Slide 1: Preliminary Results Presentation
Preliminary Results Presentation Full Year ended 30th April 2012 29th June 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
TONY PIDGLEY CHAIRMAN The Berkeley — Berkeley BB St Edward St
Slide 4: Key Messages
Key Messages 1. Strong trading performance 2. Further land bank investment 3. Strong balance sheet 4. Clear strategy 5. Well positioned to deliver
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 Year to Year to Apr 2012 Apr 2011 Change Profit before tax £214.8m £136.2m + £78.6m + 57.7% Pre-exceptional operating profit £195.7m £135.7m + £60.0m + 44.2% Pre-exceptional operating margin 18.8% 18.3% EPS – Basic 121.0p 72.1p + 48.9p + 67.8% Weighted ave. no. of shares 131.0
Slide 8: Summary of financial position
Summary of financial position Apr 2012 Apr 2011 Change Shareholders’ funds £1,099.8m £929.4m + £170.4m + 18.3% Closing net debt/(cash) £57.9m (£42.0m) - £99.9m Capital employed £1,157.7m £887.4m + £270.3m + 30.5% Net asset value per share 839.3p 709.2p 130.1p + 18.3% Shares in issue 131.0m 131.0m -
Slide 9: Bank facilities
Bank facilities Currently Previously £m Term £m Term Facility No.1 250 2017 250 2016 Facility No.2 275 2017 200 2013 525 450 St Edward 60 2016 60 2016
Slide 10: Income statement (1)
Income statement (1) Year to Year to Apr 2012 Apr 2011 Change £m £m £m Revenue 1,041.1 742.6 + 298.5 + 40.2% Gross profit 295.3 28.4% 209.1 28.2% + 86.2 + 41.2% Overheads (99.6) 9.6% (73.4) 9.9% - 26.1 + 35.6% Pre-exceptional operating profit 195.7 18.8% 135.7 18.3% + 60.1 + 44.3% Exceptional profit
Slide 11: Income statement (2)
Income statement (2) Year to Year to Apr 2012 Apr 2011 Change £m £m £m Operating profit 226.4 135.7 + 90.7 +66.8% Net finance costs (9.4) (1.5) - 7.9 Joint ventures (2.2) 2.1 - 4.3 Profit before tax 214.8 136.2 + 78.6 + 57.7% Tax (56.7) 26.4% (41.8) 30.7% - 14.9 Profit after tax 158.1 94.4 + 63.7 +
Slide 12: Homes completed and ASP
Homes completed and ASP Units ASP Units ASP 2011/12 HY01 1,506 £254,000 3,565 £280,000 2011/12 HY02 2,059 £300,000 St Edward Homes 188 £170,000 2010/11 HY02 1,295 £280,000 2,544 £271,000 2010/11 HY01 1,249 £262,000 St Edward Homes 164 £251,000 2009/10 HY02 1,287 £238,000 2,201 £263,000 2009/10 HY01
Slide 13: Abridged cash flow
Abridged cash flow Year to Year to Apr 2012 Apr 2011 £m £m Profit before tax 214.8 136.2 Increase in inventory – land (135.8) (207.4) Increase in inventory – build WIP & stock (102.7) (151.7) Transfer from inventory to rental fund (55.9) (28.7) Increase in land creditors 56.4 2.6 Other working capit
Slide 14: Abridged balance sheet
Abridged balance sheet Apr 2012 Movements Apr 2011 £m £m £m Non-current assets - Intangible assets 17.2 - 17.2 - Investment properties 83.5 54.9 28.6 - Investment in JV’s 46.5 7.8 38.7 - Other non-current assets 36.6 7.1 29.5 Inventories 1,851.7 238.5 1,613.2 Debtors 115.2 18.5 96.7 Creditors (993.0
Slide 15: Investment properties
Investment properties 30 April 30 April 2012 2011 No. No. Original number of properties committed to fund 896 896 Number of properties marketed for sale (94) - Total number of properties to be transferred 802 896 Of which: - Number of properties transferred 612 215 - Number of properties still to be
Slide 16: Inventories
Inventories Apr 2012 Movements Apr 2011 £m £m £m Land not under development 360.5 43.9 316.6 Work in progress: Land cost 723.8 91.9 631.9 1,084.3 135.8 948.5 Work in progress: Build cost 698.8 83.1 615.7 Completed units 68.6 19.6 49.0 1,851.7 238.5 1,613.2
Slide 17: Creditors
Creditors Apr 2012 Movements Apr 2011 £m £m £m Trade creditors and accruals 347.5 47.7 299.8 Deposits and on account receipts 422.9 (49.1) 472.0 Land creditors 122.8 56.4 66.4 Current tax liability 99.8 5.9 93.9 Total creditors 993.0 60.9 932.1 Land creditors Land creditors < 12 months 92.4 77.0 15.
Slide 18: Land holdings
Land holdings Apr 2012 Variance Apr 2011 Owned 25,755 - 1,110 26,865 Contracted 246 + 99 147 Agreed 20 +6 14 Plots * 26,021 - 1,005 27,026 Sales value £8,989m + £854 £8,135m Average selling price £345k + £44k £301k Average plot cost £55k + £11k £44k Land cost % 16.0% + 1.4% 14.6% Gross margin £2,580
Slide 19: Rob Perrins, Managing Director
ROB PERRINS MANAGING DIRECTOR
Slide 20: Introduction
Introduction 1. Performance Highlights 2. Strategic Objectives 3. Operating Plan • Planning • Delivery of Schemes • The Market • Land Bank • Future Investment • Structure 4. Major Projects 5. Outlook 6. Guidance
Slide 21: Performance Highlights
Performance Highlights • PBT up 57.7% to £214.8 million • 21.2% ROE • 12% growth in land bank to £2,580 million • 20 sites acquired for £311 million • 6% of land bank value added in optimisation • Forward sales up 30% to £1,056 million • Circa 84% of the land bank has a planning consent • £525 milli
Slide 22: Performance Highlights
Performance Highlights Original 5 Year 2010/11 2011/12 Financial Value Operational added by Target (Actual) (Actual) outperformance (May 2010) Cumulative £110 ROE 12.5% 15.3% 21.2% million of incremental PBT Additional £120 Land Bank 10.0% 13.1% 12.0% million of future land Growth bank value
Slide 23: Strategic Objectives
Strategic Objectives 1. To return £13 per share by the following milestones: £/Share £’million 30th September 2015 4.34 568.5 30th September 2018 4.33 567.2 30th September 2021 4.33 567.2 13.00 1,702.9 2. To create a long term, sustainable business beyond 2020
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
Slide 25: 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
Slide 26: Operating Plan: Planning
Operating Plan Planning • 84% of land bank is consented • Impact of Mayoral CIL • Impact of NPPF outside London • Key consents at: − Fulham Reach (744 units) − Chelsea Creek (489 units additional) − Abell & Cleland (275 units) − Kew Bridge (144 units additional)
Slide 27: Planning Consents (1)
Operating Plan Planning Consents (1) Fulham Reach (744) Kew Bridge (144)
Slide 28: Planning Consents (2)
Operating Plan Planning Consents (2) Chelsea Creek (889) Abell & Cleland, Westminster (275)
Slide 29: 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
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
Slide 31: Release of schemes to build
Operating Plan Release of schemes to build London South Total East Delivery of Developments: In construction No. sites 40 29 69 Not in construction No. sites 14 18 32 Total Developments No. sites 54 47 101 Planning: Detailed consent No. sites 45 31 76 Resolution to grant No. sites - 6 6 Intended for
Slide 32: London Schemes
Operating Plan London Schemes
Slide 33: London / Out of London Schemes
Operating Plan London Out of London Schemes Schemes
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
Slide 35: Market - London
Operating Plan Market - London • Strong demand for residential property in the best locations especially Zones 1 and 2 (transport, schools, infrastructure, amenities) • Circa 40% international buyers • Strong rental demand underpinning yields – investors account for circa 50% of all sales • Limited
Slide 36: Market - Outside London
Operating Plan Market - Outside London • Location led (creating primary and secondary market) • Volumes normalised and running at circa 60% of 2007 levels • Visitor traffic consistent with 2010/11 • Mortgage availability (deposits) is a constraint • FirstBuy has generated 60 sales • NewBuy just laun
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
Slide 38: Land Bank
Operating Plan Land Bank • 26,021 plots • Potential gross margin up 12% to £2,580 million • 20 sites purchased in year for £311 million • 12 sites acquired in second half for £133 million • Targeting 10% growth in value in the land bank in 2012/13 through new land and optimisation • 10,000 additiona
Slide 39: Key Sites Acquired in the Year (1)
Operating Plan Key Sites Acquired in the Year (1) One Blackfriars • Acquired December 2011 • 50 storey tower • Revised application submitted on 31st May 2012
Slide 40: Key Sites Acquired in the Year (2)
Operating Plan Key Sites Acquired in the Year (2) Albert Embankment • Hampton House and Eastbury House • Eastbury House application for new 28 storey development, designed by Rogers Stirk Harbour + Partners • Hampton House has consent for 242 units, 167 bed hotel, circa 5,000 sqft of commercial, des
Slide 41: Key Sites Acquired in the Year (3)
Operating Plan Key Sites Acquired in the Year (3) City Road Forum, EC1 • 5 Acre site • Consent for 720 units, 125 bed hotel, 160 student beds, 128,000 sq ft commercial • Tenanted until 2015
Slide 42: Key Sites Acquired in the Year (4)
Operating Plan Key Sites Acquired in the Year (4) Kent & Sussex Hospital, Royal Tunbridge Wells • 11.3 acres • Former hospital site • Acquired March 2012
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
Slide 44: 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 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
Slide 46: Structure
Operating Plan Structure − Chairman − Deputy Chairman Board − 5 Executive Directors − 6 Independent Non Executive Directors Brands − 5 Core Brands − 18 autonomous teams Operating Teams − Three new teams created (Eastern, Three Valleys, Rental Fund) − 1,200 employees (2008: 700) People − 9,000 contra
Slide 47: Major Projects
Major Projects Current estimated Likely No. year of Period Units st 1 revenues of delivery St George Tower 223 2015 3 years Riverlight 750 2016 7 years Chelsea Creek 794 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*
Slide 48: The Tower at St George Wharf
Major Projects The Tower at St George Wharf
Slide 49: Chelsea Creek
Major Projects Chelsea Creek Q2 2012
Slide 50: Riverlight
Major Projects Riverlight % Group Q2 2012 St James Designed for life Bf Berkeley ~—— | Berkeley StEdvard
Slide 51: One Tower Bridge
Major Projects One Tower Bridge
Slide 52: Ebury Square
Major Projects Ebury Square erkeley roup Q2 2012 CGI of Completed Site- Berkeley Designed for The Berkeley Group Holdings ple Berkeley i StEdward St James? ite StGeorge = Berkeley 2 a *
Slide 53: 375 Kensington High Street
Major Projects 375 Kensington High Street
Slide 54: The Strand
Major Projects The Strand = ; Q2 2012 - CGI of Completed Site fi ay 0 Group | —7 ee ~ =e tes EE St Edward Designed for life
Slide 55: Outlook
Outlook Positives • Demand vs Supply fundamentals are strong • London and South East economy is resilient • London remains World City • Strong rental yields • Government initiatives likely to stimulate demand Risks • Eurozone • Economic uncertainty • Political / Tax risk
Slide 56: Operating Guidance
Operating Guidance Previous Future 18.5% ROE over long ROE 18.5% ROE over long term term Deliver £4.34 per share by September 2015 and retain Double earnings to at the balance sheet at least at Earnings least £220 million by April the current size. Earnings 2013 likely to be “lumpy” depending on del
Slide 57: Questions
Questions Tony Pidgley Chairman Rob Perrins Managing Director Nick Simpkin Finance Director