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Building homes
Strengthening communities
Improving lives
2020 Annual Report
Tony Pidgley CBE, 1947–2020
Since the issue of Berkeley’s results for the year ended 30 April 2020
we have with the greatest sadness announced the death of our founder
and Chairman Tony Pidgley CBE. Tony’s values, vision and philosophy are
deeply embedded within Berkeley and all it does and stands for. The 2020
Annual Report reflects Tony’s lifelong passion for creating quality homes,
strengthening local communities and improving people’s lives.
Berkeley at a Glance
Berkeley builds homes and communities across London, Birmingham and the
South-East of England.
We focus on large-scale regeneration developments where our unique expertise
and strong capital base can unlock long-term social and economic value for
our stakeholders.
We are a purpose driven company, with a clear long-term vision and deeply
embedded culture and values that shape everything we do, underpinning
our success, our brand and the positive contributions we make to society,
the economy and the natural world.
Our Purpose is to build quality homes,
strengthen communities and improve
people's lives.
Our Values
Have Integrity – build trust by being
open, clear and credible
Our Vision is to be a world-class
business, defined by the quality of the
places we create, generating long-term
value and having a positive impact
on society.
Be Passionate – take pride in what
we do and the impact we make
Think Creatively – find individual
solutions for every site and situation
Respect People – work together,
empower people and value
their contribution
Excellence Through Detail – deliver
the best through attention to detail
in everything we do
Kidbrooke Village
Highlights
Delivering for all stakeholders
Contents
Financial Highlights*
Profit before tax
Net asset value per share
£503.7m
(2019: £775.2m)
£24.72
(2019: £23.05)
Pre-tax return on equity
Cash due on forward sales
16.6%
(2019: 27.9%)
£1,858m
(2019: £1,831m)
Net cash
Future gross margin in land holdings
£1,138.9m
(2019: £975.0m)
£6,417m
(2019: £6,247m)
Operational Highlights
2,723
homes delivered
(plus 435 in joint ventures)
£270m
of subsidies
includes some 10% of London’s new
private and affordable homes and
supporting some 32,000 jobs
provided to deliver affordable housing
and committed to wider community
and infrastructure benefits in the year
35
sites
have net biodiversity gain strategies,
which will create approximately
450 acres of new or measurably
improved natural habitats on these
developments alone
A-
78.8
Net Promoter Score
maintained industry-leading
Net Promoter Score (NPS) and
customer service ratings
Carbon
positive
sector-leading score for transparency
and action on climate change from CDP
business operations delivered
for a third consecutive year
* Reconciliations and explanations of our financial highlights are provided in our
Key Performance Indicators section on page 52.
Strategic Report
1 Highlights
4 Berkeley’s Strategy
6 Long-Term Regeneration
14 Chairman’s Statement
16 Carbon and Climate Change
18 Nature and Biodiversity
20 Building Strong Communities
22 Chief Executive’s Statement
28 Market Overview
30 Business Strategy: Our Vision
46 Environmental, Social and
Governance Performance
48 Berkeley Foundation
50 Business Model
52 Key Performance Indicators
54 Stakeholder Engagement
60 Section 172 (1) Statement
62 Sustainability Accounting
Standards Board Disclosures
64 Task Force on Climate Related
Disclosures
65 Non-Financial Reporting
Statement
66 How We Manage Risk
80 Trading and Financial Review
Corporate Governance
86 Chairman’s Introduction to the
Corporate Governance Report
88 Board of Directors
92 Board Leadership and
Company Purpose
96 Division of Responsibilities
99 Nomination Committee Report
102 Audit Committee Report
106 Directors’ Remuneration
Report
135 Directors’ Report
Financial Statements
144 Independent Auditors’ Report
151 Consolidated Income
Statement
151 Consolidated Statement
of Comprehensive Income
152 Consolidated Statement
of Financial Position
153 Consolidated Statement
of Changes in Equity
154 Consolidated Cash Flow
Statement
155 Notes to the Consolidated
Financial Statements
189 Company Balance Sheet
190 Company Statement
of Changes in Equity
191 Notes to the Company
Financial Statements
196 Five Year Summary
197 Financial Diary and Registered
Office and Advisors
1
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Before
2
Berkeley Group 2020 Annual Report Celebrating 20 years
of Barnes Waterside
Two decades ago our ground-
breaking partnership with the
Wildfowl and Wetlands Trust,
Thames Water and Richmond
Council transformed four
disused concrete reservoirs
into a community of 230
homes and the London Wetlands
Centre, a world renowned nature
reserve and education centre.
“This project demonstrates how
quickly wildlife can bounce back
when given the chance and the
value of green and blue spaces
to the health and wellbeing
of local people.”
Kevin Peberdy
Chief Operating Officer,
Wildfowl & Wetlands Trust
Strategic
Report
4 Berkeley’s Strategy
6 Long-Term Regeneration
14 Chairman’s Statement
16 Carbon and Climate Change
18 Nature and Biodiversity
20 Building Strong Communities
22 Chief Executive’s Statement
28 Market Overview
30 Business Strategy: Our Vision
46 Environmental, Social and Governance
Performance
48 Berkeley Foundation
50 Business Model
52 Key Performance Indicators
54 Stakeholder Engagement
60 Section 172 (1) Statement
62 Sustainability Accounting Standards
Board Disclosures
64 Task Force on Climate Related
Disclosures
65 Non-Financial Reporting Statement
66 How We Manage Risk
80 Trading and Financial Review
3
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Berkeley’s Strategy
Long-Term Strategy
Berkeley’s long-term strategy is to invest in opportunities
with the right risk-adjusted returns, while ensuring its
financial strength reflects the prevailing macro environment,
and to make returns to the shareholders who support us
to achieve our purpose.
Strategic Focus
Berkeley has a unique operating model that is responsive
to the cyclical nature of the housing market and focuses on
transforming the most challenging and complex sites into
exceptional places where communities thrive.
Strategic
appreciation that
the market is
inherently cyclical
Focus on long-
term, complex and
capital intensive
regeneration
Focus on London,
Birmingham and
the South-East
Operational risk
offset through
financial strength
at all times
Market-leading in
sustainability and
climate change
Recognised brands
and autonomous,
experienced teams
Unparalleled
commitment
to customer
satisfaction
Long-term
commitment to
community building
and enhancing
nature and
biodiversity
Unrelenting
commitment to
the quality of our
homes and places
Business model
Read more on pages 50 to 51
People at the very heart of placemaking
Read more on page 15
Land Holdings
Berkeley invests in land at the right point in the cycle and
the depth and quality of the land holdings ensures that we
do not need to acquire land unless there is a clear opportunity
to add value.
Our current portfolio consists of 58,413 plots across 98 sites.
Since 2011, Berkeley has increasingly focused on large-scale
brownfield regeneration sites where our holistic approach
to placemaking and community building can deliver lasting
positive change.
In total, Berkeley is now bringing forward over 25 of the largest
and most complex brownfield regenerations, a number of which
are now in, or coming into, production.
Land Holdings as at 30 April 2020
Total Group
100% Owned
Joint Ventures
Our Brands
100% owned
Berkeley is the original
brand, founded in 1976
in Surrey.
St George was originally
formed as a joint venture
with the Speyhawk Group
in 1985 and became wholly
owned in 1991.
St James was originally
formed as a joint venture
with Thames Water in 1996
and became wholly owned
in 2007.
St Joseph was formed
in 2016 to focus on the
Birmingham and West
Midlands markets.
Joint Ventures
St Edward is a joint
venture, formed in
2006 and co-owned
by Berkeley and M&G.
St William is a joint
venture, formed in
2014 and co-owned by
Berkeley and National Grid.
Sites
Plots – owned
Plots – contracted
Plots – total
4
98
50,558
7,855
58,413
74
39,765
2,393
42,158
24
10,793
5,462
16,255
Long-term sites
Read more on pages 6 to 13
GLOUCESTERSHIRE
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WILTSHIRE
SOMERSET
Berkeley Group 2020 Annual Report Our Portfolio
Sites under construction
Future sites
Total sites in the land bank
70
28
98
Out of London
under construction
1
17 – 51 London Road,
Staines
2 Abbey Barn Park, High
Wycombe
3 Broadacres, Southwater
4 Bersted Park
5 Barleycroft, Rudgwick
6 Brompton Gardens,
Ascot
7 Courtyard Gardens,
Oxted
8 Cranbrook
9 Edenbrook Village, Fleet
10 Eldridge Park,
Wokingham
11 Elmswater,
Rickmansworth
12 Fairwood Place,
Borehamwood
13 Farnham
14 Fleet
15 Green Park Village,
Reading
16 Hartland Village, Fleet
17 Highcroft, Wallingford
18 Highwood Village,
Horsham
19 Holborough Lakes
20 Hollyfields, Hawkenbury
21 Huntley Wharf, Reading
22 Kennet Island, Reading
23 Knights Quarter,
Winchester
24 Leighwood Fields,
Cranleigh
25 Lumina, Camberley
26 Paddock Wood
27 Princes Chase,
Leatherhead
28 Quinton Court,
Sevenoaks
29 Royal Clarence Marina,
Gosport
30 Royal Wells Park,
Tunbridge Wells
31 Snow Hill Wharf,
Birmingham
32 Taplow Riverside
33 The Arches, Watford
34 The Paperyard, Horsham
35 The Waterside,
Royal Worcester
36 Victory Pier, Gillingham
37 Woodhurst Park,
Warfield
Out of London
future sites
1 Ascot
2 Bath
3 Brighton Gas Works*
4 Effingham
5 Fidelity, Oakhill House*
6 Frimley Green
7 Glasswater Locks,
Birmingham
8 Hemel Hempstead
9 Hertford
10 Horlicks, Slough
11 Reading
12 Sevenoaks
13 St Alban’s Road, Watford
14 Stratford-Upon-Avon
15 Sunningdale Park
16 Worthing Gas Works*
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BERKSHIRE
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HAMPSHIRE
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1
1
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15 25
6
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SURREY
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3
WEST SUSSEX
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5
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KENT
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4
London under construction
1
250 City Road, Islington
2 9 Millbank, Westminster
3 Battersea Reach
4 Beaufort Park, Hendon
5 Chelsea Creek
6 Clarendon, Haringey
7 Dickens Yard, Ealing
8 Filmworks, Ealing
9 Forbury, Blackheath
10 Fulham Reach
11 Goodman’s Fields,
25 Southall Waterside
26 Sovereign Court,
Hammersmith
27 The Cottonworks,
Finsbury Park
28 The Dumont,
Albert Embankment
29 Trent Park, Enfield
30 West End Gate,
Paddington
31 White City Living
32 Wimbledon Hill Park
33 Woodberry Down,
Finsbury Park
Aldgate
12 Grand Union Place, Brent
13 Kensington Row and
Royal Warwick Square
14 Kidbrooke Village
15 King’s Road Park,
Fulham
16 London Dock, Wapping
17 One Blackfriars,
Southwark
18 Oval Village
19 Prince of Wales Drive,
Battersea
20 Queenshurst, Kingston
21 Richmond Chase
22 Royal Arsenal Riverside,
Woolwich
23 Royal Exchange,
Kingston
24 South Quay Plaza,
Docklands
London future sites
Bethnal Green
1
2 Bow Common
3 Camden Goods Yard*
4 Centre House,
Wood Lane
5 Chambers Wharf,
Southwark
6 Fulham
7 Lea Bridge
8 Malt Street, Southwark*
9 Poplar
10 Silk Stream, Barnet
11 Syon Lane, Hounslow*
12 TwelveTrees Park,
Newham
29
27 33
6
1
3
17
2
28
18
5
19
7
12
22
9
14
1
11
16
8
2
9
24
10
4
31
4
30
13
26
15
6
10
5
3
25
12
7
8
11
21
20
23
32
* New sites contracted for acquisition during the year
5
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Long-Term Regeneration
Sites acquired before 2011
Berkeley has increased the number of long-term brownfield regeneration projects within
its portfolio from 5 in 2011, to over 25 in 2020. These underused sites are being transformed
into welcoming neighbourhoods of between circa 1,000 to 5,000 homes, supported by
a mix of community amenities and infrastructure. These holistic placemaking programmes
are delivered in collaboration with local communities and partners, taking up to 30 years
to complete.
Berkeley is unique in having built up the expertise, experience and capital base to
successfully manage the complex planning, remediation, infrastructure, construction
and social challenges involved in these long-term projects.
We are now the only developer undertaking major brownfield regeneration at scale
in London and the South East, as the increasing risk and complexity of these activities
has seen those with lesser expertise and resources leave this area of the market.
Returning blighted brownfield sites to sustainable community use is vital to meeting
local housing needs, energises local economies and relieves pressure on greenfield land.
Woodberry Down
Hackney | N4 | Berkeley
Site: post war housing estate regeneration
| 64 acres
Vision:
— 5,700 mixed-tenure homes | 1,800 delivered
to date
— community-led regeneration of post war estate
— creation of the Woodberry Wetlands nature
reserve in partnership with London Wildlife
Trust and Thames Water
— unique partnership delivery model with
Woodberry Down Community Organisation,
Hackney Council, Manor House Development
Trust and Notting Hill Genesis
— 15 acre network of parkland | public squares
| playgrounds | nature trails | diverse mix of
wildlife habitats
— waterside amphitheatre | Redmond Community
Centre | shops | cafés and restaurants | pub |
post office
— electric car charging infrastructure
— community event programme | dedicated
community development support
“ Our partnership at Woodberry
Down is delivering one of Europe’s
biggest single-site regeneration
projects, providing new, modern,
genuinely affordable homes for
existing tenants and fantastic
new facilities and open spaces
for everyone.”
Philip Glanville,
Mayor of Hackney
6
Berkeley Group 2020 Annual Report Kidbrooke Village
Greenwich | SE3 | Berkeley
Site: housing estate regeneration | 270 acres
Vision:
— 4,966 mixed-tenure homes | 1,900 delivered to date
— phased regeneration of failing post-war Ferrier Estate
— early delivery of social rent homes to rehouse existing
estate residents on site
— 86 acres of biodiverse parkland and open space |
natural children’s playspace | multi-use games area
— +258% net biodiversity gain within Cator Park
delivered in partnership with London Wildlife Trust |
wetland habitats, swales and wildflower meadows |
500+ new trees
— Kidbrooke Construction Skills Centre | pub | gym |
supermarket | office | cafés | restaurant | community
space and health centre
Royal Arsenal Riverside
Greenwich | SE18 | Berkeley
Site: brownfield | 89 acres | derelict munitions
manufacturing site
Vision:
— 5,100 mixed-tenure homes | 3,500 homes delivered
to date
— restored and repurposed 23 Grade II Listed buildings
— 12 acres of public space including pedestrian streets
| cycle routes and footpaths | public squares | 1km
Thames Path
— 6.5 acres of parkland | 500 new trees | green roofs
| bat and bird boxes | meadow and grassland planting
— nurseries | dentist | pharmacy | bank | pubs |
supermarkets | hotel | cafés | restaurants
— combined heat and power network | energy efficient
building fabric
— electric car charging infrastructure
— Berkeley delivered on-site Crossrail station box
— community development support | year round
— electric car charging infrastructure | 1,100 cycle
community events programme
parking spaces
— delivered 37 of the first Berkeley Urban Houses; three
storey modular town houses built off-site
Chelsea Creek
Hammersmith & Fulham | SW6 | St George
Site: brownfield | 10 acres | derelict gasworks
Vision:
— 1,230 mixed-tenure homes | 800 delivered to date
— 4.5 acres of public space set around two new canals
and a marina
— pedestrian and cycle routes including bridge links
across the canals
— two children’s playspaces
— biodiverse landscaping | 200 new trees | green
and brown roofs
— shops | art gallery
— energy efficient building fabric | sustainable urban
drainage network | electric car charging infrastructure
| secure cycle parking
Beaufort Park
Barnet | NW9 | St George
Site: brownfield | 25 acres | derelict RAF aerodrome and
industrial buildings
Vision:
— 3,200 mixed-tenure homes | 2,500 delivered to date
— 8 acres of public space including parkland | traditional
square and bandstand | two children’s playspaces |
pedestrian and cycle routes
— 4.5 acres of green space | green roofs | bat and bird boxes
— nursery | shops | café | pubs | restaurants | business space
— restoration of the Grade II Listed Grahame-White
Watchtower building
— well established community traditions including annual
Party in the Park and carol concerts
7
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Long-Term Regeneration
Sites acquired since 2011
After
Computer generated image
Before
Southall Waterside
Ealing | UB2 | Berkeley
Site: brownfield | 88 acres | derelict gasworks
Vision:
— 3,750 mixed-tenure homes | 300 delivered to date
— 42 acres of public open space including two parks |
children’s playspace | 1km landscaped canal frontage
| fitness trails and cycle network | public squares
and gardens
— target 75.5% net biodiversity gain | meadows | hedgerow
| grassland | 2,500 new trees and copses | wetlands with
new reedbeds and ponds
— leisure, entertainment and retail space
— community hub | nursery | primary school | health centre
— new road bridge, relief road and connection to
A-road network
— footbridge connections to neighbouring 90 acre Minet
Country Park | short walk to forthcoming Southall Station
on the Elizabeth Line
— electric car charging | photovoltaic panels | communal
heat and power network
— calendar of community events | dedicated
community support
Computer generated image
Computer generated image
St Albans Road
Watford | WD24 | Berkeley
Site: brownfield | 6 acres | retail park
Vision, subject to planning permission:
— 1,200 mixed-tenure homes
West End Gate
Westminster | W2 | Berkeley
Site: brownfield | 3 acres | car park and mixed use buildings
Vision:
— 844 mixed-tenure homes | 100 delivered to date
— new primary school | nursery | playspace and multi-use
— traditional mansion block architecture reflecting
games areas | community hall
local character
— 2 acres of public open space | Wi-Fi enabled public
— 4,300 sqft flagship restaurant | shops | bars | cafés
piazza | space for GP surgery | flexible commercial space
| public artworks
— target +287% biodiversity net gain | 2 acres of natural
landscaping | 300 new trees | living roofs | bird boxes
and beehives
— increased tree cover | biodiverse gardens and
natural habitats | central water feature | rainwater
harvesting system
— energy efficient building fabric
— electric charging infrastructure | car club | 1,300 secure
— 1,350 cycle parking spaces | electric car charging
cycle spaces
infrastructure | improved cycling and pedestrian links
— energy efficient building fabric | communal heat and
— community development plan
power network
8
Berkeley Group 2020 Annual Report Computer generated image
Computer generated image
250 City Road
Islington | EC1V | Berkeley
Site: brownfield | 5 acres | former offices and employment area
Vision:
— 950 mixed-tenure homes | 230 delivered to date
— iBasin 78,000 sqft contemporary office complex delivered
to BREEAM ‘Excellent’ standard and Wired Score ‘Platinum’
| 39,000 sqft of restaurants, bars, cafés and 190-bed nhow hotel
— 49% open space including 1.9-acre Wi-Fi enabled parkland and
central piazza with bronze sculptures celebrating the site’s historic
links to the canal network
— new natural habitats including varied parkland | new mature trees
| wildflower planting | green roofs | bat boxes
— electric car charging | car club | 1,400 secure cycle spaces
— communal heat and power network | energy efficient building
fabric | heat reflective glazing
Horlicks
Slough | SL1 | Berkeley
Site: brownfield | 12 acres | former Horlicks factory
Vision:
— 1,300 mixed-tenure homes
— restoring the iconic factory, clock tower and Grade II Listed
war memorial
— 2 acres of public open space including a landscaped public square
| pedestrian and cycle routes
— 5,000 sqft nursery
— 2.6 acres of landscaped gardens | 315 new trees | mixed
natural habitats
— energy efficient building fabric | photovoltaic panels
— electric vehicle car club | electric car charging infrastructure
| 1,300 cycle spaces
Green Park Village
Reading | RG2 | St Edward
Site: brownfield | 180 acres | light-industrial, vehicle storage and
top-soil storage
Vision:
— 1,175 mixed-tenure homes and extra-care apartments
| 370 delivered to date
— market square with water feature | primary school and nursery
| community sports facilities | community hall | shops and café
| children’s playspaces
— 10 acres of green space | 250 new trees | feature lake and swales
| trim trails
— new train station and transport interchange | electric vehicle
charging infrastructure | secure cycle spaces | pedestrian and
cycle network
— sustainable drainage network | solar panels
— public art | calendar of community events
Prince of Wales Drive
Wandsworth | SW8 | St William
Site: brownfield | 5 acres | former gasholder site
Vision:
— 955 mixed-tenure homes | 250 delivered
— railway viaduct arches converted to access routes and opened up
for commercial uses
— 50% open space including two public squares | landscaped gardens
| children’s playspace | footpaths | biodiverse habitats
— café | gym | shops | nursery | offices
— heritage artworks including remnants of the former gasholder
— electric car charging infrastructure | car club | 1,200 secure
cycle spaces
— photovoltaic panels | energy efficient building fabric | communal
heat and power network
9
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Long-Term Regeneration
Sites acquired since 2011
Computer generated image
Computer generated image
London Dock
Tower Hamlets | E1 | St George
Site: brownfield | 15 acres | derelict print works and offices
Vision:
— 1,800 mixed-tenure homes | 450 delivered to date
Malt Street
Southwark | SE1 | Berkeley
Site: brownfield | 6 acres | former warehouse and factory
Vision, subject to planning permission:
— 1,453 mixed-tenure homes
— restoration of Grade II Listed Pennington Street
— 50% public open space including a linear park and 1-acre
Warehouse as a commercial hub
public square
— shops | office space | restaurants | creative and
maker space
— 7.5 acres of public space including a pedestrianised
boulevard | Gauging Square | network of landscaped
streets, footpath and cycle ways
— target +435% net biodiversity gain including 4.5 acres
of green space | mixed natural habitats and diverse
native planting | 170 new trees | green and brown roofs
— sustainable urban drainage systems | combined heat
and power | electric car charging infrastructure |
secure cycle parking
— London Dock Community Fund awarding £18,000 per
year to local causes | community events programme
— green roofs with rooftop beehives | network of trees to form
a linked canopy | bat and bird boxes | diverse native species
and seasonal planting to support wildlife
— extensive community consultation | 90+ local
engagement events
— energy efficient building fabric
— sustainable urban drainage network
Poplar Riverside
Tower Hamlets | E14 | St William
Site: brownfield | 20 acres | derelict gasworks
Vision:
— 2,800 mixed-tenure homes
— 50% open space including 2.5 acre riverside park |
multi-functional community spaces | pedestrian and
cycle network | reopening access to the River Lea
— target +83% biodiversity gain including wetland habitats
| grassland | riverside meadow
— shops | cafés | restaurants | pub | flexible workspace |
leisure spaces | community hub | land for the delivery
of a secondary school
— electric car charging infrastructure | secure cycle storage
— energy efficient building fabric | communal heat and
power network
Computer generated image
10
Berkeley Group 2020 Annual Report Before
After
Hartland Village
Hampshire | GU51 | St Edward
Site: brownfield | 205 acres | derelict jet engine testing and
development site
Vision:
— 1,500 mixed-tenure homes
— village centre including 420 pupil primary school
| nursery | community hall | shops | café
— community amenities and landscape delivered
early to nurture community life, with dedicated
community support
— hyperoptic broadband connection to every home and
— 48% public space including biodiverse parkland | village
commercial space
green | cycle and walking network | 70 acre country park
| nature trails
— target +37% net biodiversity gain including wetland
habitats | grassland | 1,000 new trees
— 2,759 cycle parking spaces | electric vehicle charging
infrastructure
— rainwater harvesting | sustainable drainage network
including a lake and swales
Computer generated image
Computer generated image
Syon Lane
Hounslow | TW7 | St Edward
Site: brownfield | 14 acres | former supermarket sites
Vision, subject to planning permission:
— 2,100 mixed-tenure homes
— 40,000 sqft of commercial space
— 6 acres of open space including a new civic square
| water gardens | pedestrian routes
— new Tesco store | community space | GP surgery | gym
| workspace | bar | restaurant
— biodiverse landscape designed in partnership
with London Wildlife Trust including wildlife pond
| naturalistic planting | grass and wildflower meadows
| 400+ new trees
— 3,000+ secure cycle spaces | electric car charging
infrastructure
Silk Stream
Barnet | NW9 | St George
Site: brownfield | 8 acres | Sainsbury’s supermarket and
car park
Vision, subject to planning permission:
— 1,309 mixed-tenure homes
— 38% open public space including 1.5-acre park |
wildflower grassland | children’s playspace | pedestrian
routes | new trees
— new 96,000 sqft replacement supermarket | restaurants
| offices | gym
— banks of neighbouring Silk Stream landscaped and
opened up
— energy efficient building fabric | green and brown roofs
| rain gardens | sustainable urban drainage systems
— partnership with Sainsbury’s ensuring existing store
remains open until replacement complete
11
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Long-Term Regeneration
Sites acquired since 2011
Computer generated image
Computer generated image
12
White City Living
Hammersmith & Fulham | W12 | St James
Site: brownfield | 10 acres | former warehousing and
logistics site
Vision:
— 1,845 mixed-tenure homes | 100 delivered to date
— over 50% public space including a 5-acre park | public
gardens, waterfalls and fountains | pedestrian routes
— target +86% biodiversity net gain (phase one) | increased
tree cover | parkland | linear habitats | native planting
— bridge and pedestrian decks built over the Central Line |
pedestrian access routes created through railway arches
— shops | cafés | restaurants | outdoor events venue |
community space
— electric car charging infrastructure | car club | secure
cycle parking
— hyperoptic data connection to all homes and
commercial spaces
— all commercial units BREEAM ‘Very Good’ or
‘Excellent’ standard
— energy efficient building fabric | communal heat
and power network
Clarendon
Haringey | N8 | St William
Site: brownfield | 12 acres | derelict gasworks and
industrial sheds
Vision:
— 1,714 mixed-tenure homes
— 41% public space including a community park | public
square | playspace | pedestrian routes
— electric car charging infrastructure | 3,000 secure
cycle spaces
— rainwater harvesting feeding landscape irrigation
— all bathrooms precision manufactured off site
— 120,000 sqft of mixed commercial space
— community café | nursery | community space
| shops | bars
— energy efficient building fabric | communal heat
and power network serving wider community
South Quay Plaza
Tower Hamlets | E14 | Berkeley
Site: brownfield | 4 acres | former office complex
Vision:
— 1,289 mixed-tenure homes
— community crèche | riverside bars and restaurants
— 65% public space including landscaped edge of South
Dock | children’s playspace | heritage arts trail
— new park | play areas | riverside walkway | over 280 new
trees | native planting
— rooftop photovoltaic panels | 15,000-litre capacity
rainwater harvesting system | communal heat and
power network
— electric car charging infrastructure | 2,000 secure
cycle spaces
Berkeley Group 2020 Annual Report Computer generated image
Computer generated image
Grand Union
Brent | HA0 | St George
Site: brownfield | 22 acres | derelict industrial estate
Vision:
— 3,030 mixed-tenure homes
— 50% public open space including a canal-side public
square and gardens | pedestrian and cycle routes
— target +220% net biodiversity gain including 8.4 acres
of green space | riverside meadow and grassland
habitats | native trees and diverse seasonal planting
— shops | community centre | nursery | affordable
workspace | health centre | multi-level light
industrial building
— rooftop photovoltaic panels | green and brown roofs |
combined heat and power | sustainable urban drainage
systems | rainwater harvesting | BREEAM ‘Excellent’
for all non-residential space
— locally shaped masterplan with extensive community
engagement programme | 25+ consultation events
— creation of Grand Union Development Trust and
Alperton Summer Festival
Oval Village
Lambeth | SW11 | Berkeley
Site: brownfield | 8 acres | former gasholder site and
neighbouring supermarket and office
Vision:
— 1,300 mixed-tenure homes
— extensive community engagement programme | 16 key
stakeholder groups | 24-hour community hotline | 30+
outreach events | local employment programmes
— 20% open space including a park square | cycle and
footpaths | car free streets
— target +179% net biodiversity gain | enhanced natural
habitats | enhanced tree cover | green and brown roofs
— replacement supermarket | community space | 160,000
sqft co-working space | shops | café | restaurants | bars
— electric charging infrastructure to 40% of parking spaces
| car club | 1,200 secure cycle spaces
— restoration of Grade II Listed gasholder, with the iconic
backdrop of the Oval Cricket Ground
— photovoltaic panels | energy efficient building fabric
| communal heat and power network
Computer generated image
Computer generated image
TwelveTrees Park
Newham | E16 | Berkeley
Site: brownfield | 26 acres | former Parcelforce depot
Vision:
— 3,800 mixed-tenure homes
King’s Road Park
Hammersmith & Fulham | SW6 | St William
Site: brownfield | 15 acres | derelict gasworks
Vision:
— 1,830 mixed-tenure homes
— new entrance to West Ham Station and three bridges
— 38% open space including a 6 acre community park
across the Docklands Light Railway
— 1,000 pupil secondary school | community space
| shops | restaurants | bars | leisure | workspace
and offices
| public square and event space | pedestrian and cycle
network | biodiverse landscaping
— youth centre | community space | shops | bars | cafés
| restaurants | leisure spaces
— 45% public open space including a 4.5 acre park
| pedestrian and cycle network | public squares
— electric charging infrastructure to 100% of parking
spaces | 3,500 secure cycle spaces | car club
— biodiverse landscaping strategy | mixed natural
habitats | green roofs | beehives, bird boxes and
bat boxes | diverse native planting
— rainwater harvesting | sustainable urban
drainage network
— energy efficient building fabric | communal heat
and power network | photovoltaic panels
— energy efficient building fabric | communal heat and
power network
— restoration of listed buildings, war memorials and
a Grade II* Listed gasholder, thought to be the
world’s oldest
13
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Chairman’s Statement
and contributions to society. As the
crisis unfolded, we were struck by
the selfless bravery of our front line
public services and the kindness and
resilience of the local communities in
which we work. Our local teams have
been part of this heartening response,
which has reaffirmed our core belief in
the value of community-building and
supporting local people.
For us, placemaking is all about people.
It’s about turning underused spaces
into welcoming neighbourhoods which
reflect the local character and where
people are connected to each other,
proud of their homes and feel part
of community life. There is no exact
formula for achieving this, but as we
are seeing at places like Hartland
Village, Woodhurst Park, Kidbrooke
Village and Trent Park, we can make
fantastic progress when we listen
to people and take time to engage
them in creating and managing
their neighbourhoods.
This year we have further embedded
and delivered our approach to net
biodiversity gain, with 35 sites now
on course to measurably increase
natural life. These projects, including
Poplar Riverside, White City Living
and Southall Waterside, will deliver
over 450 acres of new or measurably
enhanced natural habitats and become
beautiful green landscapes where
people can experience the benefits
of nature.
I am very proud that this is Berkeley’s
third year of delivering carbon positive
building operations, thanks to our long-
term commitments to reduce energy
use and use cleaner sources of power.
We have also continued our work
towards delivering net zero carbon
developments and will continue to
engage with Government, the energy
sector and our World Green Building
Council partners to develop long-
term solutions.
Over the last twelve months MHCLG
reaffirmed Government’s commitment
to improving building safety with
a suite of new measures, including
guidance on cladding. While we
welcome the commitment to improving
the building regulation regime, the
impact of the latest guidance on
mortgage valuations and the ability of
fire engineers to provide the necessary
certificates for lenders is creating
delays in the second hand housing
market which seems unlikely to ease
until a collaborative regime, based on
risk assessment, is established.
Awards highlights
Housebuilder of the Year,
Building Awards
The Mayor of London’s Award
for Sustainable & Environmental
Planning, Kidbrooke Village
The Mayor of London’s Award
for Good Growth, Oval Village
Future of Real Estate Award,
EG Awards
National Company of the Year,
EG Awards
Sustainable Housebuilder of the
Year, Housebuilder Awards
RIBA National Award, Merano
Residences
Investor in Customers,
Gold Award
Carbon Reduction or Offset
Programme of the Year, Better
Society Awards
RoSPA Health & Safety Awards,
Construction Housebuilding &
Property Development Sector
Award Winner
Business of the Year, Third
Sector Business Charity Awards
These results reflect a strong
performance for the year, driven by
the fantastic progress of our long-
term brownfield regeneration sites,
many of which are now maturing into
welcoming and popular communities.
The onset of the Covid-19 lock-down
in the last five weeks of the period
had a significant impact on our
operating environment, but Berkeley
ended the year in a strong financial
and operational position as our
resilient business model and agile
working culture defined our response.
Berkeley’s strategy is designed for a
high risk cyclical housing market, so
when conditions shift for any reason
we have high liquidity, long-term
cash flow visibility and highly skilled
teams with the grip to effect decisive
operational change. This means we
are well placed to manage the current
period of uncertainty without call on
the Government’s furlough scheme or
its Covid Corporate Financing Facility.
Our agility mitigated the early impacts
of Covid-19 and ensured the safety and
wellbeing of our people, customers,
suppliers and local communities, which
is always our first priority. The speed
and precision of the implementation
of the necessary far-reaching changes
to our working practices showed our
highly skilled people and suppliers at
their very best.
Our awards and achievements
Read more on pages 32 to 33 and
44 to 45
The suffering and upheaval caused by
Covid-19 has given cause to reflect on
what really matters and our purpose
14
Berkeley Group 2020 Annual Report The year has seen further progress
in developing our own facility for the
manufacture of precision made homes
using innovative, modern methods of
construction. The bespoke machinery
is being installed during the coming
year prior to production commencing.
This really represents the future for
our industry, addressing many of the
challenges around the supply chain,
skills, the environment and quality.
During the year, Berkeley made
shareholder returns of £280.3 million,
of which £130.5 million was represented
by share buy-backs and £149.8 million
by dividends. Of the £140.0 million
return already announced to be made
by 30 September 2020, £6.0 million
has been made to date through
share buy-backs. The amount that
will be returned as dividend will be
announced on 13 August 2020 taking
account of any share buy-backs in
the intervening period.
In closing, I want to express my
gratitude and appreciation to our
people. They are highly skilled, hugely
committed and put our core values
into practice every day. This deeply
embedded culture is what sets
Berkeley apart and ensures we deliver
long-term value for all stakeholders.
Tony Pidgley CBE
Executive Chairman
Prioritise long-term
brownfield regeneration –
focusing our resources on
returning underused sites
to community use
Embrace community
engagement – going the
extra mile to seek out local
people, listen and deliver
the things they care about
Create inclusive,
welcoming and tenure
blind communities –
with homes of all tenures
built to the same high
design standards
Meet National Space
Standards – so every new
home offers the generous
living spaces people need
Deliver quality outside
space with every home –
to support people’s health,
wellbeing and quality
of life
Deliver high quality
public amenities – shaped
in partnership with local
people so they meet
real needs and bring
communities together
Embrace net
biodiversity gain –
so every new site adds
to nature and supports
people’s wellbeing
Enable zero carbon
homes by 2030 –
developing zero carbon
transition plans for every
new site
Deliver electric car
charging infrastructure
– to enhance air
quality and support
a more sustainable
transport system
Deliver carbon positive
building operations –
to tackle climate change
Invest in advanced
manufacturing – to create
the beautifully designed,
low carbon, high quality
homes of the future
15
People at the very heart of placemakingOur driving purpose is to create quality homes, strengthen communities and improve people’s lives through fantastic placemaking. The foundations of our approach include: Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Carbon and Climate Change
Berkeley has long recognised the importance of both reducing carbon emissions
to minimise future climate change and adapting our business to help ensure that our
operations, our supply chain, and the homes and places we create remain resilient
to changes in temperatures and weather patterns.
Our approach to climate change was originally set out in 2007 within our Climate Change
Policy and has featured as a key commitment theme within our core business strategy,
Our Vision, since its inception in 2010.
Long-standing commitment to addressing climate change
2007
First developer
to publish climate
change policy
2010
Carbon emissions
reduction target
set and first homes
certified to Level 3
of the Code
for Sustainable
Homes
2014
Key focus on
climate change
adaptation
measures for new
homes, including
thermal comfort
2018
First
homebuilder
to have carbon
positive
operations
2019
First homebuilder
to produce
zero carbon
transition plans
for all new
developments
2020
onwards
Science-based
target, scenario
analysis and
reducing
embodied
carbon
Reducing carbon emissions
There is a fundamental need to
take action to reduce the emissions
resulting from both our development
activities and from the use of the
homes and places we create. Our key
focus during 2018–2020 has been on
delivering carbon positive operations
and identifying solutions that enable
net zero carbon homes (see pages 17
and 37). We have also been exploring
future transport trends to understand
how we can design for these and
encourage a shift away from an over-
reliance on petrol and diesel vehicles.
We are currently developing science-
based targets to guide our future
approach to reducing carbon
emissions, including increased focus
on embodied carbon, defined as the
emissions resulting from the extraction,
processing and transportation of
materials to our sites.
Adapting to climate change
Climate change poses risks to
our business with the potential
to impact our operations, supply
chain and customers (see pages
76 to 77). A detailed climate change
adaptation risk identification exercise
was undertaken in 2014 to inform
our strategy, facilitated by specialist
consultants and involving key
representatives from across the business.
The key risks identified for the homes
and places we develop were flooding,
overheating and water shortage.
Berkeley takes action to minimise the
potential for these risks throughout the
development process. As an example,
in 2017 Berkeley launched a thermal
comfort risk assessment tool, which
highlights site-specific risks and actions
to reduce the risk of overheating during
design, construction and occupation.
We will now evolve our understanding
of climate change risks and our
approach through undertaking
more detailed climate-related
scenario analysis.
Climate-related disclosures
Berkeley welcomes the
recommendations of the Financial
Stability Board’s (FSB) Task Force on
Climate-related Financial Disclosures
(TCFD). We report qualitatively
on the governance, strategy, risk
management, and metrics and targets
components of the recommendations
on page 64 and within a stand-alone
report available on our website.
A-
Detailed qualitative and quantitative
information is provided to CDP’s
Climate Change Programme on an
annual basis. We are proud that our
2019 disclosure was recognised with
a leadership score of ‘A-’.
Electric charging points at Richmond Chase
Electric excavator at Trent Park
16
Berkeley Group 2020 Annual Report Carbon Positive Operations
Committed to reducing the carbon emissions from our sites, offices and sales suites
Park Village site, whilst on other
sites we have collaborated with
our contractors to trial the industry’s
first fully electric mini excavator.
In 2020, our absolute location-
based emissions have reduced by
14% compared to our baseline
year of 2016. Significant changes
to behaviours, procedures and
technologies will need to continue
over the coming years to further
reduce our operational carbon
emissions. In the meantime, we
continue to voluntarily support
verified projects that realise carbon
emissions reductions to offset more
than our remaining emissions on
an annual basis and to continue to
be carbon positive. Details on the
projects supported in 2020 can
be found on our website.
Taking action to reduce the
emissions resulting from our
operations is a priority. We are
pleased that our efforts to reduce
electricity consumption through
measures such as efficient lighting
and master switches were recognised
during energy audits completed in the
year by external parties. We have also
procured 100% renewable electricity
for our sites, offices and UK-based
sales suites since May 2017.
With a focus on large-scale
regeneration schemes, the
activities undertaken by Berkeley
and our contractors remain carbon
intensive; the removal of existing
structures that are no longer fit
for purpose and the extensive
remediation of brownfield sites
is heavily reliant on plant and
machinery that is traditionally fuel
powered. Recognising that taking
action to reduce emissions resulting
from fuel consumption is our biggest
challenge, this year we have switched
to using biodiesel on our Green
100%
renewable electricity procured
for UK activities since May 2017
Carbon positive
in our operations since May 2017
14%
reduction in emissions since 2016
Net Zero Carbon Homes
Committed to reducing the carbon emissions from the homes we develop
Berkeley’s aim is to create highly
efficient, low energy homes which
can draw the power they need
from clean and renewable sources.
However there remains uncertainty
in the industry around the right
long-term solutions for homes due
to changing energy policies and
uncertainty around carbon emissions
from grid electricity and gas in
the future.
In 2019, with the support of specialist
external consultants, we produced
zero carbon transition plans for three
trial sites to help us to deliver homes
which can operate at net zero carbon
by 2030. Our research and analysis
determined that it is achievable
through a combination of design
and future proofing measures, and
taking into consideration the required
energy infrastructure, available
technologies and sustainable
operating costs for our customers.
In May 2019 we set a new
commitment for a zero carbon
transition plan to be produced for all
new sites, with eight additional plans
completed to date. Although each
plan is site specific and therefore
unique, there are common elements:
minimising energy consumption
through performance improvements
in the building fabric (for example
improved insulation properties);
allowing for a range of technologies
to provide space heating; maximising
potential for battery storage;
and negotiating renewable energy
tariffs for our customers.
To engage with others in our industry
and to help inform our understanding
on the successful delivery of a low
carbon built environment, Berkeley
continues to be a programme
partner of the Advancing Net Zero
work being led by the UK Green
Building Council (UKGBC).
17
Net zero carbon homes
in operation by 2030
First
homebuilder to produce zero carbon
transition plans for all new sites
Programme partner
UKGBC Advancing Net Zero
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Nature and Biodiversity
More nature afterwards than before we began
On every Berkeley site we ensure that there is more nature incorporated into the
development than was there before. People and nature belong together. Nature calms
our minds, lifts our spirits and gives us the beautiful green spaces where we can all relax,
explore, rest and play. Being close to nature, day after day, can improve our wellbeing,
strengthen our communities and make us all-round happier and healthier people.
Developing our
pioneering approach
We have always recognised the
importance of biodiversity and the
value that nature brings to people.
That is why we incorporate open space,
tree-lined streets and parks. It is the
reason we appoint an ecologist to
every site and incorporate living roofs.
In 2016, in recognition of our intention
to leave more nature behind when
we have finished than existed before
we began, we committed to creating
a net biodiversity gain on all our sites.
We worked with experts to create
a toolkit which we now use on every
site to baseline the existing conditions
and then calculate the increase we can
achieve through different interventions.
Calculating net
biodiversity gain
At the start of each project, we
instruct an ecologist to use their
specialist knowledge to measure the
site’s biodiversity using our toolkit,
based on standardised metrics and
values developed by DEFRA and
Natural England. This establishes
the baseline score.
Our approach helps us to make
informed choices resulting in stronger
and more nature-rich landscapes over
the long-term.
The Nine Concepts: making
space for nature and beauty
Our approach is about more than just
the calculation of creating a net gain;
it is about encouraging our ecologist,
designers and landscape
engineers to incorporate nature into
our developments from the earliest
design stages. To enable this we have
also developed the Nine Concepts
document which provides ideas of how
we can create nature-rich landscapes.
The Nine Concepts for delivering nature-rich landscapes
Ecologist
Project team
Landscape
designer
Green
infrastructure
Management
Connectivity
Species diversity
and adaptiveness
The Nine
Concepts
Buildings and
hard landscape
Seasonality
and maturity
Links to the
community
Habitats and
vegetation types
Local ecological
character and
distinctiveness
Our ideas brought to life
At Paddock Wood
we are creating two
areas of species-rich
grassland within
the open spaces;
this will help to
attract bees, moths
and butterflies.
At Sunningdale Park
we are enhancing
existing woodland
and an orchard
and creating
new woodland.
At Leven Road,
Poplar we are
creating a wildflower
meadow and
intensive green
roofs.
At Southall
Waterside we are
creating a new
wetland that will
be planted with
reeds which will also
improve the water
quality of the site.
18
Berkeley Group 2020 Annual Report Partnerships
We developed our approach over
many years working with partners who
inspired and challenged us. It started
20 years ago when we worked with
Wildfowl and Wetlands Trust (WWT)
to create Barnes Waterside and the
London Wetlands Centre, as pictured
on pages 2 to 3. Later, we partnered
with the London Wildlife Trust to
deliver the Woodberry Wetlands
in the heart of Hackney.
By working with these partners
we were able to see the benefit that
nature brings to our developments.
The Wildlife Trusts continue to provide
practical support in the delivery of
living landscapes on our developments.
Future legislation
The Government now intends to make
biodiversity net gain mandatory for all
new sites and we were pleased to be
cited in its consultation for our existing
approach to nature and biodiversity
net gain. The forthcoming requirement
will be for a 10% increase in biodiversity
habitat value, which the vast majority
of our sites far exceed, so we will be
well-placed to continue to demonstrate
our leadership in this area.
35
developments have committed to
creating a net biodiversity gain
185Ha
Habitat creation or enhancement
committed to, equivalent to an area
larger than Hyde Park
Best practice
Our approach was cited in the
Government’s consultation on making net
gain mandatory for new developments
CIRIA BIG Biodiversity
Challenge Awards
— Client Award for net biodiversity
gain approach in 2018
— Medium Scale Permanent Award
at Fitzroy Gate in 2017
— Pollinator Award at One Tower Bridge
in 2016
Implementing a net biodiversity gain at Kidbrooke Village
In 2018, we chose Kidbrooke Village to
demonstrate our approach by creating
our first large-scale implementation
of a net biodiversity gain strategy.
The project focused on rewilding the
traditionally planted 20 acre Cator Park,
which was created in an early phase of
the project.
Green infrastructure – Working
with the London Wildlife Trust
and landscape architects HTA, we
introduced a more valuable network
of green infrastructure, creating
wildflower meadows, grassland and
wetland habitats. We introduced
more varied native planting, and we
allowed areas to grow wild so they
support more life.
Habitats and vegetation types –
Through spring and summer
Kidbrooke Village is a riot of
wildflowers, shrubs, bushes, reeds
and grasses. It hums with dragonflies,
butterflies, bees and beetles.
There are far more birds, including
water fowl, herons, willow warblers
and starlings. A peregrine falcon
has also been spotted.
Links to community – Since
the rewilding began, it is more
of a focal point for community
life and we partner with London
Wildlife Trust to organise nature
walks, bird and bug spotting
sessions, school visits, family fun
days and conservation volunteering.
Net biodiversity gain – According
to our toolkit, the rewilding of
Kidbrooke Village will deliver
a net biodiversity gain of more than
200% once it grows to full maturity.
It now takes less water and energy
to maintain and the landscape acts
as a sustainable urban drainage
system which naturally holds
and filters rainwater.
19
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
Building Strong Communities
Having a lasting social impact
Our ambition on every development is to strengthen the local community, improve people’s
quality of life and have a lasting social impact that can be felt beyond our site boundaries.
This is what really drives us and we focus on regenerating large-scale brownfield sites with
the greatest potential for positive change.
“ We work collaboratively with local stakeholders to
co-create plans with local influence and character.”
A community-led approach
We work hard to understand every
community in which we work and
to build strong relationships with
local people, councils, charities
and grass roots organisations.
Community engagement is an integral
first step in our masterplanning process
and continues throughout project
delivery. This is how we develop shared
objectives and deliver the changes
local stakeholders care about most.
Early stage community
investment
We prioritise the delivery of public
amenities and welcoming natural
spaces, ensuring the wider community
benefits from an early stage.
Examples include the 65 acre Country
Park we delivered in the first phase
of Woodhurst Park (Bracknell Forest)
and the 40,000 sqft pop-up cultural
and community hub we created at
Clarendon (Haringey).
Locally inspired masterplans
We don’t use standardised building
designs or housing types. Instead,
each masterplan is unique, informed
by the site’s heritage and shaped in
partnership with local communities.
We select design teams with the
skills to meet the specific needs
of each project, including leading
architects, engineers, ecologists and
landscape specialists, who work
collaboratively with local stakeholders
to co-create plans with local influence
and character.
Hartland Village Country Park
Right: Hartland Village was designed
with the local community to include
a 70 acre park and public amenities
Below: the open landscape at
Kidbrooke Village
20
Berkeley Group 2020 Annual Report Culture and values
Long-term community building
is highly complex and requires
a pragmatic, patient and flexible
mind-set from all concerned.
Our collaborative culture and strong
values underpin our long-term
approach to placemaking and help us
successfully navigate the challenges
involved. We respect people, listen
carefully, think creatively and have
the passion to make sure thousands
of small decisions are made in the
spirit of partnership.
Read more about our values on
page 94
“ We respect people, listen
carefully, think creatively
and have the passion
to make sure thousands
of small decisions
are made in the spirit
of partnership."
Woodberry Down
Evidence based
community building
Since 2012 we have been working with
social scientists and leading academics
to create and embed an evidence
based community building framework,
Creating Successful Places. We have
now applied the framework’s 13 key
criteria to 60 projects, helping us to
deliver more sustainable places with
a high quality of life.
Maximising social value
Over the last year we have been
developing an internal toolkit which
enables project teams to quantify the
social value their development will
create over the long-term. Using a set
of indicators our teams will be able
to test the relative value of different
interventions so they can achieve the
maximum social impact.
Read more on pages 38 to 39
Community voice
and influence
Strong and enduring communities
have empowered local leaders, so we
actively encourage residents to join or
form social clubs and decision making
bodies which shape and influence the
local area in the long-term.
21
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Chief Executive’s Statement
no further significant disruption
from a second wave of Covid-19
or a disorderly end to the Brexit
transition period.
Berkeley’s net cash of £1,138.9 million
(April 2019: £975.0 million) continues
to reflect the measured investment of
recent years and is commensurate with
the uncertain operating environment.
Notwithstanding this, Berkeley has
increased the estimated gross profit in
its land holdings to £6.4 billion (April
2019: £6.2 billion).
Strategy update and
Shareholder Returns
Berkeley’s purpose is to create homes,
strengthen communities and improve
lives, using its sustained commercial
success to make valuable and enduring
contributions to society, the economy
and natural world. To achieve this, the
Company’s long-term strategy is to
invest in opportunities with the right
risk-adjusted returns, while ensuring
that its financial strength reflects the
prevailing macro environment, and to
make returns to the shareholders who
support the Company to achieve its
purpose, through either dividends or
share buy-backs.
Since the end of the financial crisis
in 2011, the Company has acquired
a number of long-term regeneration
sites, some of which are now in, or
coming into, production and is in
the process of bringing forward over
25 large and complex residential-led
developments, of which 20 have been
acquired since the start of this period.
These sites typically deliver between
1,000 and 5,000 homes and their
development can take up to 30 years
to complete. Their complexity often
means that it can be five or six years
before the first homes are delivered.
They require significant upfront
capital investment, coupled with the
unique expertise that the Group has
accumulated over the last 20 years
and which is embedded throughout its
21 autonomous operating companies.
Berkeley is transforming neglected
industrial and brownfield land into
thriving new communities which deliver
quality homes of all tenures, biodiverse
open spaces and a mix of shops,
offices and amenities for local people.
The successful transformation of
these sites is founded on trusted
partnerships with local authorities and
communities and their development is
directly aligned to the Government’s
strategy for increasing the supply
Summary of performance
Berkeley has delivered pre-tax profit of
£503.7 million for the year. This is from
the sale of 2,723 homes (2019: 3,698)
at an average selling price of £677,000
(2019: £748,000), reflecting the
mix of properties sold in the year.
The reduction in profit before tax of
35.0% on the prior year was anticipated
and reflects the progressive completion
of a number of Central London
developments acquired in the period
from 2009 to 2013.
These results represent a strong
performance and are in line with the
guidance in place at the start of the
year. Robust trading during the year,
with improved sentiment and gathering
momentum, following the decisive
December General Election result, led
to consensus for the year increasing
to around £550 million. The Company
was on track to meet this prior to
the Covid-19 lockdown at the end of
March when guidance was revised to
£475 million, on concern of the ability
to complete property transactions
during lockdown. Berkeley therefore
surpassed its initial expectation in this
regard, in spite of the challenges of
maintaining production on site and
for customers in securing mortgages
and achieving legal completions in
this period.
From the onset of Covid-19 we have
focused on adapting our activities
to keep all stakeholders safe, to limit
impacts on our ongoing operations
and to fulfil our commitments to our
customers and partners. Following
the Government’s 23 March lockdown
instruction, we worked quickly to
establish safe protocols for our site
operations; always with reference
to industry bodies, including the
Construction Leadership Council, and
Government guidance. After an initial
reduction to around 40% of normal
production capacity, our activities have
been largely restored and stabilised
through the effective implementation
of these safe working practices and,
on average, our sites are currently
operating at around 80% of production
capacity. This has taken a huge amount
of hard work and dedication from our
experienced teams and supply chain.
Looking forward, this response to
the initial impact of Covid-19 means
that the Company is still targeting
a cumulative pre-tax ROE of 15%
for the six year period ending on
30 April 2025, which broadly equates
to average annual pre-tax profit of
£500 million. We now anticipate profit
delivery in the coming year to be
weighted towards the second half of
the year in an approximate one third
to two thirds ratio. This does assume
22
Berkeley Group 2020 Annual Report “ Berkeley’s purpose is to
create homes, strengthen
communities and improve
people’s lives. Our
sustained commercial
success enables the
valuable and enduring
contributions we make
to society, the economy
and the natural world.”
of good quality homes across all
tenures. The Company is now the
only developer undertaking major
brownfield regeneration at scale in
London and the South-East as the
increasing risk and complexity of
these activities has seen those with
lesser expertise and resources leave
this area of the market. The delivery
of these sites is vital to meeting the
housing needs of the country’s towns
and cities, while relieving pressure
on greenfield land.
Chelsea Creek
Over the last two years construction
has begun on over 20 new sites
giving Berkeley a firm foundation
for delivering, prior to Covid-19, an
anticipated 50% increase in production
over the next five years, underpinned
by a strong opening forward sales
position. While Covid-19 has caused
short-term delays and volatility, it
does not change the fundamental
strength of the business, which is
set up in appreciation of the risks
of a cyclical market.
In terms of capital allocation, the
priority right now, as it is for all
responsible businesses, is on cash
conservation to safeguard the business
and ensure that it is in the best possible
place once the recovery begins.
Berkeley has reviewed its business plan,
eliminated non-essential expenditure,
and re-profiled its sites to focus
its work in progress investment on
delivering its forward sales and where it
has good visibility of the local market.
The depth and quality of the land bank
means that we will only acquire land
with compelling characteristics, where
we can add value over the long-term.
Notwithstanding this, Berkeley’s
financial strength means that it can
continue to meet its purpose by
investing in its unique operating model
to deliver large, complex regeneration
sites and help the country rebound
from the impact of the pandemic and
to continue supporting approximately
32,000 UK jobs, directly and indirectly,
in its business and supply chain for the
foreseeable future.
The Company remains committed to
its programme to deliver sustainable
Shareholder Returns of £280 million
per annum up until 2025, but will
defer the previously proposed return
of £455 million surplus capital for
up to two years due to the volatility
presented by Covid-19. This will
also provide the Company with the
flexibility to use the surplus capital to
either make enhanced cash returns to
shareholders or to invest in incremental
land interests, should opportunities
arise which would lead to enhanced
shareholder value over the cycle.
The surplus capital will remain on the
Balance Sheet until the enhanced
returns or incremental land investment
is made. Incremental land investment
will be defined as cash spent on land
interests, over and above the cost of
land used in the Income Statement,
from 1 May 2020.
In this period of uncertainty, Berkeley
will continually review its strategy and
has flexibility and optionality within
its business model to adjust its plans
quickly should market conditions
change; always prioritising financial
strength ahead of annual profits.
Berkeley is able to make its Shareholder
Returns through either share buy-
backs or dividends. Since January
2017, when share buy-backs were
first introduced, the Company has
acquired 14.6 million shares for
£514.3 million, at an average price of
£35.25 per share and the annual return
of £280 million now equates to £2.23
per share; an 11% increase to the initial
£2.00 per share. The next six monthly
return of £140 million is due to be
paid by 30 September 2020. Of this
£6.0 million has already been made
via share buy-backs. The amount to be
returned as dividend will be announced
on 13 August 2020 and paid on
11 September 2020 to shareholders on
the register on 21 August 2020, taking
account of any further share buy-backs
in the intervening period.
Housing market
Going into the lockdown period
Berkeley was experiencing a stable
and satisfactory trading environment.
Sales for the 12 months were some 10%
ahead of the prior year, with sentiment
buoyed by the certainty brought by
the decisive December 2019 General
Election result.
This momentum also reflected both
the desirability of Berkeley’s homes in
under-supplied markets and increased
launch activity with a number of new
developments coming to the market
in 2019/20. These included Grand
Union in Brent, St William’s King’s
Road Park and The Cottonworks in
Finsbury, Royal Exchange in Kingston
and a number of developments in
the South-East including Abbey
Barn Park in High Wycombe, Huntley
Wharf in Reading, Hollyfields in Royal
Tunbridge Wells, St William’s Courtyard
Gardens in Oxted and Lumina in
Camberley. In addition, St Edward
agreed to dispose of 190 retirement
living apartments at Royal Warwick
Square, Kensington, through a forward
sale agreement to a retirement
living provider.
Pricing remained firm throughout the
financial year and Berkeley secured
prices above its business plan levels,
broadly covering any cost increases.
23
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Chief Executive’s Statement continued
Sales in April and May reflected the
impact of lockdown and were around
50% below normal market conditions,
with pricing remaining above business
plan levels. This is a good result given
the very significant disruption to the
sales and home moving process during
this period. As the economy gradually
re-opens we are seeing activity
increase, but it is too early to determine
where demand will settle over the
coming months.
Fundamentally, this remains a good
time to purchase in our markets
of London and the South-East
where supply remains well below
underlying demand. With interest
rates at historically low levels and
good mortgage availability, following
a temporary interruption as the UK
entered lockdown, affordability levels
are high for those who have a deposit;
particularly when compared with the
cost of renting. For those who can
look through the prevailing short-term
uncertainty, there are opportunities
for long-term value.
It will be important to see what
measures Government puts in
place around property taxation, the
speed and cost of planning and its
own direct investment in the sector
(including Help To Buy), as this will
play a significant part in determining
the pace of recovery in a sector that
can play a leading role in the recovery
of the wider economy.
The Group’s cash due on forward sales
at 30 April 2020 is at £1.86 billion
compared with £1.83 billion a year
ago. The cash due on these forward
sales will be collected in the next three
financial years and it excludes sales
of affordable housing and sales by our
joint ventures. Berkeley’s sales continue
to be split broadly evenly between
owner-occupiers and investors, with
overseas customers continuing to
see value in the London market.
Help To Buy reservations accounted
for a net 290 sales in the year,
including joint ventures.
Berkeley has added six new sites to
its land holdings in the year, which
includes three in our joint ventures.
In London, the sites are in Old
Kent Road in Southwark where we
have completed a challenging land
assembly and achieved a resolution
to grant consent for up to 1,300 new
homes, a site acquired conditionally
in Brentford where we will be working
to deliver a scheme of over 1,000 new
homes (St Edward) and in Camden
24
where we will be providing over
600 new homes. Outside London,
we have acquired a site unconditionally
in Tonbridge, Kent for around 150
new homes and in the St William
joint venture we have conditionally
contracted sites in Brighton
and Worthing.
These new sites are fantastic additions
to our land holdings and provide
Berkeley with the opportunity to
add value over time. We continue
to appraise new land opportunities,
but in the current environment with
heightened risk, a key factor will be
the extent to which both vendors and
planning authorities recognise the
development risk. This complexity
means acquiring and bringing forward
new sites remains challenging and
a slow process, however, Berkeley is
in a strong position having brought
through planning and into development
a significant number of long-term
schemes in the last few years.
On the planning front we have secured
eight new consents in the year,
including St William’s development
in Poplar for up to 2,800 new homes
and the former Horlicks factory
redevelopment in Slough for 1,300
new homes, and we also obtained
58 revisions to existing consents.
Build cost rises continued at around
4% until the end of 2019. From the
beginning of this calendar year build
costs have been neutral. As the UK
emerges from lockdown, and we assess
medium-term demand levels, we
anticipate further deflationary pressure
on costs in the short-term as activity
levels are uncertain.
Our Vision
Through the ‘Our Vision’ strategy for
the business we aim to generate long-
term value and have a positive impact
on our employees, customers, the
environment and society.
The strategy has now been in
place for a decade and we have
set commitments every two years
under our five strategic focus areas:
Customers, Homes, Places, Operations
and Our People. The achievements
and advances set out below are now
embedded in Berkeley’s day-to-day
operations and, during the coming
financial year, we will put in place a new
set of stretching targets for the future.
Performance highlights include:
Berkeley Group 2020 Annual Report Chiswick Gate
— Putting customers at the heart
of our decisions: We maintain an
Investor in Customers Gold rating
across all operating companies.
Our Net Promoter Score of 78.8
(on a scale of -100 to +100) and
Recommend To A Friend score of
98.5% are both significantly higher
than the industry averages of 39
and 89%, respectively (HBF, March
2020 figures).
— Taking action on climate change:
We incorporate adaptation
measures for future weather
patterns into the homes and
developments we build and are the
first homebuilder to produce zero
carbon transition plans for all new
developments. These will enable the
homes to operate at zero carbon
from 2030, taking into account
how the design, specification and
infrastructure we provide can
reduce the carbon emissions of
home owners both now and in the
future. We have maintained our
award-winning carbon positive
approach within our operations
since 2017/18, and received a sector
leading ‘A-’ score for transparency
and action on climate change
from CDP.
— Building communities: Our projects
are large scale and long-term, giving
us greater scope to involve local
people, understand their priorities
and make lasting contributions to
the local community’s strength,
wellbeing and quality of life. This
enables us to create welcoming and
inclusive neighborhoods with homes
of all tenures and a mix of beautiful
public spaces, natural landscapes
and amenities that bring people
together to enjoy community life.
Once residents start to move in
we use Community Development
Plans to get neighbours talking and
create social connections across the
wider area. We have now trialled
aSocial Value Toolkit on three sites,
which helps our teams to quantify
and maximise the social benefits
of our holistic regeneration and
placemaking strategies.
— Pioneering approach to nature:
Our leading approach to achieve
a net biodiversity gain on each and
every site we develop has been
commended by Natural England
and echoed in the Government’s
Environment Bill which sets
out the intention to mandate
net biodiversity gain for new
developments. We have committed
to create or enhance around 450
acres since we implemented the
commitment. Nature is just one
area for which we were recognised
as Sustainable Housebuilder
of the Year at the Housebuilder
Awards 2019.
25
Kidbrooke Village
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Chief Executive’s Statement continued
— Championing health, safety and
wellbeing: Our latest 12 month
rolling Annual Injury Incidence Rate
(AIIR) is 1.17 reportable incidents
for every 1,000 people working
on our sites and in our offices
(2019: 1.14). This is testament to the
dedication of our teams in focusing
on behavioural safety in addition
to adhering to stringent standards.
This year we have developed
a network of more than 220 mental
health first aiders and have signed
up to the Building Mental Health
Charter and Framework.
— Considerate construction: We
are proud to run our sites with
consideration to local communities
and the environment. Our 12
month rolling average Considerate
Constructors Scheme score of
43/50 is significantly above the
industry average for the same
period (37/50) and demonstrates
the care we take on each
development under construction
to limit our impact on our
surroundings.
— Nurturing careers and improving
the industry’s image: A focus on
emerging talent as a means of
helping to address the industry skills
shortage has resulted in an increase
in the proportion of our workforce
being an apprentice, graduate
or training (9% in 2019/20). The
REACH Apprenticeship Scheme
was named CITB’s Large Apprentice
Employer of the Year 2019 and we
held the fourth Berkeley Group
Apprenticeship Awards in autumn
2019 to celebrate the efforts of our
supply chain, which supported more
than 500 apprentices working on
our sites during the year.
— Promoting diversity and inclusion:
We continue to prioritise and
promote diversity within our
workforce and the wider industry
through our Diversity and Inclusion
Strategy. Measures include an
enhanced maternity policy, in-
house diversity awareness training
programmes, recruitment and
training programmes targeting
underrepresented groups and
expanding our partnership with
Women in Construction (WIC).
This is an area upon which we will
continue to focus.
The Berkeley Foundation
The Berkeley Foundation (the
‘Foundation’), a registered charity,
works in partnership with the voluntary
sector to focus the skills, resources
and fundraising efforts of the Berkeley
26
Group on helping young people
overcome barriers, improve their
lives and build a fairer society.
Performance highlights from the year
include the launch of a new £350,000
funding programme to support young
women from marginalised communities
into work, extending our Super 1’s
disability cricket partnership with
the Lord’s Taverners and awarding
£200,000 in emergency grants to
support our local charity partners
to maintain their vital services in the
wake of Covid-19.
Over the course of the year the
Foundation committed £3 million
to good causes across London,
Birmingham and the South of
England, supporting more than 4,600
people through its programmes and
partnerships. This contribution was
made possible through the generosity
and commitment of Berkeley Group
staff, with 63% of our people directly
contributing to the Foundation
and volunteering more than 10,000
hours of their time. Berkeley Group
maintained its Diamond Payroll Giving
Award in 2019 and the Foundation’s
impacts were recognised with four
major accolades at the Third Sector
Business Charity Awards, including the
Corporate Foundation award and the
overall Business of the Year prize.
Outlook
The UK economy has experienced
almost four years of uncertainty
since the referendum on leaving the
European Union in 2016. While the
decisive December 2019 General
Election result saw an improvement
in sentiment at the start of the year,
the risks and opportunities around the
nature of our future trade agreements
with the EU and other countries still
remain. Covid-19 has now introduced
a new set of unprecedented challenges
and is indiscriminately questioning
the resilience of individual sectors and
companies in the most searching way.
Berkeley starts the coming year from
a position of relative strength, with
net cash of £1,138.9 million, forward
sales of £1.9 billion and an estimated
£6.4 billion of gross profit in our
land holdings. Our unique operating
model, with financial strength and
agility at its heart, has enabled us to
act quickly to review our business
plan in light of the risks presented by
Covid-19 and continue investing in our
brand, delivering homes on our large,
complex, regeneration sites, putting
people at the heart of placemaking.
Berkeley Group 2020 Annual Report White City Living
“ The Company is now the
Richmond Chase
only developer undertaking
major brownfield
regeneration at scale in
London and the South-
East as the increasing risk
and complexity of these
activities has seen those
with lesser expertise and
resources leave this area
of the market. The delivery
of these sites is vital to
meeting the housing needs
of the country’s towns
and cities, while relieving
pressure on greenfield land.”
This puts Berkeley in a position from
which it can continue to deliver for
all its stakeholders during these
unprecedented times, helping the
country rebound from the impact
of the pandemic and to continue
supporting approximately 32,000
UK jobs, directly and indirectly, in its
business and supply chain for the
foreseeable future.
Underpinning this investment for
Berkeley, is the under-supply of quality
new homes in London and South-East.
Beyond the immediate tragic human
impact, Covid-19 will undoubtedly have
a profound impact on how we work,
how we live and how we spend our
leisure. Berkeley’s focus on the quality
of life on its developments, prioritising
nature, connectivity and the wellbeing
of its customers will be an advantage
as the market recovers. London remains
a fantastic global city and with interest
rates at an all-time low, the cost of
buying a home for those who can
afford a deposit is low, compared with
the alternative of renting.
Housebuilding and construction
can play a vital role in the broader
economic recovery following Covid-19.
This will require Government support,
similar to that seen following the
2008/09 financial crisis, including:
the reversal of the property tax
increases seen since 2014; a reduction
in the bureaucracy and cost of
planning; and direct investment into
affordable housing.
In closing, it is important to return
to the human cost of this terrible
pandemic and our first priority remains
the health, safety and wellbeing of
our people, our customers and our
supply chain, whose response over
recent weeks has been remarkable,
and I sincerely thank them all.
Rob Perrins
Chief Executive
27
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Market Overview
Understanding our market
The housing market is cyclical in nature
and is one of the key indicators of the
health of the economy. Berkeley has
a strong track record of delivering
homes through numerous market
cycles, predominantly in London and
the South East of England.
Supportive market
fundamentals
The UK economy has experienced
a period of prolonged uncertainty in
recent years, through the negotiations
to leave the European Union, the 2019
General Election and, most recently,
the Covid-19 global pandemic.
However, the underlying housing
market fundamentals remain robust:
— the London and South East markets
remain undersupplied;
— interest rates remain at historical low
levels following recent emergency
rate cuts;
— mortgage availability is strong; and
— affordability levels are supportive
for those who have the
requisite deposit.
Any positive Government intervention
and stimulation measures will also
assist the sector’s recovery.
London and South-East
under supplied
The latest Government manifesto sets
out to deliver 300,000 homes a year
nationally by the mid 2020s, a level
which has not been achieved since
the late 1960s, when the public sector
was contributing over 40% of all new
homes a year alongside the private
sector(1).
There were 241,000 additional homes
delivered in England in 2018/19
(of which 214,000 were new build),
the highest level for 40 years(1,2),
which is nearly 30% lower than the
annual target. However, the supply
of these homes do not match the
underlying demand on a regional
basis(3). Whilst a number of regions
are oversupplied, there are material
shortfalls in Berkeley’s key markets,
being London and the South East.
Looking at London specifically,
housing delivery has averaged 36,000
homes a year over the last three
years, of which new build delivery has
averaged 30,000(2). This is around
half of the London housing need of
72,000 identified(3), which in turn is
higher than the 53,000 now targeted
per annum within the London Plan.
This is a recently revised target,
down from 65,000 a year following
an assessment of the achievability
of bringing smaller sites forward for
development in the Capital.
The acute undersupply in London
is set to worsen in the medium-
term. There were just over 12,000
construction starts during 2019(4),
which is 30% lower than in 2018, 50%
lower than the peak achieved during
2015 and over 75% lower than the
Mayor of London’s latest revised target.
Falling transaction volumes
and SDLT receipts
Ahead of the Covid-19 induced
interruption to sales activity in both
the new build and second hand market,
transaction volumes nationally had
fallen by 7% year on year during 2019,
to around 785,000. London accounted
for around 82,000 of these, which was
9% lower than in 2018(5).
Current (2019) transaction levels are
nearly 40% lower nationally than the
peak in 2007 ahead of the Global
Financial Crisis, and around 55% lower
within London(5). The pace at which
any pent-up demand returns to the
market will depend upon how the
economy recovers, with unemployment
levels and Government stimulus being
critical drivers.
Housing supply shortfall in London and South East
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
36,447
6,388
North
East
North
West
Yorkshire
and The
Humber
East
Midlands
West
Midlands
East of
England
London
South
East
South
West
Net additional dwellings (2018/19)
Average annual housing needs (to 2026)
Sources: MHCLG(2,3)
Falling new starts in London
s
h
t
n
o
m
2
1
g
n
i
l
l
o
R
30,000
25,000
20,000
15,000
10,000
5,000
0
2014
2009
Q4 Q1 Q4 Q1 Q4 Q1 Q4 Q1 Q4 Q1 Q4 Q1 Q4 Q1 Q4 Q1 Q4 Q1 Q4 Q1 Q4
2010
2019
2016
2018
2013
2015
2012
2017
2011
Source: MHCLG(4)
28
Berkeley Group 2020 Annual Report
Transaction volumes in London and England
1,500,000
1,250,000
1,000,000
750,000
500,000
250,000
0
300,000
250,000
200,000
-13%
-33%
Slab to slice
SDLT regime
3% SDLT levy
imposed
2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012
Q4
Q4
Q4
Q4
Q4
Q4
Q4
Q2
Q2
Q2
Q2
Q2
Q2
2013
Q2
2013
Q4
2014
Q2
2014
Q4
2015
Q2
2015
Q4
2016
Q2
2016
Q4
2017
Q2
2017
Q4
2018
Q2
2018
Q4
2019
Q2
2019
Q4
150,000
100,000
50,000
0
)
s
h
t
n
o
m
2
1
g
n
i
l
l
o
r
(
s
n
o
i
t
c
a
s
n
a
r
t
d
n
a
g
n
E
l
)
s
h
t
n
o
m
2
1
g
n
i
l
l
o
r
(
s
n
o
i
t
c
a
s
n
a
r
t
n
o
d
n
o
L
England
England (excl. London)
London
Source: Land Registry
The Help To Buy Equity Loan scheme
in its current form ends in March 2021,
and will be replaced by a scheme with
regional price caps and available to
first time buyers only for a further two
years out to March 2023. The scheme
had previously supported around 40%
of the national new build market, and
to a much lesser extent in London.
The change in SDLT regime and rate
increase in December 2014 signalled the
beginning of a period of stagnation, and
then reduction, in transaction volumes.
This was exacerbated by the introduction
of the 3% SDLT levy for additional
property purchases in April 2016.
Additional property purchasers
(including overseas purchasers) are
an important element of the housing
market, providing greatly needed,
good quality rental accommodation.
They also contribute significantly to
the delivery of new build homes, as
they typically acquire early in the
development cycle which provides
developers and their funders with
the requisite financial security to
bring forward what are highly capital
intensive, and otherwise speculative,
developments. This helps enable
the delivery of thousands of new
homes, in a funding market where
owner-occupiers are restricted by
mortgage offer periods and income
multiples, and development finance
for smaller developers is predicated
on the financial security provided
by forward sales.
Since December 2014, volumes have
reduced by 13% nationally and by a third
in London(6).
In March 2020, the Government
announced a 2% SDLT surcharge for
overseas purchasers, effective from April
2021. The impact of this policy is yet to
be determined, but these purchasers
have always been an integrally small but
important part of the overall housing
market, particularly in London’s new build
sector for the reasons previously stated.
SDLT receipts totalled £8.3 billion in 2019,
of which £1.7 billion related to the 3%
levy, with around a fifth of all transactions
being subject to the levy. Current (2019)
SDLT receipts are around £1.0 billion lower
than the peak SDLT receipts reported in
2017. Approximately half of this reduction
relates to the First Time Buyer (FTB) relief
introduced in November 2017 (which has
not materially increased FTB activity)
(7). The balance of the reduction reflects
the fact that the benefit of the additional
levy income is now being outweighed by
reducing transaction volumes.
Additionally, SDLT revenue is
disproportionally geared towards
London, with nearly 40% being
generated from just over 10% of
total transactions and, as such, the
greater decline in London transactions
detrimentally impacts SDLT revenues.
Interventions that could
stimulate housing delivery
Housing and construction are critical
bellwethers to the overall economy and
during previous cycles Governments
have successfully stimulated
growth with a focused approach
to these key sectors. In the current
operating environment, the following
interventions would prevent a further
contraction of the housing market,
revive much-needed housing delivery
and create the foundation for a wider
economic recovery. Introducing these
measures also provides Government
with a unique opportunity to engage
and focus the homebuilder sector
on raising standards and embracing
sustainable placemaking.
— SDLT reductions or holidays to
encourage both owner-occupiers
and the investors who underpin
housing delivery. A reduction
in stamp duty revenue would
be balanced by a stimulated
construction and homebuilding
sector, which would deliver more
affordable homes, wider social
contributions, sustain greater
employment and increase other
tax receipts (income tax, VAT,
corporation tax).
— An extension of the existing Help
To Buy scheme ahead of tapering
price caps could assist in boosting
demand in the near term and bring
home ownership into reach for
more households.
— Review of the planning tariffs
(affordable housing requirements,
Section 106 contributions and
Community Infrastructure Levy) for
complex, long-term developments
to reflect the uncertain environment.
— Direct investment into the sector.
Sources: (1) MHCLG Live Table 244; (2) MHCLG LT 118; (3) MHCLG Consultation, 2017; (4) MHCLG LT 253a; (5) Land Registry;
(6) HM Revenue & Customs; (7) UK Finance
29
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
Business Strategy: Our Vision
Berkeley’s business strategy is called ‘Our Vision’. Through the delivery of Our Vision,
we aim to be a world-class business, defined by the quality of the places we create,
generating long-term value and having a positive impact on society.
There are five areas of strategic focus under Our Vision:
Customers
Provide exceptional service to all
of our customers and put them
at the heart of our decisions
Read more on pages 34 to 35
Homes
Deliver high quality homes with
low environmental impact where
people aspire to live
Read more on pages 36 to 37
Places
Create strong communities where
residents can live an enjoyable,
sustainable life
Read more on pages 38 to 39
Operations
Make the right long-term decisions,
run the business efficiently and
work collaboratively with our
supply chain
Read more on pages 40 to 41
Our People
Develop highly skilled teams that
work together in a safe, healthy
and supportive environment and
contribute to wider society
Read more on pages 42 to 43
By focusing on strategic objectives
under these areas, we ensure that we
continue to provide customers with an
exceptional service, whilst delivering
high quality homes and places where
communities can thrive and where
people can live sustainable lifestyles.
We also recognise that the skills,
knowledge and dedication of our
people, alongside the efficient
management of our operations,
are fundamental to the ongoing
success of our business.
30
Strategic commitments
Every two years we review and develop
strategic commitments under each
of our focus areas to drive continual
improvement. We ensure a consistently
strong approach through the
following mechanisms:
— Integration of new themes
The regular review of commitments
provides the opportunity to
identify and address any emerging
global, industry or business issues
and opportunities.
— Evolution of continuing themes
A number of themes remain high
level priorities for Berkeley to take
action on. These feature within our
strategic commitments for recurring
periods, in recognition of the need
to drive incremental change.
Our headline commitments are our
priority actions for each two year
period. In addition to these, we have
supporting commitments, which in
many instances are previous headline
commitments that have become
embedded into our everyday activities.
Completion of ten years of
Our Vision
In May 2018, we launched ten
headline commitments to achieve by
April 2020, underpinned by revised
supporting commitments in each
focus area.
The conclusion of this cycle marks
a decade of Our Vision and is an
ideal time for us to reflect upon the
achievements of the strategy, and
plan for the future.
Read more on pages 32 to 33
Berkeley Group 2020 Annual Report The following were found to be the
most material topics for Berkeley:
— Build Quality Standards – ensuring
homes and developments meet
strict quality and safety standards.
— Health, Safety and Wellbeing –
including employees, external
contractors and those working
along the supply-chain.
— Climate Change – including both
mitigation (reducing current impact)
and adaptation (adapting and
updating current operations for
the future).
— Sustainable Homes and
Developments – ensuring the
homes and places we create are
sustainable, promote sustainable
living and are future ready.
Preparing for the next ten years
In early 2020 we undertook detailed
research and a materiality study to
determine how Our Vision should evolve
for the next decade and beyond.
Materiality
The first step in defining the most
material topics for Berkeley included
analysis of industry trends, industry
reports, peer reviews and wider global
commitments. The result of this
research was a list of 16 topics.
In order to prioritise and gauge
the relative importance of each
of these 16 topics, and with the
support of an objective third party,
Berkeley obtained feedback from
more than 40 internal and external
stakeholders. Stakeholder groups
included industry experts, government
agencies, contractors, external
consultants, suppliers and internal
stakeholders. Through a mixture
of surveys and interviews, both
quantitative and qualitative data were
collected. Each of the topics was also
independently rated on the importance
and impact it may have to the core
Berkeley business. This includes both
risk and likelihood considerations.
Sustainability
Our Vision is an integrated business
strategy, bringing together our
commitments across a wide
range of business topics, including
sustainability. This is reflected by
having a Main Board Executive
Director with overarching
responsibility for Our Vision,
sustainability, and health and safety.
We believe that each of our
employees has a duty to integrate
sustainability into their role and
working practices. Policies and
standards are set at a Group level
(see our Non-Financial Reporting
Statement on page 65), and are
supported by a sustainability
management system in place across
all of our operating companies.
This includes procedures to manage
sustainability at each stage of the
development process.
It is important that we help to
address global challenges through
our activities. We have reviewed
the United Nations’ Sustainable
Development Goals (SDGs) and the
targets that sit beneath them, to
understand how they relate to our
business and where we can make
the most significant contribution.
Although all the goals are important
and interconnected, we have
identified four that we have the
greatest ability to influence.
Updating Our Vision
moving forward
We are now embedding our lessons
learnt from the past ten years into
daily business activities, with a focus
on the key topics which are material
to us. The results of this work will
inform our development and update
of Our Vision, Berkeley's responsible
business strategy, moving forward.
Read more about our
approach to sustainability:
www.berkeleygroup.co.uk/
sustainability
31
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Ten Years of Our Vision
Celebrating a decade of achievements
For more than 40 years, Berkeley has been synonymous with attention to detail, respect for
people and communities, great customer service and a real passion for places that grace their
surroundings and that people can be proud of.
In 2010, we created Our Vision as an ambitious strategy for the future and to provide
a framework for us to set out our commitments across the five areas of focus. The strategy
has now been in place for a decade and we are proud of the many achievements it has driven
over this period across each of our five focus areas; Customers, Homes, Places, Operations
and Our People.
Building communities
A focus on people and partnerships has
always been at a centre of what we do.
We have completed pioneering work on
how to create strong communities and are
now beginning to quantify the value that
each of our developments brings to society.
Read more on pages 20 to 21
37,800
homes in over
180 communities
60
sites followed Building
Communities framework
Taking action on carbon
We were the first homebuilder to sign up to Level
3 of the Code for Sustainable Homes and also the
first to become carbon positive in our operations
in 2017/18. As well as focusing on efficiencies, we
are now going beyond Government requirements
by compiling a zero carbon transition plan for
each new development to enable the homes to
operate at net zero carbon by 2030.
Read more on pages 16 to 17
Carbon positive
operations since May 2017
First
homebuilder to produce zero
carbon transition plans
Enhancing nature
We have always focused on the spaces between
the buildings as much as the homes themselves,
through the incorporation of excellent
landscaping. For more than a decade we have
consulted an ecologist for each site and we were
the first developer to commit to biodiversity net
gain. Now every project team ensures there will
be more nature after we finish a development
than before we began.
Read more on pages 18 to 19
First
developer to commit to
a net biodiversity gain
on all new sites
35
sites committed to
biodiversity net gain
Queen’s Award
We won the Queen’s Award for Sustainable
Development in 2014 for our approach set out
within Our Vision and held the award until 2019.
This is the UK’s highest accolade for business
success and it was the second time Berkeley has
been recognised having previously won the award
in 2008, becoming the first housebuilder to have
achieved this.
32
Berkeley Group 2020 Annual Report Excelling in
customer experience
We put the customer at the heart
of every decision. We focus on
providing a tailored, excellent service
to all of our customers and high
quality homes. We monitor feedback
from each customer and focus on all
homes being ready on time as well
as the customer feeling special
and valued.
Investor in
Customers Gold Award
achieved across all businesses
Championing health, safety
and wellbeing
Our Annual Injury Incidence Rate (AIIR)
has decreased significantly over the
decade, which is testament to the
focus of every construction site and
management team. Every division has
implemented a wellbeing programme for
staff and we are a signatory to the
industry Building Mental Health Charter.
220
trained mental health first aiders
Considerate construction
Each of our teams works hard to
operate with consideration to our
workforce, the environment and our
neighbours. We are a partner member
of the Considerate Constructors
Scheme (CCS) and receive regular
external audits against its Code of
Considerate Practice. We are delighted
to be recognised annually at the CCS
Awards, including Most Considerate
Site in the UK twice in the decade.
260
awards in the decade
78.8
Net Promoter Score (NPS)
significantly higher than the
industry average
1.17
Annual Injury Incidence Rate (AIIR)
consistently outperforms the
industry average
43/50
Considerate Constructors Scheme
(CCS) scores consistently ahead
of the industry average
Berkeley Group
Industry (HBF)*
Berkeley Group
Industry (HSE)*
7
8
.
8
3
9
0
.
5
5
.
1
2
4
0
.
.
4
2
2
.
3
6
3
.
3
6
6
1
.
1
7
4
0
6
8
.
3
5
3
1
.
Berkeley Group
Industry (CCS)*
4
3
3
9
.
.
3
6
8
9
2011
2020
2011
2020
2014
2020
* Based on Home Builders Federation (HBF)
data first published in 2016
* Based on Health & Safety Executive data
and methodology
* Based on independent CCS audits,
out of a maximum score of 50
Supporting learning through
apprenticeships and training
We set our first major commitment
to apprentices and training in 2014
and over the past five years have
increased the number of graduates
and apprentices in our own
workforce, as well as supported
our supply chain in this area.
We introduced the annual Berkeley
Apprentice Awards in 2016 to
celebrate these successes.
9.3%
of our own employees are now
apprentices, graduates or in
formal training
300
average number of apprentices
working across our operations
each month since 2016
Innovation and
off-site manufacture
Berkeley East Thames delivered
the patented and award-winning
Urban House type in 2017, later using
off-site methods.
Berkeley has committed and started
to develop our own facility for the
manufacturing of precision made
homes which presents the future for
our industry, addressing many of the
challenges around quality, the supply
chain, environmental efficiencies
and skills.
Contributing to society
through the Berkeley
Foundation
We launched the Berkeley Foundation
in 2011 to enable us to have a positive
impact on young people and their
families. Around two thirds of our
employees get involved each year
through fundraising, donations and
Give as You Earn.
>26,000
people reached since 2011
£20.9m
committed since 2011
33
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Customers
Provide exceptional service to all of our customers
and put them at the heart of our decisions
Excelling in customer experience
Our customers are at the heart of
every decision we make. We are always
mindful that we are building someone’s
home; the place they will enjoy, relax
in and feel secure. We have created
a ‘customer first’ mind-set and empower
teams to think and act differently.
Key to the ongoing success of our
business is that we listen to, understand
and respond to the needs of our
customers. This is supported by a range
of employee training opportunities and
the continuation of our Sales Academy
to bring talented individuals from other
industries into the business.
from In-house Research for the fifth
consecutive year.
Improving communication
Our sales teams have an in-depth
knowledge of their development to
help our customers find the right home
to best suit their needs. Each customer
receives a tailored information pack
and has a designated Berkeley
representative throughout their home
buying journey. Customers are given
the opportunity to use our interactive
online system, MyHome Plus, covering
a range of features, from selecting
choices and options to receiving
updates on construction progress.
Setting standards
We benchmark our customer service
performance against companies both
in and out of the sector using the
Net Promoter Score (NPS). We were
once again awarded the Investor in
Customers Gold Award across each
of our businesses, in addition to
Outstanding Customer Service Awards
Promoting sustainable living
We provide home specific sustainability
information during marketing, purchase
and completion. At Hartland Village, for
example, we provide customers with an
illustrated Garden Guide providing
practical guidance on how to boost
biodiversity within their own garden.
Berkeley is one of a select group of
developers whose customers can
secure mortgage interest discounts on
energy efficient new homes, using
Barclays’ Green Home Mortgage.
Making homebuying accessible
Our UK First Policy requires
each individual home to be made
available in the UK either first or at
the same time as launching overseas.
Berkeley is proud to support the
Mayor of London’s initiative to offer
lower-cost new properties exclusively
to Londoners and UK-based
buyers first.
Our approach to placemaking
and communities, coupled with our
reputation for high quality delivery
and customer service, provides
Berkeley with the best opportunity to
forward sell our homes where possible.
This approach underpins our future
financial performance and provides
good visibility of cash flow. It is
imperative as a risk management tool
in a capital intensive cyclical industry.
34
Berkeley Group 2020 Annual Report Headline commitment:
Net Promoter Score
Establish Berkeley amongst the top performing
companies for customer service, as evidenced by the
Net Promoter Score.
Headline commitment:
Mortgage lending
Make the case for a proportionate approach to lending,
including two year mortgage offers, so that every
purchaser has a fair chance in the new build market.
ONGOING
In 2018 we committed to make the case for the
introduction of longer mortgage offer periods to give
every purchaser an equal opportunity in the new build
market. The business models of lenders are influenced
by the traditional housing market and the systems in
place are there to serve this model.
Over the two year commitment period we:
— Met with a number of the UK's leading lending banks.
— Had ongoing encouraging engagement with one
lender regarding running a trial of a new mortgage
product. Unfortunately the trial did not occur during
the 2018 – 2020 period, but we will continue to work
with lenders and make the case for the introduction
of longer mortgage offer periods to cover temporary
disruptions to the mortgage market.
— Continued to be one of a select group of developers
to have been identified to make available Barclays’
Green Home Mortgage product, where purchasers
of our energy efficient new homes can receive
discounts on the interest rate they pay on
their mortgage.
— Engaged in active dialogue with several major
lenders to facilitate the introduction of virtual
valuations in response to the Covid-19 restrictions.
This has allowed our customers to continue with their
mortgages despite the challenging circumstances.
In 2020/21 we will continue to have dialogue with
lenders around the new build market. We believe that
the events of 2020 have proved beyond doubt that
longer mortgage products are essential if customers
are to have the confidence that their banks will stand
by them when they purchase homes off plan. It is only
by backing our customers to make these purchases that
we can keep building the homes that London needs.
In 2018 we committed to continue to focus on providing
excellent customer service, and an excellent overall
customer experience. We sought to monitor our
performance, share good practice amongst our teams
and implement new initiatives.
Over the two year commitment period we:
— Improved our six month rolling average Net
Promoter Score to 78.8 (on a scale of -100 to 100),
outperforming the industry and demonstrating that
our customers are likely to recommend us to a friend.
— Continued to focus on three items which we know
are most important to our customers: providing
timely and accurate responses to customer queries,
ensuring that homes are defect free and making
customers feel special and valued.
— Monitored and discussed customer experience and
our Net Promoter Score at each Group Customer
Service and Sales and Marketing Committee
meeting, together with lessons learnt from different
parts of the business.
— Enhanced our interactive online system, MyHome
Plus, to enable customers to easily access the
information they need on their new home.
— Continued to use technology such as FieldView to
support thorough build quality assurance processes
and dedicated after sales care.
— Progressed work to better understand and respond
to the emotional journeys of our customers.
In 2020/21 we will continue to put customers at the
heart of our decisions and focus all teams on delivering
an exceptional customer experience.
78.8
Net Promoter Score, compared to an industry average
of 39 (HBF, March 2020)
98.5%
customers would recommend us to a friend, compared
to an industry average of 89% (HBF, March 2020)
In addition to progressing work under our headline commitments, we have been taking steps to deliver our other
2018 – 2020 commitments, which are to:
Understand and respond to customers’
Communicate sustainable living to customers
emotional journeys
Promote the use of MyHome Plus
Market homes in the UK and London first
Meet minimum standards for sales and marketing
suite set-up
Promote digital and sustainable communication
Undertake sales and marketing suite exit interviews
Read more about our approach online:
www.berkeleygroup.co.uk/about-berkeley-group/our-vision/customers
35
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Homes
Deliver high quality homes with low environmental
impact where people aspire to live
Focusing on detail
We build high quality homes for
everyone: families, first-time buyers,
students, and for senior citizens,
including those who need care.
We do not have any standard
property types or formats, and no
two Berkeley developments are the
same. Instead we work with the best
architects to create unique designs
that meet the varied requirements
of all types of home buyers.
Creating safe and healthy homes
We design a range of features into our
homes that benefit residents’ health
and wellbeing, including good levels
of daylight, insulation to help regulate
temperature and reduce noise, and
storage space. This year we have
launched our new design framework for
healthy homes and supported industry
work on designing safer homes.
Taking action on climate change
We apply an energy hierarchy to
each development, by focusing on the
building fabric and then incorporating
clean and renewable technologies.
Each of our new sites compiles
a transition plan to understand how
we can enable our homes to operate
at net zero carbon by 2030. To ensure
that our homes are comfortable both
now and in the future with expected
changes in climate, we use our thermal
comfort risk assessment to take
into account factors that can affect
overheating, such as location, building
type and ventilation strategies.
Designing sustainable homes
We seek to ensure that the materials
we specify and procure are
responsibly sourced, in accordance
with our Sustainable Specification
and Procurement Policy. We also
incorporate a range of features into
our homes to help our customers
further reduce their impact, from
energy efficient light fittings and
recycling bins, to low water use
fittings and fixtures.
Building homes for the future
As technology evolves and new
products enter the market, we
continually undertake research and
development to enable us to be
at the forefront of employing new
innovative technologies and the right
infrastructure to best serve and future-
proof our homes for our customers.
At the same time, we continue to
embed our minimum infrastructure
recommendations covering broadband
and cabling provision, which enable our
customers to benefit from the freedom
of being able to ‘plug in’ technologies
as they become available.
36
Berkeley Group 2020 Annual Report Headline commitment:
Safe and healthy homes
Launch a design framework to contribute to the
wellbeing of our customers, including safety, air
quality and thermal comfort.
Headline commitment:
Net zero carbon
Produce a transition plan for each new development
which enables the homes to operate at net zero
carbon by 2030.
In 2018 we committed to undertake research into how well
designed homes can lead to better health and wellbeing
outcomes for residents, and to develop a new framework
for our teams to use during the design process.
Over the two year commitment period we:
— Undertook detailed research in the area of healthy
homes, drawing on both UK and international
sources of best practice.
— Compiled a new healthy home design framework,
structured around seven topic areas: thermal comfort,
safety and security, noise, indoor air quality, light,
adaptability and space and storage. The framework
introduces a range of recommendations that could
be applied to help create a ‘healthier’ home.
— Launched the framework to our project teams to
support the design phase of all new developments,
building upon our longer-standing commitments to
space and storage standards, as well as minimising
overheating through the use of our thermal comfort
risk assessment.
— Developed a strategic partnership with the Royal
Society for the Prevention of Accidents (RoSPA).
Through this partnership, we supported the
production of the ‘Safer by Design’ standard,
a framework to reduce serious accidental injury
in new-build homes through a series of prioritised
and evidence based design recommendations.
This was formally launched in autumn 2019.
In 2020/21 we will embed the healthy homes framework
into our design processes, and aim to complete our first
homes to RoSPA’s new Safer by Design Gold standard.
85%
completed homes met Berkeley space standards,
with minimum ceiling heights, storage and sizing
above typical requirements
21
developments under construction have undertaken
overheating risk assessments to help identify
measures to mitigate the risk
In 2018 we committed to develop transition plans, with
the aim to identify how we can enable our homes to
operate at net zero carbon by 2030. Our research has
shown that this can be achieved through design and
future-proofing measures. We want to deliver zero
carbon homes for our customers but there remains
uncertainty about the right long-term solution that will
provide our homes with low carbon heating and energy.
Over the two year commitment period we:
— Researched how we can deliver low carbon energy
and heat in new developments, in the context of
changing energy policies and uncertainty around the
carbon intensity of gas and electricity within the grid.
— Used findings to trial zero carbon transition plans for
three of our sites. The trials enabled us to understand
what the common elements for delivering low
carbon homes are, including; having a ‘fabric first’
approach, being technology agnostic, allowing for
a wide range of technologies to provide heating,
maximising storage potential for future technologies
such as batteries and negotiating green or renewable
energy tariffs for our customers.
— Became the first homebuilder to introduce a new
commitment for all new sites to develop a zero
carbon transition plan. In total we have completed
11 transition plans.
— Continued to be a programme partner for the
UKGBC’s Advancing Net Zero work, to help inform
industry understanding and the delivery of a low
carbon built environment.
We will continue to produce zero carbon transition
plans in 2020/21 and to be prepared for future changes
in regulation in this area.
11
zero carbon transition plans developed to enable
homes to operate at net zero carbon by 2030
94%
completed homes with an Energy Performance
Certificate (EPC) rating of at least a B
In addition to progressing work under our headline commitments, we have been taking steps to deliver our other
2018 – 2020 commitments, which are to:
Undertake post occupancy evaluation to understand
the in use performance of our buildings
Enable connected homes
Specify sustainable materials in accordance with our
Sustainable Specification and Procurement Policy
Install internal recycling facilities in new homes
Install water efficient fittings, so that new homes achieve
an internal water use of less than 105 litres per person
per day
Install energy efficient lighting in new homes
Meet Berkeley minimum fire ratings and energy
efficiency standards for domestic appliances, which
are over and above the Government guidelines
Read more about our approach online:
www.berkeleygroup.co.uk/about-berkeley-group/our-vision/homes
37
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Places
Create strong communities where residents can live
an enjoyable, sustainable life
Meeting a local need
Our experienced land teams focus
on investing in the right locations
where there is strong demand for
new homes, good transport links
and the scope to create successful
new places. We undertake a rigorous
evaluation of the opportunities and
risks of each potential acquisition,
focusing on complex regeneration sites.
This and our strong financial position
ensure that we deliver on our offers,
fostering trust and underpinning
enduring relationships.
Building communities
By approaching each development in
a spirit of partnership, and by working
in collaboration with local authorities
and communities, we strive to establish
a true sense of community on our
developments. At TwelveTrees Park
we engaged with the local community
to formulate a steering group who
are helping to curate the community
spaces in the development. We engage
during the early design and planning
phase and we use our toolkit, Creating
Successful Places, as a framework
to ensure that the right facilities and
mechanisms are implemented to
create a unique and fantastic place
to live and to realise a shared vision.
The development of community
plans for some sites helps to facilitate
thriving communities whilst focusing
on how the development will be
managed in the long-term.
More nature afterwards than before
we began
We have always recognised the value
that nature brings to people through
the incorporation of open space, tree-
lined streets and parks. We launched
our approach to biodiversity net
gain on every site in 2017 and since
then, are set to enhance or create
185 hectares of space across 35 sites.
Throughout the development of our
approach we have worked closely with
the London Wildlife Trusts who have
helped to provide practical support
in the delivery of living landscapes
on our developments.
Designing sustainable places
We want our developments to enable
our customers to live sustainable
lifestyles. Providing public realm and
facilities, such as schools and places
to eat and exercise, can be key to this.
We also incorporate infrastructure
that promotes sustainable travel, such
as pedestrian routes, cycle storage
and electric vehicle charging points.
Truly sustainable places are great
places now, but also stand the test
of time; we include features such as
sustainable drainage and rainwater
harvesting systems, to increase
resilience to future climate change
impacts, such as flooding, overheating
and water shortages.
38
Berkeley Group 2020 Annual Report Headline commitment:
Community and social value
Understand the social value generated by new
development and embed a coherent approach
to building communities on all our sites.
Headline commitment:
Sustainable transport
Explore future transport trends and encourage a
modal shift away from an over-reliance on petrol
and diesel cars.
In 2018 we committed to embed our long-standing
work on building communities on all of our sites and
to begin to quantify and explain the benefits that our
developments generate for local communities, the local
economy, and the environment.
In 2018 we committed to understanding how transport
methods and our customers’ needs and expectations
are likely to change over time and using this research to
identify practical actions we could take as a developer
to promote sustainable travel.
Over the two year commitment period we:
Over the two year commitment period we:
— Engaged the local community in the design of
each new development and applied our Creating
Successful Places framework.
— Continued to develop community plans on existing
developments. These often include events, such as
the Summer Fete at Kidbrooke Village, whilst at South
Quay Plaza an app promotes activities to residents.
— Worked with a specialist consultancy to develop
an approach to measure the value to society of our
developments. We used more than 20 indicators to
assess the value, each of which is underpinned by
peer-reviewed research.
— Trialled the approach on three developments, taking
Berkeley data on aspects from access to nature
to job creation and community spaces to quantify
the value to society they will generate each year
once they are lived in. This is in addition to any s106
agreements made as part of the planning process.
A key factor was found to be job creation through
the provision of commercial spaces.
In 2020/21 we will refine and test the methodology
to ensure that it is balanced and robust and introduce
a new tool to help our project teams to value the
development throughout the design stages and
ultimately to ensure that we incorporate the right design
features to maximise the social value in the long-term.
£60m per year
Value to society to be generated from three pilot
developments once they are lived in, in addition to the
benefits of any s106 agreements made as part of the
planning process
16
community plans across our developments
under construction
— Reviewed the current utilisation of car parking, cycle
parking and electric vehicle spaces on a number of
existing developments, and reviewed travel plans to
identify best practice.
— Researched how the transport mix is likely to change
over time, making us well placed to anticipate future
travel patterns and design accordingly.
— Continued to ensure that developments under
construction provide future residents with
sustainable travel options including car clubs, cycle
storage spaces and electric car charging points.
— Hosted a roundtable with external experts such
as Healthy Streets, London Cycling Campaign and
E.ON to discuss the key findings from the research
and drafted a list of key principles for sustainable
transport for our developments.
— Held an internal workshop to debate and refine the
new principles, including Healthy Streets, cycling
infrastructure, electric car charging points and
designing for deliveries to our sites.
— Were awarded the Transport for New Homes Award
2019 for Royal Arsenal Riverside, celebrating recent
developments where residents do not need cars to
live a full life.
In 2020/21 we will seek to embed the sustainable
transport principles into our standard design practices.
61,000
cycle storage spaces being provided on developments
under construction
3,600
electric car charging points being provided on
developments under construction, with infrastructure
being put into place to support an additional 2,200
In addition to progressing work under our headline commitments, we have been taking steps to deliver our other
2018 – 2020 commitments, which are to:
Achieve net biodiversity gain on all new developments
Develop an approach to integrated water management
Explore temporary meanwhile uses during
construction works
Achieve BREEAM Very Good on all commercial space,
student accommodation and senior living housing
Install living roofs on all suitable residential apartment
roof spaces
Review the performance of managing agents and the
durability of schemes
Read more about our approach online:
www.berkeleygroup.co.uk/about-berkeley-group/our-vision/places
39
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Operations
Make the right long-term decisions, run the business efficiently
and work collaboratively with our supply chain
A focus on quality
The quality of our homes is paramount
to our reputation and our build
teams always strive for the highest
standards. This year a thorough review
of build quality processes has been
undertaken and a Group-wide Build
Quality Assurance system has been
compiled to ensure consistency of
approach. We are a board member of
the Get It Right Initiative (GIRI) – a UK
construction industry group actively
improving productivity and quality
in the sector by eliminating errors.
Collaborating with our supply chain
We maintain a network of senior
trade sponsors within our business to
engage with contractors, in addition
to daily collaboration on a site-by-site
basis and holding local events such as
supply chain conferences. Our Supply
Chain Portal provides information to
tendering companies and over the
2018 – 2020 Our Vision period we have
implemented enhanced and consistent
arrangements to procure contractors
on best overall value, rather than cost
alone. We are a long-standing signatory
to the Prompt Payment Code, paying
contractors within 30 days.
assessments. We are proud to have
zero environmental prosecutions
and to be awarded Three Trees
in WWF’s timber scorecard 2019.
We are a partner of the Supply Chain
Sustainability School, to provide
consistent messaging on sustainability
to the supply chain.
Carbon positive and sustainable
construction
We were the first UK homebuilder
to become carbon positive in our
operations in 2017/18; we focus on
energy efficiency, procure renewable
electricity for our UK activities and
offset more than the remaining
emissions each year.
Each of our operating companies is
supported by a dedicated sustainability
professional who provides advice and
training, and completes sustainability
Operating considerately
By registering each of our sites
to the Considerate Constructors
Scheme (CCS) we sign up to a Code
of Considerate Practice and our site
teams strive to minimise impact on our
neighbours. In 2019/20 we achieved an
average score of 43/50 in independent
audits, compared with an industry
average of 37/50.
40
Berkeley Group 2020 Annual Report Headline commitment:
Off-site manufacture
Deliver the Berkeley Modular facility and ensure
that 30% of construction value is delivered through
off-site assembly by 2020.
ONGOING
Headline commitment:
Waste and plastics
Work with our supply chain to develop a
zero waste strategy, focusing on key wastes
including plastics.
ONGOING
In 2018 we committed to deliver the Berkeley Modular
facility and develop our approach to considering both
volumetric off-site manufacture and the use of off-site
components within all future projects.
Over the two year commitment period we:
— Constructed a 160,000 sqft factory building in
Northfleet, Kent, to house Berkeley Modular’s
advanced precision manufacturing facility, with
a focus on producing high quality modules. Work
is progressing with fitting out and testing the facility
to support production commencement.
— Developed a definition of volumetric and component
off-site manufacture for the business for consistent
understanding and data capture.
— Updated our commercial reporting systems
to formally capture costs in relation to off-site
assembly. All projects must review the potential for
off-site manufacture from an early stage and monitor
spend on off-site methods.
— Increased the proportion of site build cost delivered
through off-site assembly cost to 12%; whilst the
figure is below the initial target, it is expected to
increase in the future once the manufacturing facility
is fully operational and allowing for projects which
have recently selected volumetric and modular
off-site methods to commence construction.
— Achieved more than 20% of build value through
off-site manufacture at a number of sites. At South
Quay Plaza this was achieved through the use of
bathroom pods, a unitised facade and pre-cast walls
and columns, which are now solutions being used
across the business.
In 2020/21 we will continue to embed our approach to
modular construction into our operations and identify
opportunities on a project-by-project basis from the
earliest stages in the design process.
In 2018 we committed to better understand the waste
streams produced by our activities and take joint action
with our supply chain to address waste production.
Over the two year commitment period we:
— Analysed existing waste data in more detail in order
to identify priority areas for reduction.
— Held a zero waste workshop with around 50 senior
stakeholders to collaboratively explore what a zero
waste future could look like for Berkeley sites and
the wider industry. Barriers to achieving zero waste
and potential solutions to overcome these were
highlighted and discussed.
— Drafted a zero waste strategy ready for release
across the business in 2020.
— Conducted plastic reduction reviews across our
offices and sites to increase awareness and align on
our ambition, sharing key insights across the business.
— Implemented a number of initiatives within divisions
to reduce waste, focusing on plastics. For example,
reusable packaging systems have been set up to
allow materials and products to be brought to site,
unloaded and the packaging immediately removed
by the supplier.
— Focused on increasing awareness and discussions
about single-use plastic during the early tender
stages and included this as a consideration for the
assessment and sign off of all main packages at
Berkeley East Thames.
— Became members of the Alliance for
Sustainable Building Product’s (ASBP) Plastics
in Construction Group.
In 2020/21 we will launch our zero waste strategy.
We recognise the need for a transition to a circular
economy and that this will be an ongoing challenge
for our business and the sector in general over the
coming years.
12%
construction value delivered through
off-site assembly
40
sites incorporating volumetric or component
off-site assembly
95%
waste reuse and recycling rate from
construction activities
50
senior industry stakeholders attended
our supply chain waste workshop
In addition to progressing work under our headline commitments, we have been taking steps to deliver our other
2018 – 2020 commitments, which are to:
Reduce carbon emissions per person by 14% and evolve
Source materials responsibly, including certified timber
our carbon positive programme
Undertake office sustainability reviews and site
Use and provide feedback from our Tender Scoring
sustainability assessments
Matrix for procuring on best overall value
Reduce water use per person by 6%
Use paper efficiently and source it sustainably
Sign up to the Considerate Constructors Scheme (CCS)
and achieve a minimum score of 40/50 in every audit
Enhance procedures for build quality and
quality assurance
Read more about our approach online:
www.berkeleygroup.co.uk/about-berkeley-group/our-vision/operations
41
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Our People
Develop highly skilled teams that work together in a safe, healthy
and supportive environment and contribute to wider society
Attracting, developing and
retaining talent
Our employees are our strongest
resource; it is important that we attract,
develop and retain talented teams at
every level. Each operating company
runs personal and professional
development schemes and ensures
individuals receive the support and
training that they need.
Promoting inclusivity
Our Equality and Diversity Policy sets
out our goal of promoting diversity
and inclusion and is supported by
our Diversity and Inclusion Strategy
to create an environment where people
are respected and appreciated for
what makes them different.
Developing young people
Our graduate programme is rated
in the top 100 companies for early
careers by the Job Crowd and we
welcomed 31 new graduates in 2019.
We are also pleased to support an
average of 300 apprentices across
our operations each month, including
100 directly employed by Berkeley.
Berkeley Capital’s REACH
apprenticeship scheme was named
Large Apprentice Employer of the
Year 2019 by the Construction
Industry Training Board (CITB) and
we celebrated the success of both
individuals and suppliers at our
fourth annual Apprentice Awards
in autumn 2019.
Responsible employment
We are committed to paying at least
the Living Wage Foundation’s Living
Wage. We continue to take action to
ensure that our business and supply
chain are free of modern slavery (see
our Modern Slavery Statement and
policy on our website for more detail).
Championing health, safety
and wellbeing
Working with our supply chain
we aim to achieve industry-leading
performance, and demonstrate clear
and unequivocal leadership to others
in the construction sector. Each
operating company has dedicated
resource to drive performance,
supported by weekly Director-level
visits to each site and status reviews
at each Board meeting. In the past year
we became a signatory to the Building
Mental Health Charter, launched the first
CALM zone at Southall Waterside and
now have more than 220 trained mental
health first aiders. Berkeley St Edward
was the sector winner at the RoSPA
Awards in June 2019.
Improving lives through the support
of the Berkeley Foundation
We encourage employees to have
a positive impact on society both
directly and through the support of
the Berkeley Foundation, a registered
charity aimed at helping young people,
their families and communities (see
pages 48 to 49). In 2019/2020, around
two thirds of our employees got
involved and 33% contributed via
Give As You Earn.
42
Berkeley Group 2020 Annual Report Headline commitment:
Industry image
Engage with young people, education providers
and employers to transform perceptions of careers
in the built environment.
Headline commitment:
Diversity and inclusion
Implement a programme to create an inclusive
environment where employees can reach their full
potential, irrespective of their identity or background.
ONGOING
In 2018 we committed to developing a programme of
engagement with young people as well as education
providers and employers to show the breadth of viable,
attractive career opportunities that exist in the industry.
Over the two year commitment period we:
— Continued to be a partner organisation to Build UK,
which works across the industry to encourage the
next generation to choose a career in construction.
— Developed a range of videos for our website and
engagement events to highlight the breadth of roles
within Berkeley and our supply chain.
— Encouraged employees from all roles and levels to
act as Construction Ambassadors. More than 50
volunteered and 16 have been trained, enabling them
to promote the industry with a consistent message.
— Enabled people to go behind the scenes of 12 of
our live construction sites as part of Open Doors
2019, an industry-wide event designed to change
perceptions of the industry.
— Ran a series of engagement events with young
people, ranging from school visits and lessons to work
experience and mentoring. Berkeley Southern and
Berkeley St Edward jointly won an Investors in Young
People Gold Award for supporting Hampshire Council
in getting teens into work.
— Helped to design new apprenticeship standards
suitable for modular construction.
— Increased engagement with universities, with
a particular focus on students studying topics
relating to the production process.
380
visits to schools by our teams and school visits
to our construction sites
16
Berkeley employees trained as Construction
Ambassadors by the Construction Industry Training
Board (CITB) to raise the profile of the industry
In 2018 we committed to developing and implementing
a Diversity and Inclusion Strategy. We understand the
benefits a diverse workforce can bring and recognise
that the industry as a whole faces underrepresentation
of women as well as people from a broad range
of backgrounds.
Over the two year commitment period we:
— Developed a Group-level strategy for diversity
and inclusion covering aspects such as recruitment,
workplace inclusion and flexibility, and organisational
design and culture.
— Launched enhanced parental leave policies in
autumn 2019 for employees.
— Reviewed our recruitment processes including
adapting our experienced hire application journey
to make the candidate experience more inclusive
and streamlined.
— Focused on the importance of diversity on interview
panels, including during graduate assessment centres.
— Developed Group-wide unconscious bias e-learning
modules which are now ready to roll out to all staff
and managers.
— Worked closely with Women Into Construction
by hosting regular ‘experience’ events across our
developments as well as a ten day programme at
Southall Waterside in July 2019, and made them
a key beneficiary of the Berkeley Foundation
‘Empowering Young Women into Work’ programme.
— Continued to implement specific measures at
an operating company level, for example training
and workshops, agile working and staff surveys
and discussions.
37% 35%
of employees are female of the Board and senior
management are female
At 30 April 2020
Board of Directors
Senior Management
Board and Senior Mgmt
Reporting to Senior Mgmt
Total employees
Female
Male
Total
4
4
8
12
3
15
16
7
23
49
1,058
183
1,786
232
2,844
In addition to progressing work under our headline commitments, we have been taking steps to deliver our other
2018 – 2020 commitments, which are to:
Develop and implement a strategy for mental health
Raise awareness of modern slavery
Maintain programmes for healthy workplaces
Ensure that each employee has opportunities for
learning and development
Pay the Living Wage Foundation’s Living Wage to
direct employees
Undertake weekly Director health and safety visits
Target 5% of our direct employees to be apprentices,
sponsored students or graduates on formalised
training schemes
Promote apprenticeships and training to our
supply chain
Aspire to operate incident and injury free, targeting
an Annual Injury Incidence Rate (AIIR) of 2.75
Encourage support of the Berkeley Foundation
Read more about our approach online:
www.berkeleygroup.co.uk/about-berkeley-group/our-vision/people
43
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
Our Vision
Highlights for the 2019/20 financial year
Customers
Homes
Net Promoter Score
78.8
six-month rolling average NPS,
compared with a Home Builders
Federation (HBF) industry average
of 39 (March 2020)
Safer by Design
supported the Royal Society for the
Prevention of Accidents (RoSPA)
new Safer by Design framework to
reduce accidents in new build homes
Sustainable Housebuilder
of the Year
at the Housebuilder Awards 2019,
praised by the judges for our
advanced philosophy around our
biodiversity net gain and carbon
positive commitments
Recommend to a friend
98.5%
customers would recommend
us to a friend, compared with
a HBF industry average of 89%
(March 2020)
Investor in Customers
Gold 2020
achieved across all of our
operating companies based on an
independent assessment including
feedback from both customers
and employees
11
zero carbon
transition plans
completed in the year on our
developments to enable homes
to operate at zero carbon by
2030. We are a partner of the UK
Green Building Council (UKGBC)
Advancing Net Zero programme
RIBA National
Award Winner
Royal Institute of British Architects
(RIBA) National Award Winner
2019 for significant contribution to
architecture at Merano Residences
(St James)
In-house Research
2020 Gold Award
for customer satisfaction and
Outstanding Award for each brand
44
Berkeley Group 2020 Annual Report Places
Operations
Our People
10
additional sites committed to
leaving more nature behind on an
area of more than 100Ha. The first
implementation of biodiversity
net gain was achieved at
Kidbrooke Village
Considerate construction
43/50
average Considerate Constructors
Scheme (CCS) audit score,
compared with the industry
average of 37/50
500
apprentices worked across our
sites and offices during the year,
including more than 100 directly
employed. Berkeley Capital’s
REACH programme won the
CITB Large Employer of the
Year Apprenticeship Award
1.17
Annual Injury Incidence Rate (AIIR),
compared with the Health and
Safety Executive’s (HSE) industry
average of 3.66
63%
employees involved with the work
of the Berkeley Foundation during
the year
>200
community facilities
planned on sites under construction,
including four doctor’s surgeries,
nine schools, 15 sports facilities and
25 community spaces
Future of Real
Estate winner
two awards at the EG Future
of Real Estate Awards: National
Company of the Year and Future
of Real Estate Award for being
at the forefront of innovation
£60m per year
value to society to be generated
each year once three pilot sites
are lived in. Our emerging work on
quantifying the benefit to society
which new development brings
covers a range of indicators from
nature to affordable housing to
job creation
Carbon positive
award-winning approach of
focusing on energy reduction in
our operations and then purchasing
renewable electricity and
offsetting more than our remaining
operational emissions through
verified projects
>3,600
active electric car charging points
committed within developments
under construction, and 61,000
cycle storage spaces
28 days
taken to pay suppliers on average,
in line with the period outlined as
part of the Construction Supply
Chain Payment Charter
220
employees trained as mental health
first aiders. We became a signatory
to the Building Mental Health
Charter in autumn 2019
45
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Environmental, Social and Governance Performance
We monitor a range of Environmental, Social and Governance (ESG) indicators across
the Our Vision focus areas; Customers, Homes, Places, Operations and Our People.
Indicator
Measure
Unit
2019/20
2018/19
2017/18 Notes
Customer
experience
Net Promoter Score
Customers who would
recommend us to a friend
New homes
Completed homes
Sustainable
homes
Completed homes with
an Energy Performance
Certificate (EPC) rating
of at least a ‘B’
Completed homes to be
supplied with low carbon
or renewable energy
Average water efficiency
of completed homes
Completed homes with
internal recycling facilities
Sustainable
places
New developments
committed to deliver
net biodiversity gain
Developments regenerating
brownfield land
Developments with
sustainable urban
drainage systems
Developments with
cycle storage
Developments with electric
car charging points
#
%
#
%
%
78.8
73.5
73.9 Six-month rolling average to March
2020, compared with a sector average
of 39 (HBF, 2020).
98.5
97.1
97.0 Year to March 2020, compared
with an industry average of 89%
(HBF, March 2020).
3,158
3,959
4,050 The number of homes that legally
completed during the year including
our joint ventures.
94
93
91 The average EPC score was 84
(B rating).
70
72
73 The proportion of completed homes
with low carbon or renewable
technology.
lppd
102.7
102.6
103.2 The average internal water efficiency
100
10
94
7
of legally completed homes in litres
per person per day.
96 The proportion of completed homes
provided with recycling facilities.
18 Each site is a new site submitted
for planning permission which has
committed to delivering a net
biodiversity gain.
76
85
85 Proportion of developments
under construction on previously
developed land.
94
98
98 Proportion of developments under
construction with water management
practices such as swales and
permeable paving.
100
100
100 Proportion of developments
incorporating cycle storage facilities.
61,000 were being provided on sites
under construction in 2019/20.
76
74
73 Proportion of developments including
%
#
%
%
%
%
Community
contribution
Affordable housing and
wider contributions
£m
270
525
Environmentally
responsible
operations
Environmental prosecutions #
0
0
Greenhouse gas emissions
(location-based)
tCO2e
24,846
28,777
Water consumption
m3
214,517
224,443
electric car charging facilities; 3,600
points were being provided on sites
under construction in 2019/20.
420 The contribution we make in affordable
housing subsidies and wider community
infrastructure benefits delivered or
committed to during the year.
0 The number of environmental
prosecutions in the year.
25,465 The location-based emissions resulting
from our office, sales and site activities
reported for our operational boundary.
209,987 The volume of water consumed across
our regional offices, development sites
and sales suites.
Construction waste
generated
Construction waste
reused or recycled
tonnes 177,560
142,648
130,520 Construction waste produced by our
development sites.
%
95
94
93 Proportion of construction waste that
has been reused or recycled.
46
Berkeley Group 2020 Annual Report Indicator
Measure
Unit
2019/20
2018/19
2017/18 Notes
#/50
43
43
43 Based on independent audits by the
Considerate
construction
Supply chain
Average Considerate
Constructors Scheme
(CCS) score
Days taken to pay
suppliers on average
Employees
Total employees
Health and safety Annual Injury Incidence
Rate per 1,000 people
#
#
#
#
#
%
#
#
#
#
#
#
#
#
%
%
%
Work-related employee
and contractor fatalities
Hours of training
delivered on health
and safety matters
Employees paid the
Living Wage Foundation’s
Living Wage
Board of Directors —
Male
Board of Directors —
Female
Senior management —
Male
Senior management —
Female
Reporting to senior
management — Male
Reporting to senior
management — Female
Total employees —
Male
Total employees —
Female
Direct apprentices
and training
Employees involved
with Give As You Earn
Staff involved with the
Foundation
Company reports to CDP
Y/N
Company is featured on the
FTSE4Good Index Series
Y/N
Contribution to GDP
Tax
£
£
28
30
25
CCS. Within 2019/20 5 visits (5%) were
scored beneath 40/50.
In line with the period outlined as part of
the Construction Supply Chain Payment
Charter.
2,844
2,664
2,689 The total number of employees at
30 April each year.
1.17
1.14
1.42 The number of reportable injuries
during the year in relation to Berkeley
employees and contractors working
across our sites.
0
0
0 There were no fatalities during the year.
34,126
30,792
26,328 In 2019/20, this included training
more than 220 people as mental health
first aiders.
100
100
100 This excludes apprentices who are
being provided with training as part
of their role, in line with the Living
Wage Foundation’s guidance.
12
4
3
4
12
4
4
4
12
4
4
2
183
195
183
49
48
41
1,786
1,639
1,672
1,058
1,025
1,017
9.3
9.8
7.3 Calculated as the average monthly
percentage of our direct workforce
that are apprentices, graduates or
employees undertaking formal training.
33
32
33 We maintain a Charities Aid Foundation
(CAF) Diamond Award for payroll
giving.
63
Y
Y
65
60 Based on an annual survey of all staff.
Y
Y
Y An ‘A-’ leadership score was obtained
in 2019/20.
Y Berkeley has been featured on the
index since 2003.
2.6bn
3.0bn
3.0bn Berkeley’s calculated overall
contribution to GDP.
675m
816m
756m This includes taxes paid directly by
Berkeley and the taxes paid by its
customers and suppliers as a result
of Berkeley activities.
47
Living Wage
Diversity
Early years
careers
Charity and
the Berkeley
Foundation
Benchmarks
and Indices
Contribution
to society
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Berkeley Foundation
Building a society where every young person can thrive
The Berkeley Foundation is
a registered charity, launched
by Berkeley in 2011. It works
in partnership to help
young people in London,
Birmingham and the South
of England to overcome
barriers, improve their lives
and build a fairer society.
It focuses its work in
four areas:
A safe place to call home
Ensuring young people have secure,
stable accommodation.
Health and wellbeing
Supporting young people to live happy,
healthy lives.
The skills to succeed
Helping young people develop the skills
and capabilities they need to thrive.
Access to employment
Enabling young people to overcome
barriers to work and kick-start
their careers.
“Berkeley provides the
core funding for the
Foundation and pays all of
its overheads. This support
means that every penny
raised for the Foundation
is spent on charitable
activities.”
Working in partnership
The Foundation builds long-term,
impactful partnerships with the
voluntary sector through three
main routes:
Strategic partnerships
Long-term, high value charity
partnerships which operate on
multiple levels.
This year saw the Foundation renew
its major partnership with The Change
Foundation for a further five years.
The new partnership will see over 300
young people take part in the Street
Elite programme across London and
Birmingham by 2024, and represents
a deep and long-term commitment
to tackling youth unemployment and
violence affecting young people.
In the final quarter of the year, the
Foundation has rapidly reconfigured
its work to respond to the Covid-19
pandemic. The crisis has hit the most
vulnerable in our society hardest,
and these are the people that
the Foundation exists to support.
The Foundation has been helping
its charity partners to respond by
adapting programmes to operate
remotely, setting up new initiatives,
and providing emergency funding to
help organisations weather the storm.
Designated charities
20 charities chosen by our employees
which are local to their offices
and developments.
Community investment fund
Targeted funding programmes, aimed
at supporting innovation and building
evidence of what works.
As well as funding frontline services,
these partnerships put the skills,
resources and networks of Berkeley
to work, through skilled volunteering,
collaboration, and by providing work
experience and job opportunities on
our sites. The Covid-19 crisis has seen
our staff step up to support their
communities – sourcing PPE for charity
partners, delivering online workshops
for young people self-isolating at home,
and raising vital funds through new
initiatives such as the 2.6 Challenge.
Berkeley St. Edward ‘Pedal to Paris’,
July 2019.
48
Berkeley Group 2020 Annual Report Foundation highlights
4 Awards
The Foundation’s work was recognised
with four awards at the 2020 Third
Sector Business Charity Awards,
including the Corporate Foundation
award and the overall Business of the
Year prize.
>4,600
This year, the Foundation’s work
has reached more than 4,600
people, helping them to move out
of homelessness, build their skills, move
into work or access new opportunities.
>10,000
Berkeley staff volunteer more than
10,000 hours each year to support
their local communities.
£3m
This year, the Berkeley Foundation has
committed almost £3 million to support
our local communities.
63%
of Berkeley staff do something
each year to support the
Berkeley Foundation.
33%
of Berkeley staff are signed up to
our Give As You Earn (GAYE) scheme,
earning Berkeley a Diamond Payroll
Giving Award in 2019 – the highest
level available.
£6.3m
Berkeley staff have raised
more than £6.3 million for
the Berkeley Foundation
and its charity partners through
fundraising and GAYE to date.
Mayor’s Fund for London
– Kitchen Social
The Berkeley Foundation has
supported the Mayor’s Fund for
London’s Kitchen Social programme
since its launch in 2017. Kitchen Social
provides healthy meals and activities
to children at risk of going hungry
during the school holidays.
The Covid-19 pandemic has further
highlighted the problem of food
insecurity in the UK. With schools
closed for the majority of students,
many pupils are missing out on their
free school meals. Combined with
rising unemployment and loss of
income, the crisis has seen a rise
in families turning to food banks.
In 2019, the Greater London
Authority estimated that 400,000
children aged 16 or under were in
food insecurity. Hunger and isolation
not only affect a child’s physical
wellbeing, but also their long-
term educational attainment and
employment prospects.
Local Kitchen Social hubs give
children and young people a safe
place to go during the school
holidays where they can socialise,
make new friends and get a free,
healthy meal. The Foundation
supports 18 hubs across London
in areas where the Berkeley Group
operates. Since the start of the
partnership, these hubs have fed
almost 4,000 children.
Throughout the crisis, Kitchen
Social has been working closely
with other food charities to provide
packed lunches, hot food for
collection and deliveries of fruit
and vegetable boxes to vulnerable
families. They have also provided
activity packs for the children to
keep them stimulated and engaged
during the lockdown. The Berkeley
Foundation has supported this work
with an additional emergency grant
of £20,000, and storage space
has been provided at Berkeley’s
Oval Village site to help the charity
manage deliveries.
Berkeley staff also got involved
in December, when Berkeley St
Edward hosted Christmas dinner
for their local Kitchen Social hub.
After a construction site tour,
40 children tucked into a proper
feast including Christmas crackers
and mince pies.
49
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Business Model
Our Purpose is to build quality homes, strengthen communities and
improve people’s lives.
Strategic focus areas
under our business
strategy: Our Vision
Read more on pages 30 to 45
Customers
Provide exceptional service
to all of our customers and
put them at the heart of
our decisions
Homes
Deliver high quality homes
with low environmental impact
where people aspire to live
Inputs for value creation
Our approach
People across the business
— Employees and supply
chain with the expertise and
experience to deliver complex
regeneration developments
— Recognised brands and
autonomous, talented and
experienced teams who
embrace Berkeley’s core values
in their approach
Relationships and partnerships
with key stakeholders
— Relationships with public
and private joint venture
partners, land owners, our
supply chain, local authorities,
industry bodies, communities
and customers
Physical and natural resources
— Well located land
holdings where
we can add value
— High quality materials
and resources
Financial
— Financial capital underpinned
by a strong balance sheet,
net cash and forward sales
— Rigorous land investment
appraisal process
Read more on pages 80 to 83
Reducing carbon and addressing
climate change
— Energy hierarchy applied
to each development,
incorporating clean and
renewable technologies.
— Seek to ensure materials
we specify and resource
are responsibly sourced.
50
Our unique
approach
We focus on large-
scale regeneration
developments where
our unique expertise and
strong capital base can
unlock long-term social
and economic value for
our stakeholders.
We are a purpose
driven company, with
a clear long-term vision
and deeply embedded
culture and values that
shape everything we
do, underpinning our
success, our brand
and the positive
contributions we make
to society, the economy
and the natural world.
Prioritising
sustainability
Prioritise long term
brownfield regeneration –
focusing our resources on
returning underused sites
to community use
Enable Zero Carbon Homes by
2030 – developing zero carbon
transition plans for every site
Deliver carbon positive
building operations – to tackle
climate change
Create inclusive, welcoming and
tenure blind communities – with
homes of all tenures built to the
same high design standards
Embrace net biodiversity gain
– so we add to nature on every
new site
Invest in advanced
manufacturing – to create the
beautifully designed, low carbon,
high quality homes of the future
Berkeley Group 2020 Annual Report Places
Create strong communities
where residents can live an
enjoyable, sustainable life
Operations
Make the right long-
term decisions, run the
business efficiently and
work collaboratively with
our supply chain
Our People
Develop highly skilled teams
that work together in a safe,
healthy and supportive
environment and contribute
to wider society
Our core activities
Identifying and
acquiring land
A unique
operating
model
creating
long-term
sustainable
value
Designing
and planning
new homes,
places and
communities
Building
new homes,
places and
communities
Marketing
and customer
service
Placekeeping
and stewardship
Value created
People across the business
— Increased knowledge and
skills through strong retention,
training and development
— Excellent health and safety
record and employee wellbeing
— Job creation through
construction activity and
on completed developments
Relationships and partnerships
with key stakeholders
— Reputation for high quality
delivery across all tenures
— Enduring stakeholder
relationships underpinned by
trust and partnership approach
— Satisfied customers
Read more on pages 54 to 59
Physical and natural resources
— Thriving developments where
people aspire to live and work
— Reducing greenhouse gas
emissions, water use and
waste production through
direct activities and the design
of homes
— Enhancing biodiversity
to support nature and
people’s wellbeing
Financial
— Strong, sustainable risk-adjusted
returns for shareholders
— Ability to invest at the right
point in the cycle
Reducing carbon and addressing
climate change
— Carbon positive operations
— New homes that are resilient
to future changes in climate and
ready to operate at zero carbon
by 2030
Read more on pages 16 to 17
51
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Key Performance Indicators
Our key performance indicators (KPIs) are aligned to the business
strategy and are used to actively monitor business performance.
Financial KPIs
Profit before tax
Pre-tax return on equity
Net cash
£503.7m
(2019: £775.2m)
16.6%
(2019: 27.9%)
£1,138.9m
(2019: £975.0m)
This is our core measure of profitability,
our absolute return from the sale and
delivery of new homes in the year.
The efficiency of the returns generated
from shareholder equity in the business
is measured by calculating profit before
tax as a percentage of the average of
opening and closing shareholders’ funds.
This provides a measure of the financial
strength of the Group.
Net asset value per share
Cash due on forward sales
Future gross margin in land holdings
£24.72
(2019: £23.05)
£1,858m
(2019: £1,831m)
£6,417m
(2019: £6,247m)
This balance sheet measure reflects
the value of shareholders’ interests
in the net assets of the business.
This measures cash due from
customers during the next three
financial years under unconditional
contracts for sale. It excludes sales
of affordable housing and sales by
our joint ventures.
This provides a measure of expected
value in the Group’s land holdings,
including its share of joint ventures, in
the event that it successfully sells and
delivers the developments planned for.
Non-financial KPIs
Net Promoter Score
78.8
(2019: 73.5)
Annual Injury Incidence Rate per
1,000 people
1.17
(2019: 1.14)
Direct apprentices and training
9.3%
(2019: 9.8%)
Our six-month rolling Net Promoter
Score (NPS) is an indicator of the
success of our efforts to provide
world-class customer service.
Our NPS significantly outperforms
the sector average of 39 (HBF, 2020)
and compares favourably with top
performing consumer brands.
This measure shows the number
of reportable injuries during the year,
in relation to the number of Berkeley
employees and contractors working
across our sites. It compares favourably
to the industry average of 3.66
(HSE, 2019).
Calculated as the average monthly
percentage of our direct workforce
that are apprentices, graduates or
employees undertaking formal training.
Over 500 apprentices have worked
across our operations throughout the
year, with an average of around 300
in any one month.
Greenhouse gas emissions intensity
2.24
(2019: 2.52)
This measure relates our annual
location-based greenhouse gas
emissions resulting from our
operational activities to the number
of Berkeley employees and the
number of contractors working
on our sites. The figure is disclosed
on an operational reporting boundary.
Affordable housing and
wider contributions
£270m
(2019: >£525m)
This measures our contribution to
affordable housing subsidies and wider
community and infrastructure benefits
delivered or committed to during
the year.
In addition to these
non-financial KPIs, Berkeley
monitors and reports on
business performance through
a host of other data, highlights
and awards. Some of these are
detailed within the Our Vision
business strategy sections
of this report.
Read more on pages 30 to 45
52
Berkeley Group 2020 Annual Report Economic Contribution
Each year an external assessment is completed on the Group’s
Economic Impact based on Berkeley’s financial data as well
as publicly available statistics. The results for the last five years
are presented below.
Economy
£14.0bn
Berkeley’s contribution to UK GDP was
£2.6 billion in 2019/20 and £14.0bn for
the five years.
Homes
19,253
Berkeley built 3,158 homes in 2019/20
and a total of 19,253 over the last five
years (including joint ventures).
Tax
£3.7bn
Total UK tax contribution of
£675 million in 2019/20 and over
£3.7 billion during the last five years.
This includes taxes paid directly by
Berkeley and the taxes paid by its
customers and suppliers as a result
of Berkeley activities.
Royal Arsenal Riverside
On average, every new home built by Berkeley in the last five years has generated
£300,000 of value to the state through taxation and contributions to the community.
Communities
£2.1bn
Including £0.3 billion in 2019/20.
In total, Berkeley has contributed
£1.5 billion as a subsidy for affordable
housing and committed to additional
payments of £0.6 billion to help pay for
a wide range of facilities and services
for local communities.
Jobs
32,000
Berkeley has supported, on average,
32,000 jobs per annum directly and
indirectly through its supply chain over
the five year period.
53
Goodman’s Fields
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Stakeholder Engagement
Delivering for all stakeholders
Customers
Placing the customer at the heart of every decision
What do we learn?
We get to know what is most
important to each of our customers
when they are buying their new home
and are able to tailor their experience
and choice of home accordingly.
We learn how to provide the best
experience to our customers; what
matters to customers and their
priorities. We know that providing their
new home on time and making them
feel special and valued along the way
is important.
We know that quality is important to
our customers so we focus on the detail,
both in terms of the specification of the
home and the quality of the construction.
We learn to empower our sales and
marketing and customer service teams
to deliver the right level of service for
each of our customers.
We understand that if any problems arise,
it is important to rectify them quickly to
maintain customer satisfaction.
What do we do?
We provide a bespoke service to all
of our customers.
We create a range of homes that
meet the differing needs of a range
of home buyers.
We continue to innovate and ensure
we are providing aspirational homes
with leading specifications.
Local management teams review each
and every independent customer survey.
We share feedback from our
developments through our ‘lessons
learnt’ portal and use this to inform
our future developments.
Our Sales and Marketing Committee
and our Customer Service Committee,
drawn from across the Group, review
customer feedback and identify areas
for improvement.
We achieve world-class levels of
customer satisfaction as recorded
through the NPS and ‘recommend
to a friend’ figures. We maintain
an Investor in Customers Gold rating
for our approach.
Our senior management teams
and Main Board actively interact
with customers on a regular basis.
If any issues arise, these are resolved
promptly and effectively.
Our customers are at the heart of every decision we make. We are always
mindful that we are building someone’s home; the place they will enjoy,
relax in and feel secure. This extends beyond customer-facing activities,
from the initial purchase of land through to the design of each home and
wider development.
How do we engage?
Throughout the customer journey
each customer has a dedicated point
of contact within Berkeley. From initial
enquiries we engage with the customer
to understand what they want from
a new home and to help them with
their selection process.
Customers can provide feedback
at any stage and our teams are
encouraged to share this more widely
between developments and across the
business via our ‘lessons learnt’ portal.
We tailor their purchase information to
them, and promote the use of MyHome
Plus, our online portal for customer
communication. This enables us to
provide key information and updates to
our customers and allows customers to
make choices and communicate with us
when it is convenient for them to do so.
Six weeks after a customer has
completed on their new home they
are given the opportunity to complete
a detailed, independent survey
covering all aspects of their experience,
from the home and the development
to the levels of service they received.
On some developments we run more
detailed focus groups. We have also
considered the emotional journey of
our customers, their drivers, concerns
and needs from us at various stages
of their journey.
We complete sales suite exit interviews
on developments to understand why
potential customers chose not to
purchase a property from Berkeley, in
order to better understand purchaser
expectations and priorities.
In autumn 2019, Investor in Customers
undertook research involving feedback
from over 2,800 of our customers as
part of a customer experience
assessment to determine how well we
understand their needs, anticipate their
needs and communicate with them.
We conduct and commission consumer
research and test our products in
workshop conditions to ensure that
we continue to understand and meet
evolving buyer expectations.
54
Berkeley Group 2020 Annual Report Communities and Local Government
Making a positive contribution to the communities in which we work
What do we do?
We create enduring local partnerships
based on shared objectives for the
community’s future.
We create bespoke masterplans and
placemaking strategies which reflect
local views, aspirations and concerns.
We co-design places, buildings and
amenities with local stakeholders so
they have clear community influence
and support.
Where possible we use local suppliers
and prioritise local people for training
and job opportunities on our sites.
We contribute to community life
around our sites, supporting local
events, school engagement projects,
skills and careers programmes,
biodiversity learning days, cultural
projects and community volunteering.
We form partnerships with local
charities and good causes which
improve community life.
Read more on pages 48 to 49
We build responsibly and with respect
and care for our neighbours.
We register every site with the CCS,
which independently assesses
our conduct.
Read more on pages 40 to 41
We create site specific Community
Development Plans to create social
links and integration with the
wider community.
We test each project against
an evidence based Community
Assessment framework to ensure
it supports community wellbeing.
We are introducing a Social Value
Toolkit to quantify and maximise
community benefits over the
long-term.
55
Engagement with local communities and councils is at the heart of our
placemaking and delivery model. Through partnership working with local
stakeholders we create better integrated communities and greater social,
environmental, economic and commercial value.
Read more on pages 20 to 21
What do we learn?
We get to know local residents,
councillors and MPs, community
leaders, civic societies, charities,
businesses and a broad range of
grassroots organisations.
We learn what each stakeholder thinks
and feels about their local community
– what they value, what is missing
and what should change.
We learn the local history, traditions
and culture.
We learn how the wider area works
and how existing amenities fit in.
We learn the local planning
context, political priorities and
community causes.
We learn the local demographics
and the social, environmental and
economic factors affecting local life.
How do we engage?
Site specific consultation and
engagement strategies seek out
contributions from a representative
mix of local people and stakeholders.
Engagement starts pre-planning
and we nurture lasting, collaborative
relationships throughout
project delivery.
Read more on pages 20 to 21
Engagement includes open days,
community design workshops,
presentations to local groups,
one-to-one meetings, door knocking,
walking tours, pre-application planning
meetings, exhibitions, Design Review
Panels, newsletters, notices,
advertising, surveys, site specific
websites and a mix of digital
consultation and engagement tools.
On some developments, dedicated
community engagement specialists
work to expand our local networks and
ensure that we address local needs.
We test our masterplans against
an evidence-based Community
Assessment framework to ensure they
support community wellbeing and are
socially sustainable.
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Stakeholder Engagement continued
Employees
Promoting health, wellbeing and inclusion
operating companies in an open forum
to share their experiences, lessons
learnt and best practices and to
collaborate on key projects.
We survey employees every two years
to hear their views on our approach to
customer service as part of the Investor
in Customers Gold award, and also
about what it is like to work at Berkeley.
We provide opportunities for
employees to engage with the Main
Board; for example, all new graduates
meet the senior management team as
part of their induction and are given
the opportunity to attend a Q&A
session with the Managing Director.
Main Board meetings are held at
different site locations enabling the
full Board to meet with the local teams.
To this extensive engagement
framework and in compliance with the
2018 UK Corporate Governance Code,
we have added a People Engagement
Forum to ensure that there is
a dedicated forum comprising a cross
section of staff, to identify and share
best practice and to bring together
the main themes from these multiple
activities for the Board.
What do we learn?
We gain overall satisfaction rates
and verbatim comments through our
surveys which help us to improve.
We understand topics which are
important to our employees and areas
that need further focus such as health
and wellbeing, diversity and inclusion,
parental leave and communication.
Our employees share our passion for
great places and attention to detail
and are proud to work for Berkeley.
What do we do?
We provide a bespoke and focused
approach for the employee based
on where they are working.
We implemented enhanced parental
leave policies in autumn 2019.
We are trialling other initiatives
such as agile working at operating
company level.
We implemented a new People
Engagement Forum.
We are enhancing internal communication,
for example with a new intranet system
to be launched in summer 2020.
Our people are key to the successful delivery of our business model and are
one of our five focus areas of our business strategy, Our Vision. This includes
setting standards to encourage and monitor health and wellbeing, learning
and development, and diversity and inclusion. The mechanisms we have
designed exist to improve the experience of all our staff and therefore
one of the primary considerations is the health, wellbeing and inclusion
of our employees.
How do we engage?
Berkeley has long-established
mechanisms for communication with
staff through a number of channels
and activities within its autonomous
divisions and operating companies;
the output of which is reported up
to the Board through the Executive
Committee. As a result our teams’
initiatives are implemented at a local
level. Engagement is encouraged and
supported by the Main Board but the
outputs are designed and actioned
within each region.
Through Our Vision, our businesses
have adopted a broad range of
initiatives including:
— Engagement surveys – many of
the businesses choose to undertake
a local staff engagement survey.
For example, within St George there
is an annual Your Voice survey which
helps to understand and measure
engagement across a number of
areas; 88% of employees responded
to the latest survey.
— Staff conferences – each of the
businesses hosts periodic staff
conferences to bring together the
workforce and communicate key
achievements and future plans.
These staff conferences often
give employees an opportunity
to participate in a Q&A with the
management team. For example,
in Berkeley St Edward a conference
is held twice a year.
— Sessions with the management –
this could include time with the
Managing Director or management
team and an opportunity to discuss
on a one-to-one basis or as a small
group. Around the Group ‘Breakfasts
with the MD’ have proved to be
really popular forums for sharing
information and raising ideas and
concerns in a relaxed atmosphere.
We seek input into the development
of our business strategy, Our Vision,
including the Our People workstream.
Every member of staff is given the
opportunity to share their views on
a survey. We then hold a series of
workshops with around 100 people
attending to refine and develop
the approach.
We maintain a Group-level committee
covering each of our functional areas,
from land and planning to technical
and health and safety. Many of these
are chaired by a Main Board Director,
or a senior representative. Each of the
committees meets regularly to bring
together people from each of the
56
Berkeley Group 2020 Annual Report Supply Chain
Ensuring responsible procurement and collaborative delivery
Contractors want to build a long-
term relationship with us as a Group
and understand the pipeline of
opportunities which may be available
in the future across all of the
operating companies.
What do we do?
We develop long-term, collaborative
supply chain partnerships which ensure
that we can make full use of the
expertise and specialist skills of
our suppliers.
We procure on overall value rather than
cost alone, and provide feedback to
companies that tender for work.
We ensure full compliance and buy-in
around our site safety, quality, ethics,
human rights and environmental
standards and behaviours.
We pay contractors promptly, as a
signatory to the Prompt Payment Code.
We hold meetings and events by trade
at a Group level to gather feedback
and discuss any issues.
We hold regular meetings and
encourage informal, day-to-day
dialogue at a project level.
We issue trade-specific opportunity
schedules every six months to provide
the supply chain with visibility of
future work.
We have developed and implemented
supply chain e-learning for both our
commercial and construction teams.
We worked with our supply chain to
understand the implications of and
mitigating actions around Covid-19.
57
Effective communication and engagement with our supply chain is
critical to the success of our business and the delivery of high quality
developments. We engage early from the pre-tender stage right through
to development on site, and our contractors become a valuable and
integral part of our project teams.
How do we engage?
We communicate our Group-wide
standards early in the tender process,
using our Supply Chain Portal to ensure
that those tendering are aware of
requirements, in particular our health
and safety and sustainability standards.
We communicate throughout the tender
process with frequent communication
from our commercial team, together
with more formal tender meetings.
A pre-start meeting before site works
commence helps the contractors and
project teams build a good working
relationship from the outset and our site
teams then engage with the contractors
on a daily basis. Standards are
reinforced through regular site
meetings, signage and ‘toolbox talks’.
We have dedicated Director-level Trade
Sponsors for each of the key trades to
provide a platform for engagement and
to ensure that any feedback is taken
back to the Commercial Committee
and addressed.
Our operating companies hold events
such as supplier days and conferences.
We are an active participant of the
Homes Leadership Group of the Supply
Chain Sustainability School, assisting in
determining the direction and priority
topics for supply chain resources.
We set up a Supply Chain Taskforce
and completed a detailed engagement
process with our supply chain in 2018;
over 125 companies responded to our
initial survey.
We are members of the Chartered
Institute of Procurement and Supply
Construction Leaders Group, where
we proactively share and develop
industry-wide best practice.
What do we learn?
We operate high standards on our sites
with a particular focus on build quality
and health and safety.
Contractors want to be engaged as
early as possible within the project
programme in order to be able to feed
into the design and any practicalities
regarding site logistics.
They want to receive feedback on their
tenders and understand how they
performed in relation to other
tendering parties.
Contractors want to be paid in
a timely manner. They want to be
treated as an extended part of the
project team, with the Berkeley
values of respect and integrity.
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Stakeholder Engagement continued
Government, Regulators and Industry
Working together in the spirit of partnership
Working collaboratively to drive innovation within our industry and
increase the positive social and economic impacts of new development.
What do we learn?
We understand and inform emerging
trends, issues and policy thinking
affecting our delivery environment.
We share and learn the latest best
practice and innovations in relation
to all aspects of regeneration,
placemaking and housing delivery.
We understand Government priorities
and the direction of future policy
impacting our business.
How do we engage?
We work constructively with
Government, regulators, local
authorities and industry bodies
to shape a delivery environment
which supports quality homebuilding
and sustainable placemaking.
We contribute to relevant policy
consultations and maintain
constructive dialogue with Government
departments and regulatory bodies.
At project level we engage with
local authorities to understand
and deliver planning, regeneration,
housing, environmental and economic
policy objectives.
We are active members of collaborative
initiatives and membership bodies,
including the World Green Building
Council, UKGBC, Supply Chain
Sustainability School, Natural England’s
Developer Forum, Construction
Leadership Council, CCS, Supply Chain
Sustainability School, Construction
Industry Advisory Committee, New
London Architecture and the London
Chamber of Commerce.
58
What do we do?
We align our business strategy and
delivery model with long-term national
policy objectives including:
— Regenerating underused brownfield
land at scale
— Delivering high quality new homes
— Creating mixed, tenure blind and
integrated communities
— Enhancing community wellbeing
and quality of life
— Delivering measurable social value
— Reducing carbon emissions from
the building process
— Transitioning to net zero
carbon homes
— Implementing net biodiversity gain
and nature recovery
— Advancing precision manufacturing
within the housing industry
— Enhancing fire safety standards
— Enhancing health, safety
and wellbeing in the
construction workforce
We research, trial and implement
solutions to these key public policy
challenges and publish our methods
so others can apply our learning.
For example our Net Biodiversity
Gain toolkit and Community
Assessment toolkits.
We contribute to the public debate
around housing delivery and meet
with regulators and policy makers at
regional and national levels to share
insights into key business and market
related matters.
We are the founding partner
of the Quality of Life Foundation,
an independent charitable trust
dedicated to making community
wellbeing central to the delivery
of new homes and places.
Berkeley Group 2020 Annual Report Investors
Delivering sustainable financial returns
Delivering sustainable financial returns for our investors over the
long-term is a fundamental aspect of the Group’s strategy. This is
complemented by the businesses’ approach to ESG matters, particularly
the measures Berkeley is taking to help combat climate change, the
impact of our development activity on the environment and our response
to the issues of fire safety for buildings.
What do we learn?
We believe that investors are seeking
a secure financial investment that
provides sustained risk adjusted returns
over the long-term.
This includes establishing an
understanding of the wider issues that
are most important to investors which
include our approach to ESG matters.
In particular, our investors are
interested in the measures we are
taking to help combat climate change,
the impact of our development activity
on the environment and the quality
of the homes we build, amongst
other factors.
How do we engage?
Investor roadshows are run following
the interim and year end financial results
announcements, giving stakeholders the
opportunity to make specific enquiries
of senior management.
During the year there are opportunities
to hold one-to-one meetings and
conference calls with management,
as appropriate.
Site visits with the CEO and Group
Finance Director provide investors the
opportunity to view the operations
of the business, as appropriate.
Throughout the year the Group Finance
Director and CEO, as appropriate, meet
with shareholders and investors on
ad-hoc basis. Such meetings are
frequently held on site and provide
investors the opportunity to view the
operations of the business.
Structured shareholder consultations
are undertaken on key governance
related matters, such as capital returns,
remuneration policy and
Board composition.
Analyst briefings are held immediately
following the interim and year end
financial results announcements.
What do we do?
We have an operating model that
recognises the risks of an inherently
cyclical housing market and operational
complexities of the sites we develop
and therefore places financial strength
and resilience at its core.
We focus on:
— Investing in the land bank to
ensure sufficient pipeline and
value-added development
opportunities for the Group.
The current gross margin in the
land bank is £6.4 billion across 98
developments providing investors
insight into the capacity of future
returns if the Group successfully
sells and delivers its developments
— Securing forward sales which
effectively underwrite the costs
of our construction activity. The
cash due on forward sales stood
at £1.9 billion at 30 April 2020
(2019: £1.8 billion) under
unconditional open market
contracts for sale
— Balance sheet strength. The Group
is holding net cash of £1.1 billion
at 30 April 2020 which will
enable the Group to withstand
cyclical downturns and continue
to invest in sites when the right
opportunities arise
The net asset value per share
at 30 April 2020 was £24.72
(2019: £23.05), reflecting the value
of shareholders’ interests in the net
assets of the business.
This has enabled the Group to set
out a long-term shareholder returns
programme whereby it is returning
£280 million a year to shareholders
and this level of annual return is set
to continue to 2025, providing there
is no material change in the operating
environment. Under this programme,
returns can be made via a combination
of share buy-backs and dividends.
Through corporate publications,
Berkeley’s website and Annual Report
we publish our approach to and actions
in respect of the ESG matters affecting
Berkeley and its stakeholders.
59
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Section 172 (1) Statement
In accordance with Section 172 of the Companies Act 2006, the Directors of the Company
must act in a way he or she considers, in good faith, would be most likely to promote the
success of the Company for the benefit of its members as a whole and in doing so the
Directors should have regard (amongst other matters) to:
the likely consequences
of any decisions in the
long-term
the interests of the
Company’s employees
the impact of the
Company’s operations
on the community
and environment
the desirability of the
Company maintaining
a reputation of
high standards of
business conduct
the need to foster the
Company’s business
relationships with
suppliers, customers
and others
the need to act fairly
between members of
the Company
The paragraphs below show how the Directors fulfil their duties in respect of these obligations by addressing in turn some
of the key areas of focus for the Board. Further detail of Board activity in the year is described in the Governance section
on page 92 to 93.
Relevant factors
under s172(1)
Culture
and values
Business
model and
strategy:
Our Vision
60
Directors’ consideration of factors in accordance with s.172(1)
The matters above are continuously considered by the Directors when
discharging their duties and are embedded into the culture and values of the
business. For more details on our purpose, culture and values see page 94.
The Directors have collective responsibility for promoting the long-term
success of the Company in a safe and sustainable manner in order to create
shareholder value. The Directors provide leadership and set the Company’s
strategic long-term objectives.
Berkeley’s business strategy is called ‘Our Vision’. Through delivery of
Our Vision the Directors aim to create a world-class business that is defined
by the quality of the places being created as well as generating long-term
value and having a positive impact on society. For more details of Our Vision
see pages 30 to 47.
Berkeley has a unique long-term operating model, as shown on pages 50 to
51. The focus of the business is on large-scale regeneration opportunities that
maximise social and economic value for the community. Details of the long-
term regeneration sites under construction and future sites can be found on
pages 6 to 13. Each development has a unique, locally inspired masterplan with
a mix of public spaces, natural landscapes and amenities that help create new
and sustainable communities.
The Directors are responsible for all key decisions taken to manage the
overall operations of the Company, its strategy and long-term objectives.
The Directors are provided with guidance on regulatory matters and
independent professional advice where required.
Operational Committees operate in areas such as health and safety, production,
customer service and Our Vision/sustainability, and report to the Board on key
issues facing stakeholders across the business. In addition, senior management
are in regular contact with the Directors to keep them informed of business
operations. More details on the governance structure of the business and key
focus areas of the Directors is found on pages 92 to 93 and 96 to 98.
Within the Board, certain matters are delegated to individual Directors as well
as Committees to oversee key areas of governance. Each Committee operates
within clearly defined Terms of Reference. For details of the key Board
Committees and their responsibilities see page 98.
Berkeley Group 2020 Annual Report
Relevant factors
under s172(1)
Risk
management
Community
and
Environment
Employees
Stakeholders
Directors’ consideration of factors in accordance with s.172(1)
The Directors on the Board are responsible for setting and monitoring the risk
appetite for the business. At operating company and divisional level, Board
meeting agendas and information packs are structured around key risks facing
the business. Furthermore, there is a formalised process to identify and report
risks to the Board, including impact assessments and details of actions being
taken to mitigate these risks. For more detail of risk management see ‘How we
manage risks’ on pages 66 to 79.
The impact of the Company’s operations on the community and environment
is a key factor in the design and construction of all Berkeley developments,
see pages 16 to 21. As part of the Board’s ongoing commitment in this area
additional information and disclosures have been provided in line with the
TCFD and SASB on pages 62 to 64.
The Company seeks to create and enhance communities, and our economic
contribution and value to society is evidence of the focus in these areas.
See page 53.
Berkeley recognises that our employees are our strongest resource and it is
important that the Company attracts, develops and retains talented teams at
every level.
The Company has a framework of well established engagement mechanisms
within its autonomous divisions and at Group level, including staff conferences
where the Chairman speaks and takes questions, staff surveys, town halls
and ‘Breakfast with the MD’; as well as through its Our Vision workstreams.
Read more on page 56.
An employee forum has been established with representatives from across
the business. The forum will ensure there is a single forum assessing these
activities, sharing best practice and capturing their output for the Executive
Committee and Board. Read more on page 95.
The factors listed in s.172 of the Companies Act 2006 are key drivers in
development of the strategy of the Company, which is to focus on long-term
regeneration developments that create sustainable social and economic
returns. This begins through building strong relationships and engaging with
our stakeholders to deliver Our Vision. Further information on who our key
stakeholders are and how we engage and deliver is shown on pages 54 to 59.
The Directors acknowledge there is often a balance to be struck between
stakeholders in order to succeed in achieving the long-term strategy of the
business. In such circumstances the views and objectives of each stakeholder
are carefully considered. Where there are conflicts of interest these are
carefully managed to ensure that the purpose and values of the business are
promoted and maintained.
Following concerns raised by shareholders at the 2019 Annual General
Meeting (AGM), the Remuneration Committee has consulted extensively
with shareholders and proxy advisors on proposed new amendments to the
Company’s Remuneration Policy. Following consideration of the Committee’s
proposals the majority of shareholders were supportive of the changes.
These changes were due to be proposed at a General Meeting to be held in
March 2020. As a consequence of the global spread of Covid-19 this has been
postponed but the Board will reconsider appropriate amendments to be made
to the Remuneration Policy in light of the postponement. It is expected that
any such amendments would be put to shareholders for consideration at the
time of the AGM. Read more on page 93.
61
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
Sustainability Accounting Standards Board Disclosures
We have chosen to disclose sustainability topics and accounting methods in line with the Home Builders Sustainability
Accounting Standard issued by the Sustainability Accounting Standards Board (SASB).
SASB was founded in 2011 as a not-for-profit, independent standards-setting organisation to establish and maintain
industry-specific standards to assist in disclosing financially material, decision-useful sustainability information to investors.
The Group has chosen to disclose sustainability topics and accounting metrics in line with the Home Builders Sustainability
Accounting Standard issued by SASB. This information is to assist investors in understanding the governance and
management of the Group’s environmental and social impacts arising from its activities as well as the ability of the Group
to create value over the long-term.
Sustainability Disclosure Topics & Accounting Metrics
Activity metric*
Number of controlled lots
Code
IF-HB-000.A
Number of homes delivered
IF-HB-000.B
Category
Quantitative
Quantitative
Unit of measure
Number
Number
Number of active selling
communities
IF-HB-000.C
Quantitative
Number
Data
58,413
3,158
70
* All metrics include joint venture operations
Topic
Code
Accounting metric
Category
Unit of
measure
Data
Land Use &
Ecological
Impacts
IF-HB-160a.1
IF-HB-160a.2
IF-HB-160a.3
IF-HB-160a.4
Number of (1) lots
and (2) homes
delivered on
redevelopment sites
Number of (1) lots
and (2) homes
delivered in regions
with High or
Extremely High
Baseline Water
Stress
Total amount of
monetary losses
as a result of legal
proceedings
associated with
environmental
regulations
Discussion
of process
to integrate
environmental
considerations into
site selection, site
design, and site
development and
construction
Quantitative
Number
(1) 54,654 including joint ventures
(2) 2,813 including joint ventures
Quantitative
Number
(1) 52,758 including joint ventures
(2) 2,621 including joint ventures
Quantitative
Reporting
currency
£nil
Discussion
and Analysis
n/a
Each project team uses an environmental
risk register to identify risks such as
contaminated land, pollution, water
management and ecology and take action
to reduce these risks. Our business
strategy, Our Vision, sets requirements for
the design process, from nature to climate
change adaptation measures and these
are audited against each year. We set
requirements during construction, including
regular sustainability site assessments and
external Considerate Constructors Scheme
audits, together with targets for water and
energy efficiency and waste recycling.
Workforce
Health &
Safety
IF-HB-320a.1
(1) Total recordable
incident rate (TRIR)
and (2) fatality rate
for (a) direct
employees and (b)
contract employees
Quantitative
Rate
(1)(a) AIIR: 0.35 (1)(b) AIIR: 1.46
Note: Annual Injury Incidence Rate (AIIR)
reported in line with UK Health and Safety
Executive (HSE) methodology
(2)(a) 0 (2)(b) 0
62
Berkeley Group 2020 Annual Report Topic
Code
Accounting metric
Category
Unit of
measure
Data
Design for
Resource
Efficiency
IF-HB-410a.1
(1) Number
of homes that
obtained a
certified HERS®
Index Score and
(2) average score
IF-HB-410a.2
IF-HB-410a.3
IF-HB-410a.4
IF-HB-410b.1
Community
Impacts
of New
Developments
IF-HB-410b.2
IF-HB-410b.3
IF-HB-420a.1
Climate
Change
Adaptation
Percentage of
installed water
fixtures certified
to WaterSense®
specifications
Number of homes
delivered certified
to a third-party
multi-attribute
green building
standard
Description
of risks and
opportunities
related to
incorporating
resource efficiency
into home design,
and how benefits
are communicated
to customers
Description
of how proximity
and access to
infrastructure,
services and
economic centres
affect site
selection and
development
decisions
Number of (1) lots
and (2) homes
delivered on infill
sites
(1) Number of
homes delivered
in compact
developments
and (2) average
density
Number of
lots located
in 100-year
flood zones
Number, Index
score
Quantitative
Note that the HERS certification standard is
not applicable within the UK. Information on
mandatory Energy Performance Certificates
is provided as an alternative.
Percentage
(%)
Quantitative
Number
Quantitative
n/a
Discussion
and Analysis
n/a
Discussion
and Analysis
(1) 3,158
(2) 84 (B rating)
Note that ratings range from ‘A’ (very
efficient) to ‘G’ (inefficient). 94% completed
homes were rated B or above.
Note that WaterSense specifications are
not applicable within the UK. The water
efficiency of our completed homes is
provided as an alternative.
Target: 105 litres per person per day
Average: 102.7 litres per person per day.
Note that there are no equivalent multi-
attribute green building standards in
the UK.
We design to high fabric efficiency to
reduce the energy demand and install
water saving fixtures and fittings. A key
risk associated with the design of energy
efficient homes is the unintended
consequence of overheating and therefore
we consider overall building design and
performance. We have an Our Vision
commitment to communicate sustainability
with customers at all stages in the
purchasing process, from initial marketing
brochures to detailed information upon
completion of the home.
At Berkeley, proximity to key transport
nodes is a factor in the selection of land and
the majority of sites are on brownfield land
so are located within towns and cities with
existing transport and economic centres.
Once the land has been purchased, we have
commitments within Our Vision around
factors such as sustainable transport.
Number
Quantitative
(1) 42,464 including joint ventures
(2) 2,400 including joint ventures
Number
Quantitative
(1) 2,280 including joint ventures
(2) This data is not currently analysed, we
are looking to provide this information in
the future.
Number
Quantitative
16,871
63
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Task Force on Climate-related Financial Disclosures
Berkeley welcomes the recommendations of the Financial Stability Board’s (FSB) Task Force on Climate-related Financial
Disclosures (TCFD). Berkeley reports on climate-related governance, strategy, risk management, and metrics and targets in
a stand-alone report as found on our website (www.berkeleygroup.co.uk/about-us/sustainability/reports-and-case-studies)
and within our annual response to CDP’s Climate Change Programme. Both climate change mitigation and adaptation are
key areas of focus for Berkeley, featuring prominently within the Our Vision business strategy.
Berkeley continues to take actions to further implement the TCFD recommendations through the evolution of our
processes and reporting mechanisms. The table below summarises the key areas where Berkeley has already made
progress and where we have reported on these.
Governance
Disclose the
organisation’s governance
around climate-related
risks and opportunities.
Strategy
Disclose the actual
and potential impacts
of climate-related risks
and opportunities
on the organisation’s
businesses, strategy,
and financial planning
where such information
is material.
The Board has ultimate responsibility for climate-related risks and opportunities.
A nominated Executive Director, Karl Whiteman, has direct responsibility for climate change
and wider sustainability topics.
To ensure climate-related actions are incorporated into Berkeley’s daily activities, there
is a Group Sustainability Team focused on identifying strategic risks and opportunities,
performance monitoring and reporting. Dedicated sustainability practitioners are also in
place within Berkeley’s operating companies to support local management and project
teams in meeting their responsibilities to implement Berkeley’s Our Vision strategy, identify
climate change risks and opportunities facing their business and to drive continual
improvement in performance.
Read more on pages 76 to 77 and 90.
Climate change mitigation and adaptation are key areas of focus for Berkeley, featuring
prominently within the Our Vision business strategy.
A detailed climate change adaptation risk identification exercise was undertaken in 2014 to
inform strategic commitments as part of Our Vision, facilitated by specialist consultants and
involving key representatives from across the business. The key risks identified for the homes
and places we develop include flooding, overheating and water shortage. These have
remained the key risks and areas of focus in terms of the product we build since the risk
assessment was first undertaken.
In addition to recognising the importance of adapting our homes and places to be resilient
to future climate change risks, Berkeley is focused on taking action to reduce the emissions
resulting from our direct activities and those resulting from the use of the homes and
developments we create as evidenced by our carbon positive and net zero carbon
homes commitments.
Berkeley will be undertaking more detailed climate-related scenario analysis to evolve our
understanding of climate-related risks and opportunities.
Read more on pages 16 to 17 and 30 to 45.
Risk Management
Disclose how the
organisation identifies,
assesses and manages
climate-related risks.
Climate change is considered a principal risk to Berkeley. The Group Sustainability Team
identifies strategic climate change risks and opportunities facing Berkeley through the
regular review of issues and trends. Active collaboration with external experts, and
representation at conferences and events help to ensure up-to-date knowledge. Identified
risks and opportunities are shared with the Board and included within the strategic risk
register reviewed by the Audit Committee.
Read more on pages 66 to 79.
Metrics and Targets
Disclose the metrics
and targets used
to assess and manage
relevant climate
related risks and
opportunities where
such information
is material.
Berkeley reports on greenhouse gas (GHG) emissions for which we are responsible on an
annual basis. To minimise Berkeley’s contribution to climate change, we have an operational
carbon intensity reduction target under Our Vision that is reviewed every two years to
ensure continual improvement. Berkeley has also committed to procuring 100% renewable
electricity for its UK operations and offsetting our remaining emissions since 2017/18.
Berkeley has broader targets for the homes and places we develop, including the provision
of energy efficient lighting and appliances, as well as enabling homes to operate at net zero
carbon by 2030.
We are currently working with an external consultant to develop longer-term science-based
targets for our activities
Read more on pages 46 to 47 and 138 to 139.
Berkeley will continue to work with external experts to develop science-based targets, climate-related scenario analysis
and related disclosures in line with the recommendations of the TCFD. We have complied with the Streamlined Energy
and Carbon Reporting (SECR) framework in our emissions reporting in the Directors’ Report on pages 138 to 139.
64
Berkeley Group 2020 Annual Report Non-financial Reporting Statement
The following table summarises where our non-financial information can be found in our Annual Report.
Reporting requirement
Environmental
matters
Relevant policies in place that govern
our approach
Where to read more in this report to understand the impact on the
business, and the outcome of applying our policies
— Sustainability Policy
— Our Vision: Homes, Places and Operations, pages 36
— Sustainable Places Policy
— Sustainable Business Policy
— Climate Change Policy
— Sustainable Specification
and Procurement Policy
to 41
— Carbon and Climate Change, pages 16 to 17
— Nature and Biodiversity, pages 18 to 19
— Environmental, Social and Governance Performance,
pages 46 to 47
Employees
— Employee Policy
— Our Vision: Our People, pages 42 to 43
— Apprenticeships and Skills
— Stakeholder Engagement, page 56
Development Policy
— Environmental, Social and Governance Performance,
— Equality and Diversity Policy
pages 46 to 47
— Health and Safety Policy
Respect for
human rights
— Modern Slavery Statement
— Corporate Governance Report, page 95
— Human Rights, Modern Slavery
— Stakeholder Engagement, pages 56 to 57
and Child Labour Policy
— Equality and Diversity Policy
— Whistleblowing Policy
— Sustainable Specification
and Procurement Policy
— Our Vision: Operations and Our People, pages 40 to 43
Social matters
— Sustainable Places Policy
— Our Vision: Places and Our People, pages 38 to 39
— Apprenticeships and Skills
and 42 to 43
Development Policy
— Berkeley Foundation, pages 48 to 49
— Sustainable Specification
and Procurement Policy
— Climate Change Policy
— Economic Contribution, page 53
— Stakeholder Engagement, pages 54 to 59
Anti-bribery and
anti-corruption
— Anti-Bribery and
Corruption Policy
— Corporate governance; Bribery Act and Anti-Money
Laundering Regulations, page 104
— Business Ethics Policy
— Corporate Hospitality
and Promotional
Expenditure Policy
— Whistleblowing Policy
— Anti-Facilitation of Tax
Evasion Policy
How we
manage risk
Business model
Non-financial KPIs
— Our external and internal risks, including climate
change, sustainability, and health and safety can
be found on pages 66 to 79.
— Our business model and its links to our strategy and
stakeholders can be found on pages 50 to 51.
— Our non-financial KPIs can be found on page 52.
In addition to these non-financial KPIs, Berkeley
monitors and reports on business performance through
a host of other data, highlights and awards. Some of
these are detailed within the Our Vision business
strategy sections of this report on pages 30 to 47.
A copy of all our policies can be found on our website:
www.berkeleygroup.co.uk/about-us/sustainability/governance-and-management/policies
65
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements How We Manage Risk
The assessment of risk and embedding risk management throughout Berkeley
are key elements of setting and delivering the Group’s strategy.
Risk appetite
The Board is responsible for setting
and monitoring the risk appetite
for Berkeley when pursuing its
strategic objectives. The Board’s
approach to, and appetite for risk
is summarised below:
Cyclical market
Berkeley’s business model is centred
on the Board’s appreciation of the
risks of the cyclical market in which
the business operates, where market
sentiment and transaction levels
can change quickly, requiring us to
adopt a flexible approach to our
investment decisions.
Operational complexity
The business model also recognises the
complexity of the planning and delivery
of the sites Berkeley undertakes, and
mitigates this risk by focusing its
activities in London and the South-
East, recognising the importance of
relationships and local knowledge and
having highly skilled teams in place.
Autonomy and values
We have recognised brands and
autonomous, talented and experienced
teams who embrace Berkeley’s core
values in their approach. We create
bespoke solutions for each site
which requires experienced, intensive
management and as such do not
produce a standard product.
Financial strength
This translates into an approach that,
at all times through the cycle, keeps
financial risk low, recognising the
operational risks within the business.
Through our strong financial position
we are therefore able to take, under
normal circumstances, increased
operational risk to deliver robust
risk-adjusted returns, within the
parameters of our business model.
Emerging risks
We face a number of uncertainties
that have the potential to be materially
significant to our long-term strategy
but cannot be fully defined as
a specific risk at present, and therefore
cannot be fully assessed or managed.
These emerging risks typically have
a long time horizon and are discussed
and agreed by the Board on a regular
basis. There are also areas of our
existing principal risks that are evolving
over time, including climate change
and cyber risks.
The risk from Covid-19 has very quickly
elevated from being an emerging
risk in early 2020 to impacting all the
principal risks facing our business.
The speed and scale of the impact
of Covid-19 has been unprecedented
in recent times and has fundamentally
affected all aspects of our business.
The Group’s risk appetite is reviewed
annually and approved by the Board.
This review guides the actions we take
to implement our strategy.
Following the moderation in the risk
appetite of the Group seen this time
last year, the turn of the calendar year
had seen this position improve, with
more clarity on the political outlook
following the general election in
December 2019 and the UK leaving
the EU at the end of January 2020,
leading to a period of stable trading
and continuation of the normal market
conditions. However, the escalation
of the Covid-19 pandemic over the
last few months has meant that
the risk appetite has since reduced
given the significant uncertainties
this has created across all elements
of our business, the UK and wider
global economy.
In accordance with provisions of the
2018 UK Corporate Governance Code,
the Directors have carried out a robust
assessment of the principal risks facing
the Group, including those that would
threaten its business model, future
performance, solvency or liquidity.
Berkeley operates, coupled with a deep
seated knowledge of our industry and
operations based on the substantial
experience of the Board. This takes into
account the likelihood and impact of
risks, whether pre-existing or emerging,
which may materialise in the short
or longer-term.
Emerging risks are also considered
at each Board meeting and are then
fed down to the operating businesses
for further review and consideration,
if applicable.
A fundamental principle of the
operating structure of the Group is that
the prime responsibility for assessing,
managing and monitoring the majority
of the risks rests with operational
management, thus ensuring risk
management is embedded in our
day-to-day operations.
Risk registers at operational level
are overlain by wider strategic
risks facing the Group, such as
macro-economic risk. This is then
assessed and managed by the Board
and Executive Committee.
The Audit Committee has responsibility
for ensuring the effectiveness of risk
management and internal controls on
behalf of the Board. The controls and
processes surrounding how we assess
risk across the Group are explained
further in the Corporate Governance
Report on pages 102 to 105.
The principal operating risks and
our approach to mitigating them are
described in more detail on pages
68 to 79.
Risk management
framework
The Board takes overall responsibility
for risk management, and the
assessment of risk. Embedding risk
management into the business is
a key element of setting and delivering
our strategy. Our approach combines
a top-down strategic review and
feedback of risks by the Board, coupled
with a bottom-up review and reporting
of risk by each operating business.
The Covid-19 pandemic is a unique and
unprecedented risk that has evolved
rapidly over the last few months. It is
having, and will continue to have, an
impact across our entire risk landscape.
We have incorporated Covid-19
commentary into each principal risk
and have also included a separate
new Covid-19 risk which gives an
overview of the related uncertainties,
potential impacts on the Group and
our approach to mitigating the risk.
The top-down assessment of risk
by the Board includes a review of
the external environment in which
Whilst we consider there has been no
material change to the nature of the
Group’s principal risks, not surprisingly,
66
Berkeley Group 2020 Annual Report the potential impact and likelihood
of them arising has increased as
a result of the challenging external
environment and significant ongoing
uncertainty arising from Covid-19.
Exposure to financial risk
The financial risks to which Berkeley
is exposed include:
Liquidity risk
The risk that the funding required for
the Group to pursue its activities may
not be available.
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
The risk that Group financing activities
are affected by fluctuations in market
interest rates.
Other financial risks
Berkeley contracts all of its sales
and the vast majority of its purchases
in sterling, and so has no significant
exposure to currency risk, but does
recognise that its credit risk includes
receivables from customers in a range
of jurisdictions who are themselves
exposed to currency risk in contracting
in sterling.
Management of
financial risks
Berkeley adopts a prudent approach
to managing these financial risks.
Treasury policy and central overview
The Board approves treasury
policy and senior management
control day-to-day operations.
Relationships with banks and cash
management are co-ordinated centrally
as a Group function. The treasury
policy is intended to maintain an
appropriate capital structure to
manage the financial risks identified
and provide the right platform for the
business to manage its operating risks.
Low gearing
The Group is currently financing its
operations through shareholder equity,
supported by £1,139 million of net cash
on the Balance Sheet. This in turn
has mitigated its current exposure to
interest rate risk.
Viability Statement
In accordance with code provision
31 of the 2018 revision of the UK
Corporate Governance Code, the
Directors have assessed the longer
term viability of the Group.
The Directors have undertaken
their assessment over a three year
period from 1 May 2020 to 30 April
2023. The majority of the Group’s
developments are long-term in
nature and the Board’s strategic
planning reviews cover at least this
timeframe. Furthermore, the Group
owns or controls the land required
for this period and accordingly
there is sufficient detail within the
individual site cash flow forecasts to
enable a meaningful assessment over
this period.
In making its assessment, the
Directors have considered the
principal and emerging risks facing
the Group, amplified in the final
quarter of the year by the wide
ranging impacts of Covid-19, and how
the Group mitigates such risks, which
are summarised on pages 66 to 79
of the Strategic Review. The majority
of risks to the Group are operational
in nature due to the Group’s focus
on long-term complex regeneration
sites and therefore risk management
is appropriately embedded in the
day-to-day business processes and
controls. The individual site cash
flow forecasts, which are used to
prepare the Group’s consolidated
cash forecasts, take account of these
individual site operational risks.
The Group’s business model, as
set out on pages 50 to 51 of the
Strategic Review, recognises
these operational risks, and that
the property market is inherently
cyclical, and accordingly a core risk
management principle for the Group
is to keep financial risk sufficiently
low through forward selling where
possible, maintaining a sound balance
sheet and appropriate headroom
within its financing activities. As at
30 April 2020, the Group has net cash
of £1,139 million and total liquidity of
£1,889 million when this net cash is
combined with banking facilities of
£750 million which are in place until
November 2023. Furthermore, the
Group has cash due on forward sales
of £1,858 million.
The Group’s consolidated cash
flow forecasts include appropriate
allowances for discretionary
investment and the quantum and
timing of this is in turn subject to
the delivery of the individual site
operational cash flows. The viability
assessment has considered the
impact of reduced sales activity
in the three year period from the
business plan levels as a result of
adverse macro-economic conditions,
augmented by the impacts of
Covid-19. The Directors have also
taken into account appropriate
mitigating actions which may be
instigated in response, primarily
around curtailed discretionary
investment, such as lower new land
purchases or deferment of new site
starts, amongst others.
Based on the assessment, the
Directors confirm that they have
a reasonable expectation that the
Group will be able to continue in
operation and meet its liabilities
as they fall due over the three year
period commencing 1 May 2020.
Read more on our Going Concern
on page 141.
Headroom provided by bank facilities
The Group has £750 million of
committed credit facilities maturing
in November 2023. This comprises
a term loan of £300 million and the
revolving credit facility of £450 million.
Berkeley has a strong working
partnership with the six banks that
provide the facilities and this is key
to Berkeley’s approach to mitigating
liquidity risk.
Forward sales
Berkeley’s approach to forward selling
new homes to customers provides
good visibility over future cash flows,
as expressed in cash due on forward
sales which stands at £1.86 billion at
30 April 2020. It also helps mitigate
market credit risk by virtue of
customers’ deposits held from the
point of unconditional exchange of
contracts with customers.
Land holdings
By investing opportunistically in
land at the right point in the cycle,
holding a clear development pipeline
in our land holdings and continually
optimising our existing holdings, we
are not under pressure to buy new
land when it would be wrong for the
long-term returns for the business.
Detailed appraisal of spending
commitments
A culture which prioritises an
understanding of the impact of all
decisions on the Group’s spending
commitments and hence its balance
sheet, alongside weekly and monthly
reviews of cash flow forecasts at
operating company, divisional and
Group levels, recognises that cash
flow management is central to the
continued success of Berkeley.
67
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements How We Manage Risk continued
External risks
Risk description and impact
Approach to mitigating risk
Residual
risk rating
Likelihood
change
Impact change
during year
Commentary and developments if any during the year
Covid-19
Covid-19 is impacting all areas of our
operations, including our employees,
purchasers and supply chain.
The extent of the impact will be heavily
dependent on factors including, but
not limited to, the length of UK and
international lockdowns, the nature and
extent of any government interventions,
the severity of economic effects and the
speed and nature of the recovery.
The Company is also mindful of the risks
presented by a potential second wave of
Covid-19, which would clearly exacerbate
the eventual impact of the pandemic.
The Covid-19 pandemic has been a focus for the Board
over the last few months. The extensive experience and
skill set of the Executive and Non-Executive Directors,
coupled with the resilience of our business model, has
enabled us to weather the initial impact.
The health and safety of our employees and contractors
has been paramount, with office based staff transitioning
to home working, and strict social distancing rules,
following Government and public health guidance, being
implemented on all our sites.
We have been working closely with all elements of our
supply chain to monitor both materials and labour levels
in order to ensure that we can keep our sites operating.
Whilst our sales offices were closed from the second half
of March until the middle of May, we have been utilising
digital channels to maintain contact with our domestic and
overseas customers. We have also been providing virtual
tours for prospective customers.
Economic
outlook
As a property developer, Berkeley’s
business is sensitive to wider economic
factors such as changes in interest
rates, employment levels and general
consumer confidence.
Recognition that Berkeley operates in a cyclical market
is central to our strategy and maintaining a strong
financial position is fundamental to our business
model and protects us against adverse changes in
economic conditions.
High
Some customers are also sensitive to
changes in the sterling exchange rate in
terms of their buying decisions or ability
to meet their obligations under contracts.
Land investment in all market conditions is carefully
targeted and underpinned by demand fundamentals and
a solid viability case, respecting the cyclical nature of the
property industry.
Changes to economic conditions in the
UK, 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.
Levels of committed expenditure are carefully monitored
against forward sales secured, cash levels and headroom
against our available bank facilities, with the objective of
keeping financial risk low to mitigate the operating risks
of delivery in uncertain markets.
Production programmes are continually assessed,
depending upon market conditions. The business
is committed to operating at an optimal size, with
a strong balance sheet, through autonomous
businesses to maintain the flexibility to react swiftly,
when necessary, to changes in market conditions.
High
New Risk New Risk Our business resilience and risk planning have been tested in recent months
and the business has responded well to the challenges presented by
the pandemic.
All levels of our organisation have been involved in assessing, planning and
responding to the significant number of resulting risks in order to mitigate
their impact on the business.
Read more on pages 22 to 27
Prior to the emergence of the Covid-19 pandemic, volatility in the UK
economy had reduced, despite ongoing uncertainty over the outcome
of trade deals following the exit from the EU, with low inflation
and unemployment.
UK growth forecasts were reduced in late 2019 due to the expected
pressure on productivity.
In recent months the UK and global economies have been significantly
impacted by Covid-19, with high levels of macro-economic and
market uncertainty.
A significant recession is forecast for the UK economy despite the
unprecedented financial intervention from the Government, with reductions
in productivity across many sectors and an expected rise in unemployment.
The scale and length of any recession is unknown at this stage.
Read more on pages 14 to 15 and 22 to 27
68
Berkeley Group 2020 Annual Report
Key
Increase risk
No change
Decrease risk
Residual
risk rating
Likelihood
change
Impact change
during year
Commentary and developments if any during the year
High
New Risk New Risk Our business resilience and risk planning have been tested in recent months
and the business has responded well to the challenges presented by
the pandemic.
All levels of our organisation have been involved in assessing, planning and
responding to the significant number of resulting risks in order to mitigate
their impact on the business.
Read more on pages 22 to 27
Risk description and impact
Approach to mitigating risk
Covid-19
Covid-19 is impacting all areas of our
operations, including our employees,
purchasers and supply chain.
The Covid-19 pandemic has been a focus for the Board
over the last few months. The extensive experience and
skill set of the Executive and Non-Executive Directors,
coupled with the resilience of our business model, has
The extent of the impact will be heavily
enabled us to weather the initial impact.
dependent on factors including, but
not limited to, the length of UK and
international lockdowns, the nature and
has been paramount, with office based staff transitioning
extent of any government interventions,
to home working, and strict social distancing rules,
the severity of economic effects and the
following Government and public health guidance, being
speed and nature of the recovery.
implemented on all our sites.
The health and safety of our employees and contractors
The Company is also mindful of the risks
We have been working closely with all elements of our
presented by a potential second wave of
supply chain to monitor both materials and labour levels
Covid-19, which would clearly exacerbate
in order to ensure that we can keep our sites operating.
the eventual impact of the pandemic.
Whilst our sales offices were closed from the second half
of March until the middle of May, we have been utilising
digital channels to maintain contact with our domestic and
overseas customers. We have also been providing virtual
tours for prospective customers.
Economic
outlook
As a property developer, Berkeley’s
Recognition that Berkeley operates in a cyclical market
business is sensitive to wider economic
is central to our strategy and maintaining a strong
factors such as changes in interest
rates, employment levels and general
financial position is fundamental to our business
model and protects us against adverse changes in
consumer confidence.
economic conditions.
High
Some customers are also sensitive to
Land investment in all market conditions is carefully
changes in the sterling exchange rate in
targeted and underpinned by demand fundamentals and
terms of their buying decisions or ability
a solid viability case, respecting the cyclical nature of the
to meet their obligations under contracts.
property industry.
Changes to economic conditions in the
UK, Europe and worldwide may lead to
Levels of committed expenditure are carefully monitored
against forward sales secured, cash levels and headroom
a reduction in demand for housing which
against our available bank facilities, with the objective of
could impact on the Group’s ability to
keeping financial risk low to mitigate the operating risks
deliver its corporate strategy.
of delivery in uncertain markets.
Production programmes are continually assessed,
depending upon market conditions. The business
is committed to operating at an optimal size, with
a strong balance sheet, through autonomous
businesses to maintain the flexibility to react swiftly,
when necessary, to changes in market conditions.
Prior to the emergence of the Covid-19 pandemic, volatility in the UK
economy had reduced, despite ongoing uncertainty over the outcome
of trade deals following the exit from the EU, with low inflation
and unemployment.
UK growth forecasts were reduced in late 2019 due to the expected
pressure on productivity.
In recent months the UK and global economies have been significantly
impacted by Covid-19, with high levels of macro-economic and
market uncertainty.
A significant recession is forecast for the UK economy despite the
unprecedented financial intervention from the Government, with reductions
in productivity across many sectors and an expected rise in unemployment.
The scale and length of any recession is unknown at this stage.
Read more on pages 14 to 15 and 22 to 27
69
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
How We Manage Risk continued
External risks continued
Risk description and impact
Approach to mitigating risk
Residual
risk rating
Likelihood
change
Impact change
during year
Commentary and developments if any during the year
Political
outlook
Significant political events, including
the impact of leaving the EU, may
impact Berkeley’s business through,
for instance, the reluctance of buyers
to make investment decisions due to
political uncertainty and, subsequently,
specific policies and regulation may
be introduced that directly impact
our business model.
Whilst we cannot directly influence political events, the
risks are taken into account when setting our business
strategy and operating model. In addition, we actively
engage in the debate on policy decisions.
High
Regulation
Adverse changes to Government policy
on areas such as taxation, housing and
the environment could restrict the ability
of the Group to deliver its strategy.
Berkeley is primarily focused geographically on London,
Birmingham and the South-East of England, which
limits our risk when understanding and determining
the impact of new regulation across multiple locations
and jurisdictions.
High
Failure to comply with laws and
regulations could expose the Group
to penalties and reputational damage.
We welcome the proposed changes
to building regulations following the
Hackitt Review.
The effects of changes to Government policies at all
levels are closely monitored by operating businesses and
the Board, and representations made to policy-setters
where appropriate.
Berkeley’s experienced teams are well placed to interpret
and implement new regulations at the appropriate time
through direct lines of communication across the Group,
with support from internal and external legal advisors.
Detailed policies and procedures are in place where
appropriate to the prevailing regulations and these are
communicated to all staff.
70
Brexit dominated the political landscape in the first nine months of the
year with delays and the risk of a No Deal Brexit creating uncertainty that
impacted both consumer and business confidence.
With the UK leaving the EU on 31 January 2020, we entered an 11 month
transition period with the objective of agreeing a trade deal with the EU
by the end of 2020.
The decisive General Election result in December 2019, provided a stronger
mandate for Government to implement its policies and this provides a more
stable domestic economic outlook. However, considerable risk remains
around the completion and nature of the new trading relationship with
Europe and rest of the world, which requires continued close monitoring.
In particular, there could be significant supply chain disruption in the event
of a disorderly conclusion to the Brexit transition period.
The Company is also mindful of the risks presented by a potential second
wave of Covid-19, which would clearly exacerbate the eventual impact
of the pandemic.
The new points-based immigration system should support Berkeley’s
requirement for appropriately skilled site based staff. So long as the
process of implementation is efficient and not administratively costly
and burdensome.
Since the emergence of the Covid-19 pandemic, all focus from Government
has been on dealing with the crisis and implementing necessary measures,
focused initially on the NHS and supporting the wider economy and jobs.
Recent measures to support the housing market have been welcomed,
including extending site hours for construction work, reopening estate
agents and allowing people to move house.
Read more on pages 14 to 15 and 22 to 27
Housing and construction are sectors that have historically been seen
to lead economic recovery. There are a number of areas of regulation and
policy around housing, including property taxation, planning, affordable
housing and direct investment, which could be reviewed by Government
to stimulate recovery in the wake of Covid-19.
The Ministry of Housing, Communities & Local Government (MHCLG)
reaffirmed the Government’s commitment to improving building safety
by announcing a suite of new measures, including guidance on cladding.
While we welcome the commitment to improving the building regulation
regime, the impact of guidance on mortgage valuations on the ability of fire
engineers to give the necessary clearance certificates for lenders is creating
delays in the second hand housing market.
Read more on pages 14 to 15 and 22 to 27
Berkeley Group 2020 Annual Report
Risk description and impact
Approach to mitigating risk
Residual
risk rating
Likelihood
change
Impact change
during year
Commentary and developments if any during the year
Key
Increase risk
No change
Decrease risk
Political
outlook
Significant political events, including
the impact of leaving the EU, may
impact Berkeley’s business through,
for instance, the reluctance of buyers
to make investment decisions due to
political uncertainty and, subsequently,
specific policies and regulation may
be introduced that directly impact
our business model.
Whilst we cannot directly influence political events, the
risks are taken into account when setting our business
strategy and operating model. In addition, we actively
engage in the debate on policy decisions.
High
Regulation
Adverse changes to Government policy
Berkeley is primarily focused geographically on London,
on areas such as taxation, housing and
Birmingham and the South-East of England, which
the environment could restrict the ability
limits our risk when understanding and determining
of the Group to deliver its strategy.
the impact of new regulation across multiple locations
and jurisdictions.
High
Failure to comply with laws and
regulations could expose the Group
to penalties and reputational damage.
We welcome the proposed changes
to building regulations following the
Hackitt Review.
The effects of changes to Government policies at all
levels are closely monitored by operating businesses and
the Board, and representations made to policy-setters
where appropriate.
Berkeley’s experienced teams are well placed to interpret
and implement new regulations at the appropriate time
through direct lines of communication across the Group,
with support from internal and external legal advisors.
Detailed policies and procedures are in place where
appropriate to the prevailing regulations and these are
communicated to all staff.
Brexit dominated the political landscape in the first nine months of the
year with delays and the risk of a No Deal Brexit creating uncertainty that
impacted both consumer and business confidence.
With the UK leaving the EU on 31 January 2020, we entered an 11 month
transition period with the objective of agreeing a trade deal with the EU
by the end of 2020.
The decisive General Election result in December 2019, provided a stronger
mandate for Government to implement its policies and this provides a more
stable domestic economic outlook. However, considerable risk remains
around the completion and nature of the new trading relationship with
Europe and rest of the world, which requires continued close monitoring.
In particular, there could be significant supply chain disruption in the event
of a disorderly conclusion to the Brexit transition period.
The Company is also mindful of the risks presented by a potential second
wave of Covid-19, which would clearly exacerbate the eventual impact
of the pandemic.
The new points-based immigration system should support Berkeley’s
requirement for appropriately skilled site based staff. So long as the
process of implementation is efficient and not administratively costly
and burdensome.
Since the emergence of the Covid-19 pandemic, all focus from Government
has been on dealing with the crisis and implementing necessary measures,
focused initially on the NHS and supporting the wider economy and jobs.
Recent measures to support the housing market have been welcomed,
including extending site hours for construction work, reopening estate
agents and allowing people to move house.
Read more on pages 14 to 15 and 22 to 27
Housing and construction are sectors that have historically been seen
to lead economic recovery. There are a number of areas of regulation and
policy around housing, including property taxation, planning, affordable
housing and direct investment, which could be reviewed by Government
to stimulate recovery in the wake of Covid-19.
The Ministry of Housing, Communities & Local Government (MHCLG)
reaffirmed the Government’s commitment to improving building safety
by announcing a suite of new measures, including guidance on cladding.
While we welcome the commitment to improving the building regulation
regime, the impact of guidance on mortgage valuations on the ability of fire
engineers to give the necessary clearance certificates for lenders is creating
delays in the second hand housing market.
Read more on pages 14 to 15 and 22 to 27
71
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
How We Manage Risk continued
Internal risks
Risk description and impact
Approach to mitigating risk
Residual
risk rating
Likelihood
change
Impact change
during year
Commentary and developments if any during the year
Understanding the markets in which we operate is central
to Berkeley’s strategy and, consequently, land acquisition
is primarily focused on Berkeley’s core markets of London,
Birmingham and the South-East of England, markets in
which it believes the demand fundamentals are strong.
Berkeley has experienced land teams with strong market
knowledge in their areas of focus, which gives us the
confidence to buy land without an implementable planning
consent and, with an understanding of local stakeholders’
needs, positions Berkeley with the best chance of securing
a viable planning consent.
Berkeley acquires land, where it meets its internal criteria for
purchase, and considers joint ventures in particular as a vehicle
to work with the right partners who bring good quality land
complemented by Berkeley’s expertise.
Each land acquisition is subject to a formal internal appraisal
and approval process prior to the submission of a bid and
again prior to exchange of contracts to give the Group the
greatest chance of securing targeted land.
Berkeley’s land holdings mean that it has the land in place
for its immediate business plan requirements and can therefore
always acquire land at the right time in the cycle.
The Group’s strategic geographical focus and expertise
place it in the best position to conceive and deliver the right
consents for the land acquired.
Full detailed planning and risk assessments are performed
and monitored for each site without planning permission, both
before and after purchase.
Our assessment of the risk profile dictates whether sites are
acquired either conditionally or unconditionally.
The planning status of all sites is reviewed at both monthly
divisional Board meetings and Main Board meetings.
The Group works closely with local communities in respect
of planning proposals and strong relationships are maintained
with local authorities and planning officers.
We have developed a series of commitments within Our
Vision, our plan for the business, to ensure that we retain
and develop the best people to support the business in the
long-term. This includes a talent management programme,
investment in training and the implementation of health
and wellbeing initiatives.
Succession planning is regularly reviewed at both divisional
and Main Board level. Close relationships and dialogue are
maintained with key personnel.
Remuneration packages are constantly benchmarked
against the industry to ensure they remain competitive.
Land
availability
An inability to source suitable land
to maintain the Group’s land holdings
at appropriate margins in a highly
competitive market could impact
on the Group’s ability to deliver its
corporate strategy.
Planning
process
Delays or refusals in obtaining
commercially viable planning
permissions could result in the
Group being unable to develop
its land holdings.
This could have a direct impact
on the Group’s ability to deliver
its product and on its profitability.
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.
72
Medium
High
The Group continues to focus on enhancing the value of the land bank
through a combination of acquiring new sites, enhancing the value of
existing sites and bringing sites through the strategic pipeline of long-
term options.
Investment decisions are affected by the uncertainty in the political and
economic outlook, as well as complexities in the planning system, although
new opportunities may arise as demand from other use classes evolves.
The risk remains unchanged in the year, with Berkeley remaining selective
in the land market, acquiring six new sites in the year, including two in
St William and one in St Edward.
Read more on pages 4 to 5 and 83
The planning process remains highly complex and time consuming
with ongoing demands from a combination of affordable housing,
the Community Infrastructure Levy, Section 106 obligations and
review mechanisms.
Whilst we have secured a number of planning consents in the year, these
have taken a long time to obtain and there remains hurdles before starting
on site. These include areas such as utilities, remediation, easements,
compulsory purchase orders and the discharge of planning conditions,
which are all added impediments to increased delivery.
The closure of council and Planning Inspectorate offices during Covid-19
is likely to exacerbate these challenges, although the Coronavirus Bill does
enable councils to hold committee meetings virtually.
Read more on page 83
The Group continues to have a stable senior management team and despite
the normal pressure of people retention, overall retention rates remained
stable during the course of the year as a result of the ongoing focus on
talent management, career progression opportunities, training and health
and wellbeing initiatives.
Read more on pages 56, 61 and 95
Medium
The motivation, retention and progression of our people remains
fundamental to the delivery of our strategy.
Berkeley Group 2020 Annual Report
is primarily focused on Berkeley’s core markets of London,
Birmingham and the South-East of England, markets in
which it believes the demand fundamentals are strong.
Berkeley has experienced land teams with strong market
knowledge in their areas of focus, which gives us the
confidence to buy land without an implementable planning
consent and, with an understanding of local stakeholders’
needs, positions Berkeley with the best chance of securing
a viable planning consent.
Berkeley acquires land, where it meets its internal criteria for
purchase, and considers joint ventures in particular as a vehicle
to work with the right partners who bring good quality land
complemented by Berkeley’s expertise.
Each land acquisition is subject to a formal internal appraisal
and approval process prior to the submission of a bid and
again prior to exchange of contracts to give the Group the
greatest chance of securing targeted land.
Berkeley’s land holdings mean that it has the land in place
for its immediate business plan requirements and can therefore
always acquire land at the right time in the cycle.
The Group’s strategic geographical focus and expertise
place it in the best position to conceive and deliver the right
consents for the land acquired.
Full detailed planning and risk assessments are performed
and monitored for each site without planning permission, both
before and after purchase.
Our assessment of the risk profile dictates whether sites are
acquired either conditionally or unconditionally.
The planning status of all sites is reviewed at both monthly
divisional Board meetings and Main Board meetings.
The Group works closely with local communities in respect
of planning proposals and strong relationships are maintained
with local authorities and planning officers.
Key
Increase risk
No change
Decrease risk
Risk description and impact
Approach to mitigating risk
Residual
risk rating
Likelihood
change
Impact change
during year
Commentary and developments if any during the year
Land
availability
An inability to source suitable land
Understanding the markets in which we operate is central
to maintain the Group’s land holdings
to Berkeley’s strategy and, consequently, land acquisition
Medium
at appropriate margins in a highly
competitive market could impact
on the Group’s ability to deliver its
corporate strategy.
The Group continues to focus on enhancing the value of the land bank
through a combination of acquiring new sites, enhancing the value of
existing sites and bringing sites through the strategic pipeline of long-
term options.
Investment decisions are affected by the uncertainty in the political and
economic outlook, as well as complexities in the planning system, although
new opportunities may arise as demand from other use classes evolves.
The risk remains unchanged in the year, with Berkeley remaining selective
in the land market, acquiring six new sites in the year, including two in
St William and one in St Edward.
Read more on pages 4 to 5 and 83
Planning
process
Delays or refusals in obtaining
commercially viable planning
permissions could result in the
Group being unable to develop
its land holdings.
This could have a direct impact
on the Group’s ability to deliver
its product and on its profitability.
High
The planning process remains highly complex and time consuming
with ongoing demands from a combination of affordable housing,
the Community Infrastructure Levy, Section 106 obligations and
review mechanisms.
Whilst we have secured a number of planning consents in the year, these
have taken a long time to obtain and there remains hurdles before starting
on site. These include areas such as utilities, remediation, easements,
compulsory purchase orders and the discharge of planning conditions,
which are all added impediments to increased delivery.
The closure of council and Planning Inspectorate offices during Covid-19
is likely to exacerbate these challenges, although the Coronavirus Bill does
enable councils to hold committee meetings virtually.
Read more on page 83
Retaining
people
An inability to attract, develop,
We have developed a series of commitments within Our
motivate and retain talented employees
Vision, our plan for the business, to ensure that we retain
could have an impact on the Group’s
and develop the best people to support the business in the
ability to deliver its strategic priorities.
long-term. This includes a talent management programme,
Failure to consider the retention and
succession of key management could
result in a loss of knowledge and
competitive advantage.
investment in training and the implementation of health
and wellbeing initiatives.
Succession planning is regularly reviewed at both divisional
and Main Board level. Close relationships and dialogue are
maintained with key personnel.
Remuneration packages are constantly benchmarked
against the industry to ensure they remain competitive.
Medium
The motivation, retention and progression of our people remains
fundamental to the delivery of our strategy.
The Group continues to have a stable senior management team and despite
the normal pressure of people retention, overall retention rates remained
stable during the course of the year as a result of the ongoing focus on
talent management, career progression opportunities, training and health
and wellbeing initiatives.
Read more on pages 56, 61 and 95
73
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
How We Manage Risk continued
Internal risks continued
Risk description and impact
Approach to mitigating risk
Residual
risk rating
Likelihood
change
Impact change
during year
Commentary and developments if any during the year
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.
The Group has experienced sales teams both in the UK and
within our overseas sales offices, supplemented by
market-leading agents.
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 across a broad range of property prices to appeal
to a wide market.
The Group’s ability to forward sell reduces the risk of the
development cycle where possible, thereby justifying and
underpinning the financial investment in each of the Group’s
sites. Completed stock levels are reviewed regularly.
The Group has adapted its sales strategy to the Covid-19
pandemic, with increased use of digital channels and
virtual tours.
Liquidity
Reduced availability of the external
financing required by the Group
to pursue its activities and meet
its liabilities.
The Board approves treasury policy and senior management
control day-to-day operations. Relationships with banks
and cash management are co-ordinated centrally as
a Group function.
Failure to manage working capital may
constrain the growth of the business
and ability to execute the business plan.
The treasury policy is intended to maintain an appropriate
capital structure to manage the Group’s financial risks and
provide the right platform for the business to manage its
operating risks.
Low
The Group has £750 million of committed credit facilities maturing in
November 2023.
Cash flow management is central to the continued
success of Berkeley and is particularly important as
a consequence of the Covid-19 crisis and remains a key
focus for management. There is a culture which prioritises
an understanding of the impact of all decisions on the
Group’s spending commitments and hence its balance sheet,
alongside weekly and monthly reviews of cash flow forecasts
at operating company, divisional and Group levels.
Berkeley has a broad product mix and customer base
which reduces the reliance on mortgage availability across
its portfolio.
The Group participates in the Government’s Help to Buy
scheme, which provides deposit assistance to
first-time buyers, and has participated in other
Government schemes historically.
Deposits are taken on all sales to mitigate the financial
impact on the Group in the event that sales do not
complete due to a lack of mortgage availability.
Mortgage
availability
An inability of customers to secure
sufficient mortgage finance now or in
the future could have a direct impact
on the Group’s transaction levels.
74
High
Medium
Prior to Covid-19, the UK market had remained stable, coupled with robust
demand from the overseas market. The last few months has however seen
an understandable significant reduction in demand during the period
of lockdown.
The use of digital sales and marketing channels, including virtual tours, has
proved effective in meeting demand where customers are committed to
purchase a new home. Since mid-May, sales offices have started to reopen
for one-to-one appointments.
The Group has well located developments which are well presented and the
design and mix of homes on each development are continually reviewed to
ensure that these respond to market demand.
Customers remain at the heart of all of our decisions, and Berkeley
prioritises customer service through its Our Vision commitments, with
levels of service comparable to other top performing companies. We are
committed to understanding their needs and consistently meeting or
exceeding their expectations.
Read more on pages 28 to 29, 34 to 35 and 54
This comprises a term loan of £300 million and revolving credit facility
of £450 million. With net cash of in excess of £1.1 billion at 30 April 2020,
this is £1.85 billion of liquidity.
In addition, during the year, the St William joint venture refinanced its bank
facilities, increasing these from £150 million to £360 million in an amended
three year facility.
Berkeley has a strong working partnership with the six banks that provide
the facilities and is key to Berkeley’s approach to mitigating liquidity risk.
Read more on page 59
An economic environment of continued low interest rates, combined with
resilient economic performance, has supported mortgage availability,
resulting in a steady risk profile.
Restrictions on income multiples and the length of mortgage offers remain
constraints on demand.
The support of the mortgage market by lenders will be critical to the market
recovering quickly from the impacts of the Covid-19 pandemic. In particular,
the full suite of mortgage products and loan to value ratios (LTVs) that were
in place prior to Covid-19 should be reinstated to support the new homes
market, taking an appropriately long-term view on valuations. Mortgages are
long-term investments for banks and short-term volatility in pricing will
recover over mortgage lifetimes.
Read more on pages 28 to 29 and 34 to 35
Berkeley Group 2020 Annual Report
Risk description and impact
Approach to mitigating risk
Residual
risk rating
Likelihood
change
Impact change
during year
Commentary and developments if any during the year
Key
Increase risk
No change
Decrease risk
Securing
sales
An inability to match supply to demand
The Group has experienced sales teams both in the UK and
in terms of product, location and price
within our overseas sales offices, supplemented by
High
could result in missed sales targets and/
market-leading agents.
or high levels of completed stock which
in turn could impact on the Group’s
Detailed market demand assessments of each site are
ability to deliver its corporate strategy.
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 across a broad range of property prices to appeal
to a wide market.
The Group’s ability to forward sell reduces the risk of the
development cycle where possible, thereby justifying and
underpinning the financial investment in each of the Group’s
sites. Completed stock levels are reviewed regularly.
The Group has adapted its sales strategy to the Covid-19
pandemic, with increased use of digital channels and
virtual tours.
Cash flow management is central to the continued
success of Berkeley and is particularly important as
a consequence of the Covid-19 crisis and remains a key
focus for management. There is a culture which prioritises
an understanding of the impact of all decisions on the
Group’s spending commitments and hence its balance sheet,
alongside weekly and monthly reviews of cash flow forecasts
at operating company, divisional and Group levels.
The Group participates in the Government’s Help to Buy
scheme, which provides deposit assistance to
first-time buyers, and has participated in other
Government schemes historically.
Deposits are taken on all sales to mitigate the financial
impact on the Group in the event that sales do not
complete due to a lack of mortgage availability.
Liquidity
Reduced availability of the external
The Board approves treasury policy and senior management
Low
financing required by the Group
to pursue its activities and meet
its liabilities.
control day-to-day operations. Relationships with banks
and cash management are co-ordinated centrally as
a Group function.
Failure to manage working capital may
The treasury policy is intended to maintain an appropriate
constrain the growth of the business
capital structure to manage the Group’s financial risks and
and ability to execute the business plan.
provide the right platform for the business to manage its
operating risks.
Mortgage
availability
An inability of customers to secure
sufficient mortgage finance now or in
Berkeley has a broad product mix and customer base
which reduces the reliance on mortgage availability across
Medium
the future could have a direct impact
its portfolio.
on the Group’s transaction levels.
Prior to Covid-19, the UK market had remained stable, coupled with robust
demand from the overseas market. The last few months has however seen
an understandable significant reduction in demand during the period
of lockdown.
The use of digital sales and marketing channels, including virtual tours, has
proved effective in meeting demand where customers are committed to
purchase a new home. Since mid-May, sales offices have started to reopen
for one-to-one appointments.
The Group has well located developments which are well presented and the
design and mix of homes on each development are continually reviewed to
ensure that these respond to market demand.
Customers remain at the heart of all of our decisions, and Berkeley
prioritises customer service through its Our Vision commitments, with
levels of service comparable to other top performing companies. We are
committed to understanding their needs and consistently meeting or
exceeding their expectations.
Read more on pages 28 to 29, 34 to 35 and 54
The Group has £750 million of committed credit facilities maturing in
November 2023.
This comprises a term loan of £300 million and revolving credit facility
of £450 million. With net cash of in excess of £1.1 billion at 30 April 2020,
this is £1.85 billion of liquidity.
In addition, during the year, the St William joint venture refinanced its bank
facilities, increasing these from £150 million to £360 million in an amended
three year facility.
Berkeley has a strong working partnership with the six banks that provide
the facilities and is key to Berkeley’s approach to mitigating liquidity risk.
Read more on page 59
An economic environment of continued low interest rates, combined with
resilient economic performance, has supported mortgage availability,
resulting in a steady risk profile.
Restrictions on income multiples and the length of mortgage offers remain
constraints on demand.
The support of the mortgage market by lenders will be critical to the market
recovering quickly from the impacts of the Covid-19 pandemic. In particular,
the full suite of mortgage products and loan to value ratios (LTVs) that were
in place prior to Covid-19 should be reinstated to support the new homes
market, taking an appropriately long-term view on valuations. Mortgages are
long-term investments for banks and short-term volatility in pricing will
recover over mortgage lifetimes.
Read more on pages 28 to 29 and 34 to 35
75
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
How We Manage Risk continued
Internal risks continued
Risk description and impact
Approach to mitigating risk
Residual
risk rating
Likelihood
change
Impact change
during year
Commentary and developments if any during the year
Climate
change
The effects of climate change could
directly impact Berkeley’s ability to
deliver its product through disruptions
to programme and supplies of materials.
Initial scenario analysis indicates that
homes and developments in London
and the South-East of England could be
adversely affected through overheating,
water shortages and flooding.
There is also an increased level of
interest in disclosures on climate change
management and action. Failure to
improve reporting and performance in
line with evolving regulations, investor
requests and societal expectations
could expose Berkeley to penalties
and reputational damage.
Sustainability Berkeley is aware of the environmental
and social impact of the homes and
places that it builds, both throughout
the development process and during
occupation and use by customers
and the wider community.
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 demands for
sustainable homes and communities.
The Group Sustainability Team identifies strategic climate
change risks and opportunities facing the business through
the regular review of issues and trends, along with active
collaboration with external experts. These are shared with
the Chief Executive and Board Director Responsible for
Sustainability (including climate change).
Climate change is a key theme within our business strategy,
Our Vision, with commitments to both mitigate and adapt
to climate change.
By taking action under our operational carbon emissions
reduction target our sites, offices and sales suites are
identifying and investing in energy efficiency measures.
We also look to reduce the impact of our homes and places
when in use and are taking action to contribute to a zero
carbon built environment.
To build resilience into our homes and developments, we
consider climate change risks and incorporate measures
to reduce these. This includes undertaking an overheating
risk assessment pre-planning and incorporating relevant
measures to improve thermal comfort.
We welcome the recommendations of the Financial Stability
Board’s (FSB) Task Force on Climate related Financial
Disclosures (TCFD) and are taking action to implement
these over time through the evolvement of our processes
and reporting.
The strategic direction for sustainability is set at a Group
level and is integrated within our business strategy,
Our Vision. We have specific commitments to enhance
environmental and social sustainability considerations
in the operation of our business and the delivery of our
homes and places.
Operational procedures and processes are regularly
reviewed to ensure that high standards and legal
compliance are maintained.
Dedicated sustainability teams are in place within the
business and at Group level, providing advice, monitoring
performance and driving improvement.
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.
Berkeley’s health and safety strategy is set by the Board.
Dedicated health and safety teams are in place in each
division and at Head Office.
A lack of adequate procedures and
systems to reduce the dangers inherent in
the construction process increases the risk
of accidents or site related catastrophes,
including fire and flood, which could result
in serious injury or loss of life leading to
reputational damage, financial penalties
and disruption to operations.
Procedures, training and reporting are all regularly
reviewed to ensure that high standards are maintained and
comprehensive accident investigation procedures are in
place. Insurance is held to cover the risks inherent in large
scale construction projects.
The Group continues to implement initiatives to improve
health and safety standards on site.
76
High
We monitor the actions taken to reduce carbon emissions across our activities
and report the greenhouse gas emissions for which we are responsible.
Following our leading approach in 2017/18, we continue to achieve carbon
positive operations on an annual basis, offsetting more emissions than
we produce.
We also regularly review the features incorporated into our homes and places
to both mitigate and adapt to climate change. As part of our net zero carbon
homes commitment, all developments submitted to planning since May 2019
have been required to develop a zero carbon transition plan, enabling homes
to operate at net zero carbon by 2030.
This year, a Government consultation was held on the Future Homes Standard
which proposes options to increase energy efficiency requirements for new
homes in 2020 and again in 2025. Berkeley responded to the consultation and
awaits future announcements on regulatory changes.
A number of extreme weather events took place in 2019/20 both in the UK
and globally. With the exception of some sites closing for a short period during
severe winter weather, these did not have an impact on Berkeley’s activities.
The year also saw a rise in public consciousness about the risks posed and an
increasing global movement against climate change.
Berkeley continues to report qualitatively on the governance, strategy and risk
management components of the TCFD recommendations on our website and
via our response to the CDP Climate Change Programme.
Read more on pages 16 to 17, 64 and 138 to 139
This year, the Environment Bill 2020 was re-introduced to parliament, setting
out plans to protect and improve the natural environment in the UK across
key topics such as resources and waste management, air quality, sustainable
water resources, nature and green space, and chemical regulations.
Based on current processes and procedures, these plans are not expected to
significantly impact Berkeley.
The Environment Bill specifically introduces a mandatory requirement for
biodiversity net gain in the planning system. Berkeley is well placed to meet
this requirement having committed to create a net biodiversity gain on its
new developments since May 2017.
Read more on pages 16 to 19, 30 to 47 and 62 to 63
Health and safety remains an operational priority for Berkeley and our AIIR
was 1.17 at the year end, well below our target of 2.75 and remains one of the
best in the industry.
In response to Covid-19, the Group has implemented strict social distancing
rules on all its sites, in line with Government and public health guidance, to
ensure the health and safety of its staff and contractors. Specific procedures
for all the Group’s offices and sales suites are also in place.
Read more on pages 42 to 43
Medium
The Group continues to focus on commitments and initiatives that enable the long-
term success of our business and developments, and that differentiate Berkeley.
Medium
High levels of production continued during the majority of the year, with site
based headcount averaging 9,000.
Berkeley Group 2020 Annual Report
Risk description and impact
Approach to mitigating risk
Residual
risk rating
Likelihood
change
Impact change
during year
Commentary and developments if any during the year
Key
Increase risk
No change
Decrease risk
Climate
change
The effects of climate change could
directly impact Berkeley’s ability to
The Group Sustainability Team identifies strategic climate
change risks and opportunities facing the business through
deliver its product through disruptions
the regular review of issues and trends, along with active
to programme and supplies of materials.
collaboration with external experts. These are shared with
High
We monitor the actions taken to reduce carbon emissions across our activities
and report the greenhouse gas emissions for which we are responsible.
Following our leading approach in 2017/18, we continue to achieve carbon
positive operations on an annual basis, offsetting more emissions than
we produce.
We also regularly review the features incorporated into our homes and places
to both mitigate and adapt to climate change. As part of our net zero carbon
homes commitment, all developments submitted to planning since May 2019
have been required to develop a zero carbon transition plan, enabling homes
to operate at net zero carbon by 2030.
This year, a Government consultation was held on the Future Homes Standard
which proposes options to increase energy efficiency requirements for new
homes in 2020 and again in 2025. Berkeley responded to the consultation and
awaits future announcements on regulatory changes.
A number of extreme weather events took place in 2019/20 both in the UK
and globally. With the exception of some sites closing for a short period during
severe winter weather, these did not have an impact on Berkeley’s activities.
The year also saw a rise in public consciousness about the risks posed and an
increasing global movement against climate change.
Berkeley continues to report qualitatively on the governance, strategy and risk
management components of the TCFD recommendations on our website and
via our response to the CDP Climate Change Programme.
Read more on pages 16 to 17, 64 and 138 to 139
Medium
The Group continues to focus on commitments and initiatives that enable the long-
term success of our business and developments, and that differentiate Berkeley.
This year, the Environment Bill 2020 was re-introduced to parliament, setting
out plans to protect and improve the natural environment in the UK across
key topics such as resources and waste management, air quality, sustainable
water resources, nature and green space, and chemical regulations.
Based on current processes and procedures, these plans are not expected to
significantly impact Berkeley.
The Environment Bill specifically introduces a mandatory requirement for
biodiversity net gain in the planning system. Berkeley is well placed to meet
this requirement having committed to create a net biodiversity gain on its
new developments since May 2017.
Read more on pages 16 to 19, 30 to 47 and 62 to 63
Medium
High levels of production continued during the majority of the year, with site
based headcount averaging 9,000.
Health and safety remains an operational priority for Berkeley and our AIIR
was 1.17 at the year end, well below our target of 2.75 and remains one of the
best in the industry.
In response to Covid-19, the Group has implemented strict social distancing
rules on all its sites, in line with Government and public health guidance, to
ensure the health and safety of its staff and contractors. Specific procedures
for all the Group’s offices and sales suites are also in place.
Read more on pages 42 to 43
77
Initial scenario analysis indicates that
homes and developments in London
the Chief Executive and Board Director Responsible for
Sustainability (including climate change).
and the South-East of England could be
Climate change is a key theme within our business strategy,
adversely affected through overheating,
Our Vision, with commitments to both mitigate and adapt
water shortages and flooding.
to climate change.
There is also an increased level of
By taking action under our operational carbon emissions
interest in disclosures on climate change
reduction target our sites, offices and sales suites are
management and action. Failure to
improve reporting and performance in
line with evolving regulations, investor
requests and societal expectations
could expose Berkeley to penalties
and reputational damage.
identifying and investing in energy efficiency measures.
We also look to reduce the impact of our homes and places
when in use and are taking action to contribute to a zero
carbon built environment.
To build resilience into our homes and developments, we
consider climate change risks and incorporate measures
to reduce these. This includes undertaking an overheating
risk assessment pre-planning and incorporating relevant
measures to improve thermal comfort.
We welcome the recommendations of the Financial Stability
Board’s (FSB) Task Force on Climate related Financial
Disclosures (TCFD) and are taking action to implement
these over time through the evolvement of our processes
and reporting.
Sustainability Berkeley is aware of the environmental
and social impact of the homes and
places that it builds, both throughout
the development process and during
occupation and use by customers
and the wider community.
The strategic direction for sustainability is set at a Group
level and is integrated within our business strategy,
Our Vision. We have specific commitments to enhance
environmental and social sustainability considerations
in the operation of our business and the delivery of our
homes and places.
Failure to address sustainability issues
Operational procedures and processes are regularly
could affect the Group’s ability to
reviewed to ensure that high standards and legal
acquire land, gain planning permission,
compliance are maintained.
manage sites effectively and respond
to increasing customer demands for
sustainable homes and communities.
Dedicated sustainability teams are in place within the
business and at Group level, providing advice, monitoring
performance and driving improvement.
Health and
safety
Berkeley’s operations have a direct impact
Berkeley considers this to be an area of critical importance.
on the health and safety of its people,
contractors and members of the public.
Berkeley’s health and safety strategy is set by the Board.
Dedicated health and safety teams are in place in each
division and at Head Office.
A lack of adequate procedures and
systems to reduce the dangers inherent in
Procedures, training and reporting are all regularly
the construction process increases the risk
reviewed to ensure that high standards are maintained and
of accidents or site related catastrophes,
comprehensive accident investigation procedures are in
including fire and flood, which could result
place. Insurance is held to cover the risks inherent in large
in serious injury or loss of life leading to
scale construction projects.
reputational damage, financial penalties
and disruption to operations.
The Group continues to implement initiatives to improve
health and safety standards on site.
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
How We Manage Risk continued
Internal risks continued
Risk description and impact
Approach to mitigating risk
Product
quality and
customers
Berkeley has a reputation for high
standards of quality in its product.
If the Group fails to deliver against these
standards and its wider development
obligations, it could be exposed to
reputational damage, as well as reduced
sales and increased cost.
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 product
quality is maintained.
The Group has detailed quality assurance procedures in
place surrounding both design and build to ensure the
adequacy of build at each key stage of construction.
Customer satisfaction surveys are undertaken on the
handover of our homes, and feedback incorporated into
the specification and design of subsequent schemes.
Build cost
and
programme
Build costs are affected by the
availability of skilled labour and the
price and availability of materials,
suppliers and contractors.
Declines in the availability of a skilled
workforce, and changes to these prices
could impact on our build programmes
and the profitability of our schemes.
Cyber and
data risk
The Group acknowledges that it places
significant reliance upon the availability,
accuracy and confidentiality of all of
its information systems and the data
contained therein.
The Group could suffer significant
financial and reputational damage
because of the corruption, loss or theft
of data, whether inadvertent or via
a deliberate, targeted cyber attack.
A procurement and programming strategy for each
development is agreed by the divisional Board before site
acquisition, whilst 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.
The Group monitors its development obligations and
recognises any associated liabilities which arise.
Our Vision includes ongoing commitments to promote
apprenticeships and training across both our employees
and our indirect workforce and the Group works closely
with contractors, schools, colleges and training providers
to promote the industry, reach talent and up-skill our
workforce through the completion of relevant qualifications.
Berkeley’s systems and control procedures are designed
to ensure that data confidentiality and integrity are
not compromised.
Our Information Security Programme focuses primarily
on detection and prevention of security incidents and
potential data breaches. Ongoing monitoring and scanning
are conducted to detect vulnerabilities in a timely manner.
We also work closely with our suppliers and partners to
improve understanding of security best practices.
An IT Security Committee meets monthly to address all
cyber security matters. The Group has Cyber Essentials
Plus certification and a Group-wide security awareness
programme, which is refreshed on a regular basis to
update employees on current cyber security trends.
The Group operates multiple data centres, thereby
ensuring that there is no centralised risk exposure
and the adequacy of the IT disaster recovery plan
is regularly assessed.
The Group has cyber insurance in place to mitigate
against any financial impact.
78
Residual
risk rating
Likelihood
change
Impact change
during year
Commentary and developments if any during the year
Medium
The Group’s continued focus on improving the quality of design and
product, with attention to every detail in our homes, remains at the heart
Medium
High
of our delivery.
our customers.
We are constantly looking at ways to meet the demands of changing
lifestyles, as well as the rapidly changing levels of expectations from
We have reviewed and enhanced our procedures over build quality in line
with the impending new regulation, following the Hackitt enquiry, noting
that the new regime must be efficient and responsive so as not to delay
build programmes and the delivery and handover of new homes.
Good progress continues to be made on the construction of our modular
factory, which will help deliver a significant portion of construction value
through off-site assembly.
Read more on pages 34 to 35 and 54
Build cost increases have moderated over the course of the year to 2.5% for
the year as a whole.
Pressures from skills shortages remain, with the UK construction industry
continuing to face a significant skills shortage.
The Group has reviewed in detail the impact of Covid-19 on the build
programme for each site as a result of potential materials shortages and
supply chain delays, as well as implementing social distancing measures.
Read more on page 57
The threat from cyber attacks remains high, and the Covid-19 pandemic
creates additional opportunities for attacks, particularly with many
businesses now operating remotely.
The methods of attack continue to evolve and are becoming more
sophisticated, with a step change in the methods and available technologies
that can be used.
Email based attacks remain a significant risk and the Group continues to
operate a leading email protection solution.
The Security Operations Centre is fully operational and continues to monitor
and alert on unusual activity.
In the year the Group achieved the Government’s Cyber Essentials Plus
certification for the fourth consecutive year.
Awareness has been raised with staff of the increased cyber risk in the
current Covid-19 environment.
Read more on page 92
Berkeley Group 2020 Annual Report
Risk description and impact
Approach to mitigating risk
Product
quality and
customers
Berkeley has a reputation for high
standards of quality in its product.
If the Group fails to deliver against these
standards and its wider development
obligations, it could be exposed to
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 product
quality is maintained.
The Group has detailed quality assurance procedures in
reputational damage, as well as reduced
place surrounding both design and build to ensure the
sales and increased cost.
adequacy of build at each key stage of construction.
Customer satisfaction surveys are undertaken on the
handover of our homes, and feedback incorporated into
the specification and design of subsequent schemes.
Build cost
and
programme
Build costs are affected by the
availability of skilled labour and the
price and availability of materials,
suppliers and contractors.
Declines in the availability of a skilled
workforce, and changes to these prices
could impact on our build programmes
and the profitability of our schemes.
A procurement and programming strategy for each
development is agreed by the divisional Board before site
acquisition, whilst 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.
The Group monitors its development obligations and
recognises any associated liabilities which arise.
Our Vision includes ongoing commitments to promote
apprenticeships and training across both our employees
and our indirect workforce and the Group works closely
with contractors, schools, colleges and training providers
to promote the industry, reach talent and up-skill our
workforce through the completion of relevant qualifications.
not compromised.
Our Information Security Programme focuses primarily
on detection and prevention of security incidents and
potential data breaches. Ongoing monitoring and scanning
are conducted to detect vulnerabilities in a timely manner.
improve understanding of security best practices.
An IT Security Committee meets monthly to address all
cyber security matters. The Group has Cyber Essentials
Plus certification and a Group-wide security awareness
programme, which is refreshed on a regular basis to
update employees on current cyber security trends.
The Group operates multiple data centres, thereby
ensuring that there is no centralised risk exposure
and the adequacy of the IT disaster recovery plan
is regularly assessed.
The Group has cyber insurance in place to mitigate
against any financial impact.
Key
Increase risk
No change
Decrease risk
Residual
risk rating
Likelihood
change
Impact change
during year
Commentary and developments if any during the year
Medium
Medium
Cyber and
data risk
The Group acknowledges that it places
Berkeley’s systems and control procedures are designed
significant reliance upon the availability,
to ensure that data confidentiality and integrity are
High
accuracy and confidentiality of all of
its information systems and the data
contained therein.
The Group could suffer significant
financial and reputational damage
of data, whether inadvertent or via
a deliberate, targeted cyber attack.
because of the corruption, loss or theft
We also work closely with our suppliers and partners to
The Group’s continued focus on improving the quality of design and
product, with attention to every detail in our homes, remains at the heart
of our delivery.
We are constantly looking at ways to meet the demands of changing
lifestyles, as well as the rapidly changing levels of expectations from
our customers.
We have reviewed and enhanced our procedures over build quality in line
with the impending new regulation, following the Hackitt enquiry, noting
that the new regime must be efficient and responsive so as not to delay
build programmes and the delivery and handover of new homes.
Good progress continues to be made on the construction of our modular
factory, which will help deliver a significant portion of construction value
through off-site assembly.
Read more on pages 34 to 35 and 54
Build cost increases have moderated over the course of the year to 2.5% for
the year as a whole.
Pressures from skills shortages remain, with the UK construction industry
continuing to face a significant skills shortage.
The Group has reviewed in detail the impact of Covid-19 on the build
programme for each site as a result of potential materials shortages and
supply chain delays, as well as implementing social distancing measures.
Read more on page 57
The threat from cyber attacks remains high, and the Covid-19 pandemic
creates additional opportunities for attacks, particularly with many
businesses now operating remotely.
The methods of attack continue to evolve and are becoming more
sophisticated, with a step change in the methods and available technologies
that can be used.
Email based attacks remain a significant risk and the Group continues to
operate a leading email protection solution.
The Security Operations Centre is fully operational and continues to monitor
and alert on unusual activity.
In the year the Group achieved the Government’s Cyber Essentials Plus
certification for the fourth consecutive year.
Awareness has been raised with staff of the increased cyber risk in the
current Covid-19 environment.
Read more on page 92
79
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
Trading and Financial Review
Consequently, the Group’s operating
margin has decreased to 24.5% from
26.0% last year.
Berkeley’s share of the results of joint
ventures was a profit of £33.3 million
(2019: £8.8 million). St William
delivered its first profits in the year
resulting from the completions across
four developments; Prince Of Wales
Drive in Battersea, Elmswater in
Rickmansworth, Fairwood Place in
Borehamwood and The Cottonworks
in Highbury. The stage of delivery on
St Edward developments means the
current completions are predominately
at Green Park Village in Reading.
Taxation
The Group has an overall tax
charge of £93.6 million for the
year (2019: £147.8 million) and
an effective tax rate of 18.6%
(2019: 19.1%). The Group manages
its tax affairs in an open and
transparent manner with the
tax authorities and observes all
applicable rules and regulations in
the countries in which it operates.
Factors that may affect the Group’s
tax charge include changes in tax
legislation and the closure of open
tax matters in the ordinary course
of events. The adjustments in respect
of previous years reflects agreement
of a number of previously open
issues and tax relief claims.
Total Tax paid (year ended 30 April 2020)
£241.12m
Corporation tax
SDLT
PAYE
Employees’ NI
Employer’s NI
£94.39m
£21.33m
£79.44m
£13.62m
£32.34m
For the year ended 30 April 2020, the total tax contribution to the UK Treasury was £241m;
split between taxes borne by Berkeley of £148m (corporation tax, employer's NIC and
SDLT) and taxes borne by our employees of £93m (PAYE and employees' NIC). This total
tax contribution does not include the indirect tax contribution paid by Berkeley's suppliers
and customers. The wider indirect tax impact is set out on page 53.
30 April
2020
£’million
1,920.4
637.4
(167.7)
469.7
0.7
33.3
503.7
(93.6)
410.1
324.9p
118.7p
16.6%
33.2%
8.7%
24.5%
26.2%
18.6%
30 April
2019
£’million
2,957.4
926.2
(157.8)
768.4
(2.0)
8.8
775.2
(147.8)
627.4
481.1p
40.6p
27.9%
31.3%
5.3%
26.0%
26.2%
19.1%
Change
£’million
-1,037.0
-288.8
-9.9
-298.7
+2.7
+24.5
-271.5
+54.2
-217.3
-156.2p
+78.1p
-11.3%
Change
%
-35.1%
-31.2%
+6.3%
-38.9%
-35.0%
-34.6%
-32.5%
+192.0%
Trading performance
Revenue of £1,920.4 million in the year
(2019: £2,957.4 million) arose primarily
from the sale of new homes in London
and the South-East. This included
£1,883.7 million of residential
revenue (2019: £2,797.0 million) and
£36.7 million of commercial revenue
(2019: £160.4 million). There were no
ground rent or land sales in the year
(2019: £nil).
2,723 new homes (2019: 3,698) were
sold across London and the South-East
at an average selling price of £677,000
(2019: £748,000) reflecting the mix
of developments and varying stages
thereon, particularly in London.
Revenue of £36.7 million from
commercial property includes the
disposal of mainly retail and leisure
space across a number of our London
developments. In the comparative year
revenue of £160.4 million included two
significant disposals of a 190-bed hotel
at 250 City Road and 71,000 sq ft of
office, retail and leisure space at One
Tower Bridge.
The gross margin percentage has
increased to 33.2% (2019: 31.3%),
reflecting the mix of properties sold
in the year. Overheads of £167.7 million
(2019: £157.8 million) increased
by £9.9 million in the year. This is
predominantly due to an increase in
the charge to the Income Statement
for the Group’s share schemes
following the changes to the 2011 LTIP
approved at the September 2019 AGM.
Income Statement
for the Year Ended
Revenue
Gross profit
Operating expenses
Operating profit
Net finance costs
Share of joint venture results
Profit before tax
Tax
Profit after tax
Earnings Per Share — Basic
Dividend Per Share
Pre-Tax Return on Equity
80
Berkeley Group 2020 Annual Report
Abridged Cash Flow
for the Year Ended
Profit before tax
(Increase)/decrease in inventory
Increase/(decrease) in customer deposits
Other working capital movements
Net (increase)/reduction in working capital
Net receipts from/(investment in) joint ventures
Tax paid
Other movements
Cash inflow before share buy-backs and dividends
Shareholder returns — share buy-backs
Shareholder returns — dividends
(440.2)
97.4
267.7
Increase in net cash
Opening net cash
Closing net cash
The Group has remained cash positive
on a net basis throughout the year.
Net finance income totaled £0.7 million
for the year (2019: £2.0 million net
finance costs) due to interest income
on cash deposits which outweighed
facility fees, interest on drawn
borrowings and imputed interest
on land creditors.
Pre-tax return on equity for the year
is 16.6%, compared to 27.9% last year
reflecting the return of profitability to
normal levels. Basic earnings per share
has decreased by 32.5% from 481.1
pence to 324.9 pence, which takes into
account the buy-back of 3.5 million
shares at a cost of £130.5 million under
the Shareholder Returns programme.
Financial Position
Net assets increased over the course
of the year by £138.3 million, or 4.7%, to
£3,101.6 million (2019: £2,963.3 million).
This is after payment of £149.8 million
of dividends and the £130.5 million of
share buy-backs. This equates to a net
asset value per share of 2,472 pence,
up 7.2% from 2,305 pence at 30 April
2019, given the share buy-backs
undertaken in the year.
Inventories have increased
by £440.2 million from
£3,114.7 million at 30 April 2019 to
£3,554.9 million at 30 April 2020.
Inventories include £519.7 million
of land not under development
(30 April 2019: £395.2 million),
£2,895.7 million of work in progress
(30 April 2019: £2,584.7 million) and
£139.5 million of completed stock
(30 April 2019: £134.8 million).
The increase in land not under
development reflects the combination
of new sites acquired as well as
previously conditional sites which
have completed during the year
represented by cash and new land
creditors. This increase outweighed
the land cost moved into production
which was across seven non-joint
venture sites. These sites moved into
production, coupled with further
investment in build on a number of
forward sold London developments,
led to the increase in work in progress
inventory in the year. Completed stock
is spread across a number of sites and
remains at comfortable levels.
30 April
2020
£’million
503.7
(75.1)
112.9
(89.8)
(7.5)
444.2
(130.5)
(149.8)
163.9
975.0
1,138.9
181.9
(208.9)
49.0
30 April
2019
£’million
775.2
22.0
(62.8)
(178.8)
(16.0)
539.6
(198.9)
(53.0)
287.7
687.3
975.0
Trade and other payables are
£1,931.8 million at 30 April 2020
(30 April 2019: £1,595.5 million).
These include £783.5 million of
on-account receipts from customers
(30 April 2019: £686.1 million) and
land creditors of £372.7 million
(30 April 2019: £92.6 million).
The significant increase reflects
the new sites brought onto the
balance sheet with a corresponding
increase in inventory. The new
land creditors include TwelveTrees
Park in Newham, which became
unconditional during the year, and the
site acquired at Camden, amongst
others. Of the total £372.7 million
land creditor balance, £109.0 million
is short-term and £263.7 million is
spread over future financial years.
Provisions of £114.9 million (30 April
2019: £79.1 million) include post-
completion development obligations
and other provisions.
The Group ended the year with net
cash of £1,138.9 million (30 April
2019: £975.0 million) which consists
of cash holdings of £1,638.9 million
and £500 million of debt drawn
under the Group’s banking facilities.
This debt consists of a long-term
£300.0 million term loan and a short-
term £200 million revolving credit
facility loan which was drawn in March
2020. There is a further undrawn
£250 million available to the Group
under its revolving credit facility.
81
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements 30 April
2020
£’million
Change
£’million
30 April
2019
£’million
261.8
121.8
383.6
-112.9
+16.3
-96.6
3,554.9
+440.2
73.4
(783.5)
(1,150.8)
(114.9)
1,962.7
1,138.9
3,101.6
2,472p
+5.4
-97.4
-241.4
-35.8
-25.6
+163.9
+138.3
+167p
374.7
105.5
480.2
3,114.7
68.0
(686.1)
(909.4)
(79.1)
1,988.3
975.0
2,963.3
2,305p
In total, 10,945 plots (30 April
2019: 9,812 plots) in Berkeley’s land
holdings relate to 18 St William
developments which are contracted
in the joint venture. St William has
completed the purchase of ten of
these sites which include the long-
term regeneration developments
of Prince of Wales Drive (over 950
homes), Clarendon in Hornsey (over
1,700 homes), King’s Road Park in
Fulham (over 1,800 homes) and Poplar
(over 2,800 homes). The remaining
eight St William sites are included in
Berkeley’s conditional land holdings.
Berkeley continues to work closely
with National Grid to identify further
sites from across its portfolio to bring
through into the joint venture.
Trading and Financial Review continued
Abridged Balance Sheet as at
Non-current assets
— Investment in joint ventures
— Other non-current assets
Total non-current assets
Inventories
Debtors
Deposits and on account receipts
Other trade payables
Provisions
Capital employed
Net cash
Net assets
Net asset value per share
This is an increase in net cash
of £163.9 million during the year
(2019: £287.7 million) as a result of
£470.5 million of cash generated
from operations (2019: £767.2 million)
and a net outflow of £75.1 million in
working capital (2019: net inflow of
£22.0 million), before tax and other
net cash inflows of £48.8 million
(2019: net outflow £249.6 million),
share buy-backs of £130.5 million
(2019: £198.9 million) and dividends of
£149.8 million (2019: £53.0 million).
Banking
The Group has banking facilities which
total £750 million, currently comprising
a drawn £300 million term loan,
and a £450 million revolving credit
facility of which £200 million is drawn.
The Group has clarity of financing with
the facilities in place to November
2023. The Group’s cash holdings are
currently placed on deposit with its
relationship banks.
Joint ventures
Investments accounted for using
the equity method have decreased
from £374.7 million at 30 April 2019
to £261.8 million at 30 April 2020.
Berkeley’s joint ventures include
St Edward, a joint venture with M&G,
and St William, a joint venture with
National Grid plc. The decrease in
joint venture investments during
the year reflects Berkeley’s share
of undistributed joint venture profits
of £33.3 million, further funding into
St William of £2.5 million, settlement
of St Edward loans of £29.0 million
offset by a dividend distribution from
St Edward of £177.7 million.
82
In St Edward, 64 homes were sold in
the year at an average selling price
of £768,000 (2019: 255 at £469,000).
The majority of completions occurred
at Green Park Village, complimented
by further completions at the
Kensington development.
In total, 5,310 plots (30 April
2019: 3,736 plots) in Berkeley’s
land holdings relate to six St Edward
developments, three in London
(Westminster, Kensington and
Brentford which was acquired in the
year) and three outside the Capital
(Reading, Fleet, and Wallingford).
The joint venture will not be
proceeding with a conditional site
in Queensway, Birmingham which
has been removed from the land
holdings in the year.
In St William, 371 homes were sold
in the year at an average selling price
of £716,000 (2019: six at £709,000).
These completions were across
four developments: Prince Of Wales
Drive, Elmswater, Fairwood Place and
The Cottonworks.
During the year, St William reviewed
its banking arrangements, having
regard to the size of the business and
its land holdings. As a consequence,
St William increased its committed
banking facilities to £360 million
from £150 million in March 2020.
The agreement has a three year
term, with options over an additional
two years.
Berkeley Group 2020 Annual Report Land Holdings as at
Owned
Contracted
Plots
Sales value
Average selling price (ASP)*
Average plot cost
Land cost (%)
Gross margin
GM%
* ASP reflects joint venture revenue at 100%
Land
Berkeley’s land holdings comprise
58,413 plots at 30 April 2020 (30 April
2019: 54,955 plots), including joint
ventures. Of these land holdings,
50,558 plots (30 April 2019: 41,639)
are on 86 sites that are owned and
included on the balance sheet of the
Group or joint ventures and 7,855
plots (30 April 2019: 13,316) are on
12 contracted sites which either do not
yet have a planning consent or have
another conditional element such as
vacant possession. The Group also
holds a strategic pipeline of long-term
options for in excess of 5,000 plots.
The plots in the land holdings at
30 April 2020 have an estimated
future gross profit of £6,417 million
(30 April 2019: £6,247 million), which
includes the Group’s 50% share of the
anticipated profit on any joint venture
development. The increase in the year
is due to a combination of new sites
acquired, new or revised planning
consents and market movements,
which has more than offset the
gross profit taken through the
Income Statement.
Berkeley has obtained eight new
planning consents in the year:
Abbey Barn Park in High Wycombe,
17-51 London Road in Staines, the
St William sites in Poplar and Hertford,
Sunningdale Park, Eastside Locks in
Birmingham, Centre House in White
City and the former Horlicks factory
in Slough. In addition, there have been
over 55 revised consents which have
sought to improve the development
solution for each scheme to add value
and/or reduce risk.
Of Berkeley’s 86 owned sites, 70 sites
(plots: 37,671) have an implementable
planning consent and are in
construction. A further 11 sites (plots:
10,634) have a consent which is not
yet implementable; due to practical
technical constraints and challenges
surrounding, for example, vacant
possession, CPO requirements or
utilities provision. This means Berkeley
has just five sites (plots: 2,253) which
it owns unconditionally that do not
have a planning consent.
Of the 12 contracted sites, one site
has a planning consent and two
have achieved resolutions to grant
consent but are subject to section
106 agreements. Given the contracted
nature of all of these sites, there is low
financial risk on the balance sheets
of the Group or its joint ventures.
The estimated future gross margin
represents management’s risk-adjusted
assessment of the potential gross profit
for each site, taking account of a wide
range of factors, including: current
sales and input prices; the political
and economic backdrop; the planning
regime; and other market forces; all
of which could have a significant effect
on the eventual outcome.
Rob Perrins
Chief Executive
30 April
2020
50.558
7,855
58,413
£23.7bn
£473k
£45k
11.0%
Change
+8,919
-5,461
+3,458
+£1.1bn
+£1k
-£6k
-1.5%
£6,417m
+£170m
27.1%
-0.5%
30 April
2019
41,639
13,316
54,955
£22.6bn
£472k
£51k
12.5%
£6,247m
27.6%
The Strategic Report on pages 4 to
83 was approved by the Board and
signed on its behalf by:
Rob Perrins
Chief Executive
17 June 2020
83
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
84
Berkeley Group 2020 Annual Report
Woodhurst Park, Bracknell
This growing community will
include 750 mixed-tenure homes,
a new local primary school and
65 acres of biodiverse parkland
and public space. The welcoming
open landscape includes streams,
ponds, woodland and meadows,
creating a network of natural
habitats for local wildlife and
people to enjoy.
Corporate
Governance
86 Chairman’s Introduction to the Corporate
Governance Report
88 Board of Directors
92 Board Leadership and Company Purpose
96 Division of Responsibilities
99 Nomination Committee Report
102 Audit Committee Report
106 Directors’ Remuneration Report
135 Directors’ Report
85
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Chairman’s Introduction to the Corporate Governance Report
Board activities
Berkeley has a Board of diverse
experience, contribution and skills and
each of its Directors, as set out in their
biographies on pages 88 to 91 of this
report, brings complementary talents
and experience which I believe enhance
the effectiveness of the Board.
Good governance plays a significant role
in a successful business strategy and the
Board has undertaken a number of key
activities across these areas during the
year. These key matters include:
— Review of the business strategy in
light of the surplus capital generated
in recent financial years and
consequential proposal of additional
capital returns to shareholders in
January 2020.
— Review of the Company’s
remuneration policy in light of the
Group’s evolving strategy culminating
in the proposal of amendments to
the Group’s remuneration policy in
January 2020.
— Consideration of emerging issues
facing the Company and the
immediate response to challenges
imposed by Covid-19, including the
decision to postpone the proposed
enhanced capital returns to
shareholders and remuneration
policy amendments.
— Continual review of the composition
of the Board and plans for
succession including the re-election
of Adrian Li.
Whilst these are the key matters arising
in the year, the Board agenda very
clearly covers a vast array of areas
impacting the business and a number
of these are set out on pages 92 to 93 of
this report, including our progress on the
Berkeley Modular factory, our approach
to sustainability, climate change and fire
safety both in our buildings and leading
within the industry, amongst others.
Looking forward to 2020/21, the Board
will continue to monitor the corporate
governance agenda and seek to improve
and adapt our governance processes
to ensure best practice in a way which
complements Berkeley’s unique business
model and operating structure.
In closing, I would like to thank all of
my Board colleagues for their valuable
service during the year.
Tony Pidgley CBE
Executive Chairman
Introduction
I am delighted to introduce the
Corporate Governance Report
for the 2019/20 financial year.
The Board continues to embrace
high standards of corporate
governance and this financial year
is the Company’s first operating
under the principles and provisions
of the UK Corporate Governance
Code 2018 (‘the Code’), which the
Group has adopted.
This report details how the Board
has considered and applied the
principles and provisions of the
Code by addressing in turn each
of the five main areas of the Code,
as follows, and providing information
relating to the principles and
provisions contained within
each area:
Board Leadership and
Company Purpose
pages 92 to 95
Division of Responsibilities
pages 96 to 98
Nomination Committee Report
pages 99 to 101
Audit Committee Report
pages 102 to 105
DIrectors’ Remuneration Report
pages 106 to 134
A copy of the Code is available on
the Financial Reporting Council’s
website www.frc.org.uk.
Stakeholders and Company
purpose, culture and value
The strategic focus and purpose of the
business is centred on transforming
underutilised places and creating
new homes in neighbourhoods that
return sustainable social, economic
and environmental value back to the
community which improves the lives
of all those touched by our activities.
This long-term value added approach to
regeneration delivers broad benefits to
numerous stakeholders. Further detail
on the business’s strategy and approach
to development can be found in
Our Vision on pages 30 to 46 of the
Strategic Report whilst we set out our
engagement with and impact on our
stakeholders on pages 54 to 59 of the
Strategic Report.
Culture and values are intrinsic and can
deliver enormous unquantified value to
any organisation if they are aligned to
the strategy, widely understood and truly
embedded throughout the business.
The Code states that the Board should
establish the Company’s purpose, values
and strategy, and satisfy itself that these
and its culture are aligned. At Berkeley,
the culture starts with the tone from
the Board and permeates all of the
autonomous businesses and teams
within the Group. Our values are set out
on page 94 of this Report, along with
information on how the Board assesses
and monitors culture. I see every day
how these are truly part of the DNA of
our people whose energy, passion and
determination drive the business forward
for the benefit of all our stakeholders.
86
Berkeley Group 2020 Annual Report Audit
Remuneration
Nomination
Key
Chairman of Committee
Member of Committee
Board Committee membership
Member
Tony Pidgley
Glyn Barker
Andy Myers
Alison Nimmo
Diana Brightmore-Armour
Rachel Downey
Peter Vernon
Veronica Wadley
Non-Executive Director experience – Areas of expertise
Recent relevant financial experience
Other current PLC board experience
Construction
Development
Finance/banking
Commerce
Media/Comms
Public sector/government
International
All Directors appear in more than one category.
Board composition
Gender split
Non-Executive Director tenure
Chairman
Executive Director
Non-Executive Director
1
6
9
Female
Male
25%
75%
0–3 years
3–6 years
7–9 years
9+ years
2
3
3
1
87
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Board of Directors
Glyn Barker BSc
(Hons) FCA
Deputy Chairman and
Senior Independent
Director
Date of appointment
to the Board:
3 January 2012 and as
Deputy Chairman and Senior
Independent Director on
18 April 2018
Committee memberships:
R
A
N
Skills, experience and
contribution:
Glyn is a Chartered Accountant
and has extensive experience as
a business leader and a trusted
advisor to FTSE 100 companies.
He has a deep understanding
of accounting and regulatory
issues together with extensive
understanding of transactional
and financial services.
Glyn was appointed as a Non-
Executive Director of Berkeley
following a 35 year career
with PricewaterhouseCoopers
LLP (‘PwC’), where he held
a number of senior posts
including UK Vice Chairman,
UK Managing Partner and UK
Head of Assurance. He also
established and ran PwC’s
Transaction Services business.
Other appointments:
Independent Non-Executive
Director, Transocean Ltd
Chairman, Irwin Mitchell
Holdings Ltd
Senior Advisor, Novalpina
Capital LLP
Tony Pidgley CBE
Chairman
Rob Perrins BSc
(Hons) FCA
Chief Executive
Richard Stearn BSc
(Hons) FCA
Group Finance Director
Date of appointment
to the Board:
1 May 2001
Date of appointment
to the Board:
13 April 2015
Committee memberships:
None
Committee memberships:
None
Skills, experience and
contribution:
Richard re-joined Berkeley on
13 April 2015 as Group Finance
Director, having previously
worked for the Company from
2002 to 2011 as Group Financial
Controller. In the intervening
period, Richard spent three
years at Quintain Estates and
Development plc, serving as the
company’s Finance Director for
most of that time.
Richard is responsible
for the Group’s finance,
insurance, treasury, tax and
investor relations functions.
He also leads on strategic risk
management and has oversight
of the Group’s IT function.
Richard has 17 years of direct
experience in the property and
development industry. Prior to
joining Berkeley, he trained
and practiced for 12 years as
a Chartered Accountant with
PricewaterhouseCoopers LLP,
auditing and advising a wide
range of clients.
Other appointments:
None
Skills, experience and
contribution:
Rob joined Berkeley in 1994
having qualified as a Chartered
Accountant with Ernst & Young
in 1991. He was appointed to
the Group Main Board in 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 Chief Executive on
9 September 2009.
Rob has more than 20 years
experience in the real estate
and financial services industries.
He has a strong track record
in driving growth, delivering
strategic plans and a wealth
of financial and general
management experience.
He contributes to the Bank of
England’s Real Estate Forum.
Rob is passionate about
Berkeley’s social purpose
and is Chair of Trustees for
the Berkeley Foundation; an
independent charity which
supports disadvantaged
young people.
Other appointments:
Chair of Trustees, Berkeley
Foundation (since 2011)
Trustee, Crisis (since 2020)
Council Member and Chair
of the Finance and
Infrastructure Committee,
Aston University (since 2015)
Governor, Wellington College
(since 2009)
Date of appointment
to the Board:
Co-founder of Berkeley in 1976
and led the business as Group
Managing Director for 33 years.
Appointed Group Chairman on
9 September 2009.
Committee memberships:
N
Skills, experience and
contribution:
Tony has pioneered
Berkeley’s holistic approach
to placemaking and shaped
a strong Company culture
and values centred on
respect for people, customer
focus, partnership working
and relentless attention
to detail. These qualities
are the cornerstones
of Berkeley’s success.
Tony has advised successive
Governments on housing,
placemaking and the
regeneration of public sector
land. He was a member
of Lord Heseltine’s Estate
Regeneration Advisory Panel,
the Thames Estuary 2050
Growth Commission and the
Mayor of London’s Outer
London Commission.
He was the longest-serving
President in the history of the
London Chamber of Commerce
and Industry and was awarded
a CBE in 2013 for services
to the housing sector and
the community.
Other appointments:
Trustee, Berkeley Foundation
Trustee, Sir Simon Milton
Foundation
Vice President, Wildfowl &
Wetlands Trust
Trustee of Weybridge
Youth Centre
Advisory Board Member
for Public Practice
88
Berkeley Group 2020 Annual Report
Key to Committees
A Audit Committee
N Nomination Committee
R Remuneration Committee
Committee Chair
Sir John Armitt
Non-Executive Director
Dame Alison Nimmo
Independent
Non-Executive Director
Veronica Wadley CBE
Independent
Non-Executive Director
Adrian Li MA
(Cantab), MBA, LPC
Independent
Non-Executive Director
Date of appointment
to the Board:
1 October 2007. Sir John served
as Deputy Chairman and
Senior Independent Director
from 5 September 2012 to
18 April 2018.
Committee memberships:
None
Skills, experience and
contribution:
Sir John is currently Chairman
of National Express Group
PLC, City & Guilds Group and
the National Infrastructure
Commission. He is an
Independent Non-Executive
Director of Expo 2020.
Sir John was President of the
Institution of Civil Engineers
(2015 – 2016), Chairman of the
Olympic Delivery Authority
(2007 – 2014), Chairman of
the Engineering and Physical
Science Research Council
(2007 – 2012) and a member
of the Transport for London
Board (2012 – 2016). From 2001
to 2007, he was Chief Executive
of Network Rail and its
predecessor, Railtrack, and prior
to that he was Chairman of
John Laing plc’s international
and civil engineering divisions.
Sir John brings a wealth of
operational, commercial and
technical experience amassed
throughout his career.
Sir John received a knighthood
in 2012 for services to
engineering and construction
and he was awarded a CBE in
1996 for his contribution to the
rail industry.
Other appointments:
Chairman, National Express
Group PLC
Chairman, City & Guilds Group
Chairman, National
Infrastructure Commission
Independent Non-Executive
Director, Expo 2020
Date of appointment
to the Board:
5 September 2011
Date of appointment
to the Board:
3 January 2012
Date of appointment
to the Board:
2 September 2013
Committee memberships:
Committee memberships:
A
N
Skills, experience and
contribution:
Dame Alison is a Chartered
Surveyor and Town Planner by
training and is the former Chief
Executive of The Crown Estate.
Alison has extensive experience
in urban regeneration and
property. Prior to joining
The Crown Estate, she led the
design and delivery of the
London 2012 Olympic and
Paralympic Games venues as
Director of Regeneration and
Design at the Olympic Delivery
Authority and was the lead on
sustainability and legacy for
the Olympic Park. Her previous
roles have included Chief
Executive of Sheffield One and
Project Director of Manchester
Millennium Ltd.
Alison was awarded a CBE
in 2004 for services to urban
regeneration and a DBE in 2019
for public service and services
to the Exchequer. She is
a Fellow of the Institution of
Civil Engineers and the Royal
Institute of British Architects.
In 2014, Alison was awarded
the prestigious Royal Town
Planning Institute Gold
Medal for recognition of her
services to town planning
and sustainability throughout
her career.
Other appointments:
Member of Imperial College’s
White City Syndicate
Skills, experience and
contribution:
Veronica is a journalist by
profession; she was Editor
of the Evening Standard from
2002 to 2009 and previously
Deputy Editor of the Daily
Mail and the Daily Telegraph.
Previously, Veronica was Chair
of the Arts Council London
and National Council member
of Arts Council England from
2010 – 2018. She was Senior
Advisor to the Mayor of London
from 2012 to 2016, during which
time Veronica oversaw the
delivery of youth volunteering
and employment programmes
and developed new strategy
for business relationships and
sponsorship for the Greater
London Authority. Through her
involvement in such mayoral
schemes Veronica brings an
in-depth understanding of local
government and communities
in London.
In 2018 Veronica was awarded
a CBE for services to the arts.
Veronica was also previously
a Member of the City of London
Education Board.
Other appointments:
Independent Director, Times
Newspapers Holdings Ltd
Member of the Royal College
of Music Board
Governor of the Yehudi
Menuhin School
Co-Founder and Trustee
of the London Music Fund
Governor of Shoreditch
Park Academy
Committee memberships:
None
Skills, experience and
contribution:
Adrian is Co-Chief Executive
of The Bank of East Asia,
Ltd, where he is responsible
for overall management and
control of the group. He holds
a Master of Management
degree from the Kellogg School
of Management and an MA
in Law from the University
of Cambridge.
In addition to his banking
experience, Adrian brings
a global and diverse
perspective to Board
discussions and provides
valuable insight into the
Far East property and
finance markets.
Other appointments:
Co-Chief Executive of The Bank
of East Asia, Ltd
Independent Non-Executive
Director of two listed
companies under the Sino
Group (Sino Land Company Ltd
and Tsim Sha Tsui Properties Ltd)
Independent Non-Executive
Director, China State
Construction International
Holdings Ltd
Independent Non-Executive
Director, COSCO SHIPPING
Ports Ltd
89
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
Board of Directors continued
Sean Ellis BSc (Hons)
Executive Director
Karl Whiteman BSc
(Hons)
Executive Director
Justin Tibaldi
Executive Director
Paul Vallone
Executive Director
Date of appointment
to the Board:
9 September 2010
Date of appointment
to the Board:
10 September 2009
Date of appointment
to the Board:
8 December 2017
Date of appointment
to the Board:
8 December 2017
Committee memberships:
None
Committee memberships:
None
Committee memberships:
None
Committee memberships:
None
Skills, experience and
contribution:
Karl joined Berkeley in 1996
as a Construction Director,
before rising to Divisional
Managing Director of Berkeley
Homes East and West Thames.
He joined the Group Main Board
on 10 September 2009 as a
Divisional Executive Director.
Karl leads two of the country’s
most celebrated regeneration
projects – Kidbrooke Village
and Royal Arsenal Riverside.
He is Managing Director of
Berkeley Modular where he
is leading the development
of the Group’s precision
manufacturing facility in Kent.
Karl oversees the delivery of
Our Vision, the Group’s business
strategy, which is driving
performance and innovation
across the business. He is also
responsible for the Group’s
approach to sustainability,
along with the Group-wide
health and safety strategy and
is Chairman of the Health and
Safety Committee.
Other appointments:
None
Skills, experience and
contribution:
Justin joined Berkeley in 1999 as
a senior surveyor and went on
to hold board positions within
the Group’s London divisions,
including a spell at Woolwich
Arsenal and overseeing the
delivery of Tabard Square, SE1.
He became Managing Director
of Berkeley Homes (Capital) in
2011 and joined the Main Group
Board on 8 December 2017, as
a Divisional Executive Director.
Justin is responsible
for the Group’s Estates
Management Committee
and shapes Company
policy on placekeeping and
sustainable resident-led
stewardship. He also has
oversight of the Group’s
Commercial Committee.
Having recently completed
developments at Goodman’s
Fields and One Tower Bridge,
his current project portfolio
includes the long-term
regeneration of Hackney’s
Woodberry Down, one of the
country’s most successful
housing estate redevelopment
programmes. He also leads
the delivery of South Quay
Plaza, one of London’s tallest
residential buildings, 250 City
Road, where over 1,000 homes
are being built around a public
square and commercial hub,
as well as the development
at Trent Park, where over 250
homes are being built in the
setting of Trent Country Park.
Other appointments:
None
Skills, experience and
contribution:
Paul joined Berkeley in 1990,
with a background in property
sales and marketing. He went
on to become a Managing
Director before joining
the Main Group Board on
8 December 2017 as a Divisional
Executive Director.
Paul is Executive Chairman
of the St Edward joint venture
with Prudential, and is
Divisional Managing Director
of Berkeley Homes (Central
and West London). Paul is
Chairman of the Group’s Sales
and Marketing Committee,
the Group-wide Digital
Steering Group and Berkeley’s
international office network.
Paul oversees a number of
projects in the Group which
include Oval Village, built on
the site of the historic Oval
Gasworks and 9 Millbank,
a combination of newly built
properties and the restoration
of a landmark building.
He is also overseeing
St Edward’s Hartland
Village, one of the Group’s
most ambitious long-term
regeneration programmes
outside of London. This will see
a long-derelict National Gas
turbine site transformed into
a highly sustainable new village.
Other appointments:
None
Skills, experience and
contribution:
Sean joined Berkeley in 2004
and was appointed to the Main
Group Board on 9 September
2010, as a Divisional Executive
Director. Sean is Chairman
of St James Group, Berkeley
Homes (Eastern Counties) and
the joint venture with National
Grid, St William. As the head
of these businesses he has
overseen highly acclaimed
mixed use developments across
London and the South East,
including Riverlight, winner of
the RIBA National Award 2018.
As Chairman of St William,
Sean leads the long-term
regeneration of former
National Grid gas infrastructure
sites, which require complex
remediation and placemaking
strategies. With St James,
Sean is overseeing the
transformation of an 11 acre
former warehousing site in the
White City Opportunity Area
– a long-term regeneration
programme which will deliver
more than 1,800 homes.
Sean is Chairman of the Group’s
Land and Planning Committee
and is a regular contributor
to the national planning and
housing debate. He began his
career at Beazer Homes and
prior to joining Berkeley held
various senior positions at
Laing Homes, where he was
appointed Managing Director
in 1999.
Other appointments:
None
90
90
Berkeley Group 2020 Annual Report Key to Committees
A Audit Committee
N Nomination Committee
R Remuneration Committee
Committee Chair
Andy Myers BEng
(Hons) ACA
Independent
Non-Executive Director
Diana Brightmore-
Armour FCCA, MCT
Independent
Non-Executive Director
Peter Vernon FRICS
Independent
Non-Executive Director
Rachel Downey ACA
Independent
Non-Executive Director
Date of appointment
to the Board:
6 December 2013
Date of appointment
to the Board:
1 May 2014
Date of appointment
to the Board:
6 September 2017
Date of appointment
to the Board:
8 December 2017
Committee memberships:
Committee memberships:
Committee memberships:
Committee memberships:
A
R
N
R
A
Skills, experience and
contribution:
Andy qualified as a Chartered
Accountant with KPMG in
1990 and has extensive finance
and commercial experience.
He is Chief Financial Officer
at SHL Group, the global
leader in talent innovation.
Previously he was Chief
Financial Officer at McLaren
Technology Group where he
had responsibility for finance,
IT and strategic procurement.
Andy has also held senior
finance roles at Rolls-Royce
plc and at the BMW/Rover
Group. He joined Rolls-Royce
plc as Finance Director of the
Combustion Business Unit in
2000 and was promoted to
CFO of the Energy Sector,
based in Washington DC,
two years later.
Other appointments:
Chief Financial Officer, SHL
Group
Skills, experience and
contribution:
Diana is a Fellow of the
Association of Chartered
Certified Accountants and
a Fellow of the Association
of Corporate Treasurers.
She was the Chief Executive
Officer, UK & Europe of the
Australia and New Zealand
Banking Group Ltd until
31 December 2019, where she
was responsible for oversight
of the day-to-day activities
of the branch, including the
local execution of the Group’s
strategy, promoting a culture
of compliance and ensuring
appropriate standards of
conduct and governance.
Diana was previously CEO,
Corporate Banking at Lloyds
Banking Group (2004 –
2012) and spent her early
career at The Coca-Cola
Company. She has 30 years’
international experience in
banking, corporate finance,
financial management, treasury
and audit.
Diana is a strong supporter
of talent development and
gender diversity through her
involvement with the 30% Club,
City Women’s Network.
Other appointments:
Non-Executive Director of
C. Hoare & Co.
Skills, experience and
contribution:
Peter brings extensive
experience of complex real
estate transactions. He is Group
Executive Director at Grosvenor
where he has responsibility
for overseeing the group’s
operating companies in North
America, Asia and Britain
and Ireland with an active
programme of real estate
investment and development
in 11 world cities. During the
period 2008 to 2016, Peter was
Chief Executive of Grosvenor
Britain and Ireland.
Peter is also a Trustee
of Peabody, the housing
association that owns and
manages more than 66,000
homes across London and the
South East.
He has been a Director
of London First, Deputy
Chairman of the West End
Partnership, a member of the
British Property Federation
Policy Committee and of
the RSA Insurance Group
London Regional Board.
He was a member of the
Government’s Montague
Review into the Private Rented
Sector, a Commissioner of the
City Growth Commission and
a member of the Government’s
Estates Regeneration
Advisory Panel.
Other appointments:
Group Executive Director,
Grosvenor
Trustee of Peabody
Skills, experience and
contribution:
Rachel brings extensive
regeneration expertise. She is
Project Director of Manchester
Life, a joint venture between
Abu Dhabi United Group
and Manchester City Council
established in 2014 to make
a significant contribution
towards achieving Manchester’s
regeneration and residential
growth ambitions.
Prior to that Rachel has
managed various projects
including the submission
to the Government for
£113 million to transform
the public-housing stock
in several neighbourhoods
across Manchester and
Salford as part of the
Housing Market Renewal
Pathfinders programme.
Rachel, a Chartered
Accountant, is also currently
a Trustee of the We Love
Manchester Emergency
Fund and was previously
a Trustee of the Lord Mayor
of Manchester’s Charity Appeal
Trust (2015 – 2019).
Other appointments:
Project Director,
Manchester Life
Trustee of We Love Manchester
Emergency Fund
91
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
Board Leadership and Company Purpose
The Board
At the date of this report, the
Board comprises sixteen Directors:
the Chairman, six Executive
Directors and nine Independent
Non-Executive Directors and thus
complies with the Code requirement
that at least half of its Directors,
excluding the Chair, are Independent
Non-Executive Directors.
The Board has collective
responsibility for promoting the
long-term success of the Company
in a safe and sustainable manner
in order to create value for
stakeholders. The Board provides
leadership and sets the Company’s
long-term strategic objectives.
Its duties are set out in a formal
schedule of matters specifically
reserved for decision by the Board.
More details on the governance
structure of the Company can be
found on page 97 of this report.
Meetings
The Board met formally four times
during the year ended 30 April
2020 and there were no absences.
There were also four Board calls
during the year.
In addition to these formal meetings
of the Board, the Non-Executive
Directors meet with the Chairman
twice per year. The Chief Executive
and 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 Chairman
present, at a meeting chaired by
the Senior Independent Director.
The Board is also consulted
in advance of any significant
market announcement.
Board and Committee 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.
92
Board activities during the year and key focus areas
The governance structure on page 97 of this report sets out the key responsibilities of
the Board of Directors. These key responsibilities are met through a number of standing
agenda items for which reports are presented and debated covering, for example,
health and safety, customer service, ESG related matters, the housing and sales
market and investor relations. The output of these valuable discussions held at the
Main Board meetings, which benefit from the broad experience of the Non-Executive
Directors, informs the strategy for each area. This is then fed back into each operating
company by the Executive Directors in the local operating company board meetings.
In addition, the Board holds some meetings at key sites, which included
St George’s Grand Union and St Edward’s 9 Millbank developments in the last year.
This facilitates a presentation by the local divisional management team on the
respective developments including the development solution, challenges facing the
site and those that have been overcome, the engagement with the local community
and the overall financial performance of the development.
Broadly, the focus of Board activities during the year falls into three areas; strategy,
finance and governance.
Strategy
Planning status of future
developments
The Board received updates at each
meeting on the status of key sites
without a planning consent, covering
the development plans, community
engagement activities and the
planning milestones.
Modular
factory
The Board received regular updates on
the progress of the construction of the
Berkeley Modular factory in Kent.
During the year the fit out of the factory
has continued in preparation for the first
modules being produced.
Health and
safety incidents
The Board reviewed the status of ongoing
investigations into health and safety
related incidents in the year. The Group
currently has an industry leading AIIR
of 1.17, compared with the Health and
Safety Executive’s industry average
of 3.66; see page 33 of the
Strategic Report.
Fire
safety
Divisional management have conducted
reviews of a significant number of
completed buildings during the year.
Summary reports on the status
of these reviews have been shared
with the Board for review, in light
of regulatory developments.
Progress against climate
change commitments and
approach to sustainability
In line with the Group Strategy, the Board
approved targets on new sites to ensure
that they were in line with the current
commitments. In addition the Board
received regular updates on sites under
development to ensure that the targets
are being met in line with commitments
made during the planning process.
Further details of the Group’s performance
in respect of ESG matters of strategic
importance to the Group are set out on
pages 46 to 47 of the Strategic Report.
Cyber security and
data protection
The Board undertook an annual review
of the training, policies and procedures in
place in relation to ongoing compliance
with data protection laws. As a result,
a new training module was rolled out
to all Group employees to ensure that
they were up to date on the current
legislation. Through the Audit
Committee, the Board received an
update on the Company’s actions
relating to cyber security.
Company
tax policy
The tax strategy is ultimately overseen by
the Board of Directions. During the year
the Board undertook a review of the Group
Tax Policy to ensure that risks associated
with the interpretation and application
of taxation laws and regulations are
appropriately managed, identified and
evaluated in accordance with the Group’s
risk management framework.
Berkeley Group 2020 Annual Report Finance
Dividends and
shareholder returns
The Board reviewed its plans for
the surplus capital generated in the
business during the year and in January
2020 it announced that it intended to
return capital to shareholders beyond
the regular £280 million a year level.
A circular issued in February proposed
to return £500 million by means of
a B share scheme in March 2020, with
a further £500 million in March 2021 by
means of a C share scheme.
Governance
As a result of the global Covid-19
pandemic and resulting uncertain
outlook the Board decided to postpone
the return of surplus capital, but
undertook to continue with the regular
shareholder returns of £280 million
per annum.
Annual report
and accounts
During the year the Board reviewed
and approved the Annual Report
and Accounts, along with associated
press releases, the interim results and
Trading Updates.
Several issues were considered by the
Board during the year relating to the
operation, tenure and independence
of members of the Board, including:
the tenure and independence of Sir John
Armitt, the tenure of Executive Chairman
Tony Pidgley pursuant to provisions
9 and 19 of the Code, the perceived
over-Boarding of Adrian Li and the
Executive Directors’ remuneration.
— Tony Pidgley, who co-founded
Berkeley, fulfils the role of Executive
Chairman which the Board believes
is in the best interests of the
Company. The transition to this
model took place in 2009 and
shareholders have supported this
structure ever since as it has secured
the succession of the Executive team
and continued long-term success
of the Company. Having a strong
Senior Independent Director and
Deputy Chairman ensures that there
is a balance of responsibility at the
top of the Company.
— The Board recognises that Sir John
Armitt’s tenure as an Independent
Non-Executive Director has exceeded
nine years which the Code refers
to in the context of Non-Executive
Directors. The Board has considered
this matter and concluded that Sir
John continues to maintain and
contribute an independent view in all
Board deliberations, providing robust
challenge and scrutiny. Furthermore,
his extensive construction expertise
and experience continue to be of
significant value to the Board.
— The Company noted that at its
Annual General Meeting (‘AGM’)
held on 6 September 2019, 46.26%
of votes were cast against the re-
election of Adrian Li, an increase on
the previous two years’ votes against.
The Company understands that
the votes against reflect concerns
regarding the number of directorships
Adrian Li holds and whether he
has the capacity to deal with an
exceptional period of Board activity
at Berkeley. The Board remains
cognisant of the FRC’s view that
investors and their advisors should
pay due regard to a company’s
individual circumstances.
The Company remains strongly
of the view that Adrian Li continues
to be a valuable and effective
Independent Non-Executive Director
on the Board, who consistently
demonstrates sustained commitment
and availability. Adrian is an active
member of the Board who brings
an almost unique insight due to his
background and experience. He was
appointed to the Board in 2013 and
has attended all Board meetings
since then. Furthermore, Adrian
continues to contribute strongly
during ad hoc periods of increased
activity, as has been notably evident
during recent times of unprecedented
challenge arising from Covid-19 when
he, like other Board members, has
made himself available as events
have developed.
Notwithstanding, the strong and
sustained contribution that Adrian Li
brings to the Company, the Board,
aided by Adrian, has begun the
process of identifying a replacement,
and will seek to match as closely as
possible the very special and almost
unique skills, attributes and diversity
that Adrian brings to Berkeley.
— The Board consulted with
shareholders and proposed changes
to address concerns expressed
by shareholders at the 2019 AGM.
These included the introduction of
new performance conditions and
increasing the cash return hurdle in
line with the then proposed enhanced
shareholder returns. While the EGM
scheduled for March to vote on these
proposals was cancelled, the Board
was grateful for the time devoted
by shareholders to the consultation
and their strong support for the
proposed changes.
Throughout the year ending 30 April
2020, and in accordance with Listing
Rule 9.8.6R, the Company has
complied with the principles and
relevant provisions of the Code,
save where explanations have been
provided as an alternative as permitted
by the introduction to the Code.
Where appropriate, relevant explanations
in respect of provisions 9, 19 and 38 are
set out on this page and page 115 of
this Report.
93
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
Board Leadership and Company Purpose continued
Our Culture
Berkeley’s unique culture is the sum of our shared values, vision, traditions and overarching
sense of purpose. Together, they have a dynamic and energising effect on the way we
work, shaping our day-to-day behaviours, manners and actions, our goals, our expectations
of each other, our long-term strategies and our brand.
Our Values
Have
Integrity
Be
Passionate
Think
Creatively
Respect
People
Excellence
Through
Detail
Build trust by
being open, clear
and credible
Take pride in what
we do and the
impact we make
Find individual
solutions for
every site
and situation
Work together,
empower people
and value
their contribution
Deliver the best
through attention
to detail in
everything we do
Our Vision
is to be a world-class business, defined by the quality of the
places we create, generating long-term value and having
a positive impact on society.
Our Purpose
is to build quality homes, strengthen communities
and improve people’s lives.
Read more on pages 30 to 45
How do we embed
our culture?
Berkeley’s founders believed that
a strong, value based working culture
was the key driver for long-term
performance, customer loyalty and
brand strength. This remains at the very
heart of our philosophy and we continue
to actively cultivate, embed and reinforce
our culture throughout every area of
the business.
Our obsession with culture is
everywhere. We talk about it, write
about it and celebrate it. It is part of
our interviews, inductions, performance
reviews, team meetings and staff
conference. It is described on the walls
of our office, sites and marketing suites.
It is reinforced through our training
programmes, performance targets and
staff awards. It sets the standards by
which we openly judge our behaviours,
products, service and processes.
How do we characterise our culture?
These are the core features of the Berkeley culture. They are not rigid rules, but
dynamic and intrinsic features of the way we think, work and behave.
We are passionate
about people and
communities
We strive to enhance
quality, in every
small detail
We are sustainable,
responsible and
always think
long term
We are highly
collaborative, flexible
and responsive
partners
We put our
customers at the
heart of everything
Health and safety
always comes first
We value autonomy,
independence and
entrepreneurial flair
We are agile, decisive
and trust our
instincts
We lead by example,
innovate and break
the mould
94
Berkeley Group 2020 Annual Report The Chief Executive and Finance Director
meet with the major shareholders
twice annually to discuss the strategy
and operations of the Group as well
as any issues the shareholders wish to
raise. The Board is always available for
conference calls or dialogue with any
of the major shareholders throughout
the year.
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.
Employee and workforce
engagement
The aim of the Board is to develop
a highly skilled workforce that will
work together in a safe, healthy and
supportive environment. The Board
recognises that talented and motivated
employees are the Company’s strongest
resource. Health and safety of our
employees is paramount, in terms
of both physical and mental wellbeing
and this continues to be a key
area of focus for the Board though
Our Vision.
In addition to ensuring the safe operation
of our sites for our employees and
sub-contractor workforce, the Board
engages with employees in a number
of different ways. The Chairman and
Chief Executive regularly visit the
operating businesses and developments
under construction to engage with
employees and oversee the site activities.
Members of the Board are present at
annual staff conferences to provide
business updates and encourage open
group discussions.
During the year, in compliance with
The Code, a people engagement forum
was set up to give employees from
all areas of the business direct access
to the Board and encourage regular
communications. The forum will ensure
there is a single forum assessing these
activities, sharing best practice and
capturing their output for the Executive
Committee and Board.
For more details on how the Board
engages with employees see page 56
Annual General Meeting
The Company’s AGM will take place
at 11 a.m. on 4 September 2020.
In light of the evolving developments
and related Government restrictions in
response to COVID-19, and to minimise
public health risks, the 2020 Annual
General Meeting is to be held as
a closed meeting, details of the AGM
and arrangements for engagement
with shareholders will be set out within
the Notice of Meeting.
In accordance with the FRC Guidance
on Board Effectiveness, 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.
At the AGM, voting on all resolutions will
be by proxy voting and the results of
the AGM will be announced to the Stock
Exchange shortly after the close of the
meeting. They will also be made available
on the Company’s website.
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
during normal business hours at the
Company’s registered office. Ordinarily,
these are also available for inspection
at the AGM.
Whistleblowing
The Group has a whistleblowing policy,
which has been communicated to
all employees. In accordance with
this policy, Directors, management,
employees and external stakeholders
can report in confidence, outside of
normal reporting channels, any concerns
they may have of malpractice, financial
irregularity, breaches of any Group
procedures, or other matters. Any such
concerns are subject to proportionate
and independent investigation.
The policy is available to view on the
Group’s website.
Stakeholders
The role of the Board is to deliver value
to all stakeholders and promote the
long-term success of the Company.
The Board recognises the importance
of engaging with all of its stakeholders,
including its shareholders, around
all aspects of the Group’s activities.
More details on how the Board has had
regard to stakeholder interests and has
complied with s.172 of the Companies
Act 2006 can be found on pages 60
to 61 of the Strategic Report.
The strategy and risk appetite in which
the Company operates is set by the
Board. Key focus areas are identified
and carefully considered by the Board
to ensure that the Company operates
within the risk framework laid out and
decisions fully contribute to the delivery
of the Group’s strategy. Some key
aspects are discussed below. For more
details on the risk framework and how
we manage risks see pages 66 to 79
of the Strategic Report.
Shareholder engagement
The Company undertakes active
dialogue with its current and prospective
institutional shareholders through
meetings or calls. During 2019/20
discussions focused around the half year
and year end and covered topics such as
performance, markets, business strategy
and capital allocation, interim and full
year results and governance matters.
In addition to these meetings, Executive
Directors have spoken to a large number
of shareholders and proxy advisory
agents in order to discuss specific
queries raised. As part of its consultation
on amendments to the Remuneration
Policy and Long Term Incentive Plan
(LTIP) following the 2019 AGM, the
Board, including the Chairman of the
Remuneration Committee, held calls
and met with shareholders representing
over 80% of the Company’s issued share
capital. The Board also meets with retail
shareholders at the AGM.
Shareholders are also kept up to date
with the Company’s activities through
the Annual Reports, interim results
announcements and Trading Updates.
In addition, the corporate website
provides information on the Group
and latest news, including regulatory
announcements and corporate
governance updates. The presentations
made after the announcement of the
preliminary and interim results are
also available in the Investor Relations
section of the website. The Board
is kept informed of the views of the
shareholders through periodic reports
from the Company’s broker, UBS.
95
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Division of Responsibilities
The Board has a range of experience
and has strong knowledge in areas of
property development, construction,
communications, public sector
and banking, both in the UK and
internationally. It is the balance of
skills, experience, independence and
knowledge of the Board as a whole
which ensures that the duties and
responsibilities of the Board and its
Committees are discharged effectively.
The roles of Chairman and Chief
Executive are separately held and there
are clear written guidelines to support
the division of responsibility between
them. The Chairman is responsible for
the effective operation of the Board
and shareholder general meetings,
for overseeing strategy, corporate
governance and the Berkeley culture,
for mentoring the executive team
and for ensuring that each Director
contributes to effective decision making.
The Chief Executive has day-to-day
executive responsibility for the running
Board responsibilities
of the Group’s businesses. His role is
to implement, develop and deliver the
strategy and business plans, to enable
the Group to meet its objectives and to
maintain relationships with investors and
to develop the management team.
The Non-Executive Directors, led by
the Senior Independent Director Glyn
Barker, have the skills, experience,
independence and knowledge of the
Company to enable them to discharge
their respective duties and responsibilities
effectively. Each Non-Executive Director
is prepared to question and to challenge
management. All of the Non-Executive
Directors are considered to have been
independent throughout the year.
The Board reviews the independence of
Non-Executive Directors on an annual
basis taking into account each individual’s
professional characteristics, behaviour
and their contribution to unbiased and
independent debate. See pages 92 to 93
of this Report for more details.
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 a Board level.
Strong central functions, including
Legal, Health & Safety and Company
Secretarial, provide support and
consistency to the Board. 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.
Individual areas of responsibility are
explained below.
Executive Chairman
Group Finance Director
Senior Independent Director
The Executive Chairman
is responsible for:
— the effective operation of
the Board;
— overseeing the development
and implementation of
the Group’s strategy and
corporate governance;
— setting and sustaining the culture
and purpose of the Group; and
— encouraging constructive
Board relations and open
debate and ensuring that each
Director contributes to effective
decision making.
The Executive Chairman is supported
by the Company Secretary in relation
to policies, processes and the timely
provision of information to the Board.
Chief Executive
The Chief Executive
is responsible for:
— day-to-day running of the
Group’s operations;
— implementing, developing and
delivering the strategy to enable
the Group to meet its objectives;
— maintaining relationships with
investors; and
— developing the management
team and succession planning.
96
The Group Finance Director
is responsible for:
— managing the financial affairs
of the Group, including tax and
treasury functions;
— strategic risk management of the
Group; and
— oversight of the IT functions.
The Senior Independent Director
is responsible for:
— evaluating the
Chairman’s performance;
— meeting with Non-Executive
Directors annually and providing
feedback to the Chairman and
Chief Executive; and
— providing support and advice
for the Chairman and for other
members of the Board as required.
Executive Directors
Non-Executive Directors
Collectively, the Executive Directors
on the Board have responsibility for:
— operational aspects of
implementing the Group’s
strategy, including land
acquisitions, planning,
construction and sales of
completed homes;
— driving performance and
innovation across the business;
— ensuring sustainability and
environmental targets are met
across the developments;
— people and employee matters;
— customer service matters;
— health and safety strategy; and
— placekeeping and sustainable
residential stewardship.
Collectively, the Non-Executive
Directors on the Board have
responsibility for:
— providing additional advice and
expertise to support the Board
in setting and implementing the
Group strategy;
— providing constructive challenge
to Board decisions;
— serving on Board Committees to
ensure fair and balanced policies
are implemented, including
executive remuneration and risk
management; and
— having an awareness of
shareholder and other
stakeholder matters and offering
guidance as required.
Berkeley Group 2020 Annual Report Governance structure
Executive and Chairman's Committees
Divisional and operating company Boards
Key responsibilities include:
— business planning
— reviewing the financial and
operating performance
of all Group divisions
and companies
— risk management
— cash management
— delivery of Group strategy
— legal and regulatory matters
— brand and reputation
— relationships with
Local Authority and
Government stakeholders
— people
Key responsibilities include:
— health and safety
— sales and marketing
— land and planning
— people retention
and development
— regulatory matters
— production
— assessing the impact
of the economic and
political environment
— site-specific matters
— customer service
In addition we have Operational Committees drawn from across the Group’s autonomous companies and teams where information,
experience and best practice are shared. These Committees, which report to the Executive Committee, cover the following areas:
— Health and Safety
— IT
— Production
— Customer Service
— Commercial and Technical
— Sales and Marketing
— Our Vision/Sustainability
Board of Directors
Key responsibilities include:
— overall management of the Group, its strategy and
long-term objectives
— approval of corporate plans
— approval of all material 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
— approval of policies in key areas including sustainability, Health
and Safety, Business Ethics, Equality, Modern Slavery and
Share Dealing
Audit Committee
Remuneration Committee
Nomination Committee
Key responsibilities include:
— reviewing the structure, size and
composition of the Board and
Board Committees and making
recommendations to the Board
— evaluating the balance of skills,
knowledge and experience on
the Board
— leading the process for identifying
and nominating candidates for
Board vacancies
— overseeing the annual evaluation
of the Board
Key responsibilities include:
— monitoring the integrity of the
financial reporting
— reviewing significant financial
reporting matters and
accounting policies
— reviewing the adequacy and
effectiveness of the Group’s risk
management and internal
control systems
— monitoring the effectiveness
of the Group’s internal audit function
— overseeing the relationship with
the external auditor, including
appointment, removal and fees
— ensuring the auditor’s independence
and the effectiveness of the
audit process
— monitoring and mitigation
of emerging and principal risks
Key responsibilities include:
— determining and agreeing 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
— determining the performance
conditions for the Bonus Plan
operated by the Company and
approving the total annual payments
made under this Plan
— determining all share incentive
plans for approval by the Board
and shareholders
— taking into account the views of
shareholders when determining
plans under the Remuneration Policy
— ensuring that the contractual terms
on termination, and any payments
made, are fair to the individual and
the Company and that failure is
not rewarded
— noting annually the remuneration
trends and any major changes in
employee benefit structures across
the Company or Group
97
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Division of Responsibilities continued
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 considers these procedures
to be working effectively.
Board Committees
The Board has delegated certain matters
to individual Executives and to the
specific Committees of the Board: Audit,
Remuneration and Nomination. The three
main Board Committees operate within
clearly defined Terms of Reference
pursuant to the provisions of the Code.
The Terms of Reference for each of
the three main Board Committees can
be downloaded from the Corporate
Governance page of the Investor
Information section of the Company’s
website. Copies are also available to
shareholders on application to the
Company Secretary. The responsibilities
of the key Board Committees are
described here.
98
Executive and
Chairman’s Committees
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.
Details of membership, meetings
and attendance can be found in the
table on page 99 of this Report.
Key areas of responsibility of the
Nomination Committee can be
found on page 99 of this Report.
The Executive Committee meets
regularly and reviews the financial
and operating performance of all
Group divisions and companies.
The Chief Executive, R C Perrins,
chairs this Committee and other
members comprise A W Pidgley
CBE, S Ellis, R J Stearn, J Tibaldi,
P M Vallone, K Whiteman and
A J Dowsett, Managing Director
of St William.
The Chairman’s Committee,
chaired by A W Pidgley CBE,
meets monthly and comprises the
Group Chief Executive, the Group
Finance Director and the Group’s
Head of Legal. This Committee
reviews strategic and regulatory
matters impacting the Group and
its operations.
Remuneration Committee
Audit 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.
Details of membership, meetings
and attendance can be found in the
table on page 106 of this Report.
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 Chief
Executive and Finance Director
regarding the remuneration
of their Executive colleagues.
The principles and details
of Directors’ remuneration are
contained in the Directors’
Remuneration Report on pages
106 to 134.
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,
including financial, operational
and compliance controls, and
overseeing the relationship with
the external auditor.
The Audit Committee comprises
four independent Non-Executive
Directors. A Myers, who chairs the
Audit Committee, and G Barker
are both considered to have
recent and relevant experience as
demonstrated by their biographies
on pages 88 to 91 of this report.
All members of the Committee
have competence relevant to the
residential development sector.
Details of membership, meetings
and attendance can be found in the
table on page 102 of this Report.
An explanation of the role and
activities of the Audit Committee
during the year is contained in
the Audit Committee Report
on page 102.
Berkeley Group 2020 Annual Report Nomination Committee Report
The Board of Directors presents its Nomination Committee Report for the year
ended 30 April 2020.
Details of the membership, meetings and attendance of the Nomination
Committee are reported in the table below.
Membership meetings and attendance
Committee member
Date of appointment
to Committee
Meeting
attendance
Tony Pidgley CBE (Chairman)*
9 September 2009
Glyn Barker
Diana Brightmore-Armour
Veronica Wadley CBE
18 April 2018
15 October 2015
13 June 2012
2/2
2/2
2/2
2/2
*Chairman of the Nomination Committee since 9 September 2009
Meeting Items discussed
Meeting
Item discussed
December
2019
— Board and Committees composition
— 2020 AGM voting on the re-election of Adrian Li
April
2020
— Diversity levels within the Board
— Skills matrix for Non-Executive Directors
— Board and Committees composition
— Response to 2020 AGM voting on the re-election of Adrian Li
— Non-Executive Director succession planning
Committee Purpose and
Responsibilities
The purpose of the Committee is to:
— review the structure, size and
composition of the Board and
Board Committees and make
recommendations to the Board
having regard to succession planning
and supporting diversity;
— evaluate the balance of skills,
knowledge and experience on
the Board; and
— lead the process for identifying and
nominating candidates for the Board.
The Committee’s Terms of Reference
sets out its full remit and can be
downloaded from the section dealing
with Investor Relations on the Berkeley
website (www.berkeleygroup.co.uk).
Board and Committee
balance, diversity,
independence and
effectiveness
Recognising the benefits that diversity
can bring to all areas of the Group and
noting the recommendations of the
Hampton-Alexander and Parker Reviews,
Berkeley seeks to build a Board which
represents a wide range of backgrounds
and experience. Female representation
on the Board is at 25%, just below the
target set by the Hampton-Alexander
Review. This largely reflects the
fact that the Board includes seven
Executive Directors, all of whom are
male. This structure ensures direct
representation on the Board from
the Group’s main divisions and key
functional disciplines, also supporting
the Group’s wider succession planning.
The predominance of male Executive
Directors reflects the long-standing
image of our industry and wider
construction sector.
Berkeley is helping lead the
transformation of this wider image,
bringing through a generation of
talented women into senior positions
within the business who represent 57%
of the next tier of senior management.
When taken together with the four
female Non-Executive Directors, female
representation in the most senior roles
within the Group stands at 35%.
A W Pidgley CBE
Chairman, Nomination Committee
99
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Nomination Committee Report continued
The Group already meets the ethnic
diversity target set by the Parker
Review. Appointments to the
Board follow a formal, rigorous and
transparent process and are made
on the basis of merit and capability
and in the best interests of the Group.
The recommendations of the Hampton-
Alexander and Parker Reviews were key
considerations during the last Board
recruitment process; they will be again
when a Board vacancy next arises.
They are also considered in developing
a diverse pipeline of candidates in
relation to succession planning.
The Board reviews the independence
of Non-Executive Directors on an
annual basis taking into account each
individual’s professional characteristics,
behaviour and their contribution to
unbiased and independent debate.
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 senior employees
and to visit the Group’s sites.
Ongoing training is available to all
Directors to meet their individual needs.
Board members also receive regular
guidance and updates on regulatory
matters and the corporate governance
framework that the Group operates
under. Additionally, during the year,
Directors received training on the
Market Abuse Regulations and on
data breaches in light of the General
Data Protection Regulations.
Members of the Audit and Remuneration
Committees receive briefings from our
auditors and remuneration advisors
respectively to ensure that they remain
up to date with current regulations and
developments. All Directors have access
to advice from the Company Secretary
and independent professional advisors,
at the Company’s expense, where
specific expertise is required in the
course of their duties.
Board evaluation 2019/20
As internal Evaluations have been
conducted in the years 2018 and
2019, in line with best practice, Claire
Howard Consultancies, who has no
other connection with the Company or
individual Directors, was appointed to
facilitate an external review for 2019/20.
Unfortunately, the impact of Covid-19 has
delayed completion of this review which
will be concluded shortly and its findings
included in next year’s Annual Report.
The Evaluation is being conducted
through private one to one discussions
with each Director, the Group Solicitor
and the Company Secretary. Despite
challenging circumstances, all
participants have embraced the exercise,
making themselves available, preparing
for and engaging in these conversations.
The conversations were searching,
free-flowing and covered a wide range
of topics. Having just completed them,
Claire Howard Consultancies is in the
course of assimilating its findings,
with a view to their being discussed
with the Chairman prior to submission
to the Board in anticipation of a full
Board discussion.
The Board set itself the following goals
in 2018/19:
1. To continue working on diversity
of every sort in the workplace by
creating opportunities and support
for a mixed and diverse work force;
2. To build on its research and
development into modern forms
of construction;
3. To continue to support the Group’s
industry leading biodiversity agenda;
4. To ensure that the Group’s culture
of combining regulatory observance
with an entrepreneurial approach is
embedded throughout the Company
so that everyone taking a senior role
is well-versed in the culture; and
5. To monitor and re-assess risk in
a difficult and uncertain macro
economic environment and respond
to its challenges all whilst maintaining
a strong Balance Sheet.
Progress against these goals:
1. As part of our desire to attract more
women to work in the housebuilding
industry and at Berkeley in particular,
enhanced maternity and paternity
policies were introduced in the
year, informed by feedback from
staff engagement;
2. The Board has continued to champion
modern forms of construction.
Having completed the construction
of the factory building for producing
modular buildings, plant and
machinery to fabricate the modular
homes has now been designed and
is being manufactured for installation;
3. The Company has enhanced its
biodiversity approach by developing
its nine concepts toolkit to produce
nature-rich landscapes and 35 sites
now have net biodiversity gain
strategies. More details on this toolkit
appear in the Nature and Biodiversity
section of the Annual Report;
4. An Employee Forum was established
during the year with representatives
from across the business. The forum
will ensure there is a single fulcrum
for identifying and sharing best
practice in people engagement and
communication with the autonomous
businesses, as well as capturing
their output for the Board. This will
be a two way process, enabling the
Employee Forum to give feed back
to the Board on issues that face
them within the business and be an
additional platform for the Board to
promote, monitor and ensure that the
Berkeley culture is firmly embedded
throughout the organisation. This will
sit alongside the committees of senior
staff where the entrepreneurial nature
and culture of the business guided
by regulatory compliance is regularly
reinforced by the Board; and
5. The Board has maintained a strong
balance sheet. It has shown itself to
be particularly flexible and capable
of managing risk in the face of
the Covid-19 challenge by moving
swiftly to postpone the enhanced
shareholder returns at the onset of
the epidemic, putting in place market
leading protections to enable its sites
to remain open when many of its
competitors had to close theirs and
moved to efficient home working for
all staff who did not need to attend
their place of work ahead of the
anticipated lock-down.
100
Berkeley Group 2020 Annual Report Employee diversity
and inclusion
Berkeley strives to be an equal
opportunity employer and a Group-
wide Equality and Diversity Policy is
in place, in line with Group strategy,
making it clear that it does not
tolerate discrimination in any form.
Specific criteria exist for all members
of the Board and all appointments are
made with regard to merit and relevant
experience, taking into account diversity
and gender. A copy of the Company’s
policy is available on the website.
A W Pidgley CBE
Chairman, Nomination Committee
17 June 2020
The goals for 2020/21 are yet to be
finalised but will include ensuring that
the business is in a strong position to
weather the immediate and longer
term effects of the economic impact
of Covid-19 whilst maintaining a strong
balance sheet. Whilst this will clearly be
the main focus of the Board, it will also
work to seek to promote and encourage
a more diverse work force during
the year.
Succession planning
During the year the Committee
reviewed the Board’s composition to
ensure that it had the correct balance
of skills, experience and knowledge
required for the leadership of the
Group. Consideration was also given to
succession planning for both Executive
and Non-Executive Directors with the
intention of maintaining and developing
still further a strong and diverse Board.
The process for identifying and
recommending new appointments
to the Board includes a combination
of discussions and consultations, in
addition to formal interviews, utilising the
services of an independent recruitment
specialist, when appropriate. There have
been no appointments during the year
ended 30 April 2020. However, following
concerns raised at the AGM in September
2019 over the number of directorships held
by Adrian Li, the Board has announced
that it intends to seek a replacement and
Adrian is assisting the Board in this.
Election and re-election
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. In accordance with the
requirements of the Code, all Directors
offer themselves for re-election at the
AGM each year including at the AGM to
be held on 4 September 2020.
101
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Audit Committee Report
The Board of Directors presents its Audit Committee Report for the year
ended 30 April 2020 which has been prepared on the recommendation of the
Audit Committee.
The report has been prepared in accordance with the requirements of the
UK Corporate Governance Code 2018, the Listing Rules, Disclosure and
Transparency Rules 7.1 and 7.2 and the FRC Guidance on Board Effectiveness.
Details of the composition and experience of the Committee can be found in
the Directors’ biographies on pages 88 to 91 of this report and details of the
number of meetings of the Committee are reported in the table below.
Membership meetings and attendance
Committee member
Andy Myers (Chairman)*
Glyn Barker
Dame Alison Nimmo
Rachel Downey
Date of appointment
to Committee
Meeting
attendance
6 December 2013
5 September 2011
5 September 2012
18 April 2018
3/3
3/3
3/3
3/3
*Chairman of the Audit Committee since 1 September 2014
Meeting items discussed
Meeting
June
2019
Item discussed
— Draft results for the year ended 30 April 2019
— KPMG’s audit report
— Risk management and internal control, in particular the
Viability Assessment and Assessment of Fraud Risk
— Internal audit report
— Auditor independence and non-audit fees and services
— Draft 2019 Annual Report
December
2019
— Draft interim results for the 6 months ended
31 October 2019
— KPMG’s Report on the Audit Plan and Strategy for the
year ending 30 April 2020
— KPMG’s Report on the interim review period
— Internal audit report
— Review of the Company’s approach to cyber security
and data protection
— Auditor independence and non-audit fees and services
— Annual review of Risk Management and Internal
Control Framework
— Internal audit report
— Auditor independence and non-audit fees and services
— Review of the potential impact of Covid-19
March
2020
Committee purpose
and responsibilities
The Committee has formal Terms of
Reference which set out its role and the
authority delegated to it by the Board.
The Terms of Reference were reviewed
during 2019/20 together with the
policy on the independence of external
auditors, and no changes were made.
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 matters and
accounting policies.
— Risk management and
internal control
Reviewing the adequacy and
effectiveness of the Group’s risk
management and internal control
systems and monitoring the
effectiveness of the Group’s internal
audit function.
— External audit
Overseeing the relationship with
the external auditor, including
appointment, removal and fees, and
ensuring the auditor’s independence
and the effectiveness, performance
and progress of the statutory
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 Committee meetings,
the Finance Director presented, and
the Committee debated, the financial
results, 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, half year and year end results
announcements and the contents of
Trading Updates issued during the year.
The Committee’s review incorporated
consideration of the appropriateness
of the relevant accounting policies
and financial reporting estimates and
judgements adopted therein.
Andy Myers
Chairman, Audit Committee
102
Berkeley Group 2020 Annual Report 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.
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
year is included in note 2.16 to the
Consolidated Financial Statements.
In addition, there is a formalised process
whereby each division produces
quarterly risk and control reports that
identify risks, the potential impact and
the actions being taken to mitigate the
risks. These risk reports are reviewed and
updated quarterly.
The views of the Group’s external
auditor, who 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 during the 2019/20
financial year included:
— Carrying value of inventory and
profit 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 requires a periodic assessment
by management of each of the
Group’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,
particularly on the long-term sites.
These assumptions are relevant to the
determination of profit recognised
on properties completed in the year.
The conclusions of this assessment
were reported by exception to the
Committee in a financial overview
paper prior to release of the Group’s
half year and year end results.
— Post completion
development 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
in respect of the construction of the
Group’s portfolio of complex mixed
use property developments which are
expected to be incurred in the ordinary
course of business, based on historic
experience of the Group’s sites and
current site-specific risks, but which
are uncertain in terms of timing and
quantum. The basis for determining
these provisions was presented to
the Committee for its consideration.
The Committee reviewed the relevant
papers and discussed the assumptions
underlying this determination with
Risk management and
internal control
The Board acknowledges that it has
overall responsibility for monitoring the
Group’s systems of risk management
and internal control, ensuring that they
comply with the Code, and for reviewing
their effectiveness, at least annually.
There are ongoing processes and
procedures for identifying, evaluating
and managing the principal and
emerging 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 2020 Annual
Report and Accounts were approved
and accord with the FRC’s Guidance on
Risk Management, Internal Control and
Related Business Reporting. The Board’s
approach to setting and monitoring risk
appetite and the overall risk management
framework is set out on pages 66 to 79
of the Strategic Report.
Internal control procedures are designed
to manage rather than eliminate risk.
They can only provide reasonable and
not absolute assurance against material
misstatement or loss.
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 and a robust assessment
of the Company’s emerging and principal
risks, further details of which are set
out on page 66 of the Strategic Report.
The key features of the system of internal
control include:
Risk assessment
Risk reporting is embedded within
ongoing management reporting
throughout the Group. At operating
company and divisional level, Board
meeting agendas and information
packs are structured around the key
risks facing each of the businesses.
These risks include health and safety,
sales, production (build cost and
programme), land and planning, retaining
people, economic and political outlook,
regulatory and site-specific matters.
A Group Risk Management Report is
presented at each Group Board Meeting,
which overlays wider strategic risks
than those covered by the operations.
This sets out the annual changes in the
risk appetite and profile of the Group,
the impact and mitigation of these risks.
Financial reporting
A comprehensive budgeting and real-
time forecasting system, covering both
profit and cash, operates throughout
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 to the Group Executives
is prepared. The results of all operating
companies are reported monthly and
compared with both budget and the
previous month’s forecast.
There is a consolidation process in
place which ensures that there is a
reconciliation 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 of land, which includes
rigorous legal, environmental, planning
and financial appraisals and are all
subject to executive authorisation.
Rigorous procedures are also followed
for the selection of consultants and
contractors to work on the Group’s
developments. The review and
monitoring of all build programmes and
cost budgets are fundamental elements
of the Company’s monthly and annual
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.
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Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
Audit Committee Report continued
Bribery Act and Anti-Money
Laundering Regulations
The Board has responsibility for
complying with the requirements of
the Bribery Act 2010 and The Money
Laundering, Terrorist Financing and
Transfer of Funds (Information on the
Payer) Regulations 2017 and is charged
with overseeing the development and
implementation of the Group’s policies
and procedures thereon and monitoring
ongoing compliance.
Internal audit
Internal auditors are in place at a Group
level and divisional level as appropriate,
to provide assurance on the operation
of the Group’s control framework.
The Committee undertook its annual
review of the Group’s Risk Management
and 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 103 of the
Corporate Governance Report,
and covered:
— the assessment of the principal and
emerging risks facing the Group;
— the key elements of the Group’s
control processes, covering financial,
operational and compliance controls,
to mitigate these risks; and
— 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 considered any internal
control recommendations raised by the
Group’s auditors during the course of the
external audit and the Group’s response
to dealing with such recommendations.
A report summarising the recent
activities of the internal audit function
was presented to each of the Committee
meetings during the year. These
reports covered:
— a summary of the key findings
arising from the most recent 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; and
— 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.
The Committee reviewed the
assumptions and methodology behind
the Group’s Viability Statement, the
period that the assessment covered
and the sensitivity analysis undertaken.
The Committee was satisfied that the
Viability Statement was appropriate and
recommended its approval to the Board.
The Viability Statement can be found on
page 67 of this report.
External audit
KPMG was appointed as the Company’s
auditor in the year ended 30 April 2014
by way of a competitive tender.
Approach
KPMG presented its audit strategy to the
Committee during the year. The strategy
document identified its assessment
of the key audit risks and other areas
of audit focus, the scope of the audit
work, and updated the Committee on
regulatory changes for the current year.
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 accounting judgements and
estimates in respect of these key audit
risks and any other findings arising from
its work.
The external auditor has open recourse
to the Non-Executive Directors should
they consider it necessary. There is
private dialogue between the Chairman
of the Committee and the external
auditor prior to each Committee meeting
and, after each meeting, the opportunity
for the Committee to meet with the
external auditor without the Executive
Directors and management present.
Independence of the
external auditor
As part of its audit strategy presentation,
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.
In order to safeguard auditor
independence, the Committee has
a policy on the provision of non-
audit services by the external auditor.
In accordance with that policy the ratio
of audit fees to non-audit fees should
be no greater than 0.7:1, with a target
of lower than 0.5:1 in any one year and
in aggregation over the previous three
financial years. The ratio for the year
ended 30 April 2020 was 0.0:1, well
within this limit, and merely related to
the fees for the interim review which
are closely related to the annual audit
process. Audit and non-audit fee
disclosures are set out in note 2.4 to
the Consolidated Financial Statements.
104
Berkeley Group 2020 Annual Report Any departure from this ratio will only
be as a consequence of transactional
work and only where such transactional
work is non-recurring.
Where the Committee considers it is
right for the external auditor to undertake
such non-recurring transactional work,
the Committee will ensure:
i) that the nature of the work and the
basis for using the external auditor
shall be disclosed in the Annual Report;
ii) that the work does not pose any threat
to the independence and objectivity
of the external auditor; and
iii) that there is a presumption in favour
of using other firms to provide
transactional advice unless such
advice can only be provided by the
external auditor on the grounds that:
Appointment of KPMG
On completion of the audit, the
Committee reviewed the performance
and effectiveness of KPMG with
feedback from senior management.
The Committee has resolved to
propose KPMG’s re-appointment
at the 2020 AGM.
The Committee remains mindful of
evolving best practice under the UK
Corporate Governance Code 2018 and
is subject to the requirements of the
Financial Reporting Council and the
EU in determining its future approach
to re-tendering the external audit
appointment. The Company confirms
that it complied with the provisions
of the Competition and Markets Audit
Authority’s Order for the financial year
under review.
A Myers
Chairman, Audit Committee
17 June 2020
— it is proprietary to them;
— it has pre-existing knowledge
and experience of a situation
which precludes the use of
alternative firms;
— the nature of the transaction is
such that the Group’s auditor is the
only practical appointment; and
— it is at the discretion of the
Chairman of the Audit Committee.
Non-audit work carried out by all
accounting firms, including the
external auditor, is 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 the auditor
is independent.
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Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Directors’ Remuneration Report
Annual Statement of the Chair of the Remuneration Committee
Remuneration Committee membership
Committee Member
Glyn Barker, Chairman*
Andy Myers
Peter Vernon
13 June 2012
1 May 2014
18 April 2018
Date of appointment
to Committee
Meeting
attendance
3/3
3/3
3/3
106
117
118
120
123
124
129
*Chairman of the Remuneration Committee since 14 June 2013
Contents of the Directors’ Remuneration Report
Annual Statement of the Chair of the
Remuneration Committee
Berkeley’s Remuneration Philosophy
Remuneration at a Glance
How the Remuneration Policy was operated in
2019/20 and how the new Remuneration Policy
will operate in 2020/21
Additional context on Berkeley Executive
Directors’ pay
Employment at Berkeley
Annual Report on Remuneration
Glyn Barker
Chairman, Remuneration Committee
106
Key responsibilities of the
Committee
— Determine and agree with the Board
the broad policy for the remuneration
of the Executive Directors and
senior management.
— Review pay policies for the
wider workforce.
— Determine performance conditions
for the incentive plans operated by
the Company and approve the total
annual payments made under them.
— Determine all share incentive
plans for approval by the Board
and shareholders.
— Take into account the views of
shareholders and the wider workforce
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’s Terms of Reference
sets out its full remit and can be
downloaded from the section dealing
with Investor Relations on the Berkeley
website (www.berkeleygroup.co.uk)
Who supports the
Committee?
In determining the Executive Directors’
remuneration for the year, the Committee
consulted with the Chairman, A W
Pidgley, the Chief Executive, R C Perrins,
and the Finance Director, R J Stearn.
No Director played a part in any
discussion about his own remuneration.
The Company Secretary attended each
meeting as Secretary to the Committee.
PricewaterhouseCoopers LLP (PwC) is
the independent remuneration advisor
to the Committee. PwC also provided
Berkeley with tax advisory services
during the year.
The Committee reviewed the nature of
the other services provided by PwC and
was satisfied that no conflict of interest
exists or existed in the provision of
these services. PwC is a member of the
Remuneration Consultants Group and
the voluntary code of conduct of that
body is designed to ensure objective
and independent advice is given to
remuneration committees. Fixed fees
of £50,000 (prior year: £50,000) were
provided to PwC during the year in
respect of remuneration advice received.
There are no connections between PwC
and individual Directors to be disclosed.
Berkeley Group 2020 Annual Report Financial highlights of 2019/20
The company has had another strong year reflected in the following components of performance:
— Net cash of £1,138.9 million (2019: £975.0 million) after making shareholder return payments of £280.3 million
(2019: £251.9 million)
— Pre-tax return on shareholders’ equity of 16.6% (2019: 27.9%)
— Net asset value per share increased by 7.2% to £24.72 (2019: £23.05)
— Forward sales of £1.9 billion (2019: £1.8 billion)
— Future anticipated gross margin in the land bank up 2.7% to £6,417 million (2019: £6,247 million)
— Profit before tax of £503.7 million (2019: £775.2 million)
Long-term Company performance
Return on Equity
Berkeley’s Return on Equity compared with the sector over the last 10 years illustrates the relative performance of the Company:
2010/11
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
2017/18
Restated
2018/19
2019/20
10 year
average
Berkeley
15.3%
21.2%
22.4%
27.5%
35.1%
30.8%
41.1%
41.9%
27.9%
16.6%
28.0%
Sector highest
15.3%
21.2%
22.4%
27.5%
35.1%
30.8%
41.1%
41.9%
34.1%
32.3%
28.0%
Sector lowest
(6.2%)
(0.4%)
3.4%
3.5%
12.2%
16.0%
15.7%
11.0%
15.9%
15.0%
10.2%
Sector average*
(excluding
Berkeley)
1.0%
4.8%
8.5%
11.4%
18.2%
22.3%
24.2%
23.3%
24.9%
23.8%
16.2%
*Sector includes Barratt Developments, Vistry, Redrow, Taylor Wimpey, Bellway and Persimmon.
The performance over the last 10 years highlights Berkeley’s strategy to deliver long-term returns over the cycle rather than
focused on one year. The results of the remainder of the sector for 2019/20 reflect annual results prior to Covid-19.
Impact on remuneration
The strong performance of the Company set out above has resulted in the vesting of the relevant tranche of the award under
the 2011 LTIP on 30 September 2019; following the return to shareholders of £279.3m in the year to that date.
Under the Policy approved in 2019, there is no Bonus Plan for the Executive Directors.
Governance
The key governance highlights for the year were as follows:
— Committee continued to respond to changes proposed by the FRC to the UK Corporate Governance Code.
— Reviewed the Committee’s Terms of Reference and assessed its effectiveness.
— Continued an extensive engagement with our shareholders (see later section).
Decisions made during the year
The Committee determined the following during the year:
— Salary rise for Directors for 2019/20 of between 2.7% and 2.8%, below the level of general employee rises to employees
of on average of 4.1%.
— Vesting of the 2011 LTIP tranche in September 2019.
— Actions in relation to the impact of Covid-19 on Executive Director base salaries and Non-Executive Director fees.
Compliance statement
This Report, prepared by the Committee on behalf of the Board, has been prepared in accordance with the provisions of
the Companies Act 2006 (the Act), the Listing Rules of the Financial Conduct Authority and the Large and Medium-sized
Companies and Groups (Financial Statements and Reports) (Amendment) Regulations 2013. The Act requires the Auditor to
report to the Company’s shareholders on the audited information within this report and to state whether, in their opinion, those
parts of the report have been prepared in accordance with the Act. The Auditor’s opinion is set out on pages 144 to 150 and
those aspects of the report that have been subject to audit are clearly marked. It is considered that throughout the year under
review the Company has complied with the governance rules and best practice provisions applying to UK-listed companies.
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Annual Statement of the Chair of the Remuneration Committee continued
Dear Shareholder,
I am pleased to introduce our Directors’ Remuneration Report for the year ended 30 April 2020.
I want to begin by saying that Berkeley, like many other businesses in the UK, has been impacted by Covid-19. During this crisis,
the health and safety of our people, subcontractors and customers has been our first priority. My letter sets out some of the
actions we have taken in response to Covid-19 from a remuneration perspective.
I also want to provide you with some further context on some of the changes that we were proposing in the lead-up to Covid-19.
These changes were in response to an extensive consultation exercise with our major shareholders following feedback on the
Remuneration Policy which was approved at the 2019 Annual General Meeting. The Committee appreciates that whilst the 2019
Remuneration Policy was accepted by many shareholders, there were a number of shareholders and proxy advisers who felt
they could not support it. Whilst the proposed changes to our Executive Director remuneration were not implemented, due
to the Board’s postponement of the increase in the Shareholder Returns via the B and C share scheme, as a Committee we
want to provide full transparency on the recent consultation exercise and to set out the changes to the 2011 LTIP that we have
decided to proceed with which respect the principles agreed with shareholders in the lead up to the adjourned 2020 EGM.
Impact of Covid-19 on Directors’ remuneration
The following table sets out the key components of Directors’ remuneration and the decisions made by the Committee:
Element of Remuneration
Committee Decision
Rationale
2019/20 Bonus
Payment of Deferred Bonus
from the legacy Bonus Plan
in 2019/20
In accordance with the Remuneration
Policy agreed by shareholders at
the 2019 AGM the Company no
longer operates a bonus plan for the
Executive Directors.
The Committee determined that
the bonus earned in years prior to
2019/20 but deferred, and which was
payable in June 2019, should be paid in
accordance with the rules of the legacy
Bonus Plan.
Consistent with the shareholder approved
Remuneration Policy.
— The payment reflected bonus earned but deferred
from previous financial years and therefore there
was no impact of Covid-19.
— The Company paid deferred elements to other
eligible employees.
— The 2019/20 financial year was one of strong
performance for the Company.
— Dividends were paid to shareholders.
— The Company’s balance sheet, liquidity and
finances are strong.
— No Government assistance was taken in relation
to Covid-19.
2019/20 LTIP Tranche
Vesting
The performance conditions were
satisfied, and the tranche of the 2011
LTIP award vested in accordance with
the schedule on 30 September 2019.
— The 2011 LTIP is a long-term plan with initial
awards granted in 2011; therefore, subject to the
performance conditions being met; the Committee
felt that it is equitable to allow vesting.
2020/21 Salary/Fee
increases
The Committee did not feel that it was
appropriate to make salary rises to the
Executive Directors for the upcoming
financial year given the challenging
external environment and the general
sensitivity to Executive remuneration.
In addition, Executive Directors agreed
to a 20% reduction in base salaries for
the period beginning on 1 April 2020
until there is greater visibility on the
housing market. The Chair and Non-
executive Directors have taken a similar
reduction in their fees for this period.
— The vesting reflected strong performance over
a number of years.
— All the years reflected in this vesting were prior
to Covid-19.
— The Committee did not feel that it was appropriate
in the current climate to increase the salaries
of the Executive Directors or fees for the Non-
executive Directors.
— The Company has not taken advantage of the
Covid-19 Job Retention Scheme or furloughed
any employees.
— Nor has the Company taken advantage
of any other Government assistance resulting
from Covid-19.
2020/21 Bonus
As stated above there is no bonus plan
as part of the 2019 Remuneration Policy.
Consistent with the shareholder approved
Remuneration Policy.
108
Berkeley Group 2020 Annual Report Element of Remuneration
Committee Decision
Rationale
Payment of Deferred Bonus
from the legacy Bonus Plan
due in 2020/21
The Committee has determined that
the bonus earned in previous years but
deferred, which becomes payable in
2020/21, should be paid in accordance
with the rules of the legacy Bonus Plan
during 2020/21. For avoidance of doubt
these are bonuses which were earned
prior to 2019/20.
— The payment reflects bonus earned but deferred
from previous financial years and therefore there
was no impact of Covid-19.
— It is the Company’s intention to pay deferred bonus
to other eligible employees.
— It is the Company intention to pay the committed
dividends to shareholders in respect of the 2020/21
financial year.
2020/21 LTIP Tranche
Vesting
Subject to the performance conditions
being satisfied it is the Committee’s
intention to allow the tranche of the
2011 LTIP to vest in accordance with the
schedule on 30 September 2020.
— The Company’s balance sheet, liquidity and
finances are strong.
— The Company has not and nor does it currently
intend to take Government assistance resulting
from Covid-19.
— The 2011 LTIP is a long-term plan with initial
awards granted in 2011; therefore, subject to the
performance conditions being met; the Committee
feels that it is equitable to allow vesting.
— Further the vesting of the tranche in September
2020 is subject to additional performance
conditions agreed by the Directors (to their
detriment) following the shareholder consultation
exercise at the beginning of 2020 (see below for
full details).
Remuneration Policy consultation exercise in 2020
Introduction
The Committee consulted extensively with shareholders at the beginning of 2020. Full details were provided in the Circular
issued to shareholders on 24 February 2020 for a General Meeting on 18 March 2020 to approve additional returns to
shareholders through a “B” shares mechanism. On 12 March 2020 the Company adjourned the General Meeting and issued
an RNS Announcement including the following information:
“Today’s announcement is made in the context of the current increased macro uncertainty, which has been uniquely impacted
by the global spread of Coronavirus. While there has been no noticeable impact on Berkeley’s business to date, the ultimate
impact on UK business is unknown. There is no recent historic precedent and for this reason it is absolutely right for any
responsible business to approach the next six months with a reduced risk appetite and heightened sense of caution.
This in no way alters the Board’s view of the long-term value of the business. Indeed, Berkeley’s business model is set
up for the cyclicality of the housing market; to withstand downside scenarios and be well placed to take opportunities as
they arise. Berkeley has net cash of in excess of £1.0 billion at the date of this statement with a further £750 million of bank
facilities available.
However, on balance, the Board has decided to postpone the increase in the Shareholder Returns that was scheduled to be
made via a B and C share scheme as set out in a Circular posted to Shareholders on 24 February 2020. The Board is keen to
stress that it currently still intends to make the enhanced returns but will reassess this in our Full Year Results Announcement
in June, by when it is indicated the effect of Coronavirus will be more measurable and certain.
In view of this postponement, the General Meeting which was convened for 18 March 2020 is being adjourned indefinitely.
If having reassessed the position, the Board decides to proceed with an enhanced return requiring shareholder approval, as it
currently anticipates, any proposals would be put to shareholders at the time of the Annual General Meeting in September 2020.
The circular to shareholders of 24 February 2020 also included proposals to amend the Remuneration Policy. The Board is
grateful to its major shareholders who participated in the consultation on the amendments and for their positive response.
The Board will reconsider appropriate amendments to be made to the Remuneration Policy in light of the postponement noted
above, and it is expected that any such amendments would be put to shareholders for consideration at the time of the Annual
General Meeting. In the meantime, the Company will revert to its current schedule for Shareholder Returns. The Company
is therefore announcing today that a dividend of £124.8 million (99.32 pence per share) will be paid on 31 March 2020 to
Shareholders on the register on 20 March 2020, with an ex-dividend date of 19 March 2020. It is also committing to make
the next £140.1 million return to be made by 30 September 2020 through a combination of share buy-backs and dividends.”
At the time the Company decided to adjourn the General Meeting on 18 March 2020 it had received votes representing 68.16%
of the issued share capital of which 94.96% was supportive of the resolution to amend the 2019 Remuneration Policy.
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Annual Statement of the Chair of the Remuneration Committee continued
Background
The changes set out in my letter forming part of the Circular reflected our commitment to shareholders, following the
Company’s AGM on 6 September 2019, to respond to concerns raised by proxy voting advisers and which were shared by
a number of shareholders, around certain aspects of the LTIP. Following consultation with shareholders and proxy advisers, the
Committee proposed to amend the terms and conditions of The Berkeley Group Holdings plc 2011 Long Term Incentive Plan
(the ‘2011 LTIP’ or the ‘Plan’):
— to reflect the proposed increased return to shareholders as set out in the Circular; and
— to address the concerns raised by some shareholders on amendments to the 2011 LTIP as part of the approval of the 2019
Remuneration Policy at the September 2019 AGM.
As part of the proposed amendments, the Executives were being asked to agree to a set of changes that further restricted and
limited their existing awards to reflect the concerns of a significant minority of the Company’s shareholders (which had been
accepted by the Executives). The Committee believed that these changes brought the Executives near to the point where any
further adverse changes to their awards ran the risk of the Executive team fragmenting. If the proposed changes were approved,
the Committee believed that the right balance would have been struck to secure the ongoing commitment and performance of
the Executive team to the long-term benefit of all stakeholders.
The only changes proposed to the 2019 Remuneration Policy were in respect of amendments to the 2011 LTIP. However, there
was also a commitment in the implementation of the 2019 Remuneration Policy that the Company pension contributions for
incumbent Executive Directors would be aligned with that of the majority of employees by 2022.
Proposed changes to the 2011 LTIP
The Committee proposed the following key changes to the 2011 LTIP, as approved at the Company’s AGM on 6 September 2019:
Change in the vesting terms (Part 1 – Increased cash returns hurdle):
It was proposed that the tranche of award eligible to vest on 30 September 2020 be subject to an increased shareholder return
performance condition of £500m (increased from £280m), a cumulative return increase from £14.85 to £16.74 per share.
It was further proposed that the tranche of award eligible to vest on 30 September 2021 be subject to an increased shareholder
return performance condition of £500m (increased from £280m), a cumulative return increase from £17.08 to £20.74 per share.
Change in vesting terms (Part 2 – Introduction of new performance conditions):
It was proposed that 50% of each tranche of award be subject to the following additional performance conditions at each
vesting date as well as meeting the cumulative return targets:
— It was proposed that 30% of the tranche be subject to achieving a cumulative pre-tax Return on Equity (‘ROE’) of a minimum
of 15% (to be calculated commencing 1 May 2019);
— It was further proposed that 20% of the tranche be subject to being on target to achieve a cumulative level of Profit before
Tax (‘PBT’) of a minimum of £3bn for the six years ending 30 April 2025.
The proposed new performance conditions would apply to all tranches from September 2020 to September 2025. Full details
of the new performance conditions are set out on page 45 of the Circular.
Rationale for why the Committee believed shareholders should support the proposals
The Committee believed that the proposed changes to the operation of the 2011 LTIP addressed concerns raised by some
shareholders at the 2019 AGM. The Committee further believed that the key attraction of the proposed Remuneration Policy
amendment to shareholders was that, for the same number of shares capable of being earned when awards were granted in
2011, the value provided to shareholders per share would be increased from £13.00 (from inception of the Plan) to £29.66 under
the proposal.
Purpose of Berkeley remuneration
One of the key principles of the 2018 UK Corporate Governance Code is that “remuneration policies and practices should
be designed to support strategy and promote long-term sustainable success. Executive remuneration should be aligned to
company purpose and values and be clearly linked to the successful delivery of the Company’s long-term strategy.”
The link to the Company’s strategy has been the key principle underpinning Berkeley’s approach to remuneration. Evidence of
the long-term sustainable success of the Company can be seen in the total returns to shareholders and financial performance
over the period shown in the graph on page 117. The Committee believes that a key component of the Company’s success has
been the retention and incentivisation of a core team of talented Executives for a long period ensuring continuity and a long-
term focus in a cyclical market. The Committee has asked the Executives a number of times to amend their existing awards to
increase the performance conditions, reduce the amounts payable and extend the periods over which these reduced amounts
were paid to ensure Berkeley reflected changing attitudes to remuneration. It is important to recognise that such amendments
have been made with the full support of the Executives who were under no legal obligation to agree to detrimental changes
to the terms of their existing awards.
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Berkeley Group 2020 Annual Report Strategy link
The Company has always been able to draw a direct link between its corporate strategy and reward strategy. Therefore, with
the commitment to increase the return to shareholders set out in the RNS announcement made by the Company on 22 January
2020 (the “Announcement”), the Committee proposed the increase in the return performance conditions for the 2011 LTIP set
out in the Circular. The Committee believes this direct link between the Company strategy and reward strategy has benefited all
stakeholders to date and will continue to do so over this next period.
Committee response to shareholders’ concerns
During consultation with shareholders in advance of the approval of the 2019 Remuneration Policy (which included amendments
to the 2011 LTIP) issues were raised by a minority of shareholders on the 2011 LTIP. The following table now sets out how the
Committee addressed these issues through the revised proposals set out the Circular:
Issue
A question was raised whether the cumulative return of £280m p.a. (£2 per share) was sufficiently challenging.
Committee
response
The Committee believes that the return target requires the consistent delivery of strong underlying ROE,
profit and cash performance. The chart on page 117 demonstrates this consistent strong performance over
multiple years.
However, the Committee has always reflected the Company’s strategy in its remuneration structure and
therefore has increased the return targets for the 2011 LTIP to reflect the increased return committed to in
the Announcement.
Issue
There was a concern raised that Total Shareholder Return was the sole performance condition with the removal of the
bonus plan.
Committee
response
It is the Committee’s view as stated above that the Total Shareholder Return is the output of a number
of successful inputs (ROE, profit and cash) and therefore does not result in a narrow focus but on a holistic
approach to delivering long-term sustainable performance with the Shareholder Returns.
However, the Committee is proposing (and management have agreed) to include within the performance
conditions for the 2011 LTIP specific cumulative performance conditions based on pre-tax ROE and Profit
before Tax (“PBT”) in line with the Company’s strategy communicated to shareholders. The basis for their
inclusion is they are part of the focus on operational performance that has delivered the returns strategy over
the last 15 years and will continue to do so in the future.
The long-term nature of the business, with an unrelenting focus on the customer and communities, coupled
with the complexity associated with delivering tall buildings, means that Berkeley has always focused on
long-term value creation, as opposed to annual profit targets to best drive shareholder value.
It should be noted that this is another detrimental change to the terms and conditions on which the 2011 LTIP
awards were granted and therefore is something to which participants have had to agree.
Issue
There was a concern raised around the overall quantum payable under the 2011 LTIP both in absolute terms and
comparative to the performance delivered.
Committee
response
The Committee with the support of management has reduced the quantum from the amount originally set
out in the awards made under the 2011 LTIP and made the performance conditions more challenging over
the period from the date of grant in 2011.
As set out above, the Committee has increased the return targets and introduced additional ROE and
PBT cumulative performance conditions to the original terms and conditions of the awards granted to
participants. This has substantially increased the performance required with a detrimental effect on the
original value of the awards.
Management has agreed to a number of reductions in quantum, and to longer deferral periods, in addition
to the increase in performance conditions. All these changes have been made to subsisting awards and
therefore require participant consent which the Committee has been grateful to receive. From a financial
perspective, the changes made to the LTIP since 2016 have reduced the potential value vesting by more
than 50% and extended the period over which this value is earned from 10 years to 15 years. The annualised
value has therefore fallen by approximately two thirds, and could be reduced further if the new performance
conditions proposed herein are not met.
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Annual Statement of the Chair of the Remuneration Committee continued
Operation of the 2011 LTIP vesting in 2020/21
The adjournment of the General Meeting on 18 March 2020 meant that formal shareholder approval was not received for the
additional return on capital or the proposed changes to the operation of the 2011 LTIP through the amendment to the 2019
Remuneration Policy. However, given the indication of the strong level of shareholder support for the changes to the operation
of the 2011 LTIP, the Committee has determined to retain the spirit of the proposals set out above and in detail in the Circular
whilst recognising the increased uncertainty and challenge caused by Covid-19 and its aftermath. Specifically, the Committee
has reflected the up to two year deferment of the enhanced capital return, which recognises the volatility caused by Covid-19
and the potential for the Company to investment the surplus capital in incremental new land should opportunities arise which
would lead to enhanced shareholder value, by requiring full visibility of the maintenance of the £455 million surplus capital
at 30 September 2020 and 2021.
It should be noted that all the performance conditions set out below (other than the Base Return) are new retrospective
additions to existing awards to the detriment of participants. It is important to note that these performance conditions are an
amendment to the terms of the original awards to add additional performance conditions above those that the awards were
granted with i.e. a strengthening of performance conditions; an important reason for the strong shareholder support in March.
The following table sets out the proposals set out in the Circular for the 2011 LTIP, how they have been amended and will be
applied for the September 2020, 2021, 2022 and 2023 vestings, and the Committee’s rationale:
Tranche of
the 2011 LTIP Proposal set out in the Circular
2020 and 2021 Vesting
Revised proposal
Committee rationale
Return
Targets
No tranche of the LTIP award
can vest without the satisfaction
of these targets.
No change.
Base Return £280m (approx.)
£280m (approx.)
Enhanced
Return
£455m (approx.)
112
It is the intention of the Committee to
retain the discipline and rigour of the
proposal set out in the Circular whilst
recognising the need for additional
flexibility over the next period due
to Covid-19 and its aftermath.
The Enhanced Return performance
condition will be satisfied provided that
one or more of the following conditions
are met at the September 2020 and
September 2021 vesting dates:
1. The Enhanced Return has been made;
2. Additional investment in land
interests have been made, equivalent
in value to the Enhanced Return,
above the cost of the replacement of
land that has been used in the Profit
& Loss Account. The Company’s basis
of calculating whether it is additional
investment is where it spends more
on land than 11.6% of revenues on
a cumulative basis from 1 May 2020
(11.6% is based on the percentage of
land cost to revenue in the current
land bank);
3. A combination of 1 and 2, which
represent permitted uses (“Permitted
Uses”) of the surplus capital;
4. The Company has a minimum of
£455m (approx.) of net cash on the
balance sheet (after making the Base
Return and after any amount of cash
already spent on Permitted Uses
since 12 March 2020 is deducted).
Core design principle behind the
2011 LTIP.
This is the commitment made by
the Company and part of the 2011
LTIP performance criteria prior to
the proposal set out in the Circular.
The Committee has retained the
principal of an Enhanced Return
but adjusted the satisfaction of
the target to allow the Company
to respond flexibly to the
uncertain external environment
caused by Covid-19 and ensure
the maximization of value for all
stakeholders.
The key changes are:
1. To allow the Company the
flexibility to invest in land above
the replacement land. The
Company drove exceptional
performance from land acquired
after the 2008 financial crisis
and wishes to ensure that it
has sufficient firepower to take
advantage of any opportunities
in the current market.
2. The uncertainty today and
the lack of clarity on the
future housing market has
resulted in the Committee
wishing to ensure that there
is a wider window for providing
the Enhanced Return (or
investment in additional land
interests) to allow a prudent
approach to be operated.
In effect the Committee has
provided a two year window for
the September 2020 and 2021
vestings in which the Enhanced
Return performance condition
has to be met.
Berkeley Group 2020 Annual Report Tranche of
the 2011 LTIP Proposal set out in the Circular
Vesting
Financial
Targets
50% of the 2011 LTIP Tranche
capable of vesting at the 2020
and 2021 vesting dates will
vest on the satisfaction of the
Base and Enhanced Return
performance conditions.
Where these performance
conditions are not met 100%
of the relevant tranche at 2020
or 2021 will lapse.
Provided the return performance
conditions have been satisfied
50% of tranche under the 2011
LTIP is subject to the satisfaction
of the following additional
performance conditions.
Revised proposal
No change.
No change.
Cumulative
ROE
It was proposed that 30% of the
tranche be subject to achieving
a cumulative pre-tax Return on
Equity (“ROE”) of a minimum
of 15% (to be calculated
commencing 1 May 2019).
No change.
Cumulative
Profit before
Tax
It was further proposed that
20% of the tranche be subject
to being on target to achieve
a cumulative level of Profit
before Tax (“PBT”) of a minimum
of £3bn for the six years ending
30 April 2025.
The Committee is proposed to retain the
cumulative PBT target but is proposing
the following clarification on the
assessment of the target in any one year:
(1) To achieve the target in any one year,
the Company needs to deliver PBT
of at least £500m; or
(2) The Company must be on track to
deliver a cumulative PBT run rate
of £3bn.
Committee rationale
The return performance conditions
remain the primary performance
conditions which have to be met
for each tranche of the 2011 LTIP
award for any level of vesting.
This was one of the principle
concerns raised by the minority
of shareholders in relation to the
2019 Remuneration Policy and
therefore the Committee has
determined to proceed with its
implementation of the additional
financial performance conditions
irrespective of the adjournment of
the 18 March 2020 General Meeting.
Core long-term element of the
measurement of the success of
the implementation of Berkeley’s
strategy.
The Committee felt that whilst
the spirit of the cumulative PBT
target should be retained, given
the Company’s withdrawal of profit
guidance, that some flexibility
should be introduced to deal with
the one-off unpredictable impact
of Covid-19.
2022 Vesting
Return
Targets
Same as for 2020.
Base Return £280m (approx.)
Enhanced
Return
£455m (approx.)
£230m (approx.) of which must
have been spent on Permitted
Uses by 31 March 2022.
The Enhanced Return performance
condition will be satisfied provided that
the following conditions are met at the
September 2022 vesting date:
1. The Enhanced Return has been made;
2. Additional investment in land
interests have been made, equivalent
in value to the Enhanced Return,
above the cost of the replacement
of land that has been used in the
Profit & Loss Account;
3. A combination of 1 and 2; and
4. The Company has a minimum of
£455m (approx.) of net cash on the
balance sheet (after making the Base
Return and after any amount of cash
already spent on Permitted Uses
since 12 March 2020 is deducted).
By the September 2022 vesting
date, the Company must have
actually paid the Enhanced
Return to shareholders and/or
used the funds to make additional
investment in land interests.
This is the additional return set
out in the Circular for the B shares
which would have been provided
in September 2020 had Covid-19
not resulted in the adjournment
of the General Meeting and
the requirement for additional
flexibility by introducing a two
year period in which the Enhanced
Return must have been paid and/
or invested.
113
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Directors’ Remuneration Report continued
Annual Statement of the Chair of the Remuneration Committee continued
Tranche of
the 2011 LTIP Proposal set out in the Circular
Vesting
Same as for 2020.
Financial
Targets
Cumulative
ROE
Same as for 2020.
30% of the tranche is subject
to achieving a cumulative
pre-tax Return on Equity
(“ROE”) of a minimum of 15%
(to be calculated commencing
1 May 2019).
Cumulative
Profit before
Tax
2023 Vesting
Return
Targets
Same as for 2020.
Base Return £280m (approx.)
Revised proposal
Committee rationale
1. To achieve the target in any one year,
the Company needs to deliver PBT of
at least £500m; or
2. The Company must be on track to
deliver a cumulative PBT run rate
of £3bn.
Enhanced
Return
£230m (approx.); being £455m
less the Enhanced Return paid
in respect of the 2022 vesting.
The Enhanced Return performance
condition will be satisfied provided
that either:
1. The Enhanced Return has been made;
2. Additional investment in land
interests have been made, equivalent
in value to the Enhanced Return,
above the cost of the replacement
of land that has been used in the
Profit & Loss Account; or
3. A combination of 1 and 2.
By the September 2023 vesting
date, the Company must have
actually paid the Enhanced
Return to shareholders and/or
used the funds to make additional
investment in land interests.
This is the additional return set
out in the Circular for the C shares
which would have been provided
in September 2021 had Covid-19
resulted in the adjournment
of the General Meeting and
the requirement for additional
flexibility by introducing a two
year period in which the Enhanced
Return must have been paid and/
or invested.
Vesting
Same as for 2020.
Financial
Targets
Cumulative
ROE
Same as for 2020.
30% of the tranche is subject
to achieving a cumulative
pre-tax Return on Equity
(“ROE”) of a minimum of 15%
(to be calculated commencing
1 May 2019).
Cumulative
Profit before
Tax
1. To achieve the target in any one year,
the Company needs to deliver PBT
of at least £500m; or
2. The Company must be on track to
deliver a cumulative PBT run rate
of £3bn.
See pages 120 to 122 for further details of the implementation of the 2019 Remuneration Policy in 2020/21.
114
Berkeley Group 2020 Annual Report Wider workforce considerations
The Committee is responsible for overseeing remuneration for the most senior employees at the Company. However, we are
aware of our duty to oversee remuneration principles at all levels, ensuring that pay is fair, competitive and strategically aligned
for our employees. Remuneration arrangements are in place which ensure that all employees can share in the Company’s
success and these arrangements are discussed further on page 124. The Committee has taken steps to implement the corporate
governance changes which have come into effect at the beginning of 2019 and the expansion of our remit. We have set out
specific details below of how the approved Remuneration Policy aligns with the Code.
Berkeley recognises that our employees are our strongest resource and it is important that the Company attracts, develops
and retains talented teams at every level. The autonomous business structure results in numerous strong people engagement
activities which, through the short lines of communication, flow up to the Board through the Executive Committee and Our
Vision People work stream.
To supplement this existing extensive engagement framework, that includes staff conferences where the Chairman speaks
and takes questions, staff surveys, Town Halls and ‘Breakfast with the MD’ sessions, we have during the year set up a people
engagement forum with representation from across the business. This forum will ensure that there is a single forum assessing
these activities, sharing best practice and capturing their output for the Executive Committee and Board. During the year,
we have implemented enhanced parental pay and leave policies, reflecting feedback from the business and our people.
Compliance with the 2018 UK Corporate Governance Code
I have set out below how our 2019 Remuneration Policy takes into consideration the 2018 UK Corporate Governance Code
which applies for financial years beginning on or after 1st January 2019.
Key remuneration element of the
2018 UK Corporate Governance Code
Alignment with our Remuneration Policy
Five year period between the date of grant and realisation
for equity incentives.
The LTIP exceeds this requirement, with a performance period
which is a total of 14 years from grant to final vesting.
Phased release of equity awards.
Discretion to override formulaic outcomes.
The LTIP ensures the phased release of equity awards through
annual rolling vesting.
The Remuneration Policy contains the ability to override
formulaic outcomes and apply discretion where deemed
necessary.
Post-cessation shareholding requirement.
We have a two year post-cessation shareholding requirement.
Pension alignment.
Extended malus and clawback.
We have lowered pension entitlement for new Executive
Directors to 6%, to be in line with eligibility for the majority of
the wider workforce.*
The current malus and clawback provisions already exceed the
best practice suggested in relation to the new Code.
* The Company is committed to full alignment of pension contributions for the incumbent Executive Directors with that of the wider workforce
by the end of 2022.
115
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Directors’ Remuneration Report continued
Annual Statement of the Chair of the Remuneration Committee continued
Shareholder support
The results of the shareholder votes on the 2019 Remuneration Policy and 2019 Annual Report on Remuneration are set
out below.
2019 Annual Report on Remuneration
2019 Remuneration Policy
Votes For
Votes Against
93.9%
6.1%
Votes For
Votes Against
57.0%
43.0%
In conclusion
The Annual Report on Remuneration, together with this letter, will be subject to an advisory shareholder vote at the forthcoming
AGM in September 2020. I would like to thank the shareholders who have engaged with us and supported us during the year.
I would also like to thank my fellow Committee members for their support during the year.
I look forward to receiving your support for the resolution seeking approval of the Annual Report on Remuneration at our
forthcoming AGM. If you have any questions, I am happy to discuss and can be contacted via our Company Secretary,
Ann Dibben.
G Barker
Chairman, Remuneration Committee
17 June 2020
116
Berkeley Group 2020 Annual Report Berkeley’s Remuneration Philosophy
Our remuneration philosophy
We have developed a clear set of principles which embed our strategy into how we deliver remuneration to our
Executive Directors.
Remuneration principle
Details
Fixed pay should be aligned to the
market and the individual’s experience.
The Committee sets salaries for the Executive Directors based on their experience,
role, individual and corporate performance. Salaries on appointment to the Board
may be set below that of the comparator group and subsequently, based on
appropriate levels of individual and corporate performance, may be increased with
experience gained over time.
Variable pay should be linked to
the long-term performance of the
company.
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.
Executives should be rewarded for
long-term sustainable performance.
Executives should hold substantial
equity holdings.
Executive remuneration should not be
excessive.
Our Remuneration Policy delivers all variable pay in the form of long-term incentives.
The long-term incentives, which now extend to 2025, 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 is focused on executing
our capital allocations strategy and generating long-term sustainable value for
shareholders.
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.
We have introduced a two year post-cessation holding period to further enhance this
and align with emerging best practice.
The Committee is cognisant of the broader environment regarding Executive
remuneration and the potential concerns regarding the quantum available to
Executive Directors notwithstanding the level of performance and growth which
may have been achieved by the Company.
The Committee considers the use of remuneration caps to be an appropriate
response to these challenges.
How have we performed since the 2011 LTIP was introduced?
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 2011 LTIP locks in the Executive team for at least 14 years, which is far longer than
is typical in most publicly listed companies and ensures that they are focused on the long-term performance of the Company.
The following chart shows Berkeley’s Total Shareholder Return (TSR) performance against the FTSE 250, FTSE 100 and FTSE
All Share indices since 2011.
500
400
300
200
100
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Berkeley
FTSE 250 Index
FTSE All Share Index
FTSE 100 Index
117
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
Directors’ Remuneration Report continued
Remuneration at a Glance
What we paid Executive Directors in the year?
Executive
Director
£’000
A W Pidgley
R C Perrins
R J Stearn
K Whiteman
S Ellis
J Tibaldi
P Vallone
Salary
2020
Pension
2020(1)
Annual
bonus
2020(2)
Total Remuneration
LTIP(3)
Cap(4)
Actual(5)
Benefits
2020(6)
197
551
374
359
359
359
359
—
93
56
54
54
54
54
—
—
—
—
—
—
—
8,000
7,345
2,813
2,830
4,580
1,980
1,980
8,200
8,000
3,250
3,250
5,000
2,400
2,400
8,197
7,989
3,243
3,243
4,993
2,393
2,393
88
41
22
25
20
14
18
Total
2020
8,285
8,030
3,265
3,268
5,013
2,407
2,411
Total
2019
8,257
7,809
3,186
3,147
4,960
2,282
2,286
Notes
1. S Ellis is a member of a defined contribution scheme and received a contribution equal to 15% of salary. P Vallone is also a member
of a defined contribution scheme and received an element of his pension entitlement of 15% of salary as contributions, with the remainder
received by way of payments in lieu of a pension contribution from the Company. No amounts were paid into pension arrangements in
respect of R C Perrins, K Whiteman, R J Stearn and J Tibaldi during the year ended 30 April 2020, who instead received payments in lieu
of a pension contribution from the Company (2019/20: percentages of salary 17%, 15%, 15%, and 15% respectively).
2. There are no further contributions which will be made into the Bonus Plan. Any accrued deferred balance will continue to pay-out for
participants. The actual payments made in the year are set out on page 130.
3. This represents the fourth tranche of the 2011 LTIP that vested on 30 September 2019 at a share price of £41.96 subject to the operation
of the Total Remuneration Cap (see table on page 131 for details). Where the LTIP value would have been greater without the Cap, it is the
capped amount which is payable and therefore disclosed in the single figure of remuneration.
4. The Total Remuneration Cap limits the amount of total remuneration that has been earned over the financial year and is capable of being
paid out. This was introduced as part of the Remuneration Policy approved by shareholders at the 2017 EGM.
5. The Total Remuneration Cap operated for the 2019/20 financial year and where the remuneration would have been greater without the Cap,
it is the capped amount which is payable and therefore disclosed in the single figure of remuneration.
6. Benefits, which are not included in calculating the Remuneration Cap, include a fully expensed company car or cash allowance alternative
and medical insurance.
The following table sets out the total fixed pay and total variable pay in 2019/20 and 2018/19:
£’000
A W Pidgley
R C Perrins
R J Stearn
K Whiteman
S Ellis
J Tibaldi
P Vallone
Total Fixed
Total Variable
2020
285
685
452
438
433
427
431
2019
257
674
446
437
429
422
426
2020
8,000
7,345
2,813
2,830
4,580
1,980
1,980
2019
8,000
7,135
2,740
2,710
4,531
1,860
1,860
Annual Bonus outcome
In line with the Remuneration Policy, the Company does not operate a bonus plan. The accrued deferred balances in participant
Bonus Plan accounts under the legacy Bonus Plan will continue to pay-out as normal – see page 130 for details of the payments
out of the bank this year and banked shares carried forward.
118
Berkeley Group 2020 Annual Report LTIP
The fourth tranche of the 2011 LTIP award vested in the year as follows. The number of options released from the Plan is limited
to ensure the value of the Total Remuneration Cap for each individual is not exceeded:
Executive
Director
Options
granted
under 2011
LTIP
Percentage
of Options
capable of
vesting
Performance
measure and
outcome
Options
capable of
vesting
Value of gain
on vested
Capped value
(and value
Number
of options
vested (after
application
Value above
options(1)
vested)(2)
of Cap)(3)
the Cap(4)
A W Pidgley
5,000,000
R C Perrins
5,000,000
R J Stearn
954,328
13.4%
K Whiteman
1,000,000
S Ellis
2,250,000
J Tibaldi(5)
P Vallone(5)
450,000
450,000
16.67%
£835.4m of
shareholder
returns from
1 October
2016 to
the 30
September
2019 – 100%
achieved
670,000
23,116,675
8,000,000
231,867
15,116,675
670,000
23,116,675
7,344,800
212,877
15,771,875
127,879
4,412,144
2,813,000
81,530
1,599,144
134,000
4,623,335
2,830,250
82,030
1,793,085
301,500 10,402,504
4,580,250
132,751
5,822,254
75,000
2,587,688
1,980,250
57,394
607,438
75,000
2,587,688
1,980,250
57,394
607,438
Notes
1. The value of gain on the options at vesting is calculated using the opening share price of £41.96 on 30 September 2019 (the date the options
vested and became exercisable) less the exercise price of £7.4575 per share.
2. The Total Remuneration Cap limits the value of the LTIP vesting in the year. The Total Remuneration Cap operated for the 2019/20 financial
year and where the LTIP value would have been greater without the Cap, it is the capped amount which is payable and therefore disclosed
in the single figure of remuneration. The capped amount is equivalent to the Total Remuneration Cap less salary less pensions.
3. This is the actual number of options which vested on 30 September 2019 and could be exercised by the participants.
4. This is the value of the options above the Total Remuneration Cap which would have vested had the Cap not operated.
5. As set out in the 2019 Notice of Annual General Meeting, on 25 September 2019, J Tibaldi and P Vallone, were granted a further 150,000
options each, in addition to the 300,000 options granted in 2018, taking their total to 450,000 options. This additional award was in line with
the commitment made on their appointment as Executive Directors by the Remuneration Committee and in line with the Policy. The original
grant of 300,000 options is eligible to vest 25% each year (75,000 options) in 2018, 2019, 2020 and 2021. The additional 150,000 options will
be eligible to vest in two tranches in 2020 and 2021. Therefore in September 2019, 75,000 shares were capable of vesting (16.67% of the total
options granted). However, vesting will be restricted by the existing Total Remuneration Cap in both cases.
The Committee did not adjust the level of option vesting as a result of share price growth over the performance period. It was
an inherent feature of the 2011 LTIP that management and shareholders’ interests were aligned based on total shareholder
returns (including share price growth) over the performance period. The Committee did not exercise any other discretion in
relation to the level of the option vesting other than to apply the Total Remuneration Cap.
Directors’ shareholdings and share interests
It is a core facet of Berkeley’s Remuneration Policy that the Executive Directors acquire and hold material shareholdings in the
Company, in order to align their interests with those of the Company’s shareholders.
The table below illustrates the minimum shareholding requirements for the Executive Directors and the value of the shares
they currently own (as a percentage of salary). Full details on the Directors’ share interests can be found in the Annual Report
on Remuneration.
% of salary
A W Pidgley
R C Perrins
R J Stearn
K Whiteman
S Ellis
J Tibaldi
P Vallone
Shareholding
requirement
Value of
beneficially
owned shares
400%
34,987%
400%
8,613%
200%
200%
200%
200%
200%
1,850%
3,306%
3,235%
564%
594%
All the Executive Directors exceed their minimum shareholding requirements. Due to the large shareholdings of the Executive
Directors, a relatively small change in the share price would have a material impact on their wealth. The ability for the Executive
Directors to gain and lose dependent on the share price performance of the Company at a level which is material to their total
remuneration is a key facet of the Company’s Remuneration Policy.
119
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Directors’ Remuneration Report continued
How the Remuneration Policy was operated in 2019/20
and how it will be operated in 2020/21
Element and key features of current
Remuneration Policy
How the Remuneration Policy was
implemented in 2019/20
How we plan to implement the Remuneration
Policy in 2020/21
Base salary
Set on appointment and reviewed
annually (effective from 1 May each year)
or when there is a change in position
or responsibility.
Determined taking into account
a number of external and
internal factors.
The salaries for 2019/20 are set out
below:
Base salary levels for 2020/21 will be as
follows:
£000’s
% Increase
£000’s
% Increase
A W Pidgley
R C Perrins
R J Stearn
K Whiteman
S Ellis
J Tibaldi
P Vallone
200
560
380
365
365
365
365
0%
A W Pidgley
2.8%
R C Perrins
2.7%
R J Stearn
2.8%
K Whiteman
2.8%
S Ellis
2.8%
J Tibaldi
2.8%
P Vallone
200
560
380
365
365
365
365
0%
0%
0%
0%
0%
0%
0%
In reviewing the salaries of the Executive
Directors for 2019/20, the Committee
also took account of the employment
conditions and salary increases awarded
to employees throughout the Group,
which were on average 4.1%.
See the Chair’s Annual Statement
for details of actions taken in respect
of Covid-19.
There were no salary rises for the
Executive Directors for 2020/21. In
respect of employees the Company
made no rises to reflect the current
external environment.
See the Chair’s Annual Statement
for details of actions taken in respect
of Covid-19.
Benefits
Normal company benefit provision.
Normal company benefit provision.
Benefits include a fully expensed car or
car allowance alternative, and medical
insurance.
Additional benefits may be offered such
as relocation allowances on recruitment.
Pension
The Company provides either a
contribution to a pension arrangement
or a payment in lieu of pension.
The pension contributions for 2019/20
were as follows:
The pension contribution levels for
2020/21 will be as follows.
% salary
% salary
A W Pidgley
R C Perrins
R J Stearn
K Whiteman
S Ellis
J Tibaldi
P Vallone
0%
A W Pidgley
17%
R C Perrins
15%
R J Stearn
15%
K Whiteman
15%
S Ellis
15%
J Tibaldi
15%
P Vallone
0%
17%
15%
15%
15%
15%
15%
For future appointments, the maximum
pension contribution will be capped at
6% of salary. This is in line with the level
provided to the wider workforce.
No change in relation to future
appointments which will be in line with
wider workforce level of 6% of salary.
The Committee will be aligning the
pension contributions of the incumbent
Executive Directors with the wider
workforce level by the end of 2022.
120
Berkeley Group 2020 Annual Report Element and key features of current
Remuneration Policy
How the Remuneration Policy was
implemented in 2019/20
How we plan to implement the Remuneration
Policy in 2020/21
Bonus
Under the legacy Bonus Plan, awards
are earned annually over a six-year
plan period, subject to stretching
performance targets, which are set at
the beginning of the plan year. 50% of
a participant’s plan account will be paid
out annually for the first five years with
100% of the balance paid at the end of
the sixth plan year.
Malus applies up to the date of payment.
Clawback applies three years post the
date of payment.
LTIP
No Plan available for new grants during
the three-year policy period unless, on
recruitment, where a new Executive
Director may be eligible to participate
in the 2011 LTIP and also provided
the total number of awards granted
to all participants do not exceed the
limits agreed with shareholders at the
2011 AGM.
No bonus plan was operated in respect
of this financial year.
No bonus plan will be operated in
respect of this financial year.
Accrued and deferred payments will
continue to pay out under the legacy
Bonus Plan.
Accrued and deferred payments will
continue to pay out under the legacy
Bonus Plan.
The Chair’s Annual Statement sets
out how the Committee is proposing
to operate the 2011 LTIP for this
financial year.
The fourth vesting of options
under the 2011 LTIP occurred on
30 September 2019.
The maximum level of options capable
of vesting was 13.4% of the total grant
(25% of the original options granted in
2018 for Tibaldi and Vallone) provided
that £833.1 million of shareholder
returns plus £2 for each share issued
or reissued in the period 1 October 2016
to 30 September 2019, was provided
through a combination of dividends and
share buy-backs.
This performance condition was met
in full and therefore the maximum level
of options vested.
Further details on the operation of the
2011 LTIP in the year 2019/20 are set out
on page 131.
J Tibaldi and P Vallone received an
additional grant of 150,000 options on
25 September 2019. See note 5 on page
119 which sets this out in further detail.
Total Remuneration Cap
Individual caps will limit the amount
of total remuneration that can be paid
in respect of the financial year.
The Total Remuneration Caps for
2019/20 were as follows:
The Total Remuneration Caps remain
unchanged.
A W Pidgley
R C Perrins
R J Stearn
K Whiteman
S Ellis
J Tibaldi
P Vallone
Total cap p.a.
£’000
8,200
8,000
3,250
3,250
5,000
2,400
2,400
Minimum shareholding requirement
The Committee operates a system of
shareholding 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 and
Chief Executive Officer this is 400% of
base salary, for other Executive Directors
200% of base salary. The Committee
retains the discretion to increase
shareholding requirement.
The minimum shareholding requirement
remains unchanged.
121
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Directors’ Remuneration Report continued
How the Remuneration Policy was operated in 2019/20
and how it will be operated in 2020/21 continued
Element and key features of current
Remuneration Policy
How the Remuneration Policy was
implemented in 2019/20
How we plan to implement the Remuneration
Policy in 2020/21
Post-cessation shareholding
requirement
To ensure that Executive Directors
continue to be aligned with the
shareholders’ interests post their
cessation of employment with
the Group.
For two years following the cessation
of employment, Executive Directors are
required to hold shares to the value of
the shareholding guideline that applied
at the cessation of their employment;
or, in cases where the individual has not
had sufficient time to build up shares
to meet their guideline, the actual level
of shareholding at cessation.
The post-cessation shareholding
requirement remains unchanged.
NED fee policy
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.
Non-Executive Director fee levels for
2019/20 were as follows:
Non-Executive Director fee levels for
2020/21 will be as follows:
— Deputy Chairman and SID fee: £123.1k;
— Deputy Chairman and SID fee: £123.1k;
— Basic fee: £68k;
— Basic fee: £68k;
— Additional fee for chairmanship
of Committee: £13k (no change)
— Additional fee for chairmanship
of Committee: £13k
Fees were increased by 3%. The average
employee rise in salaries was 4.1%.
There were no fee rises proposed
for 2020/21.
See the Chair’s Annual Statement
for details of actions taken in respect
of Covid-19.
See the Chair’s Annual Statement
for details of actions taken in respect
of Covid-19.
Key elements of Berkeley’s Remuneration Policy for 2020/21
Policy elements Purpose
20/21
21/22
22/23
23/24
24/25
25/26
Base salary
To recruit and retain Executive Directors
of the appropriate caliber and experience
to achieve the Company’s business strategy
Benefits
Pension
LTIP
To provide competitive levels
of employment benefits
To provide competitive levels
of pension benefits
No plan available for new grants during the
policy period to current Executive Directors
Total
Remuneration
Cap
To achieve a balance between the need
to reward and incentivise the Executive
Directors to implement the Company
strategy and the interests of other
stakeholders in the Company
Shareholding
requirement
To ensure that Executive Directors’ interests
are aligned with those of shareholders over
a longer time horizon
Total remuneration cap varies by each Executive Director
122
Berkeley Group 2020 Annual Report Additional context on Berkeley Executive Directors’ pay
Our Remuneration positioning philosophy
The current Remuneration Policy is to set the main elements of the Executive Directors’ remuneration package against two
benchmarks: the FTSE 100; and a Company comparator group.
Base salary
Experience & role
Pension
Lower quartile
Benefits
Market practice
Incentives
Upper decile
The comparator group of companies for the 2019/20 financial year comprised:
— Persimmon
— Countryside Properties
— Taylor Wimpey
— Vistry Group
— Barratt Developments
— Crest Nicholson Holdings
— Bellway
— Redrow
— Balfour Beatty
— Galliford Try
— McCarthy and Stone
Our Policy quantum compared to the FTSE 100
The following table shows the relative position of base salary and target total remuneration under the current Remuneration
Policy for our Executive Directors compared to the FTSE 100.
A W Pidgley
R Perrins
R Stearn
K Whiteman
Base
salary
Target total
Remuneration
Base
salary
Target total
Remuneration
Base
salary
Target total
Remuneration
Base
salary
Target total
Remuneration
S Ellis
J Tibaldi
P Vallone
Base
salary
Target total
Remuneration
Base
salary
Target total
Remuneration
Base
salary
Target total
Remuneration
The above charts show clearly the Remuneration Committee’s policy of providing comparatively modest salaries in combination
with a leveraged approach to incentivisation.
123
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Directors’ Remuneration Report continued
Employment at Berkeley
The Remuneration Committee’s remit
This year, the Committee has expanded its remit to include responsibility for setting and managing the remuneration
of Berkeley’s senior management, in addition to Executive Directors. The Committee’s focus is on determining the
remuneration policy and practices to ensure that the incentives operated by the Company align with its culture and strategy.
The Committee also has oversight of wider workforce pay and policies and incentives, which enables it to ensure that the
approach to Executive remuneration is consistent with those for the workforce. The Committee is provided with additional
information from the Company in order to carry out these responsibilities.
Fairness, diversity and wider workforce considerations
The Committee seeks to ensure that pay is fair throughout the Company and makes decisions in relation to the structure
of Executive pay in the context of the cascade of pay structures throughout the business.
Remuneration across the Company
The Committee carried out its first oversight review of key remuneration elements, policies and processes by employee group
during the 2019/20 financial year. This process was introduced in order for the Committee to carry out its oversight and review
of wider workforce pay and policies and to ensure they are designed to support the Company’s desired culture and values.
A process was adopted whereby the Committee receives a report periodically from the Company setting out key details
of remuneration throughout the Company. Clearly the levels of remuneration and the types offered will vary across the
Company depending on the employee’s level of seniority and role and also the employee’s location. The Committee is not
looking for a homogeneous approach; however, when conducting its review, it is paying particular attention to:
— Whether the element of remuneration is consistent with the Company’s Remuneration Principles;
— If there are differences, are they objectively justifiable; and
— Does the approach seem fair and equitable in the context of other employees.
Once the Committee has conducted its review of the wider workforce remuneration and incentives it considers the approach
applied to the remuneration of the Executive Directors and Senior Management. In particular, the Committee is focused
on whether, within the framework set out above, the approach to the remuneration of the Executive Directors and Senior
Management is consistent with that applied to the wider workforce.
The following table sets out a summary of the information received by the Committee.
Element of remuneration
Key areas reviewed and summary of findings
Salary
Pension
Benefits
Bonus
We set salaries to ensure that we remain competitive in the market and that levels are appropriate
considering roles and responsibilities of individuals. We have also committed to ensuring that all
our employees receive at least the voluntary Living Wage as set by the Living Wage Foundation.
We provide either a contribution to a pension arrangement or a payment in lieu of pension.
The maximum pension contribution for employees is 15% of salary; the average is 6% which
is now aligned with our new Remuneration Policy.
We offer a range of benefits to our employees, including medical insurance.
Each business operates a bonus scheme for its employees. For senior employees (other than
Executive Directors) elements of the bonus plan are linked to the performance of the relevant
Division and are deferred to ensure performance over the long-term and to provide lock-in.
Executive Directors are no longer eligible for bonuses.
Medium-term incentives
In addition, medium-term incentive schemes are in place for all levels of staff below Executive
Director, with currently over one quarter of all employees receiving awards under these schemes.
The Committee is satisfied that:
— All employees are treated consistently and that the context and knowledge shared with the Committee is a useful
underpin to ensure that the Committee’s future decision-making around Executives’ and senior management’s pay
supports fair and equal remuneration;
— Salary increases for employees across the Company are being applied on an equitable basis, and that average
employee increases are considered when setting salary increases for both the Executive Directors and Non-Executive
Directors;
— Our levels of variable pay continue to be linked to the achievement of stretching performance targets and a strong
governance framework, and all-employees have the ability to share in the success of the Company. The incentive
approach applied to the Executive Directors aligns with the wider Company policy on incentives, which is to have
a higher percentage of at risk performance pay the more senior the employee and to increase the amount of incentive
deferred, provided in equity and/or measured over the longer term the more senior the employee; and
124
Berkeley Group 2020 Annual Report — Overall the wider workforce pay policies and practices for all employees are in line with the remuneration principles, and
the approach to Executive remuneration aligns with wider Company pay policy and that there are no anomalies specific
to the Executive Directors.
Gender pay gap reporting
The Group did not publish its gender pay data for 2019 as the Government suspended the requirement to submit data on
24 March 2020 as a result of Covid-19. The mean and medium pay gap for last year did not materially change from the prior
year. This pay gap is, like much of our industry, primarily driven by the shape of our workforce, with a lower proportion of women
in senior, higher paid roles, and more women occupying junior, lower paid roles. The shape of our workforce also impacts our
bonus gap, with our senior Executives participating in the Company’s Long Term Incentive Plans.
How we are improving diversity, fairness and equality across our organisation
Berkeley is committed to paying for performance equally and fairly and rewarding and retaining our best people. We are already
taking steps that will increase the proportion of women within the organisation as a whole, recognising the desire in the Group
to promote from within and therefore providing increased opportunities for career progression within the organisation and to
more senior roles over the long-term.
Central to this is to recruit and retain a high calibre workforce and in May 2018 we launched two new commitments within
Our Vision, Berkeley’s long-term strategy, to help achieve this.
Industry image
One of the greatest barriers for young people, especially women, joining our industry is the perception of the roles within the
industry. We are committed to undertaking a range of activities including ensuring that existing material for the industry includes
clear pathways for progression and by developing a programme for school and further education engagement.
As part of our progress in this area we have we have put a special focus on increasing engagement with universities across
the country. This has seen active participation and sponsorship of events that are specifically focused around promoting our
industry to women. These have included various talks and events designed specifically to educate and engage young women
on the benefits of working in the built environment.
We work closely with ‘Women Into Construction’ by hosting regular ‘experience’ events across our developments as well
as making them one of the beneficiaries of the Berkeley Foundation’s ‘Empowering Young Women into Work’ programme
announced in 2019.
We are also focused on encouraging and developing our existing employees. One example is in our St James business, which
will be hosting an ‘Inspiring Women in Construction’ event aimed at motivating and encouraging women in all roles within
St James and St William, including a series of speeches by successful women from across the industry highlighting their
employment journey.
Diversity and inclusion
There is a historic under-representation of women in our industry and we believe there are real benefits in ensuring diverse
views, skills and perspectives which can lead to creative thinking and more effective problem solving. We have committed
to focusing on diversity by developing guiding principles and seeking to attract and retain a diverse workforce.
As part of this commitment we have developed a Group-level strategy for diversity and inclusion covering aspects such as
recruitment, workplace inclusion and flexibility and organisational design and culture, and launched enhanced parental leave
policies in autumn 2019 for employees.
Our graduate scheme continues to target a balanced intake each year, aiming to identify the next generation of leaders
within the organisation. This will naturally take a period of time but we are investing for the long-term. We are also focused on
providing apprenticeships, through recruitment and for existing employees, in order to improve skills within both Berkeley and
the wider industry. Our internal apprenticeship programme REACH has excelled in female recruitment achieving an average of
19% of women entering built environment and trade apprenticeships in the last four years.
In addition to these initiatives, as a business we understand the importance of recruiting responsibly and efficiently to help with
the progression of women within the business. In the last year we have seen ourselves complete a range of activities to address
this. We have undertaken a full review of our recruitment processes and adapted our experienced hire application journey to
make the candidate experience more inclusive and streamlined.
A focus has also been placed on the importance of gender diversity on interview panels. As a result an increased number
of females have been included in the graduate recruitment assessment process to provide better gender balance and to act
as ambassadors for women in the industry.
All staff will also be completing unconscious bias training to give them a better understanding of how biases affect recruitment
and progression decisions and help to mitigate against them.
125
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Directors’ Remuneration Report continued
Employment at Berkeley continued
Pay comparisons
In 2019, the Committee chose to adopt early the CEO pay ratio disclosure requirements which would otherwise come into effect
in this year’s Directors’ Remuneration Report.
Since then, the Committee determined that it would be appropriate to use Option B, which involves using the 2019/20 gender
pay gap data to identify the three employees that represent the 25th percentile, median and the 75th percentile. We believe this
provides a clear and robust methodology to facilitate year on year reporting whilst remaining simple and providing a reasonable
estimate for employee pay at these levels.
Chief Executive pay ratio
Year
2019/20(1)
Method
25th percentile
pay ratio
Median
pay ratio
75th percentile
pay ratio
Option B
189:1
125:1
84:1
1. CEO pay ratio is determined by reference to representative employee data as at 30 April 2020
Under Option B of The Companies (Miscellaneous Reporting) Regulations 2018, the latest available gender pay gap data
(i.e. from April 2020) was used to identify the best equivalent for three Group UK employees whose hourly rates of pay were
at the 25th, 50th and 75th percentiles for the Group. A full-time equivalent total pay and benefits figure for the 2019/20 financial
year was then calculated for each of those employees. No adjustments (other than the approximate up-rating of pay elements
to achieve full-time equivalent rates) were made and no components of pay have been omitted.
A small number of employees at either side of the quartile points identified from the gender pay gap data were also considered,
together with their corresponding full time equivalent total pay and benefits figures to ensure that the employees identified at
each of the three percentile points are reasonably representative of each quartile.
The table below sets out the salary and total pay and benefits for the representative employees
Salary
Total pay and benefits
25th percentile
Median 75th percentile
£38,000
£52,767
£74,383
£42,576
£64,083
£96,049
The Committee is satisfied that the individuals identified within each relevant percentile appropriately reflects the employee
pay profiles at those quartiles, and that the overall picture presented by the ratios is consistent with our pay, reward and
progression policies.
In addition to the all-employee ratio, we also present below the ratio of total single figure remuneration across the entire
Berkeley senior Executive team (excluding the Chairman) with that of the Chief Executive. This demonstrates broadly consistent
ratios across the team reflecting the consistent nature of the pay structures for these individuals.
Executive Director
R J Stearn
K Whiteman
S Ellis
J Tibaldi
P Vallone
Chief Executive
pay ratio
2.5:1
2.5:1
1.6:1
3.3:1
3.3:1
Shareholders expect the Chief Executive to have a significant proportion of his pay based on performance and paid in shares.
It is this element of his package which will provide any observed volatility in his remuneration when comparing on a year-to-
year basis to the wider employee population. The Committee is comfortable that the underlying picture is not one of a greater
divergence of the Chief Executive’s remuneration from employees, i.e. excluding the volatility of the LTIP, the relationship will be
consistent. There is likely to be significant volatility in this ratio year-on-year, and we believe that this is likely to be caused by the
following factors:
— Our Chief Executive’s pay is made up of a higher proportion of incentive pay than that of our employees, in line with
the expectations of our shareholders. This introduces a higher degree of variability in his pay each year, which will affect
the ratio.
— The value of long-term incentives is disclosed in pay in the year it vests, which increases the Chief Executive’s pay in that
year, again impacting the ratio for that year.
126
Berkeley Group 2020 Annual Report — Long-term incentives are provided in shares, and therefore an increase in share price magnifies the impact
of a long-term incentive award vesting in a year.
— We recognise that the ratio is driven by the different structure of the pay of our Chief Executive versus that of our
employees, as well as the make-up of our workforce. This ratio varies between businesses even in the same sector.
What is important from our perspective is that this ratio is influenced only by the differences in structure, and not
by divergence in fixed pay between the Chief Executive and the wider workforce.
— Where the structure of remuneration is similar, as for the Executive Directors and the Chief Executive, the ratio will
be much more stable over time.
— None of the lower quartile, median and upper quartile employees identified this year are participants in the LTIP.
If the value of the LTIP is excluded in the CEO pay ratio calculation, the ratios would be as follows:
— To employee at the 25th percentile – 16:1
— To employee at the 50th percentile – 11:1
— To employee at the 75th percentile – 7:1
External pay comparisons
On page 123 we have compared our Remuneration Policy quantum to the FTSE 100.
Comparison of Chief Executive total remuneration and Total Shareholder Return against
the market
The graph below shows the Company’s performance, measured by Total Shareholder Return (TSR), compared with the
performance of the FTSE 250, FTSE 100 and the FTSE All Share indices. The Company considers these the most relevant indices
for total shareholder return disclosure required under the Regulations.
To give context to the total single figure levels of the Chief Executive we have also included the single figure historical outcomes
from the table below onto the chart in order to demonstrate the clear alignment between shareholder returns and the Chief
Executive’s single figure pay that results from the nature of the remuneration structure in place.
)
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b
e
r
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r
u
t
e
R
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e
d
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a
h
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800
700
600
500
400
300
200
100
0
2010/11
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
Chief Executive Single Figure
Berkeley Group Holdings
FTSE 250 Index
FTSE All Share Index
FTSE 100 Index
30,000
25,000
20,000
15,000
10,000
5,000
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0
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(
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127
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
Directors’ Remuneration Report continued
Employment at Berkeley continued
Chief Executive/Chairman pay in the last 10 years
The table below shows the remuneration of the Chairman and Chief Executive for each of the financial years shown in the graph
above. Given the nature of the roles of A W Pidgley and R C Perrins, the table below provides information on both individuals.
Executive
Director
2019/20
2018/19
2017/18
2016/17
2015/16
2014/15
2013/14
2012/13
2011/12
2010/11
Single total figure of remuneration (£’000)(1)
A W Pidgley
Chairman
R C Perrins
Chief Executive
Annual bonus pay-out
(as % maximum opportunity)(2)
Multi-year incentive vesting awards
(as % maximum opportunity)
8,285
8,257
8,256
29,192
21,489
23,296
3,757
3,638
2,799
2,033
8,030
7,809
7,806
27,963
10,993
12,357
2,271
2,198
1,692
1,226
–
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%/See Note 9
100%/See Note 8
100%/See Note 7
100%/See Note 6
100%/See Note 5
100%/See Note 4
See Note 3
Notes
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, introduced
in 2010/11 and then the new six year Bonus Plan put in place for 2015/16.
3. 2011/12, 2012/13 and 2013/14 Multi-year vesting awards represent deferred awards that were released during the year under the initial
Bonus Plan. In accordance with the initial 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 2015, the last financial year of the initial Bonus Plan, there were no forfeiture events under the Bonus Plan.
4. 2014/15 Multi-year vesting represents the 2009 LTIP Part B awards that vested during the year and the deferred Bonus Plan awards as per
note 3 above.
5. 2015/16 Multi-year vesting represents the 2009 LTIP Part B awards that vested during the year.
6. 2016/17 Multi-year vesting represents the 2011 LTIP first tranche that vested during the year and deferred awards that were released during
the year under the Bonus Plan.
7. 2017/18 Multi-year vesting represents the 2011 LTIP second tranche that vested during the year and deferred awards that were released
during the year under the Bonus Plan.
8. 2018/19 Multi-year vesting represents the 2011 LTIP third tranche that vested during the year and deferred awards that were released during
the year under the Bonus Plan.
9. 2019/20 Multi-year vesting represents the 2011 LTIP fourth tranche that vested during the year (see table on page 131 for details) and
deferred awards that were released during the year under the Bonus Plan (see table on page 130 for details).
Percentage change in Chief Executive’s remuneration
The following table compares the Chief Executive’s pay (including salary, taxable benefits and annual bonus) between 2018/19
and 2019/20 with 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:
2018/19 to 2019/20 year on year change (%)
Base salary
Taxable benefits
Annual bonus
R C Perrins
Chief Executive
2.8%
9.9%
n/a
Group
employees
4.1%
1.9%
1.1%
The Committee considers the year on year change in salary between the Chief Executive and the employees as a clear
indication that there is not a divergence in the rate of fixed pay.
128
Berkeley Group 2020 Annual Report Annual Report on Remuneration
This section of the Remuneration Report contains details of how the Company’s Remuneration Policy, approved by shareholders
at the EGM on 23 February 2017 and as amended at the AGM on 6 September 2019, was implemented for Executive Directors
during the financial year that ended on 30 April 2020. An advisory resolution to approve this report (including the Chair’s
Annual Statement) will be put to shareholders at the AGM in September 2020.
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 2019/20
financial year. The components of the single figure for 2019/20 are aligned with the calculation of the individual elements of
remuneration for the purposes of the Total Remuneration cap, which was first introduced as part of the Remuneration Policy
approved by shareholders at the 2017 EGM and re-approved at the 2019 AGM.
Executive Director
£’000
Salary
2020
Pension
2020
Annual
bonus
2020(1)
Total Remuneration
LTIP(2)
Cap(3)
Actual(4)
Benefits
2020(5)
A W Pidgley
R C Perrins
R J Stearn
K Whiteman
S Ellis
J Tibaldi
P Vallone
197
551
374
359
359
359
359
–
93
56
54
54
54
54
–
–
–
–
–
–
–
8,000
8,200
7,345
2,813
2,830
4,580
1,980
1,980
8,000
3,250
3,250
5,000
2,400
2,400
8,197
7,989
3,243
3,243
4,993
2,393
2,393
88
41
22
25
20
14
18
Total
2020
8.285
8,030
3,265
3,268
5,013
2,407
2,411
Notes
1. There are no further contributions which will be made into the Bonus Plan. Any accrued deferred balance will continue to pay-out for
participants. The actual payments made in the year are set out on page 130.
2. This represents the fourth tranche of the 2011 LTIP that vested on 30 September 2019 at a share price of £41.96 subject to the operation
of the Total Remuneration Cap (see table on page 131 for details). Where the LTIP value would have been greater without the Cap, it is the
capped amount which is payable and therefore disclosed in the single figure of remuneration. The capped amount is equivalent to the Total
Remuneration Cap less salary less pensions.
3. The Total Remuneration Cap limits the amount of total remuneration that has been earned over the financial year and is capable of being
paid out.
4. The Total Remuneration Cap operated for the 2019/20 financial year and where the remuneration would have been greater without the Cap,
it is the capped amount which is payable and therefore disclosed in the single figure of remuneration.
5. Benefits, which are not included in calculating the remuneration cap, include a fully expensed company car or cash allowance alternative and
medical insurance.
Comparative figures for 2018/19, as disclosed in last year’s Directors’ Remuneration Report, are set out in the table below.
Executive
Director
£’000
A W Pidgley
R C Perrins
R J Stearn
K Whiteman
S Ellis
J Tibaldi
P Vallone
Pension
2019
Annual
bonus
2019(1)
Cap(2)
Actual(3)
Cap(4)
Actual(5)
Benefits
2019(6)
LTIP
Total Remuneration
–
92
55
53
53
53
53
–
8,000
8,000
8,200
8,200
1,635
740
710
781
710
710
5,500
2,000
2,000
3,750
1,150
1,150
5,500
8,000
2,000
2,000
3,250
3,250
3,750
5,000
1,150
1,150
2,400
2,400
7,772
3,165
3,118
4,939
2,268
2,268
57
37
21
29
21
14
18
Total
2019
8,257
7,809
3,186
3,147
4,960
2,282
2,286
Salary
2019
200
545
370
355
355
355
355
Notes
1. This represents the contribution into the Bonus Plan for the level of performance achieved in the financial year. 50% of this contribution
is deferred in shares or share equivalents.
2. The LTIP Cap limits the value of the LTIP vesting in the year. This was introduced as part of the Remuneration Policy approved by
shareholders at the 2017 EGM.
3. This represents the third tranche of the 2011 LTIP that vested on 1 October 2018 at a share price of £36.38 subject to the operation of the LTIP
Cap. Where the LTIP value would have been greater without the Cap, it is the capped amount which is payable and therefore disclosed in the
single figure of remuneration.
4. The Total Remuneration Cap limits the amount of total remuneration that has been earned over the financial year and is capable of being
paid out. This was introduced as part of the Remuneration Policy approved by shareholders at the 2017 EGM.
5. The Total Remuneration Cap operated for the 2018/19 financial year and where the remuneration would have been greater without the Cap,
it is the capped amount which is payable and therefore disclosed in the single figure of remuneration.
6. Benefits, which are not included in calculating the remuneration cap, include a fully expensed company car or cash allowance alternative and
medical insurance.
129
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Directors’ Remuneration Report continued
Annual Report on Remuneration continued
The table below sets out the single total figure of remuneration and breakdown for each Non-Executive Director. Non-Executive
Directors do not participate in any of the Company’s incentive arrangements nor do they receive benefits.
Non-Executive Director (£’000)
J Armitt(2)
A Nimmo
G Barker
V Wadley
A Li
A Myers
D Brightmore-Armour
P Vernon
R Downey
Basic fees
Additional fees(1)
Total fees
2020
81.0
66.9
121.0
66.9
66.9
66.9
66.9
66.9
66.9
2019
80.0
66.0
119.5
66.0
66.0
66.0
66.0
66.0
66.0
2020
2019
–
–
–
–
–
–
–
–
–
–
12.8
13.0
–
–
–
–
–
–
2020
81.0
66.9
121.0
66.9
66.9
79.7
66.9
66.9
66.9
2019
80.0
66.0
119.5
66.0
66.0
79.0
66.0
66.0
66.0
Notes
1. Additional fees represent fees paid for the role of Committee Chairmanship.
2. J Armitt receives a base fee of £82,400 to reflect his experience and pre-eminent standing in construction and infrastructure, and the value
he continues to add to the Board.
Bonus payments from deferred balance of the legacy Bonus Plan (Audited)
No further contributions will be made under the Bonus Plan. Under the Bonus Plan 50% of a participant’s plan account will be
paid out annually for the first five years with 100% of the balance paid at the end of the sixth plan year.
a. Plan
account
brought
forward
Shares
16,287
41,777
18,912
18,138
19,952
13,857
13,857
b. Plan
account
brought
forward(1)
£’000
701
1,797
814
780
858
596
596
142,780
6,143
c. Contribution
into plan
accounting
for the
financial year
2019/20(2)
£’000
–
–
–
–
–
–
–
–
d. Plan
account
balance
following
contribution
for financial
year 2019/20
e. Amount
paid following
contribution
for financial
year 2019/20
(50% of
column d)
£’000
701
1,797
814
780
858
596
596
£’000
350
899
407
390
429
298
298
f. Plan
account
carried
forward
£’000
350
899
407
390
429
298
298
g. Plan
account
carried
forward(3)
Shares
8,376
21,485
9,726
9,328
10,261
7,127
7,127
6,143
3,071
3,071
73,430
Executive Director
A W Pidgley
R C Perrins
R J Stearn
K Whiteman
S Ellis
J Tibaldi
P Vallone
Total
Notes
1. Converted at a share price of £41.83 at 30 April 2020 plus £0.2008 dividend paid on 13 September 2019 and £0.9932 dividend paid on
31 March 2020.
2. No contributions made into the plan account for the year as disclosed in the single figure table for 2019/20.
3. Converted at a share price of £41.83 at 30 April 2020.
4. All amounts are rounded to the nearest £’000.
130
Berkeley Group 2020 Annual Report Long-term incentives (Audited)
The fourth vesting of options under the 2011 LTIP occurred on 30 September 2019. The maximum level of options capable
of vesting was 13.4% (25% of the original options granted in 2018 for Tibaldi and Vallone) of the total grant provided that
£835.4 million of shareholder returns had been made from 1 October 2016 to 30 September 2019, through a combination
of dividends and share buy-backs. This performance condition was met in full and therefore the maximum number of options
capable of vesting vested.
The table below sets out the number of options over shares that vested for each Executive Director and the achievement
against the conditions required for vesting taking into account the application of the Total Remuneration Caps.
Options
granted
under
2011 LTIP
Percentage
of options
capable
of vesting
Performance
measure
and
outcome
Options
capable of
vesting
Value of
gain on
vested
options(1)
Number
of options
vested
(after
application
Capped
value
(and value
vested)(2)
of Cap)(3)
Value
above the
Cap(4)
Banked
options(5)
Cumulative
Banked
options(6)
A W Pidgley
5,000,000
R C Perrins
5,000,000
R J Stearn
954,328
13.4%
K Whiteman
1,000,000
S Ellis
2,250,000
J Tibaldi(7)
450,000
P Vallone(7)
450,000
16.67%
£835.4m of
shareholder
returns
from
1 October
2016 to
the 30
September
2019 –
100%
achieved
670,000
23,116,675
8,000,000
231,867
15,116,675
438,133
1,220,451
670,000
23,116,675
7,344,800
212,877
15,771,875
457,123
1,413,717
127,879
4,412,144
2,813,000
81,530
1,599,144
46,349
162,688
134,000
4,623,335
2,830,250
82,030
1,793,085
51,970
180,550
301,500
10,402,504
4,580,250
132,751
5,822,254
168,749
510,336
75,000
2,587,688
1,980,250
57,394
607,438
17,606
52,468
75,000
2,587,688
1,980,250
57,394
607,438
17,606
52,468
Notes
1. The value of gain on the options at vesting is calculated using the opening share price of £41.96 on 30 September 2019 (the date the options
vested and became exercisable) less the exercise price of £7.4575 per share.
2. The Total Remuneration Cap limits the value of the LTIP vesting in the year. The Total Remuneration Cap operated for the 2019/20 financial
year and where the LTIP value would have been greater without the Cap, it is the capped amount which is payable and therefore disclosed
in the single figure of remuneration. The capped amount is equivalent to the Total Remuneration Cap less salary less pensions.
3. This is the actual number of options which vested on 30 September 2019 and could be exercised by the participants.
4. This is the value of the options above the Cap which would have vested had the Cap not operated.
5. This is the number of options representing the value above the Cap, which are banked and capable of vesting at a future vesting date.
6. This is the cumulative banked options including options banked in prior years.
7. As set out in the 2019 Notice of Annual General Meeting, on 25 September 2019, J Tibaldi and P Vallone, were granted a further 150,000
options each, in addition to the 300,000 options granted in 2018, taking their total to 450,000 options. This additional award was in line with
the commitment made on their appointment as Executive Directors by the Remuneration Committee and in line with the Policy. The original
grant of 300,000 options is eligible to vest 25% each year (75,000 options) in 2018, 2019, 2020 and 2021. The additional 150,000 options will
be eligible to vest in two tranches in 2020 and 2021. Therefore in September 2019, 75,000 shares were capable of vesting (16.67% of the total
options granted). However, vesting will be restricted by the existing Total Remuneration Cap in both cases.
8. Each Executive Director exercised all the options that vested on 30 September 2019. Under the rules of the Plan, after the sale of shares to
pay tax, only 10% of shares are permitted to be sold each year until 30 September 2025 at which point the sale restriction falls away.
131
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Directors’ Remuneration Report continued
Annual Report on Remuneration 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 Chairman and Chief Executive 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 £41.83 on 30 April 2020, compliance with these requirements was as follows:
Actual
Shareholding
as % base
salary at
30 April
2020
Achievement
at 30 April
2020
Obligation
(% base salary)
Executive Director(1)
A W Pidgley
R C Perrins
R J Stearn
K Whiteman
S Ellis
J Tibaldi
P Vallone
400%
400%
200%
200%
200%
200%
200%
34,987%
8,613%
1,850%
3,306%
3,235%
564%
594%
Non-Executive Director(2)
(% NED net fees) % net fees
J Armitt
A Nimmo
G Barker
V Wadley
A Li
A Myers
D Brightmore-Armour
P Vernon
R Downey
Notes
1. To be achieved within five years of appointment.
2. To be achieved within three years of appointment.
100%
100%
100%
100%
100%
100%
100%
100%
100%
636%
232%
603%
224%
2,321%
292%
116%
232%
150%
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
132
Berkeley Group 2020 Annual Report Executive Director
A W Pidgley
R C Perrins
R J Stearn
K Whiteman
S Ellis
J Tibaldi
P Vallone
Non-Executive Director
J Armitt
A Nimmo
G Barker
V Wadley
A Li
A Myers
D Brightmore-Armour
P Vernon
R Downey
Beneficially
owned
shares(1)
2011 LTIP
Option
interests
subject to
conditions(2)
Banked
LTIP
options(3)
Total
interests
held
1,672,800
1,340,000
1,220,451
4,233,251
1,153,055
1,340,000
1,413,717
3,906,772
168,051
255,762
162,688
586,501
288,444
268,000
180,550
736,994
282,267
603,000
510,336
1,395,603
49,243
300,000
52,468
401,711
51,837
300,000
52,468
404,305
6,891
2,000
9,411
2,000
20,000
3,000
1,000
2,000
1,290
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6,891
2,000
9,411
2,000
20,000
3,000
1,000
2,000
1,290
Notes
1. Beneficial interests include shares held directly or indirectly by connected persons.
2. The fourth tranche of the 2011 LTIP awards vested and were exercised during the year by the Executive Director participants (see page 131
for details).
3. Banked LTIP options may vest subject to the achievement of performance conditions depending on the number of banked options held
by a participant and the share price of the Company.
Summary table
The following table sets out where in the Remuneration Committee Report the following information can be found:
Element
Taxable benefits (Audited)
Total pension entitlements (Audited)
Payments to past Directors (Audited)
Payments for loss of office (Audited)
Directors’ shareholding and share interests (Audited)
Statement of the Implementation of the new Remuneration Policy for 2020/21
Relevant
in Year
Yes
Yes
No payments
No payments
Page
120
120
–
–
Yes
Yes
132 – 133
120 – 122
133
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Directors’ Remuneration Report continued
Annual Report on Remuneration continued
Relative importance of spend on pay
The table below sets out the relative importance of spend on pay in the 2018/19 and 2019/20 financial years compared with
distributions to shareholders.
Remuneration of Group employees (including Directors)
Distributions to shareholders
2019/20
(£m)
2018/19
(£m)
% change
216
280
214
252
1%
11%
Service contracts
Details of the service contracts or letters of appointment for the current Directors are as follows:
Date of contract/
letter of appointment
Expiry date
Notice period
by Company
or Director
Executive Director
A W Pidgley
R C Perrins
R J Stearn
24 June 1994
15 July 2002
Rolling service contract with no fixed expiry date
12 months
Rolling service contract with no fixed expiry date
12 months
3 October 2014
Rolling service contract with no fixed expiry date
12 months
K Whiteman
15 January 1996
Rolling service contract with no fixed expiry date
12 months
S Ellis
J Tibaldi
P Vallone
5 May 2004
30 June 1999
Rolling service contract with no fixed expiry date
12 months
Rolling service contract with no fixed expiry date
12 months
25 September 1990
Rolling service contract with no fixed expiry date
12 months
Non-Executive Director
J Armitt
A Nimmo
G Barker
V Wadley
A Li
A Myers
1 October 2007
Renewal annually on 1 May
5 September 2011
Renewal annually on 1 May
3 January 2012
Renewal annually on 1 May
3 January 2012
Renewal annually on 1 May
2 September 2013
Renewal annually on 1 May
6 December 2013
Renewal annually on 1 May
D Brightmore-Armour
1 May 2014
Renewal annually on 1 May
P Vernon
R Downey
6 September 2017
Renewal annually on 1 May
8 December 2017
Renewal annually on 1 May
n/a
n/a
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 all Directors are subject to annual re-election.
When setting notice periods for Executive Directors, the Committee has regard to market practice and corporate governance
best practice. Notice periods will not be greater than 12 months.
134
Berkeley Group 2020 Annual Report Directors’ Report
The Directors submit their report
together with the audited Consolidated
and Company Financial Statements
for the year ended 30 April 2020.
For the purpose of DTR 4.1.8R,
the Directors’ Report is also the
Management Report for the year ended
30 April 2020.
Certain information that is relevant
to this report, including information
required in accordance with the
Companies Act 2006, the Large and
Medium-sized Companies and Groups
(Accounts and Reports) Regulations
2008 (as amended), DTR 4.1.8R, DTR 7,
LR 9.4.3R and LR 9.8R can be found in
the Strategic Report and the Corporate
Governance section of this report,
as detailed in each case below, and
is thereby incorporated by reference
into this report.
The following information in respect
of LR 9.8.4R can be located in the
following sections:
Information
Capitalised
interest
Unaudited
financial
information
Long-term
incentive
schemes
Waiver of
Directors’
emoluments
Section in
Annual Report
Directors’
Report
–
Pages
137
N/A
Remuneration
Report
106 to
134
Remuneration
Report
106 to
134
Allotments of
equity securities
–
Contracts of
significance
Directors’
Report
Controlling
shareholders
–
Dividend
waivers
Directors’
Report
N/A
136
N/A
136
(i.e.
EBT)
The Corporate Governance section
on pages 86 to 134 forms part of the
Directors’ Report. The Company’s
statement of how it has applied the
Principles of the Code and complied with
the relevant provisions of the Code is set
out on pages 86 and 93 of this Report.
A full review of the business, its
development, performance and position
at the year end, together with information
in respect of important events and
future developments, as required by DTR
4.18R, is set out on pages 22 to 27 of the
Strategic Report and is incorporated into
this report by reference.
Financial risk management
and financial instruments
The Company has not engaged in
financial instruments. Information in
respect of the principal financial and
operating risks and uncertainties relating
to the business, including the Group’s
financial risk management objectives
and policies and its exposure to liquidity,
foreign currency, interest rate, price
and credit risks, is set out on pages 66
to 79 of the Strategic Report and in
note 2.23 of the Consolidated Financial
Statements, and is incorporated into this
report by reference.
Dividends
An interim dividend of 20.08 pence
per share was paid to shareholders on
13 September 2019 and a further interim
dividend of 99.32 pence per share
was paid to shareholders on 31 March
2020. A further interim dividend is
proposed to be paid as part of the
£140.0 million shareholder return to
be provided by 30 September 2020
through a combination of dividends
and share buy-backs. The amount to
be paid as a dividend will be announced
on 13 August 2020, taking account
of any share buy-backs undertaken
as part of the Shareholder Returns
Programme. The dividend will be paid
on 11 September 2020 to shareholders
on the register on 21 August 2020.
Post Balance Sheet events
There are no post balance sheet events
that require disclosure.
Research and development
The Group is engaged in various
research and development activities,
including the development of modular
manufacturing, which forms part of the
Group strategy and is reported in Our
Vision. Details of this can be found in the
Strategic Report on page 33.
Share capital
The Company had 136,648,882 ordinary
shares of 5 pence each in issue at
30 April 2020 (2019: 140,157,183), which
are fully paid. During the year to 30 April
2020 and in accordance with the
authority provided by shareholders at
the 2018 and 2019 AGMs, the Company
has purchased for cancellation 3,508,301
ordinary shares with a nominal value
of £175,415 which equated to 2.50%
of the called-up share capital of the
Company at the beginning of the period,
excluding treasury shares. The aggregate
consideration paid for these shares
was £130.5 million. As at 30 April 2020
the Company held 10,941,900 shares in
treasury. These shares have no voting
rights. Authority will be sought from
shareholders at the forthcoming AGM
to renew the authority given at the 2019
AGM 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.
The business of the Company shall
be managed by the Directors, who
may exercise all the powers of the
Company subject to the provisions
of the Company’s Articles of Association
(the ‘Articles’) and statutes, and to
such directions as may be given by
the Company in general meeting by
special resolution, provided that no such
direction or alteration of the Articles shall
invalidate any prior act of the Directors
which would have been valid if such
direction or alteration of the Articles
had not been given.
Further details of Directors’ powers are
set out in the Articles of Association
of the Company.
135
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Directors’ Report continued
At the Company’s 2019 AGM, Directors
were authorised to allot shares or grant
rights to subscribe for, or convert, any
security into shares up to an aggregate
nominal amount of £2,115,645 and to allot
shares for a similar aggregate nominal
amount for the purposes of a rights
issue. Directors were further authorised
to allot securities through the sale of
treasury shares up to a nominal value
of £317,379. These authorities will apply
until the conclusion of the 2020 AGM
and it is proposed that renewal of the
authorities will be sought.
Movements in the Company’s share
capital are shown in note 2.18 to the
Consolidated Financial Statements.
All the Company’s issued share capital
is publicly listed on the London
Stock Exchange.
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. The Articles
are available on the Company’s website
at www.berkeleygroup.co.uk/investor-
information/corporate-governance.
Copies are available by writing to the
Company Secretary and are also open
to inspection at Companies House.
All shares have full rights in the Company
with respect to voting, dividends and
distributions, except as explained
above in respect of treasury shares.
Further information in respect of the
rights and obligations attaching to the
ordinary shares are set out in the Articles
of Association of the Company.
Directors
The Directors of the Company, their
profiles and details of their roles and
Committees of which they are members
are detailed on pages 88 to 91 and
are incorporated into this report by
reference. All of these Directors served
throughout the year under review.
There are no specific restrictions on the
size of a shareholding nor on the transfer
of shares, which are both governed
by the Articles of Association and the
prevailing law. The Directors are not
aware of any agreements between
holders of the Company’s shares that
may result in restrictions on the transfer
of shares or on voting rights.
No person has special rights of control
over the Company’s share capital.
Information on the Group’s share option
schemes is set out in note 2.5 to the
Consolidated Financial Statements.
Details of the Long-Term Incentive
Schemes and Long-Term Incentive Plans
for key Executives are set out within
the Directors’ Remuneration Report on
pages 106 to 134.
The appointment and replacement of
Directors is governed by the Company’s
Articles, the Code, the Companies
Act 2006 and any related legislation.
The Company, by ordinary resolution,
or the Directors may from time to time
appoint a Director to fill a casual vacancy
or as an additional Director. Any Director
so appointed shall hold office only
until the next following annual general
meeting and shall then be eligible
for reappointment.
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 Code all of the Directors will
offer themselves for re-election at the
forthcoming AGM.
Each of the Directors proposed
for re-election at the AGM is being
unanimously recommended by all
the other members of the Board.
This recommendation follows the
completion of the annual Board
evaluation process, which was facilitated
externally this year. Further information
relating to the evaluation is set out
on pages 100 to 101.
The interests of the Directors and
their connected persons in the share
capital of the Company and its
subsidiaries are shown on the Company
website. At 30 April 2020 each of
the Executive Directors was deemed
to have a non-beneficial interest in
213,802 (2019: 437,358) ordinary shares
held by the Trustees of the Berkeley
Group Employee Benefit Trust (EBT).
The shares held in the EBT rank pari
passu with all other shares in issue.
However, the Trustee of the EBT has
waived entitlement to dividends until
further notice and 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 2.24 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.
136
Berkeley Group 2020 Annual Report Between 30 April 2020 and 17 June
2020 the Company was not notified
of any changes to substantial interests
pursuant to Rule 5 of the DGTR.
The Company’s s.172 Statement on
pages 60 to 61 of the Strategic Report
sets out further details of how the
Directors’ have:
Donations
The Group made no political donations
(2019: £nil) during the year.
Capitalised interest
No interest has been capitalised by the
Group during the period under review
(2019: £nil).
Employee engagement
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.
Further information is provided on
pages 42 to 43 and page 56 of the
Strategic Report.
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 or civil partnership, pregnancy
and maternity, race, religion or belief
(including lack of belief), sex and
sexual orientation.
Stakeholder engagement
The Company recognises the importance
of good supplier, customer and other
relationships to the overall success of
the business and manages dealings with
stakeholders in a fair, consistent and
transparent manner.
— engaged with employees;
— had regard to employee interests and
the effect of that regard, including on
the principal decisions taken by the
Company during the year; and
— had regard to the need to foster the
Company’s business relationships
with suppliers, customers and
others, and the effect of that regard,
including on the principal decisions
taken by the Company during
the year.
Sustainability
The Group is committed to being
a responsible and sustainable business
which thinks about the long-term
and creates positive environmental,
social and economic impacts.
These aspects are considered in
the Group’s approach to managing
its operational activities and in the
homes and places it develops.
The Group has an integrated
strategy for the business: Our Vision.
Sustainability is a key element of
the Group’s strategy with a number
of commitments directly relating to
material sustainability topics such as
climate change. Information on Our
Vision can be found within the Strategic
Report and on the Group’s website.
The Directors have ultimate responsibility
for sustainability within the Group.
The Sustainability Leadership Team,
which meets monthly to set strategic
direction and review performance,
consists of the Chief Executive, the Board
Director Responsible for Sustainability
and the Group Sustainability Team.
Dedicated operational practitioners
work throughout the business to ensure
that sustainability is incorporated into
daily activities.
Directors’ indemnities
The Company maintains Directors’
and officers’ liability insurance which
provides appropriate cover for legal
action brought against its Directors.
The Company’s practice has always been
to indemnify its Directors in accordance
with the Company’s Articles 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 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.
No pension scheme indemnity provisions
(as defined by Section 235 of the
Companies Act 2006) were in force
during the year ended 30 April 2020 for
the benefit of the Trustee Directors of
the Berkeley Group plc Benefits Plan.
Substantial shareholders
The latest notifications received by
the Company from shareholders in
respect of their interests, pursuant to
Rule 5 of the Disclosure Guidance and
Transparency Rules (“DGTR”), as at
30 April 2020 are as follows:
Number of
ordinary
shares
held(i)
% of
voting
rights(i)
BlackRock Inc.
11,698,607
8.72
First Eagle Investment
Management LLC(ii)
10,071,368
7.81
(i)
The number of ordinary shares held and
percentage of voting rights is as stated by
the shareholder at the time of notification.
(ii) First Eagle Global Fund has notified the
Company that it holds 5,013,920 ordinary
shares being 3.89% of voting rights.
This holding is included in the indirect
interests of 7.81% notified by First Eagle
Investment Management LLC.
137
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Directors’ Report continued
Greenhouse gas emissions and energy consumption
Scope 1 emissions
Unit
Total
tCO2e
2,705 A
Scope 2 location-based emissions
tCO2e
5,484 A
Scope 2 market-based emissions
tCO2e
151 A
2020
UK
2,705
5,366
33
Global
(excluding
UK)
–
118
118
2019
(restated)
Total
3,213
5,905
163
Global
(excluding
UK)
–
116
116
UK
3,213
5,789
47
Scope 3 emissions
tCO2e
13,824 A
13,020
804
17,835
16,916
919
Scope 1, Scope 2 location-based
and Scope 3 emissions
tCO2e
22,013 A
21,091
922
26,953
25,918
1,035
Scope 1, Scope 2 location-based
and Scope 3 emissions intensity
tCO2e/
person
2.16
–
–
2.49
–
–
Scope 1, Scope 2 market-based
and Scope 3 emissions
tCO2e
16,680 A
15,758
922
21,211
20,176
1,035
Scope 1, Scope 2 market-based
and Scope 3 emissions intensity
tCO2e/
person
1.63
–
MWh
11,559 A
11,559
–
–
1.96
–
12,347
12,347
–
–
Energy consumption associated
with Scope 1 emissions
Energy consumption associated
with Scope 2 emissions
Energy consumption associated with
Scope 3 emissions from contractor
purchased fuel and business travel only
Energy consumption associated
with Scope 1, Scope 2 and Scope 3
contractor purchased fuels and business
travel emissions
MWh
21,259 A
21,063
196
20,740
20,550
190
MWh
38,178 A
35,577
2,601
47,540
44,564
2,976
MWh
70,996 A
68,199
2,797
80,627
77,461
3,166
A 2020 information has been separately subject to limited assurance by PricewaterhouseCoopers LLP. For further details of the assurance provided
in 2020 and prior years, see the independent assurance reports found at www.berkeleygroup.co.uk/sustainability/reports-and-case-studies.
Scope 1 – direct emissions relating
to office, sales and development site
activities; and travel (business and other
travel where expensed) in company
owned vehicles;
Scope 2 – indirect emissions from
electricity and heat consumed for office,
sales and development site activities;
and travel (business and other travel
where expensed) in company
owned vehicles;
Scope 3 – other indirect emissions
relating to office, sales and development
site activities; travel (business and other
travel where expensed) in company
leased and employee owned vehicles;
business air travel; transmission and
distribution losses of purchased
electricity and heat; and
upstream emissions.
Methodology
The Group has reported on greenhouse
gas emissions for which it is responsible
and energy use associated with
these greenhouse gas emissions, as
required under the Companies Act
2006 (Strategic Report and Directors’
Reports) Regulations 2013 and the
Companies (Directors’ Report) and
Limited Liability Partnerships (Energy
and Carbon Report) Regulations 2018.
The emissions and energy consumption
disclosed are aligned to the Group’s
financial reporting year, are considered
material to its business and have the
following parameters:
138
Berkeley Group 2020 Annual Report Emissions and energy consumption include 50% of those resulting from the Group’s joint ventures on the basis of its equity
share. The Group’s share of joint ventures’ emissions and energy consumption in 2020 is as follows:
Scope 1 emissions
Scope 2 location-based emissions
Scope 2 market-based emissions
Scope 3 emissions
Energy consumption associated with Scope 1 emissions
Energy consumption associated with Scope 2 emissions
Energy consumption associated with Scope 3 emissions from
contractor purchased fuels and business travel only
Unit
St Edward
St William
tCO2e
tCO2e
tCO2e
tCO2e
MWh
MWh
257
227
8
1,409
1,132
899
46
172
–
723
183
674
Total
303
399
8
2,132
1,315
1,573
MWh
4,103
2,128
6,231
The emissions intensity ratios have
been calculated using the number of
Berkeley employees and the number of
contractors working on our sites. It is the
average figure for the year and includes
50% of employees and contractors
working in offices or on development
sites of Berkeley’s joint ventures.
The UK Government Environmental
Reporting Guidelines 2019 and UK
Government GHG Conversion Factors
for Company Reporting and International
Energy Agency conversion factors
have been used to calculate and
report the Group’s greenhouse gas
emissions, and to convert raw data
units into the kilowatt-hour energy
consumption measure.
The Directors confirm that reported
greenhouse gas emissions and energy
consumption have been prepared in
accordance with the Group’s established
reporting criteria, are free from
material misstatement and have been
presented in a manner that provides
relevant, reliable, comparable and
understandable information.
Emissions and energy consumption
reported outside of this Directors’ Report
are based on the Group’s operational
reporting boundary. They include 100%
joint venture emissions. Data for 2019
has been restated based on updated
data made available within the period.
Further details on our reporting
boundaries, our established reporting
criteria and the methodology adopted
for the overall calculations can be
found at www.berkeleygroup.co.uk/
sustainability/reports-and-case-studies.
Energy efficiency action
The Group’s minimum recommendations
for energy efficient site set up and
operation have continued to be
implemented in 2019/20, along with
the Carbon Management and Action
Plan which details site-specific energy
consumption and efficiency measures.
In the last year, sites have retrofitted
more energy efficient measures or
have included these from site start.
For example, motion sensors have been
installed during the site set up of The
Arches to ensure lighting is only active
when needed, whilst a master switch
has also been implemented to turn
off all unnecessary equipment at the
end of the working day to reduce out
of hours consumption. Welfare cabins
with improved energy efficiency have
also been specified, including for the
set up of Horlicks Quarter. During the
project completion of Royal Wells Park
and Ryewood, mobile welfare units
have been used which are powered by
a hybrid of solar photovoltaic panels
and a traditional generator feeding into
battery storage that once fully charged
triggers the generator to stop running.
Recognising that taking action to reduce
non-renewable fuel consumption is a key
challenge, this year the Group saw its
Green Park Village site switch to using
biodiesel within generators, whilst at
Trent Park the project team collaborated
with the groundworks contractor to
trial the industry’s first fully electric
mini excavator.
In autumn 2019, energy audits were
completed for two divisional offices
and seven development sites (including
sales suites where applicable) in line
with the requirements of the Energy
Savings Opportunity Scheme (ESOS).
Resulting recommendations are
incorporated into updated energy
efficiency recommendations for
the business.
The Group has voluntarily purchased and
retired Deep Green Renewable Energy
Guarantee of Origins (REGOs) for its
UK electricity consumption (accounted
for within the Scope 2 market-based
emissions figures presented in the
above table) and has offset its emissions
through the support of verified projects.
Further details on our approach to
being a carbon positive business can
be found at www.berkeleygroup.co.uk/
sustainability/reports-and-case-studies.
Covid-19 impact
The Covid-19 pandemic has led to
decreased carbon emissions and energy
consumption in the final months of
the reporting year; Berkeley’s sales
suites were closed, business travel
was restricted and office based staff
transitioned to home working from
the middle of March 2020. To ensure
compliance with social distancing
rules, the number of operatives and
level of activity across Berkeley sites
also reduced.
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 agreements, 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 of
either National Grid or Berkeley may give
the other joint venture partner the ability
to sell its interest in the joint venture.
139
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements The Directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the parent
Company’s transactions and disclose
with reasonable accuracy at any time
the financial position of the parent
Company and enable them to ensure
that its financial statements comply
with the Companies Act 2006. They are
responsible for such internal control as
they determine is necessary to enable
the preparation of financial statements
that are free from material misstatement,
whether due to fraud or error, and have
general responsibility for taking such
steps as are reasonably open to them
to safeguard the assets of the Group
and to prevent and detect fraud and
other irregularities.
Under applicable law and regulations,
the Directors are also responsible for
preparing a Strategic Report, Directors’
Report, Directors’ Remuneration Report
and Corporate Governance Statement
that complies with that law and
those regulations.
The Directors are responsible for the
maintenance and integrity of the
corporate and financial information
included on the Company’s website.
Legislation in the UK governing the
preparation and dissemination of
financial statements may differ from
legislation in other jurisdictions.
Directors’ Report continued
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 or
employee that provide compensation for
loss of office or employment resulting
from a takeover.
Independent auditor and
disclosure of information
to auditor
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 auditor is 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 auditor is 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.
KPMG has confirmed its willingness
to continue in office and, on the
recommendation of the Audit
Committee, a resolution to re-appoint
KPMG LLP as auditor to the Company
will be proposed at the AGM.
Annual general meeting
The Annual General Meeting of the
Company is to be held at the offices of
Herbert Smith Freehills LLP, Exchange
House, Primrose Street, London
EC2A 2EG at 11 a.m. on 4 September
2020. The Notice of Meeting, which
is contained in a separate letter from
the Chairman accompanying this
report, includes a commentary on
the business to be transacted at the
AGM and is available on our website
at www.berkeleygroup.co.uk/ investor-
information/corporate-governance.
Statement of Directors’
responsibilities in respect
of the Annual Report and
the Financial Statements
The Directors are responsible for
preparing the Annual Report and the
Group and parent Company financial
statements in accordance with
applicable law and regulations.
Company law requires the Directors to
prepare Group and parent Company
financial statements for each financial
year. Under that law they are required to
prepare the Group financial statements
in accordance with International
Financial Reporting Standards as
adopted by the European Union (IFRSs
as adopted by the EU) and applicable
law and have elected to prepare the
parent Company financial statements
in accordance with UK accounting
standards, including FRS 101 ‘Reduced
Disclosure Framework’.
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 parent Company and
of their profit or loss for that period.
In preparing each of the Group and
parent Company financial statements,
the directors are required to:
— select suitable accounting policies
and then apply them consistently;
— make judgements and estimates
that are reasonable, relevant, reliable
and prudent;
— for the Group financial statements,
state whether they have been
prepared in accordance with IFRSs
as adopted by the EU;
— for the parent Company financial
statements, state whether applicable
UK accounting standards have
been followed, subject to any
material departures disclosed and
explained in the parent Company
financial statements;
— assess the Group and parent
Company’s ability to continue as
a going concern, disclosing, as
applicable, matters related to going
concern; and
— use the going concern basis of
accounting unless they either intend
to liquidate the Group or the parent
Company or to cease operations, or
have no realistic alternative but to
do so.
140
Berkeley Group 2020 Annual Report Directors’ responsibility
statement
Each of the Directors, whose names and
functions are listed on pages 88 to 91
confirm that, to the best of each
person’s knowledge:
a. the Group financial statements, which
have been prepared in accordance
with IFRSs as adopted by the EU,
give a true and fair view of the assets,
liabilities, financial position and profit
of the Group;
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, including
those that would threaten its business
model, future performance, solvency
or liquidity; and
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 financial performance
and position, 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 80 to 83.
The Directors have assessed the business
plan and future funding requirements
of the Group over the medium-term
and compared these with the level of
committed loan facilities and existing
cash resources. As at 30 April 2020,
the Group has net cash of £1,138.9 million
and total liquidity of £1,888.9 million
when this net cash is combined with
banking facilities of £750 million, which
are in place until November 2023.
Furthermore, the Group has cash due
on forward sales of £1,858 million, around
50% of which is expected to be collected
in the next 12 months.
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 in operational existence for the
foreseeable future period, and not less
than 12 months from the date of these
financial statements. For this reason it
continues to adopt the going concern
basis of accounting in preparing its
Consolidated Financial Statements.
By order of the Board
Ann Dibben
Company Secretary
The Berkeley Group Holdings plc
Registered number: 5172586
17 June 2020
141
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements 142142
Berkeley Group 2020 Annual Report
Berkeley Group 2020 Annual Report Fulham Reach,
Hammersmith & Fulham
This 7 acre disused distillery
site will become a community
of more than 700 mixed-tenure
homes. An extensive community
engagement programme shaped
the masterplan, which will see
half of the land become public
open space and a new pontoon
and boat club giving local
people and schools improved
access to the Thames.
Financial
Statements
144 Independent Auditor’s Report
151 Consolidated Income Statement
151 Consolidated Statement
of Comprehensive Income
152 Consolidated Statement
of Financial Position
153 Consolidated Statement of Changes
in Equity
154 Consolidated Cash Flow Statement
155 Notes to the Consolidated Financial
Statements
189 Company Balance Sheet
190 Company Statement of Changes
in Equity
191 Notes to the Company Financial
Statements
196 Five Year Summary
197 Financial Diary and Registered Office
and Advisors
143
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Independent Auditor’s Report to the Members
of The Berkeley Group Holdings plc
1. Our opinion is unmodified
We have audited the financial statements of The Berkeley
Group Holdings plc (“the Company”) for the year ended
30 April 2020 which comprise the Consolidated Income
Statement, Consolidated Statement of Comprehensive
Income, Consolidated Statement of Financial Position,
Consolidated Statement of Changes in Equity, Consolidated
Cash Flow Statement, Company Balance Sheet, Company
Statement of Changes in Equity, and the related notes,
including the accounting policies in note 1 and C1.
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 2020 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, including FRS 101 Reduced Disclosure
Framework; 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.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable
law. Our responsibilities are described below. We believe
that the audit evidence we have obtained is a sufficient
and appropriate basis for our opinion. Our audit opinion
is consistent with our report to the audit committee.
We were first appointed as auditor by the Directors on
27 November 2013. The period of total uninterrupted
engagement is for the seven financial years ended 30 April
2020. We have fulfilled our ethical responsibilities under,
and we remain independent of the Group in accordance
with, UK ethical requirements including the FRC Ethical
Standard as applied to listed public interest entities. No non-audit
services prohibited by that standard were provided.
Overview
Materiality:
Group financial
statements
as a whole
Coverage
£21.0 million (2019: £27.0 million)
4.2% (2019: 3.5%) of Group profit
before tax
90% (2019: 97%) of group profit
before tax
Key audit matters
vs 2019
Recurring risks Carrying value of inventory
and profit recognition
Post completion
development provisions
Recoverability of the parent
Company’s investment in,
and amounts due from its
subsidiaries
2. Key audit matters: our assessment of risks
of material misstatement
Key audit matters are those matters that, in our professional
judgement, were of most significance in the audit of the
financial statements and include the most significant
assessed risks of material misstatement (whether or not due
to fraud) identified by us, including those which had the
greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the
engagement team. We summarise below the key audit
matters, in decreasing order of audit significance, in arriving
at our audit opinion above, together with our key audit
procedures to address those matters and, as required for
public interest entities, our results from those procedures.
These matters were addressed, and our results are based on
procedures undertaken, in the context of, and solely for the
purpose of, our audit of the financial statements as a whole,
and in forming our opinion thereon, and consequently are
incidental to that opinion, and we do not provide a separate
opinion on these matters.
In the prior year, we reported a Key Audit Matter in respect
of the impact of uncertainties due to the UK exiting the
European Union on our audit. As a result of developments
since the prior year report, including the Group’s own
preparation, the relative significance of this matter on our
audit work, including in relation to the carrying value of
inventory and profit recognition which remains a key audit
matter, has reduced. Accordingly, we no longer consider
this a key audit matter.
144
Berkeley Group 2020 Annual Report Carrying value
of inventory and
profit recognition
(£3,554.9 million;
2019: £3,114.7 million)
Refer to page 103
(Audit Committee
Report) and note
2.12 on page 171
(accounting policy and
financial disclosures).
The risk
Our response
Subjective estimate:
The Group recognises profit on each
unit sold based on an overall forecast
margin for each site, which is derived
from the total forecast revenue
and total forecast costs for the site.
This allows the land and build costs of
a development to be allocated to each
individual unit on a systematic basis.
Site forecasts may comprise multiple
phases and can be completed over
a number of years. Further estimation
uncertainty and exposure to market
cyclicality exists within longer-
term sites.
Future sales prices and forecast costs
to complete are dependent on market
conditions and can be difficult to
predict. Political and economic factors
including, but not limited to, the future
market uncertainties surrounding the
impacts of COVID-19 may influence
market conditions.
Inventory represents the capitalised
site costs to date less amounts
recognised in cost of sales for units
which have been completed and
handed over to customers. It is held
at the lower of cost and net realisable
value, the latter also being based on
the forecast sales prices for the site.
The level of uncertainty from COVID-19
impacting the Group’s assessments of
the future economic environment may
influence the Group’s estimates of net
realisable value.
The effect of these matters is that,
as part of our risk assessment, we
determined that carrying value of
inventory and profit recognition
has a high degree of estimation
uncertainty, with a potential range
of reasonable outcomes greater
than our materiality for the financial
statements as a whole, and possibly
many times that amount.
The financial statements (note 2.12)
disclose the sensitivity estimated by the
Group in respect of the approach taken
for margin recognition for the longer-
term regeneration developments in
the portfolio.
Our procedures included:
— Control observation: We attended a selection
of the Group’s build cost meetings that are held
for each site. Our attendance at these meetings
included assessing whether the appropriate
individuals attended the meetings, assessing that
the site forecast costs for developments were
reviewed and discussed and cost forecasts were
updated as appropriate;
We inspected whole site forecasts, on
a sample basis, and challenged management’s
inputs and assumptions by performing the
following procedures:
— Historical comparisons: Agreed a sample
of forecast build costs to purchase contracts,
supplier agreements or tenders and agreed
a sample of costs incurred in the year to invoice
and/or payment;
— Benchmarking assumptions: Assessed, based
on the risks highlighted by the Group’s build cost
review meetings and industry cost indices, the
appropriateness of allowances made for cost
increases in longer-term developments as well
as contingencies held;
— Benchmarking assumptions: Compared forecast
sales prices against recent prices achieved in
the local market, historical sales prices, and
considered factors, including COVID-19, that
may impact the achievable price on forecast
future sales;
— Our sector experience: Utilised the audit team’s
experience, supported as appropriate by the firm’s
property experts, to consider the appropriateness
of the forecast sales prices and forecast future
cost assumptions;
— Sensitivity analysis: Evaluated the impact of
varying changes in sales prices and build costs
on the forecast margin and considered whether
this indicated an alternative basis of margin
recognition in the year. This evaluation included
applying severe, but also plausible downside
scenarios including, but not limited to the
COVID-19 impact on sales prices; and
— Assessing transparency: We have also
considered the adequacy of the Group’s
disclosures in note 2.12 to the financial statements
regarding the degree of judgement, estimation
uncertainty, and sensitivity to key assumptions
involved in arriving at the forecast site margins
and resultant profit recognised.
Our results
— We found the resulting estimates in determining
the carrying value of inventory and profit
recognition to be acceptable (2019: acceptable).
145
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Independent Auditor’s Report to the Members
of The Berkeley Group Holdings plc continued
The risk
Our response
Post completion
development
provisions
(£109.8 million;
2019: £74.2 million)
Refer to page 103
(Audit Committee
Report) and page 173
(accounting policy and
financial disclosures).
Subjective estimate:
The Group holds post completion
development provisions in respect
of claims and construction related
liabilities that have arisen, or that prior
claims experience indicates may arise
for remediation of defects subsequent
to the completion of certain
developments. The identification
and estimation of amounts to
be recognised in relation to post
completion development provisions is
judgemental by its nature and there is
a risk that the estimate is incorrect and
the provision is materially misstated.
The effect of these matters is that,
as part of our risk assessment, we
determined that post completion
development provisions have a high
degree of estimation uncertainty,
with a potential range of reasonable
outcomes greater than our materiality
for the financial statements as a whole
and possibly many times that amount.
Recoverability of the
parent Company’s
investment in, and
amounts due from, its
subsidiaries
Investment carrying
value £1,430.5 million
(2019: £1,421.7 million),
and amounts due
from subsidiaries
£685.5 million
(2019: £229.2 million)
Refer to page 193
(accounting policy and
financial disclosures).
Low risk, high value
The carrying amount of the parent
Company’s investments in, and
amounts due from, its subsidiaries
represents 66.9% and 32.0%
(2019: 85.2% and 13.7%) of the
Company’s total assets, respectively.
Their recoverability is not at a high risk
of significant misstatement or subject
to significant judgement. However, due
to their materiality in the context of the
parent Company financial statements,
this is considered to be the area that
had the greatest effect on our overall
parent Company audit.
Our procedures included:
— Personnel interviews: We enquired of Group and
divisional Directors and inspected board minutes
to assess completeness of claims provided for;
— Test of detail: When a provision has been
made for significant known issues and claims,
we inspected the Group’s calculation of the
provision held, considered internal remediation
cost assessments and third party evidence,
where available;
— Benchmarking assumptions: Where past events
indicated an obligation may arise, we evaluated
risk assessments performed in respect of known
issues and/or settled and considered any changes
in the development portfolio over time, in
assessing the calculation of the provision;
— Enquiry of lawyers: In respect of open matters
of litigation, we held discussions with the
Group’s legal counsel and reviewed relevant
correspondence; and
— Assessing transparency: We have also
considered the adequacy of the Group’s
disclosures in note 2.16 to the financial statements
regarding the degree of judgement, estimation
uncertainty, and sensitivity to key assumptions
involved in arriving at the recorded post
completion development provisions.
Our results
— We found the resulting estimates in determining
post completion development provisions to be
acceptable (2019: acceptable).
Our procedures included:
— Test of detail: comparing the carrying amount
of 100% of investments with the relevant
subsidiaries’ draft balance sheet to identify
whether their net assets, being an approximation
of their minimum recoverable amount, were in
excess of their carrying amount; assessing 100%
of amounts due from subsidiaries to identify, with
reference to the relevant debtors’ draft balance
sheet, whether they have a positive net asset
value and therefore coverage of the debt owed,
and assessing whether those subsidiaries have
historically been profit-making.
Our results
— We found the carrying amount of the parent
Company’s investment in, and amounts
due from, its subsidiaries to be acceptable
(2019: acceptable).
146
Berkeley Group 2020 Annual Report Profit before taxation
£503.7 million
(2019: £775.2 million)
Group materiality
£21.0 million
(2019: £27.0 million)
£21.0 million
Whole financial
statements materiality
(2019: £27.0 million)
£14.0 million
Range of materiality
at 11 components
(£0.2m to £14.0m)
(2019: £1.0 million
to £21.0 million)
Profit before taxation
Group materiality
£1.05 million
Misstatements reported
to the audit committee
(2019: £1.35 million)
3. Our application of materiality and an
overview of the scope of our audit
Materiality for the Group financial statements as a whole
was set at £21.0 million (2019: £27.0 million), determined
with reference to a benchmark of group profit before
tax of £503.7 million (2019: Group profit before tax of
£775.2 million), of which it represents 4.2% (2019: 3.5%).
Materiality for the parent company financial statements
as a whole was set at £12.0 million (2019: £24.3 million),
determined with reference to a benchmark of company total
assets of £2,139.6 million (2019: £1,667.9 million), of which
it represents 0.6% (2019: 1.5%).
We agreed to report to the Audit Committee any corrected
or uncorrected identified misstatements exceeding
£1.05 million (2019: £1.35 million), in addition to other
identified misstatements that warranted reporting on
qualitative grounds.
Of the Group’s 17 (2019: 18) reporting components,
we subjected 11 (2019: 10) to full scope audits for group
purposes and 6 (2019: 8) to specified risk-focused
procedures, all performed by the group team. The latter
components were not individually financially significant
enough to require a full scope audit for group purposes
but did present specific individual risks that needed to
be addressed.
The components within the scope of our work accounted
for the percentages illustrated opposite.
There are no residual components in 2020 (2019: no
residual components).
Group revenue
Group profit before tax
10
3
90%
(2019 97%)
97
90
100%
(2019 100%)
100
100
Group total assets
16
18
84%
(2019 82%)
82
84
Full scope for group audit
purposes 2020
Specified risk-focused
audit procedures 2020
Full scope for group audit
purposes 2019
Specified risk-focused
audit procedures 2019
Residual components
147
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Independent Auditor’s Report to the Members
of The Berkeley Group Holdings plc continued
4. We have nothing to report on
going concern
The Directors have prepared the financial statements on the
going concern basis as they do not intend to liquidate the
Company or the Group or to cease their operations, and as
they have concluded that the Company’s and the Group’s
financial position means that this is realistic. They have
also concluded that there are no material uncertainties
that could have cast significant doubt over their ability
to continue as a going concern for at least a year from the
date of approval of the financial statements (“the going
concern period”).
Our responsibility is to conclude on the appropriateness
of the Directors’ conclusions and, had there been a material
uncertainty related to going concern, to make reference to
that in this audit report. However, as we cannot predict all
future events or conditions and as subsequent events may
result in outcomes that are inconsistent with judgements
that were reasonable at the time they were made, the
absence of reference to a material uncertainty in this
auditor’s report is not a guarantee that the Group and
the Company will continue in operation.
In our evaluation of the Directors’ conclusions, we
considered the inherent risks to the Group’s and Company’s
business model, including the impact of Brexit, and analysed
how those risks might affect the Group’s and Company’s
financial resources or ability to continue operations over
the going concern period. We evaluated those risks and
concluded that they were not significant enough to require
us to perform additional audit procedures.
Based on this work, we are required to report to you if:
— we have anything material to add or draw attention to
in relation to the directors’ statement in Note 1 to the
financial statements on the use of the going concern
basis of accounting with no material uncertainties
that may cast significant doubt over the Group and
Company’s use of that basis for a period of at least
twelve months from the date of approval of the financial
statements; or
— the related statement under the Listing Rules set
out on page 107 is materially inconsistent with our
audit knowledge.
We have nothing to report in these respects, and we did not
identify going concern as a key audit matter.
5. We have nothing to report on the other
information in the Annual Report
The Directors are responsible for the other information
presented in the Annual Report together with the financial
statements. Our opinion on the financial statements does
not cover the other information and, accordingly, we do
not express an audit opinion or, except as explicitly stated
below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and,
in doing so, consider whether, based on our financial
statements audit work, the information therein is materially
misstated or inconsistent with the financial statements or
our audit knowledge. Based solely on that work we have not
identified material misstatements in the other information.
Strategic report and directors’ report
Based solely on our work on the other information:
— we have not identified material misstatements in the
strategic report and the directors’ report;
— in our opinion the information given in those reports
for the financial year is consistent with the financial
statements; and
— in our opinion those reports have been prepared in
accordance with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration
Report to be audited has been properly prepared in
accordance with the Companies Act 2006.
Disclosures of emerging and principal risks and
longer‑term viability
Based on the knowledge we acquired during our financial
statements audit, we have nothing material to add or draw
attention to in relation to:
— the Directors’ confirmation within the Viability Statement
on page 67 that they have carried out a robust
assessment of the emerging and principal risks facing the
Group, including those that would threaten its business
model, future performance, solvency and liquidity;
— the Principal Risks disclosures describing these risks and
explaining how they are being managed and mitigated;
and
— the Directors’ explanation in the Viability Statement of
how they have assessed the prospects of the Group, over
what period they have done so and why they considered
that period to be appropriate, and their statement as
to whether they have a reasonable expectation that the
Group will be able to continue in operation and meet
its liabilities as they fall due over the period of their
assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
148
Berkeley Group 2020 Annual Report Under the Listing Rules we are required to review
the Viability Statement. We have nothing to report in
this respect.
Our work is limited to assessing these matters in the
context of only the knowledge acquired during our financial
statements audit. As we cannot predict all future events
or conditions and as subsequent events may result in
outcomes that are inconsistent with judgements that were
reasonable at the time they were made, the absence of
anything to report on these statements is not a guarantee
as to the Group’s and Company’s longer-term viability.
Corporate governance disclosures
We are required to report to you if:
— we have identified material inconsistencies between the
knowledge we acquired during our financial statements
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 position and performance, business
model and strategy; or
— the section of the annual report describing the work
of the Audit Committee does not appropriately address
matters communicated by us to the Audit Committee; or
— a corporate governance statement has not been
prepared by the Company.
We are required to report to you if the Corporate
Governance Statement does not properly disclose
a departure from the provisions of the UK Corporate
Governance Code specified by the Listing Rules for
our review.
We have nothing to report in these respects.
Based solely on our work on the other information
described above:
— with respect to the Corporate Governance Statement
disclosures about internal control and risk management
systems in relation to financial reporting processes and
about share capital structures:
— we have not identified material misstatements therein;
and
— the information therein is consistent with the financial
statements; and
— in our opinion, the Corporate Governance Statement
has been prepared in accordance with relevant rules
of the Disclosure Guidance and Transparency Rules
of the Financial Conduct Authority.
6. We have nothing to report on the other
matters on which we are required to report
by exception
Under the Companies Act 2006, we are required to report
to you if, in our opinion:
— 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.
We have nothing to report in these respects.
7. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page
141, the Directors are responsible for: the preparation of
the financial statements including being satisfied that
they give a true and fair view; such internal control as they
determine is necessary to enable the preparation of financial
statements that are free from material misstatement,
whether due to fraud or error; assessing the Group and
parent Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern;
and using the going concern basis of accounting unless they
either intend to liquidate the Group or the parent Company
or to cease operations, or have no realistic alternative but to
do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or other
irregularities (see below), or error, and to issue our opinion in
an auditor’s report. Reasonable assurance is a high level of
assurance, but does not guarantee that an audit conducted
in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise
from fraud, other irregularities or error and are considered
material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions
of users taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the
FRC’s website at www.frc.org.uk/auditorsresponsibilities.
149
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Independent Auditor’s Report to the Members
of The Berkeley Group Holdings plc continued
8. The purpose of our audit work and to whom
we owe our responsibilities
This report is made solely to the Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the Company’s members those
matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company’s
members, as a body, for our audit work, for this report,
or for the opinions we have formed.
Michael Harper
(Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London
E14 5GL
17 June 2020
Irregularities – ability to detect
We identified areas of laws and regulations that could
reasonably be expected to have a material effect on the
financial statements from our general commercial and
sector experience, through discussion with the Directors
and other management (as required by auditing standards)
and discussed with the Directors and other management
the policies and procedures regarding compliance with
laws and regulations.
We communicated identified laws and regulations
throughout our team and remained alert to any indications
of non-compliance throughout the audit.
The potential effect of these laws and regulations on the
financial statements varies considerably.
Firstly, the Group is subject to laws and regulations that
directly affect the financial statements including financial
reporting legislation (including related companies
legislation), distributable profits legislation, and taxation
legislation and we assessed the extent of compliance with
these laws and regulations as part of our procedures on the
related financial statement items.
Secondly, the Group is subject to many other laws and
regulations where the consequences of non-compliance
could have a material effect on amounts or disclosures in
the financial statements, for instance through the imposition
of fines or litigation or the loss of the Group’s licence to
operate. We identified the following areas as those most
likely to have such an effect: health and safety, anti-
bribery, anti-money laundering and sanctions checking.
Auditing standards limit the required audit procedures to
identify non-compliance with these laws and regulations
to enquiry of the directors and other management and
inspection of regulatory and legal correspondence, if any.
Through these procedures we became aware of actual or
suspected non-compliance and considered the effect as
part of our procedures on the related financial statement
items. The actual or suspected non-compliance was not
sufficiently significant to our audit to result in our response
being identified as a key audit matter.
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some
material misstatements in the financial statements, even
though we have properly planned and performed our audit
in accordance with auditing standards. For example, the
further removed non-compliance with laws and regulations
(irregularities) is from the events and transactions reflected
in the financial statements, the less likely the inherently
limited procedures required by auditing standards would
identify it. In addition, as with any audit, there remained
a higher risk of non-detection of irregularities, as these
may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal controls.
We are not responsible for preventing non-compliance
and cannot be expected to detect non-compliance with
all laws and regulations.
150
Berkeley Group 2020 Annual Report Consolidated Income Statement
For the year ended 30 April
Revenue
Cost of sales
Gross profit
Net operating expenses
Operating profit
Finance income
Finance costs
Share of results of joint ventures using the equity method
Profit before taxation for the year
Income tax expense
Profit after taxation for the year
Earnings per share (pence):
— Basic
— Diluted
Notes
2020
£m
2019
£m
1,920.4
2,957.4
(1,283.0)
(2,031.2)
637.4
(167.7)
469.7
12.4
(11.7)
33.3
503.7
(93.6)
410.1
926.2
(157.8)
768.4
10.7
(12.7)
8.8
775.2
(147.8)
627.4
324.9
313.4
481.1
469.9
2.3
2.3
2.11
2.6
2.7
2.7
Consolidated Statement of Comprehensive Income
For the year ended 30 April
Profit after taxation for the year
Other comprehensive (expense)/income
Items that will not be reclassified to profit or loss
Actuarial (loss)/gain recognised in the pension scheme
2.5
Total items that will not be reclassified to profit or loss
Other comprehensive (expense)/income for the year
Total comprehensive income for the year
2020
£m
410.1
2019
£m
627.4
(1.7)
(1.7)
(1.7)
1.6
1.6
1.6
408.4
629.0
151
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Consolidated Statement of Financial Position
As at 30 April
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Investments in joint ventures
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Current tax assets
Cash and cash equivalents
Total assets
Liabilities
Non-current liabilities
Borrowings
Trade and other payables
Lease liability
Provisions for other liabilities and charges
Current liabilities
Borrowings
Trade and other payables
Lease liability
Provisions for other liabilities and charges
Total liabilities
Total net assets
Equity
Shareholders' equity
Share capital
Share premium
Capital redemption reserve
Other reserve
Retained earnings
Total equity
Notes
2020
£m
2019
£m
2.8
2.9
2.10
2.11
2.17
2.12
2.13
2.14
2.23
2.15
2.10
2.16
2.23
2.15
2.10
2.16
2.18
2.18
2.19
2.19
2.19
17.2
48.5
2.5
261.8
53.6
383.6
3,554.9
68.3
5.1
1,638.9
5,267.2
5,650.8
17.2
42.5
–
374.7
45.8
480.2
3,114.7
65.5
2.5
1,275.0
4,457.7
4,937.9
(300.0)
(263.7)
(1.3)
(60.0)
(625.0)
(300.0)
(40.5)
–
(59.1)
(399.6)
(200.0)
–
(1,668.1)
(1,555.0)
(1.2)
(54.9)
(1,924.2)
(2,549.2)
3,101.6
–
(20.0)
(1,575.0)
(1,974.6)
2,963.3
6.8
49.8
24.7
7.0
49.8
24.5
(961.3)
(961.3)
3,981.6
3,101.6
3,843.3
2,963.3
The financial statements on pages 151 to 188 were approved by the Board of Directors on 17 June 2020 and were signed on
its behalf by:
R J Stearn
Finance Director
152
Berkeley Group 2020 Annual Report
Consolidated Statement of Changes in Equity
At 1 May 2019
IFRS 16 application adjustment
at 1 May 2019
Profit after taxation for the year
Other comprehensive expense
for the year
Transactions with shareholders:
— Charge in respect of
employee share schemes
— Deferred tax in respect of
employee share schemes
— Dividends to equity holders
of the Company
At 30 April 2020
Share
capital
£m
Share
premium
£m
Capital
redemption
reserve
£m
Notes
Other
reserve
£m
Retained
earnings
£m
Total
equity
£m
7.0
49.8
24.5
(961.3)
3,843.3
2,963.3
–
–
–
2.5
2.17
2.20
–
–
–
–
–
–
-
–
–
–
–
–
–
0.2
–
–
–
–
–
–
-
–
–
–
(0.2)
410.1
(0.2)
410.1
(1.7)
(1.7)
(130.5)
(130.5)
(3.9)
(3.9)
14.3
14.3
(149.8)
(149.8)
6.8
49.8
24.7
(961.3)
3,981.6
3,101.6
Purchase of own shares
2.18
(0.2)
At 1 May 2018
7.0
49.8
24.5
(961.3)
3,471.2
2,591.2
Profit after taxation for the year
Other comprehensive income
for the year
Purchase of own shares
2.18
Transactions with shareholders:
— Charge in respect of
employee share schemes
— Deferred tax in respect of
employee share schemes
— Dividends to equity holders
of the Company
2.5
2.17
2.20
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
627.4
627.4
1.6
1.6
(198.9)
(198.9)
(3.9)
(3.9)
(1.1)
(1.1)
(53.0)
(53.0)
At 30 April 2019
7.0
49.8
24.5
(961.3)
3,843.3
2,963.3
153
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Notes
2020
£m
2019
£m
2.22
395.4
789.2
12.4
(9.1)
(89.8)
308.9
(9.7)
0.6
177.7
(31.5)
137.1
(2.0)
0.2
(130.5)
200.0
(149.8)
(82.1)
363.9
1,275.0
1,638.9
10.7
(8.8)
(178.8)
612.3
(19.5)
0.3
–
(54.0)
(73.2)
–
0.5
(198.9)
–
(53.0)
(251.4)
287.7
987.3
1,275.0
2.9
2.11
2.11
2.23
2.20
Consolidated Cash Flow Statement
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
Proceeds on disposal of property, plant and equipment
Dividends from joint ventures
Movements in loans with joint ventures
Net cash flow from investing activities
Cash flows from financing activities
Lease capital repayments
Proceeds from issue of shares
Purchase of own shares
Net increase in 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
2.22
154
Berkeley Group 2020 Annual Report
Notes to the Consolidated Financial Statements
Introduction
1 Basis of preparation
1.1
These Consolidated Financial Statements have been prepared in accordance with European Union endorsed International
Financial Reporting Standards (IFRSs), the IFRS Interpretations Committee (IFRIC) 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.
Critical accounting judgements and key sources of uncertainty
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise their 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 within
the relevant notes on pages 157 to 188.
Group accounting policies
The significant Group accounting policies are included within the relevant notes to the Consolidated Financial
Statements on pages 157 to 188.
1.2 Going concern
The Directors have assessed the business plan and future funding requirements of the Group over the medium-term and
compared these with the level of committed loan facilities and existing cash resources. As at 30 April 2020, the Group
has net cash of £1,138.9 million and total liquidity of £1,888.9 million when this net cash is combined with banking facilities
of £750 million, which are in place until November 2023. Furthermore, the Group has cash due on forward sales of
£1,858 million, around 50% of which is expected to be collected in the next 12 months.
In making this assessment, consideration has been given to the uncertainty inherent in future financial forecasts and where
applicable, severe but plausible 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 in
operational existence for the foreseeable future period, and not less than 12 months from the date of these Financial
Statements. For this reason it continues to adopt the going concern basis of accounting in preparing its Consolidated
Financial Statements.
1.3 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, unless otherwise stated in note 2.25.
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power over
the entity. In assessing control, the Group takes into consideration substantive rights that are currently exercisable.
The acquisition date is the date on which control is transferred to the acquirer. The financial statements of subsidiaries
are included in the Consolidated Financial Statements from the date that control commences until the date that control
ceases. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even
if doing so causes the non-controlling interests to have a deficit balance.
The purchase method of accounting is used to account for the acquisition of subsidiary undertakings by the Group.
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
Joint ventures are accounted for using the equity method (equity accounted investees) and are initially recognised at cost.
The Group’s investment includes goodwill identified on acquisition, net of any accumulated impairment losses.
The Consolidated Financial Statements include the Group’s share of the total comprehensive income and equity
movements of equity accounted investees, from the date that joint control commences until the date that joint control
ceases. When the Group’s share of losses exceeds its interest in an equity accounted investee, the Group’s carrying amount
is reduced to £nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or
constructive obligations or made payments on behalf of an investee.
155
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements 1.4 Adoption of new and revised standards
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 2019:
IFRS 16 ‘Leases’ replaces IAS 17 ‘Leases’ and IFRIC 4 ‘Determining whether an Arrangement contains a Lease’, setting
out criteria for recognition, measurement and disclosure of leases. The standard is effective for periods beginning on or
after 1 January 2019 and has been implemented by the Group from 1 May 2019. The Group has applied IFRS 16 using the
modified retrospective approach, under which the cumulative effect of the initial application is recognised in retained
earnings at 1 May 2019. Comparative information has therefore not been restated and is reported under the previous
accounting policies.
Under IFRS 16, most leases previously classified as operating leases under IAS 17 are recognised on the Statement
of Financial Position as a right-of-use asset along with a corresponding lease liability.
On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified
as ‘operating leases’ under the principles of IAS 17 ‘Leases’. These liabilities were measured at the present value of the
remaining lease payments, discounted using the lessee’s incremental borrowing rate as of 1 May 2019.
The associated right-of-use assets for the Group’s leases were measured on a prospective basis, applying the new rules
from 1 May 2019.
Impact on the financial statements:
On transition to IFRS 16, the Group recognised an additional £3.3 million of right-of-use assets and £3.5 million of lease
liabilities. The net difference of £0.2 million was recognised in retained earnings.
The lease liability is initially measured at the present value of the remaining lease payments, discounted using the Group’s
incremental borrowing rate. The lease term comprises the non-cancellable period of the contract, together with periods
covered by an option to extend the lease where the Group is reasonably certain to exercise that option. Subsequently, the
lease liability is measured by increasing the carrying amount to reflect interest on the lease liability, and reducing it by the
lease payments made. The lease liability is remeasured when the Group changes its assessment of whether it will exercise
an extension or termination option.
Right-of-use assets are initially measured at cost, comprising the initial measurement of the lease liability, plus any initial
direct costs and an estimate of asset retirement obligations, less any lease incentives. Subsequently, right-of-use assets are
measured at cost, less any accumulated depreciation and any accumulated impairment losses, and are adjusted for certain
remeasurements of the lease liability. Depreciation is calculated on a straight line basis over the length of the lease.
The Group has elected to apply exemptions for short-term leases and leases for which the underlying asset is of low value.
For these leases, payments are charged to the Income Statement on a straight line basis over the term of the relevant
lease. For the year ended 30 April 2020, payments charged to the Income Statement related to low value and short-term
leases were insignificant.
Right-of-use assets are presented separately in non-current assets on the face of the Statement of Financial Position and
lease liabilities are shown separately on the Statement of Financial Position in current liabilities and non-current liabilities
depending on the length of the lease term.
Amendment to IAS 28 ‘Investments in Associates and Joint Ventures’ and IFRIC 23 ‘Uncertainty over Income Tax
Treatments’, neither of which have had a significant impact on reported results or position.
Impact of standards and interpretations in issue but not yet effective
1.5
The International Accounting Standards Board (IASB) has published a number of minor amendments to IFRS’s which
will be applicable to the Group for the financial year beginning 1 May 2020. These amendments are not expected to have
a significant impact on the results of the Group.
156
Notes to the Consolidated Financial Statements continuedBerkeley Group 2020 Annual Report 2 Results for the year
2.1 Revenue
The Group’s revenue derives principally from the sale of residential homes and commercial properties across mixed
use developments.
Revenue represents the amounts receivable from the sale of properties, and ground rent assets during the
year and other income directly associated with property development. Properties are treated as sold and
profits are recognised at the point control of the unit is passed to the customer, which has been determined
as the point of legal completion. Ground rent assets are treated as sold when contracts are exchanged, all
material conditions precedent to the sale have been satisfied and control of the ground rent assets have
passed to the customer.
2.2 Segmental disclosure
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.
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.
For the purpose of monitoring segment performance and allocating resources between segments, all assets are
considered to be attributable to residential-led, mixed use property development.
2.3 Net finance costs
Finance income
Finance costs
Interest payable on bank loans and non-utilisation fees
Amortisation of facility fees
Other finance costs
2020
£m
12.4
(9.1)
(1.8)
(0.8)
(11.7)
2019
£m
10.7
(8.6)
(1.8)
(2.3)
(12.7)
Net finance income/(costs)
0.7
(2.0)
Finance income predominantly represents interest earned on cash deposits.
Other finance costs represent imputed interest on taxation, land purchased on deferred settlement terms and
lease interest.
157
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements 2.4 Profit before taxation
Expenditure recorded in inventory is expensed through cost of sales at the time of the related property
sale. The amount of cost related to each property includes its share of the overall site costs including, where
relevant, its share of forecast costs to complete. 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 inventories note 2.12 for further disclosures on the key estimates and judgements
around cost recognition.
Profit before taxation is stated after charging the following amounts:
Staff costs (note 2.5)
Depreciation on property, plant and equipment (note 2.9)
Depreciation on right-of-use assets (note 2.10)
Loss on sale of property, plant and equipment
Fees paid and payable to the Company’s current auditor for the audit of the Parent Company
Fees paid and payable to the Company’s current auditor for other services:
— Audit of the Company’s subsidiaries
— Audit related assurance services
2020
£m
276.3
2.9
1.8
0.2
0.6
0.1
0.1
2019
£m
267.3
2.4
–
0.2
0.6
0.1
0.1
The value of inventories expensed and included in the cost of sales is £1,184.3 million (2019: £1,836.0 million).
Fees paid in the year to the Group’s current auditor for audit related assurance services relate to the interim review.
In addition to the above services, the Group’s current auditor has acted 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 auditor
for audit services to the pension scheme during the year were £10,000 (2019: £8,500).
2.5 Directors and employees
Profit before taxation is stated after charging the following amounts:
Staff costs:
Wages and salaries
Social security costs
Share based payments – equity settled
Share based payments – cash settled
Pension costs
2020
£m
216.4
36.8
10.0
4.5
8.6
2019
£m
213.7
29.0
7.4
8.9
8.3
276.3
267.3
The average monthly number of persons employed by the Group during the year was 2,709 (2019: 2,673).
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 as included in the Income
Statement during the year are as follows:
158
Notes to the Consolidated Financial Statements continuedBerkeley Group 2020 Annual Report Directors’ remuneration
Amount charged under long-term incentive schemes
Company contributions to the defined contribution pension schemes
2020
£m
2.8
12.2
0.1
2019
£m
2.8
13.2
0.1
15.1
16.1
The Directors’ Remuneration Report includes disclosure of the gains made by Directors on the exercise of share options
during the year, which was £29.5 million (2019: £23.6 million) in aggregate.
The number of Director’s accruing benefits under defined contribution pension schemes in the year was 2 (2019: 2).
Equity settled 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, taking
into account only service and non-market conditions.
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.
The Group operates one (2019: one) equity settled share based payment scheme. The charge to the Income Statement
in respect of share based payments in the year relating to grants of share options awarded under the 2011 Long Term
Incentive Plan (LTIP) was £10.0 million (2019: £7.4 million). The charge to the Income Statement attributable to key
management is £10.3 million (2019: £7.6 million).
The charge to the reserves during the year in respect of employee share schemes was £3.9 million (2019: £3.9 million),
resulting from the non-cash IFRS 2 charge for the year as reflected in the Cash Flow Statement.
There were nil exercisable share options at the end of the year (2019: nil). During the year 914,516 options vested under
the 2011 LTIP (2019: 935,871).
2011 Long Term Incentive Plan
The 2011 Long Term Incentive Plan (“2011 LTIP”), announced in June 2011, is currently a 14 year plan. The original plan
required returns of £1.7 billion to shareholders over 10 years to September 2025. In December 2015, a revision to the plan
was proposed to return an additional £0.5 billion to shareholders over the same period.
At the AGM in September 2019 it was agreed to extend the returns period by a further four years to September 2025.
Shares earned but not vested up to 30 September 2021 have to be re-earned by management over four years in equal
instalments subject to an additional £2 per share of additional return being provided.
The key features of the 2011 LTIP are as follows:
— If the Company returns £2.3 billion to shareholders over a ten year period via a series of dividend payments and share
buy-backs (£16.34 per share) by the milestone dates referred to below, participants will be entitled to exercise options
and receive a number of ordinary shares in the capital of the Company at the end of each period.
— Shares earned but not vested at 30 September 2021 have to be re-earned by management over four years in equal
instalments to 2025 subject to £2 per share of additional return being provided to shareholders each year.
— The maximum number of shares capable of being earned by all participants was 19,616,503 shares, being 13% of the fully
diluted share capital of the Company at the date of approval of the plan. Individual participant caps are in place for all
Executive members.
— The exercise price of options granted under the 2011 LTIP will be £16.34 per share less an amount equal to the value
of all dividends, paid between the date of approval.
159
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements 2.5 Directors and employees continued
The cumulative distributions are set out below:
30 September 2016
30 September 2017
30 September 2018
30 September 2019
30 September 2020
30 September 2021
30 September 2022
30 September 2023
30 September 2024
30 September 2025
Cumulative
distributions –
Original
£6.34 per share
£8.34 per share
£10.34 per share
£12.34 per share
£14.34 per share
£16.34 per share
£18.34 per share
£20.34 per share
£22.34 per share
£24.34 per share
The fair value of the options granted during that year, determined using the current market pricing model, was £3.17 for
options which then 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%
As a result of modifications in 2019, which reviewed individual participant caps and extended the service period to 2025,
there was a decrease in the fair value cost of the options. This has been considered a non-beneficial modification for
accounting purposes, and accordingly there has been no impact on the accounting treatment applied.
The discount rate was determined by calculating the Group’s expected cost of capital over the vesting period at the
grant date.
During the year 300,000 additional options were granted (2019: nil) and 50,250 options lapsed (2019: 100,500). As at
30 April 2020 there were 8,131,720 options outstanding (2019: 8,796,486).
Cash settled share based payments
The cost of cash settled transactions is recognised as an expense over the vesting period measured by
reference to the fair value of the corresponding liability which is recognised on the Statement of Financial
Position. The liability is remeasured at fair value at each Balance Sheet date until settlement with changes in
fair value recognised in the Income Statement.
Bonus Banking Plan
As detailed in the Directors’ Remuneration Report on page 118, no new awards have been made under the annual Bonus
Plan during the financial year. The liability accrued relates to prior year awards and will unwind over the remaining vesting
period. The charge for the year of £2.0 million (2019: £5.6 million) relates to prior year awards, all of which relates to
key management.
Under the Bonus Banking Plan, 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 will be settled in cash each year excluding the year ending 30 April
2021 when the scheme will fully vest and at which point 50% of the remaining balance at that date will be settled in
equity, and 50% in cash. Accordingly the plan is accounted for as cash settled, with only the proportion expected to vest
in shares at the end of the plan accounted for as equity settled. This amount is not of significant quantum to warrant
individual disclosure.
160
Notes to the Consolidated Financial Statements continuedBerkeley Group 2020 Annual Report The total carrying amount of liabilities for the Bonus Banking Plan at the end of the year was £1.9 million (2019: £6.1 million),
recorded in accruals and deferred income.
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 allocated, 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 2020 was
£2.5 million (2019: £3.3 million).
The total carrying amount of liabilities for share appreciation rights at the end of the year was £13.0 million
(2019: £22.8 million), recorded in accruals and deferred income.
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.
Pension contributions under defined contribution schemes are charged to the Income Statement as they
fall due.
Defined contribution plan
Contributions amounting to £7.4 million (2019: £7.0 million) were paid into the defined contribution schemes during
the year.
Defined benefit plan
As at 30 April 2020, 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 312 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
recent valuation was carried out as at 1 May 2019. The method adopted in the 2019 valuation was the projected unit
credit method, which assumed no allowance for over performance on investments both prior to and after retirement and
pension increases derived at each term using Black Scholes Methodology with a volatility assumption of 1.75% per annum.
The market value of the Berkeley Final Salary Plan assets as at 1 May 2019 was £22.9 million and covered 98% of the
scheme’s liabilities. The Group made additional voluntary contributions of £0.6 million during the year (2019: £0.6 million).
For the purpose of IAS 19, the 2019 valuation was updated for 30 April 2020.
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.
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.
161
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements 2.5 Directors and employees continued
The amounts recognised in the Statement of Financial Position are determined as follows:
Present value of defined benefit obligations
Fair value of plan assets
2020
£m
(22.4)
23.0
2019
£m
(20.9)
22.5
Net surplus recognised in the Statement of Financial Position
0.6
1.6
Defined benefit obligations
Fair value plan assets
Net defined benefit asset
Balance at 1 May
Included in Income Statement
Past service costs
Net interest
Included in Other
Comprehensive Income
Remeasurements:
Actuarial (loss)/gain arising from:
— Demographic assumptions
— Scheme experience
— Financial assumptions
Return on plan assets
Other
Contributions by the employer
2020
£m
(20.9)
–
(0.5)
0.1
(0.4)
(1.2)
–
–
2019
£m
(19.4)
(0.6)
(0.5)
–
–
(1.0)
–
–
Benefits paid out
0.5
0.6
2020
£m
22.5
–
0.6
–
–
–
2019
£m
21.5
–
0.6
–
–
–
(0.2)
0.4
0.6
(0.5)
0.6
(0.6)
Balance at 30 April
(22.4)
(20.9)
23.0
22.5
Cumulative actuarial gains and losses recognised in equity:
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
2020
£m
1.6
–
0.1
0.1
(0.4)
(1.2)
(0.2)
0.6
–
0.6
2020
£m
(5.8)
(1.7)
–
2019
£m
2.1
(0.6)
0.1
–
–
(1.0)
0.4
0.6
–
1.6
2019
£m
(7.3)
(0.6)
2.1
Cumulative amounts of losses recognised in the Statement
of Comprehensive Income at 30 April
(7.5)
(5.8)
162
Notes to the Consolidated Financial Statements continuedBerkeley Group 2020 Annual Report The fair value of the assets were as follows:
UK equities
Global equities
Emerging market equities
High yield bonds
Diversified growth fund
Government bonds (over 15 years)
Index linked gilts (over 5 years)
Corporate bonds
Cash
30 April 2020
Long-term
value
£m
30 April 2019
Long-term
value
£m
0.9
5.9
1.8
1.6
6.9
1.5
2.6
1.7
0.1
1.1
5.3
1.9
1.7
7.2
1.2
2.4
1.5
0.2
Fair value of plan assets
23.0
22.5
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 plan assets
Present value of defined benefit obligations
23.0
(22.4)
22.5
(20.9)
21.5
(19.4)
21.0
(20.5)
18.1
(15.9)
30 April 2020
£m
30 April 2019
£m
30 April 2018
£m
30 April 2017
£m
30 April 2016
£m
Net surplus in the plan
0.6
1.6
2.1
0.5
2.2
Actuarial assumptions
The major assumptions used by the actuary for the 30 April 2020 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
2020
1.70%
2.80%
2.30%
3.00%
30 April
2019
2.40%
3.60%
2.70%
3.60%
The mortality assumptions are the standard S3PMA/S3PFA_M CMI_2019_X [1.25%]) (2019: S2PA CMI_2017_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 21.9 years and 23.6 years respectively (2019: 21.8 and 23.7 years respectively). The life expectancy of male and
female deferred pensioners (now aged 45) retiring at age 65 after the Balance Sheet date is 23.2 years and 25.1 years
respectively (2019: aged 45, 22.9 and 25.0 years respectively).
163
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements 2.5 Directors and employees continued
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
-0.25% p.a.
+0.25% p.a.
+1 year
Change
in defined
benefit
obligation
+4.2%
+1.8%
+3.8%
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 £0.6 million in contributions to its defined benefit plan in the year ending 30 April 2021,
albeit it has no obligation to do so.
2.6 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.
The tax charge for the year is as follows:
For the year ended 30 April
Current tax
UK corporation tax payable
Adjustments in respect of previous years
Deferred tax
Deferred tax movements
Adjustments in respect of previous years
Tax on items recognised directly in equity is as follows:
Deferred tax in respect of employee share schemes (note 2.17)
Current tax in respect of employee share schemes (note 2.17)
164
2020
£m
2019
£m
(93.3)
2.8
(90.5)
(0.9)
(2.2)
(3.1)
(132.4)
0.3
(132.1)
(15.0)
(0.7)
(15.7)
(93.6)
(147.8)
2020
£m
14.3
(3.4)
10.9
2019
£m
(1.1)
(3.1)
(4.2)
Notes to the Consolidated Financial Statements continuedBerkeley Group 2020 Annual Report The tax charge assessed for the year differs from the standard rate of UK corporation tax of 19.0% (2019: 19.0%).
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 years
Effect of change in rate of tax (note 2.17)
Other
Tax charge
2020
£m
503.7
95.7
1.0
–
(0.6)
(2.1)
(0.4)
2019
£m
775.2
147.3
0.8
0.3
0.5
(0.3)
(0.8)
93.6
147.8
Corporation tax is calculated at 19.0% of the estimated assessable profit for the year.
The Group manages its tax affairs in an open and transparent manner with the tax authorities and observes all applicable
rules and regulations in the countries in which it operates. Factors that may affect the Group’s tax charge in future periods
include changes in tax legislation and the closure of open tax matters in the ordinary course of events. The adjustments in
respect of previous years predominantly reflect tax relief claims made in respect of the year ended 30 April 2019.
Changes to UK corporation tax rates were substantively enacted as part of the Finance (No 2) Act 2015 on 18 November
2015 and the Finance Act 2016 on 15 September 2016. These changes included reductions to the main rate of corporation
tax to 19% from 1 April 2017 and to 17% from 1 April 2020. At the Budget 2020, the Government announced that the
corporation tax main rate for years starting 1 April 2020 and 2021 would remain at 19% and the change was substantially
enacted for IFRS and UK GAAP purposes on 17 March 2020. As a result, the deferred taxes at the Balance Sheet date have
been measured using these revised rates and are based on when the assets are expected to be realised.
2.7 Earnings per ordinary share
Basic earnings per share (EPS) are calculated as the profit for the financial year attributable to shareholders of the Group
divided by the weighted average number of shares in issue during the year.
For the year ended 30 April
Profit attributable to shareholders (£m)
Weighted average no. of shares (million)
Basic EPS (pence)
2020
410.1
126.2
2019
627.4
130.4
324.9
481.1
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 2020 the Group had two (2019: two) categories of potentially dilutive ordinary shares: 4.4 million
(2019: 2.9 million) share options under the 2011 LTIP and 30,788 (2019: 22,000) share options under the 2015 Bonus
Banking Plan.
A calculation is undertaken 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 EPS calculation.
165
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements 2.7 Earnings per ordinary share continued
For the year ended 30 April
Profit used to determine diluted EPS (million)
Weighted average number of shares (million)
Adjustments for:
— Share options – 2011 LTIP
Shares used to determine diluted EPS (million)
Diluted EPS (pence)
2.8 Intangible assets
2020
410.1
126.2
4.6
130.8
313.4
2019
627.4
130.4
3.1
133.5
469.9
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.
Cost:
At 1 May 2019 and 30 April 2020
Accumulated impairment:
At 1 May 2019 and 30 April 2020
Net book value:
At 1 May 2019 and 30 April 2020
Cost:
At 1 May 2018 and 30 April 2019
Accumulated impairment:
At 1 May 2018 and 30 April 2019
Net book value:
At 1 May 2018 and 30 April 2019
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; and
(ii) a pre-tax discount rate of 8.21% (2019: 8.98%) 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.
166
Notes to the Consolidated Financial Statements continuedBerkeley Group 2020 Annual Report 2.9 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
Fixtures, fittings and equipment
Motor vehicles
25 – 50 years
3 – 12 years
4 years
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.
Cost:
At 1 May 2019
Additions
Disposals
At 30 April 2020
Accumulated depreciation:
At 1 May 2019
Charge for the year
Disposals
At 30 April 2020
Net book value:
At 1 May 2019
At 30 April 2020
Freehold
property
£m
Fixtures,
fittings &
equipment
£m
Motor
vehicles
£m
32.4
0.9
–
33.3
1.8
0.7
–
2.5
30.6
30.8
18.8
8.3
(7.4)
19.7
8.4
1.8
(6.8)
3.4
10.4
16.3
2.8
0.5
(0.8)
2.5
1.3
0.4
(0.6)
1.1
1.5
1.4
Total
£m
54.0
9.7
(8.2)
55.5
11.5
2.9
(7.4)
7.0
42.5
48.5
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Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
2.9 Property, plant and equipment continued
Cost:
At 1 May 2018
Additions
Disposals
At 30 April 2019
Accumulated depreciation:
At 1 May 2018
Charge for the year
Disposals
At 30 April 2019
Net book value:
At 1 May 2018
At 30 April 2019
2.10 Right‑of‑use assets
Freehold
property
£m
Fixtures,
fittings &
equipment
£m
Motor
vehicles
£m
21.5
10.9
–
32.4
1.5
0.3
–
1.8
20.0
30.6
12.6
8.1
(1.9)
18.8
8.5
1.7
(1.8)
8.4
4.1
10.4
3.4
0.5
(1.1)
2.8
1.6
0.4
(0.7)
1.3
1.8
1.5
Total
£m
37.5
19.5
(3.0)
54.0
11.6
2.4
(2.5)
11.5
25.9
42.5
IFRS 16 ‘Leases’ replaces IAS 17 ‘Leases’ and IFRIC 4 ‘Determining whether an Arrangement contains a Lease’
setting out criteria for recognition, measurement and disclosure of leases. The standard is effective for periods
beginning on or after 1 January 2019 and has been implemented by the Group from 1 May 2019. The Group
has applied IFRS 16 using the modified retrospective approach, under which the cumulative effect of the initial
application is recognised in retained earnings at 1 May 2019. Comparative information has therefore not been
restated and is reported under the previous accounting policies.
Policy applicable from 1 May 2019:
The lease liability is initially measured at the present value of the remaining lease payments, discounted using
the Group’s incremental borrowing rate. The Group determines the borrowing rate from external financing
sources and adjusts this to reflect the term of the lease and the type of assets subject to the lease. The lease
term comprises the non-cancellable period of the contract, together with periods covered by an option to
extend the lease where the Group is reasonably certain to exercise that option. Subsequently, the lease liability
is measured by increasing the carrying amount to reflect interest on the lease liability, and reducing it by the
lease payments made. The lease liability is remeasured when the Group changes its assessment of whether
it will exercise an extension or termination option.
Right-of-use assets are initially measured at cost, comprising the initial measurement of the lease liability, plus
any initial direct costs and an estimate of asset retirement obligations, less any lease incentives. Subsequently,
right-of-use assets are measured at cost, less any accumulated depreciation and any accumulated impairment
losses, and are adjusted for certain remeasurements of the lease liability. Depreciation is calculated on
a straight line basis over the length of the lease.
The Group has elected to apply exemptions for short-term leases and leases for which the underlying asset is
of low value. For these leases, payments are charged to the Income Statement on a straight line basis over the
term of the relevant lease.
Right-of-use assets are presented separately in non-current assets on the face of the Statement of Financial
Position and lease liabilities are shown separately on the Statement of Financial Position in current liabilities
and non-current liabilities depending on the length of the lease term.
168
Notes to the Consolidated Financial Statements continuedBerkeley Group 2020 Annual Report Cost:
At 1 May 2019
At 30 April 2020
Additions
Lease liabilities included in the Balance Sheet:
Current
Non-current
Total
Amounts recognised in the Income Statement:
Depreciation charged on right-of-use assets – Office buildings
Depreciation charged on right-of-use assets – Motor vehicles
Interest on lease liabilities
Total
The total cash outflow for leases in 2020 was £2.0 million.
2.11 Investments in joint ventures
Office
buildings
£m
Motor
vehicles
£m
2.9
2.1
0.8
0.4
0.4
0.2
Total
£m
3.3
2.5
1.0
Total
£m
1.2
1.3
2.5
Total
£m
1.6
0.2
0.1
1.9
Joint ventures are accounted for using the equity method (equity accounted investees) and are initially
recognised at cost. The Group’s investment includes goodwill identified on acquisition, net of any
accumulated impairment losses. The Consolidated Financial Statements include the Group’s share of the total
comprehensive income and equity movements of equity accounted investees, from the date that joint control
commences until the date that joint control ceases. When the Group’s share of losses exceeds its interest in an
equity accounted investee, the Group’s carrying amount is reduced to £nil and recognition of further losses
is discontinued except to the extent that the Group has incurred legal or constructive obligations or made
payments on behalf of an investee.
Unlisted shares at cost
Loans
Share of post acquisition reserves
2020
£m
–
177.8
84.1
2019
£m
11.0
146.3
217.5
Elimination of profit on transfer of inventory to joint ventures
(0.1)
(0.1)
Details of the joint ventures are provided in notes 2.24 and 2.25.
261.8
374.7
169
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements 2.11 Investments in joint ventures continued
At 1 May
Profit after tax for the year
Increase in loans to joint ventures
Dividends from joint ventures
At 30 April
The Group’s share of joint ventures’ net assets, income and expenses is comprised as follows:
2020
£m
374.7
33.3
31.5
(177.7)
2019
£m
311.9
8.8
54.0
–
261.8
374.7
2020
Cash and cash equivalents
Other current assets
Current assets
Current liabilities
Non–current financial liabilities
Revenue
Costs
Operating profit
Interest charges
Profit before tax
Tax credit
Share of post tax profit of joint ventures
2019
Cash and cash equivalents
Other current assets
Current assets
Current liabilities
Non–current financial liabilities
Revenue
Costs
Operating profit/(loss)
Interest charges
Profit/(loss) before tax
Tax credit
Share of post tax profit/(loss) of joint ventures
170
St Edward
£m
St William
£m
Other
£m
157.0
194.4
351.4
(125.6)
(97.4)
128.4
4.7
372.4
377.1
(118.0)
(125.7)
133.4
30.6
132.7
(20.2)
(107.5)
10.4
2.6
13.0
(0.2)
12.8
25.2
(4.7)
20.5
–
20.5
–
–
–
–
–
–
–
–
–
–
–
–
–
St Edward
£m
St William
£m
Other
£m
299.7
158.7
458.4
(89.2)
(104.9)
264.3
62.0
(41.0)
21.0
0.2
21.2
(0.2)
21.0
11.3
332.6
343.9
(118.6)
(115.0)
110.3
5.2
(14.9)
(9.7)
(2.5)
(12.2)
–
(12.2)
0.1
–
0.1
–
–
0.1
–
–
–
–
–
–
–
Total
£m
161.7
566.8
728.5
(243.6)
(223.1)
261.8
163.3
(127.7)
35.6
(2.1)
33.5
(0.2)
33.3
Total
£m
311.1
491.3
802.4
(207.8)
(219.9)
374.7
67.2
(55.9)
11.3
(2.3)
9.0
(0.2)
8.8
Notes to the Consolidated Financial Statements continuedBerkeley Group 2020 Annual Report 2.12 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.
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; in particular
due to the need to take account of future direct input costs, sales prices and the need to allocate site-wide
costs on an appropriate basis to reflect the overall level of development risk, including planning risk. The Group
has established internal controls designed to effectively assess and centrally review inventory carrying values
and ensure the appropriateness of the estimates made. These assessments and allocations evolve over the life
of the development in line with the risk profile, and accordingly the margin recognised reflects these evolving
estimates. Similarly, these estimates impact the carrying value of inventory at each reporting date as this is
a function of costs incurred in the year and the allocation of inventory to costs of sales on each property sold.
In addition, the Group has consistently applied its approach to margin recognition in relation to the Group’s
particularly complex, long-term regeneration developments where certain whole-site costs are accelerated to
the early stages of the development to reflect the greater uncertainty and the evolution of risk over the life of
such developments. These developments, where the development life cycle is typically greater than ten years,
are considered to be particularly susceptible to potential downward shifts in profitability due to the cyclical
nature of the property market and its impact on both revenue and costs. As such, the inherent estimation
uncertainty is increased.
A fundamental principle of the Group’s accounting policy is to reduce the possibility of recognising margin
in the early stages of a development that could subsequently reverse. As such, for these long-term sites with
greatest estimation uncertainty, a greater proportion of whole-site costs are recognised during the earlier
stages of the development up to a point of inflection when such developments are deemed to be sufficiently
de-risked. Subsequent to this inflection point, and should the uncertainties have not materialised, margin
would increase as the visibility over projected revenue and costs across the development improves.
As at 30 April 2020 the greater proportion of whole-site costs recognised in either the current or previous
financial years during the earlier stages of the development for the Group’s particularly complex, long-term
sites amounted to 9% (2019: 9%) of the future estimated revenue for the specific sites. As with all judgements
involving estimation over a long-term horizon, the outcome of future events may affect the eventual
accounting outcome.
Land not under development
Work in progress: Land cost
Total land
Work in progress: Build cost
Completed units
Total inventories
2020
£m
519.7
907.9
1,427.6
1,987.8
139.5
2019
£m
395.2
806.7
1,201.9
1,778.0
134.8
3,554.9
3,114.7
171
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements 2.13 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. Expected credit losses are based on the difference between
the contracted cash flows due in accordance with the contract and all the cash flows that the Group expects
to receive, discounted on an approximation of the original effective interest rate. Any expected credit losses
are likely to be immaterial. For trade receivables the Group does not track changes in credit risk, but instead
recognises a loss allowance based on lifetime expected credit losses at each reporting date. 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 not collectible,
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.
Trade receivables
Other receivables
Prepayments and accrued income
2020
£m
26.2
27.4
14.7
2019
£m
38.3
18.4
8.8
68.3
65.5
Further disclosures relating to trade receivables are set out in note 2.23.
2.14 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.
Cash and cash equivalents
2.15 Trade and other payables
2020
£m
2019
£m
1,638.9
1,275.0
New property deposits and on account contract receipts are held within current 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.
Deferred revenue relates to consideration received in advance of units being delivered. Revenue is recognised
in the Income Statement at the point that control is passed to the customer, which has been determined as the
point of legal completion.
172
Notes to the Consolidated Financial Statements continuedBerkeley Group 2020 Annual Report Current
Trade payables
Deposits and on account contract receipts
Other taxes and social security
Accruals and deferred income
Non-current
Trade payables
Total trade and other payables
2020
£m
2019
£m
(586.0)
(783.5)
(40.6)
(258.0)
(620.7)
(686.1)
(31.5)
(216.7)
(1,668.1)
(1,555.0)
(263.7)
(40.5)
(1,931.8)
(1,595.5)
All amounts included above are unsecured. The total of £40.6 million (2019: £31.5 million) for other taxes and social
security includes £17.6 million (2019: £12.7 million) 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 2.23.
2.16 Provisions for liabilities and charges
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.
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.
The Group continually reviews the identified risks that it is aware of for the Group’s portfolio of developments
to ensure the amount of the provision remains appropriate.
At 1 May 2019
Utilised
Released
Post
completion
development
provisions
£m
Other
provisions
£m
(74.2)
(4.9)
15.6
12.9
–
1.8
Total
£m
(79.1)
15.6
14.7
Charged to the Income Statement
(64.1)
(2.0)
(66.1)
At 30 April 2020
(109.8)
(5.1)
(114.9)
173
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements 2.16 Provisions for liabilities and charges continued
At 1 May 2018
Utilised
Released
Charged to the Income Statement
Post
completion
development
provisions
£m
Other
provisions
£m
(74.2)
7.3
23.5
(30.8)
(7.6)
0.2
3.0
(0.5)
Total
£m
(81.8)
7.5
26.5
(31.3)
At 30 April 2019
(74.2)
(4.9)
(79.1)
Non-current
Current
Total
2020
£m
(60.0)
(54.9)
2019
£m
(59.1)
(20.0)
(114.9)
(79.1)
Provisions for other liabilities and charges primarily relate to provisions for a best estimate of certain post completion
development obligations in respect of the construction of the Group’s portfolio of complex mixed use property
developments which are expected to be incurred in the ordinary course of business, based on historical experience of the
Group’s sites and current site-specific risks, but which are uncertain in terms of timing and quantum. The increase in the
year relates to post-completion items on a number of sites, none of which are individually significant. The Group continually
reviews its utilisation of this provision and in recognition that the risk of post completion development obligations
reduces over time, releases any unutilised provision to the Income Statement on a systematic basis across the five years
following completion.
2.17 Deferred tax
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.
174
Notes to the Consolidated Financial Statements continuedBerkeley Group 2020 Annual Report Total
£m
45.8
(2.2)
(3.0)
2.1
(0.9)
14.3
(3.4)
10.9
Total
£m
65.7
(0.7)
(15.3)
0.3
(15.0)
(1.1)
(3.1)
(4.2)
45.2
0.6
(3.0)
2.0
(1.0)
14.3
(3.4)
10.9
64.9
(0.7)
(15.1)
0.3
(14.8)
(1.1)
(3.1)
(4.2)
The movement on the deferred tax account is as follows:
Accelerated
capital
allowances
£m
Retirement
benefit
obligations
£m
Short-term
timing
differences
£m
At 1 May 2019
Adjustments in respect of previous years
Charged to the income statement in year
Adjustment in respect of change of tax rate to 19% for future
periods (note 2.6)
Charged to income statement in the year
Credited to equity at 19%
Realisation of deferred tax asset on vesting of employee
share scheme
Credited to equity in year (note 2.6)
At 30 April 2020
0.6
(2.8)
–
0.1
0.1
–
–
–
(2.1)
–
–
–
–
–
–
–
–
–
55.7
53.6
Accelerated
capital
allowances
£m
Retirement
benefit
obligations
£m
Short-term
timing
differences
£m
At 1 May 2018
Adjustments in respect of previous years
Charged to the income statement in year
Adjustment in respect of change of tax rate from 20%
to 19%/17% (note 2.6)
Charged to income statement in the year
Charged to equity at 19%/17%
Realisation of deferred tax asset on vesting of employee
share scheme
Charged to equity in year (note 2.6)
At 30 April 2019
0.7
–
(0.1)
–
(0.1)
–
–
–
0.6
0.1
–
(0.1)
–
(0.1)
–
–
–
–
45.2
45.8
Short-term timing differences primarily relates to deferred tax assets held in relation to long-term incentive schemes
and bonuses.
Deferred tax is calculated in full on temporary differences at the tax rates that are expected to apply for the period
when the asset is realised and the liability is settled using a tax rate of 19% as appropriate (2019: 19%/17%). There is no
unprovided deferred tax (2019: £nil) at the Balance Sheet date.
All deferred tax assets are available for offset against deferred tax liabilities and hence the net deferred tax asset at
30 April 2020 is £53.6 million (2019: £45.8 million).
Deferred tax assets of £41.5 million (2019: £32.6 million) are expected to be recovered after more than one year.
175
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements 2.17 Deferred tax continued
The deferred tax credited/(charged) to equity during the year was as follows:
Deferred tax movement in the year in respect of employee share schemes (note 2.6)
Cumulative deferred tax credited to equity at 1 May
2020
£m
10.9
20.7
2019
£m
(4.2)
24.9
Cumulative deferred tax credited to equity at 30 April
31.6
20.7
2.18 Share capital and share premium
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.
The movements on allotted and fully paid share capital for the Company in the year were as follows:
Ordinary shares
Share capital
Share premium
2020
No ’000
2019
No ’000
2020
£m
2019
£m
Issued
At start of year
Shares cancelled
140,157
(3,508)
140,157
–
7.0
(0.2)
At end of year
136,649
140,157
6.8
7.0
–
7.0
2020
£m
49.8
–
2019
£m
49.8
–
49.8
49.8
Each ordinary share of 5 pence 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 30 September 2019, 0.2 million ordinary shares (2019: 0.5 million) were allotted and issued to the Employee
Benefit Trust.
On 1 October 2019, 0.4 million ordinary shares (2019: 0.5 million) were transferred from the Employee Benefit Trust to
Executive Directors to satisfy the exercise of options under the 2011 Long Term Incentive Plan.
At 30 April 2020 there were 0.2 million shares held in trust (2019: 0.4 million) by the Employee Benefit Trust. The market
value of these shares at 30 April 2020 was £8.9 million (2019: £16.4 million).
During the 2020 financial year, 3.5 million shares were repurchased (2019: 5.6 million) for a total consideration of
£130.5 million, excluding transaction costs (2019: £198.9 million). These shares were subsequently cancelled (2019: none).
At 30 April 2020 there were 10.9 million (2019: 11.1 million) treasury shares held by the Group. The market value of the
shares at 30 April 2020 was £457.7 million (2019: £417.0 million).
176
Notes to the Consolidated Financial Statements continuedBerkeley Group 2020 Annual Report 2.19 Reserves
The movement in reserves is set out in the Consolidated Statement of Changes in Equity on page 153.
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.
During the year 3.5 million (2019: 5.6 million) shares were repurchased to the value of £130.5 million (2019: £198.9 million).
These shares were subsequently cancelled (2019: none) as shown in note 2.18. On cancellation of the share capital the
capital redemption reserve was credited with the nominal value of shares.
Other reserve
The other reserve of negative £961.3 million (2019: negative £961.3 million) 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.
Retained earnings
On 30 September 2020 the Company issued and transferred to the Company’s Employee Benefit Trust 0.2 million
ordinary shares (2019: 0.5 million ordinary shares). On 1 October 2019 0.4 million ordinary shares were transferred from
the Employee Benefit Trust to Executive Directors to satisfy the exercise of options under the 2011 LTIP (2019: 0.5 million
ordinary shares).
2.20 Dividends per share
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.
Amounts recognised as distributions to equity
shareholders during the year:
September 2018
January 2019
September 2019
March 2020
Total dividends
2020
2019
Dividend
per share
pence
–
–
20.08
99.32
Dividend
per share
pence
33.30
7.12
–
–
£m
–
–
25.2
124.6
149.8
£m
43.8
9.2
–
–
53.0
2.21 Contingent liabilities
Certain companies within the Group have given performance and other trade guarantees on behalf of other members of
the Group in the ordinary course of business. The Group has performance agreements in the ordinary course of business
of £22.6 million which are guaranteed by third parties (2019: £20.5 million). The Group considers that the likelihood of an
outflow of cash under these agreements is low and that no provision is required.
177
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements 2020
£m
410.1
93.6
4.7
0.2
(12.4)
11.7
(33.3)
–
(4.1)
(440.2)
(3.8)
369.9
(1.0)
395.4
363.9
(200.0)
163.9
975.0
1,138.9
1,638.9
(200.0)
(300.0)
(500.0)
1,138.9
2019
£m
627.4
147.8
2.4
0.2
(10.7)
12.7
(8.8)
0.6
(4.4)
181.9
(20.9)
(138.4)
(0.6)
789.2
287.7
–
287.7
687.3
975.0
1,275.0
–
(300.0)
(300.0)
975.0
2.22 Notes to the Consolidated Cash Flow Statement
Reconciliation of profit after taxation for the year to cash generated from operations:
Profit for the financial year
Adjustments for:
— Taxation
— Depreciation
— Loss on sale of Property, Plant and Equipment
— Finance income
— Finance costs
— Share of results of joint ventures after tax
— Non-cash charge in respect of pension deficit
— Non-cash charge in respect of share awards
Changes in working capital:
— (Increase)/decrease in inventories
— Increase in trade and other receivables
— Increase/(decrease) 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
Increase in borrowings
Movement in net cash in the financial year
Opening net cash
Closing net cash
Net cash as at 30 April:
Cash and cash equivalents
Current borrowings
Non-current borrowings
Total borrowings
Net cash*
*IFRS 16 lease liabilities are detailed in note 2.10.
178
Notes to the Consolidated Financial Statements continuedBerkeley Group 2020 Annual Report 2.23 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 opportunistically and work in progress at the right point in the cycle, and deliver returns
to shareholders through dividends or share buy-backs. In 2012, the Group put in place a long-term strategic plan to see
£13.00 per share returned to shareholders over the following ten years. This plan was revised in December 2015 and the
return to shareholders increased to £16.34 per share. This plan, reported in more detail in the Strategic Report on pages 22
to 23, ensures that 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 2020 was £1,962.7 million (2019: £1,988.3 million). The decrease in capital employed in the year of £25.6 million
reflects a decrease in net assets during the year (2019: increase of £84.4 million).
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 contract receipts, lease liabilities and accruals
and deferred income. 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.
Financial instruments: financial assets
The Group’s financial assets can be summarised as follows:
Current:
Trade receivables
Cash and cash equivalents
Total financial assets
2020
£m
2019
£m
26.2
1,638.9
38.3
1,275.0
1,665.1
1,313.3
Trade receivables are non-interest bearing. Of the current trade receivables balance of £26.2 million (30 April
2019: £38.3 million) none of the balance was overdue by more than 30 days.
Cash and cash equivalents are short-term deposits held at either floating rates linked to LIBOR or fixed rates. There are
currently no Group’s assets that are measured at fair value.
179
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements 2.23 Capital management, financial instruments and financial risk management continued
Financial instruments: financial liabilities
The Group’s financial liabilities can be summarised as follows:
Current
Trade payables
Deposits and on account contract receipts
Lease liability
Accruals and deferred income
Borrowings
Non-current
Trade payables
Lease liability
Borrowings
2020
£m
2019
£m
(586.0)
(783.5)
(1.2)
(258.0)
(200.0)
(620.7)
(686.1)
–
(216.7)
–
(1,828.7)
(1,523.5)
(263.7)
(40.5)
(1.3)
(300.0)
(565.0)
–
(300.0)
(340.5)
Total trade and other payables
(2,393.7)
(1,864.0)
All amounts included above are unsecured.
Current bank loans have term expiry dates within 12 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.
The maturity profile of the Group’s non-current financial liabilities, all of which are held at amortised cost, is as follows:
Amounts due:
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
2020
£m
2019
£m
(26.6)
(445.4)
(93.0)
(25.7)
(314.8)
–
(565.0)
(340.5)
The carrying amounts of the Group’s financial assets and financial liabilities approximate their 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).
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), and
borrowings. 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. Non-current loans approximate to fair value
as they are held at variable market interest rates linked to LIBOR.
180
Notes to the Consolidated Financial Statements continuedBerkeley Group 2020 Annual Report 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.
The contractual undiscounted maturity profile of the Group’s financial liabilities, included at their carrying value in the
preceding tables, is as follows:
Amounts due:
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
2020
£m
2019
£m
(1,045.4)
(26.8)
(446.4)
(93.5)
(837.5)
(26.0)
(315.2)
–
(1,612.1)
(1,178.7)
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
2020, profit after tax for the year would have been £4.3 million higher (2019: £2.4 million 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 2020.
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 (2019: £nil), nor are there any material provisions
held against trade receivables (2019: £nil), and £nil million trade receivables are past their due date (2019: £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.
181
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements 2.23 Capital management, financial instruments and financial risk management continued
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.
The Group has committed borrowing facilities as follows:
2020
2019
Available
£m
Drawn
£m
Undrawn
£m
Termination
£m
Available
£m
Drawn
£m
Undrawn
£m
Termination
£m
Issued
Term loan
Revolving credit facility
300
450
(300)
(200)
–
Nov–23
250
Nov–23
300
450
(300)
–
Nov–23
–
450
Nov–23
750
(500)
250
750
(300)
450
The Group’s committed banking facilities currently total £750 million and expire in November 2023.
At 30 April 2020 the total drawn down balance of the facilities was £500.0 million (2019: £300.0 million) after the Group
drew down £200 million (2019: £nil) on the revolving credit facility during the year. In addition, at 30 April 2020 there were
bank bonds in issue of £28.1 million (2019: £5.0 million).
The committed 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, with all of which the Group
is in compliance.
2.24 Related party transactions
The Group has entered into the following related party transactions:
Transactions with Directors
During the year, Mr A W Pidgley paid £65,598 (2019: £225,188), Mr R C Perrins paid £120,601 (2019: £90,981), Mr S Ellis
paid £208,046 (2019: £107,039) and Mr P Vallone paid £811,191 (2019: £490,576) to the Group in connection with works
carried out at their respective homes at commercial rates in accordance with the relevant policies of the Group. There were
no balances outstanding at the year end.
Berkeley Homes plc has an agreement with Langham Homes, a company controlled by Mr T K Pidgley who is the son
of the Group’s Chairman, under which Langham Homes will be paid a fee for a land introduction on an arm’s length basis.
A fee of £300,000 has been paid under this agreement in the year (2019: £nil), there were no outstanding balances at the
year end (2019: £nil); and there are no contingent fees outstanding. Langham Homes has not introduced any new land to
the Group in the year. In the event that any further land purchases are agreed, further fees may be payable to Langham
Homes in future years.
Transactions with joint ventures
During the financial year there were no transactions with joint ventures other than movements in loans. The outstanding
loan balances with joint ventures at 30 April 2020 total £177.2 million (30 April 2019: £156.7 million).
182
Notes to the Consolidated Financial Statements continuedBerkeley Group 2020 Annual Report 2.25 Subsidiaries and joint ventures
(a) Subsidiaries
In accordance with Section 409 of the Companies Act 2006 a full list of subsidiaries, partnerships, associates, joint
ventures and joint arrangements, the country of incorporation, the registered address and the effective percentage of
equity owned, as at 30 April 2020 is disclosed below. The Berkeley Group plc is the only direct subsidiary of The Berkeley
Group Holdings plc and is an intermediate holding company. All wholly owned and partly owned subsidiaries are included
in the consolidation and all associated undertakings are included in the Group’s financial statements.
All of the companies listed below are incorporated in England and Wales have their registered office address at Berkeley
House, 19 Portsmouth Road, Cobham, Surrey, KT11 1JG and the principal activity is residential-led mixed use development
and ancillary activities. All of the companies are wholly owned by the Group and unless otherwise indicated, all of the
companies have ordinary share capital.
Agents of Berkeley Commercial
Developments Limited
Ely Business Park Limited
Agents of Berkeley Homes
(Central London) Limited
Chelsea Bridge Wharf (Block A) Limited
Chelsea Bridge Wharf (Block B) Limited
Chelsea Bridge Wharf (Block P) Limited
Chelsea Bridge Wharf (C North) Limited
Chelsea Bridge Wharf (C South) Limited
Agents of Berkeley Homes
(Hampshire) Limited
Berkeley Homes (South Western House
No.1) Limited
Agents of Berkeley Homes plc
Berkeley (Canalside) Limited
Berkeley Build Limited
Berkeley Forty-Five Limited(i)
Berkeley Forty-Four plc
Berkeley Gateway Limited
Berkeley Homes (South London) Limited
Berkeley Homes (Southern) Limited
Berkeley Homes (Surrey) Limited
Berkeley Homes (Thames Gateway) Limited
Berkeley Homes (Thames Valley) Limited
Berkeley Homes (Three Valleys) Limited
Berkeley Homes (Urban Developments)
Limited
Berkeley Homes (Urban Living) Limited
Berkeley Homes (Urban Renaissance)
Limited
Imperial Wharf (Riverside Tower)
Residential Limited
Agents of St George plc
St George Central London Limited
St George City Limited
St George Developments Limited
St George Kings Cross Limited
St George North London Limited
St George South and Central London
Limited
St George South London Limited(vii)
Berkeley Homes (West London) Limited
St George West London Limited(ii)
Berkeley Homes (Western) Limited
Agents of St George South London Limited
Berkeley Homes (West Thames) Limited
Battersea Reach Estate Company Limited
Berkeley Modular Limited
Kensington Westside No. 2 Limited
Berkeley Ninety-One Limited
Putney Wharf Estate Limited
Berkeley Partnership Homes Limited
Berkeley Seven Limited
Berkeley STE Limited
Berkeley Homes (Barn Elms) Limited
Berkeley Homes (Capital) plc
Berkeley SW Management Limited
Berkeley Urban Renaissance Limited
Berkeley Homes (Central & West London) plc
Clare Homes Limited
Berkeley Homes (Central London) Limited
Lisa Estates (St Albans) Limited
Berkeley Homes (Chiltern) Limited
Berkeley Homes (East Anglia) Limited
Berkeley Homes (East Kent) Limited
PEL Investments Limited
St John Homes Limited
St Joseph Homes Limited
Berkeley Homes (East Thames) Limited
Stanmore Relocations Limited
Riverside West (Block C)
Commercial Limited
Riverside West (Block C) Residential Limited
Riverside West (Block D)
Commercial Limited
Riverside West (Block D) Residential Limited
Riverside West Car Park Limited
St George Wharf (Block B) Limited
St George Wharf (Block C) Limited
St George Wharf (Block D)
Commercial Limited
St George Wharf Car Park Limited
Berkeley Homes (Eastern Counties) Limited
Tabard Square (Building C) Limited
Agents of St John Homes Limited
Berkeley Homes (Eastern) Limited
Berkeley Homes (Festival Waterfront
Company) Limited
Berkeley Homes (Hampshire) Limited
Berkeley Homes (Home Counties) plc
Berkeley Homes (North East London)
Limited
Agents of Berkeley Twenty Limited
Thirlstone Homes (Western) Limited
Thirlstone Homes Limited
Agents of St George Central
London Limited
Castle Court Putney Wharf Limited
Imperial Wharf (Block C) Limited
Berkeley Homes (Oxford & Chiltern) Limited
Imperial Wharf (Block J) Limited
Berkeley Homes (South East London)
Limited
Berkeley Sixty-Six Limited
Non-Agency Companies(v)
Ancestral Homes Limited
Berkeley (Inner-City Partnerships) Limited
Berkeley (SQP) Limited
Berkeley (Virginia Water) Limited(i)
Berkeley Affordable Homes Limited
Berkeley Asset MSA Limited
Berkeley College Homes Limited
183
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements 2.25 Subsidiaries and joint ventures continued
(a) Subsidiaries continued
Berkeley Commercial Developments Limited
Berkeley Homes (City) Limited
Berkeley Commercial Investments Limited
Berkeley Homes (Dorset) Limited
Berkeley Commercial Limited
Berkeley Homes (East London) Limited
Berkeley Community Villages Limited
Berkeley Homes (Essex) Limited
Berkeley Construction Limited
Berkeley Homes (Fleet) Limited(i)
Berkeley Developments Limited(i)
Berkeley Homes (Greater London) Limited
Berkeley Eighteen Limited
Berkeley Homes Group Limited
Berkeley One Hundred and Fifty-Four
Limited
Berkeley One Hundred and Fifty Limited
Berkeley One Hundred and Fifty-Nine
Limited
Berkeley One Hundred and Fifty-One
Limited
Berkeley One Hundred and Fifty-Seven
Limited
Berkeley Eighty Limited
Berkeley Eighty-One Limited
Berkeley Eighty-Three Limited
Berkeley Eighty-Two Limited
Berkeley Enterprises Limited
Berkeley Festival Development Limited
Berkeley Festival Hotels Limited
Berkeley Festival Investments Limited
Berkeley Festival Limited
Berkeley Fifty Limited
Berkeley Fifty-Eight Limited
Berkeley Fifty-Five Limited
Berkeley Fifty-Four Limited
Berkeley Fifty-Nine Limited
Berkeley Fifty-One Limited
Berkeley Fifty-Seven Limited
Berkeley Fifty-Three Limited
Berkeley Fifty-Two Limited
Berkeley First Limited
Berkeley Five Limited
Berkeley Forty Limited
Berkeley Forty-Eight Limited
Berkeley Forty-Nine Limited
Berkeley Forty-Seven Limited
Berkeley Forty-Six Limited
Berkeley Forty-Three Limited
Berkeley Forty-Two Limited
Berkeley Fourteen Limited
Berkeley Group Pension Trustees Limited
Berkeley Group Services Limited
Berkeley Group SIP Trustee Limited
Berkeley Guarantee One Limited
Berkeley Homes (Carmelite) Limited
Berkeley Homes (Chertsey) Limited
Berkeley Homes (Hertfordshire &
Cambridgeshire) Limited
Berkeley Homes (Kent) Limited
Berkeley Homes (North Western) Limited(i)
Berkeley Homes (PCL) Limited
Berkeley One Hundred and Fifty-Six Limited
Berkeley One Hundred and Fifty-Three
Limited
Berkeley One Hundred and Fifty-Two
Limited
Berkeley Homes Public Limited Company(iii)
Berkeley One Hundred and Five Limited
Berkeley Homes (South) Limited
Berkeley Homes (Southall) Limited
Berkeley Homes (Stanmore) Limited
Berkeley London Residential Limited
Berkeley Manhattan Limited
Berkeley Ninety-Eight Limited
Berkeley Ninety-Five Limited
Berkeley Ninety-Nine Limited
Berkeley Ninety-Seven Limited
Berkeley Ninety-Six Limited
Berkeley Number Four Limited
Berkeley Number Seven Limited
Berkeley Number Six Limited
Berkeley One Hundred and Eight Limited
Berkeley One Hundred and Eighteen Limited
Berkeley One Hundred and Eighty-Eight
Limited
Berkeley One Hundred and Eighty-Five
Limited
Berkeley One Hundred and Eighty Limited
Berkeley One Hundred and Eighty-Nine
Limited
Berkeley One Hundred and Eighty-One
Limited
Berkeley One Hundred and Eighty-Seven
Limited
Berkeley One Hundred and Eighty-Two
Limited
Berkeley One Hundred and Fifteen Limited
Berkeley One Hundred and Forty-Eight
Limited
Berkeley One Hundred and Forty-Five
Limited
Berkeley One Hundred and Forty-Four
Limited
Berkeley One Hundred and Forty Limited
Berkeley One Hundred and Forty-Nine
Limited
Berkeley One Hundred and Forty-One
Limited
Berkeley One Hundred and Forty-Seven
Limited
Berkeley One Hundred and Forty-Six
Limited
Berkeley One Hundred and Four Limited
Berkeley One Hundred and Nine Limited
Berkeley One Hundred and Ninety-Eight
Limited
Berkeley One Hundred and Ninety-Five
Limited
Berkeley One Hundred and Ninety-Four
Limited
Berkeley One Hundred and Ninety Limited
Berkeley One Hundred and Ninety-Nine
Limited
Berkeley One Hundred and Ninety-Seven
Limited
Berkeley One Hundred and Ninety-Six
Limited
Berkeley One Hundred and Ninety-Three
Limited
Berkeley One Hundred and Fifty-Eight
Limited
Berkeley One Hundred and Ninety-Two
Limited
Berkeley Homes (City & East London)
Limited
Berkeley One Hundred and Fifty-Five
Limited
Berkeley One Hundred and One Limited
Berkeley One Hundred and Seven Limited
184
Notes to the Consolidated Financial Statements continuedBerkeley Group 2020 Annual Report Berkeley One Hundred and Seventeen
Limited
Berkeley One Hundred and Twenty-Eight
Limited
Berkeley One Hundred and Seventy-Eight
Limited
Berkeley One Hundred and Twenty-Five
Limited
Berkeley One Hundred and Seventy-Five
Limited
Berkeley One Hundred and Twenty-Four
Limited
Berkeley Twenty-Eight Limited
Berkeley Twenty-Four Limited
Berkeley Twenty-Nine Limited
Berkeley Twenty-Seven Limited
Berkeley Twenty-Three Limited
Berkeley One Hundred and Twenty Limited
Berkeley Twenty-Two Limited
Berkeley One Hundred and Twenty-Nine
Limited
Berkeley One Hundred and Twenty-One
Limited
Berkeley One Hundred and Twenty-Seven
Limited
Berkeley One Hundred and Twenty-Six
Limited
Berkeley One Hundred and Twenty-Three
Limited
Berkeley One Hundred and Twenty-Two
Limited
Berkeley One Hundred and Two Limited
Berkeley Two Hundred and Eight Limited
Berkeley Two Hundred and Eighteen Limited
Berkeley Two Hundred and Eleven Limited
Berkeley Two Hundred and Five Limited
Berkeley Two Hundred and Fourteen Limited
Berkeley Two Hundred and Nine Limited
Berkeley Two Hundred and Nineteen Limited
Berkeley Two Hundred and One Limited(i)
Berkeley Two Hundred and Seven Limited
Berkeley Two Hundred and Seventeen
Limited
Berkeley Portsmouth Harbour Limited
Berkeley Two Hundred and Sixteen Limited
Berkeley Portsmouth Waterfront Limited
Berkeley Two Hundred and Thirteen Limited
Berkeley One Hundred and Seventy-Four
Limited
Berkeley One Hundred and Seventy-Nine
Limited
Berkeley One Hundred and Seventy-One
Limited
Berkeley One Hundred and Seventy-Seven
Limited
Berkeley One Hundred and Seventy-Six
Limited
Berkeley One Hundred and Seventy-Three
Limited
Berkeley One Hundred and Seventy-Two
Limited
Berkeley One Hundred and Six Limited
Berkeley One Hundred and Sixteen Limited
Berkeley One Hundred and Sixty-Five
Limited
Berkeley One Hundred and Sixty-Four
Limited
Berkeley One Hundred and Sixty-One
Limited
Berkeley One Hundred and Sixty-Six Limited
Berkeley One Hundred and Sixty-Three
Limited
Berkeley Properties Limited(i)
Berkeley Residential Limited(i)
Berkeley Ryewood Limited(ii)
Berkeley Seventy Limited
Berkeley Seventy-Four Limited
Berkeley Seventy-Nine Limited
Berkeley Seventy-One PLC(vii)
Berkeley One Hundred and Thirteen Limited
Berkeley Seventy-Seven Limited
Berkeley One Hundred and Thirty-Eight
Limited
Berkeley One Hundred and Thirty-Five
Limited
Berkeley One Hundred and Thirty-Four
Limited
Berkeley Seventy-Six Limited
Berkeley Seventy-Three Limited
Berkeley Seventy-Two Limited
Berkeley Sixty Limited
Berkeley Sixty-Eight Limited
Berkeley One Hundred and Thirty Limited
Berkeley Sixty-Five Limited
Berkeley One Hundred and Thirty-Nine
Limited
Berkeley One Hundred and Thirty-One
Limited
Berkeley Sixty-Four Limited
Berkeley Sixty-Nine Limited
Berkeley Sixty-One Limited
Berkeley One Hundred and Thirty-Seven
Limited
Berkeley One Hundred and Thirty-Six
Limited
Berkeley One Hundred and Thirty-Three
Limited
Berkeley One Hundred and Thirty-Two
Limited
Berkeley One Hundred and Three Limited
Berkeley Special Projects Limited
Berkeley Strategic Land Limited(vii)
Berkeley Sustainable Communities Limited
Berkeley Thirty-Eight Limited
Berkeley Thirty-Nine Limited
Berkeley Thirty-Three Limited
Berkeley Three Limited
Berkeley Twenty Limited
Berkeley Two Hundred and Thirty Limited
Berkeley Two Hundred and Three Limited
Berkeley Two Hundred and Twelve Limited
Berkeley Two Hundred and Twenty Limited
Berkeley Two Hundred and Twenty-Eight
Limited
Berkeley Two Hundred and Twenty-Five
Limited
Berkeley Two Hundred and Twenty-Four
Limited
Berkeley Two Hundred and Twenty-Nine
Limited
Berkeley Two Hundred and Twenty-One
Limited
Berkeley Two Hundred and Twenty-Seven
Limited
Berkeley Two Hundred and Twenty-Six
Limited
Berkeley Two Hundred and Twenty-Three
Limited
Berkeley Two Hundred and Twenty-Two
Limited
Berkeley Two Hundred and Two Limited
Berkeley Two Hundred Limited
Berkeley Ventures Limited
BH (City Forum) Limited
Boardcable Limited
Bromyard House (Car Park) Limited
185
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Tabard Square (Car Park) Limited
TBG (1) 2009 Limited
TBG (3) 2009 Limited
TBG (4) Limited
TBG (5) LLP+
The Berkeley Festival Waterfront Company
Limited
The Berkeley Group plc
The Millennium Festival Leisure Company
Limited
The Oxford Gateway Development
Company Limited
The Tower, One St George Wharf Limited
Thirlstone (JLP) Limited
Thirlstone Commercial Limited
Thirlstone plc
Woodside Road Limited
(i) A Ordinary and B Ordinary shares
(ii) Ordinary and Preference shares
(iii) Ordinary and Deferred shares
(iv) Ordinary, Deferred and Preference shares
(v) List contains companies that are a
principal to agency agreements but are not
agents themselves
(vi) Registered office is 83 The Avenue,
Sunbury-On-Thames, Middlesex, TW16 5HZ
(vii) Ordinary and redeemable
preference shares
+ Partnership with no share capital
2.25 Subsidiaries and joint ventures continued
(a) Subsidiaries continued
Bromyard House (Freehold) Limited
Bromyard House (North) Limited
Bromyard House Limited
BWW Management Limited
Royal Clarence Yard (Phase K) Management
Company Limited
Royal Clarence Yard Estate Limited
Sandgates Developments Limited(i)
Cambridge Riverside (Kingsley Walk) (No.2)
Management Company Limited
Sitesecure Limited
SJC (Highgate) Limited
Charco 143 Limited(i)
Chelsea Bridge Wharf (Management
Company) Limited
South Quay Plaza Management Limited
(62.5%)(vi)+
St Edward Limited
Chelsea Bridge Wharf Car Park Limited
St George (Crawford Street) Limited
Community Housing Action Limited
St George (Queenstown Place) Limited
Community Villages Limited
St George Blackfriars Limited
CPWGCO 1 Limited
St George Commercial Limited
Drummond Road (Number 1) Limited
St George Ealing Limited
Drummond Road (Number 2) Limited
St George Eastern Limited
Exchange Place No 2 Limited
St George Inner Cities Limited
Fishguard Bridge Limited
St George Investments Limited
Fishguard Tunnel Limited
St George London Limited
Great Woodcote Park Management Limited
St George Northfields Limited
Hertfordshire Homes Limited
St George Partnerships Limited
Historic Homes Limited
St George plc(iv)
Kentdean Limited
St George Project Management Limited
One Tower Bridge Limited
St George Properties Limited
Quod Erat Demonstrandum
Properties Limited
Retirement Homes Limited
Royal Clarence Yard (Marina) Limited
Royal Clarence Yard (Phase A) Limited
Royal Clarence Yard (Phase B) Limited
Royal Clarence Yard (Phase C) Limited
Royal Clarence Yard (Phase E) Limited
St George Real Estate Limited
St George Regeneration Limited
St George Southern Limited
St George Western Limited
St George Wharf Hotel Limited
St George’s Hill Property Company Limited
St James Group Limited
St James Homes (Grosvenor Dock) Limited
Royal Clarence Yard (Phase G) Management
Company Limited
St James Homes Limited
Royal Clarence Yard (Phase H) Limited
Royal Clarence Yard (Phase I) Limited
Tabard Square (Building A) Limited
Tabard Square (Building B) Limited
186
Notes to the Consolidated Financial Statements continuedBerkeley Group 2020 Annual Report Aragon Investments Limited(ii)
Jersey
28 Esplanade, Jersey, JE2 3QA
Country of incorporation
Registered office
Berkeley (Carnwath Road) Limited
Isle of Man
Berkeley (Hong Kong) Limited
Berkeley Homes Special Contracts
Public Limited(iii)
Hong Kong
Scotland
Berkeley Investments (IOM) Limited
Isle of Man
First Floor, Jubilee Buildings, Victoria Street, Douglas,
IM1 2SH, Isle of Man
3806 Central Plaza, 18 Harbour Road, Wanchai, Hong Kong
Saltire Court, 20 Castle Terrace, Edinburgh, EH1 2EN
First Floor, Jubilee Buildings, Victoria Street, Douglas,
IM1 2SH, Isle of Man
Berkeley Property Investments Limited
Jersey
28 Esplanade Jersey JE2 3QA
Berkeley Residential (Singapore) Limited
Singapore
3 Anson Road, #27-01 Springleaf Tower, Singapore, 079909
Berkeley Whitehart Investments Limited
Jersey
18 Esplanade, Jersey, JE4 8RT
Comiston Properties Limited
Bahamas
Real Star Investments Limited(i)(ii)
Silverdale One Limited(ii)
St George Battersea Reach Limited
TBG (Jersey) 2009 Limited
Jersey
Jersey
Jersey
Jersey
(i) Agency company of St James Group Limited
(ii) Non-UK Nominee Company
(iii) Ordinary, A Deferred and B Deferred shares
Shirlaw House, PO Box SS-19084, Shirley Street,
Nassau, Bahamas
28 Esplanade, Jersey, JE2 3QA
28 Esplanade, Jersey, JE2 3QA
Po Box 521, 9 Burrard Street, Jersey, JE4 5UE
44 Esplanade, Jersey, JE4 9WG
187
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements 2.25 Subsidiaries and joint ventures continued
(b) Joint ventures
At 30 April 2020 the Group had an interest in the following joint ventures which have been equity accounted to 30 April
and have an accounting date of 30 April unless otherwise indicated. All of the companies listed below are incorporated in
England and Wales and have their registered office address at Berkeley House, 19 Portsmouth Road, Cobham, Surrey, KT11
1JG and the principal activity is residential-led mixed use development and ancillary activities. All of the companies are
50% owned by the Group and unless otherwise indicated, all of the companies have ordinary share capital:
Berkeley Carlton Holdings Limited(ii)
St William Four Limited*
Berkeley Sutton Limited(ii)
St William Fourteen Limited*
Community Housing Initiatives Limited** (in liquidation) St William Holdings Limited*
Diniwe One Limited
Diniwe Two Limited
SEH Manager Limited
SEH Nominee Limited
SES Manager Limited(ii)
SES Nominee Limited
St Edward Homes Limited(iii)
St William Nine Limited*
St William Nineteen Limited*
St William One Limited*
St William Seven Limited*
St William Seventeen Limited*
St William Six Limited*
St William Sixteen Limited*
St Edward Homes Number Five Limited***
St William Ten Limited*
St Edward Homes Number Four Limited***
St William Thirteen Limited*
St Edward Homes Number One Limited***
St William Three Limited*
St Edward Homes Number Three Limited***
St William Twelve Limited*
St Edward Homes Number Two Limited***
St William Twenty Limited*
St Edward Homes Partnership Freeholds Limited
St William Twenty-Eight Limited*
St Edward Strand Partnership Freeholds Limited
St William Twenty-Five Limited*
St George Little Britain (No 1) Limited(ii)
St William Twenty-Four Limited*
St George Little Britain (No 2) Limited(ii)
St William Twenty-One Limited*
St Katharine Homes LLP(i)
St William Twenty-Seven Limited*
STKM Limited
St William Twenty-Six Limited*
Strand Property Unit Trust (unregistered)+
St William Twenty-Three Limited*
St William Homes LLP(i)*
St William Eight Limited*
St William Twenty-Two Limited*
St William Two Limited*
St William Eighteen Limited*
The St Edward Homes Partnership (unregistered partnership)(i)
St William Eleven Limited*
St William Fifteen Limited*
St William Five Limited*
The St Edward (Strand) Partnership (unregistered partnership)(i)
Thirlstone Centros Miller Limited(iv)** (in liquidation)
U B Developments Limited(iv)
(i) Partnership with no share capital
(ii) A Ordinary and B Ordinary shares
(iii) A Ordinary, B Ordinary, C Preference and D Preference shares
(iv) B Ordinary shares
* Accounting date of 31 March
** Accounting date of 31 December
*** 100% owned by St Edward Homes Limited
+ Principal place of business is 19 Portsmouth Road, Cobham, Surrey, KT11 1JG
188
Notes to the Consolidated Financial Statements continuedBerkeley Group 2020 Annual Report 2020
£m
2019
£m
1,430.5
1,430.5
708.2
0.9
709.1
1,421.7
1,421.7
245.3
0.9
246.2
(773.6)
(527.4)
894.3
7.0
49.8
24.5
813.0
894.3
Company Balance Sheet
As at 30 April
Fixed assets
Investments
Current assets
Debtors
Cash at bank and in hand
Current liabilities
Notes
C2.4
C2.5
Creditors (amounts falling due within one year)
C2.6
(804.8)
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
C2.7
C2.7
(95.7)
1,334.8
6.8
49.8
24.7
1,253.5
1,334.8
The financial statements on pages 189 to 195 were approved by the Board of Directors on 17 June 2020 and were signed
on its behalf by:
R J Stearn
Finance Director
189
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
Company Statement of Changes in Equity
At 1 May 2019
Profit after taxation for the year
Purchase of ordinary shares
Credit in respect of employee share schemes
Deferred tax in respect of employee share schemes
Dividends to equity holders of the Company
Called-up
share
capital
£m
7.0
–
(0.2)
–
–
–
Share
premium
account
£m
49.8
–
–
–
–
–
Capital
redemption
reserve
£m
Profit and loss
account
£m
Total
shareholders’
funds
£m
24.5
–
0.2
–
–
–
813.0
709.6
894.3
709.6
(130.5)
(130.5)
2.2
9.0
2.2
9.0
(149.8)
(149.8)
At 30 April 2020
6.8
49.8
24.7
1,253.5
1,334.8
At 1 May 2018
7.0
49.8
24.5
Profit after taxation for the year
Purchase of ordinary shares
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 2019
7.0
49.8
24.5
657.6
406.0
738.9
406.0
(198.9)
(198.9)
1.1
0.2
(53.0)
813.0
1.1
0.2
(53.0)
894.3
190
Berkeley Group 2020 Annual Report Notes to the Company Financial Statements
C1 Basis of preparation
C1.1 Introduction
These financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure
Framework (‘FRS 101’).
In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements
of International Financial Reporting Standards as adopted by the EU (‘Adopted IFRSs’), but makes amendments where
necessary in order to comply with the Companies Act 2006 and, as set out below, where advantage of FRS 101 reduced
disclosure exemptions has been taken.
The accounting policies adopted for the Parent Company, The Berkeley Group Holdings plc, are otherwise consistent with
those used for the Group which are set out on pages 155 to 187.
In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the
following disclosures:
— Cash Flow Statement and related notes;
— Disclosures in respect of transactions with wholly owned subsidiaries;
— Disclosures in respect of capital management;
— The effects of new but not yet effective IFRSs;
— Certain disclosures required by IFRS 13 ‘Fair Value Measurement’ and the disclosures required by IFRS 7 ‘Financial
Instrument Disclosures’; and
— Disclosures in respect of the compensation of key management personnel.
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.
C1.2 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 80 to 83.
The Group has significant financial resources and the Directors have assessed the future funding requirements of the
Group, including the return of £3.3 billion to shareholders by 2025, and compared this with 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 £95.7 million (2019: £527.4 million). For this reason they continue to adopt the going concern basis
of accounting in preparing the annual financial statements.
C2 Notes to the Company accounts
C2.1 Profit on ordinary activities before taxation
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.
Profit on ordinary activities before taxation is stated after charging the following amounts:
Auditor’s remuneration
2020
£m
0.1
2019
£m
0.1
No disclosure of other non-audit services has been made as this is included within note 2.4 of the Consolidated
Financial Statements.
191
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Notes to the Company Financial Statements continued
C2.2 Directors and employees
The Company operates one equity settled, share based compensation plan. 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. Amounts recognised in respect of Executive Directors of the
Company’s subsidiaries are recognised as an addition to the cost of the investment.
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.
Pension contributions under defined contribution schemes are charged to the Income Statement as they
fall due.
Staff costs:
Wages and salaries
Social security costs
Share based payments – Equity settled
Share based payments – Cash settled
2020
£m
2019
£m
2.4
6.0
1.4
1.0
10.8
3.0
1.9
3.4
2.8
11.1
The average monthly number of persons employed by the Company during the year was ten, all of whom are
Directors (2019: ten).
Directors
Details of Directors’ emoluments are set out in the Remuneration Report on pages 106 to 134.
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 2.5 of the Consolidated Financial Statements.
Contributions amounting to £nil (2019: £nil) were paid into the defined contribution scheme during the year.
Share based payments
The charge to the profit and loss account in respect of equity settled share based payments in the year, relating to
grants of shares, share options and notional shares awarded under the 2011 LTIP was £1.4 million (2019: £3.4 million).
The charge to the profit and loss account in respect of cash settled share based payments under the Bonus Banking Plan
was £1.0 million (2019: £2.8 million). The credit to the reserves during the year in respect of employee share schemes was
£2.2 million (2019: £1.1 million credit) which includes the corresponding entry to the cost of investment of £8.8 million
(2019: £4.1 million) detailed in note C2.4. The offsetting entry within reserves results from the non-cash IFRS 2 charge for
the year. Further information on the Company’s share incentive schemes are included in the Remuneration Report on
pages 106 to 134 as well as note 2.5 to the Consolidated Financial Statements.
192
Berkeley Group 2020 Annual Report C2.3 The Berkeley Group Holdings plc profit and loss account
The profit for the year in the Company is £709.6 million (2019: £406.0 million).
C2.4 Investments
Investments in subsidiary undertakings are included in the Balance Sheet at cost less provision for
any impairment.
Investments at cost:
Investments in shares of subsidiary undertaking at 1 May
Additions
2020
£m
2019
£m
1,421.7
8.8
1,417.6
4.1
Investments in shares of subsidiary undertaking at 1 April
1,430.5
1,421.7
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 2011 LTIP 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 subsidiaries are given within note 2.25 of the Consolidated Financial Statements.
C2.5 Debtors
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.
Current
Amounts owed from subsidiary undertakings
Deferred tax
2020
£m
685.5
22.7
2019
£m
229.2
16.1
708.2
245.3
All amounts owed from subsidiary undertakings are unsecured, bear no interest and are payable on demand.
193
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Notes to the Company Financial Statements continued
C2.5 Debtors continued
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
2020
£m
16.1
8.7
(2.1)
2019
£m
18.7
(0.6)
(2.0)
22.7
16.1
Deferred tax is calculated in full on temporary differences at the tax rates that are expected to apply for the period when
the asset is realised and the liability is settled using a tax rate of 19% as appropriate (2019: 19%/17%). Accordingly, all
temporary differences have been calculated. There is no unprovided deferred tax (2019: £nil) at the Balance Sheet date.
The deferred tax asset of £22.7 million relates to short-term timing differences (2019: £16.1 million).
C2.6 Creditors: Amounts falling due within one year
Creditors are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised
cost using the effective interest method.
Current
Amounts owed to subsidiary undertakings
Other taxation and social security
Accruals and deferred income
2020
£m
2019
£m
(790.9)
(760.4)
(11.6)
(2.3)
(8.9)
(4.3)
(804.8)
(773.6)
All amounts included above are unsecured. The interest rate on £790.9 million (2019: £760.4 million) of the balance owed
to subsidiary undertakings is 4.0% (2019: 4.0%), with no fixed repayment date.
C2.7 Called‑up share capital
Each ordinary share of 5 pence 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:
Ordinary shares
Share capital
Share premium
2020
No ’000
2019
No ’000
2020
£m
2019
£m
Issued
At start of year
Shares cancelled
140,157
140,157
(3,508)
–
7.0
(0.2)
At end of year
136,649
140,157
6.8
7.0
–
7.0
2020
£m
49.8
–
2019
£m
49.8
–
49.8
49.8
During the year 3.5 million (2019: 5.6 million) shares were repurchased to the value of £130.5 million (£198.9 million).
These shares were subsequently cancelled (2019: none). On cancellation of the share capital the capital redemption
reserve was credited with the nominal value of shares.
194
Berkeley Group 2020 Annual Report Each ordinary share of 5 pence 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 30 September 2019, 0.2 million ordinary shares (2019: 0.5 million) were allotted and issued to the Employee
Benefit Trust.
On 1 October 2019, 0.4 million ordinary shares (2019: 0.5 million) were transferred from the Employee Benefit Trust to
Executive Directors to satisfy the exercise of options under the 2011 LTIP.
At 30 April 2020 there were 0.2 million shares held in trust (2019: 0.4 million) by the Employee Benefit Trust. The market
value of these shares at 30 April 2020 was £8.9 million (2019: £16.4 million).
During the 2020 financial year, 3.5 million shares were repurchased (2019: 5.6 million) for a total consideration of
£130.5 million, excluding transaction costs (2019: £198.9 million). These shares were subsequently cancelled (2019: none).
At 30 April 2020 there were 10.9 million (2019: 11.1 million) treasury shares held by the Group. The market value of the
shares at 30 April 2020 was £457.7 million (2019: £417.0 million).
The movements in the year are disclosed in note 2.18 and note 2.19 of the Consolidated Financial Statements.
C2.8 Dividends per share
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.
Amounts recognised as distributions to equity
shareholders during the year:
September 2018
January 2019
September 2019
March 2020
Total dividends
2020
Dividend
per share
pence
–
–
20.08
99.32
£m
–
–
25.2
124.6
149.8
2019
Dividend
per share
pence
33.30
7.12
–
–
£m
43.8
9.2
–
–
53.0
C2.9 Related party transactions
The Company has not undertaken related party transactions during the year with entities that are not wholly owned
subsidiaries of The Berkeley Group Holdings plc. Transactions with wholly owned members of The Berkeley Group
Holdings plc are exempt under FRS 101 with reduced disclosure.
195
Berkeley Group 2020 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements Five Year Summary
Income statement
Revenue from operations
Operating profit
Share of results of joint ventures
Net finance income/(costs)
Profit before taxation
Basic earnings per share
Statement of financial position
Capital employed
Net cash
Net assets
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)
Cash due on forward sales(6)
Gross margin on land holdings(7)
2020
£m
1,920.4
469.7
33.3
0.7
503.7
324.9p
1,962.7
1,138.9
3,101.6
2,472p
23.8%
13.5%
16.6%
2,723
£1,858
£6,417
2019
£m
2018
(*Restated)
£m
2017
(*Restated)
£m
2016
£m
2,957.4
2,840.9
2,626.8
2,047.5
768.4
8.8
(2.0)
775.2
481.1p
817.0
162.7
(2.7)
977.0
737.1
63.0
(7.6)
792.5
501.9
36.5
(7.5)
530.9
587.4p
456.2p
295.8p
1,988.3
1,903.9
1,789.2
1,705.4
975.0
2,963.3
2,305p
687.3
2,591.2
1,938p
285.5
2,074.7
1,511p
39.5%
22.6%
27.9%
3,698
£1,831
44.2%
34.1%
41.9%
3,678
£2,193
£6,247
£6,003
42.8%
32.8%
41.3%
3,802
£2,743
£6,378
107.4
1,812.8
1,314p
34.5%
23.4%
30.8%
3,776
£3,259
£6,146
*
(1)
Figures amended to reflect the adoption of IFRS 15.
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) This measures the profitability and efficiency of which capital is being used by the Group and is calculated as profit before interest and taxation
(including joint venture profit before tax) divided by the average net assets adjusted for (debt)/cash.
(3) This measures the efficiency of returns generated from shareholder equity after taxation and is 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.
(6) Cash due from customers during the next three financial years under unconditional contracts for sale.
(7) The measure of expected value in the Group’s land holdings in the event the Group successfully sells and delivers the developments planned for.
196
Berkeley Group 2020 Annual Report
Financial Diary
Annual General Meeting and Trading Update
Half year end
Interim Results Announcement for the six months ending 31 October 2020
Trading Update
Year end
Announcement of Results for the year ending 30 April 2021
Publication of 2021 Annual Report
4 September 2020
31 October 2020
December 2020
March 2021
30 April 2021
June 2021
August 2021
Registered Office and Advisors
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
HSBC UK Bank plc
Lloyds Bank plc
Santander UK plc
Svenska Handelsbanken AB (Publ)
National Westminster Bank plc
Auditors
KPMG LLP
Registered office and
principal place of business
Berkeley House
19 Portsmouth Road
Cobham
Surrey KT11 1JG
Registered number: 5172586
Registrars
Link Asset Services
The Registery
34 Beckenham Road
Beckenham
Kent BR3 4TU
0871 664 0300 (from the UK)
+44 (0) 371 664 0300 (from overseas)
shareholderenquiries@linkgroup.co.uk
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Consultancy, design and production
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Design and production
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