Berkeley Group Holdings plc · LSE:BKG
Berkeley — The Berkeley Group Holdings — H1 FY2024 Earnings Presentation
39 slides from Berkeley's earnings presentation, Dec 8, 2023
Slide 1: Interim Results Presentation
THE BERKELEY GROUP HOLDINGS PLC Interim Results Presentation Six Months Ended 31 October 2023 8th December 2023
Slide 2: Rob Perrins, Chief Executive Officer
Rob Perrins Chief Executive Officer Biodiverse landscape at Kidbrooke Village, Greenwich 1
Slide 3: Introduction
Interim Results Presentation For the Six Months Ended 31 October 2023 Rob Perrins INTRODUCTION Chief Executive INTRODUCTION 1 Strong results with £298 million PBT, an operating margin of 19.5% and net cash maintained above £400 million Richard Stearn 2 Profit guidance extended by a year; now targeti
Slide 4: Richard Stearn, Chief Financial Officer
Richard Stearn Chief Financial Officer Clarendon, Haringey 3
Slide 5: 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 4
Slide 6: Summary of Performance
Finance Review Summary of Performance PROFIT BEFORE TAX CHANGE / CHANGE % 31 October 2023 31 October 2022 +£13.2m £298.0m £284.8m (+4.6%) OPERATING MARGIN 31 October 2023 31 October 2022 EPS - BASIC CHANGE / CHANGE % 19.5% 19.5% 31 October 2023 31 October 2022 -2.1p 198.3p 200.4p (-1.0%) PRE-TAX RET
Slide 7: 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 % 31 October 2023 30 April 2023 31 October 2023 30 April 2023 +£81.5m +118p £3,413.8m £3,332.3m (+2.4%) 3,219p 3,101p (+3.8%) CLOSING NET CASH CHANGE / CHANGE
Slide 8: 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 % 31 October 2023 30 April 2023 -£172.0m £1,963.7m £2,135.7m (-8.1%) LAND HOLDINGS PLOTS CHANGE / CHANGE % 31 October 2023 30 April 2023 -1,938 56,107 58,045 (-3.3%)
Slide 9: Homes Completed and Average Selling Price – Group
Finance Review Homes Completed and Average Selling Price (ASP) – Group Homes ASP H1 1,785 H1 £624k 2023/2024 H2 H2 FY FY 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
Slide 10: Homes Completed and ASP – Joint Ventures (St Edward & St William)
Finance Review Homes Completed and ASP – Joint Ventures (St Edward & St William) Homes ASP H1 204 H1 £1,204k St Edward 2023/2024 H2 H2 FY FY H1 251 H1 £1,036k St Edward 2022/2023 H2 343 H2 £744k FY 594 FY £885k H1 395 H1 £558k 2021/2022 H2 477 H2 £658k FY 872 FY £612k H1 145 H1 £782k St Edward & 202
Slide 11: Income Statement
Finance Review Income Statement 31 October 2023 31 October 2022 CHANGE CHANGE SIX MONTHS ENDED £’m £’m £’m % Revenue 1,191.9 1,200.7 -8.8 -0.7% Gross profit 311.6 26.1% 323.8 27.0% -12.2 -3.8% Operating expenses (79.7) 6.7% (89.9) 7.5% +10.2 -11.3% Operating profit 231.9 19.5% 233.9 19.5% -2.0 -0.9%
Slide 12: Abridged Cash Flow
Finance Review Abridged Cash Flow 31 October 2023 31 October 2022 SIX MONTHS ENDED £’m £’m Profit before tax 298.0 284.8 Increase in inventory (68.2) (164.3) Increase in customer deposits 51.8 7.8 Other working capital movements (56.7) 142.8 Net increase in working capital (73.1) (13.7) Net receipts
Slide 13: Abridged Balance Sheet
Finance Review Abridged Balance Sheet 31 October 2023 CHANGE 30 April 2023 AS AT £’m £’m £’m Non–current assets - Intangible assets 17.2 - 17.2 - Investment in joint ventures 217.6 -5.8 223.4 - Deferred tax assets 110.8 -3.7 114.5 - Right-of-use assets 5.0 -0.2 5.2 - Property, plant and equipment 33
Slide 14: Inventories
Finance Review Inventories AS AT 31 October 2023 CHANGE 30 April 2023 £’m £’m £’m Land not under development 912.0 -15.1 927.1 Work in progress: Land cost 1,649.5 -79.7 1,729.2 Total land 2,561.5 -94.8 2,656.3 Work in progress: Build cost 2,661.1 +141.1 2,520.0 Completed units 147.7 +21.9 125.8 Tota
Slide 15: Creditors
Finance Review Creditors 31 October 2023 CHANGE 30 April 2023 Land Creditor Forecast by Year AS AT £’m £’m £’m Trade creditors and 1000 775.8 -70.9 846.7 accruals 800 Provisions for liabilities 208.2 +14.6 193.6 Amounts due (£’m) Deposits and on account 973.1 +51.8 921.3 600 receipts Land creditors
Slide 16: 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
Slide 17: Land Holdings
Finance Review Land Holdings AS AT 31 October 2023 CHANGE 30 April 2023 Owned * 55,619 -2,426 58,045 Contracted 488 +488 - Plots 56,107 -1,938 58,045 Sales value £28.6bn -£0.6bn £29.2bn Average selling price ** £515k +£7k £508k Average plot cost ** £49k -£1k £50k Land cost % 9.5% -0.3% 9.8% Gross ma
Slide 18: Rob Perrins, Chief Executive Officer
Rob Perrins Chief Executive Officer Grand Union, Brent 17
Slide 19: Strategic Review Introduction
Strategic Review Introduction 1. KEY FEATURES OF BERKELEY’S STRATEGY 3. POSITIONING BERKELEY IN TODAY’S ENVIRONMENT 1a. FUNDAMENTALS 3a. OPERATING PRIORITIES 1b. STRATEGIC FOCUS 3b. GUIDANCE AND MEDIUM-TERM BASELINE 2. OPERATING ENVIRONMENT 3c. FLEXIBILITY IN CAPITAL ALLOCATION 2a. MARKET CONDITIONS
Slide 20: Key Features of Berkeley's Strategy – Fundamentals
Key Features of Berkeley’s Strategy Fundamentals Fundamental Key Features 1. Focus on Customer, Place-making and Brand 2. Added value model with unrivalled land holdings (appendix explains added value model and contains maps showing all sites) 3. Efficient execution through expert, experienced, auto
Slide 21: Key Features of Berkeley's Strategy – Strategic Focus
Key Features of Berkeley’s Strategy Strategic Focus Fundamental Key Features Berkeley’s Market 1. Focus on Customer, Place-making and 1. London – Global City Brand 2. Chronic under-supply 2. Added value model with unrivalled land holdings (maps in appendix) 3. Brownfield first (aligned with Governme
Slide 22: Operating Environment
Operating Environment Huntley Wharf, Reading 21
Slide 23: Market Conditions
Operating Environment Market Conditions Strictly Private & Confidential Sales Performance and Build Costs £1.96bn ▪ Base rates likely peaked, with mortgage rates falling Cash due on forward sales at 31 October 2023 below 5% ▪ Net private sales around one third lower than FY23 Forward Sales Definitio
Slide 24: Context for Supply-Side
Operating Environment Context for Supply-Side Strictly Private & Confidential All Businesses Industry Specific Building Planning Regulation (e.g.:) Brexit Fire Safety System RPDT Operating Geopolitical volatility Building Regs Environment Economic uncertainty Second staircases of Recent Years Intere
Slide 25: Planning Environment
Operating Environment Planning Environment Strictly Private & Confidential National London ▪ Announcement of NPPF changes ▪ New Housing Design Standards released in June 2023 sets out weakened incentive for local authorities to more stringent guidance, including on number of dual aspect proactively
Slide 26: Regulation
Operating Environment Regulation Strictly Private & Confidential Three Key Areas Building Fire Safety 1. New Building Safety Regulator’s powers in force. ▪ 4% RPDT in place ▪ Requires all buildings to pass through new ▪ Very concerned over Government’s continuing Gateway 2 from April 2024. Working w
Slide 27: Positioning Berkeley in Today's Environment
Strictly Private & Confidential Positioning Berkeley in Today’s Environment Hareshill Crookham Village, Hampshire 26
Slide 28: Current Operating Priorities
Positioning Berkeley in Today’s Environment Current Operating Priorities Current Operating Priorities ▪ Strategy pillars: o Berkeley’s inherent value rooted in its land holdings o Operating environment impacts the pace of delivery from the land holdings ▪ Current focus given ongoing elevated macro u
Slide 29: Guidance and Medium-term Baseline
Positioning Berkeley in Today’s Environment Guidance and Medium-term Baseline - Deliver at least £1.5 billion of pre-tax profits across FY24 and following two years combined - Operating margins in the historic range (17.5% to 19%) - Net cash to be maintained above £400 million Guidance: - Forward sa
Slide 30: Flexibility in Capital Allocation
Positioning Berkeley in Today’s Environment Flexibility in Capital Allocation Strictly Private & Confidential Current Capital Allocation Priorities 1. Maintain financial strength appropriate to prevailing Flexibility in Capital Allocation market conditions and operating environment 2. Invest in the
Slide 31: Questions
Results Presentation for the six months ended 31 October 2023 Questions Rob Perrins Chief Executive Richard Stearn Chief Financial Officer Camden Goods Yard - CGI 30
Slide 32: Appendices
Results Presentation for the six months ended 31 October 2023 Appendices ▪ Market Fundamentals ▪ Our Vision 2030 ▪ Long-term sustainable added-value model ▪ Sites – Delivery and Land Status ▪ Sites in London (map) ▪ Sites out of London (map) ▪ 20-year financial track record Knights Quarter, Winchest
Slide 33: Market Fundamentals – Compounding Under-Supply
Appendix Market Fundamentals – Compounding Under-Supply National Figure 1: Construction Starts ▪ The recently abolished housing delivery target under the Government’s last manifesto was 300,000 new 300,000 60,000 275,000 homes a year by mid 2020’s. 55,000 250,000 50,000 England Starts (LHS) London S
Slide 34: Our Vision 2030: Transforming Tomorrow
Appendix Our Vision 2030: Transforming Tomorrow Accreditations A- ‘leadership’ rating in 2023 Berkeley won Management Today’s Long Term Business Success award in May 2023. Judges commended Berkeley’s clear focus on ESG Sustainalytics and staff issues, and the measurement of customer satisfaction and
Slide 35: Long-term Sustainable Added-Value Model
Appendix Long-term Sustainable Added-Value Model A bottom-up approach for Berkeley: Long-term sustainable value created ▪ Prevailing business plan reflects individual site through bottom-up (not top-down) strategies and the operating environment added value model, ▪ Growing the business through inve
Slide 36: Sites - Delivery and Land Status
Appendix Sites - Delivery and Land Status LARGE LONG-TERM OTHER TOTAL AS AT 31 OCTOBER 2023 REGENERATION PIPELINE SITES LAND HOLDINGS SITES (approximately) Delivery of Developments: In construction 26 87% 24 59% 50 70% - - Not yet in construction – owned 4 13% 16 39% 20 28% 10 77% Not yet in constru
Slide 37: Sites in London
Appendix Sites in London UNDER CONSTRUCTION FUTURE SITES 1 250 City Road, Islington 1 Aylesham Centre, 2 9 Millbank, Westminster Peckham 3 Beaufort Park, Hendon 2 Borough Triangle 4 Bermondsey Place, Southwark 3 Bow Common 5 Broadway East, Bethnal Green 4 Fulham Berkeley 6 Camden Goods Yard 5 Lea Br
Slide 38: Sites outside of London
Appendix Sites outside of London UNDER CONSTRUCTION FUTURE SITES 1 Abbey Barn Park, High Wycombe 1 Bath 2 Berkeley Place, Farnham Royal 2 Bracknell 3 Broadacres, Southwater 3 Brighton 4 Eden Grove, Staines 4 Effingham 5 Farmstead, Cranbrook 5 Guildford 6 Hertford Berkeley 6 Foal Hurst Green, Paddock
Slide 39: Berkeley's 20-Year Track Record
Appendix Berkeley’s 20-Year Track Record – through the market cycle HY AS AT 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2024 Income Statement* Units Sold 1,785u 4,043u 3,760u 2,825u 2,723u 3,698u 3,678u 3,802u 3,776u 3,355u 3,742u 3,712u 3,565u 2,5
The Berkeley Group Holdings — H1 FY2024 Earnings Presentation on 6ix