Berkeley Group Holdings Plc · LSE:BKG

Berkeley — The Berkeley Group Holdings — FY2023 Earnings Presentation

39 slides from Berkeley's earnings presentation, Jun 21, 2023

  1. Slide 1: Full Year Results Presentation

    THE BERKELEY GROUP HOLDINGS PLC Full Year Results Presentation Year Ended 30 April 2023 21 June 2023

  2. Slide 2: Introduction

    Interim Results Presentation For the Year Ended 30 April 2023 Rob Perrins INTRODUCTION Chief Executive 1 INTRODUCTION Strong results with £604 million PBT in line with guidance at start of the year, in challenging operating environment Richard Stearn Chief Financial Officer 2 Unique operating model

  3. Slide 3: Richard Stearn, Chief Financial Officer

    Richard Stearn Chief Financial Officer Chelsea Creek 2

  4. Slide 4: Finance Review Introduction

    Finance Review Introduction 1. SUMMARY OF PERFORMANCE 6. ABRIDGED BALANCE SHEET 2. SUMMARY OF FINANCIAL POSITION 7. INVENTORIES 3. HOMES COMPLETED AND AVERAGE SELLING PRICE 8. CREDITORS 4. INCOME STATEMENT 9. FINANCING 5. ABRIDGED CASH FLOW 10. LAND HOLDINGS 3

  5. Slide 5: Summary of Performance

    Finance Review Summary of Performance PROFIT BEFORE TAX CHANGE / CHANGE % 30 April 2023 30 April 2022 +£52.5m £604.0m £551.5m (+9.5%) OPERATING MARGIN 30 April 2023 30 April 2022 EPS - BASIC CHANGE / CHANGE % 20.3% 21.6% 30 April 2023 30 April 2022 +9.0p 426.8p 417.8p (+2.1%) PRE-TAX RETURN ON EQUIT

  6. Slide 6: Summary of Financial Position – Balance Sheet

    Finance Review Summary of Financial Position – Balance Sheet SHAREHOLDERS’ FUNDS CHANGE / CHANGE % NET ASSET VALUE PER SHARE CHANGE / CHANGE % 30 April 2023 30 April 2022 30 April 2023 30 April 2022 +£196.2m +283p £3,332.3m £3,136.1m (+6.3%) 3,101p 2,818p (+10.0%) CLOSING NET CASH CHANGE / CHANGE %

  7. Slide 7: Summary of Financial Position – Forward Sales and Land Holdings

    Finance Review Summary of Financial Position – Forward Sales and Land Holdings FORWARD SALES CASH DUE ON FORWARD SALES CHANGE / CHANGE % 30 April 2023 30 April 2022 -£34.9m £2,135.7m £2,170.6m (-1.6%) LAND HOLDINGS PLOTS CHANGE / CHANGE % 30 April 2023 30 April 2022 -8,118 58,045 66,163 (-12.3%) GRO

  8. Slide 8: Homes Completed and Average Selling Price – Group

    Finance Review Homes Completed and Average Selling Price (ASP) – Group Homes ASP H1 2,080 H1 £560k 2022/2023 H2 1,963 H2 £658k FY 4,043 FY £608k H1 1,828 H1 £647k 2021/2022* H2 1,932 H2 £562k FY 3,760 FY £603k H1 1,104 H1 £799k 2020/2021 H2 1,721 H2 £751k FY 2,825 FY £770k H1 1,389 H1 £644k 2019/202

  9. Slide 9: Homes Completed and ASP – Joint Ventures

    Finance Review Homes Completed and ASP – Joint Ventures (St Edward & St William) Homes ASP H1 251 H1 £1,036k St Edward 2022/2023 H2 343 H2 £774k FY 594 FY £885k H1 395 H1 £558k 2021/2022 H2 477 H2 £658k FY 872 FY £612k St Edward & H1 145 H1 £782k St William* 2020/2021 H2 284 H2 £628k FY 429 FY £680k

  10. Slide 10: Income Statement

    Finance Review Income Statement 30 April 2023 30 April 2022 CHANGE CHANGE YEAR ENDED £’m £’m £’m % Revenue 2,550.2 2,348.0 +202.2 +8.6% Gross profit 696.8 27.3% 664.8 28.3% +32.0 +4.8% Operating expenses (178.5) 7.0% (156.9) 6.7% -21.6 +13.8% Operating profit 518.3 20.3% 507.9 21.6% +10.4 +2.0% Net

  11. Slide 11: Abridged Cash Flow

    Finance Review Abridged Cash Flow 30 April 2023 30 April 2022 YEAR ENDED £’m £’m Profit before tax 604.0 551.5 Increase in inventory (168.1) (332.5) (Decrease)/increase in customer deposits (10.1) 8.1 Other working capital movements 128.1 191.8 Net increase in working capital (50.1) (132.6) Net inve

  12. Slide 12: Abridged Balance Sheet

    Finance Review Abridged Balance Sheet 30 APRIL 2023 CHANGE 30 APRIL 2022 AS AT £’m £’m £’m Non–current assets - Intangible assets 17.2 - 17.2 - Investment in joint ventures 223.4 +33.0 190.4 - Deferred tax assets 114.5 -6.2 120.7 - Right-of-use assets 5.2 -0.6 5.8 - Property, plant and equipment 34.

  13. Slide 13: Inventories

    Finance Review Inventories AS AT 30 April 2023 CHANGE 30 APRIL 2022 £’m £’m £’m Land not under development 927.1 +189.0 738.1 Work in progress: Land cost 1,729.2 -223.3 1,952.5 Total land 2,656.3 -34.3 2,690.6 Work in progress: Build cost 2,520.0 +217.4 2,302.6 Completed units 125.8 -15.0 140.8 Tota

  14. Slide 14: Creditors

    Finance Review Creditors 30 April 2023 CHANGE 30 April 2022 Land Creditor Forecast by Year AS AT £’m £’m £’m Trade creditors and 1000 846.7 -45.8 892.5 accruals 800 Provisions for liabilities 193.6 +32.6 161.0 Amounts due (£’m) Deposits and on account 921.3 -10.1 931.4 600 receipts Land creditors 90

  15. Slide 15: Financing

    Finance Review Financing Group  £400 million Green Bonds in issue (until Aug 2031) £400m Green Bonds (2031)  £800 million total borrowing facilities 2.50% coupon  Term loan £260 million Investment Grade  Undrawn RCF £540 million (undrawn) Credit Rating  Maturity February 2028 with an option to

  16. Slide 16: Land Holdings

    Finance Review Land Holdings AS AT 30 APRIL 2023 CHANGE 30 APRIL 2022 Owned * 58,045 -4,953 62,998 Contracted - -3,165 3,165 Plots 58,045 -8,118 66,163 Sales value £29.2bn -£1.9bn £31.1bn Average selling price ** £508k +£17k £491k Average plot cost ** £50k -£2k £52k Land cost % 9.8% -0.8% 10.6% Gros

  17. Slide 17: Rob Perrins, Chief Executive Officer

    Rob Perrins Chief Executive Officer Highwood Village, Horsham 16

  18. Slide 18: Strategic Review Introduction

    Strategic Review Introduction 1. BERKELEY’S LONG-TERM APPROACH 2. BROWNFIELD REGENERATION IN ACTION 2a. OVAL VILLAGE 3. OPERATING ENVIRONMENT 3a. SALES PERFORMANCE AND MARKET 3b. PLANNING AND REGULATION 3c. CONSTRUCTION, MODULAR AND BUILDING SAFETY 3d. POSITIONING FOR TODAY’S ENVIRONMENT 4. GUIDANCE

  19. Slide 19: Berkeley's Long-Term Approach

    Strategic Review Berkeley’s Long-Term Approach Five Unique Features 1. Only UK homebuilder on brownfield regeneration at scale Unique long-term 2. London and South East markets systemically undersupplied Long-Term Strategy business model 3. Financial strength giving strategic optionality 4. Unrivall

  20. Slide 20: Brownfield Regeneration in Action: Oval Village – Challenges

    Strategic Review Brownfield Regeneration in Action: Oval Village Unlocking this inner London site required a complex package of enabling works, highly sensitive working practices and extensive engagement with the surrounding community Challenges  8-acre closed-off and contaminated inner London site

  21. Slide 21: Brownfield Regeneration in Action: Oval Village – Solutions

    Strategic Review Brownfield Regeneration in Action: Oval Village Upfront capital investment of over £150 million required, with an initial investment phase of seven years from site purchase to delivery of first homes in 2022 Solutions  Extensive engagement with:  Surrounding community and business

  22. Slide 22: Brownfield Regeneration in Action: Oval Village – Outcomes

    Strategic Review Brownfield Regeneration in Action: Oval Village First residents moved in to Oval Village in 2022, with total masterplan on course to deliver more than 1,300 homes set around car-free streets, public squares and biodiverse landscaping Residents’ rooftop garden at Phoenix Outcomes Cou

  23. Slide 23: Accreditations

    Appendix Our Vision 2030: Transforming Tomorrow Accreditations A- ‘leadership’ rating in 2022 Sustainalytics Berkeley won Management Today’s Long Term Business Success award in May 2023. Judges commended Berkeley’s clear focus on ESG and staff issues, and the ‘Low risk’ rating measurement of custome

  24. Slide 24: Operating Environment: Sales Performance and Market

    Strategic Review Operating Environment Sales Performance Market £2.14bn Cash due on forward  Underlying sales reservations for 2022/23  Market weakened markedly with sharp rise in sales at 30 April 2023 around 15% lower than 2021/22 (like-for-like) interest rates in September 2022  A strong perfo

  25. Slide 25: Operating Environment: Planning and Regulation

    Strategic Review Operating Environment (continued) Planning Regulation  Focus is on adding value to land holdings and  Extent and pace of new regulation is fuelling pipeline uncertainty  Increases gross profit but not margin  There are multiple independencies, for example: percentage due to the

  26. Slide 26: Operating Environment: Construction, Building Safety, Berkeley Modular

    Strategic Review Operating Environment (continued) Construction Building Safety  Build cost inflation has peaked and beginning to moderate  Berkeley has EWS 1 form certification for mortgage purposes on 99% of its relevant freehold buildings  Certain materials and trades remain under pressure, no

  27. Slide 27: Positioning Berkeley for Today's Operating and Economic Conditions

    Strategic Review Positioning Berkeley for Today’s Operating and Economic Conditions Clear Strategy in Place  Realise forward sales and match production on existing sites to demand  Add value to existing land holdings and pipeline sites  Protect operating margins as they return to historical norms

  28. Slide 28: Guidance

    Strategic Review Guidance - On target to deliver pre-tax earnings of at least £1.05 billion for the next two years (FY24 and FY25), likely to be slightly weighted to the first of these Profit Guidance: - Targeting a sustainable 15% pre-tax ROE through the cycle - Operating margins in the historic ra

  29. Slide 29: Questions

    Results Presentation for the year ended 30 April 2023 Questions Rob Perrins Chief Executive Richard Stearn Chief Financial Officer Cranbrook, Turnden 28

  30. Slide 30: Appendices

    Results Presentation for the year ended 30 April 2023 Appendices • Market Fundamentals Horlicks Quarter, Slough • 20-year financial track record • Our Vision 2030: Transforming Tomorrow • Climate Action • Nature Recovery • People and Skills • Sites – Delivery and Land Status • Sites in London (map)

  31. Slide 31: Market Fundamentals – Compounding Under-Supply

    Appendix Market Fundamentals – Compounding Under-Supply National Figure 1: Construction Starts  The recently abolished housing delivery target under the 300,000 60,000 London Starts (Rolling 12 months) England Starts (Rolling 12 months) Government’s last manifesto was 300,000 new homes a 275,000 55

  32. Slide 32: Berkeley's 20-Year Track Record

    Appendix Berkeley’s 20-Year Track Record – through the market cycle AS AT 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 Income Statement* Units Sold 4,043u 3,760u 2,825u 2,723u 3,698u 3,678u 3,802u 3,776u 3,355u 3,742u 3,712u 3,565u 2,544u 2,201u

  33. Slide 33: Climate Action

    Appendix Climate Action Scopes 1 and 2 – Direct Activity Achievement of Scopes 1 and 2 SBT  Met our SBT several years early, with a 76% reduction from 2019 baseline year  Transition away from diesel towards biodiesel HVO  100% UK electricity backed by Renewable Energy Guarantees of Origin (REGOs)

  34. Slide 34: Nature Recovery, People and Skills

    Appendix Nature Recovery, People and Skills Nature Recovery People and skills  In 2017, committed to achieving biodiversity net gain on each site  Gold member of The 5% Club with 10% of our people in ‘earn and learn’  In May 2021, committed to a 10% net gain on all sites, ahead of mandatory roles

  35. Slide 35: Sites - Delivery and Land Status

    Appendix Sites - Delivery and Land Status LARGE LONG-TERM OTHER TOTAL AS AT 30 APRIL 2023 REGENERATION PIPELINE SITES LAND HOLDINGS SITES (approximately) Delivery of Developments: In construction 26 87% 25 58% 51 70% - - Not yet in construction – owned 4 13% 18 42% 22 30% 10 71% Not yet in construct

  36. Slide 36: Sites in London

    Appendix Sites in London Berkeley is delivering 38 sites in London. 27 of these are currently in production 35

  37. Slide 37: Sites outside of London

    Appendix Sites outside of London Berkeley is delivering 35 sites outside London. 24 of these are currently in production 36

  38. Slide 38: Financial Strength and Visibility

    Appendix Financial Strength and Visibility Balance Sheet / Liquidity Land Holdings / Long-Term Pipeline Net Cash Liquidity Land Holdings - Plots Land Holdings – Gross Margin £0.4bn £1.6bn 58,000 £7.6bn Net Assets NAVPS Pipeline - Plots Pipeline – Gross Margin £3.3bn £31.01 14,000 £1.3bn Forward Sale

  39. Slide 39: Berkeley's Awards

    Appendix Berkeley’s Awards In November 2022 we were awarded Housebuilder of the In May 2023, Berkeley was awarded the Long Term Year at the WhatHouse? Awards. Judges commented Business Success award from Management Today. “With placemaking its creed, homes, communities, Judges commended Berkeley’s c

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