ANNUAL REPORT 2014
BERKELEY ANNUAL REPORT 2014
BERKELEY ANNUAL REPORT 2014
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ABOUT THIS REPORT
STRATEGIC REPORT
FINANCIALS
Welcome to the Annual Report of The Berkeley
Group Holdings plc (“the Berkeley Group” or
“Berkeley”), a publicly owned company, listed
on the London Stock Exchange within the FTSE
250. The Strategic Report explains Berkeley’s
strategy, business model, performance and
outlook. The Governance section covers the
role and activities of the Board in running the
business and their remuneration. The detailed
Financials, accompanied by a report from the
Group’s auditors, complete the Annual Report.
Business model
Performance highlights
Chairman’s statement
Managing Director’s statement
What we do
Where we operate
How we operate: managing risk
How we operate: Our Vision
Trading and financial review and outlook
GOVERNANCE
Board of Directors
Corporate governance report
Audit Committee report
Directors’ remuneration report
Directors’ report
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Independent Auditors’ report on the
consolidated financial statements
Consolidated income statement
Consolidated statement of
comprehensive income
Consolidated statement of
financial position
Consolidated statement of
changes in equity
Consolidated cash flow statement
Notes to the consolidated
financial statements
Company balance sheet
Notes to the Company
financial statements
Five year summary and definitions
Shareholder information
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THE CORNICHE, ALBERT EMBANKMENT (COMPUTER GENERATED IMAGE)
COVER: EMERALD SQUARE, ROEHAMPTON
THE BERKELEY
GROUP
Berkeley builds homes and neighbourhoods
in its core markets of London and the
South of England. Its knowledge, expertise
and proven track record, with over thirty years of
experience in this market, gives it an unrivalled
ability to deliver new homes and communities.
Berkeley will continue to forward sell its
developments wherever possible, maintaining
a strong balance sheet and keeping financial risk
low in order to mitigate the operating risks of
delivery. It will carefully allocate capital to the
right projects at the right time, matching supply
to demand wherever it can.
The Berkeley Group is honoured this year to have been awarded the UK’s highest
accolade for business success – the Queen’s Award for Sustainable Development
2014. This is the second time the group has been recognised having previously
won the award in 2008, the first housebuilder to have achieved this.
Proud to be a member of the Berkeley Group of Companies
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LONG-TERM THINKING AT
THE HEART OF OUR SUCCESS
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BUSINESS MODEL
2014 PERFORMANCE HIGHLIGHTS
The Berkeley Group builds homes and neighbourhoods.
We seek to create beautiful, successful places. These places range in size from a few
homes in market towns to complex, mixed-use urban regeneration schemes of
over 4,000 homes all built with safety, sustainability and quality at their heart.
Berkeley aims to run the business for long-term success. Its strategy rests
on five key principles, with four clear outputs:
Berkeley has committed to return £13 per share to shareholders by
September 2021. 164 pence per share (£215 million) has already been paid,
a further 90 pence per share (£122 million) has been declared for payment
in September 2014, leaving 180 pence per share (£243 million) to return
by the first milestone of 434 pence by September 2015.
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ST R ATEG Y
P ERF OR MANC E
CYCLICAL MARKET
We recognise that the property
market is inherently cyclical.
UNDERSTANDING RISK
Weunderstandthattherearesignificant
operational risks in successfully identifying,
designing, building and selling homes
and creating new places.
KNOWING OUR MARKET
We operate in London and the South
of England, markets that we know and
understand. Given the importance of
relationships and local knowledge we
believe that this gives us a competitive
advantage and enables us to deliver new
places which are socially, environmentally
and economically successful.
SOUND FINANCIALS
Weaimtokeepfinancialrisklow,by
maintaining a strong balance sheet,
forward selling new homes where
possible and carefully allocating funds
to the right projects at the right time.
AUTONOMY
We have recognised brands and
autonomous operational teams who carefully
manage each individual scheme, regardless
of size, to a bespoke design, and embrace
Berkeley’s core values in their approach.
OU R VI SI ON
“Our Vision” is Berkeley’s framework designed to implement this strategy and help all of our people contribute
to the success of the business by giving them a clear set of commitments in every area of the business.
This is explained in more detail on pages 27 to 37 of the Strategic Report.
OU T PUT S
SHAREHOLDERS
We have a clear plan to return
£13 per share (over £1.7 billion) by
2021 and to retain a successful,
sustainable business thereafter.
Our 2014 Performance
Highlights opposite show that
we are on track to achieve this.
SOCIETY
We are building new homes
to help the country meet the
housing shortfall and creating
places characterised by the
quality of their design, public
realm, transport and access
to jobs and amenities.
PEOPLE
Our approach creates
jobsinouroffices,onour
developments and in our
supply chain, some 4.5 for
every new home built. We have
engaged a loyal and dedicated
workforce within Berkeley.
PLACES
We aim to deliver sustainable
communities which endure
long after our work is complete,
and our engagement with local
people through the Berkeley
Foundation supports this.
PROFIT BEFORE TAX
EARNINGS PER SHARE
£380.0 million
£110.3m
£136.2m
£214.8m
£270.7m
£380.0m
2010
2011
2012
2013
2014
221.8 pence
RETURN ON EQUITY
NET ASSET VALUE PER SHA RE
1,066 pence
27.5%
13.3%
15.3%
21.2%
22.4%
27.5%
2010
2011
2012
2013
2014
OUTLOOK
CASH DUE ON FORWARD SALES
GROSS MARGIN IN LA ND HOLDI NGS
£2,274 million
£648m
£814m
£1,056m
£1,453m
£2,274m
2010
2011
2012
2013
2014
£3,014 million
60.0p
72.1p
121.0p
160.0p
221.8p
637p
709p
839p
1,009p
1,066p
£2,038m
£2,304m
£2,580m
£2,852m
£3,014m
2010
2011
2012
2013
2014
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2011
2012
2013
2014
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2011
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CHAIRMAN’S STATEMENT
MANAGING DIRECTOR’S STATEMENT
I am proud of the role that
Berkeley has played in
generating economic growth
and its wider contribution
to our society
Berkeley’s vision is to be a
world-class business generating
long-term value by creating
successful, sustainable places
where people aspire to live
TONY PIDGLEY CBE CHAIRMAN
ROB PERRINS MANAGINGDIRECTOR
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Commenting on the results, Chairman
Tony Pidgley said:
“Thesearestrongresultswhichreflectthe
current market conditions and Berkeley’s
bold strategy to invest at the right point
in the economic and housing cycle. Basic
earnings per share have grown by 38.6%
to 221.8 pence, of which 149 pence has
been paid to shareholders as dividends
in the year, and the estimated value of
gross margin in our land holdings is now
in excess of £3 billion.
The Board has declared a further interim
dividend of 90 pence per share (£122
million), payable on 26 September 2014 to
shareholders on the register on 22 August
2014. This means that 254 pence per share
has been paid or committed to date, and
leaves a further 180 pence per share in
ordertomeetthefirstmilestoneofpaying
434 pence per share by September 2015.
The Board considers that the Group is
currently on track to achieve this target
and is well positioned to meet the
remaining milestones by September 2021.
The last year has seen a surge of
confidencewithintheUKeconomy.
Housebuilders have been at the forefront
of the return to growth, creating a
feelgoodfactorwhichbenefitseveryone.
Their investment has underpinned
the delivery of affordable homes and
infrastructure for our communities.
This is a result of a stable economic
and political environment and strong
inward investment. London in particular
competes on a global stage and the
strength of the market here is vitally
important for maintaining momentum
in the wider domestic market.
Looking to the future the housebuilding
industry, supported by the stimulus of the
Help to Buy scheme, has the capacity
to increase further the supply of new
homes across the country.
Forward sales are critical to enable
theindustrytocommitthesignificant
capital necessary to do this. Berkeley is
building on all of its sites that have an
implementable planning consent and we
are employing over 11,000 people directly
on our sites sustaining a further 10,000
jobs indirectly in the supply chain. This
year we have completed some 30% more
homes than at the peak of the market in
2007,andIamproudoftheroleBerkeley
has played in generating economic growth
and its wider contribution to our society
through the homes and places we create.
Berkeley’s achievements are testament to
the skill and dedication of our employees,
and to the commitment of our partners
on our schemes and in the supply chain,
andIwouldliketoexpressmythanksto
allofthem.IamdelightedthattheGroup
has been recently awarded the Queen’s
Award for Enterprise for Sustainable
Development 2014. This award recognises
Berkeley’s approach to running its
business for the long-term, to help ensure
a better quality of life for everyone, now
and for generations to come.
TheBoardisconfidentthatBerkeley
has the right plan to deliver long-term
sustainable success, but remains alert
to the inherently cyclical nature of the
property market and the uncertainty
surrounding future tax policy and political
decision-making. Monetary policy and
thefinancialstabilityofbanks,whichis
currently a concern of regulators, are both
factorsinfluencingthehousingmarket
in the long-term. Provided any future
increases in interest rates or regulation
of mortgages are matched with future
wages growth as the economy expands,
the prospects for the housing market
remain positive.”
DIVIDE ND
Further interim dividend of
90p per share
payable in Sep 2014
LONG-TERM S TR ATE G Y
To return
£1.7 billion
in cash to shareholders
Looking forwards, we continue to see
opportunities to acquire land that meet
our hurdle returns. This will typically be
characterised by long-term and complex
development sites to which Berkeley can
bring its expertise. The land already in
our pipeline comprises a number of sites
that match these criteria and the ongoing
operational focus is to deliver this over
thenextfiveyears.Ifthisisachieved,
it has the potential to enhance the
existing gross margin in the land bank
by some £1.5 billion and help build a
sustainable business.
Berkeleyhasfinishedtheyearwell,
deliveringastrongcashflowperformance,
growing its unrivalled land holdings
through acquisition and optimisation,
continuing to invest in inventory and
securing additional forward sales. This
givestheBoardtheconfidenceto
continue to invest and add value whilst
never underestimating the risks inherent
in a cyclical market.
Over the remainder of the current plan,
the Board aims to deliver the targeted
dividends from earnings while maintaining
the balance sheet at least at its current
level and the value in its land holdings
above £3 billion.”
Commenting on the results, Managing
Director Rob Perrins said:
“Berkeley has built and sold 3,742 new
homes this year at an average selling
price of £423,000, driving a 40.4% increase
inpre-taxprofitsto£380.0millionand
a rise in pre-tax return on equity from
22.4% to 27.5%.
The Group remained ungeared throughout
the year, with net cash rising from
£44.7 million to £129.2 million after paying
£195.2 million of dividends to shareholders
and investing further in new land and
construction. This investment and a
favourable market have enabled us to build
and sell over 15,000 new homes in London
and the South of England over the last
fiveyears,duringwhichperiodwehave
delivered some 10% of both the total private
and affordable homes built in London.
Berkeley’s vision is to be a world-class
business generating long-term value by
creating successful, sustainable places
where people aspire to live. These results
are due to a unique combination of an
entrepreneurial approach to land buying,
a track record of working in partnership
with local authorities to create great places,
strongfinancialdiscipline,autonomous
management teams and above all a passion
for proving how good new housing can be.
With cash due on forward sales now
approaching £2.3 billion and estimated
gross margin in its land holdings now
in excess of £3 billion, the Board has
visibility over its commitment to meet the
remaining180penceofthefirstmilestone
through regular dividends. The land and
planning now in place has extended this
visibility to delivery of the second milestone
payment of 433 pence by September
2018 and Berkeley has made substantial
inroads into the planning requirement
on the land required to cover the third
milestone payment of a further 433 pence
by September 2021.
PERFORMANCE
Profitbeforetaxup
40.4%
in the year
OUTLOOK
Estimated gross margin in
land holdings
£3,014 million
at year end
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375 KENSINGTON HIGH STREET
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WHAT WE DO
WHAT WE DO:
1: IDENTIFYING AND ACQUIRING LAND
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“The Berkeley Group builds homes and neighbourhoods.
We seek to create beautiful, successful places.
These places range in size from a few homes in market towns to
complex, mixed-use urban regeneration schemes of over 4,000 homes,
all built with safety, sustainability and quality at their heart.”
1 IDE NTIF YI N G AN D A CQU I RIN G L AN D
2 D ESIGNING AND PLA NN IN G N E W H OM ES A N D PLA CES
3 BUILDING N E W HO M ES AN D PLA CES
4 MARK ETI N G A N D SE LLIN G HO M ES
5 CUSTOMER SER VICE A ND S TEWAR D S HIP
Berkeley has invested over £1.5 billion in
new land since 2009 when it set out a clear
strategy to acquire land at the right point
in the cycle.
EXPERIENCE
Experienced land teams across the business
understand the Group’s focus on investing
selectively in the right locations in our core
markets of London and the South of England
where there is underlying demand for new
homes, good transport links and the scope
to create successful new places.
POTENTIAL
The Group thrives on taking on complex,
challenging,brownfieldlandwhichothers
shy away from, but only where there are the
right commercial fundamentals, the potential
to add value and where we have the vision
to create something special through the
development process.
CAREFUL APPRAISAL
We undertake a rigorous internal appraisal
process to assess the opportunities and
risks of potential acquisitions and deliver
pre-authorisation at Board level of all
land offers and again prior to exchange
of contracts.
AN ENTREPRENEURIAL APPROACH
An entrepreneurial approach, our
financialstrengthandaflatmanagement
structure enable Berkeley to reach
purchase decisions quickly and decisively,
whichgivesconfidencethatwewilldeliver
on these decisions. We understand
the varying requirements of vendors
and landowners, whilst also considering
innovative approaches to accessing new
land such as joint ventures as in the case
of St Edward, a partnership with Prudential.
NEW LA ND
Berkeley has invested
£1.5 billion
in new land since 2009
1
The Corniche and Merano Residences,
Albert Embankment
2 DemolitionworksatKidbookeVillage
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Construction works at Royal Arsenal Riverside
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WHAT WE DO:
2: DESIGNING AND PLANNING
NEW HOMES AND PLACES
WHAT WE DO:
3: BUILDING NEW HOMES AND PLACES
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Our business is about placemaking,
not just housebuilding.
We aim to create places characterised
by the quality of their design, public
realm, transport links and access to jobs
and amenities.
CONSULTATION
We use professional architects and
leading consultants and engineers to
design every new scheme individually,
whether it consists of four or four thousand
new homes, in consultation with local
communities, and strive to deliver schemes
which are of high quality, sensitive to their
heritage and surroundings and meet the
aspirations of our customers and local
and national stakeholders.
SOCIAL AND ENVIRONMENTAL
SUSTAINABILITY
We have addressed the challenge of
understanding what makes a successful
place by implementing a framework to
promote quality of life and strength of
community, which we now apply to our
schemes. We have led the way in
delivering environmentally sustainable
living on large-scale developments.
PARTNERSHIPS
We engage closely with our partners
in the local authorities and communities
surrounding each of our sites to understand
stakeholders’needs,reflectingthesein
our designs, and want to cement our
reputation for quality and for delivering
on our promises.
PLACEMA KIN G
We aim to create
places characterised
by the quality of
design, public realm,
transport and access
to jobs and amenities.
1 Planning meeting at Abell & Cleland
2 Construction progress of Riverlight
3 CGIofRiverlight
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Berkeley is currently building on every one
of its schemes that has an implementable
planning consent.
INTENSIVE MANAGEMENT
Each of our developments is led by a
dedicated project team responsible for all
aspects of detailed design, quality, delivery,
health and safety, commercial and technical
works on their project.
The coordination of professional teams
of consultants and subcontractors and
strong communication throughout are
critical in ensuring the smooth delivery
of every project.
HEALTH AND SAFETY
Berkeley’s approach prioritises the health,
safety and wellbeing of our people and
our subcontractor teams on site with
dedicated Health and Safety managers
overseeing all of our developments.
CONSIDERATE CONSTRUCTION
Our reputation relies on all of our project
teams engaging with surrounding
communities, being a responsible and
considerate neighbour, and working with
our suppliers and contractors to complete
our schemes on time and budget.
BUILDIN G
Berkeley is currently
building on every
one of its 65
schemes that has
an implementable
planning consent.
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WHAT WE DO:
4: MARKETING AND SELLING HOMES
WHAT WE DO:
5: CUSTOMER SERVICE AND STEWARDSHIP
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Whetherfirst-timebuyers,families,
experienced investors, retailers, our
partners in housing associations or
providers of student accommodation,
Berkeley strives to ensure that its
customers receive an unparalleled
service when buying from Berkeley.
CUSTOMER FOCUS
Sales teams across the business help
ourcustomersfindtherighthometo
suit their needs and have the knowledge
and understanding to explain the
intricacies of every development.
ASPIRATIONAL HOMES
We aim to forward sell our homes
where possible to ensure that what we
arebuildingreflectsthedemandfrom
our customers and we have the
flexibilitytoevolveourproductto
meet their aspirations.
SELLI NG
Berkeley strives to
ensure that its customers
receive an unparalleled
service when buying
from Berkeley.
Customer satisfaction is the crucial
measure of whether our homes and
our service meet the aspirations of
our customers.
CUSTOMER JOURNEY
Dedicated Customer Relationship
Managers look after every stage of the
customer journey and provide a level of
care and service after completion which
we expect to match the quality of our
product across all of our schemes.
ESTATE MANAGEMENT
Successful places need the right long-
term management strategy and we work
closely with appointed managing agents
to set the right tone for our schemes
long after they have been completed.
CUSTOMER JOURN EY
Dedicated Customer
Managers look after
every stage of the
customer journey across
all of our schemes.
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SITES IN CONSTRUCTION
93%
26 sites with planning
and in construction
NEW LA ND
3
new sites acquired
in 2014
WHERE WE OPERATE
“We operate in London and the South of England, markets that we know and understand.
Given the importance of relationships and local knowledge, we believe that this gives us
a competitive advantage to enable us to deliver new places which are socially,
environmentally and economically successful.”
LONDON
SOUTH OF ENGLAND
35 34
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15 36
26
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18 17
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80%
39 sites with planning
and in construction
NEW LAN D
6
new sites acquired
in 2014
LONDON UNDER CONST RUCT ION
1 190 Strand
2 375 Kensington High Street
(including Homebase and Telereal)
3 Abell & Cleland House, Westminster
4 Battersea Reach
5 Beaufort Park, Hendon
6 Brewery Wharf, Twickenham
7 Chambers Wharf, Southwark
8 Chelsea Creek / Imperial Wharf
9 The Corniche, Albert Embankment
10 Dickens Yard, Ealing
11 Durham Road, Wimbledon
12 Ebury Square, Belgravia
13 Fulham Reach, Hammersmith
14 Goodman’s Fields, Aldgate
15 High Road, Finchley
16 Hurlingham Gate, Fulham
17 Kew Bridge Road
18 Kew Bridge West, Brentford
19 Kidbrooke Village
20 Langham Square, Putney
21 Marine Wharf, Deptford
22 Marryat Place, Wimbledon
23 Merano, Albert Embankment
24 One Blackfriars, Southwark
25 One Tower Bridge
26 One Victoria Road, Acton
27 Queen Mary’s Place, Roehampton
28 Riverlight, Battersea
29 Roman House, City of London
30 Royal Arsenal Riverside
31 Saffron Square, Croydon
32 Sir Alexander Close, Acton
33 Sovereign Court, Hammersmith
34 St Josephs, Mill Hill
35 Stanmore Place
36 The Avenue, Finchley
37 Vista, Battersea*
38 Wimbledon Hill Park
39 Woodberry Park
LOND ON FUTURE S ITES
1 22-26 Albert Embankment*
2 Barnes, Richmond*
3 City Forum, City of London
4 Hogarth, Chiswick
5 Latchmere House, Richmond
6 London Dock, Wapping
7 Old Isleworth*
8 Prince Consort House, Albert Embankment*
9 South Quay Plaza, Docklands
10 White City*
* Sites purchased during the year
N O RTH A M P T O
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WARWICKSHIRE
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GLOUCESTERSHIRE
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WILTSHIRE
OXFORDSHIRE
BERKSHIRE
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KENT
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6
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SURREY
SOMERSET
HAMPSHIRE
15
2
WEST SUSSEX
EAST SUSSEX
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OUT OF LONDON UNDER CONSTR UCTION
OUT OF LONDON FUTURE SITES
1 Ascot (2 sites)
2 Barns Green*
3 Bath*
4 Beaconsfield (2 sites)
5 Cambridge
6 Canterbury
7 Caterham
8 Cheltenham
9 Cirencester
10 Fleet
11 Gillingham
12 Gosport
13 High Wycombe
14 Holborough
15 Horsham
16 North Bersted
17 Oxshott
18 Reading
19 Sevenoaks
20 Shalford
21 St Albans
22 Tadworth
23 Tunbridge Wells
24 Worcester
1 Maidenhead
2 Taplow*
* Sites purchased during the year
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WHERE WE OPERATE continued
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PIPELINE
Berkeley’s pipeline now comprises some 11,000 plots on 13 sites where
delivery is dependent on resolving technical constraints, challenges surrounding
vacant possession and/or securing planning consent.
SOUTHALL
The former Southall Gas Works is an 84 acre
brownfield site with outline planning permission
for redevelopment to create 3,750 new homes
alongside a school, shops and offices, and is adjacent
to a Crossrail station due to open in 2019.
BERKSHIRE
LONDON
4 13
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1 3
2
6
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SURREY
5
9
8
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KENT
TH E P IPE LINE
1 Battersea Gardens*
2 Bracknell*
3 Chambers Wharf, Southwark
4 Hornsey*
5 Kidbrooke Village
6 Kingston*
7 Ockham*
8 Orpington*
9 Royal Arsenal Riverside
10 Sevenoaks*
11 Southall*
12 Westminster*
13 Woodberry Park
*Includessitescontractedduringtheyear
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HOW WE OPERATE: MANAGING RISK
“There are significant operational risks in successfully identifying, designing, building
and selling new homes and creating new places. To provide the best platform for the
business to meet these challenges, we aim to keep financial risk low, by maintaining
a strong balance sheet, forward selling new homes where possible and carefully
allocating funds to the right projects at the right time.”
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“Berkeley’s approach allows management to focus on taking the right decisions
to deliver long-term success, and retain the flexibility to take advantage
of any opportunities which arise in the short and medium term.”
OP ERATI NG R IS K
FI NANCI AL RISK
Risk management is embedded in the
organisation at operating company,
divisional and Group levels, with different
types of risk requiring different levels
and types of management response.
Berkeley’s framework for internal
control,thecontextfortheidentification,
control and monitoring of risks faced by
the Group, is set out within the Corporate
Governance Report on page 52.
The principal operating risks and our
approach to mitigating them are described
in more detail on pages 22 and 23.
The principal operating risks faced by
the Group include:
Inlightoftheseoperatingrisks,Berkeley
aimstokeepfinancialrisklow,andfinances
its operations through shareholder equity
andhassignificantundrawnfacilities
available. The Group’s operations are
insterling,andsothereisnosignificant
directcurrencyrisk.Itsmainfinancialrisks
are primarily:
LIQUIDITY RISK
The risk that suitable funding for the
Group’s activities may not be available to it.
MARKET CREDIT RISK
The risk that counterparties (mainly
customers) will default on their contractual
obligations resulting in a loss to the Group.
The Group’s exposure to credit risk is
comprised of cash and cash equivalents
and trade and other receivables.
MARKET INTEREST RATE RISK
TheriskthatGroupfinancingactivities
areaffectedbyfluctuationsinmarket
interest rates.
The Board approves treasury policy
and senior management control
day-to-day operations. Relationships
with banks and cash management are
co-ordinated centrally.
The treasury policy is intended to
maintain an appropriate capital structure
tomanagethefinancialrisksidentified
and provide the right platform for the
business to manage its operating risks.
ECO NOMIC
CONDITIONS
REGU LATIO N
PLAN NI NG
PR OCES S
R ETAI NI NG
PEOPLE
SECUR ING
SALES
MORTGAG E
AVAILABIL I TY
ENVI R ONMENTAL
AND SOC I AL
SU STAI NABI L IT Y
H EALT H AN D
SA FET Y
LAND
AVAILABIL ITY
B UIL D C OST AND
PR OGRAMME
PR ODU CT
QUAL I TY
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R ISK DESCRIPTION
MITIGATI ON
RI SK DESC RIPTI ON
MI TI GATI ON
ECONOMIC CONDITIONS
As a property developer Berkeley’s business, in the
context of the wider housing market, is sensitive to
changes in interest rates, unemployment and general
consumerconfidence.Someofitscustomersarealso
sensitive to changes in the sterling exchange rate.
ChangestoeconomicconditionsintheUK,Europe
and worldwide may lead to a reduction in demand for
housing which could impact on the Group’s ability to
deliver its corporate strategy.
REGULATION
Adverse changes to Government policy on areas such
as taxation, housing and environmental matters could
restrict the ability of the Group to deliver its strategy.
Failure to comply with laws and regulations
could expose the Group to penalties and
reputational damage.
PLANNING PROCESS
Delays or refusals in obtaining commercially
viable planning permissions on the Group’s land
holdings could result in the Group being unable
to develop the land it has purchased.
This could have a direct impact on the Group’s
abilitytodeliveritsproductandonitsprofitability.
RETAINING PEOPLE
An inability to attract, develop, motivate and retain
talented employees could have an impact on the
Group’s ability to deliver its strategic priorities.
Failure to consider the retention and succession
of key management could result in a loss of
knowledge and competitive advantage.
SECURING SALES
An inability to match supply to demand in terms
of product, location and price could result in missed
sales targets and / or high levels of completed stock
which in turn could impact on the Group’s ability to
deliver its corporate strategy.
Berkeley’sbusinessstrategyreflectsthecyclicalnatureofpropertydevelopment.
Funds are carefully targeted at investing only in land which is underpinned by demand
fundamentals that support a solid viability case even when markets are uncertain.
Levels of committed expenditure are carefully monitored against forward sales secured
andbankfacilitiesavailable,withtheobjectiveofkeepingfinancialrisklowtomitigate
the operating risks of delivery in uncertain markets.
The business is committed to operating at an optimal size, with a strong balance sheet,
tomaintaintheflexibilitytoreactswiftly,whennecessary,tochangesinmarketconditions.
The effects of changes to Government policies at all levels are closely monitored and
representations made where appropriate.
Berkeley’s experienced teams are well placed to interpret and implement new regulation
at the appropriate time through direct lines of communication across the Group. Detailed
policies and procedures are in place and these are communicated to all staff.
Full detailed planning and risk assessments are performed and monitored for each site
without planning permission, both before and after purchase.
The planning status of all sites is reviewed at monthly divisional Board meetings and
Main Board meetings.
The Group works closely with local communities in respect of planning proposals and
stronglocalrelationshipsaremaintainedwithlocalauthoritiesandplanningofficers.
The Group is focused on the markets of London and the South of England in a planning
environment which it understands and where it believes it therefore has a competitive advantage.
Remuneration packages are constantly benchmarked against the industry to ensure they
remain competitive.
Succession planning is regularly reviewed at both divisional and Main Board level.
Close relationships and dialogue are maintained with key personnel.
Detailed market demand assessments of each site are undertaken before acquisition,
and regularly during delivery of each scheme, to ensure that supply is matched to
demand in each location.
Design, product type and product quality are all assessed on a site-by-site basis to ensure
that they meet the target market and customer aspirations in that location.
The Group has a diverse range of developments with homes available at a broad range
of property prices to appeal to a wide market. Forward sales are used to take the risk out
ofthedevelopmentcyclewherepossible,therebyjustifyingthefinancialinvestmentin
each of the Group’s sites.
Completed stock levels are reviewed and debated at monthly divisional Board meetings
and quarterly Main Board meetings.
MORTGAGE AVAILABILITY
Mortgage providers have been negatively impacted
bythefinancialcrisisandthishasreducedtheirability
to provide mortgages to potential purchasers.
Aninabilityofcustomerstosecuresufficient
mortgagefinancecouldhaveadirectimpact
on the Group’s transaction levels.
Berkeley has a broad product mix and customer base which reduces the reliance on
mortgage availability across its portfolio.
The Group is participating in the Government backed mortgage indemnity scheme, NewBuy,
on a number of its schemes and on the Government’s new Help to Buy scheme.
DepositsaretakenonallsalestomitigatethefinancialimpactontheGroupinthe
event that sales do not complete due to a lack of mortgage availability.
ENVIRONMENTAL AND SOCIAL SUSTAINABILITY
Berkeley is hugely aware of the environmental
and social impact of the homes and communities
that it builds, both during the construction phase
and on occupation by its customers.
Failure to address sustainability issues could
affect the Group’s ability to acquire land, gain
planning permission, manage sites effectively
and respond to increasing customer demand
for sustainable homes.
HEALTH AND SAFETY
Berkeley’s operations have a direct impact on the
health and safety of its people, contractors and
members of the public. Berkeley considers this
to be an area of critical importance.
A lack of adequate procedures and systems to
reduce the dangers inherent in the construction
process increases the risk of accidents or site-
relatedcatastrophes,includingfireandflood,
which could result in serious injury or loss of life
leadingtoreputationaldamage,financial
penalties and disruption to operations.
LAND AVAILABILITY
An inability to source suitable land to maintain
the Group’s land bank at appropriate margins in
a highly competitive market could impact on the
Group’s ability to deliver its corporate strategy.
BUILD COST AND PROGRAMME
Build costs are affected by the availability of
skilled labour and the price and availability
of materials, supplies and subcontractors.
Changes to these prices and availability could
impactontheprofitabilityofeachscheme.
PRODUCT QUALITY
Berkeley has a reputation for the high standards
ofqualityofitsproduct.IftheGroupfailsto
deliver against these standards and its wider
development obligations, it could be
exposed to reputational damage, as well as
reduced sales and increased cost.
Our Vision provides the framework under which the Group’s approach to running a sustainable
business is formalised. This provides a framework under which detailed commitments are set
out to be adopted and embraced by all staff.
The Board has the responsibility of setting the Group’s direction in this area, to ensure
that it is aligned with the Group’s strategy.
Specificcommitmentstodeliversustainablecommunities,minimisetheimpactofthe
homes that Berkeley builds and to manage the environmental and social impacts of
Berkeley’s business form the bedrock of this approach. Environmental and Social
Sustainability assessments are built into land purchases and planning applications.
Sustainability commitments during delivery include the use of environmental performance
methodology,afocusonbrownfielddevelopmentandthemonitoringofcarbonemissions,
amongst others.
The Board has the responsibility of setting the Group’s Health and Safety strategy.
DedicatedHealthandSafetyteamsareinplaceineachdivisionandatHeadOffice.
Procedures, training and reporting are all regularly reviewed to ensure high standards
are maintained, and comprehensive accident investigation procedures are in place.
The Group has implemented a number of initiatives to improve Health and Safety standards
on site, with workshops held with contractors during the year.
Our Vision incorporates commitments in the area of Health and Safety which reinforce the
Group’s focus on this. Adequate insurance is held to cover the risks inherent in large-scale
construction projects.
Berkeley’s strategy is to acquire land opportunistically, where it meets its internal criteria
for purchase.
Land acquisition is focused on Berkeley’s core markets of London and the South of England,
markets which it understands and where it believes that the demand fundamentals are strong
and hence it stands the best chance of securing viable planning consent.
Each land acquisition is subject to formal internal appraisal and approval processes both
prior to the submission of a bid and again prior to exchange of contracts to give the
Group the best chance to secure targeted land.
TheGroupmaintainsitslandholdingstomitigateagainstsignificantimpactsfrommarket
changes or delayed build activity. Berkeley has experienced land teams with strong market
knowledge in its areas of focus.
TheGroupkeepsfinancialrisklowandmaintainstheliquiditytoenableittoremain
competitive when it bids for new land.
A procurement and programming strategy for each development is agreed by the
divisional Board before site acquisition.
A further assessment of procurement and programming is undertaken and agreed by
the divisional Board prior to the commencement of construction.
Build cost reconciliations and build programme dates are presented and reviewed in
detail at divisional cost review meetings each month.
Detailed reviews are undertaken of the product on each scheme both during the
acquisition of the site and throughout the build process to ensure that the quality of
the product is maintained.
Customer Satisfaction surveys are undertaken on the handover of all private apartments,
andfeedbackincorporatedinshapingthespecificationandqualityofsubsequentschemes.
The Group monitors its development obligations and recognises any associated liabilities
which arise.
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CASE STUDY – THE ‘BERKELEY DIFFERENCE’ AT:
GOODMAN’S FIELDS, ALDGATE
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“Our vision for Goodman’s Fields
is to create a new modern urban
quarter for the City of London, with
innovative architecture which is
sensitive to the history of the area
and the amenities that will make
this a great place to live.”
LO CATI ON
NUMBER OF HO ME S
D EVELOPMENT T YPES
LENGTH OF SCHEME
1,400
Private, affordable and
student homes, hotel, shops,
restaurants and offices
10 years
REI N TEGRATION
PUBLIC REALM
INVESTMENT IN ART
On buying the land in 2010 with planning
consent, Berkeley chose to completely
redesign the scheme with a focus on
opening up the site by developing a series
of serene open spaces for the community
to enjoy and so reintroducing a lost
quarter of the City.
An experienced team of planners and
landscape architects, and a development
plan to service homes, shops and
restaurants from underground, has created
high quality open spaces on over two acres
of the seven-acre scheme, which beautify
and complement the make-up of the site.
A competition of over 40 artists secured
the commission for a series of sculptures to
really bring the place to life. The winning
artist chose horses as his subject matter
to serve as a visual reminder of the leading
role that horses have played in London’s
rich history.
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HOW WE OPERATE:
OUR VISION
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“We have recognised brands and autonomous operational teams who carefully manage each individual
scheme, regardless of size, to a bespoke design, and embrace Berkeley’s core values in their approach.
“Our Vision” is Berkeley’s framework designed to help all of our people contribute to the success
of the business by giving them a clear set of commitments in every area of the business.”
OUR VI SI ON
To be a world class business generating long-term value by
creating successful, sustainable places where people aspire to live.
FI VE FOCUS A RE AS
C USTOM ERS
Provide exceptional service
to all of our customers and
put them at the heart of
our decisions.
HOME S
Develop individually
designed, high quality
homes with low
environmental impact.
P LAC ES
Create great places
where residents enjoy a
good quality of life, now
and in the future.
OPERATIONS
Make the right long-term
decisions whilst running the
businessefficientlyandworking
with our supply chain.
OUR PEOPLE
Develop a highly skilled workforce who run autonomous businesses, operate in a safe
and supportive working environment, and contribute to wider society.
For Berkeley to achieve long-term success,
the skills, commitment and approach of our
people throughout the business are crucial.
Berkeley needs to ensure that everyone
has the right tools to enable them to work
towards a common set of goals.
This year we have developed and evolved our
business framework, “Our Vision” (previously
Vision2020). Our Vision sets out our company
values and provides an operational framework
withfivekeyfocusareasandaseriesofclear
strategic commitments to help empower
our people and give them clear direction
across every discipline of the business.
Berkeley’s culture informs the way we work,
the way we lead the business, and what
we deliver to our customers. This year we
have reviewed and tested our values and
definedthebehavioursthatbringthem
alive. These help explain to both new
and existing employees what Berkeley
expects of them and what they can expect
of Berkeley.
InMay2014welaunchedanewsetof
stretching commitments to achieve by
April 2016. These were determined based
on input from an external stakeholder
panel and issues review, together with
consultation with each of our autonomous
companies and specialist committees.
Weexpandoneachofthefivefocusareas
of Our Vision over the next few pages.
375 KENSINGTON HIGH STREET
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HOW WE OPERATE: OUR VISION continued
CUSTOMERS
Provide exceptional service to all of our customers and put them at the heart of our decisions.
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We have set three stretching commitments in the
area of Customers to further improve our approach:
– Deliver world-class customer service measured
though the Net Promoter Score
– Launch an interactive way of communicating
with our customers, ‘My Home Plus’
– MarketallourdevelopmentsintheUKfirst
Our customers are at the heart of all our decisions.
We aim to understand their needs and consistently
meet or exceed their expectations. The service
weprovideisprofessional,efficientandhelpfulto
make the home buying process as straightforward
and enjoyable as possible. Our levels of customer
service aim to be comparable to other top brands.
All our customers are provided with a commitment
that when they buy a new home from Berkeley
they can be safe in the knowledge that it is built to
very high standards of design and quality, has low
environmental impact and that they will enjoy an
exceptional customer experience. Each customer
receives tailored information relating to their
purchase and has a dedicated point of contact
throughout the customer journey.
OUR PROGRESS IN 2012 – 2014
COMMITMENT
PROGRESS
Provide every customer with a Berkeley Customer Satisfaction Commitment
Provide user-friendly ‘quick start’ instructions and guides for running a home
Survey every customer to measure satisfaction and target that at least 95% of our customers
would recommend us to a friend
Trainsalesstaffinsustainabilitysothattheyareabletosellthebenefitstocustomers
Produce a Berkeley Sustainable Living Guide in conjunction with NGOs for use in sales
& marketing suites, at handover, as well as an interactive version of the Guide for our website
Achieved Partially achieved Not achieved
TRAINING
REC OMMENDATI ONS
C UST OMER SER VI CE
105
accreditedInstitute
of Customer Service
courses for staff
98%
of customers would
recommend us to
a friend
1st
housebuilder to achieve
InstituteofCustomerService’s
ServiceMark (St James)
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INSTITUTE OF CUSTOMER SERVICE
TheGroupjoinedtheInstituteof
CustomerService(ICS)during2014to
further improve service and to enable
benchmarking of performance. A survey of
our employees and some recent customers
was undertaken, with Berkeley performing
abovethebenchmarksetbyICSand
achieving its highest score for friendliness
of staff. Several of our businesses have
sinceimplementedaccreditedICStraining
focusing on customer service for all
employees. To date around 105 training
courses have been delivered covering
more than 500 staff and extending beyond
just customer-facing employees. We are
delighted that our St James business
becamethefirsthousebuildertoachieve
ServiceMark accreditation.
TRAINING
An intensive ‘Let’s Talk Sales’ training
programme took place for all sales staff
in summer 2013 and a number of online
training modules were also launched. Along
with training of existing employees, we have
also run our second Sales Academy. This
aims to bring talented individuals from other
industries into the business and provides
them with a structured training programme
before they are placed in a role.
UK FIRST
This year we have opened new overseas
salesofficesinBeijingandDubai.Whilst
overseas customers are important,
bringinginwardinvestmentintotheUK,
werecognisethatUKpurchasersshould
have the opportunity to buy our homes.
InAugust2013,aheadoftheMayoral
Concordat, we made a pledge to offer
alldevelopmentsintheUKbefore
marketing overseas.
CUSTOMER SURVEYS
We use customer satisfaction surveys
undertaken by an independent external
agency to measure how well we are meeting
our customers’ expectations. All of our
private purchasers are asked to complete
a survey, and this year 98% of our customers
reported that they would recommend
Berkeley to a friend (2013: 98%). We will
begin to use the Net Promoter Score (NPS)
as an indicator of customer satisfaction
and will publish this in future years
to benchmark ourselves out of sector
against world-class companies.
SUSTAINABLE LIVING
We have a role to play in promoting
sustainable lifestyles to residents and
helping them to operate their home
efficientlyandmakethebestuseof
local facilities. We also believe that this
is something our customers want; in our
2014 Customer Sustainability Survey it
washighlightedthatenergyefficiency,
running costs and open spaces are
important factors when customers are
buying their new home. All developments
now have a ‘Helping Create a Better
Future: Our Guide to More Sustainable
Living’ brochure which includes an
insertshowingsite-specificsustainability
features. An interactive version of the
brochure is available online to show what
we incorporate into our developments
and suggest ways that customers can live
more sustainably.
i Learn more about Customers at
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HOW WE OPERATE: OUR VISION continued
HOMES
Develop individually designed, high quality homes with low environmental impact.
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Each of our homes and developments is bespoke
andweusequalifiedarchitectstodesigneach
scheme. Attention to detail in design is paramount
to ensure homes meet the needs of our customers
andourspecificationsareplannedtomeetthe
varied needs of all types of homebuyers, from
luxurious houses to key worker apartments. The
impact on the environment throughout the lifetime
of the home is considered during its design with an
aim to minimise impacts and provide home owners
with the opportunity to live more sustainably. The
highqualityfinishwhichwedemandinournew
homes requires a skilled workforce and thorough
checks before handover.
We have set three stretching commitments in the
area of Homes to continue to improve our approach:
– Enablefibrebroadbandonallournewhomes
and provide community Wi-Fi
– Guarantee space standards for all new homes
– Launch a new R&D programme to utilise
customer feedback and drive innovation
through improved design
OUR PROGRESS IN 2012 – 2014
COMMITMENT
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Develop minimum design standards on all Berkeley homes including standards for sound
insulation, space, storage and overheating
Carry out post-occupancy monitoring of electricity, water and gas/heat consumption in order to
measurethesuccessofourdesignsandtoinfluencethedesignoffutureschemes
UndertakeR&DtounderstandtheimplicationsoftheGovernment’sproposedzerocarbon
standard on our future developments
Design all new homes to achieve at least Level 3 of the Code for Sustainable Homes
Achieved Partially achieved Not achieved
HO ME WORKING
SU STAI NABI LI T Y
R ECY CL I NG
100%
new homes designed
for home working
100%
newhomestobecertified
to at least Code Level 3
93%
completed homes provided
with recycling facilities
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BESPOKE DESIGN
There is no generic Berkeley scheme. Every
design is bespoke and we use architects on
every project, something which is uncommon
within the industry. Our designers range
from world-famous architects like Foster
+ Partners working on The Corniche on
Albert Embankment, to smaller practices
like BHP Harwood producing an intelligent
designtorestoreamagnificentGradeII
listed building at St Joseph’s Gate in Mill Hill.
We continue to promote good urban design
across the industry through sponsorship of
the London Festival of Architecture.
PRE-PLANNING
The design of each project is scrutinised
intensely at all stages. We have regular
project design meetings to review the
specificationinvolvingeachrelevantteam
at every level of the business. We use
focusgroupstoinfluencefutureschemes
by asking potential residents about the
designfeaturesandlevelofspecification
they would require. Whilst the key measure
ofsuccessfuldesignissatisfiedcustomers,
we are proud to have been awarded a
number of design awards to corroborate
ourapproach.Thefivestorey,five
bedroom home at Lime Grove Mews won
the coveted Grand Prix Award and the
Best Family Home Award in the London
Evening Standard’s 2013 Awards for its
thoughtfuldesignandflexibleinteriors.
ATTENTION TO DETAIL
The quality which we demand in our new
homes requires a skilled workforce and
attention to detail. We use our marketing
suites as the benchmark for build quality
andfinishineachindividualhome.
Every area is thoroughly checked before
handover to ensure that high standards
are maintained. Electronic systems to
manage post-handover maintenance have
been introduced in areas of the business
to assist with this process to ensure good
record keeping and timely close-out. We
have also undertaken studies of occupied
homes to investigate aspects such as
air quality with specialist monitoring
equipment and air leakage through
thermal imaging.
ENVIRONMENTAL PERFORMANCE
Inthelasttwelvemonths,morestringent
building regulations for energy have
been introduced, but we are awaiting the
implementationofsignificantchanges
arising from the Government’s Housing
Standards Review. The Group provided
a response to the consultation in autumn
2013 supporting the intention to simplify
the large and complex range of local and
national standards, rules and codes that
housebuilders face. On a site-by-site basis,
we continue to reach high environmental
standards. For example, some of the
deepest ground source heat pump
boreholes in London will provide up to
60% of the heating demand at Riverlight
in Nine Elms.
i Learn more about Homes at
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SOCIAL SUSTAINABILITY
During 2014 we have further developed
and launched our framework for creating
successful places. This sets out a structured
approach to placemaking and applying the
main ideas behind social sustainability to
new housing and mixed-use developments.
Thecriteriareflectissueswhichare
important to people and communities,
such as links with neighbours, access to
transport, feelings of safety, positive local
identityandtheabilitytoinfluencewhat
goes on. The framework is now used in the
design of all our new schemes, and those
of 100 homes or more conduct formal
workshops to debate and prioritise the key
issues. Results from residents at our longer-
term developments have been positive;
atWoodberryPark90%feelsatisfied
with their life overall (compared to 60%
nationally) and at Royal Arsenal Riverside
84% plan to remain in the neighbourhood
(compared to 68% nationally). We are
proud to have won ‘Property Company
oftheYear–Residential’attheEstates
Gazette Awards 2013.
PARTNERSHIPS
We have a commitment to genuine
partnership working. Partnership
arrangements need to be tailored to suit
each project, skillfully co-ordinating the
investment and ambitions of Berkeley,
the local authority, residents, Registered
Social Landlords and other stakeholders.
We listen to what local people and other
partners want and incorporate this into
the design wherever possible.
COMMUNITY ENGAGEMENT
Our Community Engagement Strategy
wasupdatedin2014toreflectcurrent
best practice and is referred to for all new
schemes. The type of engagement varies
depending on the scheme and location.
Many of our schemes adopt community
planning strategies where local people are
involved in the design, and at London Dock
additional outreach events were held to
engage parts of the community which were
under-represented during the engagement
programme, such as young people, older
people and ethnic minorities.
Other opportunities may arise for the
communitytogetinvolvedinthefinal
scheme, such as a competition at the
Phoenix School local to White City to
design an area of proposed public space.
ECOLOGY AND CLIMATE CHANGE
We continue to seek advice from ecologists
on each scheme, incorporate living roofs
and build sites well-connected for public
transport. Our approach to ecology was
noted as part of our achievement of the
Queen’s Award for Enterprise in Sustainable
Development.In2014wecompleteda
piece of research on climate change
adaptation measures to be incorporated
in developments, and to be considered
during our own operations. 77% of new
developments between 2012 and 2014
were designed to incorporate adaptation
measures.Itisoneofourheadline
commitments for 2014 to 2016 to
incorporate measures on all schemes.
i Learn more about Places at
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1 Cornerstone Café, Royal Arsenal Riverside
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HOW WE OPERATE: OUR VISION continued
PLACES
Create great places where people enjoy a good quality of life, now and in the future.
OUR APPR OACH
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We create well-designed, high quality, safe and
sustainable places which will endure as settled,
vibrant communities long into the future. These
are places where people choose to live, work and
spend their time, that directly encourage people’s
wellbeing and quality of life, and offer them a space
andabasefromwhichtoleadsafeandfulfilling
lives. Through our ability both to collaborate and to
deliver, we aim to be the developer of choice for local
authorities and existing communities. We believe
that appreciating the needs of our customers and
wider stakeholders before, during and after the
delivery of our schemes and what makes them
thrive as a community, is the right model for a truly
successful and sustainable business in our sector.
We have set three stretching commitments in the
area of Places to continue to improve our approach:
– Measure and increase people’s quality of life by
applying a framework for social sustainability
– Adapt all developments to climate change
throughmeasuresonflooding,overheating
and water shortage
– Test new forms of estate management and
community governance
OUR PROGRESS IN 2 01 2 – 201 4
COMMITMENT
PROGRESS
Work with experts to develop metrics to assess the social sustainability of our developments and
pilot the metrics on at least one completed development
Conduct post-occupancy evaluation to assess the in-use success of community facilities
(e.g. sports facilities, public realm, open space, children’s activities)
Work with residents, commercial occupiers, local businesses and the local community on at
least one mixed-use development to promote local employment opportunities
Put in place adaptation measures on all developments to address future climate change risks
Achieved Partially achieved Not achieved
SOCIAL SUSTA INABIL ITY
S 106
C YC LE ST ORAGE
20
assessments completed
under our new social
sustainability framework
£333m
S106 contributions over
thelastfiveyears
92%
new sites designed to
incorporate cycle storage
32
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BERKELEY ANNUAL REPORT 2014 / STRATEGIC REPORTBERKELEY ANNUAL REPORT 2014 / STRATEGIC REPORT
HOW WE OPERATE: OUR VISION continued
OPERATIONS
Make the right long-term decisions whilst running the business
efficiently and working with our supply chain.
OUR APPR OACH
OU R HE A DLINE COMMITMEN TS F OR 2 01 4 – 2 016
Through recognition that the property market is
inherently cyclical we make decisions with a focus
on the long-term. We understand the operational
risks in trying to successfully identify, design, build
and sell homes and create new places. We aspire
to maintain excellent partnerships with our supply
chain to ensure that high quality services and
materials are consistently provided and we are a
client of choice. We support and engage with our
supply chain and, through our supply chain, we
help to provide employment and support to young
people. We conduct our day-to-day operations
inanenvironmentallyefficientmannerandwith
consideration to our neighbours.
We have set ourselves three stretching
commitments in the area of Operations to
further improve our approach:
– Achieve a 50% increase in site-based
apprenticeships and training
– Launch a £2 million fund for the supply chain
to support innovation in health and safety
– Map our supply chain risks and
developasustainablespecification
and procurement strategy
COMMITMENT
PROGRESS
OUR PROGRESS IN 2 01 2 – 201 4
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1 Royal Arsenal Riverside
2 Roman House
Integrateanassessmentofthesustainabilityofproducts,suppliersandcontractorsintothe
formal selection process
Register all sites with the Considerate Constructors Scheme and achieve a minimum of
35 points out of 50 in site audits (32 out of 40 prior to January 2013)
Reduce average site carbon dioxide emissions by 3% per site operative by May 2014
Reduce average site water consumption by 3% per site operative by May 2014
Re-use or recycle over 85% of construction, demolition and excavation waste
Achieved Partially achieved Not achieved
FEEDBACK
CONSIDERATE CONSTRUCTORS
ENER GY
100
suppliers contacted to obtain
feedback on our role as client
40.6/50
average Considerate
Constructors Scheme score
17%
reduction in operational carbon
emissions per site operative
SUPPLY CHAIN
Once schemes are in production, the
support of a reliable and competent supply
chain is critical to success. Engagement
with our suppliers is key to remaining a
client of choice and achieving high quality
outcomes, on time and on budget. Supply
chain conferences were held by several of
our operating companies during 2014 and
a supply chain task force was established.
Risks in the supply chain have been
assessed based on current and future
market conditions and feedback requested
from more than 100 of our suppliers; 75%
said that working with the Group allowed
their business to improve its own value.
In2015weplantofurtherstrengthenour
relationships with the supply chain through
a new supplier engagement programme.
An innovation fund of up to £2 million will
be made available to support our supply
chain, and particularly small businesses, in
targeting health and safety performance
across the industry.
APPRENTICESHIPS AND TRAINING
The Construction 2025 strategy set out
a number of challenges for industry and
Government, including invigorating the
industry’s image, particularly to young
people, and increasing capability in the
workforce. Spot checks indicate that
nearly 10% of our workforce of 11,000
contractors on our sites is in formal
training, including 2% currently working
as an apprentice. Within St George,
training has been boosted through the
employment of workplace co-ordinators;
74 apprentices have been working across
11 sites during the year. Alongside our
efforts with apprentices and training, we
also aim to encourage young people into
the industry through a series of talks and
events with schools and colleges.
CONSIDERATE CONSTRUCTION
All of our construction sites are registered
under the voluntary Considerate Constructors
Scheme (CCS) and its Code of Practice.
Our average audit score of 40.6/50 is far
in excess of the industry average of 35.5.
We were delighted that one third of our
schemes were recognised at the 2014
National Site Awards, including two
which achieved Most Considerate Site
Runner-Upstatuswhichrankstheminthe
top 27 construction sites in the country.
ENVIRONMENTAL MANAGEMENT
Site carbon emissions per person have
reduced by 17%, with total emissions of
16,908 tonnes CO2e from site activities
in 2014. During the same period our
water consumption has increased by
3%;principallythiswasduetosignificant
demolition operations requiring dust
suppression and landscaping works.
Our waste recycling rate has increased
to 94% (2013: 93%). Further information
on carbon emissions is set out within
the Directors’ report on page 82.
i Learn more about Operations at
berkeleygroup.co.uk/our-vision
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BERKELEY ANNUAL REPORT 2014 / STRATEGIC REPORTBERKELEY ANNUAL REPORT 2014 / STRATEGIC REPORT
HOW WE OPERATE: OUR VISION continued
OUR PEOPLE
Develop a highly skilled workforce who run autonomous businesses, operate in a safe
and supportive working environment, and contribute to wider society.
OUR APPR OACH
OU R HE A DLINE COMMITMEN TS F OR 2 01 4 - 201 6
A devolved business structure is at the heart of our
strategy. Our recognised brands and autonomous
operational teams carefully manage each individual
scheme to ensure that the entrepreneurial spirit of
the business continues. Recruiting and retaining a
high calibre workforce is crucial to our approach. We
must support both our direct employees and the
wider workforce of the contractors working on our
sites. We are proud to be safe; safety continues to
be a key focus area across all of our operations, in
addition to enhancing health and wellbeing. We
also aim to have a positive impact on society and
enable young people to get into work through
our support of the Berkeley Foundation.
We have set ourselves four stretching commitments
in the area of Our People to continue to improve
our approach:
– Pay at least the living wage to all direct employees
– Reduce energy costs by up to £500,000,
investing 50% of the saving in new health
and wellbeing initiatives
– Encourage and support every member of staff to
be involved with the Berkeley Foundation each year
– Launch a talent management programme which
develops new ideas to enhance the business
OUR PROGRESS IN 2 01 2 – 201 4
COMMITMENT
PROGRESS
Measure staff retention rates and workforce diversity and benchmark performance
Ensure that a minimum of 5% of our own staff and those working on our construction sites are
employed in an apprenticeship or training role
ContinuetoachieveaRIDDORreportableAccidentIncidentRate(AIR)oflessthan
3.5 incidents per 1,000 employees and subcontractors
Further enhance the Group’s ‘Good Work’ health and safety programme through active
engagement with contractors’ operatives on all our projects
Raise £250,000 annually for the Berkeley Foundation through employee fundraising and donations
Achieved Partially achieved Not achieved
APPRENTICES
H EALT H AN D S AFET Y
T HE B ERK EL EY F OUND ATI ON
115
apprentices worked on
our sites in 2014
2.92
per 1,000 employees
and operatives (2013: 2.99)
AccidentIncidentRate
£5m
funds committed to
good causes through the
Berkeley Foundation
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LOYALTY AND DIVERSITY
Our business continues to grow; we
now have over 1,850 direct employees
who are central to our success. We are
mindful of the need to attract, retain and
promote a talented and diverse group of
professionalsateverylevel.Inarecent
staff survey undertaken by St James, 90%
of employees were proud to work for
St James. The business also retained its
InvestorsinPeopleaccreditation.Across
the Group, nearly 40% of employees
are female as are over 20% of our Main
Board directors. Coming second across
all industries for ‘Britain’s Most Admired
Company’ was testament to our ability
to attract talent, as well as our business
performance and social responsibility.
TRAINING
Training is provided to all employees
based on job roles. We also operate formal
training schemes for graduates, as well as
a sales academy and production academy.
Skills for effective communication, working
together and empowering others formed
akeypartoftheInstituteofCustomer
Service training already undertaken across
some of the Group and planned for further
rollout in 2015.
Inlinewiththistheme,a‘Working
Together’ conference in early May 2014
brought together 250 people from across
the business to share information.
EMPLOYMENT
Inadditiontoourdirectemployees,we
also support a large workforce through
our contractors; in April 2014 around
11,000 people were working on our sites.
InfactBerkeleyisdirectlyorindirectly
supportingaround21,000jobsintheUK.
HEALTH AND SAFETY
OurAccidentIncidentRate(AIR)remains
better than the industry average at 2.92
(2013: 2.99). There has been an increased
focus on high risk activities across the
Group in the past 18 months in response
to the dramatic increase in production,
growth in workforce and higher proportion
of more complex developments under
construction. We have doubled our team
of dedicated health and safety staff as
well as introducing new Group Health
and Safety Standards and revised safety
management systems.
THE BERKELEY FOUNDATION
The Berkeley Foundation is now a
registered charity which has committed
or invested almost £5 million to the lives
of young people and their families over
the past three years. Two thirds of our
employees were involved during the year
2013, whether by fundraising, volunteering
or payroll giving and we are aiming to
increase this to 100% over the next two
years. The Job Creation Programme
launched in 2013 has so far enabled more
than 60 unemployed people to get into
work.Anewfive-yearstrategicplanhas
been published to take the Foundation
to 2019. For more information see
berkeleyfoundation.org.uk.
i Learn more about Our People at
berkeleygroup.co.uk/our-vision
EMPLOYEE DIVERSITY
FEMALE MALE
TOTAL
697
1,171
1,868
1
3
5
6
11
14
Total
Employees
Senior
Management
Board of
Directors
At 30 April 2014.
*ThefiguresfortheBoardofDirectorsisbasedonthe
Board on the date of signing these accounts, including
one director appointed on 1 May 2014.
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BERKELEY ANNUAL REPORT 2014 / STRATEGIC REPORTBERKELEY ANNUAL REPORT 2014 / STRATEGIC REPORT
S
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Berkeley committed
£353 million
to acquire new land
in 2014
TRADING AND FINANCIAL REVIEW AND OUTLOOK
“We have a clear plan to ensure that shareholders benefit from this
success by returning £13 per share (over £1.7 billion) by 2021 and
retaining a successful, sustainable business thereafter.”
OVERVIEW
Berkeley has built and sold 3,742 new
homes this year at an average selling
price of £423,000, driving a 40.4% increase
inpre-taxprofitsto£380.0millionand
a rise in return on shareholders’ equity
from 22.4% to 27.5%.
Basic earnings per share have grown
by 38.6% to 221.8 pence, of which 149
pence has been paid to shareholders as
dividends in the year, and the estimated
value of gross margin in the Group’s land
holdings is now in excess of £3 billion.
The Group remained ungeared
throughout the year, with net cash rising
from £44.7 million to £129.2 million after
paying £195.2 million of dividends to
shareholders and investing further in
new land and construction.
HOUSING MARKET
Domestic demand in the housing market
in London and the South of England has
been strong throughout the year, above
allforplacesbenefitingfromqualityof
design, public realm, transport links and
access to jobs and amenities. The market
hasbenefitedfromastablesocialand
political environment, low interest rates,
and a return to growth in the economy.
London’s standing as a global city
continues to drive demand and attract
investmentfromwithintheUKand
overseas. London’s success is crucial
to economic growth and a plentiful
supply of good quality new homes and
places is essential to supporting this.
Berkeley understands the importance of
enabling those people who live and work
heretofindahome,andmaintainsits
commitment to offer all of its schemes
totheUKmarketfirst.
Berkeley’s experience is that prices for its
properties have increased in line with those
reported in the market more generally.
Whilst the Government’s Help to Buy
scheme has been helpful in bringing
home ownership to within the reach of
many more people, it has had limited
benefittoBerkeleyasawholeduetothe
proportion of its sales which are off-plan.
On the 17 schemes where qualifying
properties were available, it has supported
some 36% of sales in the year, a total of
159 sales over the last twelve months.
Cancellation rates in the year were
approximately 8%. These remain low
compared to normal historical ranges and
reflectthestrongermarketbothinside
andoutsideLondon.Thisisalsoreflected
in historically low completed stock levels
at 30 April 2014, at which date Berkeley
held 39 such properties in inventories
compared to 140 at 30 April 2013.
YEAR ENDED 30 APRIL
£’MILLION
£’MILLION
£’MILLION
%
2014
2013
CHANGE
CHANGE
Revenue
1,620.6
1,372.6
Operatingprofit
Netfinancecosts
Share of joint ventures result
Profitbeforetax
Taxation
Profitaftertax
EPS Basic
ROE
374.8
(6.9)
12.1
380.0
(87.1)
292.9
221.8p
27.5%
280.1
(8.1)
(1.3)
270.7
(61.0)
209.7
160.0p
22.4%
Homes sold
Average selling price
3,742
£423,000
3,712
£354,000
+248.0
+94.7
+1.2
+13.4
+109.3
-26.1
+83.2
+61.8p
+5.1%
+18.1%
+33.8%
+40.4%
+39.7%
+38.6%
PIPELINE OF FUTURE LAND
Inadditiontoitslandholdings,the
Group’s pipeline of future land now
comprises over 11,000 plots with a
potential gross margin of some £1.5
billion. These are schemes which cannot
be delivered at the current time as
they do not have an implementable
planning consent and are dependent on
resolving practical technical constraints
and challenges surrounding vacant
possession. Accordingly, these sites
have been differentiated from Berkeley’s
landholdingsastheyrequiresignificant
further investment in land, planning
and infrastructure. The Group is aiming
tounlockthesesitesoverthenextfive
years to support the business beyond the
conclusion of the current plan. Nine new
sites have been added to the pipeline
in the year, including six in London at
Southall,Kingston,Westminster,Hornsey,
Battersea and Orpington and three
outside London in Bracknell, Ockham
and Sevenoaks.
The pipeline provides a transparent
source of land for future development
beyond 2021 which is not dependent
on buying land in the open market.
LAND HOLDINGS
Berkeley has unconditionally acquired nine
new sites in the year, investing a further
£353 million in land to secure some 2,500
plots into its land holdings. These include
six London schemes, comprising a 10 acre
redevelopment site in White City, a site in
Battersea with a detailed planning consent
for 456 apartments, two sites on the
Albert Embankment and two sites in West
London. Three sites have been secured
outside London in Bath, Barns Green in
West Sussex and Taplow in Berkshire.
The Group has continued to add value
to its land holdings during the year.
Berkeley has secured a number of new
planning consents in the year, including
a former convent in Mill Hill, housing
schemes in Finchley and Maidenhead,
mixed-use schemes in Hammersmith and
Twickenham, and a student development
inBath.Inaddition,some10%ofvalue
has been added to the Group’s land
holdings through optimisation of the
future phases of existing schemes and
updates to price and cost valuations. At
30 April 2014, 65 of Berkeley’s 77 sites
have an implementable planning consent,
all of which are in construction, whilst the
remainder are in the planning process.
The Group’s land holdings now include
24,006 plots (30 April 2013: 25,684) with an
estimated future gross margin of £3,014
million (30 April 2013: £2,852 million) and
an average selling price of £419,000
(30April2013:£378,000).Thisreflects
the increased London weighting of
Berkeley’s schemes.
APRIL 2014
CHANGE
APRIL 2013
Owned
Contracted
Plots
Sales value
Average selling price
Average plot cost
Land cost
Gross margin
Gross margin (%)
23,486
520
24,006
£10,062m
£419k
£72k
17.3%
£3,014m
30.0%
-1,569
-109
-1,678
+£355m
+£41k
+£10k
+0.7%
+£162m
+0.6%
25,055
629
25,684
£9,707m
£378k
£62k
16.5%
£2,852m
29.4%
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BERKELEY ANNUAL REPORT 2014 / STRATEGIC REPORTBERKELEY ANNUAL REPORT 2014 / STRATEGIC REPORT
TRADING AND FINANCIAL REVIEW AND OUTLOOK continued
Trade and other payables are £1,367.2
million at 30 April 2014 (£1,021.4 million
at 30 April 2013). These include £741.6
million of on account receipts from
customers (30 April 2013: £426.1 million)
and land creditors of £210.0 million (30
April 2013: £180.9 million). The increase
in land creditors relates to the purchase of
a site in White City in the year on deferred
terms before payments made against
existing land creditors at Wapping.
Provisions of £57.1 million (30 April 2013:
£29.0 million) include £53.3 million in
respect of post completion development
obligations (30 April 2013: £23.6 million)
and £3.8 million of other provisions
arising in the ordinary course of business
(30 April 2013: £5.4 million).
During the year, £337.6 million of cash
was generated from operations
(2013: £291.8 million). This is before
a net investment in working capital of
£77.9 million (2013: £102.8 million),
where the increase in the investment in
construction has been matched by the
increase in customer deposits, proceeds
from the disposal of rental fund properties
of £138.2 million (2013: £12.6 million),
taxandothercashoutflowsof£118.2
million (2013: £79.3 million) and dividends
of £195.2 million (2013: £19.7 million). A
net increase in net cash of £84.5 million,
together with a £34.4 million increase in
capital employed in the balance sheet,
has resulted in a £118.9 million rise in net
assets from £1,322.4 million at 30 April
2013 to £1,441.3 million at 30 April 2014.
TRADING ANALYSIS
Revenue of £1,620.6 million this year
(2013: £1,372.6 million) mainly comprised
£1,605.0 million of residential revenue
from the sale of new homes in London
and the South of England (2013: £1,337.9
million). The remainder was commercial
revenue of £15.6 million (2013: £26.4
million). There were no land sales in the
year (2013: £8.3 million).
The residential revenue resulted from the
sale of 3,742 new homes (2013: 3,712)
on Berkeley’s private, affordable and
student schemes at an average selling
price of £423,000 (2013: £354,000). This
includes the disposal of 534 properties
from Berkeley’s rental fund to M&G
Investments.Theincreaseinaverage
selling price is consistent with successful
delivery of sites acquired in London since
2009, with the mix of schemes now in
construction weighted towards a lower
volume of higher value properties.
Revenue of £15.6 million from commercial
activities (2013: £26.4 million) included the
sale of retail space across a number of the
Group’s developments including Marine
Wharf in Deptford, Goodman’s Fields in
Aldgate, Fulham Reach in Hammersmith
andImperialWharfinFulham.
PROFIT BEFORE TAX
Operating margin has increased from
20.4%to23.1%.Thisreflectsthebenefit
of operational gearing and the change of
mix of residential properties sold, which
includes completions at the St George
Wharf Tower in the second half of the
year, offset by an increase in overheads
by £10.8 million to £134.1 million (2013:
£123.3 million) which have reduced as a
percentage of revenue from 9.0% to 8.3%.
The Group’s share of the results of joint
ventureswasaprofitof£12.1million
(2013:lossof£1.3million)whichreflects
completions at both Stanmore Place and
375KensingtonHighStreetintheyear.
Netfinancecostshavedecreasedby
£1.2 million from £8.1 million to £6.9 million.
The Group started and ended the year in a
net cash position, and so generated some
income from its cash holdings. This was
more than offset by the amortisation of facility
feesandotherfinanceincomeandcosts
including imputed interest on land creditors.
Pre-tax return on equity has increased
from 22.4% to 27.5% and measures
underlying performance from the
operational business.
Profitbeforetaxhasincreasedby£109.3
million from £270.7 million to £380.0
million. Basic earnings per share, which
reflectstheprevailingUKcorporationtax
rate and the issue of 4.3 million shares
in January to satisfy share awards, has
increased by 38.6% from 160.0 pence to
221.8 pence.
Profitbeforetax:2013
Increaseingrossmargin
Increaseinoverheads
Decreaseinnetfinancecosts
£’MILLION
270.7
+105.5
-10.8
+1.2
Increaseinresultfromjointventures +13.4
Profitbeforetax:2014
380.0
FINANCIAL POSITION
Inventorieshaveincreasedfrom£2,066.7
million at 30 April 2013 to £2,481.2 million
at 30 April 2014 which demonstrates
the continued steady investment in the
business.Inventoriesinclude£492.4
million of land not under development
(30 April 2013: £310.0 million), £1,966.4
million of work in progress (30 April 2013:
£1,711.7 million) and £22.4 million of
completed stock (30 April 2013:
£45.0 million).
Within work in progress, Berkeley’s
investment in construction has risen by
£329.3 million to £1,180.3 million at 30
April 2014, supported by a 57% increase
in cash due on forward sales. By taking
the opportunity to forward sell, Berkeley
has secured certainty over its sales
pricestogiveittheconfidencetogrow
its construction activities, but is mindful
thatbuildcostinflationisarisktofuture
margins.Upwardpressureonbuild
costs and the more restricted availability
of materials and skilled labour within
the supply chain have been prevalent,
although in the current market the impact
of this has been broadly mitigated by
house price increases.
S
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ANALYSIS OF CAPITAL EMPLOYED
APRIL 2014
£’MILLION
CHANGE
APRIL 2013
£’MILLION
£’MILLION
Investmentproperties
Assets held for resale
Other non-current assets
Inventories
Trade and other receivables
Trade and other payables
- Deposits and on account receipts
- Other trade payables
Current tax liabilities
Provisions
Capital employed
ANALYSIS OF INVENTORIES
Land not under development
Work in progress: land cost
Work in progress: build cost
Completed units
CASH FLOW
Profitbeforetax
Increaseininventories
Other working capital movements
Tax paid
Other movements
Cashinflowbeforedividends
Dividends
Increaseinnetcash
Opening net cash/(debt)
Closing net cash
7.2
-
172.7
2,481.2
159.0
(741.6)
(625.6)
(83.7)
(57.1)
1,312.1
-19.3
-75.8
+38.4
+414.5
+32.2
-315.5
-30.3
+18.3
-28.1
+34.4
26.5
75.8
134.3
2,066.7
126.8
(426.1)
(595.3)
(102.0)
(29.0)
1,277.7
APRIL 2014
£’MILLION
CHANGE
APRIL 2013
£’MILLION
£’MILLION
492.4
786.1
1,278.5
1,180.3
22.4
2,481.2
+182.4
-74.6
+107.8
+329.3
-22.6
+414.5
310.0
860.7
1,170.7
851.0
45.0
2,066.7
2014
£’MILLION
2013
£’MILLION
380.0
(414.5)
336.6
(92.4)
70.0
279.7
(195.2)
84.5
44.7
129.2
270.7
(215.0)
112.2
(69.2)
23.6
122.3
(19.7)
102.6
(57.9)
44.7
40
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BERKELEY ANNUAL REPORT 2014 / STRATEGIC REPORTBERKELEY ANNUAL REPORT 2014 / STRATEGIC REPORT
TRADING AND FINANCIAL REVIEW AND OUTLOOK continued
RETURNS TO
SHAREHOLDERS
£’MILLION
PENCE
PER
SHARE
Paid in year
ended April 2013
Paid in year
ended April 2014
Interimdividenddeclared
for payment in
September 2014
Balance to be paid by
30 September 2015
(firstmilestone)*
By 30 September 2018
(second milestone)*
By 30 September 2021
(third milestone)*
19.7
15
195.2
149
121.8
90
243.6
585.8
585.8
180
433
433
1,751.9
1,300
* Based on 135.3 million shares currently in issue
OUTLOOK
These results demonstrate that Berkeley is
well placed and, although earnings remain
sensitive to the timing of delivery of some of
its larger developments, the Board currently
expects underlying full year earnings in
2015 to be in line with current market
expectationsbeforetheone-offbenefit
of the sale of the ground rent assets. The
Group remains alert to the uncertainty which
will arise from changes to the economic
and political landscape in the run-up to a
2015 General Election and may impact the
business and the market more generally.
Berkeley understands the industry and
the inherently cyclical market in which
it operates, and has the right strategy,
people and framework to deliver long-term
sustainable success. The Group is on course
to meet its commitment to return over £1.7
billion to shareholders by 2021 and, with
the visibility provided by the land pipeline,
provide a sustainable business thereafter.
BANKING FACILITIES
At 30 April 2014, and throughout the
financialyear,theGroupwasungeared.
Committed corporate banking facilities
remain at £525 million. Of this, £250
million matures in April 2018 and £275
million in May 2018, providing good
visibility and headroom within the
Group’s business plan.
JOINT VENTURES
Investmentsaccountedforusingthe
equity method have increased from £44.1
million at 30 April 2013 to £61.4 million
at 30 April 2014. This relates almost
exclusively to Berkeley’s investment in
St Edward, a joint venture with Prudential.
St Edward has three schemes currently
in development at Stanmore Place, 375
KensingtonHighStreetand190Strand.
203 homes were sold in the year at an
average selling price of £1,235,000 (2013:
66at£277,000),anincreasewhichreflects
the change of mix in properties sold.
1,389 plots in Berkeley’s land holdings
relate to St Edward schemes (30 April
2013: 1,592), and St Edward is continuing
to identify opportunities to develop the
joint venture through further sites to
which it can add value. This includes a
commercial site in Westminster which is
conditional on vacant possession and so
is included in the land pipeline. The joint
venture is partly funded by a £60 million
bank facility which was undrawn at year
end (30 April 2013: £34 million drawn).
TAXATION
The Group’s policy is to pay the amount
of tax legally due and to observe all
applicable rules and regulations. At
the same time we have an obligation
to maximise shareholder value and to
managefinancialandreputationalrisk.
This includes minimising and controlling
our tax costs, as we look to do for all costs
of our business. Factors that may affect
the Group’s tax charge include changes in
legislation, the impact of corporate activity
(restructuring, acquisitions, disposals, etc),
the resolution of open tax issues from
prior years and planning opportunities.
The Group makes provision for potential
tax liabilities that may arise, however the
amount ultimately paid may differ from
the amount accrued.
RENTAL FUND
Berkeley’s private rental fund held 729
properties at a historic cost of £102.3
million at 30 April 2013. 534 of the
properties were held at £75.8 million as
‘Non-currentassetsclassifiedasheldfor
resale’, and the remaining 195 properties
wereheldin‘Investmentproperties’at
£26.5 million.
The sale of the 534 properties held for
resaletoM&GInvestmentscompleted
on 5 June 2013 for an aggregate price of
£105.4 million included in revenue. After
repayment of £17.4 million of funding from
the Homes and Communities Agency, and
re-investment of £10 million for a minority
stakeintheM&GInvestmentFund,thenet
proceeds of sale were £75.2 million and
aprofitof£29.6millionwasrecognised
withinoperatingprofitintheyear.
54 properties from Berkeley’s rental fund
remainheldinInvestmentproperties
at £7.2 million at 30 April 2014 (195 at
£26.5 million at 30 April 2013). This follows
the disposal in the year of 141 properties
for£32.8millionofrevenueandaprofit
of £13.6 million where market conditions
have supported their sale.
GROUND RENTS
On 30 May 2014, the Group exchanged
contracts for the sale of a portfolio of
ground rent assets for £99.8 million. The sale
is expected to give rise to a non-recurring
profitondisposalofapproximately£80
millionaftertransactioncostsinthefirst
half of the year ending 30 April 2015.
LONG-TERM STRATEGIC PLAN
Berkeley has a long-term strategic plan to
return £13 per share to shareholders by 30
September 2021, broken down into three
milestones of 434 pence by September
2015, 433 pence by September 2018 and
433 pence by September 2021.
The Board has considered the results
of the Group and determined that it is
appropriate to propose a further interim
dividend of 90 pence per share, payable
on 26 September 2014 to shareholders on
the register on 22 August 2014. With this,
the Group has now paid or committed to
pay a total of 254 pence per share under
its long-term plan to return 1,300 pence
per share to shareholders by 2021, and it
leaves 180 pence per share to return to
meetthefirstmilestoneof434penceper
share by September 2015.
S
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AWARDS
The Berkeley Group is proud to have
been awarded the Queen’s Award for
Enterprise for Sustainable Development
thisyearforthesecondtime,thefirst
housebuilder to achieve this.
For the third time, we have been recognised
by Management Today as one of Britain’s
Most Admired Companies, recognised
as the leading housebuilder and ranked
second alongside some of the country’s
most successful and respected businesses.
For the eighth year running we were
ranked as the top homebuilder in the
2013 NextGeneration benchmarking
initiative. The benchmark ranks the
UK’s25largesthomebuildersaccording
to their sustainability, strategy
and performance.
ROB PERRINS
MANAGING DIRECTOR
11 JULY 2014
QUEEN’S AWARD FOR SUSTAINABLE
DEVELOPMENT 2014
NEXT GENERATION
BENCHMARK 2013
BRITAIN’S MOST ADMIRED
COMPANY 2013
First housebuilder to win the
award for the second time
Ranked as the most
sustainable homebuilder for
the 8th successive year
Ranked second across
businesses from all sectors
These are strong results which
reflect the current market
conditions and Berkeley’s bold
strategy to invest at the right
point in the economic and
housing cycle
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BERKELEY ANNUAL REPORT 2014 / STRATEGIC REPORTBERKELEY ANNUAL REPORT 2014 / STRATEGIC REPORT
BERKELEYANNUALREPORT2014/STRATEGICREPORT
BERKELEYANNUALREPORT2014/STRATEGICREPORT
CASE STUDY – THE ‘BERKELEY DIFFERENCE’ AT:
ROYAL ARSENAL RIVERSIDE
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“Our vision for Royal Arsenal
Riverside is to transform a derelict
industrial munitions site into a
beautiful, Thame-side destination
withaflourishingcommunityand
first-classtransportlinks.”
LO CATI ON
NUMBER OF HO ME S
D EVELOPMENT T YPES
LENGTH OF SCHEME
4,961
New homes, luxury apartments,
retail and leisure facilities and
transport links
20 years
PLACEMAKING
WATERFRONT
TRANS PORT LINKS
Already home to over 4,500 residents,
Berkeley focused on the early delivery of
whatwasrequiredtoserveaflourishing
riverside community. Residents currently
benefitfromaTescoExpress,Doctors,
Dentist and nursery as well as a health
and well-being centre and the Dial Arch
gastro pub.
With a concierge, residents gym and a
swimming pool, the Waterfront will offer
London city living in Woolwich. Berkeley
will be implementing the highest level of
specificationbefittingofacentralLondon
luxury development, setting itself apart
from all competition in the area.
Berkeley invested and built the Crossrail
station box to ensure that Royal Arsenal
Riverside is one of the best connected sites
in London. With the arrival of Crossrail in
2019, central London and the West End
will be only minutes away.
44
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BERKELEY ANNUAL REPORT 2014 / STRATEGIC REPORT
BERKELEY ANNUAL REPORT 2014 / GOVERNANCE
BERKELEY ANNUAL REPORT 2014 / GOVERNANCE
GOVERNANCE
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AN EXPERIENCED AND ACTIVE BOARD
COMMITTED TO MAINTAINING A HIGH
STANDARD OF CORPORATE GOVERNANCE
CHELSEA CREEK (COMPUTER GENERATED IMAGE)
46
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BERKELEYANNUALREPORT2014/GOVERNANCE
BERKELEYANNUALREPORT2014/GOVERNANCE
BOARD OF DIRECTORS
CHAIRMAN AND EXECUTIVE DIRECTORS
TONY PIDGLEY CBE N
Co-founder of the Company
in 1976 with Jim Farrer. He was
appointed Group Chairman
on 9 September 2009, having
previously been the Group
Managing Director since the
formation of the Group in
1976. He is Chairman of the
Nomination Committee.
ROB PERRINS BSC (Hons) FCA
Joined the Company in 1994
havingqualifiedasachartered
accountantwithErnst&Young
in 1991. He was appointed
to the Group Main Board on
1 May 2001 on becoming
Managing Director of Berkeley
Homes plc. He became Group
Finance Director on 2 November
2001, moving to his current role
as Group Managing Director on
9 September 2009.
NON-E XECUTIVE DIR EC T ORS
NICK SIMPKIN ACA
Joined Berkeley in 2002 and
has held a number of senior
financepositionsincluding
Finance Director of St James
and Head of Finance for
Berkeley Group. He joined
the Board and became
Group Finance Director on
10 September 2009.
KARL WHITEMAN
Joined Berkeley in 1996
as a Construction Director
and currently leads the
Berkeley Homes East Thames
division. He joined the Board
on 10 September 2009 as a
Divisional Executive Director.
SEAN ELLIS BSC (Hons)
Joined Berkeley in 2004
with an expertise in land
and is currently Chairman
of St James Group and the
Berkeley Homes Eastern
Counties Division. He joined
the Group Main Board on
9 September 2010 as a
Divisional Executive Director.
GREG FRY FCA
Joined the Group in 1982
and is currently Chairman
of St George, having been
a Director since its inception
in 1986. He was reappointed
to the Group Main Board
on 5 September 2011 as a
Divisional Executive Director,
having previously been a
member of the Group Main
Board from 1 May 1996 to
22 July 2010.
COMPANY SECRETA RY
E A Driver
HONORARY LIFE PRESIDENT
JimFarrerMRICS,alongwithTonyPidgley
a co-founder of Berkeley, he was Group
Chairman until his retirement in 1992.
At that time he was appointed Honorary
Life President.
KEY
N Nomination Committee
A Audit Committee
R Remuneration Committee
G
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SIR JOHN ARMITT N R
Appointed a Non-executive
Director on 1 October 2007
and became Deputy Chairman
on 5 September 2012. He is
currently Chairman of the
Olympic Delivery Authority,
Chairman of National Express
Group PLC, Chairman of City
and Guilds and is a member of
the Transport for London Board.
He was Chairman of the
Engineering and Physical
Science Research Council until
31 March 2012. From 2001 to
2007, he was Chief Executive of
Network Rail and its predecessor,
Railtrack. Sir John is the Senior
IndependentDirector.
DAVID HOWELL FCA N A
Appointed a Non-executive
Director on 25 February 2004.
David is currently a Non-executive
Director of two private companies
and Copthorne Holdings Ltd, the
parent company of Countryside
Properties plc as well as being
Treasurer and a Trustee of British
Red Cross. He was previously
a Main Board Director of
lastminute.com plc, Group
Finance Director of First Choice
Holidays plc, Executive Chairman
of Western and Oriental plc,
Chairman of EBTM plc
(Everything but the Music) and a
Non-executive Director of Nestor
Healthcare Group plc. He chairs
the Audit Committee. David will
stand down from the Board at
the AGM on 1 September 2014.
ADRIAN LI
Appointed a Non-executive
Director on 2 September 2013.
He is currently Deputy Chief
Executive of The Bank of
East Asia, Ltd., with responsibility
forthebank’sHongKong
business.HeisanIndependent
Non-executive Director of Sino
Land Company Ltd., Tsim Sha
Tsui Properties Ltd., Sino Hotels
(Holdings) Ltd., China State
ConstructionInternational
HoldingsLtd.,COSCOPacific
Ltd. and Shanghai Fosun
Pharmaceutical (Group) Co. Ltd.
He is a member of the
InternationalAdvisoryBoard
ofAbertisInfraestructuras,S.A,
and is an Alternate Director of
SanMiguelBreweryHongKong
LtdandAFFINHoldingsBerhad.
ALISON NIMMO CBE A
Appointed a Non-executive
Director on 5 September 2011,
Alison is Chief Executive of The
Crown Estate. Prior to that she
led the design and delivery of
the London 2012 Olympic and
Paralympic venues as Director
of Regeneration and Design at
the Olympic Delivery Authority.
VERONICA WADLEY N A
Appointed a Non-executive
Director on 3 January 2012.
She is currently Chair of the
Arts Council London, a Senior
Adviser to the Mayor of London
and a National Council member
of Arts Council England.
Previously Editor of The Evening
Standard, she is also an
IndependentDirectorofTimes
Newspapers Holdings Ltd.
GLYN BARKER BSC (Hons) FCA
A R
Appointed a Non-executive
Director on 3 January 2012
following a 35 year career
with PwC, most recently as
itsUKViceChairman.He
previously held a number
of senior posts within PwC
including Managing Partner
and Head of Assurance and
also established and ran their
Transactions Services business.
Glyn is a Non-executive
Director of Aviva plc and
Transocean Limited, Chairman
ofthelawfirmIrwinMitchell
and a Director of the English
National Opera Company.
He is Chairman of the
Remuneration Committee.
ANDY MYERS BEng ACA A R
Appointed a Non-executive
Director on 6 December 2013,
he is currently Chief Financial
OfficeratMcLarenGroup
Limited, having previously
heldseniorfinancerolesin
Rolls Royce plc and BMW/
Rover Group.
DIANA BRIGHTMORE-
ARMOUR FCCA, MCT
Appointed as a Non-executive
Director on 1 May 2014, Diana
iscurrentlytheUKCEOofThe
Australia and New Zealand
Banking Group Ltd and
previously held the position
of CEO, Corporate Banking
at Lloyds Banking Group
(2004-2012). Diana has 30 years
of international experience in
banking,corporatefinance,
financialmanagement,treasury
and audit.
48
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CORPORATE GOVERNANCE REPORT
The Company is committed to maintaining
a high standard of corporate governance
in respect of leadership, effectiveness,
accountability, remuneration and
relationships with our shareholders as
identified by the UK Corporate Governance
Code 2012 (the Code). In the year to
30 April 2014, the revised principles and
provisions of the Code (published In
September 2012 by the Financial Reporting
Council (FRC) applied to the Company.
This section, including the Audit Committee
Report and the Remuneration Report detail
how the Company has applied the principles
and provisions of the Code. The Company’s
business model is explained in the Strategic
Report. It is the Board’s view that it has been
fully compliant with the Code throughout
the 2013/14 financial year other than
in respect of the composition of the
Remuneration Committee on which there
were two rather than three independent
Non-executive Directors between
2 September 2013 and 30 April 2014.
The Group has been fully compliant since
1 May 2014 when Andy Myers was appointed
to the committee. A copy of the Code is
available on the Financial Reporting Council’s
website www.frc.org.uk
THE BOARD
ROLE
The Board has a collective responsibility
for promoting the long term success of the
Company in a safe and sustainable manner in
order to create shareholder value. The Board
provides leadership and sets the Company’s
strategic long-term objectives.
Its duties are set out in a formal schedule of
matters specifically reserved for decision by
the Board, which include:
– Overall management of the Group, its
strategy and long-term objectives;
– Approval of corporate plans;
– Approval of all corporate transactions;
– Changes to the Group’s capital structure;
– Approval of the Group’s treasury policy;
– Approval of the Group’s interim and
annual results, dividend policy and
shareholder distributions;
– Reviewing the Group’s risks and system of
internal control;
– Changes to the Board and other senior
executive roles;
– Corporate Governance arrangements and
the Board evaluation; and
– Approval of policies in key areas including
Sustainability, Health & Safety and
Business Ethics.
COMPOSITION, DIVERSITY AND
INDEPENDENCE
At the date of this report the Board
comprises fourteen Directors; the Chairman,
five Executive Directors and eight
independent Non-executive Directors.
The biographies of these directors are set
out on page 48.
During the year, Alan Coppin stepped down
from the Board and Adrian Li was appointed
as an Independent Non-executive Director
at the Annual General Meeting on
2 September 2013. On 6 December 2013,
Andy Myers was also appointed as an
Independent Non-executive Director.
On 1 May 2014, Diana Brightmore-Armour
was appointed as an Independent Non-
executive Director.
The Board has evolved over recent years to
put in place the succession planning that
all successful organisations require and the
composition of the Board continues to be
reviewed on a regular basis to ensure that an
appropriate balance of skills is maintained.
The Board has chosen not to set specific
representation targets for women at Board
level at this time. However, it recognises
that the benefits of diversity, including
gender diversity, will continue to be an active
consideration when further changes to the
Board’s composition are considered.
The Board considers that all of the current
Non-executive Directors were independent
throughout the year. David Howell joined
the Board in February 2004 and has now
served more than nine years on the Board.
At the Annual General Meeting on
1 September 2014, David Howell will step
down from the Board. The Non-executive
Directors, led by the Senior Independent
Director Sir John Armitt, have the skills,
experience, independence and knowledge
of the Company to enable them to discharge
their respective duties and responsibilities
effectively.
The Group Executive Directors do not hold
any Non-executive Director appointments or
commitments required to be disclosed under
the Code.
CHAIRMAN AND MANAGING DIRECTOR
The roles of Group Chairman and Group
Managing Director are separately held
and there are clear written guidelines
to support the division of responsibility
between them. The Group Chairman is
responsible for the effective conduct of
the Board and shareholder meetings and
for ensuring that each Director contributes
to effective decision-making. The Group
Managing Director has day-to-day executive
responsibility for the running of the Group’s
businesses. His role is to develop and
deliver the strategy to enable the Group to
meet its objectives.
MEETINGS
The Board met five times during 2013/14 and
there were no absences.
In addition to the above formal meetings
of the whole Board, the Non-executive
Directors meet with the Group Chairman.
The Group Managing Director and Group
Finance Director are invited to attend these
meetings in part, to provide an update on
the business activities of the Group. The
Non-executive Directors meet at least
annually without the Group Chairman
present, chaired by the Senior Independent
Director.
Board papers and agendas are sent out
in the week prior to each meeting, thus
allowing sufficient time for detailed review
and consideration of the documents
beforehand. In addition, the Board is
supplied with comprehensive management
information on a regular basis.
ELECTION AND RE-ELECTION OF DIRECTORS
The Articles of Association of the Company
include the requirement for Directors to
submit themselves to shareholders for
re-election every three years. In addition,
all Directors are subject to election by
shareholders at the first opportunity after
their appointment and thereafter at intervals
of no more than three years.
However, in accordance with the
requirements of the Code, all Directors offer
themselves for re-election at the Annual
General Meeting on 1 September 2014,
other than David Howell who is standing
down from the Board.
INDUCTION AND DEVELOPMENT
On appointment, Non-executive Directors
are provided with a detailed induction
programme. This covers an overview of the
Group’s operations and its policies, corporate
responsibility and corporate affairs issues,
legal matters, and the opportunity to meet
with Directors and key staff and to visit the
Group’s sites.
No training needs were identified this year,
although ongoing training is available to
all Directors to meet their individual needs.
Board members also receive guidance
on regulatory matters and the corporate
governance framework that the Group
operates under.
Members of the Audit and Remuneration
Committees received briefings from
our auditors and remuneration advisers
respectively to ensure they remain up to date
with current regulations and developments.
All Directors have access to advice from
the Company Secretary and independent
professional advisers, at the Company’s
expense, where specific expertise is required
in the course of their duties.
BOARD EVALUATION
The Code requires that the Board
undertakes an annual evaluation of its own
performance and that of its committees
and individual directors with an externally
facilitated evaluation conducted every three
years. Having sought the services of an
independent externally facilitated third party
for the 2013 evaluation, the Board evaluation
for 2014 was carried out by the Group
Solicitor and covered:
• Strategic matters
• Board structure, committees and their
operation
• Succession planning
• Induction and development
• Assessment of the performance of
individual committees and the Chairman
• Shareholder communication
The unanimous outcome of the review was
that the Board works very well and that all the
Directors are passionate about the business,
and that they enjoy their role on the Board.
The Board has a pivotal role in preserving
the organisation’s culture and ultimately
its success. In line with all successful
organisations, succession planning is seen as
a key focus for the Company and the Board
continues to evolve to address this issue.
The autonomous structure of the Group also
provides strength in depth which further
mitigates this risk.
An action plan has been agreed by the Board
to address the recommendations made from
the review.
CONFLICTS OF INTEREST
In accordance with the Companies Act 2006,
the Company’s Articles of Association allow
the Board to authorise potential conflicts
of interest that may arise and to impose
such limits or conditions as it thinks fit. The
decision to authorise a conflict of interest can
only be made by non-conflicted Directors
(those who have no interest in the matter
being considered) and in making such a
decision the Directors must act in a way they
consider in good faith will be most likely to
promote the Company’s success.
The Company has established a procedure
whereby actual and potential conflicts of
interest of current and proposed roles to be
undertaken by Directors of the Board with
other organisations are regularly reviewed
in respect of both the nature of those roles,
and their time commitment, and for proper
authorisation to be sought prior to the
appointment of any new director. The Board
consider these procedures to be working
effectively.
INSURANCE
The Company had in place at 30 April 2014
an appropriate policy which insures Directors
against certain liabilities, including legal
costs, which they may incur in carrying out
their duties. This remains in place.
BOARD COMMITTEES
The Board has delegated certain matters
to individual Executives and to the
specific committees of the Board; audit,
remuneration and nomination. The main
three Board Committees operate within
clearly defined Terms of Reference pursuant
to the provisions of the Code. The Terms
of Reference can be downloaded from the
section dealing with Investor Relations on the
Berkeley website (www.berkeleygroup.co.uk).
Copies are also available to shareholders on
application to the Company Secretary.
The responsibilities of the key Board
committees are described below.
EXECUTIVE COMMITTEE
The Executive Committee meets monthly
and reviews the financial and operating
performance of all Group divisions and
companies. The Group Managing Director,
Rob Perrins, chairs this Committee and
other members comprise, Tony Pidgley,
Nick Simpkin, Karl Whiteman, Sean Ellis
and Greg Fry alongside other senior
management.
AUDIT COMMITTEE
The Audit Committee is responsible for
monitoring and reviewing the financial
reporting and accounting policies of the
Company, reviewing the adequacy of internal
controls and the activities of the Group’s
internal audit function and overseeing
the relationship with the external auditor.
The Audit Committee comprises five
independent Non-executive Directors.
The Committee is chaired by David Howell
and the other members at 30 April 2014
were Alison Nimmo, Andy Myers, Glyn Barker
and Veronica Wadley.
David Howell, Andy Myers and Glyn Barker
are all considered to have recent and relevant
experience. David Howell is qualified as a
chartered accountant and was the Chief
Financial Officer and a Main Board Director
of lastminute.com plc; Andy Myers is
qualified as a chartered accountant and is
currently Chief Financial Officer at McLaren
Group Limited; and Glyn Barker is also
qualified as a chartered accountant, having
previously held a number of senior posts
within PwC including Managing Partner and
Head of Assurance. Upon David Howell’s
retirement from the Board at the Annual
General Meeting on 1 September 2014, the
Committee will be chaired by Andy Myers.
The Committee met formally on three
occasions during the year to 30 April 2014
with no absences.
An explanation of the role and activities
of the Audit committee during the year is
contained in the Audit Committee report on
pages 54 to 55.
REMUNERATION COMMITTEE
The Remuneration Committee is responsible
for determining the Company’s policy for
Executive remuneration and the precise
terms of employment and remuneration of
the Executive Directors.
At 30 April 2014, the Committee comprised
Glyn Barker and Sir John Armitt who are
both independent Non-executive Directors.
The Committee was chaired by Glyn Barker.
On 1 May 2014 Andy Myers was appointed to
the Committee.
The Committee met formally on two
occasions during the year to April 2014 with
no absences.
No Director is involved in deciding his or
her remuneration. The Executive Directors
decide the remuneration of the Non-
executive Directors and the Committee takes
into consideration the recommendations of
the Group Managing Director and Group
Finance Director regarding the remuneration
of their Executive colleagues.
The principles and details of Directors’
remuneration are contained in the
Remuneration Report on pages 56 to 80.
NOMINATION COMMITTEE
The Nomination Committee ensures that the
membership and composition of the Board,
including the balance of skills, is appropriate,
as well as giving full consideration to
succession planning on a regular basis.
The Committee is chaired by the Group
Chairman, Tony Pidgley and the Independent
Non-executive members at 30 April 2014
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were David Howell, Sir John Armitt and
Veronica Wadley. David Howell will step
down from the Committee on 1 September
2014.
The Committee met formally on two
occasions during the year to 30 April 2014
with no absences.
During the year, the activities of the
Committee included considering and making
recommendations to the Board regarding
the membership of the Board committees
and reviewing succession plans for the
Executive team.
The process for identifying and
recommending new appointments
includes a combination of discussions
and consultations, in addition to formal
interviews, utilising the services of
independent recruitment specialists, as
appropriate.
KEY RISKS AND INTERNAL CONTROL
The Board acknowledges that it has overall
responsibility for ensuring that the Group’s
system of internal control comply with the UK
Corporate Governance Code 2012 and for
reviewing its effectiveness, at least annually.
Internal control procedures are designed
to manage rather than eliminate the risk
of failure to achieve business objectives,
and can only provide reasonable and
not absolute assurance against material
misstatement or loss.
There are ongoing processes and procedures
for identifying, evaluating and managing the
significant risks faced by the Group. These
processes and procedures were in place from
the start of the financial year to the date on
which the 2014 Annual Report and Accounts
were approved and accord with the Turnbull
guidance issued in 2005.
The processes are regularly reviewed by the
Board and include an annual review by the
Directors of the operation and effectiveness
of the system of internal control as part of its
year end procedures. The key features of the
system of internal control include:
CLEAR ORGANISATIONAL STRUCTURE
The Group operates through autonomous
divisions and operating companies, each with
its own board. Operating company boards
meet on a weekly basis and divisional boards
on a monthly basis, and comprehensive
information is prepared for such meetings
on a standardised basis to cover all aspects
of the business. Formal reporting lines
and delegated levels of authority exist
within this structure and the review of risk
and performance occurs at multiple levels
throughout the operating companies,
divisions and at Group.
RISK ASSESSMENT
Risk reporting is embedded within ongoing
management reporting throughout the
Group. At operating company and divisional
level, Board meeting agendas and packs
are structured around the key risks facing
the Group. These risks include health and
safety, sales, production (build cost and
programme), land and planning, economic,
regulatory and site specific matters.
In addition, there is a formalised process
whereby each division produces quarterly
risks and control reports that identify
significant risks, the potential impact and
the actions being taken to mitigate the risks.
These risk reports are reviewed and updated
regularly.
A Group Risk Management Report is
presented at each Group Main Board
Meeting, setting out the current factors
affecting the risk profile of the Group, the
mitigation of these risks and the key changes
to this risk profile since the last report.
FINANCIAL REPORTING
A comprehensive budgeting and real-time
forecasting system, covering both profit
and cash, operates within the Group. This
enables executive management to view
key financial and operating data on a daily
basis. On a weekly and monthly basis more
formal reporting up to the Group Executives
is prepared. The results of all operating units
are reported monthly and compared to
budget and forecast.
There is a consolidation process in place
which ensures that there is an audit trail
between the Group’s financial reporting
system and the Group’s statutory financial
statements.
INVESTMENT AND CONTRACTING CONTROLS
The Group has clearly defined guidelines
for the purchase and sale of land within the
Group, which include detailed environmental,
planning and financial appraisal and are
subject to executive authorisation. Rigorous
procedures are also followed for the
selection of consultants and contractors.
The review and monitoring of all build
programmes and budgets are a fundamental
element of the Company’s financial
reporting cycle.
POLICIES AND PROCEDURES
Policies and procedures, including operating
and financial controls, are detailed in policies
and procedures manuals that are refreshed
and improved as appropriate. Training to
staff is given where necessary.
CENTRAL FUNCTIONS
Strong central functions, including Legal,
Health & Safety and Company Secretarial,
provide support and consistency to the
rest of the Group. In addition, the principal
treasury-related risks, decisions and control
processes are managed by the Group
Finance function, under the direction of the
Group Finance Director.
INTERNAL AUDIT
Internal auditors are in place at divisional
and Group level to provide assurance on the
operation of the Group’s control framework.
WHISTLEBLOWING
The Group has a whistleblowing policy which
has been communicated to all staff, where
Directors, management and staff can report
in confidence any concerns they may have of
malpractice, financial irregularity, breaches of
any Group procedures, or other matters.
BRIBERY ACT
The Board has responsibility for complying
with the requirements of the Bribery Act
2010 and is charged with overseeing the
development and implementation of
the Group’s policies and procedures and
monitoring ongoing compliance.
RELATIONS WITH SHAREHOLDERS
The Company encourages active dialogue
with its current and prospective shareholders
through ongoing meetings with institutional
investors. Major shareholders have the
opportunity to meet all Directors after the
Annual General Meeting in addition to
individual meetings with the Company.
Shareholders are also kept up to date
with the Company’s activities through the
Annual and Interim Reports and Interim
Management Statements. In addition, the
corporate website gives information on the
Group and latest news, including regulatory
announcements. The presentations made
after the announcement of the preliminary
and interim results are also available on the
website.
The Board is kept informed of the views
of the shareholders through periodic
reports from the Company’s broker UBS.
Additionally, the Non-executive Directors
have the opportunity to attend the bi-annual
analyst presentations.
The Senior Independent Director is available
to shareholders if they have concerns where
contact through the normal channels has
failed or when such contact is inappropriate.
ANNUAL GENERAL MEETING
All shareholders are invited to participate in
the Annual General Meeting (“AGM”) where
the Group Chairman, the Group Managing
Director and the Chairmen of the Audit,
Remuneration and Nomination Committees
will be available to answer questions and
will also be available for discussions with
shareholders both prior to and after the
meeting.
In accordance with the Code, the Company
arranges for the Annual Report and
Accounts and related papers to be posted
to shareholders so as to allow at least 20
working days for consideration prior to the
AGM.
The Company complies with the provisions
of the Code relating to the disclosure of
proxy votes, which, including abstentions, are
declared at the AGM after each resolution
has been dealt with on a show of hands and
are announced to the Stock Exchange shortly
after the close of the meeting. The Company
also complies with the requirements of the
Code with the separation of resolutions and
the attendance of the Chairmen of the Board
Committees.
The terms and conditions of appointment for
the Non-executive Directors, which set out
their expected time commitment, in addition
to the service contracts for the Executive
Directors, are available for inspection at the
AGM and during normal business hours at
the Company’s registered office.
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BERKELEY ANNUAL REPORT 2014 / GOVERNANCEBERKELEY ANNUAL REPORT 2014 / GOVERNANCEGOVERNANCE AUDIT COMMITTEE REPORT
The Board of Directors presents its Audit
Committee Report for the year ended
30 April 2014 which has been prepared on
the recommendation of the Audit Committee
(“the Committee”).
The report has been prepared in accordance
with the requirements of the UK Corporate
Governance Code, Schedule 8 of the Large
& Medium-Sized Companies and Groups
(Accounts and Reports) Regulations 2008,
and the Listing Rules of the Financial
Conduct Authority.
Details of the composition, experience and
the number of meetings of the Committee
are reported on page 51 of the Corporate
Governance Report.
ROLE AND RESPONSIBILITIES OF THE AUDIT
COMMITTEE
The Committee has formal Terms of
Reference which set out its role and the
authority delegated to it by the Board.
The key responsibilities of the Committee
are as follows:
• Financial Reporting
Monitoring the integrity of the financial
reporting of the Company and reviewing
significant financial reporting issues and
accounting policies;
• Internal Control and Internal Audit
Reviewing the adequacy and effectiveness
of the Group’s internal control and risk
management systems and monitoring the
effectiveness of the Group’s internal audit
function; and
• External Audit
Overseeing the relationship with the
external auditor, including appointment,
removal and fees, and ensuring the
auditor’s independence and the
effectiveness of the audit process.
This report considers each of these
responsibilities in turn, and how the
Committee has discharged them during
the year.
FINANCIAL REPORTING
At each of the Audit Committee meetings,
the Group Finance Director Nick Simpkin
presented, and the Committee debated, the
results and business plan of the Group and
any significant financial reporting judgements
relevant to this.
The Committee reviewed, prior to their
publication, the financial disclosures in
the Group’s Annual Report and Accounts,
Preliminary Announcement, Interim Report
and the contents of interim management
statements issued during the year.
The Committee’s review incorporated
consideration of the appropriateness of the
relevant accounting policies and financial
reporting judgements adopted therein.
The Committee’s review of the Annual Report
concentrated on whether, taken as a whole,
it was fair, balanced and understandable and
provided the information necessary for users
of the Annual Report to assess the Group’s
business strategy and performance.
The views of the Group’s auditor, which
was in attendance at each meeting of the
Committee during the year, were taken
into account in reaching its conclusions on
these matters.
The significant matters considered by the
Committee in 2014 included:
• Carrying value of inventories and
margin recognition
Inventories comprise land not under
development, work in progress and
completed units, which are held in the
balance sheet at the lower of cost and
net realisable value. This demands a
periodic assessment by the management
team of each of Berkeley’s sites which
is sensitive to assumptions in terms of
future sales prices and construction costs
and recognises the inherently cyclical
nature of the property market and the
risks of delivery. These assumptions are
also relevant to the determination of
profit recognised on properties sold.
The conclusions of this assessment were
reported by exception to the Committee
in a financial overview paper prior to
release of the Group’s annual and interim
results.
• Provisions
The Committee recognises that
accounting for provisions relies on
management judgement in estimating
the quantum and timing of outflows of
resources to settle any associated legal
or constructive obligations. The Group
holds provisions for post-completion
development obligations, onerous
lease and estate liabilities. The basis
for determining these provisions was
presented to the Committee for their
consideration. The Committee reviewed
the relevant papers and discussed the
assumptions underlying this determination
with management and the Group’s
external auditor and concluded that it was
satisfied that the assumptions adopted
were appropriate. A table of movements
in provisions over the period is included in
note 18 to the financial statements.
• Revenue recognition
The Committee recognises that the
Group’s accounting policy for revenue
recognition, namely that properties are
treated as sold and profits are recognised
when contracts are exchanged and
building work is physically complete,
involves an element of judgement in
determining the point at which building
work is physically complete. The
Committee reviewed the quantum of
properties not yet legally completed at
each balance sheet date in conjunction
with the review undertaken by the Group’s
external auditor and concluded that the
judgements were appropriate.
Other matters considered by the Committee
included management’s assessment of the
going concern status of the Group at the
balance sheet date and the accounting
for share-based payments, although no
new share options have been granted in
the year. The Committee concurred with
management’s adopted approach on all of
these matters.
Since the year end, the Committee has
completed its review of the 2014 Annual
Report and has confirmed to the Board
that it considers it to be fair, balanced and
understandable.
INTERNAL CONTROL AND INTERNAL AUDIT
The Committee undertook its annual review
of the Group’s Internal Control Framework
during the year. This review focused on the
system of risk management and internal
control in place which is explained in
more detail on page 52 of the Corporate
Governance Report, and covered:
– the key risks facing the Group;
– the key elements of the Group’s control
processes to mitigate these risks;
– the operations and effectiveness of
internal audit.
A paper was also presented to the
Committee which summarised the Group’s
consideration, controls and monitoring of
fraud risk across its activities.
The Committee also considered any internal
control recommendations raised by the
Group’s auditors during the course of the
external audit and the company’s response
to dealing with such recommendations.
A report summarising the recent activities
of the Internal Audit function within Berkeley
was presented to each of the Committee
meetings during the year. These reports
covered:
best practice under the UK Corporate
Governance Code 2012, and will monitor the
proposals of the Financial Reporting Council
and the European Union in determining its
future approach to re-tendering.
D HOWELL
CHAIRMAN, AUDIT COMMITTEE
11 JULY 2014
– a summary of the key findings arising from
the most recent formal internal audits
undertaken;
– management responses to any control
weaknesses identified, the closure of any
open items and any recurring themes;
– the outcome of other operational review
work undertaken by the internal audit
function;
– the internal audit plan for the coming year,
for debate with and the approval of the
Committee.
The Committee was satisfied that the scope,
extent and effectiveness of the Internal Audit
function are appropriate for the Group.
EXTERNAL AUDIT
During the year, in accordance with
evolving best practice, the Committee
undertook a competitive tender process
for the audit of the Company and its
subsidiaries for the year ended 30 April 2014.
PricewaterhouseCoopers LLP (“PwC”) and its
predecessor firm had been Berkeley’s auditor
since the Company first listed in 1984.
The tender process sought to assess a
combination of the tendering parties’
understanding of the business, industry and
related risks, their intended approach, the
skills and experience of the proposed team
and a comprehensive plan to manage a
successful transition.
dialogue between the Chairman of the
Audit Committee and the external auditors
prior to each Audit Committee meeting
and, after each meeting, the opportunity for
the Committee to meet with the external
auditors without the Executive Directors and
management present.
INDEPENDENCE OF THE EXTERNAL
AUDITORS
As part of its audit strategy presentation,
and through the audit tender process, KPMG
identified the safeguards in place within its
internal processes and procedures to protect,
in respect of its own role, the independence
of its audit.
The Committee has a policy on the use of
the auditors for non-audit services in order
to safeguard auditor independence and the
ratio of audit fees (including the fees for the
Interim Review) to non-audit fees should be
no greater than 1:1. The ratio for the year
ended 30 April 2014 was within the limits of
this ratio. Audit and non-audit fee disclosures
are set out in Note 4 of the Consolidated
Financial Statements.
Any departure from this ratio will only be as
a consequence of transactional work, where
the Committee considers it is right for the
auditors to undertake such work where the
reasons for doing so are compelling, such as
where:
i) it is proprietary to them;
Following this process, KPMG LLP (“KPMG”)
was appointed to fill a casual vacancy in
accordance with the Companies Act 2006.
ii) they have pre-existing knowledge and
experience that precludes the use of
alternative firms;
APPROACH
KPMG presented its audit strategy at the
first Audit Committee meeting following
their appointment. The strategy document
identified its assessment of the key risks of
the business for the purpose of the audit,
the scope of their work and updated the
Committee on regulatory changes for
the current year. KPMG also updated the
Committee on its interaction with PwC in
respect of the handover of the external audit.
KPMG reported to the Committee at the
year end, prior to the public announcement
of the Company’s results, in which it set out
its assessment of the Company’s judgements
and estimates in respect of these risks and
any other findings arising from its work.
Its work also included a review of the
adequacy of Berkeley’s external reporting for
compliance with prevailing regulations.
The external auditors have open recourse
to the Non-executive Directors should
they consider it necessary. There is private
iii) the nature of the transaction is such that
the Group’s auditors are the only practical
solution.
Non-audit work carried out by all accounting
firms, including the auditors, is formally
reported to the Audit Committee at each
meeting. There is open dialogue between
KPMG and the Company’s senior finance
team to monitor any proposed new
instructions.
The Committee has concluded that
it is comfortable that the auditors are
independent.
APPOINTMENT OF KPMG
On completion of the audit, the Committee
reviewed the performance and effectiveness
of KPMG with feedback from executive
management. The Committee has resolved
to propose KPMG’s appointment at the 2014
Annual General Meeting.
In deciding to tender the audit this year,
the Committee was mindful of evolving
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BERKELEY ANNUAL REPORT 2014 / GOVERNANCEBERKELEY ANNUAL REPORT 2014 / GOVERNANCEGOVERNANCE G
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DIRECTORS’ REMUNERATION REPORT
ANNUAL STATEMENT FROM CHAIRMAN OF REMUNERATION COMMITTEE
DIRECTORS’ REMUNERATION POLICY
Dear Shareholder
This Remuneration Report is split into two parts:
• The Directors’ Remuneration Policy sets out Berkeley’s policy and the key factors that were taken into account in setting the policy. The
Directors’ Remuneration Policy will be subject to a binding vote at the AGM in September 2014 and will apply for a period of three years.
• The Annual Report on Remuneration sets out payments and awards made to the Directors and details the link between Company
performance and remuneration for the 2013/14 financial year. The Annual Report on Remuneration together with this letter is subject
to an advisory shareholder vote at the AGM in September 2014. The sections of this report that have been subject to audit are labelled
accordingly.
CORPORATE PERFORMANCE
Berkeley has delivered strong performance and growth during 2013/14, with the key highlights being:
• Pre-tax return on shareholders’ equity of 27.5% (2013: 22.4%)
• Dividends paid to shareholders of £195 million (2013: £20 million)
• Future anticipated gross margin in the land bank up 5.7% to £3,014 million (2013: £2,852 million)
• Basic earnings per share increased by 38.6% to 221.8 pence (2013: 160.0 pence)
• Net asset value per share increased by 5.6% to 1,065.6 pence (2013: 1,009.1 pence)
The results underline the Group’s aim of balancing earnings in the near term and creating a sustainable business, delivering value to
shareholders over the long term.
Berkeley’s Return on Equity compared with the sector over the last six years illustrates the relative performance of the Company:
Company
Berkeley
Sector highest
Sector lowest
Sector average (excluding Berkeley)
2008/09
16.2%
16.2%
(73.4%)
(26.0%)
2009/10
13.3%
13.3%
(44.2%)
(18.1%)
2010/11
15.3%
15.3%
(6.2%)
1.0%
2011/12
21.2%
21.2%
(0.4%)
4.8%
2012/13
22.4%
22.4%
3.4%
8.5%
2013/14
27.5%
27.5%
3.5%
11.4%
Return on Equity
Berkeley’s remuneration policy aims to encourage, reward and retain the Executives and ensure that their actions are aligned with the
Company’s strategy.
In particular, the emphasis on performance related pay aligns the Executives with the performance of the business which is coupled with long
term incentives that lock in the Executive team for up to 10 years which is far longer than is typical in most publicly listed companies.
INCENTIVE OUTCOMES IN 2013/14
The key incentive outcomes from the performance this year are:
• Each Executive Director earned the maximum annual contribution under the Bonus Plan;
• The awards under Part A of the 2009 LTIP vested during the year. The exercise of these awards resulted in an increase in shareholding for
A W Pidgley, R C Perrins and G J Fry.
OPERATION OF POLICY IN 2014/15
There are no changes to the operation of the policy for 2014/15.
The Executive Directors have received salary increases for 2014/15 of approximately 3%, compared to average salary increases across the
Group of 6.1%.
NEW BONUS PLAN FOR 2015/16
The Committee is seeking shareholder approval for a new Bonus Plan at the September 2014 AGM which will form part of the policy for the
financial year 2015/16 and subsequent years. Details of the new Bonus Plan are set out in the Notice of AGM and it is proposed that the Plan
will operate on the same principles as the existing Bonus Plan.
IN CONCLUSION
I look forward to receiving your support for the resolution seeking approval of the Annual Report on Remuneration at our forthcoming AGM as
well as on the Remuneration Policy applicable to our Directors which will apply from the forthcoming AGM in September 2014.
GLYN BARKER
CHAIRMAN, REMUNERATION COMMITTEE
This section of the Remuneration Report contains details of the Company’s Directors’ Remuneration Policy that will govern the Company’s
future remuneration payments. The policy described in this part is intended to apply for three years and will be applicable from the Company’s
AGM in September 2014 subject to approval by shareholders at the AGM. The policy part will be displayed on the Company’s website, in the
investor relations area, immediately after the 2014 AGM.
The Committee has established the policy on the remuneration of the Executive Directors; the Board has established a policy on the
remuneration of the Non-executive Directors.
REMUNERATION POLICY
The objective of Berkeley’s remuneration policy is to encourage, reward and retain the current Executives and ensure their actions are aligned
with the Company’s strategy. The core philosophies of the policy are:
• Fixed remuneration: The Committee sets salaries for the Executive Directors based on their experience, role, individual and corporate
performance. Salaries on appointment to the Board are set at a lower quartile level of the comparator group which, based on appropriate
levels of individual and corporate performance, will be increased with experience gained over time.
• Annual performance related pay: The Committee believes that shareholders’ interests are best served by remuneration packages that
have a large emphasis on performance-related pay which encourage the Executive Directors to focus on delivering the business strategy.
• Long-term sustainable performance: The long-term incentives which extend to 2021 have been designed to lock in the Executive team
for a far longer period than is typical in most publicly listed companies. This helps to ensure that the Executive team are focused on
generating long-term sustainable value for shareholders, not just on meeting short term performance targets.
• Substantial equity holdings: In order to align the interests of Executive Directors and shareholders, the reward strategy is designed so
that, provided performance is delivered, the Executive team become material (in relation to their overall compensation) shareholders in
the Company.
REMUNERATION POSITIONING
The policy is to set the main elements of the Executive Directors’ remuneration package against the following quartiles in the Company’s
comparator group:
Base salary
Benefits
Pension
Annual Bonus
Long-term Incentives
Experience & Role
Market practice
Lower quartile
Upper decile
Upper decile
For the purposes of benchmarking remuneration the Committee used the following comparator group of companies for the 2014/15
financial year.
Amec PLC
Bellway PLC
Marshalls PLC
Taylor Wimpey PLC
Balfour Beatty PLC
Bovis Homes Group PLC
Persimmon PLC
Travis Perkins PLC
Barratt Developments PLC
Carillion PLC
Redrow PLC
The Committee also considers the remuneration in the FTSE 250 as an additional benchmark to the main comparator group set out above
due to its relatively small number of constituent companies. On an annual basis the Committee will review the comparator groups to ensure
that they remain appropriate.
REMUNERATION POLICY DISCRETION
The Committee has discretion in several areas of policy as set out in this report. The Committee may also exercise operational and
administrative discretions under relevant plan rules approved by shareholders. In addition, the Committee has the discretion to amend
policy with regard to minor or administrative matters where it would be, in the opinion of the Committee, disproportionate to seek or await
shareholder approval.
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BERKELEY ANNUAL REPORT 2014 / GOVERNANCEBERKELEY ANNUAL REPORT 2014 / GOVERNANCEGOVERNANCE
DIRECTORS’ REMUNERATION REPORT continued
FUTURE POLICY – EXECUTIVE DIRECTORS
The table below sets out the key elements of the policy for Executive Directors:
Objective and link
to strategy
Operation
Maximum opportunity
Performance condition and assessment
There are no performance conditions on
salary. However, the performance of the
individual and the Company are reflected
in the salary they are paid.
Base salary
Core element of
remuneration, set
at a level which
is sufficiently
competitive
to recruit and
retain Executive
Directors of the
appropriate calibre
and experience
to achieve the
Company’s business
strategy.
Policy: Experience
and role
Salaries are reviewed annually and
any changes are effective from
1 May each year.
In setting levels of base salary, the
Committee takes into account
the following factors in setting
individual salary levels:
• the individual Executive
Director’s experience and
responsibilities;
• the levels of base salary
for similar positions
with comparable status,
responsibility and skills in
organisations of broadly similar
size and complexity;
• the performance of the
individual Executive Director
and the Group;
• pay and conditions throughout
the Group.
The annual salary for each
Executive Director is set out in the
statement of implementation of
remuneration policy for 2014/15 on
page 77.
The Committee has a policy on
appointment of bringing Executive
Directors on to the Board at
lower quartile levels of salary and
increasing salaries as experience
is gained and performance in the
role can be evaluated.
Where an Executive is extremely
experienced and has a long track
record of proven performance
salaries may be in the upper decile.
In setting salaries, the Committee
looks at companies of broadly
similar size and complexity, in
particular those companies within
the comparator group and those in
the FTSE 250.
In general salary rises will be
limited to the level provided to
employees of the Company as a
whole.
Benefits
To provide
competitive levels
of employment
benefits.
In line with market practice, the
Company’s policy is to provide
Executive Directors with the
following additional benefits:
Benefit values vary year on year
depending on premiums and the
maximum value is the cost of the
provision of these benefits.
None.
Policy: Market
practice
• a fully expensed company car or
cash allowance alternative;
• medical insurance;
• other benefits may be provided
from time to time.
Benefits are reviewed periodically
to ensure they remain market
competitive.
The payments are not included
in salary for the purposes of
calculating any benefit or level
of participation in incentive
arrangements.
G
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Objective and link
to strategy
Operation
Maximum opportunity
Performance condition and assessment
Annual Bonus
The Bonus Plan
aligns rewards to
the key objectives
linked to short
to medium term
performance
whilst ensuring
that there is a
balance between
incentivising the
Executive Directors,
providing a
sustainable ongoing
level of return to
shareholders and
ensuring the long-
term sustainability
of the Company.
The Notice of AGM
sets out details
of the proposed
replacement for the
Bonus Plan which
will form part of
the policy, subject
to shareholder
approval, for the
financial year
2015/16 and
subsequent years.
Policy: Upper
decile
At the beginning of the plan
period of five financial years (first
bonus year started in FY 2010/11),
participants had a plan account to
which Company contributions were
made.
No Company contribution is made
to a participant’s plan account
unless the annual performance
criteria are met.
The maximum bonus potential for
all Executive Directors is 300% of
salary for any plan year.
At threshold performance no
bonus can be earned.
At target performance 50% of the
maximum bonus can be earned.
Bonus is earned on a straight line
basis between points.
The Company contribution will be
set annually as a percentage of
salary for each Executive Director.
Having regard to the strategy of
the Company, the Committee will
set:
• The performance levels
(including minimum
performance thresholds) for
the performance conditions for
each plan year;
• The maximum annual Company
contribution for each participant
for the plan year.
Participants will be entitled to an
annual payment of 50% of their
plan account at the end of each
financial year. All balances will
be deferred in shares or notional
shares. At the end of the five year
plan period 100% of the balance of
participants’ accounts will be paid.
Dividends paid during a
financial year will be added to a
participant’s plan account on an
annual basis.
There are two types of performance
condition; Group and Divisional. Both
are measured at the end of each financial
year.
The bonus payable to each of the Group
Chairman, Group Managing Director and
Group Finance Director is determined by
reference to Group performance.
For the Divisional Directors, 50% of the
potential bonus payable is determined
by reference to Group performance
and 50% by reference to Divisional
PBT performance for which they have
responsibility.
The Group performance condition is a
matrix of Return on Equity (ROE) and
Land Bank Growth.
The Divisional performance condition is
based upon Divisional Profit before Tax
(PBT).
There is a risk adjustment mechanism
built into the operation of the Bonus
Plan. If the threshold levels of ROE, Land
Bank Growth or Divisional PBT are not
met for any financial year during the five
years of operation of the Bonus Plan part
of a participant’s plan account will be
forfeited. This adjustment mechanism
ensures:
• Performance must be maintained
over the five years of operation of
the Bonus Plan or the value in the
participant’s plan account will not
increase;
• If there is a material deterioration
in performance, 50% of the balance
of the participant’s account will be
forfeited.
The Committee has the discretion to
adjust targets or weightings for any
exceptional events that may occur during
the year.
The Committee intends to provide full
prospective and retrospective disclosure
of Group performance targets. The
Committee is of the view that the
Divisional performance targets are
commercially sensitive both at the time
of setting the targets and at the point
when they are measured and the bonus
determined. It is therefore the opinion of
the Committee that these Targets cannot
be disclosed for a material period of time.
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BERKELEY ANNUAL REPORT 2014 / GOVERNANCEBERKELEY ANNUAL REPORT 2014 / GOVERNANCEGOVERNANCE DIRECTORS’ REMUNERATION REPORT continued
Objective and link
to strategy
Operation
Long-Term Incentive Plan
Maximum opportunity
Performance condition and assessment
No Plan available
for new grants
during the Policy
Period.
Policy: Upper
decile
Pension
To provide
competitive levels of
retirement benefit.
Policy: Lower
quartile
The maximum number of shares approved by shareholders under The Berkeley Group Holdings plc 2011 Long-Term
Incentive Plan has been granted. Therefore, no additional awards can be made under this Plan (unless on cessation
of employment by an existing participant shares become available).
No other Long Term Incentive Plan arrangement will be implemented by the Company during the Policy Period.
The maximum contribution or
payment in lieu is 25% of salary.
None.
The annual rate for each Executive
Director is set out in the statement
of implementation of remuneration
policy for 2014/15 on page 77.
The Company’s policy is either to
provide a contribution to a pension
arrangement or provide payments
in lieu of pension.
Messrs Pidgley, Perrins, Fry and
Whiteman currently receive
payments in lieu of pension.
Messrs Simpkin and Ellis currently
receive a pension contribution.
All payments in lieu of pension are
subject to income tax and national
insurance.
Pension is not included in salary
figures for the purposes of
determining any other benefit
entitlement.
Shareholding requirement
To ensure that
Executive Directors’
interests are aligned
with those of
shareholders over a
longer time horizon.
Policy: Market
practice
The Committee operates a
system of shareholder guidelines
to encourage long-term share
ownership by the Executive
Directors.
This should be achieved within five
years of appointment for Executive
Directors.
In the case of the Group Chairman
this is 400% of base salary, for other
Executive Directors 200% of base
salary. The Committee retains the
discretion to increase shareholding
requirements.
Shareholdings as at 30 April 2014
are provided on page 75.
None.
NOTES TO THE FUTURE POLICY TABLE
RATIONALE BEHIND SELECTION OF PERFORMANCE MEASURES AND TARGETS FOR BONUS PLAN
The annual bonus plan measures provide direct alignment with the short to medium-term strategic objectives of the Company:
Two Group performance targets – The balance of operating a return based measure (ROE) and a value based measure (Land Bank Growth)
should ensure that there is a balance between incentivising the Executive Directors to provide a sustainable ongoing level of return to
shareholders whilst ensuring the long-term sustainability of the Company, as follows:
• the Bonus Plan incentivises the delivery of increased profits in order to achieve ROE at the same time as growing the land bank. It should be
noted that the ROE will be set from a challenging base as the Company has not taken any land write downs as is the case with the majority
of its competitors;
• ROE is a compound measure and therefore if shareholder funds are reinvested and not paid as dividends, earnings growth will be
compounded to achieve the targets;
• the fact that the Bonus Plan targets also include growth in the land bank value, means that Executive Directors are encouraged to acquire
land in the current market on favourable terms as well as maximise sustainable profit growth;
• ROE as a measure highlights the inefficiency of retaining surplus cash on the balance sheet. In order to deliver the targeted level of returns,
this will encourage the Company to invest or return cash to shareholders.
Level of targets – The Committee wishes to incentivise the Executive Directors to achieve a good level of returns to shareholders whilst
ensuring the long-term sustainability of the Company. Therefore the targets set have to take into account an appropriate level of risk. The
Bonus Plan allows a close tailoring by the Committee of the performance conditions to the budget and performance of the Company for each
financial year.
Divisional PBT targets – The Divisional targets were chosen to ensure the Divisional Directors are appropriately focused on the profitability
of their respective Divisions which ultimately enhance the delivery of returns to shareholders. The targets are set by the Committee at
the beginning of the financial year at a level which is challenging taking into account the potential level of bonus payments, the market,
development availability and other relevant issues.
RECOVERY PROVISIONS
Under the terms of the Bonus Plan, there is a risk adjustment mechanism built in so that should threshold levels of performance not be
achieved, 50% of the balance of the participant’s account will be forfeited.
No recovery provisions apply to salary, benefits and pension.
CHANGES TO REMUNERATION POLICY FROM PREVIOUS POLICY
There have been no changes to the operation, maximum opportunity or performance measures in relation to the salary, annual bonus, pension
and other benefits.
DIFFERENCES IN REMUNERATION POLICY FOR ALL EMPLOYEES
The Group seeks to establish remuneration packages that will attract, retain and motivate high quality employees. Salary and benefit packages
for all employees are linked to both individual and business performance.
The Company’s business comprises of a number of operating Divisions. The annual and longer term cash based compensation arrangements
for these other senior employees of the Company are therefore linked to the performance of the relevant Division for which they work. Some
elements of the cash bonus plans are annual while other elements are deferred to ensure long-term consistent delivery by each Division. It
is the view of both the Committee and the Board as a whole that these arrangements are very effective at ensuring the delivery of Divisional
performance for which these senior employees are responsible.
All other eligible employees participate in bonus plans, which, together with salary reviews linked to business performance, enable all
employees to share in the success of the Group.
ELEMENTS OF PREVIOUS POLICY THAT WILL CONTINUE TO APPLY
The following subsisting awards will continue to operate on the terms and conditions set out in the relevant plan rules, as approved by
shareholders in relation to the 2009 LTIP and 2011 LTIP. Full details of the subsisting awards are set out in previous year’s Committee Reports.
Awards under these arrangements do not form part of the ongoing remuneration policy; however payments may be made in the future
subject to the achievement of the relevant performance conditions.
Objective and link
to strategy
Operation
Maximum opportunity
Performance condition
and assessment
Awards granted under the Berkeley Group Holdings plc 2009 Long-Term Incentive Plan (2009 LTIP)
The 2009 LTIP aligns
Executive Director
interests with those
of shareholders
by focusing
on delivering
sustainable
superior returns to
shareholders.
Approved by
shareholders at
the 2009 EGM and
amended at the
2011 AGM.
Further details on
the 2009 LTIP are
set out in the 2009
Notice of EGM
and 2011 Notice of
AGM.
Following shareholder approval on 15 April 2009, a
maximum of 7,100,000 shares were capable of being
granted under Part B of the 2009 LTIP.
The grants under Part B of the 2009 LTIP will vest in two
tranches, subject to certain conditions:
• 50% on 15 April 2015;
• 50% on 15 April 2016.
Shareholder approval was received at the 2011 AGM to
amend the rules of the 2009 LTIP (covering both Part A
and Part B) so that the terms of existing options granted
can be adjusted in the event of the payment of a cash
dividend or dividend in specie. This provides that where
such a dividend is paid the adjustment will be a reduction
in the exercise price of an option by the amount or value
of the dividend provided that the exercise price can
never be less than zero and a reduction will only be made
to the exercise price of an option that is not then capable
of exercise.
Awards under Part A of the 2009 LTIP were all exercised
in January 2014.
A total of 6,090,000 options
are outstanding under Part
B of the 2009 LTIP (held by
Executive Directors and
other senior employees)
and no new awards will be
granted.
The grants under Part B of
the 2009 LTIP are options
which will vest subject to:
• continued employment
to the relevant vesting
date;
• the satisfaction of the
underpin condition
that Net Assets Per
Share are at least £9.00
at each of the vesting
dates. The Committee
determined to increase
the Net Asset Per Share
underpin for the vesting
of options from £5.94
set at the date of grant
to £9.00 and to require
that this underpin be
met at each of the
vesting dates.
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DIRECTORS’ REMUNERATION REPORT continued
Objective and link
to strategy
Operation
Maximum opportunity
Performance condition and
assessment
Deferred balances under the Berkeley Group Holdings plc Bonus Plan (the Bonus Plan)
Provides long-
term shareholder
alignment for
Executive Directors
by deferring a
proportion of the
annual award under
the Bonus Plan.
Participants are entitled to an annual
payment of 50% of their plan account at the
end of each financial year.
All balances will be deferred in shares
or notional shares. At the end of the five
year plan period 100% of the balance of
participants’ accounts will be paid.
See Annual Bonus Plan on page 71 for
further details.
Deferred awards under the Bonus
Plan from previous financial years will
be part of the Company’s ongoing
arrangements.
Full details of the subsisting awards
are set out in previous year’s
Committee Reports.
See pages 71 to 73.
NOTES TO ELEMENTS OF PREVIOUS POLICY THAT WILL CONTINUE TO APPLY
RATIONALE BEHIND SELECTION OF PERFORMANCE MEASURES AND TARGETS
The 2009 LTIP and 2011 LTIP measures were selected as the Committee believes they provide direct alignment with the long-term strategic
objectives of the Company and shareholders. The 2011 LTIP plan aims to maximise returns within a given level of risk, disciplining the business
to make significant returns to shareholders in cash over a sustained period and balances investment and returns to shareholders.
2011 LTIP PERFORMANCE TARGETS
The following table sets out the cumulative distributions, the relevant dates and the consequences of failing to deliver these distributions by
these relevant dates:
Required date
Cumulative distribution
(on or before required
date)
Consequences of failing to make the cumulative distributions on or before
the required date
30 September 2015
£568.7m
Options lapse, no shares vest and 2011 LTIP terminates on 1 October 2015.
Awards granted under the Berkeley Group Holdings plc 2011 Long-Term Incentive Plan (2011 LTIP)
30 September 2018
£1,136.1m
The 2011 LTIP aligns
Executive Director
interests with those
of shareholders
by focusing on
creating sustainable
superior returns to
shareholders over a
10 year period.
Approved by
shareholders at
the 2011 AGM and
amended at the
2012 AGM.
Further details on
the 2011 LTIP are
set out in the 2011
Notice of AGM
and 2012 Notice of
AGM.
The 2011 LTIP is a ten year plan which
supports the Company’s long term plan
to make a priority return of approximately
£1.7 billion to shareholders, representing
183% of the Net Assets per Share at 30 April
2011 (£7.09/share), through a combination
of dividends and share buy-backs, by
September 2021.
The plan aims to make the returns to
shareholders in cash over a sustained period,
ensuring the Group remains at the right
size and balances investment and returns to
shareholders.
If the Company returns £1.7 billion to
shareholders over a ten year period via a
series of dividend payments (£13/share) and
share buy-backs by the dates referred to in
the footnote to this table, participants will
be entitled to exercise options and receive
a number of ordinary shares in the residual
capital of the Company at the end of the
ten year period after the returns have been
distributed.
The exercise price of options granted under
the 2011 LTIP will be £13 per share less an
amount equal to the value of all dividends
paid between the date of approval of the
2011 LTIP and 30 September 2021, provided
the exercise price cannot be less than zero.
The maximum number of shares
capable of being earned by all
participants is 19,616,503 shares,
being 13% of the fully diluted share
capital of the Company at the date
of approval of the plan.
The awards for each Executive
Director are set out below:
Executive
Director
Number of shares
Performance will be
measured against cumulative
distribution targets.
The notes to this table set out
the cumulative distributions
required by the relevant
dates and the consequences
of failing to deliver these
distributions.
A W Pidgley
5,000,000
R C Perrins
5,000,000
N G Simpkin
3,250,000
S Ellis
2,250,000
K Whiteman
1,000,000
G J Fry
1,866,503
Including awards to other senior
employees of the Company, options
over a total of 19,616,503 shares are
outstanding.
No new awards will be granted
under the 2011 LTIP to the current
Executive Directors.
Where the cumulative distributions on or before 30 September 2018 is less than
£1,136.1m, the following process determines the number of shares vesting:-
1 The number of shares capable of vesting is calculated on the level of dividend
paid and capable of being paid as at 30 September 2018.
2 The exercise price of the shares capable of vesting is set by reducing the
original exercise price of £13 by the level of cumulative dividend actually paid
on or before 30 September 2021.
3 No shares will vest until the end of the 2011 LTIP period on 30 September 2021
subject to the participant’s continued employment at this date.
30 September 2021
£1,703.6m
The process is the same as above with the relevant date being
30 September 2021.
£1,703.6 m paid in full prior
to 30 September 2021
(including £13/share in
dividends)
£1,703.6m
In circumstances where £1,703.6 m of cumulative distributions (including £13/
share in dividends) are made prior to 30 September 2021 awards shall vest in full.
Participants will be able to exercise their awards of options from the date this
cumulative target is met and may also sell any shares necessary to pay their tax
liability on exercise.
In respect of the balance of their shares participants shall only be able to sell a
maximum of 10% p.a. of this balance until 30 September 2021 at which date the
sale restrictions shall lapse.
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BERKELEY ANNUAL REPORT 2014 / GOVERNANCEBERKELEY ANNUAL REPORT 2014 / GOVERNANCEGOVERNANCE DIRECTORS’ REMUNERATION REPORT continued
ILLUSTRATIONS OF APPLICATION OF REMUNERATION POLICY
The graphs below seek to demonstrate how pay varies with performance for the Executive Directors based on our stated remuneration
policy for 2014/15 financial year. Whilst the historic long-term incentive plans do not form part of the future remuneration policy for 2014/15,
the Executive Directors are working towards the achievement of the relevant targets and they have therefore been included in the
illustrations below.
A W Pidgley
(£000)
3,318
51%
19%
31%
1,013
100%
5,623
60%
22%
18%
R C Perrins
(£000)
2,297
57%
16%
27%
617
100%
3,977
66%
19%
16%
N G Simpkin
(£000)
1,329
56%
14%
30%
403
100%
2,254
66%
16%
18%
Minimum
On-target Maximum
Minimum
On-target Maximum
Minimum
On-target Maximum
G J Fry
(£000)
424
100%
1,801
60%
17%
23%
1,112
48%
14%
38%
K Whiteman
(£000)
884
39%
16%
45%
396
100%
1,372
50%
21%
29%
S Ellis
(£000)
399
100%
1,890
60%
19%
21%
1,144
50%
15%
35%
Minimum
On-target Maximum
Minimum
On-target Maximum
Minimum
On-target Maximum
Key:
Fixed
Annual variable
Multiple reporting period
Assumptions used in determining the level of pay-out under given scenarios are as follows:
Element
Fixed Elements
Minimum
On-target
Maximum
Fixed elements do not vary with performance and comprise:
• 2014/15 base salary
• Estimated benefits for 2014/15
• Pension (or cash in lieu of) contributions.
Annual Variable Element
Bonus Plan
0%
Annual cash element where
performance measures relate to
one financial year
Multiple Reporting Period Elements
Bonus Plan
Deferred element where
performance measures relate to
more than one financial year
2011 LTIP
2009 LTIP Part B
0%
0%
0%
25% of maximum award 1,2
50% maximum award 1
25% of maximum award 1,2
50% maximum award 1
50% vesting 3
50% vesting 4
100% vesting 3
100% vesting 4
Notes
1. The total under all elements of the Bonus Plan is a maximum of 175%-300% of salary p.a. dependent upon Executive Director.
2. A level of 50% vesting for ‘on-target’ performance reflects the mid-point of the performance range under the Bonus Plan Group
performance matrix and PBT Divisional targets. See page 78 for more details.
3. The 2011 LTIP is a one-off award granted over a 10 year period therefore we have used one tenth of the IFRS 2 fair value of the options at
the date of grant as the Maximum and 50% of this value for On-Target.
4. The 2009 LTIP Part B is a one-off award which vests over 6 and 7 years (50% in 2015 and 50% in 2016). Therefore we have used one sixth and
one seventh of IFRS 2 fair values of the options at the date of grant as the Maximum and 50% of this value for On-Target.
5. In accordance with the Regulations, no allowance has been made for share price appreciation.
FUTURE POLICY – NON-EXECUTIVE DIRECTORS
The table below sets out the key elements of the policy for Non-executive Directors:
Objective and link to
strategy
Operation
Maximum
Performance
conditions and
assessment
To attract Non-
executive Directors
with the requisite
skills and experience
to contribute to
the strategy of
the Company
and to review its
implementation.
Current fee levels are set out in the
statement of implementation of
remuneration policy on page 79.
N/A
In general fee rises will be limited
to the level provided to employees
of the Company as a whole.
In setting fees, the Board looks
at the upper quartile fee levels of
companies of broadly similar size
and complexity, in particular those
companies within the comparator
group and those in the FTSE 250.
On an annual basis the Board will
review the comparator groups to
ensure they appropriately reflect
the Company’s size, operations
and business complexities.
All Non-executive Directors have specific terms of
engagement and their remuneration is determined
by the Board within the limits set by the Articles of
Association.
Each Non-executive Director receives a fee which
relates to membership of the Board and additional
fees are paid for Committee Chairmanship.
In exceptional circumstances, fees may also be paid
for additional time spent on the Company’s business
outside of the normal duties.
The Board reviews the fees of the Non-executive
Directors annually taking into account the following
factors:
• the workload and level of responsibility of the
Non-executive Directors under the changing
corporate governance expectations of
shareholders and their representative bodies;
• the current market rate for fees for Non-executive
Directors based on the comparators used for the
Executive Directors.
Changes are effective from 1 May each year.
The Company has a shareholding requirement for
Non-executive Directors, linked to net fee they
receive from the Company. This is equal to 100% of
net fees. This should be achieved within three years
of appointment for Non-executive Directors.
Non-executive Directors cannot participate in any of the Company’s share incentive plans or performance based plans and are not eligible to
join the Company’s pension scheme.
APPROACH TO RECRUITMENT REMUNERATION
The Committee’s approach to recruitment remuneration is to pay no more than is necessary to attract candidates of the appropriate calibre
and experience needed for the role. The remuneration package for any new recruit would be assessed following the same principles as for the
current Executive Directors.
The Committee is mindful that it wishes to avoid paying more than it considers necessary to secure the preferred candidate and is aware of
guidelines and shareholder sentiment regarding one-off or enhanced short or long-term incentive payments made on recruitment and the
appropriateness of any performance conditions associated with an award.
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BERKELEY ANNUAL REPORT 2014 / GOVERNANCEBERKELEY ANNUAL REPORT 2014 / GOVERNANCEGOVERNANCE
DIRECTORS’ REMUNERATION REPORT continued
Where an existing employee is promoted to the Board, the policy would apply from the date of promotion but there would be no
retrospective application of the policy in relation to subsisting incentive awards or remuneration arrangements. Accordingly, prevailing
elements of the remuneration package for an existing employee would be honoured and form part of the ongoing remuneration of the
employee. These would be disclosed to shareholders in the following year’s Annual Report on Remuneration.
SERVICE CONTRACTS
Details of the service contracts or letters of appointment for the Directors are as follows:
The table below summarises our key policies with respect to recruitment remuneration:
Executive Directors
Date of contract
Expiry date
Notice period by Company or
Director
Element
Policy
Base salary and benefits
Pension
Annual bonus
Long-Term incentives
The salary level will be set taking into account the responsibilities of the individual, experience and
the salaries paid to similar roles in comparable companies. The Committee will apply the policy set
out on salaries for the current Executive Directors in the remuneration policy table.
The Executive Director shall be eligible to receive benefits in line with Berkeley’s benefits policy as
set out in the remuneration policy table.
The Executive Director will be entitled to receive contributions into a pension plan or alternatively
to receive a supplement in lieu of pension contributions in line with Berkeley’s pension policy as set
out in the remuneration policy table.
The Executive Director will be eligible to participate in the Bonus Plan as set out in the
remuneration policy table.
The maximum potential opportunity under this Plan is 300% of salary.
On recruitment, a new Executive Director will be eligible to participate in the 2011 LTIP set out in
the “Elements of previous policy that will continue to apply” section, provided awards are available
under the Plan and the total number of awards granted to all participants does not exceed
19,616,503 shares under subsisting options as agreed with shareholders at the 2011 AGM.
Maximum Level of Variable
Remuneration
300% of salary under the Bonus Plan and any available awards under the 2011 LTIP provided awards
are available under the Plan and the total number of awards granted to all participants does not
exceed 19,616,503 shares under subsisting options.
Share buy-outs
Relocation policies
The Committee’s policy is not to provide buy-outs as a matter of course. However, should the
Committee determine that the individual circumstances of recruitment justified the provision of
a buy-out, the value of any incentives that will be forfeited on cessation of a director’s previous
employment will be calculated taking into account the following:
• the proportion of the performance period completed on the date of the director’s cessation of
employment;
• the performance conditions attached to the vesting of these incentives and the likelihood of
them being satisfied;
• any other terms and condition having a material effect on their value (‘lapsed value’);
The Committee may then grant up to the equivalent value as the lapsed value, where possible,
under the Company’s incentive plans. To the extent that it was not possible or practical to provide
the buyout within the terms of the Company’s existing incentive plans, a bespoke arrangement
would be used.
Where the new Executive Director is relocated from one work-base to another, the Company may
provide one-off/on-going as part of the Director’s relocation benefits compensation to reflect the
cost of relocation for the Executive in cases where they are expected to spend significant time
away from their country of domicile.
The level of the relocation package will be assessed on a case by case basis but will take into
consideration any cost of living differences/housing allowance/schooling.
A W Pidgley
24 June 1994
R C Perrins
15 July 2002
N G Simpkin
11 September 2002
G J Fry
27 June 1996
K Whiteman
15 January 1996
S Ellis
5 May 2004
Rolling service contract with no
fixed expiry date
12 months
Rolling service contract with no
fixed expiry date
12 months
Rolling service contract with no
fixed expiry date
12 months
Rolling service contract with no
fixed expiry date
12 months
Rolling service contract with no
fixed expiry date
12 months
Rolling service contract with no
fixed expiry date
12 months
Non-executives
Letter of appointment
Expiry date
Notice period by Company or
Director
J Armitt
D Howell
A Nimmo
G Barker
V Wadley
A Li
A Myers
1 October 2007
Renewable annually on 1 May
24 February 2004
Renewable annually on 1 May
5 September 2011
Renewable annually on 1 May
3 January 2012
3 January 2012
Renewable annually on 1 May
Renewable annually on 1 May
2 September 2013
Renewable annually on 1 May
6 December 2013
Renewable annually on 1 May
n/a
n/a
n/a
n/a
n/a
n/a
n/a
All service contracts and letters of appointments are available for viewing at the Company’s registered office.
The Company’s practice is to appoint the Non-executive Directors under letters of appointment, which are renewable annually on 1 May. They
are subject to the provisions of the Articles of Association dealing with appointment and rotation every three years, however in accordance
with the UK Corporate Governance code are subject to annual re-election.
When setting notice periods for Executive Directors, the Committee has regard for market practice and corporate governance best practice.
Notice periods will not be greater than 12 months.
PAYMENTS FOR LOSS OF OFFICE
When determining any loss of office payment for a departing Director the Committee will always seek to minimise the cost to the Company
whilst complying with the contractual terms and seeking to reflect the circumstances in place at the time. The Committee reserves the right to
make additional payments where such payments are made in good faith in discharge of an existing legal obligation (or by way of damages for
breach of such an obligation); or by way of settlement or compromise of any claim arising in connection with the termination of an Executive
Director’s office or employment.
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BERKELEY ANNUAL REPORT 2014 / GOVERNANCEBERKELEY ANNUAL REPORT 2014 / GOVERNANCEGOVERNANCE DIRECTORS’ REMUNERATION REPORT continued
The table below sets out the Company’s termination policy in respect of Executive Director contracts for each element of total remuneration.
For each element the table also sets out the boundaries of Committee discretion to apply flexibility to the default position.
Element
Approach
Application of Committee discretion
Base salary and benefits
In the event of termination by the Company, there will be no
compensation for loss of office due to misconduct or normal resignation.
The Committee has discretion to make a lump sum
payment in lieu.
In other circumstances, Executive Directors may be entitled to receive
compensation for loss of office which will be a maximum of twelve months
salary.
Such payments will be equivalent to the monthly salary and benefits that
the executive would have received if still in employment with the
Company. Executive Directors will be expected to mitigate their loss within
a twelve month period of their departure from the Company.
Pension
Pension contributions or payments in lieu of pension contribution will be
made during the notice period. No additional payments will be made in
respect of pension contributions for loss of office.
The Committee has discretion to make a lump sum
payment in lieu.
Annual bonus
Cessation of employment
The treatment of the Bonus
Plan is governed by the rules
of the plan.
If a participant ceases to be employed by a Group Company for any
reason an award that has not vested shall lapse unless the Committee in its
absolute discretion determines otherwise for ‘good leaver’ reasons
(including, but not limited to, injury, disability, ill health, retirement,
redundancy or transfer of the business).
If the Committee, determines that deferred awards held in a participants
plan account shall not lapse on cessation of employment, all deferred
awards held in the participant’s plan account shall vest immediately and
the Committee shall determine:
(a) whether the measurement date for that plan year is brought forward to
the date of cessation or remains at the end of the plan year;
(b) whether a reduction is applied to the payment to take account the
proportion of the plan year elapsed and the contribution to the Group.
If the Committee determines that the measurement date is the date of
cessation, the Committee shall pro-rate the performance conditions to the
date of cessation.
Change of control
The Committee has the discretion to determine that
an Executive Director is a good leaver.
The Committee retains discretion to set the
measurement date for the purposes of determining
performance measurement and whether to pro-rate
the contribution for that plan year.
It should be noted that it is the Committee’s policy
only to apply such discretions if the circumstances at
the time are, in its opinion, sufficiently exceptional,
and to provide a full explanation to shareholders
where discretion is exercised.
On a change of control, all deferred awards held in a participant’s plan
account shall vest immediately and the Committee shall determine:
The Committee retains discretion to pro-rate the
contribution for that plan year.
(a) that the measurement date is the date of the change of control;
(b) whether a reduction is applied to the payment to take account the
proportion of the plan year elapsed and the participant’s contribution to
the Group.
The Committee shall pro-rate the performance conditions to the
measurement date.
In the event of an internal reorganisation, the Committee may determine
that awards are replaced by equivalent awards.
It is the Committee’s policy in normal circumstances
to pro-rate to time; however, in exceptional
circumstances where the nature of the transaction
produces exceptional value for shareholders and
provided the performance targets are met the
Committee will consider whether pro-rating is
equitable.
2009 LTIP Part B
Cessation of employment
The treatment of 2009 LTIP
Part B awards is governed by
the rules of the plan, as
approved by shareholders at
the 2009 EGM and the
amendment approved at the
2011 AGM.
If a participant ceases to be employed by a Group Company for any
reason other than death, injury, ill-health, disability, retirement, the
employing Company ceasing to be a Group Company or a transfer of the
business or any other reason determined by the Committee, the
participant’s option shall lapse.
For ‘good leaver’ reasons noted above, the number of shares under
option capable of vesting will be calculated by pro-rating to the amount of
the relevant vesting period completed on the date of cessation of
employment. Awards will only vest at the end of the relevant vesting
period subject to the satisfaction of the performance condition.
The exercise price shall be adjusted for the payment of any cash dividend
or dividend in specie in accordance with the plan rules.
The Committee has the discretion to determine that
an Executive Director is a good leaver.
The Committee will only use its general discretion to
determine that an Executive Director is a good
leaver in exceptional circumstances and will provide
a full explanation to shareholders, if possible in
advance, of the basis for its determination.
Element
Approach
Application of Committee discretion
2009 LTIP Part B continued
Change of control
On a change of control of the Company or Court sanction of a scheme of
arrangement, all options shall be exercisable. The number of shares under
option exercisable on a change of control will be determined by pro-rating
the time elapsed from the date of grant to the date of the change of
control compared to the original vesting period and subject to the
satisfaction (as determined by the Committee in its absolute discretion) of
the performance condition at the date of the change of control.
The exercise price shall be adjusted for the payment of any cash dividend
or dividend in specie to the date of the relevant transaction in accordance
with the plan rules.
In the event of an internal reorganisation, options shall not vest unless the
Board consents and the Board may determine that options are exchanged
for an option over a successor company’s shares.
The Committee have the discretion to determine
how the performance condition taken into account
on a change of control. The Board will only use this
discretion in exceptional circumstances and will
provide a full explanation to shareholders, if possible
in advance, of the basis for its determination.
2011 LTIP
Cessation of employment
The treatment of 2011 LTIP
awards is governed by the
rules of the plan, as approved
by shareholders at the 2011
AGM Meeting and the
amendment approved at the
2012 AGM.
If a participant ceases to be employed by a Group Company for any
reason other than death, injury, ill-health, disability, redundancy, retirement,
the employing Company ceasing to be a Group Company or a transfer of
the business or any other reason determined by the Committee, the
participant’s option shall lapse.
For ‘good leaver’ reasons noted above, the Committee will determine the
number of shares capable of vesting taking into account dividends paid
per share and share buy-backs as at the termination date and the number
of shares under option held by the participant.
The exercise price shall be adjusted for any dividends paid in accordance
with the plan rules.
Change of control
The Committee has the discretion to determine that
an Executive Director is a good leaver.
The Committee will only use its general discretion to
determine that an Executive Director is a good
leaver in exceptional circumstances and will provide
a full explanation to shareholders, if possible in
advance, of the basis for its determination.
An option will become exercisable in full immediately prior to a change of
control of the Company, Court sanction of a scheme of arrangement or the
disposal of all, or substantially all, of the assets of the Company and its
subsidiaries.
The exercise price shall be adjusted for any dividends made to the date of
the relevant transaction in accordance with the plan rules.
In the event of an internal reorganisation, options shall not vest unless the
Committee consents and the Committee may determine that options are
exchanged for an option over a successor company’s shares.
Consideration shall be given by the Committee, in
consultation with the participants, as to whether the
type or timing of any consideration receivable by
shareholders should affect either the timing of the
exercise of options and/or alter the calculation of
the exercise price such that the participants do not
receive a greater or lesser benefit from the
transaction than the shareholders beyond the ability
to exercise their options.
Other contractual
obligations
No contractual provision agreed prior to 27th June 2012 that could impact
quantum of the payment.
None.
CONSIDERATION OF EMPLOYMENT CONDITIONS ELSEWHERE IN THE COMPANY
In making annual pay decisions the Committee also gives consideration to pay and employment conditions in the rest of the Group, including
any base salary increases awarded. The Committee is provided with data on the remuneration structure for management level tiers below the
Executive Directors, and uses this information to ensure consistency of approach throughout the Company. No comparison metrics were used.
Although the Committee takes into account the pay and conditions of other employees, the Company did not consult with employees when
drawing up the policy report.
CONSIDERATION OF SHAREHOLDER VIEWS
The Committee takes the views of the shareholders seriously and these views are taken into account in shaping remuneration policy and
practice. Shareholder views are considered when evaluating and setting remuneration strategy and the Committee commits to consulting with
key shareholders prior to any significant changes to its remuneration policy.
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BERKELEY ANNUAL REPORT 2014 / GOVERNANCEBERKELEY ANNUAL REPORT 2014 / GOVERNANCEGOVERNANCE DIRECTORS’ REMUNERATION REPORT continued
ANNUAL REPORT ON REMUNERATION
This section of the remuneration report contains details of how the Company’s 2013/14 remuneration policy for Directors was implemented
during the financial year ending on 30 April 2014. An advisory resolution to approve this report will be put to shareholders at the AGM.
SINGLE TOTAL FIGURE OF REMUNERATION (AUDITED)
The table below sets out the single total figure of remuneration and breakdown for each Executive Director paid in the 2013/14 financial year.
Comparative figures for 2012/13 have also been provided. Figures provided have been calculated in accordance with the Regulations.
Salary
Benefits
Annual bonus
2014
£’000
2013
£’000
2014
£’000
2013
£’000
2014
£’000
2013
£’000
Multi-year
performance
incentive
2014
£’000
2013
£’000
Pensions
Total
2014
£’000
2013
£’000
800
484
321
334
314
314
780
470
312
325
305
305
47
32
23
28
24
27
39
31
21
31
21
26
1,200
1,170
1,574
1,516
136
133
726
353
292
275
275
705
343
284
200
267
947
424
359
294
333
912
380
329
302
302
82
48
50
47
47
80
47
49
46
46
2014
£’000
3,757
2,271
2013
£’000
3,638
2,198
1,169
1,103
1,063
1,018
954
996
874
946
2,567
2,497
181
169
3,121
2,969
3,931
3,741
410
401
10,210
9,777
Executive
Director
A W Pidgley
R C Perrins
N G Simpkin
G J Fry
K Whiteman
S Ellis
Notes
1. 2013/14 and 2012/13 multiyear performance incentive – the amounts relate to awards that were released under the Annual Bonus Plan.
2. Benefits include a fully expensed company car or cash allowance alternative and medical insurance.
The table below sets out the single total figure of remuneration and breakdown for each Non-executive Director. Figures provided have been
calculated in accordance with the Regulations.
Basic fees
Additional fees (4)
Total fees
Non-executive Director
2014
£’000
2013
£’000
J Armitt
D Howell
A Coppin (1)
A Nimmo
G Barker
V Wadley
A Li (2)
A Myers (3)
Notes
103
56.5
19
56.5
56.5
56.5
38
23
409
93
55
55
55
55
55
–
–
368
2014
£’000
–
12.5
–
–
12.5
–
–
–
25
2013
£’000
–
12.5
12.5
–
–
–
–
–
25
2014
£’000
103
69
19
56.5
69
56.5
38
23
434
2013
£’000
93
67.5
67.5
55
55
55
N/A
N/A
393
1. Resigned from the Board on 2 September 2013.
2. Appointed to the Board on 2 September 2013.
3. Appointed to the Board on 6 December 2013.
4. Additional fees represent fees paid for the role of Committee Chairmanship.
Non-executive Directors do not participate in any of the Company’s incentive arrangements nor do they receive any benefits.
ADDITIONAL DETAILS IN RESPECT OF SINGLE TOTAL FIGURE TABLE (AUDITED)
The main elements of the remuneration outcomes for 2013/14 are set out below.
TAXABLE BENEFITS
Taxable benefits comprise a fully expensed company car or cash allowance alternative and medical insurance.
ANNUAL BONUS
In respect of the year under review, the Executive Directors’ performance was carefully reviewed by the Committee and performance against
the Bonus Plan targets is summarised below:
Executive Director
A W Pidgley
R C Perrins
N G Simpkin
G J Fry
K Whiteman
S Ellis
Maximum Annual
Bonus
Weighting – % of
maximum paid for
Group Performance
Weighting – % of
maximum paid for
Divisional Performance
Annual Bonus
Contribution to Plan
Account for 2013/14
£’000
Annual Bonus
Contribution to Plan
Account for 2013/14
% of maximum
300%
300%
220%
175%
175%
175%
100%
100%
100%
50%
50%
50%
0%
0%
0%
50%
50%
50%
2,400
1,452
706
585
550
550
100%
100%
100%
100%
100%
100%
Assessment of Group performance condition
The matrix of targets against which performance has been assessed for the current year are set out below:
Land Bank Growth
<1%
0.0%
Bonus Plan
Deduction
0%
0%
0%
0%
0%
0%
Performance Requirement Matrix
<15.0%
15.0%
16.0%
17.0%
18.0%
19.0%
20.0%
0%
50%
60%
70%
80%
90%
100%
y
t
i
u
q
E
n
o
n
r
u
t
e
R
Notes
1%
50.0%
2%
62.5%
3%
75.0%
4%
87.5%
5%
100.0%
0%
25%
30%
35%
40%
45%
50%
0%
31%
38%
44%
50%
56%
63%
0%
38%
45%
53%
60%
68%
75%
0%
44%
53%
61%
70%
79%
88%
0%
50%
60%
70%
80%
90%
100%
1. The matrix shows the percentage of each of the performance requirements for a given level of performance and the corresponding percentage of the targeted
maximum annual bonus potential that could be earned for 2013/14.
2. Straight line bonus vesting between points.
3. Return on Equity (ROE) is defined as profit before tax divided by average shareholders’ funds.
4. Land Bank Growth is defined as the annual percentage increase in the development margin in the land bank.
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BERKELEY ANNUAL REPORT 2014 / GOVERNANCEBERKELEY ANNUAL REPORT 2014 / GOVERNANCEGOVERNANCE
DIRECTORS’ REMUNERATION REPORT continued
Actual performance against the maximum targets for 2013/14 are set out below, along with the targets and actual performance for the
preceding three years of the five year plan:
The deferred balances on each Director’s plan account are set out below.
Return on Equity
Land Bank Growth
Bonus Plan year
Maximum Target
2013/14
2012/13
2011/12
2010/11
20.0%
18.5%
16.5%
13.5%
Actual
27.5%
22.4%
21.2%
15.3%
Maximum Target
5.0%
10.0%
8.0%
10.0%
Actual
5.7%
10.5%
12.0%
13.1%
For the 2013/14 financial year, the annual Bonus Plan contribution based on performance against the Group performance targets matrix
equated to 100% of the maximum annual bonus subject to this condition.
Assessment of Divisional PBT performance condition
Division
St George
Berkeley Homes Urban
Renaissance
St James Group
Percentage of bonus
element paid for threshold
performance
Percentage of bonus
element paid for maximum
performance
Level of actual performance
as a percentage of the
maximum performance
target
Percentage of bonus
element earned following
assessment against the
performance target
0%
0%
0%
100%
100%
100%
100%
100%
100%
100%
100%
100%
The Divisional PBT targets are set at the beginning of the financial year at a level which is challenging taking into account the potential level of
bonus payments, the market, the developments under management and other relevant issues. Disclosure of PBT targets are considered to be
commercially sensitive as the disclosure of such details could be detrimental to the Company’s future strategic plans.
For the 2013/14 financial year, the annual Bonus Plan contribution based on performance against the Divisional PBT targets equated to 100%
of maximum annual bonus subject to this condition.
The Committee exercised no discretion in determining incentive outcomes for the year ended 30 April 2014.
Bonus earned but deferred under the Bonus Plan
Under the Bonus Plan, the earned bonus for the year is added to each individual Director’s plan account. 50% of the balance on the plan
account at the end of the financial year is released and 50% deferred. See remuneration policy table on page 59 for details on the operation of
the Bonus Plan.
c.
Contribution
into plan
account for
the financial
year 2013/14
d. Plan account
balance
following
contribution
for financial
year 2013/14
e. Amount
released
following
contribution
for financial
year 2013/14
f. Amount
released
- annual
bonus (50%
of column c)
g. Amount
released
- multiyear
(column e
less column
f)
b. Plan
account
brought
forward (1)
h. Plan
account
carried
forward
i. Plan
account
carried
forward (2)
£’000
3,147
1,895
847
718
588
666
£’000
2,400
1,452
706
585
550
550
£’000
5,547
3,347
1,553
1,303
1,138
1,216
£’000
2,774
1,673
777
651
569
608
£’000
1,200
£’000
1,574
726
353
292
275
275
947
424
359
294
333
£’000
2,774
1,673
777
651
569
608
Shares
120,912
72,948
33,853
28,398
24,801
26,505
a. Plan
account
brought
forward
Shares
128,835
77,563
34,669
29,406
24,084
27,284
321,841
7,861
6,243
14,104
7,052
3,121
3,931
7,052
307,417
Executive
Director
A W Pidgley
R C Perrins
N G Simpkin
G J Fry
K Whiteman
S Ellis
Notes
1. Converted at a share price of £22.94 at 30 April 2014 plus £0.59 dividend paid 27 September 2013 plus £0.90 dividend paid 17 January 2014.
2. Converted at a share price of £22.94 at 30 April 2014.
There is a risk adjustment mechanism built into the operation of the Bonus Plan. If the threshold levels of ROE, Land Bank Growth or Divisional
PBT are not met for any financial year during the five years of operation of the Bonus Plan part of a participants plan account will be forfeited.
LONG-TERM INCENTIVES
No LTIPs with performance conditions related to the 2013/14 financial year vested during the year.
TOTAL PENSION ENTITLEMENTS (AUDITED)
No Executive Directors participate in any defined benefit arrangements. For reference, Nick Simpkin and Sean Ellis are members of a defined
contribution scheme, and Greg Fry was until June 2013. They received contributions equal to 15% of salary.
No amounts were paid into pension arrangements in respect of Tony Pidgley, Rob Perrins and Karl Whiteman during the year ended
30 April 2014, who instead received payments in lieu of a pension contribution from the Company during the year (2013/14: percentages
of salary 17%, 17% and 15% respectively). Greg Fry received payments in lieu of a pension contribution from the Company from June 2013
onwards at 15% of salary.
SCHEME INTERESTS AWARDED IN 2013/14 FINANCIAL YEAR (AUDITED)
No awards were made to the Executive Directors in the year under the incentive arrangements.
PAYMENTS TO PAST DIRECTORS (AUDITED)
No payments to past Directors were made during the year.
PAYMENTS FOR LOSS OF OFFICE (AUDITED)
No payments for loss of office were made during the year.
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BERKELEY ANNUAL REPORT 2014 / GOVERNANCEBERKELEY ANNUAL REPORT 2014 / GOVERNANCEGOVERNANCE DIRECTORS’ REMUNERATION REPORT continued
DIRECTORS’ SHAREHOLDING AND SHARE INTERESTS (AUDITED)
The Company has a shareholding requirement for both Executive and Non-executive Directors, linked to base salary or net fee they receive
from the Company. In the case of the Group Chairman this is 400% of base salary, for other Executive Directors 200% of base salary and for the
Non-executive Directors 100% of net fees. This should be achieved within five years of appointment for Executive Directors and three years of
appointment for Non-executive Directors.
Using the Company’s closing share price of £22.94 on 30 April 2014, compliance with these requirements was as follows:
Director
Executive Director
A W Pidgley
R C Perrins
N G Simpkin
G J Fry
K Whiteman
S Ellis
Non-executive Director
J Armitt
D Howell
A Nimmo
G Barker
V Wadley
A Li
A Myers
Obligation
(% base salary/NED net fees)
% base salary/NED net fees at
30 April 2014
Achievement at 30 April 2014
400%
200%
200%
200%
200%
200%
100%
100%
100%
100%
100%
100%
100%
19,445%
7,344%
193%
7,972%
262%
89%
350%
495%
140%
447%
455%
700%
46%
√
√
x
√
√
x
√
√
√
√
√
√
x
The table below summarises the Directors’ interests in shares:
Director
Executive Director
A W Pidgley
R C Perrins
N G Simpkin
G J Fry
K Whiteman
S Ellis
Non-executive Director
J Armitt
D Howell
A Nimmo
G Barker
V Wadley
A Li
A Myers
Notes
Scheme interests – Options and awards over shares
Option interests subject to conditions2
Shares1
2009 LTIP Part B
2011 LTIP
Total Interests held
6,781,124
1,549,405
27,000
1,160,746
35,815
12,212
9,112
8,631
2,000
7,800
6,500
10,000
650
1,500,000
750,000
250,000
500,000
250,000
175,000
–
–
–
–
–
–
–
5,000,000
5,000,000
3,250,000
1,866,503
1,000,000
2,250,000
–
–
–
–
–
–
–
6,500,000
5,750,000
3,500,000
2,366,503
1,250,000
2,425,000
–
–
–
–
–
–
–
1. Beneficial interests include shares held directly or indirectly by connected persons.
2. Please see the description of 2009 LTIP Part B and 2011 LTIP awards in the ‘elements of previous policy that will continue to apply’ section on pages 61 to 62.
3. 2009 LTIP Part B option exercise price £6.76 at 30 April 2014.
4. 2011 LTIP option exercise price £11.36 at 30 April 2014.
2009 LTIP PART A
The balance of the shares originally awarded under the 2004(b) LTIP (i.e. 3/12 of the shares), totalling 5,330,340 shares, were replaced by
options with an exercise price of £3.00 per share granted under the 2009 LTIP. This new option was identified as Part A of the 2009 LTIP. These
options were awarded on 29 June 2009, at which time the Element 2 awards under the 2004 (b) LTIP were surrendered.
During the year, the 4,441,950 options outstanding under the 2009 LTIP Part A vested and were exercised on 31 January 2014 by A W Pidgley,
R C Perrins and G J Fry, as set out below.
These options represent an incentive earned by the Executive Directors over the last 10 years (2004 – 2014).
Executive Director
A W Pidgley
R C Perrins
G J Fry
Notes
Type of award
2009 LTIP Part A
2009 LTIP Part A
2009 LTIP Part A
Number of Options
Over Shares
Exercise Price of
Exercised Options
Share Price on
Date of Exercise
Gain on Exercise
£’000
2,842,848
1,066,068
533,034
£1.36
£1.36
£1.36
£25.83
£25.83
£25.83
69,564
26,087
13,043
1. The original exercise price was adjusted from £3.00 to £1.36 to reflect the payment of dividends during the vesting period.
There are no options vested but unexercised at 30 April 2014.
DILUTION
The 2009 LTIP and 2011 LTIP were special arrangements, approved by shareholders at the EGM in April 2009 and AGM in September 2011
respectively. In considering dilution under the 2011 LTIP the Committee took account of the long term nature of the plan which extends
beyond the length of normal incentive plans.
In addition, the Committee took into account, after the priority return of £1.7 billion (£13 per share), representing 183% of Net Assets at
30 April 2011, that the dilution on existing shareholders until the hurdle return has been achieved will have no effect and the dilution will only
have effect on the value created above the priority return of £1.7 billion.
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BERKELEY ANNUAL REPORT 2014 / GOVERNANCEBERKELEY ANNUAL REPORT 2014 / GOVERNANCEGOVERNANCE 300
250
200
150
100
50
0
2009
Notes
DIRECTORS’ REMUNERATION REPORT continued
PERFORMANCE AND PAY
The graph below shows the Company’s performance, measured by total shareholder return (TSR), compared with the performance of the
FTSE250, the FTSE All Share and the Company’s remuneration comparator group The Company considers these the most relevant indices for
total shareholder return disclosure required under these Regulations.
PERCENTAGE CHANGE IN GROUP CHAIRMAN’S AND THE MANAGING DIRECTOR’S REMUNERATION
The table below compares the percentage increase in the Group Chairman’s and Managing Director’s pay (including salary, taxable benefits
and annual bonus) between 2012/13 and 2013/14, with the average change for the wider employee population. The Company considers the
full-time employee population, excluding the Main Board, to be an appropriate comparator group and the most stable point of comparison:
Total shareholder return from 30 April 2009 (%)
Base salary
Taxable benefits
Annual bonus
2012/13 to 2013/14 year on year change (%)
Group Chairman
Managing Director
Group employees
2.6%
22.4%
2.6%
3.0%
2.9%
3.0%
5.3%
4.6%
3.6%
RELATIVE IMPORTANCE OF SPEND ON PAY
The table below sets out the relative importance of spend on pay in the 2013/14 and 2012/13 financial years compared with distributions to
shareholders.
Item
Remuneration of Group employees
(including Directors)
Distributions to shareholders
2013/14
(£m)
142
195
2012/13
(£m)
97
20
% change
46%
875%
Berkeley Group
Holdings plc
FTSE 250 Index
FTSE All Share Index
Comparator Group
2010
2011
2012
2013
2014
STATEMENT OF IMPLEMENTATION OF REMUNERATION POLICY IN THE FOLLOWING FINANCIAL YEAR
1. Total shareholder return (“TSR”) is a measure showing the return on investing in one share of the Company over the measurement period (the return is the value of
the capital gain and reinvested dividends). This calculation is then carried out for the relevant indices and constituents of the comparator group.
GROUP CHAIRMAN AND MANAGING DIRECTOR REMUNERATION OVER PAST 5 YEARS
The table below shows the remuneration of the Group Chairman and Managing Director for each of the financial years shown above.
Given the nature of the roles of A W Pidgley and R C Perrins, the table below provides this information for both individuals.
Year
2013/14
2012/13
2011/12
2010/11
2009/10
Notes
Single figure of total remuneration (£’000)
Group
Chairman
Managing
Director
Annual bonus pay-out
(as % maximum opportunity)
Multiyear incentive vesting
awards (as % maximum
opportunity)
3,757
3,638
2,799
2,033
2,406
2,271
2,198
1,692
1,226
1,127
100%
100%
100%
100%
100%
See Note 3
n/a
n/a
1. Single figure of total remuneration for each year has been calculated in accordance with the Regulations.
2. From 2010/11 onwards the annual bonus pay-out figures represent annual Company contributions under the Bonus Plan.
3. 2011/12, 2012/13 and 2013/14 multiyear vesting awards represent deferred awards that were released during the year under the Bonus Plan. In accordance with the
Bonus Plan rules the Company’s contribution is earned based on the satisfaction of the annual performance conditions. Part of the Company contribution is
provided as a deferred award. 100% of these deferred awards will be paid out unless there has been forfeiture during the deferral period and subject to continued
employment at the date of release. At the year ended 30 April 2014 there has not been a forfeiture event under the Bonus Plan.
EXECUTIVE DIRECTORS
The remuneration policy and its implementation for the forthcoming financial year is summarised below:
SALARY
The salaries for 2014/15 are set out below:
Executive Director
2013/14 Salary
£’000
2014/2015 Salary
£’000
% change
Lower Quartile
Median
Upper Quartile
FTSE 250 £’000
A W Pidgley
R C Perrins
N G Simpkin
G J Fry
K Whiteman
S Ellis
800
484
321
334
314
314
825
500
331
344
324
324
3.1
3.3
3.1
3.0
3.2
3.2
424
436
284
255
255
255
502
507
334
327
327
327
590
587
391
375
375
375
The increases agreed by the Committee for the Executive Directors reflects the Committee’s policy of increasing individual Director’s salaries
over time to reflect their experience, performance and the performance of the Group. In reviewing the salaries of the Executive Directors, the
Committee has also taken account of the employment conditions and salary increases awarded to employees throughout the Group, which
were on average 6.1% this year.
BENEFITS AND PENSION
No changes are proposed to benefits or pension in 2014/15.
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BERKELEY ANNUAL REPORT 2014 / GOVERNANCEBERKELEY ANNUAL REPORT 2014 / GOVERNANCEGOVERNANCE
DIRECTORS’ REMUNERATION REPORT continued
BONUS PLAN
The maximum bonus potentials for the year ending 30 April 2015 are set out below:
Executive Director
A W Pidgley
R C Perrins
N G Simpkin
Maximum Bonus (%
of salary)
300%
300%
220%
G J Fry
175%
K Whiteman
175%
S Ellis
220%
Key features of the Bonus Plan
See remuneration policy table on page 59 for details on the operation of the Bonus Plan.
Performance conditions
The bonus payable to each of the Group Chairman, Group Managing Director and Group Finance Director will be determined by reference
to the Group performance condition. For the Divisional Directors, 50% of the potential bonus payable will be determined by reference to the
Group performance condition and 50% by reference to the Divisional PBT performance condition.
Group performance condition
The ROE maximum performance condition for the year ending 30 April 2015 has been increased from 20% to 25%. The maximum
performance condition for land bank growth remains at 5%.
The following table sets out the performance conditions for the Bonus Plan for the year ended 30 April 2015:
Land Bank Growth
<0%
0.0%
Bonus Plan
Deduction
0%
0%
0%
0%
0%
0%
Performance Requirement Matrix
<20.0%
20.0%
21.0%
22.0%
23.0%
24.0%
25.0%
0%
50%
60%
70%
80%
90%
100%
y
t
i
u
q
E
n
o
n
r
u
t
e
R
Notes
0.0%
50.0%
1.0%
60.0%
2.0%
70.0%
3.0%
80.0%
4.0%
90.0%
5.0%
100.0%
0%
25%
30%
35%
40%
45%
50%
0%
30%
36%
42%
48%
54%
60%
0%
35%
42%
49%
56%
63%
70%
0%
40%
48%
56%
64%
72%
80%
0%
45%
54%
63%
72%
81%
90%
0%
50%
60%
70%
80%
90%
100%
1. The matrix shows the percentage of each of the performance requirements for a given level of performance and the corresponding percentage of the targeted
maximum annual bonus potential that could be earned for 2014/15.
2. Straight line bonus vesting between points.
3. Return on Equity (ROE) is defined as profit before tax divided by average shareholders’ funds.
4. Land Bank Growth is defined as the annual percentage increase in the development margin in the land bank.
Divisional PBT performance condition
The Divisional PBT targets are set at the beginning of the financial year at a level which is challenging taking into account the potential level
of bonus payments, the market, development availability and other relevant issues. It is the view of the Committee that the disclosure of these
targets in advance would provide the Company’s competitors with an unfair advantage. However the Committee may in the future provide
retrospective disclosure to allow shareholders to judge the level of bonus actually earned against the relevant Division’s performance.
LONG-TERM INCENTIVES
No changes are proposed to the Company’s long-term incentive arrangements in 2014/15. The operation of the historic 2009 and 2011 LTIP
arrangements are set out in the Director’s Remuneration Policy section on pages 61 to 62.
NON-EXECUTIVE DIRECTORS
The following table sets out the fee rates for the Non-executive Directors in the year ended 30 April 2014 and those rates which will apply in
the year ending 30 April 2015:
Deputy Chairman and SID fees
Basic Fee
Additional fee for chairmanship of Audit and Remuneration Committee
2013/14
£103,000
£56,500
£12,500
2014/15
£106,000
£58,500
£12,500
% change
2.9%
3.5%
–
CONSIDERATION BY THE DIRECTORS OF MATTERS RELATING TO DIRECTOR’S REMUNERATION
MEMBERS OF THE COMMITTEE
The committee currently comprises three Independent Non-executive Directors, Glyn Barker (Chairman), Sir John Armitt and Andy Myers.
Glyn Barker (Chairman) and Sir John Armitt were members of the committee at 30 April 2014 and Andy Myers was appointed to the
Committee on 1 May 2014.
The members of the Committee have no personal financial interest other than as shareholders in matters to be decided, no potential conflicts
of interest arising from cross Directorships and no day-to-day involvement in the running of the business.
Director
Glyn Barker
Sir John Armitt
Number of meetings during financial year
Number of meetings attended
2
2
2
2
ROLE OF THE COMMITTEE AND ACTIVITIES
The key responsibilities of the Committee are to:
• determine and agree with the Board the broad policy for the remuneration of the Executive Directors. This includes salary, bonus plans,
share options, other share based incentives and pensions;
• determine the performance conditions for the Bonus Plan operated by the Company and approve the total annual payments made under
this Plan;
• determine all share incentive plans for approval by the Board and shareholders;
• take into account the views of shareholders when determining plans under the remuneration policy;
• ensure that the contractual terms on termination, and any payments made, are fair to the individual and the Company and that failure is not
rewarded;
• note annually the remuneration trends and any major changes in employee benefit structures across the Company or Group.
The Committee has formal terms of reference which describes its full remit. This can be downloaded from the section dealing with Investor
Relations on the Berkeley website (www.berkeleygroup.co.uk).
The Committee’s activities during the 2013/14 financial year included:
Meeting
June 2013
March 2014
Items discussed
Draft Remuneration Report for the year ended 30th April 2013
Pay review for the Group for the year ended 30th April 2013
Executive Remuneration Benchmarking report
New Directors Remuneration regulations and changes to Remuneration Report
78
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BERKELEY ANNUAL REPORT 2014 / GOVERNANCEBERKELEY ANNUAL REPORT 2014 / GOVERNANCEGOVERNANCE
DIRECTORS’ REMUNERATION REPORT continued
BERKELEY ANNUAL REPORT 2014 / GOVERNANCE
DIRECTORS’ REPORT
ADVISORS TO THE COMMITTEE
The Committee is able to seek independent advice at the expense of the Company; no advice has been sought by the Committee during the
year under review.
In determining the Executive Directors’ remuneration for the year, the Committee consulted with the Group Chairman, Tony Pidgley, the
Group Managing Director, Rob Perrins and the Group Finance Director, Nick Simpkin. No Director played a part in any discussion about his
own remuneration.
In addition, the Committee had access to information on executive reward provided to the Board by PricewaterhouseCoopers LLP (PwC).
PwC is a member of Remuneration Consultants Group and, as such, voluntarily operates under the code of conduct in relation to executive
remuneration consulting in the UK.
During the year, the Company paid a retainer fee of £50,000 to PwC for services in relation to advice provided to the Board that was also used
by the Committee.
KPMG have been the Company’s auditors since December 2013 and have therefore audited these financial statements. Prior to this PwC
were the Company’s auditors and the Board reviewed the nature of the services provided during this time and was satisfied that no conflict of
interest existed in the provision of these services.
STATEMENT OF VOTING AT GENERAL MEETING
The table below shows the advisory vote on the 2012/13 Remuneration Report at the AGM held on 2nd September 2013.
2012/13 Remuneration Report
Votes for
85,537,828
%
Votes against
%
Votes withheld
89.57%
9,955,633
10.42%
216,649
Please note that the first votes on the Annual Report on Remuneration and the Director’s Remuneration Policy are due to take place at the
2014 AGM.
The Directors’ Remuneration Report has been approved by the Board.
By Order of the Board
GLYN BARKER
CHAIRMAN OF THE REMUNERATION COMMITTEE
11 JULY 2014
The Directors submit their report together
with the audited consolidated and company
financial statements for the year ended
30 April 2014.
PRINCIPAL ACTIVITIES AND REVIEW OF THE
BUSINESS
The Company is the UK holding company
of a Group engaged in residential-led
property development focusing on urban
regeneration and mixed-use developments.
The Company is incorporated and domiciled
in England and Wales and is quoted on the
London Stock Exchange.
The information that fulfils the requirements
of the Strategic report can be found on
pages 3 to 45 of the Annual Report which
provide more detailed commentaries on
the business performance during the year
together with the outlook for the future.
In addition, information in respect of the
principal financial and operating risks of
the business is set out on pages 20 to 23
of the Strategic Report.
TRADING RESULTS AND DIVIDENDS
The Group’s consolidated profit after
taxation for the financial year was £292.9m
(2013: £209.7m). The Group’s joint ventures
contributed a profit after taxation of £12.1m
(2013: loss of £1.3m).
An interim dividend of 90p per share was
paid to shareholders on 17 January 2014.
A further interim dividend of 90p per share
is proposed, payable on 26 September 2014
to shareholders on the register on 22 August
2014.
POST BALANCE SHEET EVENT
On 30 May 2014, the Group exchanged
contracts for the sale of a portfolio of ground
rent assets for £99.8 million. The sale is
expected to give rise to a non-recurring profit
on disposal of approximately £80 million after
transaction costs in the year ending 30 April
2015.
SHARE CAPITAL
The Company had 135,357,183 ordinary
shares in issue at 30 April 2014 (2013:
134,857,183). No shares are held in treasury.
Authority will be sought from shareholders
at the forthcoming Annual General Meeting
to renew the authority given at the 2013
Annual General Meeting for a further year,
permitting the Company to purchase its own
shares in the market up to a limit of 10% of its
issued share capital.
Movements in the Company’s share capital
are shown in note 20 to the consolidated
financial statements.
G
O
V
E
R
N
A
N
C
E
Information on the Group’s share option
schemes is set out in note 5 to the
consolidated financial statements. Details of
the Long-Term Incentive Schemes and Long-
Term Incentive Plans for key executives are
set out in the Remuneration Report on pages
56 to 80.
ARTICLES OF ASSOCIATION
The Articles of Association set out the basic
management and administrative structure
of the Company. They regulate the internal
affairs of the Company and cover such
matters as the issue and transfer of shares,
Board and shareholder meetings, powers
and duties of Directors and borrowing
powers. In accordance with the Articles of
Association, Directors can be appointed
or removed by shareholders in a general
meeting.
The Articles may only be amended by
special resolution at a general meeting of
shareholders. Copies are available by writing
to the Company Secretary and are also open
to inspection at Companies House.
DIRECTORS
The Directors of the Company and their
profiles are detailed on pages 48 and 49. All
of these Directors served throughout the year
under review with the exception of Adrian Li,
who was appointed on 2 September 2013,
and Andy Myers, who was appointed on
6 December 2013. Alan Coppin stood down
from the Board on 2 September 2013.
The Articles of Association of the Company
require Directors to submit themselves for
re-election every three years. In addition
all Directors are subject to election at the
first opportunity after their appointment
to the Board. However, in accordance with
the UK Corporate Governance Code all the
Directors will offer themselves for re-election
at the forthcoming Annual General Meeting,
other than David Howell, who is standing
down from the Board.
The Directors’ interests in the share capital of
the Company and its subsidiaries are shown
in the Remuneration Report on page 75. At
30 April 2014 each of the Executive Directors
were deemed to have a non-beneficial
interest in 106,799 (2013: 237,363) ordinary
shares held by the Trustees of The Berkeley
Group Employee Benefit Trust. The trustee
of the Berkeley Group Holdings Employee
Benefit Trust (“EBT”) has agreed not to
vote on any shares held in the EBT at any
general meeting.
There were no contracts of significance
during, or at the end of, the financial year in
which a Director of the Company is, or was,
materially interested, other than those set
out in note 27 to the consolidated financial
statements, the contracts of employment of
the Executive Directors, which are terminable
within one year, and the appointment terms
of the Non-executive Directors, which are
renewable annually and terminable on one
month’s notice.
DIRECTORS’ INDEMNITIES
The Company’s practice has always been to
indemnify its Directors in accordance with the
Company’s Articles of Association and to the
maximum extent permitted by law. Qualifying
third party indemnities, under which the
Company has agreed to indemnify the
Directors, were in force during the financial
year and at the date of approval of the
financial statements, in accordance with the
Company’s Articles of Association and to the
maximum extent permitted by law, in respect
of all costs, charges, expenses, losses and
liabilities, which they may incur in or about
the execution of their duties to the Company,
or any entity which is an associated company
(as defined in Section 256 of the Companies
Act 2006), or as a result of duties performed
by the Directors on behalf of the Company or
any such associated company.
SUBSTANTIAL SHAREHOLDERS
The Company has been notified of the
following interests, pursuant to Rule 5 of the
Disclosure Rules and Transparency Rules, as
at 11 July 2014:
NUM BER O F
ORD INARY
SH ARES HELD
% OF ISSUED
CAPITAL
NATURE OF
HOLDING
13,092,232
9.67%
Indirect
First Eagle Investment
Management, LLC
Anthony William Pidgley
Aberdeen Asset Managers
BlackRock Inc.
6,781,124
6,719,188
6,699,472
Standard Life Investments Ltd
6,599,895
William Blair
6,553,042
5.01%
4.96%
4.95%
4.88%
4.84%
Direct
Indirect
Indirect
Indirect/Direct
Direct
80
81
BERKELEY ANNUAL REPORT 2014 / GOVERNANCE DIRECTORS’ REPORT continued
DONATIONS
The Group made no political contributions
(2013: £nil) during the year.
EMPLOYMENT POLICY
The Group’s policy of operating through
autonomous subsidiaries has ensured close
consultation with employees on matters
likely to affect their interests. The Group is
firmly committed to the continuation and
strengthening of communication lines with all
its employees.
An Equal Opportunities Policy was
introduced in 2001. Following periodic
reviews (the most recent in September
2010) the policy is now an Equality and
Diversity Policy with the aim of ensuring that
all employees, potential employees and
other individuals receive equal treatment
(including access to employment, training
and opportunity for promotion) regardless
of their age, disability, gender reassignment,
marriage and civil partnership, pregnancy
and maternity, race, religion or belief
(including lack of belief), sex and sexual
orientation. It is the policy of the Group to
support the employment of people with
disabilities wherever practicable and to
ensure, as far as possible, the training, career
development and promotion opportunities
are available to all employees. This policy
includes employees who become disabled
whilst employed by the Group.
All disclosures concerning diversity of the
Group’s Directors, senior management
and employees (as required under the
Companies Act 2006 (Strategic Report and
Directors’ Report) Regulations 2013) are
contained within the Strategic Report on
pages 36 to 37.
SUSTAINABILITY
The Group considers its approach to
sustainability, defined as the effective
management of environmental, social and
economic risks and opportunities facing the
company, to be an integral part of managing
its business. Our framework for the business,
Our Vision, sets out our integrated approach
to managing sustainability within the context
of the wider aims for the business. This
approach is outlined within the Strategic
Report and more extensive information is
available on Berkeley’s website. We believe
that this integrated approach demonstrates
how sustainability is embedded within the
day-to-day operations of our business.
We remain committed to enhancing the
Group’s high standards through continuous
improvement. Our Sustainability Governance
Committee is responsible for setting the
strategic objectives and the Main Board
continues to monitor strategic development
and progress against commitments and Key
Performance Indicators. The Sustainability
Working Group, comprising divisional
executives and managers, is responsible for
delivering these objectives and reviewing
progress against targets.
GREENHOUSE GAS EMISSIONS
Scope 1 (tCO2e)
Scope 2 (tCO2e)
Scope 3 (tCO2e)
Total (tCO2e)
2014
1,941
10,221
9,662
21,824
Emissions intensity (tCO2e/person)
2.5
The Group has reported on greenhouse
gas emissions for which it is responsible,
as required under the Companies Act 2006
(Strategic Report and Directors’ Reports)
Regulations 2013. The emissions disclosed
are aligned to the Group’s financial reporting
year, are considered material to its business
and have the following parameters:
Scope 1 – direct emissions relating to office,
sales and development site activities; and
work-related travel in company owned
vehicles;
Scope 2 – indirect emissions from electricity
consumed for office, sales and development
site activities;
Scope 3 – other indirect emissions relating
to office, sales and development site
activities; work related travel in leased and
employee owned vehicles; business air
travel; transmission and distribution losses
of purchased electricity; and upstream
emissions
Emissions include 50% of those resulting
from the Group’s joint ventures on the basis
of its equity share.
The intensity ratio has been calculated using
the total number of direct employees across
the Group and the number of contractors
working on our sites.
The GHG Protocol Corporate Accounting
and Reporting Standard (revised edition),
UK Government Environmental Reporting
Guidelines 2013 and UK Government GHG
Conversion Factors for Company Reporting
2013 have been used to calculate and report
the Group’s greenhouse gas emissions.
Further details on the methodology adopted
can be found at berkeleygroup.co.uk/
sustainability/reports-and-opinions, and other
environmental key performance indicators
(KPIs) can be found at berkeleygroup.co.uk/
our-vision/performance-2012-2014.
HEALTH AND SAFETY
The Group considers the effective
management of health and safety to
be an integral part of managing its
business. Accordingly, the Group Main
Board continues to monitor the strategic
development and audit the implementation
by all divisions of their Occupational Health
& Safety Management Systems to ensure
that, both at Group and divisional level,
they remain compliant with recognised
established standards.
We remain committed to enhancing the
Group’s high standards through continuous
improvement. Our Health & Safety
Committee is responsible for setting the
strategic objectives of the Group, and the
Health & Safety Working Group, comprising
divisional executives and managers, is
responsible for delivering these objectives
and reviewing progress against targets set for
our established key performance indicators,
reporting this quarterly to the Group Main
Board.
TAKEOVER DIRECTIVE – AGREEMENTS
Pursuant to the Companies Act 2006, the
Company is required to disclose whether
there are any significant agreements that
take effect, alter or terminate upon a change
of control.
Change of control provisions are included
as standard in many types of commercial
agreement, notably bank facility agreements
and joint venture shareholder agreements,
for the protection of both parties. Such
standard terms are included in Berkeley’s
bank facility agreement which contains
provisions that give the banks certain rights
upon a change of control of the Company.
Similarly, in certain circumstances, a change
of control may give Berkeley’s joint venture
partner, Prudential Assurance Company
Limited, the ability to exercise certain rights
under the shareholder agreement in relation
to its St Edward Homes joint venture.
In addition, the Company’s share schemes
contain provisions which take effect upon
change of control. These do not entitle the
participants to a greater interest in the shares
of the Company than that created by the
initial grant of the award. The Company does
not have any arrangements with any Director
that provide compensation for loss of office
or employment resulting from a takeover.
The remaining information required to be
disclosed under the Takeover Directive
can be found within notes 5 and 20 to the
consolidated financial statements.
INDEPENDENT AUDITORS AND DISCLOSURE
OF INFORMATION TO AUDITORS
Each of the persons who is a Director at
the date of approval of this Annual Report
confirms that:
• So far as the Director is aware, there is no
relevant audit information of which the
Company’s auditors are unaware; and
• The Director has taken all the steps that
he/she ought to have taken as a Director
in order to make himself/herself aware
of any relevant audit information and to
establish that the Company’s auditors are
aware of that information.
This confirmation is given and should be
interpreted in accordance with the provisions
of Section 418 of the Companies Act 2006.
A resolution to appoint KPMG LLP as
auditors to the Company will be proposed at
the Annual General Meeting.
ANNUAL GENERAL MEETING
The Annual General Meeting of the
Company is to be held at the Woodlands
Park Hotel, Woodlands Lane, Stoke
D’Abernon, Cobham, Surrey KT11 3QB
at 11.00am on 1 September 2014. The
Notice of Meeting, which is contained in a
separate letter from the Group Chairman
accompanying this report, includes
a commentary on the business to be
transacted at the Annual General Meeting.
SHARE CAPITAL STRUCTURE
The Company is compliant with DTR
7.2.6. and the information relating to the
Company’s share capital structure is included
in the Directors’ Report on page 81.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
IN RESPECT OF THE ANNUAL REPORT AND
THE FINANCIAL STATEMENTS
The Directors are responsible for preparing
the Annual Report, the Remuneration Report
and the financial statements in accordance
with applicable law and regulations.
Company law requires the Directors to
prepare financial statements for each
financial year. Under that law the Directors
have prepared the Group Financial
Statements in accordance with International
Financial Reporting Standards (IFRSs) as
adopted by the European Union, and have
prepared the Parent Company Financial
Statements in accordance with United
Kingdom Accounting Standards (United
Kingdom Generally Accepted Accounting
Practice) and applicable law.
Under company law the Directors must not
approve the financial statements unless they
are satisfied that they give a true and fair
view of the state of affairs of the Group and
the Company and of the profit or loss of the
Group for that period.
In preparing these financial statements, the
Directors are required to:
• select suitable accounting policies and
then apply them consistently;
• make judgements and estimates that are
reasonable and prudent;
• state whether IFRS as adopted by the
European Union and applicable UK
accounting standards have been followed,
subject to any material departures
disclosed and explained in the Group and
Parent Company Financial Statements
respectively; and
• prepare financial statements on the going
concern basis unless it is inappropriate to
presume that the Group will continue in
business.
The Directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the Company’s
transactions and disclose with reasonable
accuracy at any time the financial position of
the Company and the Group and to enable
them to ensure that the financial statements
and the Remuneration Report comply with
the Companies Act 2006 and, as regards the
Group financial statements, Article 4 of the
IAS Regulation. They are also responsible for
safeguarding the assets of the Company and
the Group and hence for taking reasonable
steps for the prevention and detection of
fraud and other irregularities.
The Directors are responsible for the
maintenance and integrity of the Company’s
website. Legislation in the United Kingdom
governing the preparation and dissemination
of financial statements may differ from
legislation in other jurisdictions.
DIRECTORS’ RESPONSIBILITY STATEMENT
Each of the Directors, whose names and
functions are listed on pages 48 to 49 confirm
that, to the best of each person’s knowledge:
a. the Group financial statements, which
have been prepared in accordance with
IFRS’s as adopted by the European Union,
give a true and fair view of the assets,
liabilities, financial position and profit of
the Group; and
b. the Strategic Report, together with the
Directors’ report, includes a fair review of
the development and performance of the
business and the position of the Group,
together with a description of the principal
risks and uncertainties that it faces.
c. The Annual Report, taken as a whole, is
fair, balanced and understandable and
provides the information necessary for
shareholders to assess the Company’s
performance, business model and
strategy.
GOING CONCERN
The Group’s business activities together
with the factors likely to affect its future
development performance and position
are set out in the Strategic Report. The
financial position of the Group, its cash flows,
liquidity position and borrowing facilities are
all described in the Trading and Financial
Review on pages 38 to 43.
The Group has significant financial resources
and the Directors have assessed the future
funding requirements of the Group, including
the repayment of £1.7 billion to shareholders
by 2021, and compared this to the level of
committed loan facilities and cash resources
over the medium term. In making this
assessment consideration has been given
to the uncertainty inherent in future financial
forecasts and where applicable reasonable
sensitivities have been applied to the key
factors affecting the financial performance of
the Group.
The Directors have a reasonable expectation
that the Company has adequate resources
to continue its operational existence for
the foreseeable future. For this reason they
continue to adopt the going concern basis of
accounting in preparing the annual financial
statements.
By order of the Board
EA DRIVER
COMPANY SECRETARY
THE BERKELEY GROUP HOLDINGS PLC
REGISTERED NUMBER: 5172586
11 JULY 2014
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BERKELEY ANNUAL REPORT 2014 / FINANCIALS
BERKELEY ANNUAL REPORT 2014 / FINANCIALS
FINANCIALS
ON TRACK TO MEET OUR
AMBITIOUS TEN YEAR PLAN
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INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS
OF THE BERKELEY GROUP HOLDINGS PLC
OPINIONS AND CONCLUSIONS ARISING FROM OUR AUDIT
Our response: Our audit procedures in respect of this area included, amongst others:
1) OUR OPINION ON THE FINANCIAL STATEMENTS IS UNMODIFIED
We have audited the financial statements of The Berkeley Group Holdings plc for the year ended 30 April 2014 set out on pages 89 to 119.
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the parent company’s affairs as at 30 April 2014 and of
the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards as adopted by
the European Union;
• the parent company financial statements have been properly prepared in accordance with UK Accounting Standards; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group
financial statements, Article 4 of the IAS Regulation.
2) OUR ASSESSMENT OF RISKS OF MATERIAL MISSTATEMENT
In arriving at our audit opinion above on the financial statements the risks of material misstatement that had the greatest effect on our audit
were as follows:
Carrying value of inventories and profit recognition (inventories: £2,481.2m, gross profit: £508.9m)
Refer to page 54 (Audit Committee statement), page 96 (accounting policy) and page 106 (financial disclosures)
The risk: The Group recognises profit on each sale by reference to the overall site margin, which is the forecast profit percentage for a site
that may comprise multiple phases and can last a number of years. The recognition of profit is therefore dependent on the Group’s estimate
of future selling prices and build costs, which form the basis of the site forecast. Inventory represents the costs of land, materials, design and
related production and site costs to date. It is held at the lower of cost and net realisable value, the latter also being based on the forecast for
the site. As such errors in these forecasts can impact the assessment over the carrying value of inventories and gross profit.
Future selling prices are dependent on market conditions, which can be difficult to predict. Future build costs are subject to a number of
variables including the accuracy of designs, market conditions in respect of materials and sub-contractor cost and construction issues. There is
a risk that the actual revenue and costs are different to those forecast resulting in material misstatement of inventory and gross profit.
There is also a risk that costs are inappropriately recognised within inventories or the allocation of costs that relate to the whole site, such as
land and infrastructure, is inappropriate across development phases, resulting in a material misstatement of inventory or gross profit.
Our response: Our audit procedures performed in this area included, amongst others:
Testing the Group’s controls by checking approvals over reviewing and updating selling price and cost forecasts, setting budgets and
authorising and recording of costs. We attended a selection of management’s cost review meetings, to check that they are effectively
challenging the costs incurred and forecast.
We inspected the site forecasts, on a sample basis, and challenged the assumptions for future costs and sales. This included comparing sales
forecasts to sales made to date and to prices achieved on comparable local sales. We compared actual margins achieved to forecasts, to
check the accuracy of the Group’s forecasting process. We corroborated a sample of cost forecasts back to supplier agreements or tenders
and considered allowance for cost increase included in these forecasts. We also agreed a sample of costs incurred to date to invoice
and/or payment, including checking that they were allocated to the appropriate site and development phase, and met the definition of
inventory costs.
For all significant new land acquisitions and a sample of other land acquisitions we inspected purchase contracts to understand the terms and
any deferred or contingent payments. We re-performed the calculation of such amounts to check the amounts recorded. We considered any
previous acquisitions to establish any changes in amounts recorded for related deferred or contingent payments and assessed the accuracy
of these. Where a site was pre-development, we evaluated the reliance on planning and other third party actions to achieve the forecast, and
considered the impact on carrying values.
We checked that the margin recognised in the year on any units sold was in line with the forecast site margin. We evaluated the sensitivity of
the margin to a change in sales prices and costs and considered whether this indicated a risk of impairment.
We considered the adequacy of the Group’s disclosures over inventory and the degree of judgement and estimation involved in arriving at the
forecast and resultant profit.
Provisions (£57.1m)
Refer to page 54 (Audit Committee statement), page 96 (accounting policy) and page 107 (financial disclosures)
The risk: The Group holds provisions in respect of construction related liabilities that have arisen, or that prior claims experience indicates may
arise, subsequent to the completion of certain developments. The determination and valuation of provisions is judgmental by its nature and
there is a risk that the estimate is incorrect and the provision is materially misstated.
Enquiring of management and inspecting board minutes and the risk register for actual and potential claims arising in the year, and
challenging whether provisions are required for these claims. For all significant known issues and claims provided for we inspected third party
correspondence where available and compared it to the provision held. We also discussed claims with legal counsel.
We inspected the calculation of the provision held. For known issues we challenged the cost forecast for work to be undertaken and, where
possible, compared these to quotes to undertake the remediation. For claims that history indicated may arise, we evaluated settled issues
and considered any differences in the development portfolio then and now, such as increasing complexity of construction, as evidence for the
calculation of the provision.
We assessed each provision against the requirements of the relevant accounting standards and the Group’s policy and assessed whether the
Group’s disclosures adequately disclose the potential liabilities of the Group.
Revenue recognition (£1,620.6m)
Refer to page 54 (Audit Committee statement), page 94 and 96 (accounting policy) and page 89 (financial disclosures)
The risk: It is the Group’s policy to recognise 100% of revenue on property units when contracts are exchanged and the building work is
physically complete, being the point at which the Group is satisfied it has discharged its obligations to the buyer. Contract exchange, including
the payment of a deposit, may have occurred sometime in the past. However, the legal completion of the sale remains dependent on the
receipt of final payment. The recognition of revenue is generally before legal completion, being the point at which the balance of the sale is
paid for and title transfers, and as such is potentially more subjective than recognising at the latter point.
The risk is that the unit is not physically complete or that the buyer does not complete the purchase, as should either of these be the case the
revenue should not be recognised.
Our response: Our audit procedures on these areas included, among others;
Detailed testing of controls over sales approval and sample testing of sales in the year with a particular focus on significant sales recorded
close to the year-end where the final payment was not yet received.
We inspected the internal sign-off sheets to check that sales recorded in the year had gone through the Group’s approval process for sale
of properties and the paperwork provided by third parties who approve the sale of newly constructed buildings, including the Council of
Mortgage Lender approval, which is required to sell new build properties.
For a sample of sales made in the year that were not legally complete at the year-end, we visited the sites around the year-end date to assess
by physical inspection the extent to which building work was complete and the property was physically ready to be handed over to a buyer.
After the year end, and up to the date of signing the audit report, we assessed whether final payments from buyers had been made and
appeared as receipts in the bank statements. Where amounts were still outstanding we considered other information, such as correspondence
agreeing later payments and reasons for this, in evaluating the recoverability of these amounts and appropriateness of related revenue
recognition.
We have also considered the adequacy of the Group’s disclosures in respect of the judgements taken in recognising revenue for property units
prior to legal completion.
3) OUR APPLICATION OF MATERIALITY AND AN OVERVIEW OF THE SCOPE OF OUR AUDIT
The materiality for the Group financial statements as a whole was set at £18.0m, calculated using a benchmark of Group profit before taxation
(of which it represents 4.7%) which we believe is the key benchmark used by members of the company in assessing financial performance.
We agreed with the audit committee to report to it all corrected and uncorrected misstatements we identified through our audit with a value
in excess of £0.9m, in addition to other audit misstatements below that threshold that we believe warranted reporting on qualitative grounds.
Audits for Group reporting purposes were performed at key reporting components covering 93% of Group revenue; 95% of Group profit
before taxation and 93% of Group total assets. Desktop reviews were performed on the remaining components.
The audits undertaken for Group reporting purposes at the key reporting components of the company were all performed to local materiality
levels, which were set individually for each subsidiary and ranged from £2.6 million to £14.1 million. These audits were completed by the
Group audit team.
4) OPINION ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006
In our opinion:
• the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and
• the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared
is consistent with the financial statements.
86
87
BERKELEY ANNUAL REPORT 2014 / FINANCIALSBERKELEY ANNUAL REPORT 2014 / FINANCIALSFINANCIALS INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF THE BERKELEY GROUP HOLDINGS PLC continued
BERKELEY ANNUAL REPORT 2014 / FINANCIALS
CONSOLIDATED INCOME STATEMENT
5) WE HAVE NOTHING TO REPORT IN RESPECT OF THE MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
Under ISAs (UK and Ireland) we are required to report to you if, based on the knowledge we acquired during our audit, we have identified
other information in the annual report that contains a material inconsistency with either that knowledge or the financial statements, a material
misstatement of fact, or that is otherwise misleading.
In particular, we are required to report to you if:
• we have identified material inconsistencies between the knowledge we acquired during our audit and the directors’ statement that they
consider that the annual report and financial statements taken as a whole is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group’s performance, business model and strategy; or
• the Audit Committee Report does not appropriately address matters communicated by us to the audit committee.
For the year ended 30 April
Revenue
Cost of sales
Gross profit
Net operating expenses
Operating profit
Finance income
Finance costs
Under the Companies Act 2006 we are required to report to you if, in our opinion:
Share of results of joint ventures using the equity method
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from
branches not visited by us; or
• the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the
accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Under the Listing Rules we are required to review:
• the directors’ statement, set out on page 83, in relation to going concern; and
• the part of the Corporate Governance Statement on pages 50 to 53 relating to the company’s compliance with the nine provisions of the
2010 UK Corporate Governance Code specified for our review.
We have nothing to report in respect of the above responsibilities.
SCOPE OF REPORT AND RESPONSIBILITIES
As explained more fully in the Directors’ Responsibilities Statement set out on page 83, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view. A description of the scope of an audit of accounts is
provided on the Financial Reporting Council’s website at www.frc.org.uk/auditscopeukprivate. This report is made solely to the Company’s
members as a body and subject to important explanations and disclaimers regarding our responsibilities, published on our website at
www.kpmg.com/uk/auditscopeukco2013a which are incorporated into this report as if set out in full and should be read to provide an
understanding of the purpose of this report, the work we have undertaken and the basis of our opinions.
SEAN MCCALLION (SENIOR STATUTORY AUDITOR)
FOR AND ON BEHALF OF KPMG LLP, STATUTORY AUDITOR
CHARTERED ACCOUNTANTS
15 CANADA SQUARE
LONDON, E14 5GL
11 JULY 2014
Notes
3
3
10
2, 4
6
2014
£m
1,620.6
(1,111.7)
508.9
(134.1)
374.8
3.4
(10.3)
12.1
380.0
(87.1)
292.9
2013
£m
1,372.6
(969.2)
403.4
(123.3)
280.1
1.5
(9.6)
(1.3)
270.7
(61.0)
209.7
7
7
221.8p
188.4p
160.0p
140.3p
F
I
N
A
N
C
I
A
L
S
Profit before taxation for the year
Income tax expense
Profit after taxation for the year
Earnings per ordinary share:
Basic
Diluted
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 April
Profit after taxation for the year
Other comprehensive expense:
Items that will not be reclassified to profit or loss
Actuarial loss recognised in the pension scheme
Deferred tax on actuarial loss recognised in the pension scheme
Total items that will not be reclassified to profit or loss
Items that may be reclassified subsequently to profit or loss
Change in value of other investments
Total items that may be reclassified subsequently to profit or loss
Other comprehensive income/(expense) for the year
Total comprehensive income for the year
Notes
5
6
11
2014
£m
292.9
(0.6)
0.1
(0.5)
1.0
1.0
0.5
293.4
2013
£m
209.7
(0.8)
0.2
(0.6)
–
–
(0.6)
209.1
88
89
BERKELEY ANNUAL REPORT 2014 / FINANCIALS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
As at 30 April
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Investment properties
Investments accounted for using the equity method
Other investments
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Non-current assets classified as held for sale
Total assets
Liabilities
Non-current liabilities
Trade and other payables
Provisions for other liabilities and charges
Current liabilities
Borrowings
Trade and other payables
Current tax liabilities
Provisions for other liabilities and charges
Total liabilities
Total net assets
Equity
Shareholders’ Equity
Share capital
Share premium
Capital redemption reserve
Other reserve
Revaluation reserve
Retained profit
Total equity
Notes
2014
£m
2013
£m
8
9
9
10
11
19
12
13
14, 25
15
17
18
16
17
18
20
20
21
21
21
21
17.2
22.0
7.2
61.4
11.0 –
61.1
179.9
2,481.2
159.0
130.2
2,770.4
–
2,770.4
2,950.3
(148.6)
(48.5)
(197.1)
(1.0)
(1,218.6)
(83.7)
(8.6)
(1,311.9)
(1,509.0)
1,441.3
6.8
49.3
24.5
(961.3)
4.1
2,317.9
1,441.3
17.2
16.3
26.5
44.1
56.7
160.8
2,066.7
126.8
66.8
2,260.3
75.8
2,336.1
2,496.9
(115.5)
(27.9)
(143.4)
(22.1)
(905.9)
(102.0)
(1.1)
(1,031.1)
(1,174.5)
1,322.4
6.7
49.3
24.5
(961.3)
4.0
2,199.2
1,322.4
Capital
Share redemption
Share
capital
£m
Notes
premium
£m
reserve reserve
£m
£m
Other Revaluation
reserve
£m
Retained
earnings
£m
Total
£m
At 1 May 2013
Profit after taxation for the year
Other comprehensive income for the year
Total comprehensive income for the year
Reserves transfer from revaluation reserve
Issue of ordinary shares
Transactions with shareholders:
Credit in respect of employee
share schemes
Deferred tax in respect of
employee share schemes
Dividends to equity holders of
the Company
At 30 April 2014
6.7
49.3
24.5
(961.3)
4.0
2,199.2 1,322.4
–
–
–
–
0.1
–
–
–
21
20
5
6
22
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.1
–
–
–
–
292.9
292.9
0.5
0.5
293.4
293.4
(0.1)
–
–
0.1
3.3
3.3
17.3
17.3
(195.2)
(195.2)
6.8
49.3
24.5
(961.3)
4.1
2,317.9 1,441.3
Capital
Share redemption
Share
capital
£m
Notes
premium
£m
reserve reserve
£m
£m
Other Revaluation
reserve
£m
Retained
earnings
£m
Total
£m
At 1 May 2012
Profit after taxation for the year
Other comprehensive expense for the year
Total comprehensive income for the year
Reserves transfer from revaluation reserve
Transactions with shareholders:
Credit in respect of employee
share schemes
Deferred tax in respect of
employee share schemes
Dividends to equity holders of
the Company
At 30 April 2013
6.7
49.3
24.5
(961.3)
3.4
1,977.2 1,099.8
–
–
–
–
–
–
–
21
5
6
22
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
209.7
209.7
(0.6)
(0.6)
209.1
209.1
0.6
(0.6)
–
–
–
–
11.8
11.8
21.4
21.4
(19.7)
(19.7)
6.7
49.3
24.5
(961.3)
4.0
2,199.2 1,322.4
The financial statements on pages 89 to 114 were approved by the board of directors on 11 July 2014 and were signed on its behalf by:
N G SIMPKIN
FINANCE DIRECTOR
90
91
BERKELEY ANNUAL REPORT 2014 / FINANCIALSBERKELEY ANNUAL REPORT 2014 / FINANCIALSFINANCIALS
CONSOLIDATED CASH FLOW STATEMENT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
BERKELEY ANNUAL REPORT 2014 / FINANCIALS
For the year ended 30 April
Cash flows from operating activities
Cash generated from operations
Interest received
Interest paid
Income tax paid
Net cash flow from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of financial assets
Proceeds on disposal of property, plant and equipment
Proceeds from sale of investment properties
Movements in loans with joint ventures
Net cash flow from investing activities
Cash flows from financing activities
Repayment of borrowings
Dividends paid to Company’s shareholders
Net cash flow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the start of the financial year
Cash and cash equivalents at the end of the financial year
Notes
25
9
10
22
14, 25
2014
£m
259.7
2.7
(5.0)
(92.4)
165.0
(8.9)
(10.0) –
0.6
138.2
(5.2)
114.7
(21.1)
(195.2)
(216.3)
63.4
66.8
130.2
2013
£m
189.0
1.2
(5.9)
(69.2)
115.1
(6.6)
0.1
12.6
1.1
7.2
(38.5)
(19.7)
(58.2)
64.1
2.7
66.8
F
I
N
A
N
C
I
A
L
S
1 ACCOUNTING POLICIES
GENERAL INFORMATION
The Berkeley Group Holdings plc (the “Company”) is a public limited company incorporated and domiciled in the United Kingdom. The address of its registered
office is Berkeley House, 19 Portsmouth Road, Cobham, Surrey, KT11 1JG. The Company and its subsidiaries (together the “Group”) are engaged in residential-led,
mixed-use property development. Further information about the nature of the Group’s operations and its principal activities are set out in the Directors’ Report on
page 81.
BASIS OF PREPARATION
These Consolidated Financial Statements have been prepared in accordance with European Union endorsed International Financial Reporting Standards (“IFRSs”),
IFRS-IC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The Consolidated Financial Statements have
been prepared under the historical cost convention and on the going concern basis. Historical cost is generally based on the fair value of the consideration given in
exchange for the assets.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its
judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions
and estimates are significant to the Consolidated Financial Statements, are disclosed on page 96.
The following new standards, amendments to standards and interpretations are applicable to the Group and are mandatory for the first time for the financial year
beginning 1 May 2013: IAS 12 (Amendment) “Income Taxes”; IAS 19 (Revised 2011) “Employee Benefits”; IAS 1 (Amendment) “Presentation of Items of Other
Comprehensive Income”; IFRS 13 (Amendment) “Fair Value Measurement”; and Annual improvements to IFRSs 2009 - 2011 Cycle.
The adoption by the Company of IAS 19 Employee Benefits did not have a material effect on the consolidated financial statements for the year ended 30 April 2013
(the effect being less than £0.2 million) which have not therefore been restated. The adoption of IAS 19 has resulted in the replacement of the interest cost on the
defined benefit obligation and the expected return on plan assets with a net interest cost based on the net defined benefit asset or liability and the discount rate,
measured at the start of the year.
The other standards have not had a material impact on the results of the Company for the year ended 30 April 2014.
The following new standards, amendments to standards and interpretations have been issued, but are not yet effective for the financial year ending 30 April 2014 and
have not been adopted early: IFRS 10 Consolidated Financial Statements; IFRS 11 Joint Arrangements; IFRS 12 Disclosure of Interest in Other Entities; and IAS 28
(Amendment) Investments in Associates and Joint Ventures.
These standards are not expected to have a significant impact on the Consolidated Financial Statements.
The Group has significant financial resources and the Directors have assessed the future funding requirements of the Group and compared this to the level of
committed loan facilities and cash resources over the medium term. In making this assessment, consideration has been given to the uncertainty inherent in future
financial forecasts and where applicable, reasonable sensitivities have been applied to the key factors affecting the financial performance of the Group. The Directors
have a reasonable expectation that the Group has adequate resources to continue its operational existence for the foreseeable future. For this reason they continue to
adopt the going concern basis of accounting in preparing its consolidated financial statements.
BASIS OF CONSOLIDATION
(a) Subsidiaries
The Consolidated Financial Statements comprise the financial statements of the Parent Company and all its subsidiary undertakings. The accounting date for
subsidiary undertakings is 30 April.
Subsidiary undertakings are entities that are directly or indirectly controlled by the Group. Control exists where the Group has the power to govern the financial and
operating policies of the entity so as to obtain the benefits from its activities.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiary undertakings by the Group. The cost of an acquisition is measured as the fair
value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date,
irrespective of the extent of any non-controlling interest. The excess of cost of acquisition over the fair value of the Group’s share of identifiable net assets acquired is
recorded as goodwill. If the cost of the acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the
income statement.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.
All intra-Group transactions, balances, income and expenses are eliminated on consolidation. Acquisition-related costs are expensed as incurred.
(b) Joint ventures
Entities which are jointly controlled with another party or parties (“joint ventures”) are accounted for using the equity method of accounting. The results attributable to
the Group’s holding in joint ventures are shown separately in the consolidated income statement. The amount included in the consolidated statement of financial
position is the Group’s share of the net assets of the joint ventures plus net loans receivable. Goodwill arising on the acquisition of joint ventures is accounted for in
accordance with the policy set out above. The carrying value of goodwill is included in the carrying value of the investment in joint ventures. On transfer of land and/or
work in progress to joint ventures, the Group recognises only its share of any profits or losses, namely that proportion sold outside the Group.
SEGMENTAL REPORTING
Operating segments are identified in a manner consistent with the internal reporting provided to the chief operating decision-maker. The Group determines its
reportable segments having regard to permitted aggregation criteria with the principal condition being that the operating segments should have similar economic
characteristics.
The Group is predominantly engaged in residential-led, mixed-use property development, comprising residential revenue, revenue from land sales and commercial
revenue.
For the purposes of determining its operating segments, the chief operating decision-maker has been identified as the Executive Committee of the Board.
This committee approves investment decisions, allocates the Group’s resources and reviews the internal reporting in order to assess performance.
92
93
BERKELEY ANNUAL REPORT 2014 / FINANCIALS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
1 ACCOUNTING POLICIES CONTINUED
The Group has determined that its operating segments are the management teams that report into the Executive Committee of the Board. These management teams
are all engaged in residential-led, mixed-use development in the United Kingdom and, having regard to the aggregation criteria in IFRS 8, the Group has one
reportable operating segment.
In addition to its development activities, the Group holds certain residential properties for investment purposes. These investment activities represent a separate
segment which is included within “Other activities”, as they do not meet the size thresholds to be disclosed as a separate reportable segment.
REVENUE
Revenue represents the amounts receivable from the sale of properties and investment properties during the year and other income directly associated with property
development. Properties are treated as sold and profits are recognised when contracts are exchanged and the building work is physically complete.
Rental income is recognised in the income statement on a straight line basis over the life of the lease. Any lease incentives are recognised as an integral part of the
total rental income.
EXPENDITURE
Expenditure recorded in inventory is expensed through cost of sales at the time of the related property sale. Net operating expenditure is recognised in respect of
goods and services received when supplied in accordance with contractual terms. Provision is made when an obligation exists for a future liability in respect of a past
event and where the amount of the obligation can be reliably estimated. See Accounting estimates and judgements below for further disclosures on cost recognition.
TAXATION
The taxation expense represents the sum of the current tax payable and deferred tax. Current tax, including UK corporation tax, is provided at the amounts expected
to be paid (or received) using the tax rules and laws that have been enacted, or substantively enacted, by the reporting date.
Deferred taxation is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and
corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally
recognised on all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill, or from the initial
recognition (except in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit, or from
differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future.
Deferred taxation is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on tax laws and rates
that have been enacted or substantively enacted at the balance sheet date. The carrying value of deferred tax assets is reviewed at each balance sheet date and
reduced to the extent that it is no longer probable that sufficient taxable profits will be available against which taxable temporary differences can be utilised. Deferred
taxation is charged or credited to the income statement, except when it relates to items charged or credited directly to reserves, in which case the deferred taxation is
also dealt with in reserves.
Deferred taxation assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred
taxation assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an
intention to settle the balances on a net basis.
INTANGIBLE ASSETS
Where the cost of acquiring new and additional interests in subsidiaries, joint ventures and businesses exceeds the fair value of the net assets acquired, the resulting
premium on acquisition (goodwill) is capitalised and its subsequent measurement is based on annual impairment reviews and impairment reviews performed where an
impairment indicator exists, with any impairment losses recognised immediately in the income statement. Goodwill is allocated to cash-generating units for the
purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the
business combination in which the goodwill arose.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is carried at historic purchase cost less accumulated depreciation. Cost includes the original purchase price of the asset and the costs
attributable to bringing the asset to its working condition for its intended use. Depreciation is provided to write off the cost of the assets on a straight line basis to their
residual value over their estimated useful lives at the following annual rates:
Freehold buildings
Motor vehicles
2%
25%
Fixtures and fittings
15% / 20%
Computer equipment
33 1/3 %
Freehold property disclosed in the notes to the consolidated financial statements consists of both freehold land and freehold buildings. No depreciation is provided
on freehold land. Computer equipment is included within fixtures and fittings. The assets’ residual values, carrying values and useful lives are reviewed on an annual
basis and adjusted if appropriate at each balance sheet date. Where an impairment is identified, the recoverable amount of the asset is identified and an impairment
loss, where appropriate, is recognised in the income statement.
Subsequent costs are included in the assets’ carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits
associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other
repairs and maintenance are charged to the income statement during the financial period in which they are incurred.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within net operating expenses in the income
statement.
INVESTMENT PROPERTIES
Investment properties, which are properties held to earn rental income, are recognised using the “cost model” and are carried in the statement of financial position at
historic cost less accumulated depreciation.
Depreciation is provided to write off the element of the cost of the assets that relates to buildings at 2% per annum on a straight line basis. No depreciation is charged
on the element of the cost of the assets that relates to land.
Sales of investment properties are recognised in revenue and cost sales. These are considered to be similar in nature to the underlying property sales of the Group.
INVENTORIES
Property in the course of development and completed units are valued at the lower of cost and net realisable value. Direct cost comprises the cost of land, raw
materials and development costs but excludes indirect overheads. Provision is made, where appropriate, to reduce the value of inventories and work in progress to
their net realisable value.
Land purchased for development, including land in the course of development, is initially recorded at cost. Where such land is purchased on deferred settlement
terms, and the cost differs from the amount that will subsequently be paid in settling the liability, this difference is charged as a finance cost in the income statement
over the period to settlement.
TRADE AND OTHER RECEIVABLES
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.
A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to
the original terms of the receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash
flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the
loss is recognised in the income statement within net operating expenses. When a trade receivable is uncollectible, it is written off against the allowance account for
trade receivables. Subsequent recoveries of amounts previously written off are credited against net operating expense in the income statement.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprises cash balances in hand and at the bank, including bank overdrafts repayable on demand which form part of the Group’s cash
management, for which offset arrangements across Group businesses have been applied where appropriate.
SHARE CAPITAL
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Where any Group company purchases the Company’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs
(net of income taxes) is deducted from equity attributable to the Company’s equity holders until the shares are cancelled, sold or reissued. Where such shares are
subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included
in equity attributable to the Company’s equity holders.
BORROWINGS
Borrowings are recognised initially at fair value, net of transaction costs incurred. Any difference between the proceeds (net of transaction costs) and the redemption
value is recognised in the income statement over the period of the borrowings using the effective interest method.
TRADE AND OTHER PAYABLES
Trade and other payables on normal terms are not interest bearing and are stated at their nominal value which is considered to be their fair value. Trade payables on
extended terms are recorded at their fair value at the date of acquisition of the asset to which they relate. The discount to nominal value is amortised over the period
of the credit term and charged to finance costs.
PROVISIONS
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of resources will
be required to settle that obligation, and the amount has been reliably estimated.
DEPOSITS
New property deposits and on account contract receipts are held within current trade and other payables.
EMPLOYEE BENEFITS
(a) Pensions
The Group accounts for pensions under IAS 19 “Employee benefits”. The Group has both defined benefit and defined contribution plans. The defined benefit plan
was closed to future accrual with effect from 1 April 2007.
For the defined benefit scheme, the obligations are measured using the projected unit method. The calculation of the net obligation is performed by a qualified
actuary. The operating and financing costs of these plans are recognised separately in the income statement; service costs are set annually on the basis of actuarial
valuations of the scheme and financing costs are recognised in the period in which they arise. Actuarial gains and losses are recognised immediately in the statement
of comprehensive income. In accordance with IAS 19 the Group does not recognise on the statement of financial position any surplus in the scheme.
Pension contributions under defined contribution schemes are charged to the income statement as they fall due.
(b) Share-based payments
Where the Company operates equity-settled, share-based compensation plans, the fair value of the employee services received in exchange for the grant of the
options is recognised as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted.
At each balance sheet date, the Group revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision to original
estimates, if any, in the income statement, with a corresponding adjustment to equity.
The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are
exercised.
DIVIDENDS
Dividend distributions to shareholders are recognised as a liability in the period in which the dividends are appropriately authorised and approved for payout and are
no longer at the discretion of the Company. Unpaid dividends that do not meet these criteria are disclosed in the notes to the financial statements.
LEASING AGREEMENTS
Payments and receipts under operating lease agreements are charged or credited against profit on a straight line basis over the life of the lease.
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1 ACCOUNTING POLICIES CONTINUED
ACCOUNTING ESTIMATES AND JUDGEMENTS
Management applies the Group’s accounting policies as described above when making critical accounting judgements, of which no individual judgement is deemed
to have a significant impact upon the financial statements, apart from those involving estimations, which are detailed below.
(a) Carrying value of land and work in progress and estimation of costs to complete
The Group holds inventories stated at the lower of cost and net realisable value. Such inventories include land, work in progress and completed units. As residential
development is largely speculative by nature, not all inventories are covered by forward sales contracts. Furthermore due to the nature of the Group’s activity and, in
particular the scale of its developments and the length of the development cycle, the Group has to allocate site-wide development costs between units being built
and/or completed in the current year and those for future years. It also has to forecast the costs to complete on such developments.
In making such assessments and allocations, there is a degree of inherent estimation uncertainty. The Group has established internal controls designed to effectively
assess and centrally review inventory carrying values and ensure the appropriateness of the estimates made.
(b) Provisions
The Group makes assumptions to determine the timing and its best estimate of the quantum of its construction and other liabilities for which provisions are held.
(c) Revenue recognition
3 NET FINANCE COSTS
Finance income
Finance costs:
Interest payable on bank loans and non-utilisation fees
Amortisation of facility fees
Other finance costs
Net finance costs
Finance income predominantly represents interest earned on cash deposits.
Other finance costs represent imputed interest on taxation and on land purchased on deferred settlement terms.
Assumptions are made which complement external certifications to assess whether the building work for properties sold is physically complete and hence whether the
Group’s revenue recognition criteria have been satisfied.
4 PROFIT BEFORE TAXATION
Profit before taxation is stated after charging/(crediting) the following amounts:
2014
£m
3.4
(5.1)
(1.3)
(3.9)
(10.3)
(6.9)
2014
£m
177.3
1.9
0.7
(43.2)
(0.9)
0.2
2.7
–
–
0.1
–
–
0.2
0.1
0.1
2013
£m
1.5
(4.8)
(0.9)
(3.9)
(9.6)
(8.1)
2013
£m
138.2
1.8
–
(3.6)
(8.1)
4.8
1.9
0.2
0.1
0.1
0.1
0.2
–
–
–
Staff costs (note 5)
Depreciation of property, plant and equipment (note 9)
Loss on sale of fixed assets
Profit on sale of investment properties
Rental income from investment properties
Direct operating expense in relation to investment properties including depreciation
Operating lease costs
Fees paid and payable to the Company’s previous auditor for the audit of the Parent Company
and consolidated financial statements
Fees paid and payable to the Company’s previous auditor for other services:
– Audit of the Company’s subsidiaries
– Audit related assurance services
– Taxation compliance services
– All other non-audit services
Fees paid and payable to the Company’s current auditor for the audit of the Parent Company
and consolidated financial statements
Fees paid and payable to the Company’s current auditor for other services:
– Audit of the Company’s subsidiaries
– Taxation compliance services
The value of inventories expensed and included in the cost of sales is £1,032.9m (2013: £895.3m).
In addition to the above services, the Group’s current auditor has been asked to act as auditor to The Berkeley Final Salary Plan. The appointment of auditors to the
Group’s pension scheme and the fees paid in respect of the audit are agreed by the trustees of the scheme, who act independently of the management of the Group.
The fees paid to the Group’s auditors for audit services to the pension scheme during the year were £nil (2013: £nil).
Fees paid and payable to the Company’s current auditor for other services disclosed in the table above relate only to the period from the date of appointment of
6 December 2013. Fees paid in respect of the full year ended 30 April 2014 were £0.1 for taxation compliance services and £0.1 for all other non-audit services.
Remuneration paid to the Company’s previous auditors in respect of audit related assurance services relates to the interim review.
(d) Share-based payments
Assumptions are made in determining the fair value of employee services received in exchange for the grant of options under share-based payment awards at the
date of grant.
2 SEGMENTAL DISCLOSURE
For the purposes of determining its operating segments, the chief operating decision-maker has been identified as the Executive Committee of the Board.
This committee approves investment decisions, allocates the Group’s resources and reviews the internal reporting in order to assess performance.
The Group has determined that its operating segments are the management teams that report into the Executive Committee of the Board. These management teams
are all engaged in residential-led, mixed-use development in the United Kingdom and, having regard to the aggregation criteria in IFRS 8, the Group has one
reportable operating segment.
In addition to its development activities, the Group holds certain residential properties for investment purposes. These investment activities represent a separate
segment which is included within other activities as it does not meet the size thresholds to be disclosed as separate reportable segments. Revenue and operating
profit for the year ended 30 April 2014 include £105.4 million and £29.6 million, respectively, on the sale of 534 properties to M&G Investments and £32.8 million and
£13.6 million, respectively, on the sale of 141 other investment properties.
Segment results
Profit before tax
Residential-led mixed-use development
Other activities
2014
£m
379.7
0.3
380.0
2013
£m
269.7
1.0
270.7
Segment profit before tax represents the profit before tax allocated to each segment. This is the measure reported to the Executive Committee of the Board for the
purpose of resource allocation and assessment of segment performance.
Segment assets
Assets
Residential-led mixed-use development
Other activities
2014
£m
2,943.1
7.2
2,950.3
2013
£m
2,394.6
102.3
2,496.9
For the purpose of monitoring segment performance and allocating resources between segments all assets are considered to be attributable to residential-led
mixed-use development with the exception of investment properties which are held for the Group’s investing activities and have therefore been allocated to
other activities.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
5 DIRECTORS AND EMPLOYEES
Staff costs
Wages and salaries
Social security costs
Share-based payments
Pension costs
2014
£m
141.8
28.5
3.3
3.7
177.3
2013
£m
97.4
26.0
11.8
3.0
138.2
The average monthly number of persons employed by the Group during the year was 1,647 (2013: 1,326).
KEY MANAGEMENT COMPENSATION
Key management comprises the Main Board, as the Directors are considered to have the authority and responsibility for planning, directing and controlling the
activities of the Group. Details of Directors’ emoluments are set out in the Remuneration Report on pages 56 to 80.
EQUITY-SETTLED SHARE-BASED PAYMENTS
The Group operates three equity-settled share based payments schemes. The charge to the income statement in respect of share-based payments in the year relating
to grants of share options awarded under the 2009 Long-Term Incentive Plan and the 2011 Long-Term Incentive Plan was £9.0m (2013: £11.8m). The charge to the
income statement attributable to key management is £2.3m (2013: £10.9m).
There were no exercisable share options at the end of the year.
2009 Long-Term Incentive Plan
Part A
On 29 June 2009 the balance of the shares originally awarded under the 2004(b) Long-Term Incentive Plan, totalling 5,330,340 shares, were replaced by options under
Part A of the 2009 Long-Term Incentive Scheme, with an exercise price of £1.36 per share, in accordance with the shareholder approval obtained at the Extraordinary
General Meeting on 15 April 2009. During the year, no options lapsed, leaving 4,441,950 outstanding. These became exercisable by the relevant Executive Directors
on 31 January 2014. As a result, 4,208,071 shares were issued to the participants, representing 4,441,950 options that vested under 2009 LTIP Part A, less 233,879 of
shares equivalent to the exercise price on vesting of £1.36 per share. The share price at the date of vesting was £22.83.
Part B
Part B of the 2009 Long-Term Incentive Plan covers 6,830,000 share options with an exercise price of £6.76. Vesting of the options is in two tranches: 50% on 15 April
2015 and 50% on 15 April 2016. The options are conditional on continued employment at the relevant vesting date and the satisfaction of the underpin condition that
Net Assets per Share are at least £9.00 at 15 April 2015 and 15 April 2016. During the year, 30,000 options lapsed on the departure of employees (2013: 180,000) leaving
6,090,000 options outstanding (2013: 6,120,000).
2011 Long-Term Incentive Plan
The Company announced in June 2011 as part of a strategic review of the business a long term plan to return approximately £1.7 billion to shareholders over the
next 10 years. The rules were subsequently amended and approved at the 2012 Annual General Meeting to allow the returns to be made through a combination
of dividends (£13 per share) and share buy backs (‘distributions’). The cumulative distributions required by the plan on or before the relative milestone dates are set
out below:
30 September 2015
30 September 2018
30 September 2021
Cumulative distributions
£4.34 per share
£4.33 per share
£4.33 per share
A long term remuneration plan was proposed to support this strategy, the 2011 Long Term Incentive Plan (“2011 LTIP”), which was approved by
shareholders at the Annual General Meeting on 5 September 2011 and the amendment at the Annual General Meeting on 5 September 2012. The key
features of the 2011 LTIP are:
– if the Company returns £1.7 billion to shareholders over a ten year period via a series of dividend payments (£13 per share) and share buy backs by the milestone
dates referred to above, participants will be entitled to exercise options and receive a number of ordinary shares in the capital of the Company at the end of the ten
year period.
– the maximum number of shares capable of being earned by all participants are 19,616,503 shares, being 13% of the fully diluted share capital of the Company at the
date of approval of the plan.
The fair value of the options granted during that year, determined using the current market pricing model, was £3.17 for options which vest on 30 September 2021.
The inputs into the current market option pricing model were:
Grant date
Vesting date
Share price at grant date (p)
Exercise price (p)
Discount rate
Inputs
5 September 2011
30 September 2021
1,236
nil
6.3%
In 2014, 1,250,000 of the 19,616,503 options over shares were surrendered by one Executive Director. These have now been reallocated to a wider pool of the Group’s
senior management team. No existing beneficiaries of the Plan received any additional options over shares. All other conditions of the Plan remained unchanged.
The discount rate was determined by calculating the Group’s expected cost of capital over the vesting period at the grant date.
CASH-SETTLED SHARE BASED PAYMENTS
Bonus Banking Plan.
Under the Bonus Banking Plan, discussed in the Directors’ Remuneration page on page 59, 50% of the balance on the plan account at the end of the financial year is
deferred in notional shares in the Company. The notional shares can be settled in equity or cash at the discretion of the Company. In prior periods, the plan has been
accounted for as equity-settled. At the end of year, the plan is expected to be settled in cash, which has been accounted for as a modification to the plan.
The liability is accrued over the vesting period. The income statement is charged with an estimate for the vesting of notional shares awarded subject to service and
non-market performance conditions. The charge for 2014 was £10.8m (2013: £5.8m), of which £4.6m relates to the modification to cash-settlement.
The total carring amount of liabilities for the Bonus Plan at the end of the year was £11.4m (2013: £1.6m)
Senior Management share appreciation rights
Certain key members of senior management have been awarded cash bonuses deferred in notional shares in the Company. The notional shares have a contractual life
of five years after the bonus is allocted, and are settled in cash subject to continued employment by the Company and individual and divisional performance criteria.
The liability is accrued over the vesting period. The income statement is charged with an estimate for the vesting of notional shares awarded subject to service and
non-market performance conditions. The charge for 2014 was £6.9m (2013: £4.5m).
The total carrying amount of liabilities for share appreciation rights at the end of the year was £13.0m (2013: £6.1m)
PENSIONS
During the year, two principal pension schemes were in place for employees. The Berkeley Group plc Group Personal Pension Plan and the St George PLC Group
Personal Pension Plan are defined contribution schemes. The assets of these schemes were held in separate trustee administered funds.
The Berkeley Final Salary Plan is a defined benefit scheme which was closed to future accrual with effect from 1 April 2007.
DEFINED CONTRIBUTION PLAN
Contributions amounting to £3.3m (2013: £2.7m) were paid into the defined contribution schemes during the year.
DEFINED BENEFIT PLAN
As at 30 April 2014, the Group operated one defined benefit pension scheme which was closed to future accrual with effect from 1 April 2007. This is a separate trustee
administered fund holding the pension plan assets to meet long term pension liabilities for some 335 past employees. The level of retirement benefit is principally
based on salary earned in the last three years of employment prior to leaving active service and is linked to changes in inflation up to retirement.
The Berkeley Final Salary Plan is subject to an independent actuarial valuation at least every three years. The most recently finalised valuation was carried out as at
1 May 2013 and finalised in December 2013. The method adopted in the 2013 valuation was the projected unit method, which assumed a return on investment both
prior to and after retirement of 4.00% per annum and pension increases of 3.25% per annum. The market value of the Berkeley Final Salary Plan assets as at 1 May 2013
was £16.2m and covered 97% of the scheme’s liabilities. Following the finalisation of the 2007 valuation, with effect from 1 July 2008, employer’s required regular
contributions were reduced to zero. Following the finalisation of the 2013 valuation, the Group agreed with the Trustees of the Scheme to make additional
contributions to the Scheme of £0.2m for the remainder of the year (1 December 2013 to 30 April 2014) to address the Scheme’s deficit after which required
contributions were reduced to zero. The Group made total contributions of £0.6m during the year (2013: £0.6m).
For the purposes of IAS 19, the 2013 valuation was updated for 30 April 2014.
The most significant risks to which the plan exposes the group are:
Inflation risk: A rise in inflation rates will lead to higher plan liabilities as a large proportion of the defined benefit obligation is indexed in line with price inflation. This
effect will be limited due to caps on inflationary increases to protect the plan against extreme inflation.
Interest rate risk: A decrease in corporate bond yields would result in an increase to plan liabilities although this effect would be partially offset by an increase in the
value of the plan’s bond holdings.
– the exercise price of options granted under the 2011 LTIP will be £13 per share less an amount equal to the value of all dividends paid between the date of approval
of the 2011 LTIP and 30 September 2021, provided the exercise price cannot be less than zero.
Mortality risk: An increase in life expectancy would result in an increase to plan liabilities as a significant proportion of the Pension Schemes’ obligations are to provide
benefits for the life of the member.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
5 DIRECTORS AND EMPLOYEES CONTINUED
The amounts recognised in the statement of financial position are determined as follows:
The fair value of the assets were as follows:
Present value of defined benefit obligations
Fair value of plan assets
Net surplus
Effect of the asset ceiling
Net amount recognised on the statement of financial position
Movement in net defined benefit asset:
2014
£m
(14.8)
16.0
1.2
(1.2)
–
2013
£m
(14.6)
16.0
1.4
(1.4)
–
Balance at 1 May
Included in income statement
Net interest
Defined Benefit Obligation
Fair Value Plan Assets
Net Defined Benefit Asset
2014
£m
(14.6)
2013
£m
(13.3)
2014
£m
16.0
2013
£m
14.0
2014
£m
1.4
2013
£m
0.7
(0.6)
(0.6)
0.6
0.8
–
0.2
Included in other comprehensive income
Remeasurements:
Actuarial (loss)/gain arising from:
– demographic assumptions
– financial assumptions
– experience adjustments
Return on plan assets
(excluding interest income)
Other
Contributions by the employer
Benefits paid out
Balance at 30 April
–
(0.1)
0.1
–
–
0.4
(14.8)
–
(1.1)
–
–
–
0.4
(14.6)
Cumulative actuarial gains and losses recognised in equity:
–
–
–
(0.8)
0.6
(0.4)
16.0
–
–
–
1.0
0.6
(0.4)
16.0
Cumulative amounts of losses recognised in the statement of comprehensive income at 1 May
Net actuarial losses recognised in the year
Change in the effect of the asset ceiling
Cumulative amounts of losses recognised in the statement of comprehensive income at 30 April
–
(0.1)
0.1
(0.8)
0.6
–
1.2
2014
£m
(4.4)
(0.8)
0.2
(5.0)
–
(1.1)
–
1.0
0.6
–
1.4
2013
£m
(3.6)
(0.1)
(0.7)
(4.4)
UK Equities
Global Equities
Emerging Market Equities
Emerging Market Debt
High Yield Bonds
Diversified Growth Fund
Property
Government Bonds (over 15 years)
Government Bonds (5 to 15 years)
Corporate Bonds
Cash
Fair value of plan assets
30 April 2014
Long-term
Value
£m
0.8
3.0
0.7
1.3
0.9
2.9
1.5
1.6
0.8
2.3
0.2
16.0
30 April 2013
Long-term
Value
£m
1.2
2.9
1.2
1.6
0.8
2.9
1.3
0.8
0.8
2.4
0.1
16.0
All equity securities and government bonds have quoted prices in active markets. All government bonds are issued by European governments and are AAA- or
AA- rated. All other plan assets are not quoted in an active market.
History of asset values
Fair value of scheme assets
Present value of scheme liabilities
Net surplus in the plan
30 April
2014
£m
16.0
(14.8)
1.2
30 April
2013
£m
16.0
(14.6)
1.4
30 April
2012
£m
14.0
(13.3)
0.7
Actuarial assumptions
The major assumptions used by the actuary for the 30 April 2014 valuation were:
Valuation at:
Discount rate
Inflation assumption (RPI)
Inflation assumption (CPI)
Rate of increase in pensions in payment post-97 (Pre-97 receive 3% p.a. increases)
30 April
2011
£m
12.8
(12.4)
0.4
30 April
2014
4.30%
3.40%
2.50%
3.40%
30 April
2010
£m
11.5
(11.4)
0.1
30 April
2013
4.30%
3.25%
2.50%
3.25%
The mortality assumptions are the standard S1PA CMI_2013_X [1.0%] (2013: S1PA CMI_2009_X [1.0%]) base table for males and females, both adjusted for each
individual’s year of birth to allow for future improvements in mortality rates. The life expectancy of male and female pensioners (now aged 65) retiring at age 65 on the
balance sheet date is 22.0 years and 24.2 years respectively (2013: 22.0 and 24.0). The life expectancy of male and female deferred pensioners (now aged 50) retiring at
age 65 after the balance sheet date is 23.0 years and 25.3 years respectively (2013: 23.0 and 25.2).
Sensitivity Analysis
The calculation of the defined benefit obligation is sensitive to the assumptions set out above. The following table summarises how the impact on the defined benefit
obligation at the end of the reporting period would have increased as a result of a change in the respective assumptions.
Discount rate
Rate of inflation
Rate of mortality
Change in
Assumption
Change in defined
benefit obligation
-0.25% p.a
+0.25% p.a
+ 1 year
+4.2%
+2.9%
+2.6%
These calculations provide an approximate guide to the sensitivity of results and may not be as accurate as a full valuation carried out on these assumptions. In
practice, changes in some of the assumptions are correlated and so each assumption change is unlikely to occur in isolation, as shown above.
Funding
The Group expects to pay £0.6m in contributions to its defined benefit plan in the year ending 30 April 2015 (i.e. the next annual reporting period).
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
6 TAXATION
The tax charge for the year is as follows:
Current tax
UK corporation tax payable
Adjustments in respect of previous years
Deferred tax at 23% (note 19) (2013: 24%)
Adjustment in respect of change of tax rate from 23% to 21%/20% (note 19) (2013: 24% to 23%)
Tax on items recognised directly in other comprehensive income is as follows:
Deferred tax on actuarial loss recognised in the pension scheme (note 19)
Tax on items recognised directly in equity is as follows:
Deferred tax in respect of employee share schemes (note 19)
Current tax in respect of employee share schemes (note 19)
2014
£m
(94.3)
(4.0)
(98.3)
16.5
(5.3)
(87.1)
2014
£m
0.1
2014
£m
17.3
(23.1)
(5.8)
The tax charge assessed for the year differs from the standard rate of UK corporation tax of 22.84% (2013: 23.92%). The differences are explained below:
Profit before tax
Tax on profit at standard UK corporation tax rate
Effects of:
Expenses not deductible for tax purposes
Tax effect of share of results of joint ventures
Adjustments in respect of previous periods – current tax
Adjustments in respect of deferred tax change of rate from 23% to 21%/20% (2013: 24% to 23%)
Utilisation of losses
Other
Tax charge
2014
£m
380.0
86.8
0.5
0.1
4.0
5.3
(0.8)
(8.8)
87.1
2013
£m
(77.7)
7.0
(70.7)
10.8
(1.1)
(61.0)
2013
£m
0.2
2013
£m
21.4
–
21.4
2013
£m
270.7
64.7
0.9
0.4
(7.0)
1.1
–
0.9
61.0
The statutory tax rate in 2014 was at 22.84% (11 months at 23%, 1 month at 21%)
The adjustments in respect of previous years includes items such as contaminated land relief, research and development relief and other timing differences that are
not individually significant and have not therefore been separately disclosed.
The other adjustment predominantly relates to the deferred tax effect of the external sale of certain properties from subsidiaries incorporated in overseas tax
jurisdictions with different rates to the UK on which tax has been paid in previous years (£8.2m).
7 EARNINGS PER ORDINARY SHARE
Basic earnings per ordinary share is calculated as profit for the financial year attributable to shareholders of the Group divided by the weighted average number of
shares in issue during the year.
Profit attributable to shareholders (£m)
Weighted average number of shares (m)
Basic earnings per ordinary share (p)
2014
292.9
132.1
221.8
2013
209.7
131.0
160.0
For diluted earnings per ordinary share, the weighted average number of shares in issue is adjusted to assume the conversion of all potentially dilutive ordinary shares.
At 30 April 2014, the Group had three (2013: four) categories of potentially dilutive ordinary shares: 5.9 million £6.76 share options under the 2009 LTIP Part B and
19.6 million £nil share options under the 2011 LTIP. 4.4 million share options vested on 31 January 2014 under the 2009 LTIP Part A scheme.
A calculation is done to determine the number of shares that could have been acquired at fair value based on the aggregate of the exercise price of each share option
and the fair value of future services to be supplied to the Group which is the unamortised share-based payments charge. The difference between the number of shares
that could have been acquired at fair value and the total number of options is used in the diluted earnings per share calculation.
Profit used to determine diluted EPS (£m)
Weighted average number of shares (m)
Adjustments for:
Share options – 2009 LTIP Part A (m)
Share options – 2009 LTIP Part B (m)
Share options – 2011 LTIP (m)
Bonus plan shares (m)
Shares used to determine diluted EPS (m)
Diluted earnings per ordinary share (p)
8 INTANGIBLE ASSETS
Cost
At 1 May 2013 and 30 April 2014
Accumulated impairment
At 1 May 2013 and at 30 April 2014
Net book value
At 1 May 2013 and at 30 April 2014
Cost
At 1 May 2012 and 30 April 2013
Accumulated impairment
At 1 May 2012 and at 30 April 2013
Net book value
At 1 May 2012 and at 30 April 2013
2014
292.9
132.1
3.0
4.0
16.4
–
155.5
188.4
2013
209.7
131.0
3.6
2.6
11.9
0.3
149.4
140.3
Goodwill
£m
17.2
–
17.2
17.2
–
17.2
The goodwill balance relates solely to the acquisition of the 50% of the ordinary share capital of St James Group Limited, completed on 7 November 2006, that was
not already owned by the Group. The goodwill balance is tested annually for impairment. The recoverable amount has been determined on the basis of the value in
use of the business using the current five year pre-tax forecasts. Key assumptions are as follows:
(i) Cash flows beyond a five year period are not extrapolated;
(ii) A pre-tax discount rate of 13.21% (2013: 11.62%) based on the Group’s weighted average cost of capital.
The Directors have identified no reasonably possible change in a key assumption which would give rise to an impairment charge.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
9 PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTY
Property, plant and equipment
Cost
At 1 May 2013
Additions
Disposals
At 30 April 2014
Accumulated Depreciation
At 1 May 2013
Charge for the year
Disposals
At 30 April 2014
Net book value
At 1 May 2013
At 30 April 2014
Cost
At 1 May 2012
Additions
Disposals
Transfer to held for sale (Note 15)
At 30 April 2013
Accumulated Depreciation
At 1 May 2012
Charge for the year
Disposals
Transfer to held for sale (Note 15)
At 30 April 2013
Net book value
At 1 May 2012
At 30 April 2013
Freehold
property
£m
Fixtures and
fittings
£m
Motor
vehicles
£m
11.1
5.2
–
16.3
0.5
0.2
–
0.7
10.6
15.6
8.8
2.2
(5.0)
6.0
5.3
1.1
(4.1)
2.3
3.5
3.7
3.5
1.5
(1.0)
4.0
1.3
0.6
(0.6)
1.3
2.2
2.7
Total
£m
23.4
8.9
(6.0)
26.3
7.1
1.9
(4.7)
4.3
16.3
22.0
Property, plant and equipment
Freehold
property
£m
Fixtures and
fittings
£m
Motor
vehicles
£m
8.0
3.1
–
–
11.1
0.3
0.2
–
–
0.5
7.7
10.6
6.8
2.6
(0.6)
–
8.8
4.8
1.1
(0.6)
–
5.3
2.0
3.5
2.9
0.9
(0.3)
–
3.5
1.0
0.5
(0.2)
–
1.3
1.9
2.2
Total
£m
17.7
6.6
(0.9)
–
23.4
6.1
1.8
(0.8)
–
7.1
11.6
16.3
Investment
properties
£m
27.4
–
(19.9)
7.5
0.9
0.1
(0.7)
0.3
26.5
7.2
Investment
properties
£m
84.6
29.5
(9.2)
(77.5)
27.4
1.1
1.7
(0.2)
(1.7)
0.9
83.5
26.5
Additions to investment property in 2013 represented the value at cost of completed properties transferred from the Group’s inventory to be held for rental purposes.
The market value of the properties held at 30 April 2014 is £10.3m (30 April 2013: £43.9m) as determined by the Directors taking into account all relevant factors
including their nature and location. No independent valuation was undertaken.
10 INVESTMENTS
Unlisted shares at cost
Loans
Share of post-acquisition reserves
Elimination of profit on transfer of inventory to joint ventures
Details of the principal joint ventures are provided in note 29.
The movement on the investment in joint ventures during the year is as follows:
At 1 May
Profit/(loss) after tax for the year
Net increase/(decrease) in loans to joint ventures
At 30 April
Net increase/(decrease) in loans to joint ventures includes movements in unlisted shares at cost.
The Group’s share of joint ventures’ net assets, income and expenses is made up as follows:
Current assets
Current liabilities
Non-current liabilities
Revenue
Costs
Operating profit
Interest charges
Profit/(loss) before taxation
Tax charge
Share of post tax profit/(loss) of joint ventures
11 OTHER INVESTMENTS
Other investments comprise available-for-sale financial assets.
At 1 May
Additions
Fair value adjustment taken through other comprehensive income
At 30 April
2014
£m
12.1
41.9
7.9
(0.5)
61.4
2014
£m
44.1
12.1
5.2
61.4
2014
£m
180.4
(82.5)
(36.5)
61.4
125.6
(112.1)
13.5
(1.2)
12.3
(0.2)
12.1
2014
£m
–
10.0
1.0
11.0
2013
£m
13.7
35.1
(4.2)
(0.5)
44.1
2013
£m
46.5
(1.3)
(1.1)
44.1
2013
£m
161.9
(86.4)
(31.4)
44.1
9.4
(8.7)
0.7
(1.9)
(1.2)
(0.1)
(1.3)
2013
£m
–
–
–
–
During the year, the Group sold 534 rental properties to a fund owned and controlled by M&G Investments (Note 15). Following this sale, as agreed with
M&G Investments, the Group invested £10.0 million into the fund to acquire 100,000 units at an average price of £100 per unit. As at 30 April 2014, the Group held
100,000 units. In accordance with IFRS 7 ‘Financial Instruments: Disclosures’, these financial assets have been classified as Level 2 within the fair value hierarchy. Level 2
fair value measurements are those that are derived from inputs other than quoted prices included within level 1 that are observable for the asset (that is, as prices) or
indirectly (that is, derived from prices).
On 30 April 2014, based on inputs other than quoted prices, the units had a market value of £11.0m. A gain of £1.0m has been recognised in the consolidated
statement of comprehensive income for the year ended 30 April 2014.
Further disclosures relating to financial assets are set out in note 26.
104
105
BERKELEY ANNUAL REPORT 2014 / FINANCIALSBERKELEY ANNUAL REPORT 2014 / FINANCIALSFINANCIALS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
12 INVENTORIES
Land not under development
Work in progress
Completed units
13 TRADE AND OTHER RECEIVABLES
Trade receivables
Other receivables
Prepayments and accrued income
Further disclosures relating to trade receivables are set out in note 26.
14 CASH AND CASH EQUIVALENTS
Cash and cash equivalents
2014
£m
492.4
1,966.4
22.4
2,481.2
2014
£m
134.0
15.3
9.7
159.0
2014
£m
130.2
2013
£m
310.0
1,711.7
45.0
2,066.7
2013
£m
105.9
11.8
9.1
126.8
2013
£m
66.8
15 NON-CURRENT ASSETS HELD FOR SALE
During the year, on 5 June 2013, Berkeley sold 534 Homes and Community Agency funded residential properties within its rental fund to a fund owned and controlled
by M&G Investments for £105.4 million, which was recognised as revenue. In the prior year, these properties were held in the balance sheet as Non-current assets held
for sale of £75.8 million.
16 BORROWINGS
Current
Bank loans
Other loans
Further disclosures relating to current and non-current loans are set out in note 26.
17 TRADE AND OTHER PAYABLES
Current
Trade payables
Deposits and on account contract receipts
Loans from joint ventures
Other taxes and social security
Accruals and deferred income
Non-current
Trade payables
Total trade and other payables
2014
£m
(1.0)
–
(1.0)
2014
£m
(346.7)
(741.6)
(0.1)
(39.4)
(90.8)
(1,218.6)
(148.6)
(1,367.2)
2013
£m
(4.7)
(17.4)
(22.1)
2013
£m
(381.1)
(426.1)
(0.1)
(26.6)
(72.0)
(905.9)
(115.5)
(1,021.4)
All amounts included above are unsecured. The total of £39.4m (2013: £26.6m) for other taxes and social security includes £29.5m (2013: £22.0m) for Employer’s
National Insurance provision in respect of share-based payments.
Further disclosures relating to current trade and non-current trade payables are set out in note 26.
18 PROVISIONS FOR OTHER LIABILITIES AND CHARGES
At 1 May 2013
Utilised
Released
Charged to the income statement
At 30 April 2014
At 1 May 2012
Reclassified from accruals
Utilised
Released
Charged to the income statement
At 30 April 2013
Analysis of total provisions:
Non-current
Current
Total
a) Construction liabilities
Construction
liabilities
£m
(23.6)
1.6
–
(31.2)
(53.2)
Construction
liabilities
£m
–
(16.5)
–
6.6
(13.7)
(23.6)
Other
£m
(5.4)
0.9
1.2
(0.6)
(3.9)
Other
£m
–
(7.3)
0.7
1.2
–
(5.4)
2014
£m
48.5
8.6
57.1
Total
£m
(29.0)
2.5
1.2
(31.8)
(57.1)
Total
£m
–
(23.8)
0.7
7.8
(13.7)
(29.0)
2013
£m
27.9
1.1
29.0
The Group holds provisions for a best estimate of certain post-completion development obligations in respect of the construction of its portfolio of complex
mixed-use developments which are expected to be incurred in the ordinary course of business, based on historic experience, but which are uncertain in terms of
timing and quantum.
b) Other
Other provisions include onerous lease provisions for properties leased by the Group and provisions for the Group’s exposure to specific estate liabilities on historic
sites developed by the Group.
19 DEFERRED TAX
The movement on the deferred tax account is as follows:
At 1 May 2013
Transfer to corporation tax receivable
(Charged)/credited to the income statement at 23% (note 6)
Adjustment in respect of change of tax rate from 23% to 21%/20% (note 6)
(Charged)/credited to the income statement in year
Credited to equity at 23%
Adjustment in respect of change of tax rate from 23% to 21%/20%
Realisation of deferred tax asset on vesting of employee share scheme
Credited to equity in year (note 6)
At 30 April 2014
Accelerated
capital
allowances
£m
0.3
–
–
–
–
–
–
–
–
0.3
Retirement
benefit
obligation
£m
short-term
timing
differences
£m
–
–
(0.1)
–
(0.1)
0.1
–
–
0.1
–
56.4
(1.1)
16.6
(5.3)
11.3
21.2
(3.9)
(23.1)
(5.8)
60.8
Total
£m
56.7
(1.1)
16.5
(5.3)
11.2
21.3
(3.9)
(23.1)
(5.7)
61.1
106
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BERKELEY ANNUAL REPORT 2014 / FINANCIALSBERKELEY ANNUAL REPORT 2014 / FINANCIALSFINANCIALS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
19 DEFERRED TAX CONTINUED
Accelerated
capital
allowances
£m
Retirement
benefit
obligation
£m
Short-term
timing
differences
£m
At 1 May 2012
Transfer from corporation tax receivable
(Charged)/credited to the income statement at 24% (note 6)
Adjustment in respect of change of tax rate from 24% to 23% (note 6)
(Charged)/credited to the income statement in year
Credited to equity at 24%
Adjustment in respect of change of tax rate from 24% to 23%
Credited to equity in year (note 6)
At 30 April 2013
0.4
–
(0.1)
–
(0.1)
–
–
–
0.3
–
–
(0.2)
–
(0.2)
0.2
–
0.2
–
24.6
0.4
11.1
(1.1)
10.0
22.7
(1.3)
21.4
56.4
Total
£m
25.0
0.4
10.8
(1.1)
9.7
22.9
(1.3)
21.6
56.7
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 21% or 20% (2013: 23%). There is no unprovided deferred tax
(2013: nil).
All of the deferred tax assets were available for offset against deferred tax liabilities and hence the net deferred tax asset at 30 April 2014 was £61.1m (2013: £56.7m).
Deferred tax assets of £58.3m (2013: £33.9m) are expected to be recovered after more than one year.
The Autumn Statement (December 2013) and the draft Finance Bill 2014 included legislation to reduce the main rate of corporation tax to 21% for the financial year
commencing 1 April 2014 and 20% for the financial year commencing 1 April 2015. The change had been substantively enacted at the balance sheet date and,
therefore, has been reflected in these financial statements.
The deferred tax credited to equity during the year was as follows:
Deferred tax on actuarial loss recognised in the pension scheme (note 6)
Deferred tax in respect of employee share schemes (note 6)
Movement in the year
Cumulative deferred tax credited to equity at 1 May
Cumulative deferred tax credited to equity at 30 April
20 SHARE CAPITAL AND SHARE PREMIUM
The movements on allotted and fully paid share capital for the Company in the year were as follows:
Issued
At start of year
Issued in year
At end of year
Ordinary shares
2013
No ‘000
2014
No ‘000
134,857
500
135,357
134,857
–
134,857
2014
£m
6.7
0.1
6.8
Share Capital
2013
£m
6.7
–
6.7
2014
£m
0.1
(5.8)
(5.7)
32.7
27.0
2013
£m
0.2
21.4
21.6
11.1
32.7
Share Premium
2013
£m
49.3
–
49.3
2014
£m
49.3
–
49.3
Each ordinary share of 5p is a voting share in the capital of the Company, is entitled to participate in the profits of the Company and on a winding-up is entitled to
participate in the assets of the Company.
On 29 January 2014, the company transferred 3.6 million shares (2013: nil), held as ‘treasury shares’, to the Employee Benefit Trust.
On 31 January 2014, 0.5 million ordinary shares (2013: nil) were allotted and issued to the Employee Benefit Trust.
On 31 January 2014, 4.2 million ordinary shares (2013: nil) were transferred from the Employee Benefit Trust to Executive Directors to satisfy the exercise of options
under the 2009 Long Term Incentive Plan Part A.
At 30 April 2014 there were no shares held as ‘treasury shares’ (2013: 3.6m).
At 30 April 2014 there were 0.1m shares held in trust (2013: 0.2m). The market value of these shares at 30 April 2014 was £2.4m (2013: £4.9m).
21 RESERVES
The movement in reserves is set out in the Consolidated Statement of Changes in Equity on page 91.
OTHER RESERVE
The other reserve of negative £961.3m (2013: negative £961.3m) arose from the application of merger accounting principles to the financial statements on
implementation of the capital reorganisation of the Group, incorporating a Scheme of Arrangement, in the year ended 30 April 2005.
REVALUATION RESERVE
The revaluation reserve consists of balances in relation to two separate transactions.
The first element arose following the acquisition on 7 November 2006 of the 50% of the ordinary share capital of St James Group Limited not already owned.
A revaluation reserve of £20,297,000 was originally created in accordance with IFRS 3 through fair value adjustments to the 50% of the net assets of St James Group
Limited owned by the Group prior to 7 November 2006. Transfers of £54,000 in the year (2013: £929,000) out of retained earnings was recognised as the associated
fair value adjustments. At 30 April 2014 the balance in the revaluation reserve relating to the acquisition of St James Group Limited is £3,877,000 (2013: £3,823,000).
The second element arose in 2010 following the acquisition on 23 July 2009 of the shares owned by Saad Investments Company Limited and the outstanding
shareholder loans in five joint ventures which became fully owned subsidiaries from this date. A revaluation reserve of £560,000 was created in accordance with
IFRS 3 through fair value adjustments to the 50% of the net assets of the joint ventures owned by the Group prior to 23 July 2009. Transfers of £36,000 in the year
(2013: £304,000) out of retained earnings were recognised as the associated fair value adjustments. At 30 April 2014 the balance in the revaluation reserve relating to
the acquisition of the five entities that were previously joint ventures with Saad Investments Company Limited is £213,000 (2013: £177,000).
CAPITAL REDEMPTION RESERVE
The capital redemption reserve was created to maintain the capital of the Company following the redemption of the B Shares associated with the Scheme of
Arrangement created in 2004 which completed on 10 September 2009 with the re-designation of the unissued B shares as ordinary shares.
RETAINED EARNINGS
The Company and the Company’s Employee Benefit Trust acquired none (2013: none) of its own shares through purchases on the London Stock Exchange in the year.
22 DIVIDENDS PER SHARE
The dividends paid in 2014 were a total of £195.2 million, £77.2 million in September 2013 (59 pence per share) and £118.0 million in January 2014 (90 pence per share)
(2013: £19.7 million, 15 pence per share). A further interim dividend of £121.7 million (90 pence per share) has been declared for payment on 26 September 2014.
These financial statements do not reflect this further interim dividend.
23 CONTINGENT LIABILITIES
The Group has guaranteed road and performance agreements in the ordinary course of business of £15.0m (2013: £15.7m).
24 OPERATING LEASES – MINIMUM LEASE PAYMENTS
The total future aggregate minimum lease payments of the Group under non-cancellable operating leases are set out below:
Amounts due within:
Within one year
Between one and five years
After five years
2014
£m
1.9
4.4
2.4
8.7
2013
£m
1.5
3.9
3.0
8.4
108
109
BERKELEY ANNUAL REPORT 2014 / FINANCIALSBERKELEY ANNUAL REPORT 2014 / FINANCIALSFINANCIALS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
25 NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
Reconciliation of profit after taxation for the year to cash generated from operations:
FINANCIAL INSTRUMENTS: FINANCIAL ASSETS
The Group’s financial assets can be summarised as follows:
Profit after taxation for the year
Adjustments for:
– Taxation
– Depreciation
– Loss on sale of fixed assets
– Profit on sale of investment properties
– Finance income
– Finance costs
– Share of results of joint ventures after tax
– Non-cash charge in respect of share-based payments
Changes in working capital:
– Increase in inventories
– Increase in trade and other receivables
– Increase in trade and other payables
– Decrease in employee benefit obligations
Cash generated from operations
Reconciliation of net cash flow to net cash:
Net increase in cash and cash equivalents, including bank overdraft
Net cash outflow from decrease in borrowings
Movement in net cash/(debt) in the year
Opening net cash/(debt)
Closing net cash
Net cash:
As at 30 April
Cash and cash equivalents
Current borrowings
Net cash
2014
£m
292.9
87.1
2.0
0.7
(43.2)
(3.4)
10.3
(12.1)
3.3
(414.5)
(33.6)
370.8
(0.6)
259.7
2014
£m
63.4
21.1
84.5
44.7
129.2
2014
£m
130.2
(1.0)
129.2
2013
£m
209.7
61.0
3.5
–
(3.6)
(1.5)
9.6
1.3
11.8
(244.5)
(12.2)
154.5
(0.6)
189.0
2013
£m
64.1
38.5
102.6
(57.9)
44.7
2013
£m
66.8
(22.1)
44.7
26 CAPITAL MANAGEMENT, FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
The Group finances its operations by a combination of shareholders’ funds, working capital and, where appropriate, borrowings. The Group’s objective when
managing capital is to maintain an appropriate capital structure in the business to allow management to focus on creating sustainable long-term value for its
shareholders, with flexibility to take advantage of opportunities as they arise in the short and medium term. This allows the Group to take advantage of prevailing
market conditions by investing in land and work in progress at the right point in the cycle or delivering returns to shareholders through dividends or share buy backs.
Last year the Group put in place a long-term strategic plan to see £13 per share returned to shareholders over the next 10 years. This plan, reported in more detail in
the Trading and Financial Review on pages 38 to 42, ensures there is sufficient working capital retained in the business to continue investing selectively in new land
opportunities as they arise.
The Group monitors capital levels principally by monitoring net cash/debt levels, cash flow forecasts and return on average capital employed. The Group considers
capital employed to be net assets adjusted for net cash/debt. Capital employed at 30 April 2014 was £1,312.1m (2013: £1,277.7m). The increase in capital employed in
the year of £34.4m reflects further investment in land and work in progress during the year.
The Group’s financial instruments comprise financial assets being: trade receivables and cash and cash equivalents and financial liabilities being: bank loans, trade
payables, deposits and on account receipts, loans from joint ventures and accruals. Cash and cash equivalents and borrowings are the principal financial instruments
used to finance the business. The other financial instruments highlighted arise in the ordinary course of business.
As all of the operations carried out by the Group are in sterling there is no direct currency risk, and therefore the Group’s main financial risks are primarily:
– liquidity risk – the risk that suitable funding for the Group’s activities may not be available;
– market interest rate risk – the risk that Group financing activities are adversely affected by fluctuation in market interest rates; and
– credit risk – the risk that a counterparty will default on their contractual obligations resulting in a loss to the Group.
Current
Trade receivables
Cash and cash equivalents
Non-current
Available-for-sale financial assets
Total financial assets
2014
£m
134.0
130.2
264.2
11.0
11.0
275.2
2013
£m
105.9
66.8
172.7
–
–
172.7
Trade receivables and available-for-sale financial assets are non-interest bearing. Of the current trade receivables balance of £134.0m (30 April 2013: £105.9m), £127.3m
(30 April 2013: £87.8m) was not past due, with £6.7m being 0–30 days past due (30 April 2013: £6.6m, 0–30 days past due, £5.8m, 31 to 60 days, £5.7m over 60 days).
Cash and cash equivalents are short-term deposits held at either floating rates linked to LIBOR or fixed rates.
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:
– Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
– Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from
prices) (level 2).
– Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
The following table presents the group’s assets that are measured at fair value at 30 April 2014.
Assets
Available-for-sale financial assets
Total assets
Notes
11
–
Level 1
£m
–
11.0
Level 2
£m
11.0
–
The available-for-sale financial asset was acquired in the year (Note 11) therefore there is no prior year comparative.
FINANCIAL INSTRUMENTS: FINANCIAL LIABILITIES
The Group’s financial liabilities can be summarised as follows:
Current
Bank loans
Trade payables
Deposits and on account contract receipts
Loans from joint ventures
Accruals and deferred income
Other loans
Non-current
Trade payables
Total financial liabilities
All amounts included above are unsecured.
Level 3
£m
–
11.0
2014
£m
(1.0)
(346.7)
(741.6)
(0.1)
(90.8)
–
(1,180.2)
(148.6)
(148.6)
(1,328.8)
Total
£m
11.0
2013
£m
(4.7)
(381.1)
(426.1)
(0.1)
(72.0)
(17.4)
(901.4)
(115.5)
(115.5)
(1,016.9)
Current bank loans have term expiry dates within twelve months of the balance sheet date and are held at floating interest rates linked to LIBOR. Trade payables and
other current liabilities are non-interest bearing.
In the prior year, other loans represented a loan from the Homes and Communities Agency on which interest was payable based on a proportionate share of the net
rental income arising from the properties to which the loan related. This loan was repaid following completion of the sale of 534 HCA funded residential properties on
5 June 2014 (see note 15).
110
111
BERKELEY ANNUAL REPORT 2014 / FINANCIALSBERKELEY ANNUAL REPORT 2014 / FINANCIALSFINANCIALS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
26 CAPITAL MANAGEMENT, FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT CONTINUED
The maturity profile of the Group’s non-current financial liabilities, all of which are held at amortised cost, is as follows:
COMMITTED BORROWING FACILITIES
The Group has committed borrowing facilities as follows:
In more than one year but not more than two years
In more than two years but not more than five years
In more than five years
2014
£m
(54.3)
(93.3)
(1.0)
(148.6)
2013
£m
(27.7)
(87.8)
–
(115.5)
Revolving credit facility one
Revolving credit facility two
Available
£m
Drawn
£m
275
250
525
–
–
–
2014
Undrawn Termination
date
May-18
Apr-18
275
250
£m
525
Available
£m
Drawn
£m
275
250
525
–
–
–
2013
Undrawn Termination
date
£m
May-17
Apr-18
275
250
525
The carrying amounts of the Group’s financial assets and financial liabilities approximate to fair value.
Current trade receivables and current trade and other payables approximate to their fair value as the transactions which give rise to these balances arise in the normal
course of trade and, where relevant, with industry standard payment terms and have a short period to maturity (less than one year).
Current trade receivables include £16.2m relating to amounts owed by St Edward Homes Limited in respect of the inventory sold by the Group in 2009 (Note 27). This
is held at its discounted present value (calculated by discounting expected future cash flows at prevailing interest rates and yields as appropriate). The discount rate
applied reflects the nominal, risk-free pre-tax rate at the balance sheet date, applied to the maturity profile. At 30 April 2014 a rate of 1.08% was applied (2013: 0.43%).
Non-current trade payables comprise long-term land payables, which are held at their discounted present value (calculated by discounting expected future cash flows
at prevailing interest rates and yields as appropriate). The discount rate applied reflects the nominal, risk-free pre-tax rate at the balance sheet date, applied to the
maturity profile of the individual land creditors within the total. At 30 April 2014 a rate of 1.08% was applied (2013: 0.43%). Non-current loans approximate to fair value
as they are held at variable market interest rates linked to LIBOR.
LIQUIDITY RISK
This is the risk that suitable funding for the Group’s activities may not be available. Group management addresses this risk through review of rolling cash flow forecasts
throughout the year to assess and monitor the current and forecast availability of funding, and to ensure sufficient headroom against facility limits and compliance with
banking covenants. The committed borrowing facilities are set out below.
At 30 April 2014 the total drawn down balance across both facilities was £nil (2013: £nil). In addition, at 30 April 2014 there were bank bonds in issue of £0.2m
(2013: £0.2m).
A one year extension was granted on 24 May 2013 for revolving credit facility one, which extended the maturity date on this facility until May 2018.
The revolving credit facilities are secured by debentures provided by certain Group holding companies over their assets. The facility agreement contains financial
covenants, which is normal for such agreements, all of which the Group is in compliance with.
27 RELATED PARTY TRANSACTIONS
The Group has entered into the following related party transactions:
TRANSACTIONS WITH DIRECTORS
In terms of new transactions in the 2014 financial year:
i) Mr A W Pidgley paid £440,052 to Berkeley Homes plc for works carried out at his home under the Group’s own build scheme (2013: Mr A W Pidgley £20,156). This is
a scheme whereby eligible employees may enter into an arrangement, at commercial rates, with the Group for the construction or renovation of their own home.
There were no balances outstanding at the year end.
The contractual undiscounted maturity profile of the Group’s financial liabilities, included at their carrying value in the preceding tables, is as follows:
ii) Mr G Fry, a Director of the Company, contracted to purchase an apartment at Sovereign Court, Hammersmith, London for £819,950 on 10 September 2013 from
In less than one year
In more than one year but not more than two years
In more than two years but not more than five years
In more than five years
2014
£m
(1,183.1)
(55.0)
(96.0)
(1.0)
(1,335.1)
2013
£m
(901.4)
(27.9)
(89.0)
–
(1,018.3)
MARKET INTEREST RATE RISK
The Group’s cash and cash equivalents and bank loans expose the Group to cash flow interest rate risk.
The Group’s rolling cash flow forecasts incorporate appropriate interest assumptions, and management carefully assesses expected activity levels and associated
funding requirements in the prevailing and forecast interest rate environment to ensure that this risk is managed.
If interest rates on the Group’s cash/debt balances had been 50 basis points higher throughout the year ended 30 April 2014, profit after tax for the year would have
been £483,000 (2013: £26,000 higher). This calculation is based on the monthly closing net cash/debt balance throughout the year. A 50 basis point increase in interest
rate represents management’s assessment of a reasonably possible change for the year ended 30 April 2014.
CREDIT RISK
The Group’s exposure to credit risk encompasses the financial assets being: trade receivables and cash and cash equivalents.
Trade receivables are spread across a wide number of customers, with no significant concentration of credit risk in one area. There has been no impairment of
trade receivables during the year (2013: £nil), nor are there any provisions held against trade receivables (2013: £nil), and no trade receivables are past their due
date (2013: £nil).
The credit risk on cash and cash equivalents is limited because counterparties are leading international banks with long-term A credit-ratings assigned by international
credit agencies.
St George West London Limited, a wholly owned subsidiary of the Company. Mr Fry is also a Director of St George West London Limited.
The agreement between St George West London Limited and Mr Fry is a standard form sale and purchase agreement used by the Company on its development,
save that it is conditional upon the agreement of shareholders.
As this transaction is in excess of £100,000, it constitutes a substantial property transaction with a Director of the Company under sections 190 and 191 of the
Companies Act 2006 and is therefore conditional on the approval of shareholders, which will be sought at the Annual General Meeting on 1 September 2014.
Mr Fry paid a ten per cent deposit on exchange of contracts which will only be returned to him in the event that shareholders do not approve the transaction.
In terms of transactions previously disclosed, the purchases of an apartment by Mr G Fry at Chelsea Creek for £725,000 in 2012, by Mr A W Pidgley at Ebury Square for
£10,500,000 in 2013 and by Mr R C Perrins at 190 Strand for £2,100,000 in 2013 all received shareholder approval. As at 30 April 2014, any contractual deposits due to
date had been paid to the Group, there were no current balances outstanding and the properties were still under construction and so the sales had not yet
completed.
TRANSACTIONS WITH JOINT VENTURES
During the financial year there were no transactions with joint ventures other than movements in loans. In 2009 inventory was sold to St Edward Homes Limited for
£17,411,000 being the share of the transaction attributable to the other venturer in the joint venture. At 30 April 2014 an amount of £16,219,000 was outstanding and
included within trade receivables (2013: £21,319,000). Loans with joint ventures are disclosed in note 10.
28 EVENTS AFTER THE REPORTING PERIOD
On 30 May 2014, the Group exchanged contracts for the sale of a portfolio of ground rent assets for £99.8 million. The sale is expected to give rise to a non-recurring
profit on disposal of approximately £80 million after transaction costs in the year ending 30 April 2015.
112
113
BERKELEY ANNUAL REPORT 2014 / FINANCIALSBERKELEY ANNUAL REPORT 2014 / FINANCIALSFINANCIALS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
BERKELEY ANNUAL REPORT 2014 / FINANCIALS
COMPANY BALANCE SHEET
29 SUBSIDIARIES AND JOINT VENTURES
(a) Subsidiaries
At 30 April 2014 the Company had the following principal subsidiary undertakings which have all been consolidated, are registered and operate in England and Wales,
are all 100% owned and for which 100% of voting rights are held except where stated:
Residential led mixed-use development and ancillary activities
Berkeley Commercial Developments Limited
Berkeley First Limited (1)
Berkeley Homes (Capital) plc (1)
Berkeley Homes (Carmelite) Limited
Berkeley Homes (Central London) Limited (1)
Berkeley Homes (East Thames) Limited (1)
Berkeley Homes (Eastern Counties) Limited (1)
Berkeley Homes (Eastern) Limited (1)
Berkeley Homes (Fleet) Limited
Berkeley Homes (Hampshire) Limited (1)
Berkeley Homes (North East London) Limited (1)
Berkeley Homes (Oxford & Chiltern) Limited (1)
Berkeley Homes (PCL) Limited
Berkeley Homes (South East London) Limited (1)
Berkeley Homes (Southern) Limited (1)
Berkeley Homes (Three Valleys) Limited (1)
Berkeley Homes (Urban Renaissance) Limited (1)
Berkeley Homes (West London) Limited (1)
(1) Agency companies of Berkeley Homes plc
(2) Agency companies of St George PLC
Berkeley Homes Public Limited Company
Berkeley Partnership Homes Limited (1)
Berkeley Ryewood Limited
Berkeley Strategic Land Limited
BH (City Forum) Limited
St George Battersea Reach Limited (Jersey)
St George Blackfriars Limited
St George Central London Limited (2)
St George North London Limited (2)
St George PLC
St George South London Limited (2)
St George West London Limited (2)
St James (Grosvenor Dock) Limited
St James Group Limited
St James Homes Limited
St James (West London) Limited
The Berkeley Group plc (3)
The Tower, One St George Wharf Limited
As at 30 April
Fixed assets
Investments
Current assets
Debtors
Cash at bank and in hand
Current liabilities
Creditors (amounts falling due within one year)
Net current liabilities
Total assets less current liabilities and net assets
Capital and reserves
Called-up share capital
Share premium account
Capital redemption reserve
Profit and loss account
Total shareholders’ funds
Notes
2014
£m
2013
£m
C5
C6
C7
C8
C9
C9
C9
C10
1,397.0
1,397.0
1,395.1
1,395.1
6.0
0.9
6.9
(622.9)
(616.0)
781.0
6.8
49.3
24.5
700.4
781.0
8.3
0.9
9.2
(680.4)
(671.2)
723.9
6.7
49.3
24.5
643.4
723.9
F
I
N
A
N
C
I
A
L
S
The financial statements on pages 115 to 119 were approved by the board of directors on 11 July 2014 and were signed on its behalf by:
(3) The Berkeley Group plc is the only direct subsidiary of the Parent Company and is an intermediate holding company
N G SIMPKIN
FINANCE DIRECTOR
Other activities
BRP Investments No.1 Limited (Jersey)
BRP Investments No.2 Limited (Jersey)
(b) Joint Ventures
At 30 April 2014 the Group had an interest in the following joint ventures which have been equity accounted to 30 April, have an accounting date of 30 April and are
registered and operate in England and Wales and which are 50% owned:
St Edward Homes Limited
St Edward Homes Partnership
The St Edward (Strand) Partnership
Principal activity
Residential-led mixed-use development
Residential-led mixed-use development
Residential-led mixed-use development
114
115
BERKELEY ANNUAL REPORT 2014 / FINANCIALS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
C1 ACCOUNTING POLICIES
BASIS OF PREPARATION
These financial statements have been prepared under the historical cost convention and in accordance with the Companies Act 2006, where applicable, and
applicable accounting standards in the United Kingdom (United Kingdom Generally Accepted Accounting Practice) and on the going concern basis. The principal
accounting policies are set out below and have been applied consistently throughout the year.
The principal activity of The Berkeley Group Holdings plc (“the Company”) is to act as a holding company.
The Company has not presented its own profit and loss account as permitted by Section 408 of the Companies Act 2006.
The Company has not presented its own statement of total recognised gains and losses for the year as there are no separate gains or losses arising in the year.
GOING CONCERN
The Group’s business activities together with the factors likely to affect its future development performance and position are set out in the Business Review. The
financial position of the Group, its cash flows, liquidity position and borrowing facilities are all described in the Trading and Financial Reviews on pages 38 to 42.
The Group has significant financial resources and the Directors have assessed the future funding requirements of the Group, including the repayment of £1.7 billion to
shareholders by 2021, and compared this to the level of committed loan facilities and cash resources over the medium term. In making this assessment consideration
has been given to the uncertainty inherent in future financial forecasts and where applicable reasonable sensitivities have been applied to the key factors affecting the
financial performance of the Group.
Based on the financial performance of the Group, the Directors have a reasonable expectation that the Company has adequate resources to continue its operational
existence for the foreseeable future, notwithstanding its net current liability position of £616.0m (30 April 2013: £671.2m). For this reason they continue to adopt the
going concern basis of accounting in preparing the annual financial statements.
EXPENDITURE
Expenditure is recognised in respect of goods and services received when supplied in accordance with contractual terms. Provision is made when an obligation exists
for a future liability in respect of a past event and where the amount of the obligation can be reliably estimated.
PENSIONS
Pension contributions under defined contribution schemes are charged to the income statement as they fall due.
INVESTMENTS
Investments in subsidiary undertakings are included in the balance sheet at cost less provision for any impairment.
DEFERRED TAXATION
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date, where transactions or events that result
in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date.
A net deferred tax asset is recognised as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than
not that there will be suitable taxable profits against which to recover carried forward tax losses and from which the future reversal of underlying timing differences can
be deducted.
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates
and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is measured on an undiscounted basis.
SHARE-BASED PAYMENTS
The Company operates three equity-settled, share-based compensation plans. The fair value of the employee services received in exchange for the grant of the
options is recognised as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted.
At each balance sheet date, the Company revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision to original
estimates, if any, in the profit and loss account, with a corresponding adjustment to equity.
The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are
exercised.
DIVIDENDS
Dividend distributions to shareholders are recognised as a liability in the period in which the dividends are appropriately authorised and approved for payout and are
no longer at the discretion of the Company. Unpaid dividends that do not meet these criteria are disclosed in the notes to the financial statements.
C2 PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION
Profit/(loss) on ordinary activities before taxation is stated after charging the following amounts:
Previous auditors’ remuneration – audit fees
Current auditors’ remuneration – audit fees
2014
£m
–
0.1
2013
£m
0.1
–
No disclosure of other non-audit services has been made as this is included within note 4 of the consolidated financial statements.
C3 DIRECTORS AND EMPLOYEES
Staff costs
Wages and salaries
Social security costs
Share-based payments
2014
£m
15.0
10.0
1.4
26.4
2013
£m
4.5
10.2
7.8
22.5
The average monthly number of persons employed by the company during the year was 9, all of whom are Directors (2013: 9).
DIRECTORS
Details of Directors’ emoluments are set out in the Remuneration Report on pages 56 to 80.
PENSIONS
During the year, the Company participated in one of the Group’s pension schemes, The Berkeley Group plc Group Personal Pension Plan. Further details on this
scheme are set out in note 5 of the Consolidated Financial Statements. Contributions amounting to £48,150 (2013: £46,800) were paid into the defined contribution
scheme during the year.
SHARE-BASED PAYMENTS
The charge to the income statement in respect of share-based payments in the year, relating to grants of shares; share options and notional shares awarded under the
2009 Long-Term Incentive Plan and the 2011 Long-Term Incentive Plan was £1.4m (2013: £7.8m). Further information on the Company’s share incentive schemes are
included in the Remuneration Report on pages 56 to 80 as well as note 5 to the Consolidated Financial Statements.
C4 THE BERKELEY GROUP HOLDINGS PLC PROFIT AND LOSS ACCOUNT
The profit for the year in the Company is £248.9m (2013: loss of £39.4m).
C5 INVESTMENTS
Investments in shares of subsidiary undertaking at cost at 1 May
Additions
Investment in shares of subsidiary undertaking at cost at 30 April
2014
£m
1,395.1
1.9
1,397.0
2013
£m
1,391.3
3.8
1,395.1
Additions in the year relate to company contributions to the Berkeley Group plc for employee services to be settled through the issue of shares on the vesting of the
Berkeley Group Holdings plc 2009 Part (a), 2009 Part (b) and 2011 Long Term Incentive Plan awards for the benefit of executive directors of its subsidiaries.
The directors believe that the carrying value of the investments is supported by their underlying net assets.
Details of principal subsidiaries are given within note 28 of the Consolidated Financial Statements.
C6 DEBTORS
Current
Deferred tax
The movements on the deferred tax asset are as follows:
At 1 May
Deferred tax in respect of employee share schemes credited to reserves
Realisation of deferred tax asset on vesting of employee share scheme
At 30 April
2014
£m
6.0
2014
£m
8.3
1.1
(3.4)
6.0
2013
£m
8.3
2013
£m
4.5
3.8
–
8.3
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 21% or 20% (2013: 23%). There is no unprovided deferred tax
(2013: nil).
The deferred tax asset of £6.0m relates to short-term timing differences (2013: £8.3m).
The Autumn Statement (December 2013) and the draft Finance Bill 2014 include legislation to reduce the main rate of corporation tax to 21% for the financial year
commencing 1 April 2015. The charge has been substantively enacted at the balance sheet date and, therefore, has been reflected in the financial statements.
116
117
BERKELEY ANNUAL REPORT 2014 / FINANCIALSBERKELEY ANNUAL REPORT 2014 / FINANCIALSFINANCIALS
NOTES TO THE COMPANY FINANCIAL STATEMENTS continued
C7 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
C10 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS
Amounts owed to subsidiary undertakings
Other taxation and social security
2014
£m
(612.7)
(10.2)
(622.9)
2013
£m
(666.1)
(14.3)
(680.4)
All amounts included above are unsecured. The interest rate on £601m (2013: £601m) of the balance owed to subsidiary undertakings is 4.0% (2013: 4.0%).
At 30 April 2014 all other amounts owed to subsidiary undertakings are at floating rates linked to LIBOR and have no fixed repayment date.
Profit/(loss) for the financial year
Dividends paid
Equity settlement of employee share schemes
Credit in respect of employee share scheme
Opening equity shareholders’ funds
Closing equity shareholders’ funds
2014
£m
248.9
(195.2)
0.1
3.3
57.1
723.9
781.0
2013
£m
(39.4)
(19.7)
–
11.7
(47.4)
771.3
723.9
C8 CALLED-UP SHARE CAPITAL
The authorised share capital of the Company in the year was as follows:
At 30 April
Ordinary share capital
Redeemable preference shares of £1 each
2014
Number ‘000
2013
Number ‘000
925,000
50
925,000
50
C11 DIVIDENDS PER SHARE
The dividends paid in 2014 were a total of £195.2 million, £77.2 million in September 2013 (59 pence per share) and £118.0 million in January 2014 (90 pence per share)
(2013: £19.7 million, 15 pence per share). A further interim dividend of £121.7 million (90 pence per share) has been declared for payment on 26 September 2014.
These financial statements do not reflect this further interim dividend.
C12 RELATED PARTY TRANSACTIONS
The Company is exempt under the terms of Financial Reporting Standard 8 “Related party disclosures” from disclosing related party transactions with entities that are
part of The Berkeley Group Holdings plc or investees of The Berkeley Group Holdings plc.
Each ordinary share of 5p is a voting share in the capital of the Company, is entitled to participate in the profits of the Company and on a winding-up is entitled to
participate in the assets of the Company.
The movements on allotted and fully paid share capital for the Company in the year were as follows:
Issued
At start of year
Issued in year
At end of year
2014
No ‘000
134,857
500
135,357
Ordinary shares
2013
No ‘000
134,857
–
134,857
Share Capital
2013
£m
2014
£m
6.7
0.1
6.8
6.7
–
6.7
Share Premium
2013
£m
49.3
–
49.3
2014
£m
49.3
–
49.3
Each ordinary share of 5p is a voting share in the capital of the Company, is entitled to participate in the profits of the Company and on a winding-up is entitled to
participate in the assets of the Company.
On 29 January 2014, the company transferred 3.6 million shares (2013: nil), held as ‘treasury shares’, to the Employee Benefit Trust.
On 31 January 2014, 0.5 million ordinary shares (2013: nil) were allotted and issued to the Employee Benefit Trust.
On 31 January 2014, 4.2 million ordinary shares (2013: nil) were transferred from the Employee Benefit Trust to Executive Directors to satisfy the exercise of options
under the 2009a Long Term Incentive Plan.
At 30 April 2014 there were no shares held as ‘treasury shares’ (2013: 3.6m).
At 30 April 2014 there were 0.1m shares held in trust (2013: 0.2m). The market value of these shares at 30 April 2014 was £2.4m (2013: £4.9m).
The movements in the year are disclosed in note 20 of the Consolidated Financial Statements.
C9 RESERVES
At 1 May 2013
Profit for the financial year
Dividends paid
Credit in respect of employee share schemes
At 30 April 2014
Share
premium account
£m
49.3
–
–
–
49.3
Capital
redemption
reserve
£m
24.5
–
–
–
24.5
Profit and
loss account
£m
643.4
248.9
(195.2)
3.3
700.4
Total
£m
717.2
248.9
(195.2)
3.3
774.2
118
119
BERKELEY ANNUAL REPORT 2014 / FINANCIALSBERKELEY ANNUAL REPORT 2014 / FINANCIALSFINANCIALS
BERKELEY ANNUAL REPORT 2014 / FINANCIALS
BERKELEY ANNUAL REPORT 2014 / FINANCIALS
BERKELEY ANNUAL REPORT 2014 / FINANCIALS
FIVE YEAR SUMMARY
FINANCIAL DIARY
FINANCIAL DIARY
Years ended 30 April
Income statement
Revenue
Operating profit
Share of results of joint ventures
Net finance (costs)/income
Profit before taxation
Taxation
Profit after taxation
Profit attributable to:
Shareholders
Non-controlling interest
Basic earnings per ordinary share
Statement of financial position
Capital employed
Net cash/(debt)
Net assets
Non-controlling interest
Shareholders’ funds
2014
£m
2013
£m
2012
£m
2011
£m
2010
£m
1,620.6
1,372.6
1,041.1
742.6
615.3
374.8
12.1
(6.9)
380.0
(87.1)
292.9
292.9
–
292.9
221.8p
280.1
(1.3)
(8.1)
270.7
(61.0)
209.7
209.7
–
209.7
160.0p
226.4
(2.2)
(9.4)
214.8
(56.7)
158.1
158.5
(0.4)
158.1
121.0p
1,157.7
(57.9)
1,099.8
–
1,099.8
839p
21.9%
15.6%
21.2%
3,565
135.7
2.1
(1.5)
136.3
(41.8)
94.5
95.1
(0.6)
94.5
72.1p
891.8
42.0
933.8
(4.4)
929.4
709p
19.2%
10.6%
15.3%
2,544
106.2
(0.2)
4.4
110.4
(30.8)
79.6
79.7
(0.1)
79.6
60.0p
545.4
316.9
862.3
(3.7)
858.6
637p
20.1%
9.6%
13.3%
2,201
1,277.7
1,312.1
129.2
1,441.3
–
–
TO BE REPLACED WITH TP PAGE
1,322.4
1,441.3
1,009p
1,066p
1,322.4
44.7
Net assets per share attributable to shareholders (1)
Ratios and statistics
Return on capital employed (2)
Return on equity after tax (3)
Return on equity before tax (4)
Units sold (5)
29.9%
21.2%
27.5%
3,742
22.9%
17.3%
22.4%
3,712
(1) Net assets attributable to shareholders divided by the number of shares in issue excluding shares held in treasury and shares held by the employee benefit trust.
(2) Calculated as profit before interest and taxation (including joint venture (loss)/profit before tax) divided by the average net assets adjusted for (debt)/cash.
(3) Calculated as profit after taxation attributable to shareholders as a percentage of the average of opening and closing shareholders’ funds.
(4) Calculated as profit before taxation attributable to shareholders as a percentage of the average of opening and closing shareholders’ funds.
(5) The number of units completed and taken to sales in the year excluding joint ventures.
Annual General Meeting and Interim Management Statement
Annual General Meeting and Interim Management Statement
Half Year End
Half Year End
Interim Results Announcement for the six months ending 31 October 2014
Interim Results Announcement for the six months ending 31 October 2014
Interim Management Statement
Interim Management Statement
Year End
Year End
Preliminary Announcement of Results for the year ending 30 April 2015
Preliminary Announcement of Results for the year ending 30 April 2015
Publication of 2015 Annual Report
Publication of 2015 Annual Report
REGISTERED OFFICE AND ADVISORS
REGISTERED OFFICE AND ADVISORS
1 September 2014
1 September 2014
31 October 2014
31 October 2014
5 December 2014
5 December 2014
March 2015
March 2015
30 April 2015
30 April 2015
June 2015
June 2015
August 2015
August 2015
F
I
N
A
N
C
I
A
L
S
BANKERS
Barclays Bank PLC
Lloyds TSB Bank plc
Santander UK plc
Svenska Handelsbanken AB (Publ)
The Royal Bank of Scotland Plc
AUDITORS
KPMG LLP
REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS
Berkeley House
REGISTERED OFFICE AND
PRINCIPAL PLACE OF BUSINESS
19 Portsmouth Road
Berkeley House
Cobham
19 Portsmouth Road
Surrey KT11 1JG
Cobham
Registered number: 5172586
Surrey KT11 1JG
Registered number: 5172586
REGISTRARS
Capita Registrars
REGISTRARS
The Registry
Capita Registrars
40 Dukes Place
The Registry
London EC3A 7NH
40 Dukes Place
Tel: 0870 162 3100
London EC3A 7NH
Tel: 0870 162 3100
CORPORATE BROKER AND
FINANCIAL ADVISOR
UBS Investment Bank
SHARE PRICE INFORMATION
The Company’s share capital is listed on
the London Stock Exchange. The latest
share price is available via the Company’s
website at www.berkeleygroup.co.uk
SOLICITORS
Herbert Smith Freehills LLP
CORPORATE BROKER AND FINANCIAL ADVISOR
UBS Investment Bank
SHARE PRICE INFORMATION
The Company’s share capital is listed on the London Stock Exchange.
The latest share price is available via the Company’s website at www.berkeleygroup.co.uk
SOLICITORS
Herbert Smith Freehills LLP
BANKERS
Barclays Bank PLC
Lloyds TSB Bank plc
Santander UK plc
Svenska Handelsbanken AB (Publ)
The Royal Bank of Scotland Plc
AUDITORS
KPMG LLP
120
120
121
121