Berkeley Group Holdings Plc · LSE:BKG
Berkeley — The Berkeley Group Holdings — H1 2015/16 Earnings Presentation
34 slides from Berkeley's earnings presentation, Dec 4, 2015
Slide 1: Interim Results Presentation, Six months ended 31st October 2015
The Berkeley Group Holdings plc Interim Results Presentation Six months ended 31st October 2015 4th December 2015
Slide 2: Format of Presentation
Preliminary Results Presentation Format of Presentation Tony Pidgley CBE Chairman Richard Stearn Finance Director Rob Perrins Managing Director Questions
Slide 3: Tony Pidgley CBE, Chairman
Tony Pidgley CBE Chairman Berkeley StEdward StJames | StGeorge StWilliam
Slide 4: Richard Stearn, Finance Director
Richard Stearn Finance Director
Slide 5: Finance Review: Introduction
Finance Review Introduction - Summary of performance - Summary of financial position - Future potential share dilution - Homes completed and Average Selling Price - Income statement - Abridged cash flow - Abridged balance sheet - Financing - Land holdings
Slide 6: Summary of Performance
Finance Review Summary of Performance Six months ended 31 Oct 2015 31 Oct 2014 Change (£) Change (%) Profit before tax £293.3m £304.9m -£11.6m -3.8% EPS - Basic 166.9p 178.6p -11.7p -6.6% EPS - Diluted 149.2p 158.8p -9.6p -6.0% Adjusted * Profit before tax £242.3m £219.8m +£22.5m +10.2% EPS – Basic
Slide 7: Summary of Financial Position
Finance Review Summary of Financial Position Oct 2015 April 2015 Change (£) Change (%) Balance Sheet Shareholders’ funds £1,760.0m £1,637.9m +£122.1m +7.5% Closing net cash (£263.1m) (£430.9m) +£167.8m Capital Employed £1,496.9m £1,207.0m +£289.9m +24.0% Net asset value per share 1,289p 1,199p +90p
Slide 8: Future potential share dilution
Finance Review Future potential share dilution No. Exercise Vesting Approved by (million) Price* Date shareholders Shares in issue at 1 May 2014 135.3 2009B LTIP tranche 1 1.3 £4.96 April ‘15 Apr ‘09 Shares in issue at 31 October 2015 136.6 2009B LTIP tranche 2 1.3 £4.06 April ‘16** Apr ’09 2011 LTI
Slide 9: Homes Completed and ASP - Group
Finance Review Homes Completed and ASP - Group Plots 3,565 3,712 3,742 3,355 2,059 2,294 2,091 1,927 1,785 1,983 1,506 1,448 1,372 H1 H2 FY H1 H2 FY H1 H2 FY H1 H2 FY H1 2011/12 2012/13 2013/14 2014/15 2015/16 Berkeley Group Average Selling Price £649k £539k £575k £523k £506k £423k £376k £354k £350k
Slide 10: Homes Completed and ASP – Joint Ventures
Finance Review Homes Completed and ASP – Joint Ventures Units 230 188 203 132 144 100 88 86 66 71 78 32 34 H1 H2 FY H1 H2 FY H1 H2 FY H1 H2 FY H1 2011/12 2012/13 2013/14 2014/15 2015/16 St Edward Average Selling Price £1,464k £1,380k £1,235k £1,139k £1,229k £1,006k £810k £170k £170k £170k £272k £282
Slide 11: Income Statement
Finance Review Income Statement Year ended Oct 2015 Oct 2014 Change Change £m £m £m % Operations * Revenue 1,085.3 922.4 +162.9 +17.7% Gross profit 340.4 31.4% 288.6 31.3% +51.8 +17.9% Operating expenses (100.7) 9.3% (74.1) 8.0% -26.6 -35.9% Operating profit 239.7 22.1% 214.5 23.3% +25.2 +11.7% Net
Slide 12: Abridged Cash Flow
Finance Review Abridged Cash Flow Year ended Oct 2015 Oct 2014 £m £m Adjusted profit before tax 242.3 219.8 Profit on sale of ground rents 51.0 85.1 Increase in inventory (262.3) (130.0) Other working capital movements 19.0 7.6 Net reduction/(investment) in working capital (243.3) (122.4) Proceeds f
Slide 13: Abridged Balance Sheet
Finance Review Abridged Balance Sheet October 2015 Movements April 2015 £m £m £m Non current assets - Intangible assets 17.2 - 17.2 - Investment in JVs 108.1 +58.0 50.1 - Rental fund - -12.2 12.2 - Deferred tax assets 60.1 -12.6 72.7 - Property, plant and equipment 22.0 -1.5 23.5 Total non current a
Slide 14: Inventories
Finance Review Inventories October 2015 Movements April 2015 £m £m £m Land not under development 522.2 +180.2 342.0 Work in progress: Land cost 804.8 +6.2 798.6 1,327.0 +186.4 1,140.6 Work in progress: Build cost 1,570.7 +89.1 1,481.6 Completed units 18.7 -13.2 31.9 Inventories 2,916.4 +262.3 2,654.
Slide 15: Creditors
Finance Review Creditors October 2015 Movements April 2015 £m £m £m Trade creditors and accruals 551.4 +41.9 509.5 Provision for liabilities 85.8 +10.7 75.1 Deposits and on account receipts 1,001.7 +80.8 920.9 Land creditors 185.4 -19.7 205.1 Current tax liability 44.8 -13.0 57.8 Total creditors 1,8
Slide 16: Financing
Finance Review Financing Revolving Credit Facility Amount: £575 million Maturity: March 2020 (with optional extensions to March 2022) Utilisation and Non-Utilisation Fees: Market rates
Slide 17: Land Holdings
Finance Review Land Holdings October 2015 Variance April 2015 Owned 33,766 -449 34,215 Contracted 4,467 +1,209 3,258 Plots 38,233 +760 37,473 Sales value £18.1bn +£1.0bn £17.1bn Average selling price £473k +£17k £456k Average plot cost £66k +£8k £58k Land cost % 13.9% +1.2% 12.7% Gross margin £5.4bn
Slide 18: Rob Perrins, Managing Director
Rob Perrins Managing Director
Slide 19: Strategic Review: Introduction
Strategic Review Introduction - Performance highlights - Long term strategic plan - The Market - Land and build investment - Joint ventures - Outlook - Guidance - Conclusion
Slide 20: Performance Highlights
Strategic Review Performance Highlights Highlights Adjusted PBT up 10.2% to £242.3 million Profit of £51.0 million from sale of ground rents Dividends paid of 90 pence (£122.9 million) Net cash of £263.1 million and ungeared throughout the half year Cash due on forward sales up 3.3% to £3.1 billion
Slide 21: Long Term Strategic Plan - current
Strategic Review Long Term Strategic Plan - current Milestone Paid Outstanding Total £/share £’m £/share £’m £/share £’m By 30th September 2015 4.34 582 - - 4.34 582 By 30th September 2018 - Guided for Jan/Sep 2016 - - 1.45 197 1.45 197 - Guided for Jan/Sep 2017 - - 1.44 197 1.44 197 - Guided for Ja
Slide 22: Long Term Strategic Plan – proposed revision
Strategic Review Long Term Strategic Plan – proposed revision Milestone Paid Outstanding Total £/share £’m £/share £’m £/share £’m By 30th September 2015 4.34 582 - - 4.34 582 January 2016 - - 1.00 137 1.00 137 Year ending 30 April 2017 - - 2.00 274 2.00 274 Year ending 30 April 2018 - - 2.00 274 2.
Slide 23: The Market: Sales and Market Fundamentals
Strategic Review The Market Sales Sales rates remain at normal levels in line with last year A number of successful sales launches Investors comprise 50% of sales, and non-UK buyers 40% of sales Market Fundamentals London is a World City There is a shortfall of good quality new housing Mortgage rate
Slide 24: The Market: Land and Planning, Build
Strategic Review The Market Land and Planning Selective opportunities are there, which have led to six new land purchases in the period Good planning success in the period Planning tariff is increasing (CIL, s.106, affordable housing) Build Pressure on trades still evident Build cost inflation overa
Slide 25: Land and Build Investment - Inventories
Strategic Review Land and Build Investment - Inventories Inventories £2,916m £3,000m £2,654m £2,481m £2,500m £2,067m £1,852m £2,000m £1,614m £1,500m £1,254m £1,115m £1,000m £500m - 30 Apr 09 30 Apr 10 30 Apr 11 30 Apr 12 30 Apr 13 30 Apr 14 30 Apr 15 31 Oct 15 Land not under development WIP - land W
Slide 26: Land and Build Investment – Delivery
Strategic Review Land and Build Investment – Delivery London South Total Delivery of Developments: In construction 38 75% 18 75% 56 75% Not yet in construction 13 25% 6 25% 19 25% Total developments 51 100% 24 100% 75 100% Proportion with planning (by sites) 92% 79% 88% Number of plots 31,651 83% 6,
Slide 27: Land and Build Investment – Sites in London
Strategic Review Land and Build Investment – Sites in London
Slide 28: Land and Build Investment – Sites in the South of England
Strategic Review Land and Build Investment – Sites in the South of England
Slide 29: Land and Build Investment – Planning Consents
Strategic Review Land and Build Investment – Planning Consents Taplow Consent secured in September 2015 for 199 homes, including 40 retirement homes and a restaurant. First phase has detailed planning and is in construction First completions targeted for 2018
Slide 30: Joint Ventures: St Edward
Strategic Review Joint Ventures St Edward Joint venture with Prudential Four schemes in construction (Stanmore, 375 Kensington High Street, 190 Strand and Green Park Reading) Other sites in the land bank include Westminster
Slide 31: Joint Ventures: St William
Strategic Review Joint Ventures St William Joint venture with National Grid Three schemes in Land Holdings (Battersea, Rickmansworth and, contracted this period, Fulham)
Slide 32: Outlook
Strategic Review Outlook Positive Signs Risks Strong underlying demand in best locations Eurozone and World events undermining confidence Limited supply in best locations Tax changes (including transaction taxes) Homes are affordable when customers have equity Currency fluctuations deterring oversea
Slide 33: Guidance
Strategic Review Guidance Performance Guidance Increased regular dividend to £2 per Completed first milestone payment of share through to September 2021 434p by September 2015 on schedule Dividend Remaining return increased from £8.66 to 90p per share declared for Sept 2015 £12.00 by 2021 Land Holdi
Slide 34: Questions
Questions Tony Pidgley CBE Chairman Rob Perrins Managing Director Richard Stearn Finance Director
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