Bellway to resume some construction on May 4

Newcastle-based house building giant Bellway said on Thursday it will resume some construction work, initially on a phased basis, from Monday May 4.

In a stock market statement, Bellway said: “The construction industry is a significant contributor to the UK economy and as such, the Government has issued guidance stating that sites should continue to operate where they comply with the Construction Leadership Council’s Site Operating Procedures and Public Health England guidance.

“Over recent weeks, Bellway has been reviewing these procedures in order to establish a safe method of working for its site operatives. 

“As a result, we have developed measures to ensure social distancing and have produced strict guidelines for workers on our sites. 

“Working collaboratively with our supply chain, this will enable us to resume some construction work, initially on a phased basis, from Monday 4 May 2020 …”

Bellway also provided a trading update, saying: “In the period from 1 August 2019 to 26 April 2020, the group completed the sale of 6,506 homes (28 April 2019 – 6,596 homes), including 493 which completed on or after 23 March 2020. 

“Our order book remains substantial, with a value of £1,567 million at 26 April 2020 (28 April 2019 – £1,655 million) and comprises 5,976 plots (28 April 2019 – 6,334 plots).

“Whilst our sales centres have been closed since 23 March, we have continued to achieve a modest number of weekly reservations via telephone. 

“We do, however, expect sales activity to remain severely restrained until we can re-open sales outlets. 

“The cancellation rate, measured as a percentage of the reduced reservation rate over the same period, was 27%.

“The initial recommencement of construction works will enable Bellway to target the sales completion of a limited number of new homes over the coming weeks, although the extent to which this is achieved will depend upon customers’ ability to complete and the ability of the supply chain to safely support the industry.”

On its funding and liquidity, Bellway said: “As previously reported, the group has committed bank facilities of £545 million. 

“Since 23 March, Bellway has extended the maturity dates of tranches totalling £125 million, which were otherwise due to expire in this financial year, to July 2021. 

“These extensions will help to ensure the ongoing liquidity of the group and evidence the good, long-term relationships that Bellway has with each of its UK based banking partners. 

“The commercial terms remain in line with those included within the overall facility.

“In addition, Bellway has been confirmed as an eligible issuer for the Covid Corporate Financing Facility (“CCFF”) with an issuer limit of £300 million.  

“This source of funding is currently undrawn but remains in place as a prudent back-up should there be a continued and prolonged period of economic inactivity. 

“Together with the group’s committed banking facilities, this provides Bellway with access to funds of £845 million.

“In this context, the Group had net bank debt of £98 million at 26 April 2020 (28 April 2019 – £229 million), which is stated after making the payment of substantially all liabilities in relation to goods and services supplied in February. 

“Whilst actively managing cash flows is a priority, Bellway continues to treat its suppliers and subcontractors fairly, thereby engendering long-term support and loyalty. 

“The group therefore remains committed to paying outstanding amounts as they fall due and in accordance with our normal payment terms. 

“The amount outstanding in respect of works undertaken in March, prior to site closures, is around £155 million, with the majority of this expected to be paid by the end of April.

“Committed land obligations for the remainder of the financial year are expected to remain modest, at around £60 million, and fixed monthly cash running costs are around £15 million per month, assuming that the group does not recover any costs through the CJRS. 

“Bellway therefore has ample headroom to continue to meet its liabilities as they fall due for the foreseeable future.”