Berkeley Group Holdings Plc · LSE:BKG

Berkeley — FY2013 Earnings Presentation

49 slides from Berkeley's earnings presentation, Jun 19, 2013

  1. Slide 1: Preliminary Results Presentation

    Preliminary Results Presentation Full Year ended 30th April 2013 19th June 2013

  2. Slide 2: Format of presentation

    Format of presentation Chairman Tony Pidgley CBE Finance Director Nick Simpkin Managing Director Rob Perrins Questions

  3. Slide 3: Tony Pidgley CBE, Chairman

    TONY PIDGLEY CBE CHAIRMAN Berkeley 3 StEdward StJames NE St George i

  4. Slide 4: Nick Simpkin, Finance Director

    NICK SIMPKIN FINANCE DIRECTOR

  5. Slide 5: Review of Results

    Review of Results  Summary of performance  Summary of financial position  Potential share dilution  Income statement  Homes completed and ASP  Abridged cash flow  Abridged balance sheet − Investment properties − Inventories − Creditors  Land holdings

  6. Slide 6: Summary of Performance

    Summary of Performance Year to Year to Apr 2013 Apr 2012 Change Profit before tax £270.7m £214.8m +£55.9m +26.0% Pre-exceptional operating profit £280.1m £195.7m +£84.4m +43.1% Pre-exceptional operating margin 20.4% 18.8% EPS – Basic 160.0p 121.0p +39.0p 32.2% Weighted ave. no. of shares 131.0m 131.

  7. Slide 7: Summary of financial position

    Summary of financial position April 2013 April 2012 Change in Year Shareholders’ funds £1,322.4m £1,099.8m +£222.6m +20.2% Closing net debt/(cash) (£44.7m) £57.9m -£102.6m Capital Employed £1,277.7m £1,157.7m +£120.0m +10.4% Net asset value per share 1,009.1p 839.3p +169.8p +20.2% Shares in issue 13

  8. Slide 8: Potential Share Dilution

    Potential Share Dilution No. (million) Exercise price* Vesting date Shares in issue 131.0 2009A LTIP 4.4 £2.85 Jan ’14 2009B LTIP 6.1 £8.25 Apr ’15 / Apr ’16 2011 LTIP 19.6 £12.85 Sep ’21** 161.1 * Dividend adjusted ** Or on completion of return of £1.7bn if earlier

  9. Slide 9: Income statement (1)

    Income statement (1) Year to Year to Apr 2013 Apr 2012 Change £m £m £m Revenue 1,372.6 1,041.1 + 331.5 +31.8 % Gross profit 403.4 29.4% 295.3 28.4% + 108.1 +36.6 % Operating expenses (123.3) 9.0% (99.6) 9.6% -23.7 -23.8 % Pre-exceptional operating profit 280.1 20.4% 195.7 18.8% + 84.4 +43.1 % Except

  10. Slide 10: Income statement (2)

    Income statement (2) Year to Year to Apr 2013 Apr 2012 Change £m £m £m Operating profit 280.1 226.4 +53.7 +23.7% Net finance costs (8.1) (9.4) +1.3 Joint ventures (1.3) (2.2) +0.9 Profit before tax 270.7 214.8 +55.9 +26.0% Tax (61.0) 22.5% (56.7) 26.4% - 4.3 Profit after tax 209.7 158.1 +51.6 +32.6%

  11. Slide 11: Homes completed and ASP

    Homes completed and ASP Units ASP Units ASP 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 2010/11 HY02 1,295 £280,000 2,544 £271,000 2010/11 HY01 1

  12. Slide 12: Abridged cash flow

    Abridged cash flow Year to Year to Apr 2013 Apr 2012 £m £m Profit before tax 270.7 214.8 Increase in inventory – land (86.4) (135.8) Increase in inventory – build WIP & stock (128.6) (102.7) Transfer from inventory to rental fund (29.5) (55.9) Increase in land creditors 58.1 56.4 Other working capit

  13. Slide 13: Abridged balance sheet

    Abridged balance sheet Apr 2013 Movements Apr 2012 £m £m £m Non-current assets - Intangible assets 17.2 - 17.2 - Investment properties 26.5 (57.0) 83.5 - Investment in JV’s 44.1 (2.4) 46.5 - Deferred tax assets 56.7 31.7 25.0 - Property, plant & equipment 16.3 4.7 11.6 Assets held for sale 75.8 75.8

  14. Slide 14: Investment properties

    Investment properties Assets held for Investment sale Properties No. properties 534 195 £m £m Cost 75.8 26.5 Market value 105.4 36.8

  15. Slide 15: Inventories

    Inventories April 2013 April 2012 Movements £m £m In the year £m Land not under development 310.0 360.5 (50.5) Work in progress: Land cost 860.7 723.8 136.9 1,170.7 1,084.3 86.4 Work in progress: Build cost 851.0 698.8 152.2 Completed units 45.0 68.6 (23.6) 2,066.7 1,851.7 215.0

  16. Slide 16: Creditors

    Creditors Apr 2013 Movements Apr 2012 £m £m £m Trade creditors and accruals 414.4 66.9 347.5 Provisions for liabilities 29.0 29.0 - Deposits and on account receipts 426.1 3.2 422.9 Land creditors 180.9 58.1 122.8 Current tax liability 102.0 2.2 99.8 Total creditors 1,152.4 159.4 993.0 Land creditors

  17. Slide 17: Land holdings

    Land holdings Apr 2013 Variance Apr 2012 Owned 25,055 - 700 25,755 Contracted 629 + 383 246 Agreed - - 20 20 Plots * 25,684 - 337 26,021 Sales value £9,707m + £718m £8,989m Average selling price £378k + £33k £345k Average plot cost £62k + £7k £55k Land cost % 16.5% + 0.5% 16.0% Gross margin £2,852m

  18. Slide 18: Rob Perrins, Managing Director

    ROB PERRINS MANAGING DIRECTOR

  19. Slide 19: Introduction

    Introduction 1. Performance Highlights 2. Operating Performance 3. Strategic Objectives 4. Operating Plan  Planning  Delivery of Schemes  The Market  Land Bank  Future Investment  Structure 5. Outlook

  20. Slide 20: Performance Highlights

    Performance Highlights  PBT up 26.0% to £270.7 million  Pre-tax Return on Equity of 22.4%  10.5% growth in land bank to £2,852 million  10 sites acquired for £315 million  c.7% of land bank value added in optimisation  Forward sales up 37.6% to £1,452.8 million  87% of the land bank has a pla

  21. Slide 21: Operating Performance

    Operating Performance 25% Return on Equity Land Bank Growth 22.4% 21.2% 20% 8.9% 7.7% 15.3% 15% 1.8% 13.1% 12.0% Out Performance 10.5% Original Target 5.1% 10% 4.0% 2.5% 13.5% 13.5% 13.5% 5% 8.0% 8.0% 8.0% 0% 2010/11 2011/12 2012/13 2010/11 2011/12 2012/13

  22. Slide 22: Long Term Strategic Plan (1)

    Long Term Strategic Plan (1) 1. To return £13 per share by the following milestones: Returns No later than: £’ m 30 September 2015 568.5 30 September 2018 567.2 30 September 2021 567.2 1,702.9 Amendments to the scheme, approved in September 2012, require: - Total dividends by 30 September 2021 no le

  23. Slide 23: Long Term Strategic Plan (2)

    Long Term Strategic Plan (2) Milestone Committed Outstanding Total £/share £’m £/share £’m £/share £’m By 30th September 2015 0.74 96.9 3.60 471.6 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 0.74 96.9 12.26 1,606.0 13.00 1,702.9

  24. Slide 24: Operating Plan

    Operating Plan  Protect the value in the balance sheet  Control release of schemes to build  Match operational risk with the market conditions  Add value to the land bank  Invest in the right point in the cycle  People, structure and natural size

  25. Slide 25: Operating Plan: Protecting value on the balance sheet

    Operating Plan Protecting value on the balance sheet  Securing planning consents  Controlling our assets  Intensive management  Maintain balance sheet strength  Access to credit

  26. Slide 26: Operating Plan: Planning

    Operating Plan Planning  17 new consents in the year − 10 in London − 7 outside London  87% of land bank is consented  CIL has disproportionate impact on regeneration sites  Impact of NPPF outside London  Key consents at: − NEC House (650 student beds) − The Avenue, Finchley (64 units) − One Bl

  27. Slide 27: The Avenue, Finchley (64) (650 student beds)

    The Avenue, Finchley (64) (650 student beds)

  28. Slide 28: Planning: New consents

    Planning New consents Berkeley ¥ Group One Blackfriars (270) a8 StGeorge Royal Wells Park (243) Berkeley Designed for life ‘The Berkeley Group Holdings plc Berkeley fy StEdward StJames ite, StGeorge

  29. Slide 29: Operating Plan: Protecting value on the balance sheet

    Operating Plan Protecting value on the balance sheet  Securing planning consents  Controlling our assets  Intensive management  Maintain balance sheet strength  Maintain low financial risk

  30. Slide 30: Operating Plan

    Operating Plan  Protect the value in the balance sheet  Control release of schemes to build  Match operational risk with the market conditions  Add value to the land bank  Invest in the right point in the cycle  People, structure and natural size

  31. Slide 31: Operating Plan: Release of schemes to build

    Operating Plan Release of schemes to build London South Total Delivery of Developments: In construction No. sites 41 32 73 Not yet in construction No. sites 9 5 14 Total Developments No. sites 50 37 87 Planning: Detailed consent No. sites 42 32 74 Resolution to grant No. sites - - - Intended for rep

  32. Slide 32: Under Construction and Future Sites in London

    Under Construction and Future Sites in London London London Under Construction 190 strana BB 375 Kensington High st (including Homebase and Telereal) Ey Abell & Cleland House, Westminster + Battersea Reach Beaufort Park, Hendon Carmelite, Finchley Ei Caspian Whert, Bow Chambers Whart, Southwark = Ch

  33. Slide 33: Under Construction and Future Sites in the South

    Under Construction and Future Sites in the South Berkeley Group The South Out of London Under Construction Amersham Holborough, Snodland Ascot (2 sites) Horsham Beaconsfield (2 sites) Maidenhead Cambridge North Bersted Canterbury Oxshot! WARWICKSHIRE Caterham Reading Cheltenham (2 sites) Sevenoaks C

  34. Slide 34: Operating Plan

    Operating Plan  Protect the value in the balance sheet  Control release of schemes to build  Match operational risk with the market conditions  Add value to the land bank  Invest in the right point in the cycle  People, structure and natural size

  35. Slide 35: Operating Plan: Market - London

    Operating Plan Market - London  Continued resilience of London market  Investors represent circa 45% of all sales  UK investor market returning and seeing value in residential investment  General undersupply of new homes in best locations

  36. Slide 36: Operating Plan: Market – Outside of London

    Operating Plan Market – Outside of London  Location led  Stable volumes  Consistent visitor traffic  Help to Buy generated 31 sales from 297 registrations outside London in last two months  Dependent on return of feel good factor

  37. Slide 37: Operating Plan

    Operating Plan  Protect the value in the balance sheet  Control release of schemes to build  Match operational risk with the market conditions  Add value to the land bank  Invest in the right point in the cycle  People, structure and natural size

  38. Slide 38: Operating Plan: Land Bank

    Operating Plan Land Bank  25,684 plots  Potential gross margin up 10.5% to £2,852 million  10 sites purchased in year for £315 million  5 sites acquired in second half for £97 million  On course to achieve revised £3 billion target by April 2014  Targeting 5% growth in value in the land bank i

  39. Slide 39: South Quay Plaza

    South Quay Plaza • Acquired April 2013 • 1.9 acres • Two high rise towers

  40. Slide 40: High Road, Finchley

    High Road, Finchley • Acquired December 2012 • 2.3 acres • Planning submission May 2013

  41. Slide 41: Latchmere

    Latchmere • Acquired March 2013 • 8.9 acres • Planning submission September 2013

  42. Slide 42: St Josephs, Mill Hill

    St Josephs, Mill Hill • Acquired November 2012 • 7 acres • Grade II listed former convent • Existing planning consent under review

  43. Slide 43: Operating Plan

    Operating Plan  Protect the value in the balance sheet  Control release of schemes to build  Match operational risk with the market conditions  Add value to the land bank  Invest in the right point in the cycle  People, structure and natural size

  44. Slide 44: Operating Plan: Investment Strategy

    Operating Plan Investment Strategy Criteria Land - Counter cyclical strategy - Acquire where Berkeley can add value - Achieve hurdle rates on absolute return and Return on Capital - Acquire to a backstop Build - Match with forward sales - Balanced with earnings and dividend policy - Potential to bri

  45. Slide 45: Operating Plan

    Operating Plan  Protect the value in the balance sheet  Control release of schemes to build  Match operational risk with the market conditions  Add value to the land bank  Invest in the right point in the cycle  People, structure and natural size

  46. Slide 46: Operating Plan: Structure

    Operating Plan Structure − Chairman − Deputy Chairman Board − 5 Executive Directors − 5 Independent Non Executive Directors Brands − 5 Core Brands Operating Teams − 20 autonomous teams − 1,400 employees (2008: 700) People − 9,000 contractors (2008: 3,500) − 7,000 in the direct supply chain − 600 tra

  47. Slide 47: Outlook

    Outlook Positive Signs Key Risks  Stable market indicates it is in balance  Eurozone and World events undermining confidence  Strong underlying demand in best locations  Tax changes  Homes are affordable when customers  Currency fluctuations deterring have equity overseas buyers  Strong renta

  48. Slide 48: Conclusion

    Conclusion 1. Strong results 2. Cash generative and announced a dividend of 59 pence per share 3. Clear strategy for a cyclical market 4. Financial strength 5. Sustainable business model 6. On track to deliver £568 million to shareholders by September 2015 7. The land bank is in place with planning

  49. Slide 49: Questions

    Questions Tony Pidgley CBE Chairman Rob Perrins Managing Director Nick Simpkin Finance Director

Berkeley Group Holdings — FY2013 Earnings Presentation on 6ix