TIDMBKG
RNS Number : 0920W
Berkeley Group Holdings (The) PLC
08 December 2023
PRESS RELEASE 8 DECEMBER 2023
INTERIM RESULTS ANNOUNCEMENT
Strong performance with profit guidance extended and shareholder
returns maintained
in challenging operating environment
87% of homes delivered on brownfield land with over GBP250
million investment in
socio-economic benefits
Focus on financial strength and existing sites - not currently
investing in new developments due to the planning and regulatory
environment
The Berkeley Group Holdings plc ("Berkeley") today announces its
unaudited interim results for the six months ended 31 October
2023.
Rob Perrins, Chief Executive, said:
"Berkeley has demonstrated the resilience of its uniquely
long-term business model with today's strong results and is
extending its guidance a further year to cover the period to 30
April 2026. Over the current and the next two financial years,
Berkeley is targeting the delivery of at least GBP1.5 billion of
pre-tax profit and the maintenance of net cash above GBP400
million.
Berkeley is a purpose-driven business, building quality homes,
strengthening communities and making a positive difference to
people's lives through our development activities, underpinned by
our industry-leading Vision 2030 strategy. Berkeley stands out as
the only large-scale UK homebuilder focussed on brownfield
regeneration, which is a vital driver for economic growth and a
powerful force for good in our towns and cities.
In the six months, we have delivered 1,785 new private and
affordable homes, of which 87% are on brownfield land, and provided
over GBP250 million in subsidies to deliver affordable housing and
commitments to wider community and infrastructure benefits, more
than 100% of the post-tax profit generated in the period.
Despite urban regeneration being a clear national priority, it
has become increasingly difficult to progress this form of
development as changes to planning, tax and regulatory regimes have
created an increasingly uncertain, unpredictable and burdensome
environment. This is driving investment away from urban areas,
restricting growth and preventing homes and other tangible benefits
being delivered. It will lead to lower productivity, fewer jobs
being created and net zero being harder to achieve, as the
efficient re-use of land in urban settings to deliver,
well-connected, nature-rich new communities, near existing
infrastructure is the most sustainable form of development.
In today's environment, Berkeley will intensify its disciplined
approach to operating cost control and work in progress investment,
while continually looking to identify the best development solution
on each of its sites for the benefit of all its stakeholders. We
are ready and able to deploy capital into new opportunities once
the market and regulatory cycles inflect and returns can be earned
commensurate with the level of upfront investment and operational
risk we undertake.
While the need is clear, the challenges to new development are
complex, but we are encouraged by the level of engagement that
Berkeley and other urban regeneration specialists are now receiving
to address the specific barriers to brownfield development. We also
fully support the Mayor's ambition for good and fair outcomes for
Londoners, including high levels of affordable housing. This
requires an increase in density, higher levels of grant funding and
a reduction in other tariffs, such as the Community Infrastructure
Levy, if it is to translate into a sustainable increase in
delivery.
I would like to thank all Berkeley's people for their
contribution to these results and their unerring focus on the
customer and the fantastic places we create in this exceptionally
challenging operating environment in which Berkeley's core values
of attention to detail, creativity and resilience really come to
the fore."
Summary of FINANCIAL POSITION, Earnings AND Shareholder
Returns
As at As at Change
Financial Position 31-Oct-23 30-Apr-23 absolute
-------------------------------- ------------- ------------- ----------
Net cash GBP422m GBP410m +GBP12m
Net asset value per share GBP32.19 GBP31.01 +GBP1.18
Cash due on forward sales GBP1,964m GBP2,136m -GBP172m
(1)
Land holdings - future GBP7,245m GBP7,629m -GBP384m
gross margin
Pipeline sites / (plots
(approx.)) 13 (13,500) 14 (14,000) -1 (-500)
--------------------------------- ------------- ------------- ----------
HY to HY to Change
Earnings 31-Oct-23 31-Oct-22 %
-------------------------------- ------------- ------------- ----------
Operating margin 19.5% 19.5% -
Profit before tax GBP298.0m GBP284.8m +4.6%
Earnings per share - basic 198.3p 200.4p -1.0%
Pre-tax return on equity 17.7% 18.0% -0.3%
--------------------------------- ------------- ------------- ----------
HY to HY to
Shareholder Returns 31-Oct-23 31-Oct-22
-------------------------------- ------------- -------------
Share buy-backs undertaken GBP64.5m GBP110.5m
Dividends paid GBP63.1m GBP23.3m
--------------------------------
Shareholder returns GBP127.6m GBP133.8m
-------------------------------- ------------- -------------
Share buy-backs - volume 1.7m 2.9m
Average price paid for GBP39.01 GBP37.61
share buy-backs
Dividends per share GBP0.59 GBP0.21
--------------------------------- ------------- -------------
(1) Cash due on private exchanged forward sales
completing within the next three years
See Note 8 of the Condensed Consolidated Financial Information
for a reconciliation of alternative performance measures
-- The value of net reservations during the period is one third
lower than the comparative financial year, reflecting the sharp
increase in interest rates and the ongoing elevated political and
macro volatility.
-- Sales pricing is firm and above business plan levels, with
build cost inflation across most trades at negligible levels.
-- Operating margin stable at 19.5%, with net operating costs
reduced by GBP10 million to GBP79.7 million.
-- Net cash increased to GBP422 million, with GBP1.2 billion of
borrowing capacity providing total liquidity of GBP1.6 billion.
-- Net asset value per share has increased to GBP32.19 and reflects historic cost.
-- Earnings guidance extended by a year to cover the three years
ending 30 April 2026, over which period Berkeley is targeting to
deliver at least GBP1.5 billion of pre-tax profit (previously
GBP1.05 billion in two years to 30 April 2025).
-- On target to deliver next GBP283 million (GBP2.67 per share)
of Shareholder Returns by 30 September 2024.
-- Unrivalled land holdings with GBP7.2 billion of future gross
margin - two sites added in the period, including one transfer from
the pipeline.
CAPITAL ALLOCATION
-- Agile and ready to switch capital allocation emphasis to new
investment should the conditions for growth present themselves.
-- If Berkeley does not recommence deployment of capital into
new investment opportunities by 30 April 2027, we anticipate
returning around 100% of the profit after tax earned over this
period to shareholders, while maintaining financial strength and
ensuring we can deliver our cross-cycle 15% pre-tax ROE target.
DELIVERING FOR ALL STAKEHOLDERS
-- 1,785 homes delivered, plus 204 in joint ventures (2022:
2,080, plus 251) - 87% of which are on brownfield land.
-- Approximately GBP254 million of subsidies provided to deliver
affordable housing and committed to wider community and
infrastructure benefits in the six month period.
-- Berkeley is delivering some 10% of London's new private and
affordable homes - supporting an average of approximately 27,000 UK
jobs per annum directly and indirectly through its supply chain
over the last five years.
-- Industry leading Net Promoter Score (+79.9) and customer satisfaction ratings maintained.
-- Since 2017/18 all new planning applications have committed to
biodiversity net gain, in total 54 developments which together will
create more than 550 acres of new or measurably improved natural
habitats.
-- 23 embodied carbon studies completed and more than 20
underway as we progress our Climate Action programme.
-- Rated "A-" by CDP for climate action and transparency and AAA
rated in the MSCI global ESG index.
-- Gold membership of The 5% Club maintained, with 9% of direct
employees in 'earn and learn' positions as graduates, apprentices
or sponsored students within the six month period.
Investor and Analyst Presentation:
A pre-recorded presentation by the Directors of Berkeley on the
results will be made available on the Company's website at 11:00
today -
https://www.berkeleygroup.co.uk/investors/results-and-announcements
.
For further information please contact:
The Berkeley Group Holdings plc Novella Communications
R J Stearn (01932 868555) Tim Robertson (02031 517008)
CHIEF EXECUTIVE'S REVIEW
Purpose, Long-term Strategy and Capital Allocation
Berkeley's purpose is to build quality homes, strengthen
communities and improve lives, using our sustained commercial
success to make valuable and enduring contributions to society, the
economy and natural world.
Berkeley is the only large UK homebuilder to align with
Government on prioritising brownfield land, as we progress 32 of
the country's most challenging regeneration projects, 26 of which
are in delivery. Each of these neighbourhoods is uniquely designed
in partnership with local councils and communities and includes
valuable public amenities alongside tenure-blind private and
affordable homes.
Berkeley is a unique asset-focussed development business that
seeks to manage risk and generate value through market cycles, with
its inherent latent value rooted in its unrivalled land holdings.
We seek to find the optimum development solution for each site in
terms of both the social, natural and economic value for all
stakeholders, and the returns we deliver to our shareholders. We
firmly believe these two are mutually compatible and reinforcing.
The pace at which we deliver homes from our land holdings is
determined by the prevailing operating environment and we will
always adopt a long-term approach, prioritising financial strength
above annual profit targets.
Our capital allocation policy is clear: first, ensure financial
strength reflects the cyclical nature and complexity of brownfield
development and is appropriate for the prevailing operating
environment; second, invest in the business (land and
work-in-progress) at the right time; and third, make returns to
shareholders through dividends and share buy-backs.
Strategy positioning for today's environment and outlook
Berkeley responded to the softening sales market conditions
through 2022, which accelerated from the end of September 2022, by
focussing on delivering our forward sales, matching production on
existing sites to demand and limiting new investment in land.
This enabled Berkeley to deliver pre-tax profit for FY23 in line
with pre-existing guidance and we are on track to meet our FY24 and
FY25 aggregated guidance (at least GBP1.05 billion of pre-tax
profit), while maintaining operating margins and our financial
strength. At the end of October 2023, we have net cash in excess of
GBP400 million, cash due on forward sales of GBP2 billion and land
holdings future gross margin of GBP7.2 billion across a large
portfolio of fantastic long-term brownfield regeneration sites in
and around London.
During the last six months, macro volatility has increased,
domestically and abroad, with the prospect of UK interest rates
remaining higher for longer and weak economic growth projections.
Against this backdrop, the sales market lacks urgency and
Berkeley's net reservations for the six months to 31 October 2023
have been around a third lower than the average rate throughout
FY23. We anticipate the sales market will remain subdued before
inflecting in its normal cyclical manner once there is greater
confidence in a downward trajectory for interest rates and economic
stability returns.
On the supply side, the sharp build cost rises of recent years
have now responded to the prevailing conditions and, for Berkeley,
cost inflation across the majority of trades has receded to
negligible levels in line with our expectations. The greater supply
chain risk is now that of contractor insolvency as the inflation
cycle reverses and demand for construction services reduces.
Most significantly for future housing delivery, the planning and
regulatory environment continues to evolve and remains highly
complex, uncertain and unpredictable.
At a national level, this includes: the changes to the National
Planning Policy Framework ('NPPF'), and their impact on the
efficacy of local plans; the Levelling Up and Regeneration Act; the
requirements for second staircases in tall buildings, which are
still not finalised; recent updates to building regulations on
energy efficiency, ventilation and overheating; the requirements of
the Future Homes Standard; the introduction of the 4% RPDT (with
further levies being consulted upon); the Self-Remediation Terms
and Contract; and the introduction of the new Building Safety
Regulator and associated new regulation.
At a local level in London, this includes: policies and guidance
around building standards and energy performance, layering
additional requirements on those set centrally; and the design and
space standards in the recently published London Design
Guidance.
We are wholly aligned with the ambition to build more quality
affordable and private homes where they are most needed, and to
play our full part in meeting the country's net zero target.
However, the burden of achieving this, at a time when the economy
is adjusting to more normal conditions following a decade of zero
interest rates, must be recognised and priorities set, as housing
cannot continue to cross-subsidise at these levels, without
increased public funding. In addition to this, the industry is
currently the subject of a Competition and Markets Authority study
with which we are fully and openly participating.
The longer the status quo continues, the more the adverse impact
on current and future supply is compounded and capacity within the
industry is reduced, with SMEs particularly affected, as the number
of new homes being started, already well below the recognised need,
will continue to decline.
Consequently, during the last six months, Berkeley has taken
further steps to de-risk and reposition the business plan to
reflect the current operating environment. Despite this challenging
backdrop, Berkeley's business model continues to be resilient with
good forward visibility:
Near-term (FY24, FY25 and FY26)
-- Berkeley is targeting at least GBP1.5 billion of pre-tax
profit across the three years combined, based upon current market
conditions; extending guidance by 12 months.
-- Operating margins are expected to be within the long-term historical range (17.5% to 19%).
-- While the sales market remains subdued, cash due on forward
sales will moderate from the current position of GBP2 billion and
Berkeley will carry higher completed stock levels than in recent
years.
-- Berkeley will continue to review the development solution on
all its sites to achieve the optimum outcome for all stakeholders,
including accommodating our best current assessment of the impact
of evolving regulations, such as the requirements surrounding
second staircases in buildings over 18 metres.
-- In the absence of material new land investment, the land
holdings future gross margin will be targeted at around GBP6
billion at the end of this period.
-- Pre-tax ROE will be above 15% for the period as a whole, but
is likely to fall slightly below this for FY26.
Medium-term (FY27, FY28 and FY29)
-- Until the planning and regulatory environments unlock,
alongside an inflection in the sales market, pre-tax profitability
is anticipated to remain around the level to be delivered in
FY26.
-- The focus will be on maintaining operating margin through our
added-value approach to each site's development solution and
ensuring our operating costs are aligned to the size of the
business.
Capital allocation flexibility
-- We are on track to continue with the current shareholder
returns programme into the future but remain agile and ready to
switch our capital allocation emphasis to new investment should
market conditions and the operating environment present a
compelling opportunity.
-- If Berkeley does not recommence deployment of capital into
new investment opportunities by 30 April 2027, we anticipate
returning around 100% of the profit after tax earned over this
period (from the start of the current financial year) to
shareholders, while maintaining financial strength and ensuring we
can deliver our cross-cycle 15% pre-tax ROE target.
This strategic positioning draws on the Company's experience of
operating across the market cycle and represents a responsible
approach to ongoing elevated uncertainty and volatility, but also
ensures Berkeley retains maximum flexibility for the prevailing
conditions.
Shareholder Returns
The current shareholder return framework is based upon an annual
return of GBP283 million through to September 2025, which can be
made through either dividends or share buy-backs, subject to a
dividend underpin of 66 pence per share (approximately GBP70
million).
If the scheduled GBP283 million annual shareholder return has
not been delivered by the dividend underpin or share buy-backs, the
balance will be returned in September each year and will be
accompanied by a share consolidation, unless the balance is deemed
de minimis for these purposes. This will be effective from now and
includes the return due to be made by 30 September 2024. It
reflects the strategy set out above and is consistent with the
approach taken to the 2021 B-share return of capital, which was
also accompanied by a share consolidation.
Shareholder returns during the six months ended 31 October 2023
totalled GBP127.6 million:
Six months to 31 October 2023 2022
GBP'm GBP'm
---------------------------- ------ ------
Dividends paid 63.1 23.3
Share buy-backs made 64.5 110.5
---------------------------- ------ ------
Shareholder return for the
period 127.6 133.8
============================ ====== ======
The dividend of GBP63.1 million was paid in September (59.30
pence per share) which completed the GBP283 million return for the
year to 30 September 2023.
The GBP64.5 million share buy-backs were across 1.7 million
shares (average price: GBP39.01 per share). Of this, GBP43.1
million pertained to the GBP283 million return for the year to 30
September 2023 and GBP21.4 million pertains to the current GBP283
million return due by 30 September 2024.
The annual return of GBP283 million for the year to 30 September
2024 currently equates to GBP2.67 per share.
Housing Market and Operating Environment
Sales
For Berkeley, the value of underlying private sales reservations
for the first half is running around one third lower than the
levels secured throughout the 2022/23 financial year, reflecting
the sharp increase in interest rates from September last year and
the ongoing elevated political and macro volatility. Pricing has
been above our business plan levels, reflecting the systemic
under-supply in our core markets, and cancellation rates have been
in the normal range.
Berkeley's cash due from underlying private forward sales
remains strong at GBP1.96 billion at 31 October 2023, compared to
GBP2.14 billion at the start of the financial year. This will
moderate during the second half of the year unless sales rates
return to FY23 levels. With customers more attracted to immediately
available homes in this market, Berkeley expects to carry higher
levels of completed stock relative to recent years, as it maintains
build programs on existing phases.
Current supply in our core markets is historically low.
Focussing on London, the latest DLUHC data demonstrates this with
new starts for the 12 months to June 2023 of 20,500 including
private, PRS and affordable homes, substantially below both the
current London Plan target of 52,000 per annum and Government's
identified local housing need of 94,000 per annum.
Land and planning
Berkeley has added two new sites outside London to its land
holdings during the period, one of which is in the St Edward joint
venture and has been transferred from the pipeline:
-- 199 homes in Maidenhead, Berkshire following receipt of a planning consent, and
-- 470 homes in Guildford, Surrey where a resolution to grant
consent was obtained in October 2023 (St Edward).
In addition to these two successes, Berkeley received a planning
consent on its land parcel adjacent to West End Gate, Marylebone
for 550 homes following a Mayoral Hearing in March 2023 pursuant to
the GLA's call-in of the application in November 2021, and has
obtained some 20 amendments to planning consents on existing
sites.
While these are positive outcomes, Berkeley continues to
experience significant delays in advancing its development
proposals through the planning system.
At 31 October 2023, Berkeley's land holdings comprise 56,107
plots across 71 developments (30 April 2023: 58,045 plots across 73
developments), including those in the St Edward joint venture.
The plots in the land holdings have an estimated future gross
profit of GBP7.25 billion (30 April 2023: GBP7.63 billion), which
includes the Group's 50% share of the anticipated profit on St
Edward's joint venture developments. The net reduction in gross
profit of GBP0.38 billion principally arises through the gross
profit taken through the Income Statement, with the two new sites
added partly mitigating the impact of market movements and
regulatory changes on the anticipated future gross profit in the
land holdings. Consequently, the estimated future gross margin is
25.4% (30 April 2023: 26.2%).
The estimated future gross margin represents management's
risk-adjusted assessment of the potential gross profit for each
site, taking account of a wide range of factors, including current
sales and input prices; the political and economic backdrop; the
planning regime; and other market forces; all of which could have a
significant effect on the eventual outcome.
The pipeline comprises approximately 13,500 plots across 13
sites at 31 October 2023 (30 April 2023: 14,000 plots on 14 sites)
following the transfer of Guildford to the land holdings.
Construction
Against a backdrop of reducing new homes supply and falling
construction output, build cost inflation for Berkeley in today's
market is at negligible levels apart from some isolated trades
where demand is high. For the early trades and those most impacted
by the decline in orders we are already seeing some reductions in
current tender pricing. We expect these market-led dynamics to
continue placing downward pressure on build costs, but this is
balanced by the costs associated with ongoing regulatory
change.
Given the elevated macro uncertainty, Berkeley continues to work
with and support our established supply chain partners to ensure
sustainability of the supply chain and delivery on our development
sites.
Self-Remediation Terms and Contract
On 13 March 2023 Berkeley entered into the Self-Remediation
Terms and Contract with DLUHC. Under these terms developers have
responsibility for any life critical fire safety defects in
buildings they have developed in the last 30 years. For the 815
relevant buildings Berkeley has developed over this period, it has
third party assessments on over 90%. The majority of the remaining
buildings are where Berkeley is not the freeholder. There are 34
buildings where works remain to be completed, 15 of which are
buildings where Berkeley is reimbursing Government for the works
under the Developer Remediation contract. Where works are required
and yet to commence, Berkeley intends to begin works as soon as
reasonably possible, subject to access being provided by the
freeholder. It is Berkeley's preference to take full responsibility
for all its relevant buildings and to complete any required works
itself as this will speed up the overall process of remediation. We
are seeking recoveries from the supply chain and insurers where
appropriate.
Looking forward, Berkeley is ensuring its procedures are
compliant with new legislation and is working closely with the new
Building Safety Regulator which, together with the actions taken to
date, should restore trust and confidence to the housing market,
enabling it to operate efficiently, effectively and fairly for
all.
Outlook
While trading conditions and the operating environment remain
volatile and unsupportive of investment, Berkeley has focused on
its existing sites, as opposed to new investment, and has
maintained the strong position with which it entered the year.
Currently this is:
- GBP422 million of net cash (FY23: GBP410 million)
- GBP2.0 billion of cash due on forward sales (FY23: GBP2.1 billion)
- GBP7.2 billion of future gross margin in its unrivalled land holdings (FY23: GBP7.6 billion)
This means we are well placed to respond quickly as the
operating environment unfolds, providing strategic optionality over
capital allocation to maximise returns to shareholders over the
long-term.
Irrespective of our strategic positioning at any point in time,
we will continue to fulfil our purpose and transform the most
challenging sites into exceptional places, yielding a long-term
positive impact for society, the UK economy and natural world. We
will continue to advocate brownfield regeneration as the most
sustainable way of solving the UK's housing crisis, through which
years of patient investment and placemaking has established popular
mixed use neighbourhoods and a strong sense of community.
Rob Perrins
Chief Executive
TADING AND FINANCIAL REVIEW
Trading performance
Berkeley has delivered pre-tax profit of GBP298.0 million for
the six month period:
Six months ended 31 October 2023 2022 Change
GBP'm GBP'm GBP'm %
----------------------------- -------- -------- ------ -------
Revenue 1,191.9 1,200.7 -8.8 -0.7%
----------------------------- -------- -------- ------ -------
Gross profit 311.6 323.8 -12.2 -3.8%
Operating expenses (79.7) (89.9) +10.2 -11.3%
----------------------------- -------- -------- ------ -------
Operating profit 231.9 233.9 -2.0 -0.9%
Net finance income/(costs) 5.1 (10.6) +15.7
Share of joint ventures 61.0 61.5 -0.5
----------------------------- -------- -------- ------ -------
Profit before tax 298.0 284.8 +13.2 +4.6%
============================= ======== ======== ====== =======
Pre-tax return on equity 17.7% 18.0% -0.3%
Earnings per share - basic 198.3p 200.4p -2.1p -1.0%
Revenue of GBP1,191.9 million in the period (2022: GBP1,200.7
million) arose primarily from the sale of new homes in London and
the South East. This included GBP1,153.0 million of residential
revenue (2022: GBP1,185.8 million) and GBP38.9 million of
commercial revenue (2022: GBP14.9 million).
1,785 new homes (2022: 2,080) were sold across London and the
South East at an average selling price of GBP624,000 (2022:
GBP560,000) reflecting the mix of properties sold in the
period.
The gross margin percentage is 26.1% (2022: 27.0%), reflecting
the mix of developments on which homes were completed in the
period. Overheads of GBP79.7 million (2022: GBP89.9 million) have
decreased GBP10.2 million. The operating margin is 19.5% (2022:
19.5%), which is within the historic range.
Berkeley's share of the results of joint ventures is a profit of
GBP61.0 million (2022: GBP61.5 million), with St Edward's profits
arising predominately from completions at Royal Warwick Square and
Millbank.
The costs of borrowings and amortisation of associated fees and
imputed interest on land creditors is outweighed by interest earned
from gross cash holdings, resulting in net finance income of GBP5.1
million for the period (2022: cost GBP10.6 million).
The taxation charge for the period is GBP86.5 million (2022:
GBP63.1 million) at an effective tax rate of 29.0% (2022: 22.2%),
which incorporates the additional 4% RPDT and Corporation Tax of
25%, following the increase from 19% from 1 April 2023.
Pre-tax return on equity for the period is 17.7% (2022:
18.0%).
Basic earnings per share has decreased by 1.0% from 200.4 pence
to 198.3 pence, which takes account of the buy-back of 1.7 million
shares at a cost of GBP64.5 million under the Shareholder Returns
Programme.
Financial Position
The Group's net assets increased by GBP81.5 million over the six
month period to GBP3,413.8 million (30 April 2023: GBP3,332.3
million):
Summarised Balance Sheet 31-Oct- 30-Apr- Change
as at 23 23
GBP'm GBP'm GBP'm
----------------------------- ---------- ---------- -------
Non-current assets 384.4 394.9 -10.5
Inventories 5,370.3 5,302.1 +68.2
Debtors 93.1 92.3 +0.8
Creditors (2,855.6) (2,867.4) +11.8
------------------------------ ---------- ---------- -------
Capital employed 2,992.2 2,921.9 +70.3
Net cash 421.6 410.4 +11.2
------------------------------ ---------- ---------- -------
Net assets 3,413.8 3,332.3 +81.5
============================== ========== ========== =======
Shares, net of treasury and
EBT 106.0m 107.5m -1.5m
Net asset value per share 3,219p 3,101p +118p
Inventory
Inventories of GBP5,370.3 million include GBP912.0 million of
land not under development (30 April 2023: GBP927.1 million),
GBP4,310.6 million of work in progress (30 April 2023: GBP4,249.2
million) and GBP147.7 million of completed stock (30 April 2023:
GBP125.8 million).
During the period, Broadway East in Bethnal Green has been moved
from land not under development into work in progress.
Creditors
Total creditors of GBP2,855.6 million include GBP973.1 million
of on-account receipts from customers (30 April 2023: GBP921.3
million) and land creditors of GBP893.3 million (30 April 2023:
GBP900.7 million). Of the total GBP893.3 million land creditor
balance, GBP25.3 million is short-term and GBP868.0 million is
spread over the following eight years.
Creditors also include provisions of GBP208.2 million (30 April
2023: GBP193.6 million) which represents post-completion
development obligations, including those related to building
fire-safety matters, and other provisions.
Net cash
The Group ended the period with net cash of GBP421.6 million (30
April 2023: GBP410.4 million), an increase of GBP11.2 million
during the period:
Abridged Cash Flow for the 31-Oct-23
period ended
GBP'm
--------------------------------- ----------
Profit before taxation 298.0
Taxation paid (87.6)
Net investment in working
capital (73.1)
Net receipt from joint ventures 5.8
Other movements (4.3)
Shareholder returns (127.6)
---------------------------------- ----------
Increase in net cash 11.2
Opening net cash 410.4
Closing net cash 421.6
================================== ==========
The net cash of GBP421.6 million comprises gross cash holdings
of GBP1,081.6 million and long-term borrowings of GBP660.0
million.
Net assets and NAVPS
Net assets increased over the six month period by GBP81.5
million, or 2.4% to GBP3,413.8 million (30 April 2023: GBP3,332.3
million) due to the profit after tax for the period of GBP211.5
million outweighing the shareholder returns of GBP127.6 million and
other movements in reserves of GBP2.4 million.
The shares in issue, net of treasury and EBT shares, closed at
106.0 million compared to 107.5 million at the start of the period.
The net reduction of 1.5 million shares comprises two
movements:
-- The 1.7 million share buy-backs undertaken during the period
for GBP64.5 million (GBP39.01 per share);
-- The issue of 0.2 million shares under the 2011 LTIP.
Consequently, the net asset value per share is 3,219 pence, up
3.8% from the 3,101 pence at 30 April 2023.
Funding
The Group's borrowing capacity of GBP1,200 million is unchanged
during the period and comprises:
-- GBP400 million unsecured 10-year Green Bonds which mature in
August 2031 at a fixed coupon of 2.5% per annum; and
-- GBP800 million bank facility, including a GBP260 million
Green Term loan and a GBP540 million undrawn revolving credit
facility ('RCF'). This facility matures in February 2028, with one
remaining one-year extension option available.
Berkeley has allocated the proceeds of the Green Bonds and Green
Term Loan to its ongoing brownfield development activities in
accordance with its Green Financing Framework (available on its
website).
With total borrowings of GBP660 million throughout the half year
period, the Group's gross cash holdings of over GBP1 billion are
placed on deposit with its six relationship banks.
Joint Ventures
Included within non-current assets are investments in joint
ventures accounted for using the equity method which are at
GBP217.6 million at 31 October 2023 (30 April 2023: GBP223.4
million). The net GBP5.8 million decrease in the six month period
arises from Berkeley's 50% share of three movements:
-- Profits earned in joint ventures of GBP61.0 million;
-- Dividend distribution from St Edward of GBP74.9 million; and
-- Cash contributions (loans) to site specific joint ventures of GBP8.1 million.
In St Edward, 204 homes were completed in the period at an
average selling price of GBP1,204,000 (2022: 251 homes at
GBP1,036,000). The completions occurred at Royal Warwick Square and
Millbank in London, Hartland Village in Fleet, Green Park Village
in Reading and Highcroft in Wallingford.
In total, 2,718 plots (30 April 2023: 2,435 plots) in Berkeley's
land holdings relate to five St Edward developments, one in London
(Westminster) and four outside the capital (Reading, Fleet,
Wallingford and Guildford ).
Our Vision 2030: Transforming Tomorrow
Our Vision 2030 is Berkeley's ambitious long-term strategy,
which sets ten strategic priorities for the business over the
current decade. We are delighted to have received recognition
during the period for our action, including the Long-Term Business
Success Award at the Management Today Business Leadership Awards
and named Housebuilder of the Year at the Building Awards for the
third time in a row. We have an 'A-' Leadership level rating for
CDP Climate Action and Transparency, are AAA rated in the MSCI
global ESG index, 'low risk' rated by Sustainalytics and continue
to be listed on the FTSE4Good Index.
Our independently verified Net Promoter Score (NPS) of 79.9
outperforms the industry and many leading consumer brands. This
reflects our detailed handover checks, underpinned by our build
quality assurance arrangements, with robust training and audit
programmes in place. We continue to strengthen existing
arrangements in response to the new Building Safety Act regime
which came into force on 1 October 2023, with updated policy,
standards and new training rolled out to all production employees
in the period.
Following detailed research, we have been undertaking embodied
carbon studies on our developments since summer 2022 with 23
assessments completed and more than 20 underway. We are working
with our consultants and supply chain partners to reduce emissions
through specification and sourcing choices to meet our ambitious
science-based targets. On our construction sites, we now have 17
diesel free sites, and have saved 2,000 tonnes of carbon in the
period through the use of biodiesel HVO purchased both directly and
through our trade contractors. We continue to prepare for the
changes under the Future Homes Standard.
The climate challenge cannot be seen in isolation, and we ensure
that reversing nature decline is fundamental to our development
approach. We have committed to biodiversity net gain on 54 sites,
which together will create more than 550 acres of new or measurably
improved natural habitat. Following the success of the Biodiversity
Conference we co-hosted with Natural England and the Local
Government Association earlier this year, we are working with
Natural England to run local sessions in the spring as part of the
roll out of new mandatory legislation across the industry.
Our approach to 'environmental net gain' is focused on the four
areas where the pressures on the environment are greatest and where
we can have most impact: Climate, Pollution, Ecology and Water. We
were delighted to have been recognised for our work in this area,
through a Water Conservation Award at the National Sustainability
Awards for the joint project with Thames Water at Royal Exchange in
Kingston-Upon-Thames for being the first site at scale to achieve
water neutrality.
We continue to upskill our employees and provide pathways into
the business for a diverse range of people. 9% of our employees are
in 'earn and learn' positions, including graduates and apprentices
and those working towards professional qualifications, helping us
to maintain our Gold rating with The 5% Club. In the period we
pledged GBP100,000 of our unallocated Apprenticeship Levy to enable
London's small construction businesses to take on more apprentices.
The contribution is part of a new partnership with Workwhile, a
not-for-profit initiative which aims to create good work and ensure
disadvantaged people can access high-quality training.
Very conscious of the fragility of the supply chain in the
current market conditions, we held our first Supply Chain
Conference in November, bringing together more than 170 trade
contractors, suppliers and manufacturers to ensure we work
collaboratively and strengthen relationships. This was an
opportunity to reinforce our priorities on topics such as quality,
climate action and combatting modern slavery, together with raising
awareness about our new strategy to target zero avoidable
waste.
The Berkeley Foundation published its latest summary of its work
within its Annual Review 2023 Driving Positive Change. In the
period we have supported the successful completion of the first
cohort of green leaders through the Foundation's partnership with
Groundwork London. A new three-year partnership has also been set
up with Camden-based charity New Horizon Youth Centre to support
young Londoners experiencing homelessness to move into safe and
sustainable housing.
Principal risks and uncertainties
The Board is conscious of the ongoing elevated volatility in the
operating environment and the Group's business model and risk
management approach ensures we are agile and responsive to evolving
market conditions. As such, our risk appetite remains dynamic and
is respectful of the cyclical nature or our industry and the risks
and opportunities this presents.
The principal business risks and uncertainties facing Berkeley
for the next six months are the same as those set out on pages 87
to 99 of The Berkeley Group Holdings plc Annual Report for the year
ended 30 April 2023. These comprise the economic and political
outlook, the impact of regulation on the business and the wider
industry, the availability of land, the planning process, retention
of our people, securing sales, liquidity and working capital
management, mortgage availability, climate change and
sustainability considerations, health and safety on the Group's
developments, product quality and customers, control of build costs
and maintaining programmes, and cyber and data risk. In preparing
this interim report, full account has been taken of this risk
profile and the future outlook for the Group's developments as
embraced within the Group's strategy and outlook.
- End -
Statement of Directors' Responsibilities
This statement, which should be read in conjunction with the
independent review of the auditors set out at the end of these
Condensed Consolidated Financial Statements (the "Interim Financial
Statements"), is made to enable shareholders to distinguish the
respective responsibilities of the Directors and the auditors in
relation to the Interim Financial Statements which the Directors
confirm have been presented on a going concern basis. The Directors
consider that the Group has used appropriate accounting policies,
consistently applied and supported by reasonable and appropriate
judgements and estimates.
A copy of the Interim Financial Statements of the Group is
placed on the website of The Berkeley Group Holdings plc:
www.berkeleygroup.co.uk. The Directors are responsible for the
maintenance and integrity of the information on the website.
Information published on the internet is accessible in many
countries with different legal requirements. Legislation in the
United Kingdom governing the preparation and dissemination of the
financial statements may differ from legislation in other
jurisdictions.
The Directors confirm that this set of Interim Financial
Statements has been prepared in accordance with International
Accounting Standard 34, "Interim Financial Reporting", as adopted
by the United Kingdom and that the interim management report
includes a fair review of the information required by DTR 4.2.7R
and DTR 4.2.8R, namely:
-- an indication of important events that have occurred during
the first six months and their impact on the set of Interim
Financial Statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- material related party transactions in the first six months
and any material changes in the related party transactions
described in the last annual report.
The Directors of The Berkeley Group Holdings plc are listed in
the Annual Report of The Berkeley Group Holdings plc for the year
ended 30 April 2023. A list of current Directors is maintained on
The Berkeley Group Holdings plc's website.
On behalf of the Board
R C Perrins
Chief Executive
8 December 2023
R J Stearn
Finance Director
8 December 2023
Condensed Consolidated Income Statement
Six months Six months Year ended
ended ended
31 October 31 October 30 April
2023 2022 2023
Unaudited Unaudited Audited
Notes GBPm GBPm GBPm
----------------------------- ------ ----------- ----------- -----------
Revenue 1,191.9 1,200.7 2,550.2
Cost of sales (880.3) (876.9) (1,853.4)
----------------------------- ------ ----------- ----------- -----------
Gross profit 311.6 323.8 696.8
Net operating expenses (79.7) (89.9) (178.5)
----------------------------- ------ ----------- ----------- -----------
Operating profit 231.9 233.9 518.3
Finance income 3 25.9 6.0 23.1
Finance costs 3 (20.8) (16.6) (33.7)
Share of results of joint
ventures using the equity
method 61.0 61.5 96.3
----------- ----------- -----------
Profit before taxation for
the period 298.0 284.8 604.0
Income tax expense 4 (86.5) (63.1) (138.3)
----------------------------- ------ ----------- ----------- -----------
Profit after taxation for
the period 211.5 221.7 465.7
----------------------------- ------ ----------- ----------- -----------
Earnings per share (pence):
Basic 5 198.3 200.4 426.8
Diluted 5 196.7 197.9 422.4
----------------------------- ------ ----------- ----------- -----------
Condensed Consolidated Statement of Comprehensive Income
Six months Six months Year ended
ended ended
31 October 31 October 30 April
2023 2022 2023
Unaudited Unaudited Audited
GBPm GBPm GBPm
------------------------------------- ----------- ----------- -----------
Profit after taxation for
the period 211.5 221.7 465.7
-------------------------------------- ----------- ----------- -----------
Other comprehensive expense
Items that will not be reclassified
to profit or loss
Actuarial loss recognised in
the pension scheme (1.0) (1.7) (1.3)
Total items that will not
be reclassified to profit or
loss (1.0) (1.7) (1.3)
-------------------------------------- ----------- ----------- -----------
Other comprehensive expense
for the period (1.0) (1.7) (1.3)
-------------------------------------- ----------- ----------- -----------
Total comprehensive income
for the period 210.5 220.0 464.4
-------------------------------------- ----------- ----------- -----------
Condensed Consolidated Statement of Financial Position
31 October 31 October 30 April
2023 2022 2023
Unaudited Unaudited Audited
Notes GBPm GBPm GBPm
---------------------------------- ------ ----------- ----------- ----------
Assets
Non-current assets
Intangible assets 17.2 17.2 17.2
Property, plant and equipment 33.8 40.4 34.6
Right-of-use assets 5.0 5.0 5.2
Investments accounted for
using the equity method 217.6 184.2 223.4
Deferred tax assets 110.8 116.4 114.5
384.4 363.2 394.9
---------------------------------- ------ ----------- ----------- ----------
Current assets
Inventories 6 5,370.3 5,298.2 5,302.1
Trade and other receivables 89.3 78.2 92.3
Current tax assets 3.8 4.6 -
Cash and cash equivalents 7 1,081.6 1,002.6 1,070.4
---------------------------------- ------ ----------- ----------- ----------
6,545.0 6,383.6 6,464.8
---------------------------------- ------ ----------- ----------- ----------
Total assets 6,929.4 6,746.8 6,859.7
---------------------------------- ------ ----------- ----------- ----------
Liabilities
Non-current liabilities
Borrowings 7 (660.0) (660.0) (660.0)
Trade and other payables (868.0) (859.3) (863.4)
Lease liability (3.0) (3.1) (2.9)
Provisions for other liabilities
and charges (153.2) (117.2) (115.1)
---------------------------------- ------ ----------- ----------- ----------
(1,684.2) (1,639.6) (1,641.4)
---------------------------------- ------ ----------- ----------- ----------
Current liabilities
Trade and other payables (1,774.2) (1,837.3) (1,801.6)
Current tax liabilities - - (3.7)
Lease liability (2.2) (2.2) (2.2)
Provisions for other liabilities
and charges (55.0) (58.1) (78.5)
---------------------------------- ------ ----------- ----------- ----------
(1,831.4) (1,897.6) (1,886.0)
Total liabilities (3,515.6) (3,537.2) (3,527.4)
---------------------------------- ------ ----------- ----------- ----------
Total net assets 3,413.8 3,209.6 3,332.3
---------------------------------- ------ ----------- ----------- ----------
Equity
Shareholders' equity
Share capital 6.2 6.3 6.3
Share premium 49.8 49.8 49.8
Capital redemption reserve 25.3 25.2 25.2
Other reserve (961.3) (961.3) (961.3)
Retained earnings 4,293.8 4,089.6 4,212.3
---------------------------------- ------ ----------- ----------- ----------
Total equity 3,413.8 3,209.6 3,332.3
---------------------------------- ------ ----------- ----------- ----------
Condensed Consolidated Statement of Changes in Equity
Capital
Share Share redemption Other Retained Total
capital premium reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------------------ -------- -------- ----------- -------- --------- --------
Unaudited
At 1 May 2023 6.3 49.8 25.2 (961.3) 4,212.3 3,332.3
Profit after taxation for the period - - - - 211.5 211.5
Other comprehensive expense for the period - - - - (1.0) (1.0)
Purchase of own shares (0.1) - 0.1 - (64.5) (64.5)
Transactions with shareholders:
- Charge in respect of employee share schemes - - - - (4.2) (4.2)
- Deferred tax in respect of employee share schemes - - - - 2.8 2.8
- Dividends to equity holders of the Company - - - - (63.1) (63.1)
------------------------------------------------------ -------- -------- ----------- -------- --------- --------
At 31 October 2023 6.2 49.8 25.3 (961.3) 4,293.8 3,413.8
------------------------------------------------------ -------- -------- ----------- -------- --------- --------
Unaudited
At 1 May 2022 6.5 49.8 25.0 (961.3) 4,016.1 3,136.1
Profit after taxation for the period - - - - 221.7 221.7
Other comprehensive expense for the period - - - - (1.7) (1.7)
Purchase of own shares (0.2) - 0.2 - (110.5) (110.5)
Transactions with shareholders:
- Charge in respect of employee share schemes - - - - (4.3) (4.3)
- Deferred tax in respect of employee share schemes - - - - (8.4) (8.4)
- Dividends to equity holders of the Company - - - - (23.3) (23.3)
------------------------------------------------------ -------- -------- ----------- -------- --------- --------
At 31 October 2022 6.3 49.8 25.2 (961.3) 4,089.6 3,209.6
------------------------------------------------------ -------- -------- ----------- -------- --------- --------
Audited
At 1 May 2022 6.5 49.8 25.0 (961.3) 4,016.1 3,136.1
Profit after taxation for the year - - - - 465.7 465.7
Other comprehensive expense for the year - - - - (1.3) (1.3)
Purchase of own shares (0.2) - 0.2 - (155.4) (155.4)
Transactions with shareholders:
- Charge in respect of employee share schemes - - - - (4.5) (4.5)
- Deferred tax in respect of employee share schemes - - - - (9.8) (9.8)
- Dividends to equity holders of the Company - - - - (98.5) (98.5)
------------------------------------------------------ -------- -------- ----------- -------- --------- --------
At 30 April 2023 6.3 49.8 25.2 (961.3) 4,212.3 3,332.3
------------------------------------------------------ -------- -------- ----------- -------- --------- --------
Condensed Consolidated Cash Flow Statement
Six months Six months Year ended
ended ended
31 October 31 October 30 April
2023 2022 2023
Unaudited Unaudited Audited
Notes GBPm GBPm GBPm
------------------------------------- ------ ----------- ----------- -----------
Cash flows from operating
activities
Cash generated from operations 7 157.1 218.8 472.5
Interest received 22.6 4.3 18.2
Interest paid (18.4) (13.0) (21.4)
Income tax paid (87.6) (67.3) (133.7)
------------------------------------- ------ ----------- ----------- -----------
Net cash flow from operating
activities 73.7 142.8 335.6
------------------------------------- ------ ----------- ----------- -----------
Cash flows from investing
activities
Purchase of property, plant
and equipment (0.9) (1.7) (2.0)
Proceeds on disposal of property,
plant and equipment 0.4 - 0.8
Dividends from joint ventures 74.9 74.9 74.9
Movements in loans with joint
ventures (8.1) (7.2) (11.6)
Net cash flow from investing
activities 66.3 66.0 62.1
------------------------------------- ------ ----------- ----------- -----------
Cash flows from financing
activities
Lease capital repayments (1.2) (1.3) (2.3)
Purchase of own shares (64.5) (110.5) (155.4)
Dividends to Company's shareholders (63.1) (23.3) (98.5)
Net cash flow from financing
activities (128.8) (135.1) (256.2)
------------------------------------- ------ ----------- ----------- -----------
Net increase in cash and
cash equivalents 11.2 73.7 141.5
Cash and cash equivalents
at the start of the financial
period 1,070.4 928.9 928.9
------------------------------------- ------ ----------- ----------- -----------
Cash and cash equivalents
at the end of the financial
period 1,081.6 1,002.6 1,070.4
------------------------------------- ------ ----------- ----------- -----------
1 General information
The Berkeley Group Holdings plc (the Company) is a public
limited company incorporated and domiciled in the United Kingdom.
The address of its registered office is Berkeley House, 19
Portsmouth Road, Cobham, Surrey, KT11 1JG. The Company and its
subsidiaries (together the Group) are engaged in residential led,
mixed use property development.
This Condensed Consolidated Financial Information was approved
for issue on 8 December 2023. It does not comprise statutory
accounts within the meaning of Section 434(3) of the Companies Act
2006. Statutory accounts for the year ended 30 April 2023 were
approved by the Board of Directors on 21 June 2023 and delivered to
the Registrar of Companies. The report of the auditors on those
accounts was unqualified, did not include reference to any matters
to which the auditor drew attention by way of emphasis without
qualifying their audit report, and did not contain a statement
under Section 498 (2) or (3) of the Companies Act 2006. The Interim
Financial Statements have been reviewed, not audited.
2 Basis of preparation
2.1 Introduction
This Condensed Consolidated Financial Information for the six
months ended 31 October 2023 has been prepared in accordance with
IAS 34 'Interim Financial Reporting' as adopted for use in the UK
and the Disclosure Guidance and Transparency Rules of the UK's
Financial Conduct Authority.
The comparative figures for the year ended 30 April 2023 do not
constitute statutory accounts as defined in Section 434(3) of the
Companies Act 2006 and have been extracted from the statutory
accounts, which were prepared in accordance with International
Accounting Standards (IAS) in conformity with the requirements of
the Companies Act 2006 and UK-adopted International Financial
Reporting Standards (IFRS) and were delivered to the Registrar of
Companies.
The accounting policies, presentation and method of computations
adopted in the preparation of the 31 October 2023 Interim Financial
Statements are consistent with those followed in the preparation of
the Group's annual financial statements for the year ended 30 April
2023 except in respect of taxation which is based on the expected
effective tax rate for the year ending 30 April 2024.
The following amendments to standards and interpretations are
applicable to the Group and are mandatory for the first time for
the financial year beginning 1 May 2023:
- Amendments to IAS 1 Presentation of Financial Statements;
- Amendments to IFRS 17 Insurance Contracts;
- Amendments to IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors; and
- Amendments to IAS 12 Income Taxes.
These amendments are not expected to have a significant impact
on the results of the Group.
2 Basis of preparation (continued)
2.2 Going concern
The Directors have assessed the business plan and funding
requirements of the Group over the medium-term and compared these
with the level of committed debt facilities and existing cash
resources. As at 31 October 2023, the Group had net cash of
GBP421.6 million and total liquidity of GBP1,621.6 million when
this net cash is combined with banking facilities of GBP800 million
(committed to February 2028), of which GBP540 million is undrawn,
and GBP400 million listed bonds (which mature in August 2031).
Furthermore, the Group has cash due on forward sales of GBP1.96
billion, a significant proportion of which covers delivery for the
next 18 months.
In making this assessment, consideration has been given to the
uncertainty inherent in future financial forecasts and where
applicable, severe but plausible sensitivities have been applied to
the key factors affecting the financial performance of the Group.
The Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for not
less than 12 months from the date of approval of these Interim
Financial Statements. For this reason, it continues to adopt the
going concern basis of accounting in preparing its Interim
Financial Statements.
3 Net finance income/(costs)
Six months Six months Year ended
ended ended
31 October 31 October 30 April
2023 2022 2023
Unaudited Unaudited Audited
GBPm GBPm GBPm
-------------------------------- ----------- ----------- -----------
Finance income 25.9 6.0 23.1
-------------------------------- ----------- ----------- -----------
Finance costs
Interest payable on borrowings
and non-utilisation fees (14.6) (10.5) (21.9)
Amortisation of fees incurred
on borrowings (1.0) (0.8) (1.7)
Other finance costs (5.2) (5.3) (10.1)
-------------------------------- ----------- ----------- -----------
(20.8) (16.6) (33.7)
-------------------------------- ----------- ----------- -----------
Net finance income/(costs) 5.1 (10.6) (10.6)
-------------------------------- ----------- ----------- -----------
Finance income predominantly represents interest earned on cash
deposits.
Other finance costs represent imputed interest on land purchased
on deferred settlement terms and lease interest.
4 Income tax expense
Six months Six months Year ended
ended ended
31 October 31 October 30 April
2023 2022 2023
Unaudited Unaudited Audited
GBPm GBPm GBPm
------------------------------------ ----------- ----------- -----------
Current tax including RPDT
UK current tax payable (80.9) (67.4) (140.5)
Adjustments in respect of previous
years 0.7 (1.9) (1.4)
(80.2) (69.3) (141.9)
Deferred tax including RPDT
Deferred tax movements (5.6) 4.3 2.5
Adjustments in respect of previous
years (0.7) 1.9 1.1
------------------------------------ ----------- ----------- -----------
(6.3) 6.2 3.6
(86.5) (63.1) (138.3)
------------------------------------ ----------- ----------- -----------
5 Earnings per share
Basic earnings per share are calculated as the profit for the
financial period attributable to shareholders of the Group divided
by the weighted average number of shares in issue during the
period.
Six months Six months Year ended
ended ended
31 October 31 October 30 April
2023 2022 2023
Unaudited Unaudited Audited
Profit attributable to shareholders
(GBPm) 211.5 221.7 465.7
Weighted average no. of shares
(m) 106.7 110.6 109.1
Basic earnings per share (p) 198.3 200.4 426.8
------------------------------------- ----------- ----------- -----------
For diluted earnings per ordinary share, the weighted average
number of shares in issue is adjusted to assume the conversion of
all potentially dilutive ordinary shares.
At 31 October 2023, the Group had one (2022: one) category of
potentially dilutive ordinary shares: 0.7 million (2022: 1.2
million) share options under the 2011 LTIP.
A calculation is undertaken to determine the number of shares
that could have been acquired at fair value based on the aggregate
of the exercise price of each share option and the fair value of
future services to be supplied to the Group, which is the
unamortised share-based payments charge. The difference between the
number of shares that could have been acquired at fair value and
the total number of options is used in the diluted earnings per
share calculation.
5 Earnings per share (continued )
Six months Six months Year ended
ended ended
31 October 31 October 30 April
2023 2022 2023
Unaudited Unaudited Audited
Profit used to determine diluted
EPS (GBPm) 211.5 221.7 465.7
---------------------------------- ----------- ----------- -----------
Weighted average no. of shares
(m) 106.7 110.6 109.1
Adjustments for:
Share options - 2011 LTIP 0.9 1.4 1.1
Shares used to determine diluted
EPS (m) 107.6 112.0 110.2
---------------------------------- ----------- ----------- -----------
Diluted earnings per share (p) 196.7 197.9 422.4
---------------------------------- ----------- ----------- -----------
6 Inventories
Six months Six months Year ended
ended ended
31 October 31 October 30 April
2023 2022 2023
Unaudited Unaudited Audited
GBPm GBPm GBPm
-----------
Land not under development 912.0 919.7 927.1
Work in progress: Land cost 1,649.5 1,897.5 1,729.2
------------------------------ ----------- ----------- -----------
Total land 2,561.5 2,817.2 2,656.3
Work in progress: Build cost 2,661.1 2,362.1 2,520.0
Completed units 147.7 118.9 125.8
------------------------------ ----------- ----------- -----------
Total inventories 5,370.3 5,298.2 5,302.1
------------------------------ ----------- ----------- -----------
7 Notes to the Condensed Consolidated Cash Flow Statement
Six months Six months Year ended
ended ended
31 October 31 October 30 April
2023 2022 2023
Unaudited Unaudited Audited
GBPm GBPm GBPm
----------------------------------------------- ----------- ----------- -----------
Net cash flows from operating
activities
Profit for the financial period 211.5 221.7 465.7
Adjustments for:
Taxation 86.5 63.1 138.3
Depreciation 2.5 2.9 5.1
Loss on sale of PPE - - 3.7
Finance income (25.9) (6.0) (23.1)
Finance costs 20.8 16.6 33.7
Share of results of joint ventures
after tax (61.0) (61.5) (96.3)
Non-cash charge in respect of
share awards (4.2) (4.3) (4.5)
Changes in working capital:
Increase in inventories (68.2) (164.3) (168.1)
Decrease in trade and other receivables 5.9 67.9 57.5
(Decrease)/increase in trade and
other payables (10.8) 82.7 60.5
Cash generated from operations 157.1 218.8 472.5
----------------------------------------------- ----------- ----------- -----------
Reconciliation of net cash flow
to net cash
Net increase in net cash and cash
equivalents, including bank overdraft 11.2 73.7 141.5
Movement in borrowings - - -
---------------------------------------- -------- -------- --------
Movement in net cash in the financial
period 11.2 73.7 141.5
Opening net cash 410.4 268.9 268.9
---------------------------------------- -------- -------- --------
Closing net cash 421.6 342.6 410.4
---------------------------------------- -------- -------- --------
Net cash
Cash and cash equivalents 1,081.6 1,002.6 1,070.4
Non-current borrowings (660.0) (660.0) (660.0)
---------------------------------------- -------- -------- --------
Net cash 421.6 342.6 410.4
---------------------------------------- -------- -------- --------
8 Alternative performance measures
Berkeley uses a number of alternative performance measures
(APMs) which are not defined by IFRS. The Directors consider these
measures useful to assess the underlying performance of the Group
alongside the relevant IFRS financial information. They are
referred to as Financial KPIs throughout the results. The
information below provides a definition of APMs and reconciliation
to the relevant IFRS information, where required:
Net cash
Net cash is defined as cash and cash equivalents, less total
borrowings. This is reconciled in note 7.
8 Alternative performance measures (continued)
Net assets per share attributable to shareholders (NAVPS)
This is defined as net assets attributable to shareholders
divided by the number of shares in issue, excluding shares held in
treasury and shares held by the employee benefit trust.
Six months Six months Year ended
ended ended
31 October 31 October 30 April
2023 2022 2023
Unaudited Unaudited Audited
----------------------------------- ---------- ---------- ----------
Net assets (GBPm) 3,413.8 3,209.6 3,332.3
Total shares in issue (million) 114.9 117.7 116.5
Less:
----------------------------------- ---------- ---------- ----------
Treasury shares held (million) (8.8) (9.0) (8.9)
----------------------------------- ---------- ---------- ----------
Employee benefit trust shares held
(million) (0.1) (0.1) (0.1)
----------------------------------- ---------- ---------- ----------
Net shares used to determine NAVPS
(million) 106.0 108.6 107.5
----------------------------------- ---------- ---------- ----------
Net asset per share attributable
to shareholders (pence) 3,219.2 2,955.7 3,100.5
----------------------------------- ---------- ---------- ----------
Return on capital employed (ROCE)
This measures the profitability and efficiency of capital being
used by the Group and is calculated as profit before interest and
taxation (including joint venture profit before tax) divided by the
average net assets adjusted for (debt)/cash.
Six months Six months Year ended
ended ended
31 October 31 October 30 April
2023 2022 2023
Unaudited Unaudited Audited
------------------------------------- ---------- ---------- ----------
Operating profit (GBPm) 231.9 233.9 518.3
Share of joint ventures using the
equity method (GBPm) 61.0 61.5 96.3
------------------------------------- ---------- ---------- ----------
Profit used to determine ROCE (GBPm) 292.9 295.4 614.6
Opening capital employed:
------------------------------------- ---------- ---------- ----------
Net assets (GBPm) 3,332.3 3,136.1 3,136.1
------------------------------------- ---------- ---------- ----------
Net cash (GBPm) (410.4) (268.9) (268.9)
------------------------------------- ---------- ---------- ----------
Opening capital employed (GBPm) 2,921.9 2,867.2 2,867.2
------------------------------------- ---------- ---------- ----------
Closing capital employed:
------------------------------------- ---------- ---------- ----------
Net assets (GBPm) 3,413.8 3,209.6 3,332.3
------------------------------------- ---------- ---------- ----------
Net cash (GBPm) (421.6) (342.6) (410.4)
------------------------------------- ---------- ---------- ----------
Closing capital employed (GBPm) 2,992.2 2,867.0 2,921.9
------------------------------------- ---------- ---------- ----------
Average capital employed (GBPm) 2,957.1 2,867.1 2,894.5
------------------------------------- ---------- ---------- ----------
Return on capital employed (%) 19.8% 20.6% 21.2%
------------------------------------- ---------- ---------- ----------
8 Alternative performance measures (continued)
Return on equity (ROE) before tax
This measures the efficiency of returns generated from
shareholder equity before taxation and is calculated as profit
before taxation attributable to shareholders as a percentage of the
average of opening and closing shareholders' funds.
Six months Six months Year ended
ended ended
31 October 31 October 30 April
2023 2022 2023
Unaudited Unaudited Audited
------------------------------------ ---------- ---------- ----------
Opening shareholders equity (GBPm) 3,332.3 3,136.1 3,136.1
Closing shareholders equity (GBPm) 3,413.8 3,209.6 3,332.3
------------------------------------ ---------- ---------- ----------
Average shareholders' equity (GBPm) 3,373.1 3,172.8 3,234.2
Return on equity before tax:
------------------------------------ ---------- ---------- ----------
Profit before tax (GBPm) 298.0 284.8 604.0
------------------------------------ ---------- ---------- ----------
Return on equity before tax (%) 17.7% 18.0% 18.7%
------------------------------------ ---------- ---------- ----------
Cash due on forward sales
This measures cash still due from customers, with a risk
adjustment, at the relevant Balance Sheet date during the next
three years under unconditional contracts for sale. It excludes
forward sales of affordable housing, commercial properties and
institutional sales as well as forward sales within the Group's
joint ventures.
Future gross margin in land holdings
This represents management's risk-adjusted assessment of the
potential gross profit for each of the Group's sites, including the
proportionate share of its joint ventures, taking account of a wide
range of factors, including: current sales and input prices; the
economic and political backdrop; the planning and regulatory
regimes; and other market factors; all of which could have a
significant effect on the eventual outcome.
9 Related party transactions
The Group has entered into the following related party
transactions:
Transactions with Directors
During the period, Mr R C Perrins paid GBP87,123 (2022:
GBP35,698) and Mr P M Vallone paid GBP5,831 (2022: GBPnil) to the
Group in connection with works carried out at their respective
homes at commercial rates in accordance with the relevant policies
of the Group. There were no balances outstanding at the period end
(2022: GBPnil).
Transactions with Joint Ventures
During the period, the joint ventures paid management fees and
other recharges to the Group of GBP7.0 million (2022: GBP9.0
million). Other transactions in the period include the movements in
loans of GBP8.1 million (2022: GBP7.2 million) and the receipt of
dividends of GBP74.9 million (2022: GBP74.9 million).
The outstanding loan balances with joint ventures at 31 October
2023 total GBP49.1 million (30 April 2023: GBP40.9 million).
INDEPENDENT REVIEW REPORT TO THE BERKELEY GROUP HOLDINGS PLC
Conclusion
We have been engaged by the Company to review the Condensed
Consolidated set of Financial Statements in the half-yearly
financial report for the six months ended 31 October 2023 which
comprises the Condensed Consolidated Income Statement, the
Condensed Consolidated Statement of Comprehensive Income, the
Condensed Consolidated Statement of Financial Position, the
Condensed Consolidated Statement of Changes in Equity, the
Condensed Consolidated Cash Flow Statement and the related
explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the Condensed Consolidated set of
Financial Statements in the half-yearly financial report for the
six months ended 31 October 2023 is not prepared, in all material
respects, in accordance with IAS 34 Interim Financial Reporting as
adopted for use in the UK and the Disclosure Guidance and
Transparency Rules (the DTR) of the UK's Financial Conduct
Authority (the UK FCA).
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 Review of Financial
Information Performed by the Independent Auditor of the Entity
(ISRE (UK) 2410) issued for use in the UK. A review of financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. We read the other
information contained in the half-yearly financial report and
consider whether it contains any apparent misstatements or material
inconsistencies with the information in the Condensed Consolidated
set of Financial Statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention that causes us to believe that the Directors have
inappropriately adopted the going concern basis of accounting, or
that the Directors have identified material uncertainties relating
to going concern that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410. However, future events or
conditions may cause the Group to cease to continue as a going
concern, and the above conclusions are not a guarantee that the
Group will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
The annual financial statements of the Group are prepared in
accordance with UK-adopted international accounting standards.
The Directors are responsible for preparing the Condensed
Consolidated set of Financial Statements included in the
half-yearly financial report in accordance with IAS 34 as adopted
for use in the UK.
In preparing the Condensed Consolidated set of Financial
Statements, the Directors are responsible for assessing the Group's
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis
of accounting unless the Directors either intend to liquidate the
Group or to cease operations, or have no realistic alternative but
to do so.
INDEPENDENT REVIEW REPORT TO THE BERKELEY GROUP HOLDINGS PLC
(continued)
Our responsibility
Our responsibility is to express to the company a conclusion on
the Condensed Consolidated set of Financial Statements in the
half-yearly financial report based on our review. Our conclusion,
including our conclusions relating to going concern, are based on
procedures that are less extensive than audit procedures, as
described in the Basis for conclusion section of this report.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company for our
review work, for this report, or for the conclusions we have
reached.
Anna Jones
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London
E14 5GL
8 December 2023
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