Berkeley Group Holdings Plc · LSE:BKG
Berkeley — The Berkeley Group Holdings — H1 2014/15 Earnings Presentation
31 slides from Berkeley's earnings presentation, Dec 5, 2014
Slide 1: Interim Results Presentation, Six Months Ended 31st October 2014
The Berkeley Group Holdings plc Interim Results Presentation Six Months Ended 31st October 2014 5th December 2014
Slide 2: Format of presentation
Format of presentation Chairman Tony Pidgley CBE Financial Controller Ben Marks Managing Director Rob Perrins Questions
Slide 3: Tony Pidgley CBE, Chairman
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Slide 4: Ben Marks, Financial Controller
Ben Marks Financial Controller
Slide 5: Review of Results
Review of Results Summary of performance Summary of financial position Homes completed and ASP Income statement Abridged cash flow Abridged balance sheet − Inventories − Creditors Land holdings
Slide 6: Summary of Performance
Summary of Performance 6 months ended 31 Oct 2014 31 Oct 2013 Change (£) Change (%) Underlying * Operating Profit (underlying) £214.5m £169.6m +£44.9m +26.5% Operating Margin (underlying) 23.3% 20.7% +2.6% Underlying * Profit before tax £219.8m £169.5m +£50.3m +29.7% Return on equity 29.2% 25.0% Tot
Slide 7: Summary of financial position
Summary of financial position October 2014 April 2014 Change (£) Change (%) Shareholders’ funds £1,569.5m £1,441.3m +£128.2m +8.9% Closing net debt/(cash) (£148.4m) (£129.2m) +19.2m +14.9% Capital Employed £1,421.1m £1,312.1m +£109.0m +8.3% Net asset value per share 1,160p 1,066p +94p +8.8% Shares i
Slide 8: Homes completed and ASP
Homes completed and ASP Units ASP Units ASP 2014/15 HY01 1,372 £649,000 St Edward Homes HY01 86 £1,380,000 2013/14 HY02 1,448 £539,000 3,742 £423,000 2013/14 HY01 2,294 £350,000 St Edward Homes FY 203 £1,235,000 2012/13 HY02 1,785 £376,000 3,712 £354,000 2012/13 HY01 1,927 £335,000 St Edward Homes F
Slide 9: Income statement
Income statement 6 months ended October 2014 October 2013 Change Change £m £m £m % Underlying Revenue 922.4 821.0 +101.4 +12.4% Gross profit 288.6 31.3% 240.3 29.3% +48.3 +20.1% Operating expenses (74.1) 8.0% (70.7) 8.6% +3.4 +4.8% Operating profit 214.5 23.3% 169.6 20.7% +44.9 +26.5% Net finance co
Slide 10: Abridged cash flow
Abridged cash flow 6 months ended October 2014 October 2013 £m £m Profit before tax (underlying) 219.8 169.5 Proceeds on sale of ground rents 85.1 - - Increase in inventory (130.0) (309.8) - Other working capital movements 7.6 217.3 Net investment in working capital (122.4) (92.5) Rental fund 5.4 78
Slide 11: Abridged balance sheet
Abridged balance sheet October 2014 Movements April 2014 £m £m £m Non current assets - Intangible assets 17.2 - 17.2 - Investment in JVs 30.4 -31.0 61.4 - Rental fund 13.9 -4.3 18.2 - Deferred tax asset 53.2 -7.9 61.1 - Property, plant and equipment 22.2 +0.2 22.0 Inventories 2,611.2 +130.0 2,481.2
Slide 12: Inventories
Inventories October 2014 Movements April 2014 £m £m £m Land not under development 379.2 -113.2 492.4 Work in progress: Land cost 816.4 +30.3 786.1 1,195.6 -82.9 1,278.5 Work in progress: Build cost 1,382.5 +202.2 1,180.3 Completed units 33.1 +10.7 22.4 2,611.2 +130.0 2,481.2
Slide 13: Creditors
Creditors October 2014 Movements April 2014 £m £m £m Trade creditors and accruals 462.2 +46.7 415.5 Provision for liabilities 61.9 +4.8 57.1 Deposits and on account receipts 835.2 +93.5 741.7 Land creditors 194.2 -15.8 210.0 Current tax liability 50.9 -32.8 83.7 Total creditors 1,604.4 +96.4 1,508.0
Slide 14: Land holdings
Land holdings October 2014 Variance April 2014 Owned 23,631 +145 23,486 Contracted 750 +230 520 Plots 24,381 +375 24,006 Sales value £10,678m +£616m £10,062m Average selling price £438k +£19k £419k Average plot cost £70k -£2k £72k Land cost % 15.9% -1.4% 17.3% Gross margin £3,201m £187m £3,014m GM%
Slide 15: Rob Perrins, Managing Director
Rob Perrins Managing Director
Slide 16: 1. Introduction
1. Introduction • Performance Highlights • Long Term Strategic Plan • The Berkeley Difference • The Market • Land and Build Investment • Joint Ventures • Outlook • Guidance • Conclusion
Slide 17: 2. Performance Highlights
2. Performance Highlights Highlights Underlying PBT up 29.7% to £219.8 million £85.1 million profit from disposal of ground rent assets Dividends paid of 90 pence Net cash of £148.4 million and ungeared throughout the year Cash due on forward sales up 18.4% to £2,693 million Invested a further net £
Slide 18: 3. Long Term Strategic Plan
3. Long Term Strategic Plan Milestone Committed Outstanding Total £/share £’m £/share £’m £/share £’m By 30th September 2015 3.44 459 0.90 122 4.34 581 By 30th September 2018 - - 4.33 586 4.33 586 By 30th September 2021 ___- ___- 4.33 586 4.33 586 3.44 459 9.56 1,294 13.00 1,753 The scheme requires:
Slide 19: 4. Long Term Strategic Plan
4. Long Term Strategic Plan Surplus Capital If surplus capital is generated: Further investment in the business; Increased dividends over and above £9.56 per share; and/or Share buy-backs
Slide 20: 5. The Berkeley Difference
5. The Berkeley Difference Objectives Model • Protect value in the balance sheet 1. To be commercially successful • Control release of schemes to build • Match operational risk with market conditions 2. To be sustainable, for the long-term • Add value to the land holdings • Invest at the right point
Slide 21: 6. The Market
6. The Market Sales Sales rates have returned to normal levels after an exceptional 2013/14 A number of successful sales launches Investors comprise 50% of sales, and non-UK buyers 30% of sales Underpinning the result London is a World City There is a shortfall of good quality new housing Interest r
Slide 22: 7. Land and Build Investment
7. Land and Build Investment Inventories Inventories £2,611m £2,481m £2,067m £1,852m £1,614m £1,254m £1,115m 30 Apr 09 30 Apr 10 30 Apr 11 30 Apr 12 30 Apr 13 30 Apr 14 31 Oct 14 Land not under development WIP - land WIP - build Completed stock
Slide 23: 8. Land and Build Investment
8. Land and Build Investment Delivery London South Total Delivery of Developments: In construction No. sites 38 24 62 Not yet in construction No. sites 8 3 11 Total developments No. sites 46 26 72 Of those not yet in construction Section 106 signed No. sites 1 - 1 Resolution to grant No. sites 2 1 3
Slide 24: 9. Land and Build Investment: Sites in London
9. Land and Build Investment Sites in London
Slide 25: 10. Land and Build Investment: Sites in South of England
10. Land and Build Investment Sites in South of England
Slide 26: 11. Land and Build Investment
11. Land and Build Investment Land Holdings Average Gross Gross Units Revenue Selling Margin Margin No. £m Price £m % At 30 April 2009 30,044 7,181 £239k 2,014 28.0 At 30 April 2010 28,099 7,220 £257k 2,038 28.2 At 30 April 2011 27,026 8,136 £301k 2,304 28.3 At 30 April 2012 26,021 8,989 £345k 2,580
Slide 27: 12. Land and Build Investment: Land Pipeline
12. Land and Build Investment Land Pipeline T H E P IP E LIN E
Slide 28: 13. Joint Ventures
13. Joint Ventures St Edward • Joint venture with Prudential • Three schemes in construction (Stanmore, 375 Kensington High Street and 190 Strand) • New homes in delivery at 375 Kensington High Street and Stanmore Place St Katharine • Joint venture with Wellcome Trust • Potential capital investment
Slide 29: 14. Outlook
14. Outlook Positive Signs Key Risks Good underlying demand in best locations Eurozone and World events undermining confidence Limited supply in best locations Tax changes Homes are affordable when customers have equity Currency fluctuations deterring overseas buyers Government stimulus through Help
Slide 30: 15. Guidance
15. Guidance Performance Guidance Regular dividends up to September 90p per share declared 2015 Dividend 344p per share cumulative A proportion of September 2018 milestone via regular payments Land Holdings Gross margin up to £3.2 billion Maintain at above £3 billion Underlying earnings expected to
Slide 31: Questions
Questions Tony Pidgley CBE Chairman Rob Perrins Managing Director Ben Marks Financial Controller
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