Berkeley Group Holdings Plc · LSE:BKG
Berkeley — H1 2013/14 Earnings Presentation
33 slides from Berkeley's earnings presentation, Dec 6, 2013
Slide 1: Interim Results Presentation
Interim Results Presentation Half Year ended 31st October 2013 6th December 2013
Slide 2: Format of presentation
Format of presentation Chairman Tony Pidgley CBE Finance Director Nick Simpkin Managing Director Rob Perrins Questions
Slide 3: Tony Pidgley CBE, Chairman
TONY PIDGLEY CBE CHAIRMAN eley Group Holdings ple Berkeley 3) StEdward StJames «tk, St George
Slide 4: Dividend
Dividend Record Payment Amount Amount Date Date (pence) (£’million) First dividend (paid) 22 March 2013 19 April 2013 15 20 Second dividend (paid) 30 August 2013 27 September 2013 59 77 Third dividend (proposed) 20 December 2013 17 January 2014 90 118 164 215
Slide 5: Nick Simpkin, Finance Director
NICK SIMPKIN FINANCE DIRECTOR
Slide 6: Review of Results
Review of Results • Summary of performance • Summary of financial position • Income statement • Homes completed and ASP • Abridged cash flow • Abridged balance sheet − Investment properties − Inventories − Creditors • Land holdings
Slide 7: Summary of Performance
Summary of Performance 6 months ended 31 Oct 2013 31 Oct 2012 Change (£) Change (%) Operating Profit £169.6m £146.2m +£23.4m +16.0% Operating Margin 20.7% 21.3% Profit before tax £169.5m £142.2m +£27.3m +19.2% EPS – Basic 100.0p 82.0p +18.0p +22.0% Return on equity 25.0% 24.5%
Slide 8: Summary of financial position
Summary of financial position October 2013 April 2013 Change (£) Change (%) Shareholders’ funds £1,391.4m £1,322.4m +£69.0m +5.2% Closing net debt/(cash) (£78.9m) (£44.7m) -£34.2m Capital Employed £1,312.5m £1,277.7m +£34.8m +2.7% Net asset value per share 1,062p 1,009p +53p +5.3% Shares in issue 13
Slide 9: Income statement
Income statement 6 months ended Oct 2013 Oct 2012 Change Change £m £m £m % Revenue 821.0 686.0 +135.0 +19.7% Gross profit 240.3 29.3% 201.2 29.3% +39.1 +19.4% Operating expenses (70.7) 8.6% (55.0) 8.0% -15.7 -28.5% Operating profit 169.6 20.7% 146.2 21.3% +23.4 +16.0% Net finance costs (3.0) (3.4) +
Slide 10: Homes completed and ASP
Homes completed and ASP Units ASP Units ASP 2013/14 HY01 2,294 £350,000 St Edward Homes 72 £810,000 2012/13 HY02 1,785 £376,000 3,712 £354,000 2012/13 HY01 1,927 £335,000 St Edward Homes 66 £277,000 2011/12 HY02 1,506 £254,000 3,565 £280,000 2011/12 HY01 2,059 £300,000 St Edward Homes 188 £170,000 2
Slide 11: Abridged cash flow
Abridged cash flow 6 months ended October 2013 October 2012 £m £m Profit before tax 169.5 142.2 - Increase in inventory – land (193.7) (96.0) - Increase in inventory – build WIP & stock (116.1) (71.0) - Transfer from inventory to rental fund - (17.9) - Increase in land creditors 43.4 99.9 - Other wo
Slide 12: Abridged balance sheet
Abridged balance sheet 6 months ended October 2013 Movements April 2013 £m £m £m Non current assets - Intangible assets 17.2 - 17.2 - Investment in JVs 52.3 8.2 44.1 - Rental fund 25.0 (77.3) 102.3 - Deferred tax assets 68.2 11.5 56.7 - Property, plant and equipment 20.3 4.0 16.3 Inventories 2,376.5
Slide 13: Inventories
Inventories October 2013 Movements April 2013 £m £m £m Land not under development 553.1 243.1 310.0 Work in progress: Land cost 811.3 (49.4) 860.7 1,364.4 193.7 1,170.7 Work in progress: Build cost 968.9 117.9 851.0 Completed units 43.2 (1.8) 45.0 2,376.5 309.8 2,066.7
Slide 14: Creditors
Creditors Oct 2013 Movements Apr 2013 £m £m £m Trade creditors and accruals 426.2 11.8 414.4 Provision for liabilities 40.1 11.1 29.0 Deposits and on account receipts 608.8 182.7 426.1 Land creditors 224.3 43.4 180.9 Current tax liability 104.0 2.0 102.0 Total creditors 1,403.4 251.0 1,152.4 Land Cr
Slide 15: Land holdings
Land holdings Oct 2013 Variance April 2013 Owned 25,060 +5 25,055 Contracted - -629 629 Plots* 25,060 -624 25,684 Sales value £10,261m +£554m £9,707m Average selling price £409k +£31k £378k Average plot cost £72k +£10k £62k Land cost % 17.5% +1.0% 16.5% Gross margin £3,047m +£195m £2,852m GM% 29.7%
Slide 16: Rob Perrins, Managing Director
ROB PERRINS MANAGING DIRECTOR
Slide 17: Introduction
Introduction 1. Performance Highlights 2. Long Term Strategic Plan 3. Operating Plan 4. The Market 5. Land and Build Investment 6. Joint Ventures 7. Outlook 8. Guidance 9. Conclusion
Slide 18: 1. Performance Highlights
1. Performance Highlights • PBT up 19.2% to £169.5 million • Pre-tax Return on Equity of 25.0% • 6.8% growth in gross margin in land holdings to £3,047 million • 6 sites acquired for £278 million • c. 4% of value added to land holdings in optimisation • Forward sales up 20.2% to £1,745.8 million • 8
Slide 19: 2. Long Term Strategic Plan
2. Long Term Strategic Plan Milestone Committed Outstanding Total £/share £’m £/share £’m £/share £’m By 30th September 2015 1.64 214.8 2.70 353.7 4.34 568.5 By 30th September 2018 - - 4.33 567.2 4.33 567.2 By 30th September 2021 ___ ___ 4.33 567.2 4.33 567.2 1.64 214.8 11.36 1,488.1 13.00 1,702.9
Slide 20: 3. Operating Plan
3. Operating Plan 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 • Add value to the land holdings 2. To be sustainable, for the long-term • Invest at the right point in the c
Slide 21: 4. The Market
4. The Market Sales • London is a World City • There is a shortfall of good quality new housing • Interest rates have remained low • Investors comprise 50% of sales • Non-resident buyers comprise 30% of sales Land and Planning • £278 million invested in the period – there are opportunities in the ma
Slide 22: 5. Land and Build Investment: Inventories
5. Land and Build Investment Inventories Inventories £2,376m £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 31 Oct 13 Land not under development WIP - land WIP - build Completed stock
Slide 23: 5. Land and Build Investment: Delivery
5. Land and Build Investment Delivery London South Total Delivery of Developments: In construction No. sites 40 31 71 Not yet in construction No. sites 11 3 14 Total developments No. sites 51 34 85 Of those not yet in construction Intended for re-planning No. sites 1 - 1 Resolution to grant No. site
Slide 24: Sites in London
5. Land and Build Investment Sites in London
Slide 25: Sites in the South
5. Land and Build Investment Sites in the South
Slide 26: Land Holdings
5. 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: Land Pipeline
5. Land and Build Investment Land Pipeline
Slide 28: Land at Southall
5. Land and Build Investment Southall Land at Southall • Acquired from National Grid • 80 acres • Outline planning for 3,750 homes and 800,000 sqft of commercial space
Slide 29: 6. Joint Ventures
6. Joint Ventures St Edward • Joint venture with Prudential • Three schemes in construction (Stanmore, 375 Kensington High Street and 190 Strand) • 375 Kensington High Street delivering a year earlier than previously guided • Return on Equity of over 20% targeted St Katharine • Joint venture with We
Slide 30: 7. Outlook
7. Outlook Positive Signs Key Risks • Strong market • Eurozone and World events undermining confidence • Strong underlying demand in best locations • Tax changes • Homes are affordable when customers have equity • Currency fluctuations deterring overseas buyers • Attractive rental yields • Build cos
Slide 31: 8. Guidance
8. Guidance Performance Guidance 90p per share declared Regular dividends up to September Dividend 164p per share cumulative 2015 Achieved target of £3 billion Land Bank Maintain at £3 billion estimated gross margin Return on Equity of 20% to 25% Long term Return on Equity of 20% Performance Operati
Slide 32: 9. Conclusion
9. Conclusion Hurdle Underpin in place September 2015 Sufficient forward sales provides visibility over balance of dividends September 2018 Land bank with planning in place to underpin the next dividend September 2021 Balance of land owned but not currently under development underpins the final retu
Slide 33: Questions
Questions Tony Pidgley CBE Chairman Rob Perrins Managing Director Nick Simpkin Finance Director
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