Berkeley Group Holdings Plc · LSE:BKG
Berkeley — H1 2012/13 Earnings Presentation
53 slides from Berkeley's earnings presentation, Dec 7, 2012
Slide 1: Interim Results Presentation
Interim Results Presentation Half Year ended 31st October 2012 7th December 2012
Slide 2: Format of presentation
Format of presentation Chairman Tony Pidgley Finance Director Nick Simpkin Managing Director Rob Perrins Questions
Slide 3: Tony Pidgley, Chairman
erkeley "Sv Group TONY PIDGLEY CHAIRMAN < ty StGeorge =" Berkeley Ny Ee
Slide 4: Dividend
Dividend • Interim dividend of 15 pence per share • Payable on 19 April 2013 to shareholders on the register on 22 March 2013
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 − Inventories − Creditors Land holdings
Slide 7: Summary of Performance
Summary of Performance 6 Months to 6 Months to Oct 2012 Oct 2011 Change Profit before tax £142.2m £101.1m +£41.1m +40.7% Operating profit £146.2m £107.1m +£39.1m +36.5% Underlying operating margin 21.3% 18.9% Housebuilding operating margin 19.6% 18.8% EPS – Basic 82.0p 56.7p +25.3p +44.6% Weighted a
Slide 8: Summary of financial position
Summary of financial position Oct 2012 Apr 2012 Change Shareholders’ funds £1,217.5m £1,099.8m + £117.7m +10.7% Closing net debt/(cash) £5.5m £57.9m - £52.4m Capital employed £1,223.0m £1,157.7m + £65.3m +5.6% Land creditors £222.7m £122.8m +£99.9m Net asset value per share 929p 839p 90p +10.7% Shar
Slide 9: Income statement (1)
Income statement (1) 6 Months to 6 Months to Oct 2012 Oct 2011 Change £m £m £m Revenue 686.0 404.9 +281.1 +69.4% Gross profit 201.2 29.3% 116.5 28.8% +84.7 +72.7% Overheads (55.0) 8.0% (40.1) 9.9% -14.9 -37.2% Pre-exceptional operating profit 146.2 21.3% 76.4 18.9% +69.8 +91.4% Exceptional profit on
Slide 10: Income statement (2)
Income statement (2) 6 Months to 6 Months to Oct 2012 Oct 2011 Change £m £m £m Operating profit 146.2 107.1 +39.1 +36.5% Net finance costs (3.4) (4.4) +1.0 Joint ventures (0.6) (1.6) +1.0 Profit before tax 142.2 101.1 +41.1 +40.7% Tax (34.7) 24.4% (27.1) 26.8% -7.6 Profit after tax 107.5 74.0 +33.5
Slide 11: Homes completed and ASP
Homes completed and ASP Units ASP Units ASP 2012/13 HY01 1,927 £335,000 St Edward Homes 34 £272,000 2011/12 HY02 2,059 £300,000 2011/12 HY01 1,506 £254,000 2011/12 Total 3,565 £280,000 St Edward Homes 188 £170,000 2010/11 HY02 1,295 £280,000 2010/11 HY01 1,249 £262,000 2010/11 Total 2,544 £271,000 S
Slide 12: Abridged cash flow
Abridged cash flow 6 Months to 6 Months to Oct 2012 Oct 2011 £m £m Profit before tax 142.2 101.1 Increase in inventory – land (96.0) (115.0) Increase in inventory – build WIP & stock (71.0) (59.2) Transfer from inventory to rental fund (17.9) (23.2) Increase in land creditors 99.9 80.5 Other working
Slide 13: Abridged balance sheet
Abridged balance sheet Oct 2012 Movements Apr 2012 £m £m £m Non-current assets - Intangible assets 17.2 - 17.2 - Investment properties 101.4 17.9 83.5 - Investment in JV’s 44.9 (1.6) 46.5 - Other non-current assets (inc. deferred tax) 44.5 7.9 36.6 Inventories 2,018.7 167.0 1,851.7 Debtors 94.0 (21.
Slide 14: Inventories
Inventories Oct 2012 Movements Apr 2012 £m £m £m Land not under development 402.1 41.6 360.5 Work in progress: Land cost 778.2 54.4 723.8 1,180.3 96.0 1,084.3 Work in progress: Build cost 781.0 82.2 698.8 Completed units 57.4 (11.2) 68.6 2,018.7 167.0 1,851.7
Slide 15: Creditors
Creditors Oct 2012 Movements Apr 2012 £m £m £m Trade creditors and accruals 405.8 58.3 347.5 Deposits and on account receipts 352.2 (70.7) 422.9 Land creditors 222.7 99.9 122.8 Current tax liability 117.0 17.2 99.8 Total creditors 1,097.7 104.7 993.0 Land creditors Land creditors < 12 months 103.7 1
Slide 16: Land holdings
Land holdings Oct 2012 Variance Apr 2012 Owned 25,711 -44 25,755 Contracted 659 +413 246 Agreed - -20 20 Plots * 26,370 +349 26,021 Sales value £9,484m +£495m £8,989m Average selling price £360k +£15k £345k Average plot cost £59k +£4k £55k Land cost % 16.3% +0.3% 16.0% Gross margin £2,757m +£177m £2
Slide 17: Rob Perrins, Managing Director
ROB PERRINS MANAGING DIRECTOR
Slide 18: Introduction
Introduction 1. Performance Highlights 2. Long-Term Strategic Plan 3. Operating Plan • Planning • Delivery of Schemes • The Market • Land Bank • Future Investment • Structure 4. Major Projects 5. Outlook 6. Guidance
Slide 19: Performance Highlights
Performance Highlights PBT up 40.7% to £142.2 million Pre-tax Return on Equity of 24.5% Growth driven by investment strategy 6.9% growth in land bank to £2.76 million £202 million land commitment on 5 sites, including major redevelopment of London Dock (Wapping) c.£82 million added to build work in
Slide 20: Performance Highlights
Performance Highlights Original 5 Year 2010/11 2011/12 H1 2012/13 Operational (Actual) (Actual) (Actual) Impact Target (May 2010) £180m added to PBT ROE 12.5% 15.3% 21.2% 24.5% ahead of target Land £90 million ahead of Bank 10.0% 13.1% 12.0% 6.8% land bank target Growth
Slide 21: Long Term Strategic Plan
Long Term Strategic Plan 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 less t
Slide 22: 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
Slide 23: Operating Plan
Operating Plan Protecting value on the balance sheet Securing planning consents Controlling our assets Intensive management Maintain balance sheet strength Maintain access to credit
Slide 24: Operating Plan: Planning
Operating Plan Planning 85% of land bank is consented Impact of NPPF outside London Key consents at: − One Blackfriars (275 units) − NEC House (650 student beds) − Caterham (160 units) − Eastbury House (46 units)
Slide 25: New Consents
Operating Plan New Consents One Blackfriars (275) NEC House, Acton (650 student beds)
Slide 26: New Consents
Operating Plan New Consents Oaklands Grove Eastbury House Albert Caterham (160) Embankment (46)
Slide 27: Operating Plan
Operating Plan Protecting value on the balance sheet Securing planning consents Controlling our assets Intensive management Maintain balance sheet strength Maintain access to credit
Slide 28: 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
Slide 29: Release of schemes to build
Operating Plan Release of schemes to build London South East Total % Delivery of developments No. Sites No. Sites No. Sites In construction 40 31 71 76% Not yet in construction 14 9 23 24% 54 40 94 100% Planning Detailed consents 42 32 74 79% Resolution to grant 4 - 4 4% Intended for replanning 2 -
Slide 30: London Sites
Operating Plan London Sites London Under Construction 375 Kensington High Street Ey Abell & Cleland House, Westminster Ell Battersea Reach Beaufort Park, Hendon Blackheath Road, Deptford Camberwell Grove Carmelite, Finchley Caspian Wharf, Bow Chelsea Creek / Imperial Wharf Dickens Yard, Ealing Ebury
Slide 31: Land – Out of London Sites
Operating Plan Land – Out of London Sites
Slide 32: 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
Slide 33: Market – London
Operating Plan Market – London Continued resilience in London market Investors consistently represent circa 50% of all sales UK investor market returning and seeing value in residential investment Strong international demand with new markets added Prices stable Taxation of properties over £2 million
Slide 34: Market – Outside London
Operating Plan Market – Outside London Location led Stable volumes Consistent visitor traffic New Buy created 24 sales - unlikely to be significant for Berkeley Dependent on return of feel good factor
Slide 35: 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
Slide 36: Land Bank
Operating Plan Land Bank 26,370 plots Potential gross margin up 6.9% to £2,757 million 5 sites purchased in the period for £202 million On course to achieve revised £3 billion target by April 2014 10,000 additional plots in pipeline (strategic and contracted)
Slide 37: Key sites acquired in the year: London Dock
Operating Plan Key sites acquired in the year London Dock, Wapping • Acquired May 2012 • 15 acre site for over 1,000 new homes. • LB Tower Hamlets Local Planning Authority
Slide 38: 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
Slide 39: 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
Slide 40: 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
Slide 41: Structure
Operating Plan Structure − Chairman − Deputy Chairman Board − 5 Executive Directors − 5 Independent Non Executive Directors Brands − 5 Core Brands Operating Teams − 18 autonomous teams − 1,200 employees (2008: 700) People − 9,000 contractors (2008: 3,500) − 100 apprentices
Slide 42: Major Projects
Major Projects No. Units Estimated year of first Likely period of revenues delivery St George Tower 223 2015 3 years Riverlight 750 2016 7 years Chelsea Creek 739 2012 10 years One Tower Bridge 396 2016 6 years Kensington High Street 529 2015 7 years Ebury Square 71 2016 3 years 190 Strand 206 2017
Slide 43: The Tower at St George Wharf
Major Projects The Tower at St George Wharf
Slide 44: Chelsea Creek
Major Projects Chelsea Creek
Slide 45: Riverlight
Major Projects Riverlight By Berkeley So Group Q2 2012 Q4 2012 St James The Berkeley Group Holdings pl Berkeley i StEdward — StJames a. Nk, St George ” Berkeley ve i
Slide 46: One Tower Bridge
Major Projects One Tower Bridge
Slide 47: Ebury Square
Major Projects Ebury Square Berkeley Designed for life Tey 8 é The Berkeley Group Holdings ple “a StGeorge =" Berkeley 2
Slide 48: Kensington High Street
Major Projects 375 Kensington High Street
Slide 49: Strand
Major Projects 190 Strand Q4 2012 ) geseencoom = Speer BI St Edward Designed for life — ~ Bee stEdward sums 7 cere “Berkeley oe
Slide 50: 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 rental yields Build
Slide 51: Guidance
Guidance Summary Guidance ROE 18.5% over long term £4.34 per share by September 2015 and Earnings no diminution in balance sheet over 3 years ending 30 April 2015 Land Bank £3 billion by April 2014
Slide 52: Conclusion
Conclusion 1. Strong results 2. Clear strategy for a cyclical market 3. Financial strength 4. Sustainable business model 5. Need right environment for growth 6. A good corporate citizen 7. On track to deliver £4.34 per share to shareholders by September 2015 8. We have the people and brand
Slide 53: Questions
Questions Tony Pidgley Chairman Rob Perrins Managing Director Nick Simpkin Finance Director
Berkeley Group Holdings — H1 2012/13 Earnings Presentation on 6ix