Berkeley Group Holdings plc · LSE:BKG
Berkeley — The Berkeley Group Holdings — H1 2021 Earnings Presentation
30 slides from Berkeley's earnings presentation, Dec 4, 2020
Slide 1: Interim Results Presentation, six months ended 31 October 2020
The Berkeley Group Holdings plc Interim Results Presentation Six months ended 31st October 2020 4th December 2020
Slide 2: Interim Results Presentation agenda
Interim Results Presentation for the six months ended 31 October 2020 Rob Perrins Chief Executive Introduction Introduction 1. Covid-19 and the future operating environment Richard Stearn Finance Director 2. Resilient operating performance underpinned by Berkeley’s unique long-term operating model F
Slide 3: Richard Stearn, Finance Director
Richard Stearn Finance Director Kidbrooke Village
Slide 4: Finance Review Introduction
Finance Review Introduction - Summary of Performance - Summary of Financial Position - Homes Completed and Average Selling Price - Income Statement - Abridged Cash Flow - Abridged Balance Sheet - Inventories - Creditors - Financing - Land Holdings
Slide 5: Summary of Performance
Finance Review Summary of Performance Six months ended 31 October 2020 31 October 2019 Change Change % Profit before tax £230.8m £276.7m -£45.9m -16.6% EPS – Basic 149.6p 176.4p -26.8p -15.2% EPS – Diluted 146.2p 170.4p -24.2p -14.2% Operating margin 25.4% 27.5% Pre-Tax Return on Equity * 14.9% 18.4
Slide 6: Summary of Financial Position
Finance Review Summary of Financial Position As at As at Change Change % 31 October 2020 30 April 2020 Balance Sheet Shareholders’ funds £3,105.2m £3,101.6m +£3.6m +0.1% Closing net cash (£954.3m) (£1,138.9m) +£184.6m -16.2% Capital employed £2,150.9m £1,962.7m +£188.2m +9.6% Net asset value per sha
Slide 7: Homes Completed and ASP - Group
Finance Review Homes Completed and ASP - Group Homes 3,802 3,678 3,698 2,723 2,058 2,190 2,027 1,744 1,671 1,488 1,389 1,334 1,104 H1 H2 FY H1 H2 FY H1 H2 FY H1 H2 FY H1 2016/17 (restated) 2017/18 (restated) 2018/19 2019/20 2020/21 Average Selling Price £757k £748k £799k £713k £721k £731k £725k £740
Slide 8: Homes Completed and ASP – Joint Ventures
Finance Review Homes Completed and ASP – Joint Ventures (St Edward & St William) Homes 435 372 258 261 191 208 204 212 223 164 145 67 57 H1 H2 FY H1 H2 FY H1 H2 FY H1 H2 FY H1 2016/17 (restated) 2017/18 (restated) 2018/19 2019/20 2020/21 St Edward St Edward St Edward & St William St Edward & St Will
Slide 9: Income Statement
Finance Review Income Statement Six months ended 31 October 2020 31 October 2019 Change Change £m £m £m % Revenue 895.9 930.9 -35.0 -3.8% Gross profit 289.2 32.3% 336.3 36.1% -47.1 -14.0% Operating expenses (61.2) 6.8% (79.9) 8.6% +18.7 +23.4% Operating profit 228.0 25.4% 256.4 27.5% -28.4 -11.1% Ne
Slide 10: Abridged Cash Flow
Finance Review Abridged Cash Flow Six months ended 31 October 2020 31 October 2019 £m £m Profit before tax 230.8 276.7 Increase in inventory (329.4) (158.9) Increase in customer deposits 53.6 54.4 Other working capital movements (mainly land creditors) 97.7 7.2 Net increase in working capital (178.1
Slide 11: Abridged Balance Sheet
Finance Review Abridged Balance Sheet As at 31 October 2020 Movements As at 30 April 2020 £m £m £m Non-current assets - Intangible assets 17.2 - 17.2 - Investment in joint ventures 268.4 +6.6 261.8 - Deferred tax assets 42.6 -11.0 53.6 - Right-of-use assets 3.1 +0.6 2.5 - Property, plant and equipme
Slide 12: Inventories
Finance Review Inventories As at As at 31 October 2020 Movements 30 April 2020 £m £m £m Land not under development 340.1 -179.6 519.7 Work in progress: Land cost 1,270.5 +362.6 907.9 1,610.6 +183.0 1,427.6 Work in progress: Build cost 2,200.4 +212.6 1,987.8 Completed units 73.3 -66.2 139.5 Total inv
Slide 13: Creditors
Finance Review Creditors As at As at 31 October 2020 Movements 30 April 2020 £m £m £m Trade creditors and accruals 790.0 +14.4 775.6 Provision for liabilities 124.0 +9.1 114.9 Deposits and on account receipts 837.1 +53.6 783.5 Land creditors 438.8 +66.1 372.7 Lease liability 3.0 +0.5 2.5 Total liabi
Slide 14: Financing
Finance Review Financing Banking Facilities GROUP ST WILLIAM Amount: £750 million £360 million Term: £300 million (fully drawn) N/A RCF: £450 million (£200 million drawn March 2020 £360 million repaid in September 2020) Maturity: November 2023 March 2023 (option to extend by further two years in one
Slide 15: Land Holdings
Finance Review Land Holdings As at As at 31 October 2020 Variance 30 April 2020 Owned 53,363 +2,805 50,558 Contracted 6,964 -891 7,855 Plots 60,327 +1,914 58,413 Sales value £24.6bn +£0.9bn £23.7bn Average selling price (ASP)* £472k -£1k £473k Average plot cost £45k - £45k Land cost % 10.9% -0.1% 11
Slide 16: Rob Perrins, Chief Executive
Rob Perrins Chief Executive Broadacres, Southwater
Slide 17: Strategic Review Introduction
Strategic Review Introduction Four Key Focus Areas 1. How Berkeley has responded to Covid-19 and the increasing complexity of the operating and regulatory environment. 2. A resilient operating performance during the first six months of the financial year, underpinned by Berkeley’s uniquely long-term
Slide 18: COVID-19 and the Future Operating Environment
Strategic Review COVID-19 and the Future Operating Environment Covid-19 First priority has been the health, safety and well-being of our people, supply chain and customers Our experience and expertise means disruption has been minimised – we now have 10% more people on our sites than before the
Slide 19: Operating Model and Resilient Performance
Strategic Review Operating Model and Resilient Performance Performance First half pre-tax profits exceeded expectations at the start of the financial year Firmly on track to meet FY21 profit and pre-tax ROE target, underpinning £280 million shareholder return commitment Long-term model and fin
Slide 20: Long-term Regeneration Sites in Land Holdings
Strategic Review Long-term Regeneration Sites in Land Holdings Berkeley is delivering 28 of the largest regeneration schemes in London and the South East
Slide 21: Sales Performance and Market
Strategic Review Sales Performance and Market Sales Performance Sales have been resilient and at levels which support the business plan For Berkeley, sales for the six month period are around 15% lower than the annualised run rate for the 2019/20 financial year Cash due on forward sales increa
Slide 22: Land & Planning and Build
Strategic Review Land & Planning and Build Land & Planning Four new developments added to the land holdings, covering over 2,800 new homes. Includes: o Unconditional sites in London at Borough Triangle in Southwark, Sutton and Paddington (adjacent to West End Gate) o Conditional site in Wallingfor
Slide 23: Land and Build Investment - Delivery
Strategic Review Land and Build Investment - Delivery As at 31 October 2020 London Out of London Total Delivery of Developments: In construction 33 75% 33 68% 66 71% Not yet in construction – owned sites 6 14% 10 20% 16 17% Not yet in construction – contracted sites 5 11% 6 12% 11 12% Total developm
Slide 24: Land and Build Investment Sites in London
Land and Build Investment Sites in London
Slide 25: Land and Build Investment Sites outside of London
Land and Build Investment Sites outside of London
Slide 26: Joint Ventures: St Edward
Strategic Review Joint Ventures St Edward Joint venture with M&G Land holdings of 5,250 homes Five sites in production One site in planning Green Park Village, Reading
Slide 27: Joint Ventures: St William
Strategic Review Joint Ventures St William Joint venture with National Grid Land holdings of 10,860 homes Poplar moved into production in the period Bank facilities of £360 million Prince of Wales Drive, Battersea
Slide 28: Long-Term Purpose and Our Vision
Strategic Review Long-Term Purpose and Our Vision Purpose Berkeley’s purpose is to build homes, strengthen communities and improve lives Our long-term regeneration developments form the backbone of our purpose and strategy, and our commitments to our stakeholders “Our Vision” is Berkeley’s str
Slide 29: Guidance – Profit and Land Holdings
Strategic Review Guidance – Profit and Land Holdings Profit guidance FY21 profit anticipated to be similar to FY20 15% cumulative pre-tax ROE target for six years ending 30 April 2025, equivalent to average annual pre-tax profit of approximately £500 million In periods of extreme volatility, i
Slide 30: Guidance – Shareholder Returns and Surplus Capital
Strategic Review Guidance – Shareholder Returns and Surplus Capital Ongoing Shareholder Returns Annual Shareholder Return of £280 million re-affirmed to 2025 Effective annual return of £280 million now equivalent to £2.25 per share; an increase of 12.5% on the initial £2.00 per share Berkeley
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