The Berkeley Group Holdings Plc - Interim Results
The Berkeley Group Holdings plc ("Berkeley") today announces its unaudited interim results for the six months ended 31 October 2019.
Berkeley is the country's leading place-maker, operating principally in London, Birmingham and the South East. We are a proud UK business specialising in the creation of beautiful, successful and sustainable places where communities thrive and people of all ages and backgrounds enjoy a great quality of life.
DELIVERING FOR ALL STAKEHOLDERS
- 1,389 homes delivered - Berkeley delivers more than 10% of London's new private and affordable homes
- Over 11,000 people working across our sites
- 300 apprentices worked on Berkeley sites in the six months
- Maintaining the Industry's leading Net Promoter Score and customer service ratings
- 29 developments now have approved Net Biodiversity Gain strategies to measurably increase their environmental value and support nature recovery
- Maintaining net carbon positive business operations and progressing work to enable our new developments to operate at net zero carbon by 2030
- Pre-tax profit now returned to normal level, following successful delivery of a number of Central London developments acquired in the period from 2009 to 2013
- £276.7 million of pre-tax profit (2018: £401.2 million), with EPS down 28.3%, as anticipated
- On target to deliver £3.3 billion of pre-tax profit in the six years to 30 April 2025, with the profit in any one year ranging between £500 million and £700 million, depending upon the timing of delivery, generating pre-tax ROE of at least 15% per annum from long-term regeneration activities
- Net cash of £1,060.6 million (April 2019: £975.0 million)
- Net asset value per share up 5.2% to £24.25 (April 2019: £23.05)
- Cash due on forward sales of £1.9 billion (April 2019: £1.8 billion)
- £6.3 billion of estimated future gross margin in land holdings (April 2019: £6.2 billion)
STRATEGY FOR INVESTMENT AND SHAREHOLDER RETURNS
- Berkeley is delivering 25 large and extremely complex regeneration schemes in London and the South East, resulting in net investment in working capital in the period as it brings forward the next wave of regeneration sites
- 2 new large regeneration sites added to land holdings in the period, comprising more than 3,000 homes
- 3 new significant planning consents in the period at Staines, High Wycombe and Poplar, covering approximately 4,000 homes, with 6 sites beginning production in the period
- On track to deliver last year's extended Shareholder Returns commitment of £280 million per annum to 2025
- 3.3 million shares acquired in the six month period for £124.6 million and dividends paid of £25.2 million
Today's results reflect the consistent execution of Berkeley's uniquely long-term strategy and represent a mix of sales on a number of Central London developments acquired after the financial crisis, which are now reaching completion, and ongoing delivery of our long-standing complex, large-scale brownfield regeneration developments. A number of these regeneration developments have matured into welcoming and popular communities after years of patient investment and place-making, including Kidbrooke Village, Woodberry Down, Royal Arsenal Riverside, Chelsea Creek and Beaufort Park. Our holistic approach to reviving these undervalued sites generates sustainable commercial returns and a lasting mix of social, economic and environmental benefits that extend well beyond the site boundaries.
Looking forward in London, Berkeley is now one of very few remaining developers delivering long-term regeneration programmes at scale, due to the complexity of bringing these sites through the development process, their high capital requirements and the uncertain macro conditions that have seen others step back, despite the city's undersupply of housing. In contrast, Berkeley's strategy is founded on our expertise and experience which, combined with our balance sheet strength, enables us to effectively manage these high risk regeneration programmes and unlock the latent value within London's vast industrial spaces for all stakeholders. This long-term approach to development enables Berkeley to respond to all stages of the housing market cycle and to invest in new land opportunities at the right time.
The period has seen good progress in the development of our own volumetric modular construction facility in Ebbsfleet which will be an exemplar of innovation in construction, helping address a number of challenges within our industry's supply chain around quality and skills. The machinery is due to be commissioned throughout 2020 when the first modules will be delivered to our sites. We have employed more than 30 staff for the factory operations, with ten apprentices being trained to operate the machinery.
In October we were delighted to see the publication of the Government's draft Environment Bill, which confirmed plans to make biodiversity net gain mandatory for all developments. Berkeley has led the industry on this issue, with a total of 29 sites already committed to measurably increasing nature. We hope any future Government will progress this policy which is so vital to restoring our natural environment and ensuring more local communities will benefit from beautiful, wild and nature rich landscapes.
We are also committed to driving the decarbonisation of the built environment, and have now developed our first zero carbon transition plans for three of our sites. This research has helped establish the design principles, infrastructure choices, energy strategies and technologies that will enable Berkeley, and others, to deliver homes that can operate at net zero carbon by 2030.
I am pleased to report that Berkeley's industry leading approach to sustainability has been recognised with a series of awards, including Carbon Reduction or Offset Programme of the Year (Better Society Awards 2019); Sustainable Housebuilder of the Year (Housebuilder Awards 2019); National Company of the Year (Estate Gazette Awards 2019); and Future of Real Estate Awards (Estates Gazette Awards 2019).
Berkeley has a long-term programme in place to return £280 million to shareholders each year, through either share buy-backs or dividends in equal semi-annual instalments. The year for measuring these returns, that now equate to £2.23 per share, runs from October to September. In the first six months of the year, Berkeley paid dividends of £25.2 million and acquired 3.3 million shares for £124.6 million. This completed the return for the year ended 30 September 2019, and also included £15.3 million of the £140.1 million committed to be returned by 31 March 2020.