confident that our investment in timber frame in the years ahead will underpin the delivery of our strategic priorities, to drive long-term volume growth and an improvement in RoCE, and help meet the targets set out in our 'Better with Bellway' sustainability strategy.  \n   \n Recent trading and improving outlook \n The combination of the improvement in trading and growth in outlet numbers led to a strong increase in the forward order book in financial year 2024.  This comprised 5,144 homes (2023 - 4,411 homes) and increased in value by 18.4% to £1,412.9 million 2 (2023 - £1,193.5 million) at 31 July 2024. \n   \n Since the start of the new financial year, customer demand has remained robust and has been supported by an overall reduction in mortgage rates over the summer.  \n   \n In the nine weeks since 1 August and against a weak comparative, the private reservation rate increased by 48.5% to 147 per week (1 August to 1 October 2023 - 99), representing a private reservation rate per outlet per week of 0.59 (1 August to 1 October 2023 - 0.41).  The private reservation rate includes bulk investor sales, on attractive financial terms, totalling 232 homes (1 August to 1 October 2023 - 71 homes).  The bulk sales represented a contribution of 0.10 to the private reservation rate (1 August to 1 October 2023 - 0.03). \n   \n Reflecting recent trading and volume output, the forward order book at 29 September 2024 remained at a healthy level, comprised 5,109 homes (1 October 2023 - 4,636 homes) and had a value of £1,427.9 million 2 (1 October 2023 - £1,232.3 million). \n   \n Outlook \n The strength of the Group's forward order book, outlet opening programme and work-in-progress position provides Bellway with an excellent platform to deliver a material increase in volume output in financial year 2025.  \n   \n If market conditions remain stable, the Group is targeting to deliver completions of at least 8,500 homes in the current financial year (2024 - 7,654 homes).  As was the case in financial year 2024, volume output is expected to be weighted to the first half (half year ended 31 January 2024 - 53.5%), with this completion profile supporting cash generation and ongoing land investment.  We are also aiming to retain a healthy forward order book at the end of the current financial year (2024 - 5,144 homes) to serve as a platform for further growth in volume output in financial year 2026. \n   \n Over the long term, Bellway's divisional structure has significant capacity to deliver sustainable volume growth.  Given the depth and quality of our land bank and the Government's plans to support the increase of new housing supply, we also have scope to scale up the Group's divisional structure to fully capitalise on future growth opportunities.  Combined with our operational strength and robust balance sheet, the Group is very well-placed to deliver strong multi-year growth and to continue creating value for all our stakeholders. \n   \n   \n Jason Honeyman \n Group Chief Executive \n 14 October 2024 \n   \n   \n   \n Group Finance Director's Review \n   \n Trading performance \n The Group has delivered housing revenue of £2,356.7 million (2023 - £3,396.3 million), a reduction of 30.6%, which was in line with our expectations and driven by the decrease in volume output.    Other revenue was £23.5 million (2023 - £10.3 million) and comprises ancillary items such as land and commercial sales, and management fee income earned on our joint venture schemes.  Total revenue was 30.1% lower at £2,380.2 million (2023 - £3,406.6 million). \n   \n The table below shows the number and average selling price ('ASP') of homes completed in the year, analysed between private and social homes, and against the prior year comparative: \n   \n \n \n \n \n \n \n \n 2024 \n \n \n 2023 \n \n \n Variance (%) \n \n \n \n \n \n \n \n Homes \n \n \n ASP (£000) \n \n \n Homes \n \n \n ASP (£000) \n \n \n Homes \n \n \n ASP \n \n \n \n \n Private \n \n \n 5,758 \n \n \n 347.7 \n \n \n 8,166 \n \n \n 359.0 \n \n \n (29.5%) \n \n \n (3.1%) \n \n \n \n \n Social \n \n \n 1,896 \n \n \n 186.9 \n \n \n 2,779 \n \n \n 167.3 \n \n \n (31.8%) \n \n \n 11.7% \n \n \n \n \n Total \n \n \n 7,654 \n \n \n 307.9 \n \n \n 10,945 \n \n \n 310.3 \n \n \n (30.1%) \n \n \n (0.8%) \n \n \n \n \n   \n Total housing completions reduced by 30.1% to 7,654 homes (2023 - 10,945 homes), with the decline reflecting the lower order book at 31 July 2023 and the generally softer trading conditions in the first half of the financial year.  Overall private output reduced by 29.5% to 5,758 homes (2023 - 8,166 homes), with a 31.8% decline in social housing output to 1,896 homes (2023 - 2,779 homes).  This resulted in the proportion of social completions decreasing slightly to 24.8% of the total (2023 - 25.4%).  We have good visibility on our near-term build programmes, and we expect a similar number of social housing completions in the current financial year.  \n   \n The overall average selling price was £307,909 (2023 - £310,306), and this modest change was driven by the increase in the level of sales incentives, together with geographic and mix changes.  Overall, headline pricing has remained firm across our regions, and we currently expect the average selling price in financial year 2025 to be around £310,000. \n   \n Underlying operating performance \n The Group's commercial disciplines and proactive management of site-based overheads helped to alleviate some of the margin pressures faced during the year.  Notwithstanding this, there has been a decrease in site profitability, in line with expectations, arising from cost inflation and the use of sales incentives, together with higher site-based overheads due to the generally slower sales market since the summer of 2022.  This led to a 420 basis point reduction in the underlying gross margin to 16.0% 2,3 (2023 - 20.2%) and as a result, underlying gross profit decreased by 44.6% to £381.1 million 2,3 (2023 - £687.3 million). \n   \n Other operating income and expenses, which net to a modest expense of £1.2 million (2023 - £1.2 million), relate to the running of our part-exchange programme.  Part-exchange activity remained low and was used for only 2.8% of completions (2023 - 1.7%), with a balance sheet investment as at 31 July 2024 of only £14.5 million (2023 - £18.0 million).  The Group has strong controls around the use of part-exchange as a selling tool, and we have the financial capacity to increase its use, in a disciplined manner, if market conditions require it. \n   \n The underlying administrative expense decreased slightly to £141.8 million 2,3 (2023 - £142.2 million), with strong cost control and the lower headcount resulting from our workforce planning exercise in calendar year 2023 helping to offset underlying cost inflation.  As a proportion of revenue, underlying administrative expenses rose to 6.0% 2,3 (2023 - 4.2%), with this due to the reduction in volume output in the year. \n   \n In financial year 2025, while we are maintaining a clear focus on costs, we expect administrative expenses to rise by up to 10%.  This follows two years of broadly flat overheads and reflects the requirement to continue offering competitive reward packages to attract and retain talent in order to support our growth plans.  It also includes the initial, pre-operational costs of our new proprietary timber frame manufacturing operations. \n   \n The underlying operating margin was 10.0% 2,3 (2023 - 16.0%), with the decrease driven by the lower underlying gross margin and the operational gearing effect of the decline in volume output.  Overall, underlying cost pressures are beginning to ease, although residual cost inflation incurred in earlier periods will be realised through the income statement for legal completions in the months ahead.  In financial year 2025, we expect the underlying operating margin to approach 11.0% 2,3 . \n   \n We will continue with our disciplined approach to land investment and cost management through the cycle and, together with the support of stable conditions in the housing market, the Board is confident that an underlying operating margin in the mid-to high-teens 2,3 is sustainable over the longer term. \n \n \n Adjusting item:  Net l egacy building safety expense \n   \n Bellway continues to act responsibly with regards to building and resident safety, and this is reflected by the significant resource and funding the Group has committed to remediate its legacy apartments.  \n   \n In March 2023 the Group signed the Self-Remediation Terms ('SRT') with the Government, and we have also signed up to the Welsh Government Building Safety Developer Remediation Pact (the 'Pact') and the Scottish Safer Buildings Accord, reinforcing our responsible UK-wide approach to legacy building safety. \n   \n In total, for the year ended 31 July 2024, a net £37.0 million (2023 - £49.6 million) has been recognised in relation to legacy building safety.  The following table shows the primary components of the net adjusting expense relating to legacy building safety, split by half year: \n   \n \n \n \n \n   \n \n \n H1 24 \n \n \n H2 24 \n \n \n FY24 \n \n \n FY23 \n \n \n \n \n   \n \n \n £m \n \n \n £m \n \n \n £m \n \n \n £m \n \n \n \n \n SRT and associated review - cost of sales expense/(credit) \n \n \n 8.0 \n \n \n (1.9) \n \n \n 6.1 \n \n \n 58.1 \n \n \n \n \n SRT and associated review - cost of sales recoveries \n \n \n - \n \n \n (0.3) \n \n \n (0.3) \n \n \n (50.0) \n \n \n \n \n Structural defects - cost of sales expense/(credit) \n \n \n (0.6) \n \n \n 14.7 \n \n \n 14.1 \n \n \n 30.5 \n \n \n \n \n   \n Net cost of sales expense \n \n \n   \n 7.4 \n \n \n   \n 12.5 \n \n \n   \n 19.9 \n \n \n   \n 38.6 \n \n \n \n \n SRT and associated review - finance expense \n \n \n 8.8 \n \n \n 7.1 \n \n \n 15.9 \n \n \n 11.0 \n \n \n \n \n Structural defects - finance expense \n \n \n 0.6 \n \n \n 0.6 \n \n \n 1.2 \n \n \n - \n \n \n \n \n   \n Total net legacy building safety expense \n \n \n   \n 16.8 \n \n \n   \n 20.2 \n \n \n   \n 37.0 \n \n \n   \n 49.6 \n \n \n \n \n   \n The total adjusting expense includes a net adjusting expense of £19.9 million through cost of sales, of which a net £5.8 million relates to the refinement of overall cost estimates in relation to the SRT and associated review provision, and a modest level of recoveries.  It also comprises an additional £14.1 million for the structural defects provision in relation to an isolated design issue identified with the reinforced concrete frame of an apartment scheme in Greenwich, London in financial year 2023.  \n   \n The additional provision in relation to the Greenwich apartment scheme reflects increases in the estimated costs due to changes in the approach to remediation, following the completion of more intensive modelling work.  Bellway is actively pursuing recoveries from the entities involved in the development of the Greenwich apartment scheme, primarily through their insurers, however, given the complexity of this process, these have not yet been recognised as an asset.  The Group has undertaken a review of other buildings constructed by, or on behalf of Bellway, where the same third parties responsible for the design of the frame in the Greenwich development have been involved, and no other similar design issues with reinforced concrete frames have been identified.  \n   \n The Group's legacy building safety provision has been calculated based on our extensive experience to date, using analysis of previously tendered works and prudent, professional estimates based on our knowledge of known issues.  For buildings where full investigations have not yet been undertaken or cost reports obtained, an allowance has been made for as yet undiscovered problems, based on experience to date from similar developments.  Costs have been provided regardless of whether Bellway still retains ownership of the freehold interest in the building or whether warranty providers have a responsibility to carry out remedial works.  \n   \n As part of the industry's commitments under the SRT, developers are required to submit quarterly data returns to the Ministry of Housing, Communities and Local Government ('MHCLG').  These detail the progress on building assessments and remediation works, although in some instances, the reporting obligations can be subject to interpretation.  Notwithstanding this, Bellway has adopted a consistent and prudent approach, only reporting assessments to have been undertaken when they are supported by a report from an independent qualified fire engineer.  \n   \n The total amount Bellway has set aside for legacy buildings in England, Scotland and Wales since 2017 is £655.5 million.  Demonstrating our ongoing commitment to deliver appropriate solutions for legacy buildings, the Group has spent £146.3 million since the start of the remediation programme, including £36.3 million during financial year 2024 (2023 - £32.9 million).  The remaining provision at 31 July 2024 was £509.2 million.  \n   \n The Group's established and dedicated Building Safety division is making every effort to accelerate progress with assessment and remediation.  As at 30 September 2024, and including those buildings that have been awarded an application by the Building Safety Fund or ACM Funds, Bellway had a total of 137 buildings where work is complete or underway.     \n   \n Our experienced site remediation teams are focused on completing works as promptly and efficiently as possible and, despite ongoing industry-wide delays in relation to obtaining building access licences, we expect to make further strong progress with assessment and remediation in the current financial year and beyond.  Overall, Bellway has the operational and financial resources to meet its commitments for legacy building safety. \n \n   \n The adjusting finance expense in financial year 2024 of £17.1 million (2023 - £11.0 million) related to the unwinding of the discount on both the SRT and associated review provision and the structural defects provision.  This is a technical interest unwind, based on prevailing gilt rates at 31 July 2023 and 31 January 2024. \n   \n We currently anticipate a total adjusting legacy building safety finance expense, in relation to both the SRT and associated review provision and structural defects provision, of around £8 million in the first half of financial year 2025.  The expense in the second half of the year will, in part, be dependent upon the movement in gilt rates. \n   \n Adjusting item: Aborted transaction costs \n During the year, the Group recognised costs of £5.4 million in relation to the aborted Crest Nicholson Holdings plc transaction as an adjusting item through administrative expenses. \n   \n Operating profit \n After taking the cost of sales and administrative expenses adjusting items into consideration, total operating profit decreased by 57.9% to £212.8 million (2023 - £505.3 million). \n   \n Underlying net finance expense \n The underlying net interest expense was £9.7 million 2,3 (2023 - £9.9 million).  This includes notional interest on land acquired on deferred terms of £11.1 million (2023 - £13.1 million), with the decrease reflecting the reduction in land creditors.  \n   \n The expense also comprises interest on the Group's fully drawn fixed rate US Private Placement ('USPP') loan notes of £3.4 million (2023 - £3.4 million) and net bank interest income of £nil (2023 - £4.4 million).  Net bank interest income includes net interest receivable on cash balances, less loan interest, commitment fees and refinancing costs, and the reduction largely reflects the lower cash balances and higher borrowing in the period.  Other net interest receivable was £4.8 million (2023 - £2.2 million) and primarily comprised £4.5 million (2023 - £2.2 million) in relation to interest received on loans to joint ventures.  \n   \n Based on prevailing interest rates, the net underlying interest expense in financial year 2025 is currently expected to be around £16 million 2,3 , with the anticipated increase to be primarily driven by higher interest rates on the Group's land creditor balance. \n   \n Profit before taxation \n Including our share of loss from joint ventures of £2.3 million (2023 - £1.4 million), which reflects upfront financing costs on a long-term scheme, underlying profit before taxation reduced by 57.5% to £226.1 million 2,3 (2023 - £532.6 million).  Reported profit before taxation decreased by 62.0% to £183.7 million (2023 - £483.0 million).   \n   \n Taxation \n The income tax expense was £53.2 million (2023 - £118.0 million), reflecting an effective tax rate of 29.0% (2023 - 24.4%).  The increase in the tax rate in the period was driven by the full year effect of the six percentage points rise in the standard rate of UK corporation tax in April 2023. \n   \n The effective tax rate also includes the Residential Property Developer Tax ('RPDT'), which was introduced in April 2022 and charged at a rate of 4% of relevant taxable profits. \n   \n Profit for the year \n The underlying profit for the year was lower by 60.1%, at £160.6 million 2,3 (2023 - £402.2 million) and underlying earnings per share was 135.2p 2,3 (2023 - 328.1p).  \n   \n After considering the adjusting items, reported profit for the year reduced by 64.2% to £130.5 million (2023 - £365.0 million).  Basic earnings per share was 109.8p (2023 - 297.7p). \n   \n Strong balance sheet and financial position \n Bellway's well-capitalised balance sheet principally comprises amounts invested in land and work-in-progress.  Within total inventories of £4,714.8 million (2023 - £4,575.6 million), the carrying value of land was £2,431.4 million (2023 - £2,578.8 million) and work-in-progress increased by 14.1% to £2,123.9 million (2023 - £1,861.6 million).  The higher work-in-progress balance has arisen, as expected, because of the slower sales market, but it also reflects our investment in site infrastructure and early-stage foundation work, for our ongoing strong programme of outlet openings.  \n \n Notwithstanding the lower profit in the year, we have maintained financial resilience, and net debt at 31 July 2024 was low and in line with expectations at £10.5 million 2 (2023 - net cash of £232.0 million).  Average net debt was £45.8 million 2 (2023 - average net cash of £192.0 million).  Expenditure on land, including payment of land creditors, was £465 million (2023 - £467 million), primarily comprising cash payments on contracts approved in previous financial years.  Committed land obligations have reduced significantly to £225.3 million (2023 - £368.8 million) and adjusted gearing, inclusive of land creditors, remains low at 6.8% 2 (2023 - 4.0%). \n   \n In relation to its legacy, defined benefit pension scheme, the Group had a retirement benefit asset of £0.9 million (2023 - £2.5 million) at 31 July 2024, reflecting an ongoing commitment to fund this future, long-term obligation. \n   \n To support our growth plans and ongoing investment in land, the Group has access to significant levels of committed, medium and long-term debt finance, totalling £530 million.  This comprises bank facilities of £400 million and £130 million of fully drawn sterling USPP loan notes, which have maturity dates that extend in tranches to February 2031.  We remain focused on preserving Bellway's balance sheet resilience and we expect to end the current financial year maintaining a low level of adjusted gearing 2 . \n   \n Long-term value creation \n The Group's net asset value at 31 July 2024 was broadly in line with the prior year at £3,465.4 million (2023 - £3,461.6 million), as lower profitability was offset by cash dividend payments of £131.7 million (2023 - £171.7 million).  The positive effect of the final tranche of the £100 million share buyback, which completed in October 2023, led to a modest increase in NAV per share to 2,913p 2 (2023 - 2,871p).  \n   \n Underlying post-tax return on equity was 4.7% 2,3 (2023 - 11.7%) and underlying RoCE was 6.9% 2,3 (2023 - 15.8%), or 6.4% 2,3 (2023 - 14.3%) when including land creditors as part of the capital base.  The reduction in these return metrics was driven by the lower asset turn and underlying operating margin.  In the current financial year, we expect to deliver a strong increase in volume output and, as a result, improvements in both asset turn and margin will start a recovery in returns.  \n   \n Over the last decade, and notwithstanding periods of significant challenge for our industry, Bellway has delivered a strong annualised accounting return in NAV and dividends paid of 13.6% 2 .  Given the Group's financial strength and high-quality land bank, the Board is confident that Bellway is in an excellent position to capitalise on future growth opportunities and to continue creating value for our shareholders over the long term. \n   \n     \n Keith Adey \n Group Finance Director \n 14 October 2024 \n   \n \n   \n 'Better with Bellway' \n Our responsible and sustainable approach to business \n 'Better with Bellway' is the Group's strategy and long-term commitment with regards to acting responsibly and sustainably, which encompasses issues around people and the environment.  Through a range of initiatives, we have embedded the strategy across the Group's operations, and we are delighted that the efforts of our colleagues have been recognised through several industry awards, including 'Large Housebuilder of the Year' at the 2023 Housebuilder Awards.   \n   \n 'Better with Bellway' covers eight priority areas each with their own specific targets and KPIs linked to the underlying operations of the Group.  The strategy includes ambitious targets in respect of our three flagship priority areas of Carbon Reduction, Customers and Communities, and becoming an Employer of Choice.  Some recent highlights in these areas are shown below: \n   \n Carbon Reduction \n To achieve a lower carbon footprint at Bellway, we have committed to a significant reduction in scope 1 to 3 greenhouse gas emissions by 2030.  We have continued to make strong headway in laying the foundations to meet our stretching targets, which have been validated by the Science Based Targets initiative ('SBTi').  \n   \n Scope 3 emissions - targeting a 55% reduction by 2030 \n   \n Around 99% of the Group's carbon footprint arises from scope 3 emissions, which are from sources which Bellway does not own or control, including the products used for the construction of our homes.  By 2030 we are targeting a reduction in scope 3 carbon intensity by 55% from our 2019 baseline of 1.53 tonnes per m 2 of floor area. \n   \n In financial year 2024, the Group's scope 3 carbon emissions decreased by 7.9% to 1.40 tonnes per m 2 of floor area (2023 - 1.52 tonnes per m 2 ).  The reduction was primarily driven by the inclusion of revised Energy and Emission Projections, mandated by the Department for Energy Security and Net Zero, which assume carbon emissions from the use of new homes will reduce, over time, as UK energy production is decarbonised.  We expect to drive a further meaningful reduction in scope 3 carbon emissions in the years ahead as the industry transitions towards building to the requirements of the Future Homes Standard.  This will reduce reliance on carbon intensive fossil fuels as a source of heat and will ensure that new homes are built to a very high standard of energy efficiency. \n   \n As part of our detailed plan to cut emissions, we have several research projects underway across the business, where we are trialling new technologies and working with our customers, to drive best practice for carbon reduction.   \n   \n Our flagship research project is at the University of Salford where a Bellway 'Future Homes' has been constructed in the 'Energy House 2.0' environmental chamber, which can recreate a range of temperatures and weather conditions.  In this controlled environment, testing is underway for a variety of innovative technologies and the project has already produced valuable data on the performance of the fabric of the 'Future Homes'.  The results from the fabric performance testing showed that the thermal efficiency of the 'Future Homes' was at the top end of expectations, providing further confidence that Bellway can deliver energy efficient homes at scale using modern methods of construction.   \n   \n In recognition of the important work being carried out at 'Energy House 2.0', we are delighted that the research project has won several accolades, including 'Best Sustainability Initiative' at the 2023 Housebuilder Awards and 'Major Project of the Year' at the 2023 National Sustainability Awards. \n   \n During the year we have continued to actively engage with several of our supply chain partners on joint sustainability solutions, and we are on track to complete meetings with our top 50 suppliers by the end of calendar year 2024.  In advance of the Future Homes Standard, we are also trialling air source heat pumps at sites in each of Bellway's 20 trading divisions, as homes built to the Future Homes Standard building regulations will not be reliant on fossil fuels for their water and space heating.  \n   \n In addition, as we work towards reducing the level of embodied carbon in the supply chain, we are adopting new construction practices and the use of alternative materials.  In this regard, we have increased the use of timber frame construction across the Group, as compared to other mainstream building materials, timber requires minimal processing, has very low relative levels of embodied carbon, and sequesters emissions throughout the tree growing and replanting phase.  Following successful trials across the Group, and its long-established use in our two Scottish divisions, Bellway is targeting a material increase in timber frame use to around 30% of housing output by 2030.  \n   \n Scope 1 and 2 emissions - targeting a 46% reduction by 2030 \n   \n The Group's scope 1 and scope 2 emissions are those generated by Bellway in our own operations, and combined, these account for around 1% of our total carbon footprint.  These include direct emissions from diesel used in onsite machinery \n and gas used in office and construction site heating systems. They also include indirect emissions generated remotely, from activities undertaken by Bellway, such as our use of electricity in offices, sales centres and show homes.  \n   \n To align to the '1.5 degrees Celsius' pathway in the Paris Agreement, Bellway is targeting a 46% reduction in these emissions by 2030, and we have a range of initiatives underway to achieve this. \n   \n The Group has increased the proportion Renewable Energy Guarantees of Origin ('REGO') certified electricity procured across the business, with 90% of the Bellway's electricity on REGO tariffs as at 31 July 2024.  We have also completed a large-scale switch to use hydrotreated vegetable oil ('HVO') biodiesel across all divisions.  The use of HVO can reduce carbon emissions by over 90% compared to fossil diesel and this has played a significant role in our scope 1 and 2 reductions.  \n   \n As a result of our initiatives, the Group's scope 1 and scope 2 carbon emissions have reduced by 14.1% compared to the prior year and by 44.7% since our base year of 2019, and we are in an excellent position to meet our goal of a 46% reduction significantly ahead of the 2030 target. \n   \n While scope 1 and 2 direct emissions account for a relatively small proportion of our total carbon footprint, the initiatives to reduce emissions within Bellway have helped to foster a positive cultural change, increase colleague engagement and create a strong platform to deliver sustainability solutions with our supply chain partners.  \n   \n To achieve our ambitious targets and in addition to the measures highlighted, we are considering several further initiatives to reduce scope 1 to 3 carbon emissions in the years ahead. \n   \n Customers and Communities \n Bellway aims to provide a consistently high service and quality homes to all our customers, and the efforts under our Customer First programme have resulted in the Group retaining its position as a five-star 5 homebuilder for the eighth consecutive year.  This was awarded with an improved score of 91.6% (2023 - 91.1%) in the HBF's most recent Customer Satisfaction survey, which asks customers whether they would recommend Bellway to a friend, when surveyed eight weeks after their moving date.  \n   \n As part of our Customer First programme, we have successfully rolled out Bellway's 'House to Home', with customer demonstration plots on over 100 sites at 31 July 2024.  On each of these developments, a 'House to Home' standardised demonstration plot is divided into areas showing different construction stages to help develop customers' knowledge of the materials used in the build process, our sustainability principles, our commitment to energy efficiency and the benefits of buying a Bellway home.  This initiative has received strong positive feedback, and we believe it will continue to enhance the overall customer experience and underpin confidence in the quality of our new homes. \n   \n Bellway's overall drive to deliver high-quality homes has been reflected by 45 of our site managers winning NHBC Pride in the Job Awards during the year (2023 - 34).  This is the NHBC's flagship competition for build quality across the UK and, from a field of over 8,000 sites entering, only around 5% receive these awards.  \n   \n We are also proud to report further improvement in our NHBC Construction Quality Review score, a measure of underlying construction quality.  Our score has risen to 89.9% at 31 July 2024 (2023 - 87.9%) and ahead of the target of 87.0% we set for the year. \n   \n While the Group maintained its five-star 5 homebuilder status for the eight-week HBF survey, we have seen a slight moderation in our score in the nine-month survey to 80.1% (2023 - 80.6%).  This was in part driven by the challenging operating environment throughout the year, which led to extended response times to minor snagging issues in our new homes.  We recognise that there are areas where we can do better and, in this regard, we are launching a new customer care portal to drive an improvement in service levels and communications with our customers. \n   \n We are working hard to continually improve levels of customer service and there are a range of other initiatives underway within the business to achieve this, including additional training across our sales, customer care and construction teams.  \n   \n Employer of Choice \n Bellway is aiming to be an 'Employer of Choice' in the industry by creating a safe, diverse and inclusive environment that our colleagues can thrive in, and we are very proud that this priority area of our 'Better with Bellway' strategy won the 'Best Staff Development Award' at the 2023 Housebuilder Awards.  \n   \n There has also been an excellent response to our most recent employee engagement survey and despite the ongoing challenges in the market during the year, 87% of colleagues (2023 - 89%) said they would recommend Bellway as 'a great place to work'.  \n \n Bellway has an ongoing programme of structured apprenticeships and graduate training, and we continue to operate as a fully accredited Living Wage Employer, which covers both directly employed and subcontracted staff.  Overall, these measures will help to achieve our aim of increasing the proportion of employees in 'earn and learn' positions and support the ongoing success of the business. \n   \n A standard, consistent induction and onboarding process has also been introduced for all new starters at Bellway and we have seen a further reduction in voluntary staff turnover during the year to 18.3% (2023 - 21.9%).  The Group is aiming to improve on our high level of employee satisfaction, and we continue to seek feedback from our colleagues to attract talent and further improve staff retention. \n   \n The Group has several initiatives in place to promote diversity and inclusion and, together with a range of opportunities for career progression through our Bellway Academy, will help to ensure Bellway continues to be a rewarding place to work in the years ahead. \n   \n Further initiatives \n The Group has made good progress against the targets and KPIs set for the other priority areas of the 'Better with Bellway' strategy. \n   \n At Bellway, the health, safety, and wellbeing of our colleagues and subcontractors is our highest priority and we have set ambitious targets to raise the quality and safety of our work to even higher levels. Bellway's standards and practices are subject to continual review to challenge unsafe behaviours and drive improvements, and during the year we rolled out improved safety inductions and training across the Group.  This included strengthening internal communications on near-miss reporting to enhance the identification of key risk areas on Bellway sites. \n   \n Across the Group, we have a responsibility to manage our resources effectively and efficiently.  We aim to minimise waste, measured in tonnes per home built and, where waste is unavoidable, reuse and recycle as much as possible.  During the year we have made excellent progress in this area, achieving a 17% reduction in waste to 7.1 tonnes per home built (2023 - 8.6 tonnes).  In doing so, we have reached our 2025 target one year ahead of our original plan. \n   \n Biodiversity is also a key focus within Bellway and, to meet new regulations, we have identified and incorporated an approach on how to achieve a 10% biodiversity net gain on all new sites to be submitted for planning.  Bellway's Head of Biodiversity is leading on this area and working with our land teams to help the Group meet these important environmental targets. \n   \n Charitable engagement is a core part of Bellway's culture and during the year we have launched partnerships with several charities to support disabled and disadvantaged people, which include opportunities for work placements within Bellway.  We are also delighted that our colleagues have raised over £610,000 for Cancer Research UK in the year to 31 July 2024.  Over the last eight years we have raised over £3.7 million for this important charity.  We have since extended our partnership with Cancer Research UK and we are targeting an increase in the cumulative amount raised to £5.0 million by December 2025.   \n   \n We look forward to reporting further progress on our sustainability strategy with our interim results in March 2025.  \n   \n   \n Jason Honeyman \n Group Chief Executive \n 14 October 2024 \n \n \n   \n Group Income Statement \n for the year ended 31 July 2024 \n   \n \n \n \n \n \n \n \n Note \n \n \n 2024 \n \n \n 2023 \n \n \n \n \n \n \n \n \n \n \n £m \n \n \n £m \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Revenue \n \n \n 2 \n \n \n 2,380.2 \n \n \n 3,406.6 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Cost of sales \n \n \n \n \n \n (2,019.0) \n \n \n (2,757.9) \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Analysed as: \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Underlying cost of sales \n \n \n \n \n \n (1,999.1) \n \n \n (2,719.3) \n \n \n \n \n Adjusting item: net legacy building safety expense \n \n \n 3 \n \n \n (19.9) \n \n \n (38.6) \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Gross profit \n \n \n \n \n \n 361.2 \n \n \n 648.7 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Other operating income \n \n \n \n \n \n 50.6 \n \n \n 29.1 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Other operating expenses \n \n \n \n \n \n (51.8) \n \n \n (30.3) \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Administrative expenses \n \n \n \n \n \n (147.2) \n \n \n (142.2) \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Analysed as: \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Underlying administrative expenses \n \n \n \n \n \n (141.8) \n \n \n (142.2) \n \n \n \n \n Adjusting item: aborted transaction costs \n \n \n 3 \n \n \n (5.4) \n \n \n - \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Operating profit \n \n \n \n \n \n 212.8 \n \n \n 505.3 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Finance income \n \n \n 9 \n \n \n 9.5 \n \n \n 9.9 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Finance expenses \n \n \n 9 \n \n \n (36.3) \n \n \n (30.8) \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Analysed as: \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Underlying finance expenses \n \n \n \n \n \n (19.2) \n \n \n (19.8) \n \n \n \n \n Adjusting item: net legacy building safety expense \n \n \n 3, 9 \n \n \n (17.1) \n \n \n (11.0) \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Share of result of joint ventures \n \n \n \n \n \n (2.3) \n \n \n (1.4) \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Profit before taxation \n \n \n \n \n \n 183.7 \n \n \n 483.0 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Income tax expense \n \n \n 5 \n \n \n (53.2) \n \n \n (118.0) \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Profit for the year * \n \n \n \n \n \n 130.5 \n \n \n 365.0 \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Earnings per ordinary share - Basic \n \n \n 4 \n \n \n 109.8p \n \n \n 297.7p \n \n \n \n \n Earnings per ordinary share - Diluted \n \n \n 4 \n \n \n 109.0p \n \n \n 296.3p \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n * All attributable to equity holders of the parent. \n \n \n \n \n \n   \n \n \n \n \n \n \n \n   \n   \n \n   \n \n \n \n \n   \n Adjusting items \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Note \n \n \n 2024 \n \n \n 2023 \n \n \n \n \n \n \n \n \n \n \n £m \n \n \n £m \n \n \n \n \n Gross profit \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Gross profit per the Group Income Statement \n \n \n \n \n \n 361.2 \n \n \n 648.7 \n \n \n \n \n Adjusting item: net legacy building safety expense \n \n \n 3 \n \n \n 19.9 \n \n \n 38.6 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Underlying gross profit \n \n \n \n \n \n 381.1 \n \n \n 687.3 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Operating profit \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Operating profit per the Group Income Statement \n \n \n \n \n \n 212.8 \n \n \n 505.3 \n \n \n \n \n Adjusting item: net legacy building safety expense \n \n \n 3 \n \n \n 19.9 \n \n \n 38.6 \n \n \n \n \n Adjusting item: aborted transaction costs \n \n \n 3 \n \n \n 5.4 \n \n \n - \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Underlying operating profit \n \n \n \n \n \n 238.1 \n \n \n 543.9 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Profit before taxation \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Profit before taxation per the Group Income Statement \n \n \n \n \n \n 183.7 \n \n \n 483.0 \n \n \n \n \n Adjusting item: net legacy building safety expense \n \n \n 3 \n \n \n 37.0 \n \n \n 49.6 \n \n \n \n \n Adjusting item: aborted transaction costs \n \n \n 3 \n \n \n 5.4 \n \n \n - \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Underlying profit before taxation \n \n \n \n \n \n 226.1 \n \n \n 532.6 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Profit for the year \n \n \n \n \n \n \n \n \n \n \n \n \n \n Profit for the year per the Group Income Statement \n \n \n \n \n \n 130.5 \n \n \n 365.0 \n \n \n \n \n Adjusting item: net legacy building safety expense \n \n \n 3 \n \n \n 37.0 \n \n \n 49.6 \n \n \n \n \n Adjusting item: aborted transaction costs \n \n \n 3 \n \n \n 5.4 \n \n \n - \n \n \n \n \n Adjusting item: income tax on exceptional items \n \n \n 3 \n \n \n (12.3) \n \n \n (12.4) \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Underlying profit for the year \n \n \n \n \n \n 160.6 \n \n \n 402.2 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Group Statement of Comprehensive Income \n for the year ended 31 July 2024 \n   \n \n \n \n \n \n \n \n Note \n \n \n 2024 \n \n \n 2023 \n \n \n \n \n \n \n \n \n \n \n £m \n \n \n £m \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Profit for the year \n \n \n \n \n \n 130.5 \n \n \n 365.0 \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Other comprehensive expense \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Items that will not be recycled to the income statement: \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Remeasurement losses on defined benefit pension plans \n \n \n \n \n \n (1.6) \n \n \n (4.9) \n \n \n \n \n Income tax on other comprehensive expense \n \n \n 5 \n \n \n 0.5 \n \n \n 1.4 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n   \n Other comprehensive expense for the year, net of income tax \n \n \n \n \n \n   \n (1.1) \n \n \n   \n (3.5) \n \n \n \n \n   \n Total comprehensive income for the year * \n \n \n \n \n \n   \n 129.4 \n \n \n   \n 361.5 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n * All attributable to equity holders of the parent. \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n Group Statement of Changes in Equity \n at 31 July 2024 \n   \n \n \n \n \n \n \n \n Note \n \n \n Issued capital \n \n \n Share premium \n \n \n Capital redemption \n reserve \n \n \n Other reserves \n \n \n Retained earnings \n \n \n Total \n equity \n \n \n \n \n \n \n \n \n \n \n £m \n \n \n £m \n \n \n £m \n \n \n £m \n \n \n £m \n \n \n £m \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Balance at 1 August 2022 \n \n \n \n \n \n 15.4 \n \n \n 182.0 \n \n \n 20.0 \n \n \n 1.5 \n \n \n 3,148.9 \n \n \n 3,367.8 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Total comprehensive income for the year \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Profit for the year \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 365.0 \n \n \n 365.0 \n \n \n \n \n Other comprehensive expense * \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (3.5) \n \n \n (3.5) \n \n \n \n \n   \n Total comprehensive income for the year \n \n \n \n \n \n   \n - \n \n \n   \n - \n \n \n   \n - \n \n \n   \n - \n \n \n   \n 361.5 \n \n \n   \n 361.5 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Transactions with shareholders recorded directly in equity: \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Dividends on equity shares \n \n \n 12 \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (171.7) \n \n \n (171.7) \n \n \n \n \n Credit in relation to share options and tax thereon \n \n \n   \n 5 \n \n \n   \n - \n \n \n   \n - \n \n \n   \n - \n \n \n   \n - \n \n \n   \n 4.5 \n \n \n   \n 4.5 \n \n \n \n \n Share buyback programme and cancellation of shares \n \n \n   \n 11 \n \n \n   \n (0.4) \n \n \n   \n - \n \n \n   \n 0.4 \n \n \n   \n - \n \n \n   \n (100.5) \n \n \n   \n (100.5) \n \n \n \n \n Total contributions by and distributions to shareholders \n \n \n   \n   \n \n \n   \n (0.4) \n \n \n   \n - \n \n \n   \n 0.4 \n \n \n   \n - \n \n \n   \n (267.7) \n \n \n   \n (267.7) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n Balance at 31 July 2023 \n \n \n \n \n \n   \n 15.0 \n \n \n   \n 182.0 \n \n \n   \n 20.4 \n \n \n   \n 1.5 \n \n \n   \n 3,242.7 \n \n \n   \n 3,461.6 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Total comprehensive income for the year \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Profit for the year \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 130.5 \n \n \n 130.5 \n \n \n \n \n Other comprehensive expense * \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (1.1) \n \n \n (1.1) \n \n \n \n \n   \n Total comprehensive income for the year \n \n \n   \n   \n \n \n   \n - \n \n \n   \n - \n \n \n   \n - \n \n \n   \n - \n \n \n   \n 129.4 \n \n \n   \n 129.4 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Transactions with shareholders recorded directly in equity: \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Dividends on equity shares \n \n \n 12 \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (131.7) \n \n \n (131.7) \n \n \n \n \n Shares issued \n \n \n \n \n \n - \n \n \n 1.2 \n \n \n - \n \n \n - \n \n \n - \n \n \n 1.2 \n \n \n \n \n Credit in relation to share options and tax thereon \n \n \n   \n 5 \n \n \n   \n - \n \n \n   \n - \n \n \n   \n - \n \n \n   \n - \n \n \n   \n 5.3 \n \n \n   \n 5.3 \n \n \n \n \n Share buyback programme and cancellation of shares \n \n \n   \n 11 \n \n \n   \n (0.2) \n \n \n   \n - \n \n \n   \n 0.2 \n \n \n   \n - \n \n \n   \n (0.4) \n \n \n   \n (0.4) \n \n \n \n \n Total contributions by and distributions to shareholders \n \n \n \n \n \n   \n (0.2) \n \n \n   \n 1.2 \n \n \n   \n 0.2 \n \n \n   \n - \n \n \n   \n (126.8) \n \n \n   \n (125.6) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n Balance at 31 July 2024 \n \n \n \n \n \n   \n 14.8 \n \n \n   \n 183.2 \n \n \n   \n 20.6 \n \n \n   \n 1.5 \n \n \n   \n 3,245.3 \n \n \n   \n 3,465.4 \n \n \n \n \n   \n   * An additional breakdown is provided in the Group Statement of Comprehensive Income. \n   \n \n Group Balance Sheet \n at 31 July 2024 \n   \n \n \n \n \n \n \n \n Note \n \n \n 2024 \n \n \n 2023 \n \n \n \n \n \n \n \n \n \n \n £m \n \n \n £m \n \n \n \n \n ASSETS \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Non-current assets \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Property, plant and equipment \n \n \n \n \n \n 30.2 \n \n \n 31.7 \n \n \n \n \n Financial assets \n \n \n \n \n \n 47.7 \n \n \n 38.6 \n \n \n \n \n Equity accounted joint arrangements \n \n \n \n \n \n 9.8 \n \n \n 4.9 \n \n \n \n \n Deferred tax assets \n \n \n 5 \n \n \n - \n \n \n 1.7 \n \n \n \n \n Retirement benefit assets \n \n \n \n \n \n 0.9 \n \n \n 2.5 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n 88.6 \n \n \n 79.4 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Current assets \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Inventories \n \n \n 6 \n \n \n 4,714.8 \n \n \n 4,575.6 \n \n \n \n \n Trade and other receivables \n \n \n \n \n \n 76.8 \n \n \n 88.3 \n \n \n \n \n Corporation tax receivable \n \n \n \n \n \n - \n \n \n 8.8 \n \n \n \n \n Cash and cash equivalents \n \n \n 8 \n \n \n 119.5 \n \n \n 362.0 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n 4,911.1 \n \n \n 5,034.7 \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Total assets \n \n \n \n \n \n 4,999.7 \n \n \n 5,114.1 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n LIABILITIES \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Non-current liabilities \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Interest-bearing loans and borrowings \n \n \n 8 \n \n \n 130.0 \n \n \n 130.0 \n \n \n \n \n Trade and other payables \n \n \n \n \n \n 93.6 \n \n \n 107.3 \n \n \n \n \n Deferred tax liabilities \n \n \n 5 \n \n \n 0.7 \n \n \n 6.2 \n \n \n \n \n Provisions \n \n \n 7 \n \n \n 376.5 \n \n \n 403.5 \n \n \n \n \n \n \n \n \n \n \n 600.8 \n \n \n 647.0 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Current liabilities \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Corporation tax payable \n \n \n \n \n \n 7.9 \n \n \n - \n \n \n \n \n Trade and other payables \n \n \n \n \n \n 792.9 \n \n \n 900.8 \n \n \n \n \n Provisions \n \n \n 7 \n \n \n 132.7 \n \n \n 104.7 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n   \n \n \n \n \n \n 933.5 \n \n \n 1,005.5 \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Total liabilities \n \n \n \n \n \n 1,534.3 \n \n \n 1,652.5 \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Net assets \n \n \n \n \n \n 3,465.4 \n \n \n 3,461.6 \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n EQUITY \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Issued capital \n \n \n \n \n \n 14.8 \n \n \n 15.0 \n \n \n \n \n Share premium \n \n \n 11 \n \n \n 183.2 \n \n \n 182.0 \n \n \n \n \n Capital redemption reserve \n \n \n 11 \n \n \n 20.6 \n \n \n 20.4 \n \n \n \n \n Other reserves \n \n \n \n \n \n 1.5 \n \n \n 1.5 \n \n \n \n \n Retained earnings \n \n \n 11 \n \n \n 3,245.3 \n \n \n 3,242.7 \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Total equity \n \n \n \n \n \n 3,465.4 \n \n \n 3,461.6 \n \n \n \n \n   \n \n \n Group Cash Flow Statement \n for the year ended 31 July 2024 \n   \n \n \n \n \n \n \n \n Note \n \n \n 2024 \n \n \n 2023 \n \n \n \n \n   \n \n \n \n \n \n £m \n \n \n £m \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Cash flows from operating activities \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Profit for the year \n \n \n \n \n \n 130.5 \n \n \n 365.0 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Depreciation charge \n \n \n \n \n \n 5.1 \n \n \n 6.0 \n \n \n \n \n Finance income \n \n \n 9 \n \n \n (9.5) \n \n \n (9.9) \n \n \n \n \n Finance expenses \n \n \n 9 \n \n \n 36.3 \n \n \n 30.8 \n \n \n \n \n Share-based payment expense \n \n \n \n \n \n 4.5 \n \n \n 4.5 \n \n \n \n \n Share of post tax result of joint ventures \n \n \n \n \n \n 2.3 \n \n \n 1.4 \n \n \n \n \n Income tax expense \n \n \n 5 \n \n \n 53.2 \n \n \n 118.0 \n \n \n \n \n Increase in inventories \n \n \n 6 \n \n \n (139.2) \n \n \n (152.0) \n \n \n \n \n Decrease in trade and other receivables \n \n \n \n \n \n 11.5 \n \n \n 28.7 \n \n \n \n \n Decrease in trade and other payables \n \n \n \n \n \n (98.8) \n \n \n (75.3) \n \n \n \n \n (Decrease)/increase in provisions \n \n \n 7 \n \n \n (16.1) \n \n \n 55.7 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Cash (utilised in)/from operations \n \n \n \n \n \n (20.2) \n \n \n 372.9 \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Interest paid \n \n \n \n \n \n (6.8) \n \n \n (6.9) \n \n \n \n \n Income tax paid \n \n \n \n \n \n (38.5) \n \n \n (129.8) \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Net cash (outflow)/inflow from operating activities \n \n \n \n \n \n (65.5) \n \n \n 236.2 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Cash flows from investing activities \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Acquisition of property, plant and equipment \n \n \n \n \n \n (1.4) \n \n \n (2.7) \n \n \n \n \n Proceeds from sale of property, plant and equipment \n \n \n \n \n \n - \n \n \n 0.1 \n \n \n \n \n Increase in loans to joint ventures \n \n \n \n \n \n (13.9) \n \n \n (15.6) \n \n \n \n \n Dividends from joint ventures \n \n \n \n \n \n 2.0 \n \n \n 3.0 \n \n \n \n \n Interest received \n \n \n \n \n \n 5.3 \n \n \n 6.9 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Net cash outflow from investing activities \n \n \n \n \n \n (8.0) \n \n \n (8.3) \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Cash flows from financing activities \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Payment of lease liabilities \n \n \n \n \n \n (3.6) \n \n \n (3.5) \n \n \n \n \n Proceeds from the issue of share capital on exercise of share options \n \n \n \n \n \n 1.2 \n \n \n - \n \n \n \n \n Share buyback programme \n \n \n \n \n \n (34.9) \n \n \n (66.0) \n \n \n \n \n Dividends paid \n \n \n 12 \n \n \n (131.7) \n \n \n (171.7) \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Net cash outflow from financing activities \n \n \n \n \n \n (169.0) \n \n \n (241.2) \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Net decrease in cash and cash equivalents \n \n \n \n \n \n (242.5) \n \n \n (13.3) \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Cash and cash equivalents at beginning of year \n ...

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