2021 Annual Report
TRANSFORMING
TOMORROW
A PURPOSE DRIVEN BUSINESS
HIGHLIGHTS OF OUR YEAR
Our passion and purpose is to build quality
homes, strengthen communities and improve
people’s lives.
We focus on large-scale brownfield regeneration
sites, which are beyond the scope of
conventional homebuilders.
We are unique in having the expertise,
resources and financial strength to transform
these left behind spaces and unlock their
full social, economic and environmental value.
TRANSFORMING
TOMORROW
“This resilient set of results reflect the strength of
Berkeley’s uniquely long-term business model, the
enduring value of our high quality homes and places, and
the extraordinary performance of our people and partners
in meeting the complex challenges of the pandemic.
As the economy reopens, we are well positioned to drive
the recovery from COVID-19, to grow our business and
to further differentiate Berkeley as the country’s most
sustainable and innovative homebuilder.
To achieve this we have set out an ambitious ten-year
strategy, called, 'Our Vision 2030: Transforming Tomorrow'.
This holistic programme will challenge us to transform
key parts of our business, to transform more left behind
brownfield sites and to evolve our industry’s leading
approach to customer experience, build quality, health
and safety, climate action and nature recovery.
Our strategy is designed to meet the key challenges
and opportunities of tomorrow; positioning Berkeley
as a world-class business, trusted to transform the most
challenging sites into exceptional places and to maximise
our positive impact on society, the economy and the
natural world.”
Rob Perrins
Chief Executive
Strategic Report
01 Highlights of Our Year
04 Berkeley Group at a Glance
06 A Compelling Investment Proposition
09 Economic Contribution
10
Portfolio Overview
12 Market Overview
14
16
18
25
26 Our Sustainable Business Model
28 Key Performance Indicators
30 Trading and Financial Review
34 Our Vision: Celebrating the Success
Case Study – White City Living
Chairman’s Statement
Chief Executive’s Statement
Tony Pidgley CBE, 1947 – 2020
35
of the Last Decade
Transforming Tomorrow:
Introducing Our Vision 2030
37 Our Vision 2030: Ten Strategic
Priorities
Berkeley Foundation
51
54 Case Study – TwelveTrees Park
56 Section 172 (1) Statement
58 Stakeholder Engagement
65 Non-Financial Reporting Statement
66 Case Study – Horlicks Quarter
68 Sustainability Accounting Standards
Board Disclosures
70 Task Force on Climate-Related
Financial Disclosures
76 Environmental, Social and
Governance Performance
78 How We Manage Risk
81
Viability Statement
Corporate Governance
98 Chairman’s Introduction to the
Corporate Governance Report
100 Board at a Glance
101 Board of Directors
106 Board Leadership and
Company Purpose
111 Division of Responsibilities
115 Nomination Committee Report
118 Audit Committee Report
122 Directors’ Remuneration Report
151 Directors’ Report
Independent Auditor's Report
Financial Statements
160
167 Consolidated Income Statement
167 Consolidated Statement of
Comprehensive Income
168 Consolidated Statement of
Financial Position
169 Consolidated Statement of Changes
in Equity
170 Consolidated Cash Flow Statement
171 Notes to the Consolidated
Financial Statements
203 Company Balance Sheet
204 Company Statement of Changes
in Equity
205 Notes to the Company
Financial Statements
210 Five Year Summary
211 Financial Diary
212 Registered Office and Advisors
Financial Highlights*
£518.1m
Profit before tax (2020: £503.7m)
£1,712m
Cash due on forward sales (2020: £1,858m)
£26.12
Net asset value per share (2020: £24.72)
£1,128.2m
Net cash (2020: £1,138.9m)
16.5%
Pre-tax return on equity (2020: 16.6%)
£6,884m
Future gross margin in land holdings (2020: £6,417m)
Operating Highlights
Delivering for all stakeholders
10 new sites
acquired with the capacity to deliver 6,650 homes,
including four new sites in our St William joint venture
4 major new planning consents
obtained on long-term regeneration developments in
London, comprising 5,350 homes, along with two new
consents outside London
6 sites moved into production
including five long-term regeneration developments,
comprising 9,900 homes
23 regeneration sites
in production
Berkeley now has 23 of its 29 long-term complex
regeneration developments in production,
supporting its anticipated 50% increase in housing
delivery by 2024/25 from 2018/19 levels
7,000 plots
on sites we anticipate will come into the land holdings
during the next two years, giving visibility on increasing
estimated future gross profit in land holdings
to £7.5 billion
* Reconciliations and explanations of our financial highlights are
provided in our Key Performance Indicators section on page 28.
2,825 homes
delivered (plus 429 in joint ventures).
Berkeley is delivering some 10% of London’s new
private and affordable homes – supporting, on average,
28,000 UK jobs directly and indirectly throughout
its supply chain
>£200 million
of subsidies provided to deliver affordable housing and
committed to wider community and infrastructure
benefits in the year
77.9 NPS
maintained industry leading Net Promotor Score
(NPS) and customer satisfaction ratings
>40 developments
have net biodiversity gain strategies, which together
will create over 480 acres of new or improved natural
habitat on an area the size of London's Hyde Park
1.5°C aligned
we have been carbon neutral in our direct operations
since 2017 and have now set science-based targets
committing us to reducing emissions from our direct
operations by 50% by 2030 and reducing the carbon
intensity of our homes by 40% by 2030
Read more about our approach online:
berkeleygroup.co.uk/
about-us/
our-vision
01
Berkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements TRANSFORMING
TOMORROW
Berkeley transforms the most challenging and
complex brownfield sites into welcoming and
sustainable places, with homes and amenities
for all. We are the only major UK homebuilder
delivering urban regeneration at scale.
BEFORE
Left: Battersea Gasholders
Below: Prince of Wales Drive, Battersea
BEFORE
Below: Royal Arsenal Riverside, Woolwich
Right: Royal Arsenal Munitions Factory
Strategic Report
04 Berkeley Group at a Glance
06 A Compelling Investment
Proposition
Case Study – White City Living
Chairman’s Statement
Chief Executive’s Statement
Tony Pidgley CBE, 1947 – 2020
09 Economic Contribution
10
Portfolio Overview
12 Market Overview
14
16
18
25
26 Our Sustainable Business Model
28 Key Performance Indicators
30 Trading and Financial Review
34 Our Vision: Celebrating the
Success of the Last Decade
Transforming Tomorrow:
Introducing Our Vision 2030
35
37 Our Vision 2030: Ten Strategic
Priorities
Berkeley Foundation
51
54 Case Study – TwelveTrees Park
56 Section 172 (1) Statement
58 Stakeholder Engagement
65 Non-Financial Reporting
Statement
66 Case Study – Horlicks Quarter
68 Sustainability Accounting
Standards Board Disclosures
70 Task Force on Climate-Related
Financial Disclosures
76 Environmental, Social and
Governance Performance
78 How We Manage Risk
81
Viability Statement
Below: Southall Gas Works
Right: The Green Quarter,
Ealing
BEFORE
02
03
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements OUR BRANDS
The Berkeley Group is comprised
of six market leading brands; Berkeley,
St George, St James, St Joseph,
St Edward and St William. The Group
operates through a network of some
20 autonomous operating companies.
We also have a unique network
of international offices in key markets
across the globe, enabling us to foster
long-term relationships with our
customers in overseas markets.
100% owned
Joint ventures
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.
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.
Chelsea Creek, Hammersmith & Fulham
BERKELEY GROUP AT A GLANCE
WHO WE ARE
We are a purpose driven company
Read more on pages 106 to 110.
We have deeply embedded
values that shape our decisions
and behaviour
Read more on page 109.
Our passion and purpose is to build
quality homes, strengthen communities,
and improve people’s lives.
This core purpose shapes our culture
and drives our strategy.
Take pride in what we do
and the impact we make
Build trust by being open,
clear and credible
Have Integrity
Be Passionate
Think Creatively
Respect People
Excellence Through Detail
Find individual solutions
for every site and situation
Deliver the best through attention
to detail in everything we do
Work together, empower people
and value their contribution
We have a uniquely, long-term
operating model
Read more on pages 26 to 27.
We have an ambitious strategy
tackling ten strategic priorities
Read more on pages 35 to 50.
We have a clear vision for the future
We have a uniquely long-term operating model that is
responsive to the cyclical nature of the housing market.
We focus on large-scale regeneration where our expertise
and financial strength can deliver benefits for all of our
stakeholders and lasting positive change.
Berkeley is now bringing forward 29 of the largest and
most complex brownfield regeneration sites, a number of
which are now in, or coming into, production. In total, our
current portfolio consists of 63,270 plots across 96 sites.
Our Vision 2030: Transforming Tomorrow is our new
strategy, focused around ten strategic priorities for
the business.
Places that stand
the test of time
— Customers
— Quality
— Communities
— Climate Action
— Nature
Exceptional people
and resources
— Employee Experience
— Modernised Production
— Future Skills
— Supply Chain
— Shared Value
Our vision is to be a world-class business,
trusted to transform the most challenging
sites into exceptional places and to
maximise our positive impact on society,
the economy and the natural world.
04
05
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements A COMPELLING INVESTMENT PROPOSITION
LONG-TERM SUSTAINABLE
VALUE CREATION
The unique features of Berkeley’s land-led,
added value operating model include:
— A strong planning position
provides visibility and mitigates
regulatory risk.
— Strong forward sales underpin
near and medium-term delivery
and profits, supported by Berkeley’s
diversified sales channels with
a unique international network.
— Financial strength means that
Berkeley’s autonomous teams can
make the right long-term operating
decisions for each of our unique and
complex assets.
Our compelling investment
proposition is supported by our
capital allocation approach to:
— Ensure Berkeley’s financial
strength reflects the prevailing
macro environment
— Invest in opportunities for
the business where the right
risk-adjusted returns
are available
— Make returns to shareholders
through either dividends or
share buy-backs
— The scale of its land holdings means
Berkeley never needs to compromise
its disciplines and can acquire land
selectively and at the right point in
the cycle, taking into account the
prevailing operating environment.
— A focus on continuing to
evolve scheme design and layout
for the benefit of all stakeholders,
utilising our planning and
development expertise.
— This long-term approach focused
on brownfield regeneration
mitigates market risk with the ability
to create value through the cycle;
which contrasts with a volume
growth model with more immediate
land requirements.
1.
Purpose driven business
Our passion and purpose is to build
quality homes, strengthen local
communities and make a positive
difference to people’s lives.
This driving purpose shapes
everything we do and is
fundamental to our long-term
value added approach.
Royal Arsenal Riverside, Woolwich
4.
London and South East focus
We focus on deep under-supplied
markets with long-term demand
for high quality homes and places.
The majority of Berkeley’s capital
is allocated to London, which is
underpinned by its enduring status
as a world-class city.
5.
Autonomous, experienced teams
We operate through a decentralised
structure with over 20 operating
companies across six core brands.
Each team is autonomous,
entrepreneurial and highly
collaborative with the expertise and
local market knowledge to create
quality homes and places, whilst
managing risk.
6.
Sustainability and climate
action leadership
We are industry leaders in
sustainability and climate action,
using Our Vision 2030: Transforming
Tomorrow to ensure these areas
are central to our brand, culture,
operations and business strategy.
Our approach is holistic and
long-term, aligning us with the
global environmental challenges
our stakeholders care most about.
Hollyfields, Hawkenbury
2.
Long-term regeneration at scale
Our focus is on large-scale,
capital intensive brownfield
regeneration projects.
We unlock challenging and
complex sites over the long-term,
bringing well located land back into
community use and realising its
potential for added value returns
through the housing market cycles.
Berkeley is the only UK residential
developer regenerating brownfield
land at scale.
3.
Collaborative placemaking
We have a collaborative approach to
placemaking, designing unique and
beautiful places in partnership with
local authorities and communities.
We deliver the amenities and
natural landscapes local people
care about most, alongside high
quality, low carbon homes of all
types and tenures.
7.
Innovation
We are investing in advanced
manufacturing and innovative
digital technologies which will
embrace, expand and transform
key parts of our business operations.
These industry leading innovations
will enable Berkeley to deliver more
homes and achieve higher
standards of safety, productivity
and sustainability performance.
8.
Financial discipline
We recognise the cyclical nature
of the housing market and the
high operating risk of our complex,
long-term developments and
therefore keep financial risk low
at all times. We prioritise financial
strength ahead of annual profits.
This enables Berkeley to invest,
both in new land and in our sites,
at the right time in the cycle.
Woodberry Down, Finsbury Park
9.
Shareholder returns
We have a strong track record of
generating sustainable returns for
shareholders, with annual returns
committed through to 2025.
Read more on page 8.
06
07
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements A COMPELLING INVESTMENT PROPOSITION CONTINUED
ECONOMIC CONTRIBUTION
SHAREHOLDER
RETURNS PROGRAMME
AND SURPLUS CAPITAL
Berkeley has a strong track record
of generating sustainable returns
for shareholders throughout market
cycles. The evolution of the current
Shareholder Returns Programme is
shown in these key milestones:
Each year EY completes an Economic Impact
Assessment based on Berkeley’s financial
data as well as publicly available statistics.
The results for the last five years are
presented below.
ECONOMIC
KPIs
Homes
18,481
Berkeley built 3,254 homes in 2020/21
and a total of 18,481 over the last five
years (including joint ventures).
Economy
£13.8bn
Berkeley’s contribution to UK GDP
was over £2.5 billion in 2020/21 and
£13.8 billion for the last five years.
Tax
£3.7bn
Total UK tax contribution of £0.6 billion
in 2020/21 and £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.
2011
Established as a framework
through which £13.00 per share
(c. £1.7 billion) would be returned
over a 10 year timeframe to 2021.
2015
Total returns increased by
£3.34 per share to £16.34 per
share (c. £2.2 billion in total).
The remaining £12.00 per share
(£4.34 already paid) was scheduled
in equal annual dividends of £2.00
per share (c. £280 million) over the
6 years to September 2021.
2016
Flexibility introduced to return
the remaining £10.00 per share
(£6.34 already paid) through
a combination of share buy-backs
and dividends. Annual returns were
categorised as an absolute value
per annum (c. £280 million) which
is increased appropriately for any
new shares issued.
2018
Extended the annual £280 million
by a further four years to September
2025, bringing the total returns to
c. £3.4 billion.
SURPLUS CAPITAL
In January 2020, Berkeley
announced the return of an
additional £455 million via cash
returns in two tranches to
March 2022.
Following the onset of the
COVID-19 pandemic, the surplus
capital return was deferred for
up to two years and flexibility was
introduced to make the return
via Additional Land Investment*
or through cash returns.
In June 2021, Berkeley proposed
to return the first half (£228 million)
via a shareholder payment by
30 September 2021.
Shareholder Returns Programme
Shareholder Return mechanism
Long-term value metrics‡
as at 30 April 2021
As at 1 May 2011
To 30 September 2015
To 30 September 2016
To 30 September 2017
To 30 September 2018
To 30 September 2019
To 30 September 2020
To 31 March 2021
By 30 September 2021
Returns – committed
Surplus capital
To 30 September 2021
By 31 March 2023
Return
£m
Dividends
£m
Buy-backs
£m
Shareholders'
Equity
Net asset
value/share
–
582
273
278
278
279
280
141
141
–
582
273
188
120
34
259
11
82†
2,252
1,467
228
227
£929m
£1,638m
£1,813m
£2,075m
£2,591m
£2,963m
£3,102m
£3,175m
£7.09
£11.99
£13.14
£15.11
£19.38
£23.05
£24.72
£26.12
–
–
–
90
158
245
21
130
59
703
Land
Holdings
Future GM
£2,872m
£5,272m
£6,146m
£6,378m
£6,003m
£6,247m
£6,417m
£6,884m
* Additional Land Investment is defined as 'cash paid on land interests, over and above the cost of land used in the Income Statement,
from 1 May 2020 through 31 March 2023.
† The £82 million remaining for the period to 30 September 2021, along with the £140 million due for the six months to 31 March 2022,
are proposed to be combined with the first half of the surplus capital (£228 million) in to a £450 million shareholder payment. This will
be made via a capital reduction, subject to shareholder approval at the AGM on 3 September 2021.
‡ All figures are provided as at 30 April in the year indicated.
£2.2bn
Since 2011 Berkeley has returned
£2.2 billion to shareholders whilst
increasing shareholders equity from
£0.9 billion to £3.2 billion, with future
gross margin in the land holdings
currently estimated at £6.9 billion.
£0.7bn
£281m
Berkeley has returned £0.7 billion
via 19.0 million share buy-backs at
an average cost of £36.99 per share
since December 2016.
The ongoing annual return of
£281 million, set out to September
2025, is currently equivalent to £2.31
per share (originally £2.00 per share).
This will increase to approximately
£2.50 per share following the
proposed capital reduction.
08
On average, every
new home built by
Berkeley in the last five years
has generated £306,000
of value to the state through
taxation and contributions
to the community.
Communities
£2.0bn
Including over £0.2 billion in 2020/21.
During the last five years, Berkeley
has contributed £1.4 billion in affordable
housing subsidies and committed to
additional payments of £0.6 billion to
help pay for a wide range of facilities
and services for local communities.
Jobs
28,000
Berkeley has supported, on average,
28,000 UK jobs per annum directly
and indirectly through its supply
chain over the five year period.
Prince of Wales Drive, Battersea
09
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements PORTFOLIO OVERVIEW
OUR
PORTFOLIO
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.
Berkeley has 29 long-term regeneration sites. Berkeley
is unique in having built up the expertise, experience and
financial strength to successfully manage the complex
planning, remediation, infrastructure, construction and
social challenges involved in these long-term projects.
Returning brownfield sites to sustainable community
use is vital to meeting local housing needs, energises
local economies and relieves pressure on greenfield land.
64
Sites under
construction
32
Future sites
96
Total sites in
land holdings
29
Long-term
regeneration sites
88
Brownfield sites
Key
Under construction
Future sites
Long-term regeneration sites
Future sites
1 Bethnal Green
2 Borough Triangle*
3 Bow Common
4 Chambers Wharf, Southwark
5 Fulham
6 Lea Bridge
7 Malt Street, Southwark
8 Mitcham*
9 Paddington Green*
10 Plumstead, West Thamesmead*
11 Romford*
12 Stratford Gas Works*
13 Sutton*
14 Syon Lane, Brentford
London
Under construction
1 250 City Road, Islington
2 9 Millbank, Westminster
3 Battersea Reach
4 Beaufort Park, Hendon
5 Camden Goods Yard
6 Chelsea Creek
7 Clarendon, Haringey
8 Dickens Yard, Ealing
9 Filmworks, Ealing
10 Fulham Reach
11 Grand Union Place, Brent
12 Kensington Row and
Royal Warwick Square
13 Kidbrooke Village, Greenwich
14 King's Road Park, Fulham
15 London Dock, Wapping
16 One Blackfriars, Southwark
17 Oval Village, Vauxhall
18 Poplar Riverside, Poplar
19 Prince of Wales Drive, Battersea
20 Royal Arsenal Riverside, Woolwich
21 Royal Exchange, Kingston
22 Silk Park, Barnet
23 South Quay Plaza, Docklands
24 Sovereign Court, Hammersmith
25 The Dumont, Albert Embankment
26 The Green Quarter, Ealing
27 Trent Park, Enfield
28 TwelveTrees Park, Newham
29 West End Gate, Paddington
30 White City Living
31 Wimbledon Hill Park
32 Woodberry Down, Finsbury Park
* New sites in the year
10
Key
Under construction
Future sites
Long-term regeneration sites
Future sites
1 Ascot
2 Bath
3 Bracknell*
4 Brighton Gas Works
5 Effingham
6 Farnham Royal
7 Fidelity, Oakhill House
8 Frimley Green
9 Glasswater Locks, Birmingham
10 Hemel Hempstead
11 Hertford
12 Hillsbrow, Redhill*
13 Reading
14 Sevenoaks
15 The Eight Gardens, Watford
16 Swan's Landing,
Stratford-Upon-Avon
17 Wallingford*
18 Worthing Gas Works
Out of London
Under construction
1 Abbey Barn Park, High Wycombe
2 Barleycroft, Rudgwick
3 Bersted Park
4 Broadacres, Southwater
5 Brompton Gardens, Ascot
6 Courtyard Gardens, Oxted
7 Cranbrook
8 Edenbrook Village, Fleet
9 Eden Grove, Staines
10 Farnham
11 Foal Hurst Green, Paddock Wood
12 Green Park Village, Reading
13 Hartland Village, Fleet
14 Hareshill, Fleet
15 Highcroft, Wallingford
16 Highwood Village, Horsham
17 Holborough Lakes
18 Hollyfields, Hawkenbury
19 Horlicks Quarter, Slough
20 Huntley Wharf, Reading
21 Knights Quarter, Winchester
22 Leighwood Fields, Cranleigh
23 Lumina, Camberley
24 Princes Chase, Leatherhead
25 Quinton Court, Sevenoaks
26 Snow Hill Wharf, Birmingham
27 Sunningdale Park
28 Taplow Riverside
29 The Arches, Watford
30 The Paperyard, Horsham
31 The Waterside, Royal Worcester
32 Woodhurst Park, Warfield
* New sites in the year
Land holdings as at 30 April 2021
Total Group
100% owned
Joint ventures
Sites
Plots – owned
Plots – contracted
Plots – total
96
52,080
11,190
63,270
71
41,595
3,480
45,075
25
10,485
7,710
18,195
11
214105322112281867118131192527432720132315116251719331101426243089262912141916213110111385147926312134162304181071118251724201214GloucestershireLondonWiltshireHampshireWest SussexSurreyEast SussexKentEssexWarwickshireWestMidlandsCambridgeshireNorthamtonshireBedfordshireHertfordshireBuckinghamshireWorcestershireSomersetBerkshireOxfordshire152916125983227233226281517Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements MARKET OVERVIEW
BERKELEY’S
CORE MARKET
The housing market is cyclical in nature and is a leading
indicator of the health of the economy. Berkeley is
experienced operating in this environment and our unique
business model enables us to successfully deliver homes
throughout the whole economic cycle.
The housing market has weathered
the significant economic effects of the
COVID-19 pandemic, as well as Britain’s
concurrent exit from the European
Union, better than initially anticipated.
Government support for both the UK
economy and the housing market in
the form of the temporary Stamp Duty
Land Tax (SDLT) holiday and the
extension of Help to Buy deadlines
helped to stabilise the market and
demonstrated the Government’s
commitment to the new build sector.
The current heightened economic
uncertainties should recede as Britain
emerges from the pandemic, and
our future relationship with the EU
gains greater clarity. Crucially, the
fundamentals of the housing sector and
Berkeley’s core markets remain strong:
— London and the South East of
England remain undersupplied;
— interest rates remain at historically
low levels;
— mortgage availability is strong
with lenders reintroducing higher
loan-to-value products and
Government policy remaining
supportive of mortgage lending; and
— affordability levels remain within
historical parameters for those
with the requisite deposit.
London and the South East
is under supplied
The Government continues to target
the delivery of 300,000 homes per
year, with this commitment reiterated
in its December 2019 election
manifesto. The number of new homes
completed annually increased to
244,000 in 2019/20(1), which is the
highest level seen in nearly 40 years(2)
but was still 56,000 short of the
Government’s commitment.
According to the Government’s
assessment of housing need(3), all
of this undersupply is within London
and the South East:
— London’s housing need is now
94,000 per year. Over the last three
years an average of 37,000 per year
was delivered, an annual shortfall
of 57,000 homes.
— The housing need across the Home
Counties(6) is now 69,000 per year.
Over the last three years an average
of 53,000 per year was delivered,
an annual shortfall of 16,000 homes.
Housing supply shortfall in London and South East
Net additional dwellings (2019/20)
Housing Target (MHCLG)
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
East
England
East
Midlands
London
North
East
North
West
South
East
South
West
West
Midlands
Yorkshire
and the
Humber
Sources: MHCLG(1,3)
12
In the short-term this undersupply
looks set to worsen. While current
completions in London have reached
their highest annual level at 42,000
net additional dwellings(1), this is
unlikely to be sustainable with new
starts falling to less than 15,000 per
year for the last two years(4). This will
constrain future new build supply.
In the medium to long-term the supply
constraint in London in particular
looks set to continue. The recently
adopted London Plan has set a target
for housing delivery of 52,000 based
on London’s urban capacity to deliver
homes. Even if this target were
reached, this would still represent
a shortfall of 42,000 homes or around
45% relative to London’s assessed
housing need every year.
Looking at the national picture, annual
new build starts peaked at the end of
2018 at around 170,000(5), just over
half the Government target. Starts are
currently around 130,000, with activity
in 2020 being materially impacted by
the pandemic, but a declining trend
had already emerged during 2019.
Housing market interventions
and trends
Over recent years, well intentioned
national housing policy interventions
have disproportionately impacted both
supply and demand in London and the
South East. These changes include:
— introduction of the Community
Infrastructure Levy (CIL) in 2010;
— changes to the SDLT regime as well
as rate increases starting in 2014;
— a 3% SDLT levy for additional
properties in April 2016;
— the elimination of mortgage interest
relief for buy to let investors by
April 2020;
— a 2% surcharge for overseas
purchasers from April 2021;
— an increase in corporation tax rates
from 19% to 25% from April 2023;
— the proposed introduction in the
near future of a new Residential
Property Developer Tax; and
— a new 'Gateway 2' levy applicable
to all future high rise development
permissions.
At the same time, the Help to Buy
scheme has assisted a large number
of first time buyers onto the housing
ladder, nationally supporting around
40% of new build transactions,
although this has been less relevant
in London. This level of support is
expected to reduce, with restricted
eligibility criteria of the new scheme
for the two years to March 2023.
The net result of these interventions
is that transaction volumes have never
returned to the levels seen prior to the
Global Financial Crisis(6). After an initial
recovery after the crisis, changes to
the SDLT regime and rate increases
in December 2014 have meant the
market stabilised at a materially lower
number of transactions.
The introduction of the 3% SDLT levy
on additional property purchases
initiated a downward trend in
transaction volumes, exacerbated
in London, which has a higher than
average proportion of rental properties.
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.
An increase in activity in the initial
months of 2021 illustrates the positive
impact the SDLT holiday has in
stimulating demand, whilst also
highlighting the downward pressure
SDLT places on transactions under
normal market conditions. It also shows
the pent up demand that has built up
not only over the last year, but
systemically over a number of years.
Research on the latest market data is
identifying positive emerging trends,
which indicate an increase in underlying
demand for London expected to
continue as people begin to return to
more normal working patterns and
international travel restrictions ease.
Setting the conditions for growth
Historically the construction industry
has often led the country out of
recessions and the Government now
has a unique opportunity to engage
and focus upon the homebuilder
sector, raising standards and
Transaction volumes in London and England
1,500,000
1,250,000
1,000,000
)
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
750,000
500,000
250,000
0
3% SDLT
levy imposed
England
England (excl. London)
London (RHS)
300,000
250,000
200,000
150,000
100,000
50,000
0
2006
Q4
2007
Q4
2008
Q4
2009
Q4
2010
Q4
2011
Q4
2012
Q4
2013
Q4
2014
Q4
2015
Q4
2016
Q4
2017
Q4
2018
Q4
2019
Q4
2020
Q4
Source: Land Registry
Falling new starts in London
)
s
h
t
n
o
m
2
1
g
n
i
l
l
o
R
(
s
t
r
a
t
S
d
n
a
g
n
E
l
200,000
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
England starts
England starts (excl. London)
London starts (RHS)
+14%
50,000
45,000
40,000
35,000
30,000
-18%
25,000
20,000
-53%
+9%
15,000
10,000
5,000
0
3% levy
announced
2007
Q4
2008
Q4
2009
Q4
2010
Q4
2011
Q4
2012
Q4
2013
Q4
2014
Q4
2015
Q4
2016
Q4
2017
Q4
2018
Q4
2019
Q4
2020
Q4
Source: MHCLG(4)
)
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
)
s
h
t
n
o
m
2
1
g
n
i
l
l
o
R
(
s
t
r
a
t
S
n
o
d
n
o
L
embracing sustainable placemaking.
The following interventions would
help drive the revival of the sector,
deliver much needed housing and
create the foundations for a wider
economic recovery:
— Set a proportionate approach to
SDLT to support activity in the
market, permanently cutting SDLT
rates at all levels. Although some
revenue will be lost to the Treasury
from reduced SDLT rates, increased
economic activity that results from
the building of new homes would
more than offset this.
— Increase the amount of direct
Government investment in
affordable housing. The only time
the UK has built more than 300,000
homes per year was in the 1960s
when there was significant
Government intervention.
— Bring more marginal sites into
production with more ambitious
grants for affordable homes
and infrastructure.
— Provide visibility of any Government
support beyond the new Help to Buy
scheme to assist with future planning
for home ownership aspirations.
— Offer longer periods for mortgages
to support owner-occupier activity
at an earlier stage in the new build
sales cycle.
— Review of the planning tariffs
(affordable housing requirements,
Section 106 contributions and CIL)
for complex, long-term
developments to reflect the
uncertain environment, particularly
in light of the proposed increases
in developer taxation.
— Review of the planning system to
ensure it suitably addresses and
minimises delays as a result of
the emergence of Future Homes
Standard and modern methods
of construction requirements.
Individual home buyers, investors, and
developers like Berkeley must all have
the confidence and ability to invest in
the industry, support wider economic
activity, increase social mobility and
better match housing supply with
need across all tenures.
Sources: (1) MHCLG Live Table 118;
(2) MHCLG Live Table 244; (3) MHCLG
Indicative Local Housing Need (December
2020); (4) MHCLG Live Table 253a;
(5) Land Registry; (6) Essex, Hampshire,
Hertfordshire, Kent, Surrey, Sussex and
Thames Valley
13
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
WHITE CITY
LIVING
HAMMERSMITH & FULHAM
14
11 acre
2,370
50%
90,000 sqft
brownfield warehousing site
mixed-tenure homes
public open space
commercial and community space
The first phase of White City Living was
completed during 2020/21, with phases
two and three well underway.
The former warehousing site has become a well connected
neighbourhood, with new routes through a Victorian railway
viaduct leading into the neighbouring Westfield Shopping
Centre and new pedestrian decks and bridges built over the
Central Line to create the main entrance from Wood Lane.
This growing community is set around five acres
of biodiverse parkland, public squares, waterways and
a series of restored railway arches which will be brought
to life as cafés, restaurants and shops.
15
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements CHAIRMAN’S STATEMENT
Emerging from the pandemic in a very strong financial position,
Berkeley is now preparing to return the first £230 million
of surplus capital to shareholders this September, subject to
approval by shareholders at the Annual General Meeting of
the Company in September 2021. The remaining £225 million
of surplus capital is likely to be allocated to incremental land
investment over the next two years.
This year has also seen the launch of Our Vision 2030:
Transforming Tomorrow. This is of fundamental importance
to Berkeley given our unique role in transforming large-scale
brownfield sites into wonderful places to live. Our Vision 2030
links together our purpose, values and sustainable business
model through ten strategic priority areas including customers,
communities, nature, climate action, employee experience and
modernising production. I believe this will continue to distinguish
Berkeley from other developers through both the scope of its
operations and the scale of its ambition to create a truly
sustainable future for customers and communities.
It is with great sadness that June 2020 saw the sudden passing
of Berkeley’s co-founder and former Chairman, Tony Pidgley
CBE. I had the privilege of knowing Tony since before he
took Berkeley to the public market in 1984. He is of course
irreplaceable, but his drive, ambition and vision is deeply
embedded in the Berkeley of today. Tony was always looking
to the future and, in the years before his passing, he had the
wisdom to put in place strong succession within the Executive
team. This exceptional team, led by Rob Perrins, has enabled
the Company to respond to the challenges over the last year
so resiliently. The strength and cohesion of the Board has also
provided the foundation over the past year to allow for smooth
transition as four new Non-Executives have been appointed,
ensuring the Board, as a whole, continues to represent a diverse
and inclusive team with the requisite balance of skills, expertise
and experience that is closely aligned to the Berkeley Group
purpose and values.
The Ven. Elizabeth Adekunle and William Jackson joined the
Board in January 2021. Sarah Sands joined the Board in April
2021 and, following the year-end, the Board will be further
strengthened by the appointment of Andy Kemp in July 2021.
2021 also saw Baroness Fleet, Veronica Wadley stepping down
as a Non-Executive Director after 9 years of service. Adrian Li
and Peter Vernon will be stepping down as Non-Executive
Directors at the 2021 Annual General Meeting.
I would like to take this opportunity to formally welcome the
four new Non-Executive Directors to the Board and to thank
Veronica, Adrian and Peter for their service and in particular
their support over the past year. The transition process, which
will include the identification of the Company's next Chairman,
will continue over the coming year. I look forward to sharing
further details in due course, as the Board looks to conclude
this process in 2022.
I am grateful to the Board and Senior Management for their
support and guidance during this extraordinary year and to
all of Berkeley’s people who have shown such dedication and
professionalism in delivering such a strong performance, whilst
at the same time prioritising the health, safety and wellbeing
of all fellow staff and stakeholders.
I am very proud to be able to present such a strong set
of results and I commend the strength and resilience of
the Berkeley business and its people in such challenging
circumstances. I am confident that Berkeley is in an excellent
position to be able to emerge from the pandemic even stronger
in fulfilling its purpose to build quality homes, strengthen
communities and improve people’s lives.
Glyn Barker
Chairman
Glyn Barker
Chairman
This has been an extraordinary year, with the challenges
presented by COVID-19 impacting the daily lives of the nation,
the economy and businesses in an unprecedented and
profound way.
Looking back over the year, we have seen a remarkable
response to the pandemic; from the country’s frontline public
services, and from the scientists and businesses responsible
for creating the vaccines that provide an increasing sense of
hope and optimism for the future, and we owe them all a huge
debt of gratitude.
Each business faced its own set of challenges. Berkeley’s
purpose to create homes, strengthen communities and improve
lives carries a real responsibility as we are providing the most
basic of needs; a safe place to call home.
The pace, determination and skill with which our teams and
supply chain partners quickly adapted working practices and
sustained production throughout the year, to deliver on our
commitments to customers and communities, was remarkable
and I am very proud of our people for this. Berkeley was able
to achieve this while prioritising the health, safety and
wellbeing of all its people and stakeholders. This meant that
where others were closing operations Berkeley was able to
ensure the Covid-secure continuity of its sites and operations.
Berkeley’s financial strength has meant that the Group has not
needed to draw on any Government support nor furlough any
of its staff during the pandemic. Instead, we have been able
to utilise our strength to support our people, customers,
suppliers and local communities through a range of initiatives,
further details of which are set out opposite.
Berkeley has also differentiated itself through its financial
performance, delivering results for this year and last in
line with guidance at the start of the two-year period, before
the pandemic began. We have also maintained our shareholder
returns programme at the long-term pre-pandemic level of
£280 million per annum throughout.
OUR RESPONSE
TO COVID-19
Key features of our response
1.
Berkeley prioritised the health, safety and
wellbeing of our stakeholders at all times
2. We quickly developed and implemented
Covid Secure operations across sites, office
and sales venues
3.
4.
5.
We played a central role in developing
Government approved Site Operating Procedures
for the construction industry
Our agile working culture and high level of
in-house health & safety and site management
expertise were vital to our effective response
Our robust long-term operating model and
financial strength negated the need to furlough
our employees or request taxpayer support
6. We offered targeted support to vulnerable
employees, suppliers, charity partners and
local communities
Supporting our stakeholders
Our communities
— The Berkeley Foundation issued £660,000 in emergency
grants to our partner charities
— Donated PPE, including protective masks and gloves,
to front line public services
— Donated to local food banks and supported projects to
deliver food and household essentials to NHS staff and
other key workers
— Provided parking on our sites for emergency services
and NHS staff
— Supported vulnerable residents, ensuring they had the
supplies and help they need
— Assisted our commercial tenants to reach their
customers remotely
Our people
Supported our people by keeping the business moving,
not using the Furlough Scheme and implementing:
— Best practice Covid Secure working arrangements
across all work venues
— Immediately facilitated remote working using existing
IT systems
— Mental health and wellbeing support
Our customers
— Supported our customers by rapidly adapting operations
so we could continue to safely deliver their homes
— Enhanced communication to help individual customers
understand how changing Government guidance
affected them and to enable them to safely move home
— Expanded our digital sales offering to give customers
the confidence to make well-informed decisions and
progress their home purchase
Our suppliers
— Supporting our suppliers by paying all sub-contractor
invoices within 30 days throughout 2020/21, and
establishing accelerated payment plans where
appropriate
— Providing a COVID Secure workplace for all supply chain
operatives, including best practice socially distanced
welfare facilities
7.
8.
9.
10.
We maintained or underlying shareholder returns
in line with our commitments
Our shareholders
— Supporting our shareholders by maintaining our
Our customers saw the full value and benefits
of Berkeley’s well designed, high quality homes
and places throughout lockdown
Berkeley continued to invest in our long-term
operating model, bringing forward new
regeneration sites and increasing investment
in build work in progress
Berkeley is emerging from the pandemic in
a strong position to meet housing needs, help
drive the economic recovery and create value
for our stakeholders
underlying shareholder returns
Government and local authorities
— Supported Government to keep the economy moving,
building homes, maintaining jobs and not calling for
taxpayer support
— Played a lead role in translating public health advice into
robust industry-wide Site Operating Procedures as part
of the Construction Leadership Council
— Supported local government partners by continuing
to regenerate brownfield land and deliver their priorities
for local investment and renewal
16
17
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements CHIEF EXECUTIVE’S STATEMENT
Rob Perrins
Chief Executive
“These strong results reflect the consistent and
focused application of Berkeley’s uniquely long-
term business model, the quality of the homes and
places we create and our proficiency in adapting
to the challenges of the pandemic, sustaining
production throughout. In this environment, we
have delivered results for this year and last in line
with guidance at the start of the two year period
(which was before the pandemic), maintained our
annual £281 million shareholder return and added
ten new sites, with the capacity to deliver 6,650
new homes, to our land holdings.
We ended the year in great shape, with net cash of
£1.1 billion, cash due on forward sales of £1.7 billion
and the estimated future gross margin in our land
holdings increased to £6.9 billion, with a further
£0.6 billion in the near-term pipeline.
This is a very strong platform from which to continue
serving the most under supplied housing markets
in the country once the disruption caused by the
pandemic dissipates and London is again able
to flourish as a global destination for culture,
entertainment, education, recreation and business.
London is one of the world’s greatest open and
welcoming cities and it has been wonderful to
witness its vibrancy returning over recent weeks,
with the gradual lifting of restrictions. People thrive
on its energy, opportunity and unparalleled attributes.
Berkeley’s unrivalled land holdings now have
capacity to deliver over 63,000 homes, of
which over 70% are on our 29 large complex
regeneration sites. 23 of these are now in
production, underpinning the business plan for
the next ten years. The next three years will see
further investment in work in progress as more
of these sites approach the point of delivery
and we now have over 11,000 people working
on our construction sites, more than prior to the
pandemic, supporting Berkeley’s planned 50%
increase in delivery over the business plan period.
This progress made in the last year and strong cash
position provides Berkeley with a clear focus on
increasing investment in its Group and joint venture
land holdings, including further selective acquisitions.
It also provides the visibility for Berkeley to announce
a £450 million B share scheme, followed by a share
consolidation, comprising £228 million of surplus
capital and the remaining £222 million of scheduled
annual shareholder returns for 2021/22, subject to
approval by shareholders.”
Uniquely long-term operating model
Berkeley remains the only large UK homebuilder focused
on the regeneration of complex large-scale brownfield
projects at scale. We have built up the breadth of
expertise, financial strength and holistic placemaking
approach needed to transform these challenging sites into
welcoming and sustainable places over the long-term.
Throughout the year we have continued to invest in this
unique delivery model, adding ten new sites (6,650 new
homes) to our land holdings, advancing a further 7,000
homes in our immediate pipeline, securing four new major
planning permissions, increasing our investment in the
ongoing transformation of live projects and growing
our combined site and office workforce by over 12%
(over 1,500 net additional jobs) compared to pre-
pandemic levels.
As a result, Berkeley remains firmly on course to increase
its housing delivery by 50% by 2024/25 from 2018/19
levels, as previously set out, and is in a fantastic position
to drive the recovery and create the additional homes,
amenities, jobs and training opportunities local
communities need post COVID-19.
Holistic placemaking to create sustainable communities
Berkeley is now bringing forward 29 of the most complex
and challenging regeneration projects in the country,
including vast neglected spaces, which have fragmented
local communities and deterred investment. We passionately
believe that reviving sites like these is vital to reinvigorating
our town centres and high streets, and to supporting the
left behind communities who suffered most through the
pandemic. It takes many years of patient placemaking
to stitch these vast spaces, once cut off from their local
communities, back into the local fabric and to bring them
to life with the right mix of homes, public amenities, parks
and open spaces. This is inherently sustainable and Berkeley
is the only developer doing it at scale.
We are holistic long-term placemakers, which means
we work collaboratively with local communities to
design completely unique, welcoming and inclusive
neighbourhoods. For Berkeley, it means creating a place that
works beautifully at a human level. Somewhere welcoming,
friendly and safe, where people will really love to spend time
and feel part of the community. The process of placemaking
always starts with local consultation and engagement, and
we work very hard to seek out a diverse range of local
people to properly understand their views, ensuring our
plans complement and support their vision and goals.
We then continue working with the community, putting
in place community plans to invest in the neighbourhood’s
social and cultural strength. These plans involve a mix of
local events to get neighbours talking, and provide funding
and support for residents to set up local clubs, groups and
residents associations.
Our Vision 2030: Transforming Tomorrow
Berkeley is the country’s most ambitious and sustainable
homebuilder and we unveiled our new Our Vision 2030
strategy in the year, which sets a holistic approach for our
activities, while maximising our positive impacts on society,
the economy and the natural world. We intend to lead by
example, working with our local partners to transform our
sites and maximise the positive impacts for all stakeholders.
Our Vision 2030 sets ten strategic priorities for the coming
decade, including the next phase of our leading climate
action and nature recovery programmes, an expanded
approach to environmental net gain and continuing our
investment in a highly innovative model of precision
manufactured modular housing.
Driving ambitious carbon action
Tackling climate change has long been a priority for
Berkeley, and we successfully reduced the carbon impacts
of our sites, offices and sales venues by 73% between 2016
and 2019 through adopting more efficient practices and
procuring 100% renewable electricity.
We were the first homebuilder to deliver carbon neutral
direct operations through voluntarily offsetting our
remaining emissions, which we have done for four
successive years, and we are the only UK homebuilder with
an A Rating for Climate Action and Transparency from CDP.
We are now pushing the boundaries even further, having
become one of the first 350 companies in the world to
commit to limiting global warming to 1.5°C through adopting
ambitious, independently verified science-based greenhouse
gas reduction targets. This commits Berkeley to:
— reducing emissions from our sites, offices and sales
venues by a further 50% between 2019 and 2030 on
an absolute basis (on top of our standing reductions
which already includes the procurement of renewable
electricity for all UK consumption); and
— reducing embodied carbon within our supply chain and
the in-use emissions from our homes by 40% between
2019 and 2030 on an intensity basis.
These targets put Berkeley on a course to be a net zero
business by 2040.
AWARDS AND ACCREDITATIONS
Outstanding
Achievement
Award and Gold
Award for
customer
satisfaction.
Premier
Guarantee
Excellence
Awards
Developer
of the Year.
Sir David
Attenborough
Award for
Enhancing
Biodiversity.
Sustainable
Housebuilder
of the Year.
RoSPA Diamond
Award for an
“outstanding
corporate
contribution to
raising safety
standards”.
Awarded an
A rating for
Climate Action
and Transparency,
which is the
highest score
possible.
18
19
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements We have since co-written, launched and adopted RoSPA’s
Safer by Design framework, which sets out best practice
housing design interventions to reduce the risk of
common domestic accidents like falls, which lead to 6,000
accidental deaths each year in the UK. We are now making
the case for Government to strengthen mandatory design
standards for stair design as part of their ongoing reforms
to building regulations, which can be achieved at no
additional cost.
Strategy and Shareholder Returns, including
Surplus Capital
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.
Large-scale brownfield regeneration takes longer and
is more complex and capital intensive than traditional
housebuilding sites. It typically involves uncertain timing
from any one or combination of planning, remediation,
clearing of planning conditions, utilities, CPOs, vacant
possession and complex infrastructure works. When
approached with great care and expertise it returns greater
value to stakeholders over the long-term. Berkeley now has
29 of these long-term regeneration sites in its land holdings.
Over this last 12 months, Berkeley has added ten new sites
to its land holdings, comprising some 6,650 homes, and
added a further 1,500 through re-planning existing sites,
increasing the estimated future gross profit in the land
holdings from £6.4 billion to £6.9 billion. In addition,
Berkeley has either acquired or advanced a number of
development opportunities that will come into the land
holdings over the business plan period. These represent
a further 7,000 homes and will see Berkeley achieve its
long-term target of increasing the estimated future gross
profit in its land holdings to £7.5 billion. Within this near-
term pipeline is a strategic land site in Milton Keynes, a retail
park in Kew and two regeneration sites in St William.
Due to the nature of the new and the pipeline sites, cash
spent on land has been only slightly higher than that used
in the delivery of new homes in the year. This is due to
a number of factors associated with these sites, including
timing of land payments, the extent of infrastructure and
remediation costs on these sites and the fact that some sit
within the St William joint venture.
Immediately prior to the pandemic, Berkeley had identified
£455 million of cash that was surplus to its ongoing
business plan requirements and that it planned to return
to shareholders via a B share scheme, followed by a share
consolidation. This surplus cash was generated over the
preceding three years as Berkeley delivered a number of
central London developments acquired and designed at
the end of the Global Financial Crisis.
With the onset of the pandemic, Berkeley obtained the
support of shareholders to defer this return of surplus capital
for up to two years to; firstly safeguard the business in the
immediate aftermath of the pandemic and, secondly to
ensure it had sufficient capital should significant incremental
opportunities arise to add to its land interests. The surplus
capital would therefore be utilised to acquire incremental
land or returned to shareholders as previously envisaged.
Beaufort Park, Barnet
CHIEF EXECUTIVE’S STATEMENT CONTINUED
Berkeley Modular, Northfleet
Leading nature’s recovery
We are proud to continue leading the development
industry in reversing biodiversity loss, which is the other
great environmental challenge of our time. We were the
first homebuilder to commit to delivering a measurable net
biodiversity gain on every new site and have since built up
a pipeline of over 40 projects, which together will create
over 480 acres of new or improved natural habitats; an
area the size of London’s Hyde Park.
Modernising production
Berkeley has continued to develop our unique modular
housing system, which is manufactured using highly
automated and digitally integrated production
technologies from the aerospace and automotive
sectors. This will represent a major step forward for the
homebuilding industry, enabling Berkeley to create a new
generation of precision-made homes at a quicker pace
to exacting standards.
This focus on biodiversity and delivering ambitious and
beautiful natural landscapes has been of great benefit to
the communities within and around our sites, particularly
during the pandemic.
The success of our programme led to the Government
mandating that net biodiversity gain will become
a national legal requirement for all developments,
which could become law by the end of the year. Our
first and most mature net biodiversity gain landscape,
at Kidbrooke Village, was awarded the 2020 Sir David
Attenborough Award for Enhancing Biodiversity by the
Landscape Institute.
We are now developing a more challenging approach,
which will deliver a further valuable ‘environmental net
gain’ on every project.
Other anticipated benefits include a reduced carbon
footprint at every stage of the product lifecycle, increased
productivity, eliminating material waste, improved safety
and complete golden thread digital record capture for
every module produced.
Our factory, located in Northfleet in Kent, will deliver up to
1,000 homes per year once up to full production, with each
module leaving the factory floor fully fitted and finished.
This additional manufacturing capacity will help overcome
the construction industry’s long-term skills and recruitment
challenges, which could otherwise constrain Berkeley’s
planned increase in housing completions. First production
is scheduled for later this year.
Championing safer homes and operations
In September, we were honoured to be only the second
company to ever receive the Diamond Award from The
Royal Society for the Prevention of Accidents (RoSPA),
in recognition for an "outstanding corporate contribution
to raising safety standards across the residential
building sector".
20
21
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements CHIEF EXECUTIVE’S STATEMENT CONTINUED
Prince of Wales Drive, Wandsworth
Following the progress made in the last twelve months,
Berkeley ends the year with significantly enhanced land
holdings and a strong cash position. From this point, and
given the current buoyancy in the land market, further new
sites will be added selectively with Berkeley’s strategic
focus on continuing to invest in its joint ventures and
unrivalled land holdings.
This provides Berkeley with the visibility to commit to
making the first half of the return of surplus capital through
shareholder returns by 30 September 2021, six months
ahead of the revised scheduled date.
The Company has already made £59 million of the
£281 million shareholder returns for the current year
through share buy-backs towards the end of last year and
proposes to combine the remaining £222 million with the
first half of the surplus capital return (£228 million) to
create a £450 million payment to shareholders
(approximately £3.70 per share).
Summary of Performance
Berkeley has delivered pre-tax profits of £518.1 million for
the year. This is from the sale of 2,825 homes (2020: 2,723)
at an average selling price of £770,000 (2020: £677,000),
reflecting the mix of properties sold in the year.
These are strong results. Over the last two financial years,
Berkeley has delivered just over £1.0 billion of pre-tax profits,
which is in line with guidance at the start of the two year
period. Furthermore, Berkeley has returned £334.1 million
to shareholders in the current financial year and, taking into
account returns in previous financial years, is currently
running £59 million ahead of the underlying shareholder
returns run-rate of £281 million per annum.
This demonstrates the resilience of Berkeley’s unique
long-term operating model, supported by its financial
strength with net cash of £1.1 billion, cash due on forward
sales of £1.7 billion and future gross profit in the land holdings
of £6.88 billion.
The Company further proposes that this is undertaken via
a B share scheme, followed by a share consolidation, with
the appropriate resolutions to be put to shareholders at
the Company’s Annual General Meeting on 3 September
2021. This would see the Company’s share capital reduce
by around 8% (based on current share price) from
121.6 million to approximately 112 million shares.
Our long-term guidance remains unchanged which is for
a 15% cumulative pre-tax ROE for the six years ending
30 April 2025, equating to an average annual pre-tax profit
of approximately £500 million, which we remain firmly on
track to deliver. Specifically for the next two financial years
we expect pre-tax profits to be at a similar level to the
current year.
Following this, the next scheduled shareholder return will
therefore be the £141 million in respect of the six months
ending 30 September 2022.
Taking account of commitments on its existing sites,
including those added in the year, and pipeline sites,
Berkeley anticipates a large part of the second half of the
surplus capital return will be allocated to land expenditure
on these and new sites.
The shareholder returns of £334 million in the current
financial year were delivered through share buy-backs of
4.4 million shares for £189 million (£42.76 per share average)
and dividends of £145 million. Since January 2017, when share
buy-backs were first introduced to the Shareholder Returns
Programme, Berkeley has acquired 19.0 million shares for
£703 million, at an average price of £36.99 per share and the
annual return of £281 million currently equates to £2.31 per
share; a 15.5% increase to the initial £2.00 per share.
Housing Market and Operating Environment
Sales
Berkeley has delivered a resilient sales performance in the
year. This reflects the enduring hallmarks of our long-term
developments, epitomised through our focus on community,
nature, connectivity and overall quality of place.
Outside London, Berkeley has seen good demand aided by
Government support for both the UK economy and the
housing market in the form of the temporary SDLT holiday,
which helped to stabilise the market following the initial
impact of the pandemic.
In London, transaction levels have inevitably been impacted
by the restrictions on travel and Berkeley’s selective
approach to market; deferring certain sales launches until
restrictions are lifted and focusing on our established
developments. However, enquiry levels in London are now
ahead of pre-pandemic levels, signalling the return of
confidence to the London market as we emerge from the
restrictions of the last 15 months.
Overall, as indicated in the March Trading Update, the value
of our private sales reservations was 20% lower than the
previous financial year. Sales prices remain firm and above
business plan levels and cancellation rates are at normal
levels. At its current level of sales, Berkeley is on target to
meet its business plan over the next two years.
Our cash due on forward sales is £1.71 billion, compared to
£1.86 billion a year ago, and provides a strong underpin to
delivery over the next three years. This represents the cash
due on exchanged sales contracts which will be collected
over the next three financial years and excludes secured
sales in our joint ventures and forward sales to housing
associations. Berkeley’s sales continue to be split broadly
evenly between owner-occupiers and investors, with
overseas customers continuing to see the long-term
benefits of the London market. Help to Buy reservations
accounted for a net 403 sales in the year.
London and South East housing market fundamentals
The fundamentals of Berkeley’s core markets in London
and the South East remain strong. Most prominent in
this assessment is the ongoing undersupply of housing.
According to the latest Government assessment
(MHCLG Indicative Local Housing Need (December 2020)),
London’s housing need is now 94,000 per year. Over
the last three years an average of 37,000 per year was
delivered, an annual shortfall of 57,000 homes. The
recently adopted London Plan has set a target for housing
delivery of 52,000 based on London’s urban capacity to
deliver homes. Even if this target were reached, this would
still represent a shortfall of 42,000 homes or around 45%
relative to London’s housing need every year. The housing
need across the Home Counties is now 69,000 per year.
Over the last three years an average of 53,000 per year
was delivered, an annual shortfall of 16,000 homes.
In the short-term the undersupply in London looks set to
worsen, despite current completions in the Capital having
reached their highest annual level at 42,000 net additional
dwellings (MHCLG live table 118). However, this is unlikely
to be sustainable with new starts falling to less than 15,000
per year for the last two years (MHCLG Live Table 253a),
thereby constraining future new build supply.
In addition, interest rates remain at historically low
levels and mortgage availability is strong with lenders
reintroducing higher loan-to-value products and
Government policy remaining supportive of mortgage
lending. Affordability levels remain within historical
parameters for those with the requisite deposit.
Land and planning
During the year, Berkeley has made good progress in
advancing its land holdings by the addition of a further
ten sites, comprising around 6,650 future homes, and
optimisation which has added a further 1,500 homes,
including market movements. Together these have
seen future plots in the land holdings rise to 63,270
(2020: 58,413) which comprise estimated future gross
profit of £6.9 billion (2020: £6.4 billion), including
Berkeley’s 50% share of its joint venture sites.
The six sites in the Berkeley business include, in London,
unconditional purchases at Borough Triangle in Southwark,
a site in Paddington adjacent to our West End Gate
development and a retail site in Sutton, alongside
a conditional long-term regeneration development at
Plumstead for 1,750 homes on which we have secured
planning consent in the year. Outside London we have
conditionally acquired a site in Wallingford, Oxfordshire
and unconditionally acquired a site in Redhill, Surrey.
St William has added a further four sites to its land
holdings, contracting sites, conditional upon planning
in Stratford, Bracknell, Mitcham and Romford.
As outlined in the Strategy Review section, Berkeley’s
focus will be on investing in its joint ventures and land
holdings to continue to bring its sites forward for delivery
with further new land added selectively given the current
buoyancy in the land market.
We have secured six new planning consents in the year.
These include four consents on long-term regeneration
developments; Malt Street in Southwark for 1,350 homes,
Silk Park, Barnet for 1,300 homes, Eight Gardens in
Watford for 1,200 homes and at Plumstead for 1,750
homes, alongside two other consents for a St Joseph site
at Stratford-Upon-Avon and a site at Hildenborough in
Kent. We have also obtained over 40 revisions to existing
consents as we continue to evolve our sites.
During the year, the Planning Reform Bill was presented
to Parliament. This proposes significant changes to the
planning system and will require careful implementation to
ensure it does not create a hiatus as local authorities and
other stakeholders transition between regimes. In respect
to the proposals for a new consolidated infrastructure levy,
Berkeley recognises this is appropriate for smaller sites,
but it does run the risk of impeding the delivery of large
regeneration projects, which each have unique challenges
that require locally negotiated solutions, with empowered
local stakeholders and councils at the table. We are
similarly concerned that the proposed introduction of
mandatory design codes, as part of the planning reforms,
will not be able to take into account the constraints and
opportunities presented by complex regeneration sites.
Berkeley has a strong planning position in its land holdings
with 89% of plots having a planning consent, which
includes outline consents covering all homes on long-term
regeneration developments.
22
23
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements CHIEF EXECUTIVE’S STATEMENT CONTINUED
TONY PIDGLEY CBE, 1947 – 2020
Construction
Berkeley is currently in an investment phase as it brings
forward into delivery its portfolio of large, complex
regeneration sites acquired since the Global Financial Crisis.
Six sites have been moved into production during the year,
including five long-term regeneration developments;
TwelveTrees Park, West Ham (3,800 homes), St William’s
Poplar Riverside (2,800 homes), Silk Park, Barnet (1,300),
Horlicks Quarter, Slough (1,300 homes) and Camden
Goods Yard (700 homes).
Berkeley now has 23 of its 29 long-term complex
regeneration developments in production. Over the next
three years, we are targeting net investment into the
balance sheet of around £700 million, split evenly between
land and work in progress, as we increase the delivery
of new homes by some 50% by the end of the business
plan period (2024/25), compared to pre-pandemic
levels (2018/19).
Following a period of stable build costs during 2020,
we have seen these rise to around 4% per annum since the
start of 2021. The increase reflects the cost of materials
with rising construction activity causing strong demand for
construction products, at a time when supply chains are
adjusting to the combined impact of the UK’s exit from the
EU and COVID-19. This has also precipitated a tightening
in material availability with lead times increasing for
certain products.
Berkeley’s stance to continue production activity
uninterrupted throughout 2020 strengthened our
relationships with subcontractors and manufacturers
and we continue to work with our supply chain partners
to manage the supply constraints and maintain our
production levels.
Berkeley is very supportive of the Government in its
determination both to ensure buildings are safe for
the people that live in them and to implement the
recommendations of Dame Judith Hackitt’s review of
building safety. The last year saw the introduction of the
Fire Safety Act and the Building Safety Bill, both of which
are intended to strengthen and improve different elements
of the building safety regime, so that confidence in tall
buildings can be properly and fully restored. As part of our
own drive for continuous improvement, we will ensure that
our procedures will be compliant with the new legislation
ahead of its anticipated implementation, and are well
advanced in this regard.
Berkeley adopted a leading role in the establishment
of the current EWS1 process to demonstrate the safety
of buildings over 18 metres and we continue to engage with
MHCLG and other stakeholders to identify a stable, holistic
and comprehensive long-term process that will allow the
safety of all buildings to be assessed, based upon science
and risk assessment. This will ensure the housing market
can operate efficiently, effectively and is fair for all.
The Berkeley Foundation
The positive long-term impacts of The Berkeley
Foundation came to the fore during the pandemic as
the charities and programmes it support provided vital
capacity to meet a sudden increase in needs among
vulnerable communities.
One fantastic example of this is Kitchen Social, our
partnership with the Mayor’s Fund for London, which has
built up a food distribution network over the last four years
targeting children at risk of food poverty during school
holidays. As the pandemic set in, Kitchen Social expanded
to supply more than 500 vulnerable households facing
real hardship.
The Foundation has awarded £660,000 in emergency
COVID-19 funding during the period to help charity
partners cope with a fall in funding, greater demands
on their services and complex operating restrictions.
The Foundation also maintained its existing funding
commitments, of over £2 million in the year, and activities
throughout the period and is delighted to have renewed its
partnership with Imperial College, which encourages young
people to develop STEM skills for the future, and expanded
its funding to the Change Foundation to support the
award-winning Street Elite programme, that helps
disadvantaged young people find pathways into
employment, education or training through sport.
Outlook
Berkeley is well placed to continue delivering for our
stakeholders as the economy continues to re-open,
following 15 months of unprecedented disruption from the
COVID-19 pandemic. Throughout this period Berkeley has
sustained production and continued investing in the future,
adding ten new sites to our land holdings and moving five
large complex regeneration sites, covering some 10,000
new homes, into production.
Berkeley remains committed to London. We fully recognise
the impact of COVID-19 and the important conjecture and
debate around the future of cities. However, we firmly
believe that this does not represent a permanent structural
shift that has the capacity to reverse urbanisation or
detract from the attraction of a global city such as London,
with all that it has to offer in terms of culture, entertainment,
education, recreation and business. It is a deeply under
supplied market and Berkeley’s unique approach to
placemaking with its focus on community, nature,
connectivity and overall quality of place will resonate
with customers even more as the country emerges from
the pandemic.
Berkeley has an ambitious plan for the future, underpinned
by its Vision 2030: Transforming Tomorrow strategic
priorities, and the position of strength with which it begins
the period. Achieving this transformative plan, including
its stretching targets for carbon reduction and increased
delivery of new homes, requires significant investment for
which it is essential to have the necessary conditions for
growth in place. We are therefore mindful that the level
of investment will be constrained by the coming increase
in Corporation Tax and the new Residential Property
Developer Tax. It is also important to a have stable
regulatory environment that allows business to innovate.
We are excited about a future where Berkeley will be at
the forefront of this transformation.
Rob Perrins
Chief Executive
Tony Pidgley CBE co-founded The Berkeley
Group in 1976 and led the business until his
sudden death in June 2020.
1
He grew the Company from a start-up to a highly
sustainable FTSE 100 business.
Tony had a lifelong passion for creating high quality homes
and places that strengthen the communities around them.
He constantly pushed the boundaries, drove up standards
and changed the industry for the better.
Tony’s vision, values and philosophy are deeply embedded
within Berkeley and continue to shape the way we work
and the homes and places we create.
2
In Tony’s words:
Good development is all about
people. It's about making life better,
creating beautiful homes and putting
the wellbeing of the whole community
at the heart of every plan.
6
7
1: Tony with Berkeley co-founder Jim Farrer. They broke the mould
by offering customers real choice, quality and a personal service.
2: Never happier than when on site.
3: Two of Tony's proudest moments came in 2008 and 2014, when
Berkeley won the Queen’s Award for Sustainable Development.
4: Tony was awarded a CBE in 2013 for 'services to the housing
sector and the community'.
5: The opening of Cator Park at Kidbrooke Village.
6 and 7: In the 1990s Tony shifted Berkeley’s focus to large-scale
urban regeneration projects, including Barnes Waterside and
Imperial Wharf.
4
3
5
24
25
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements OUR SUSTAINABLE BUSINESS MODEL
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 brands and the positive
contributions we make to society.
INPUTS FOR
VALUE CREATION
WHAT WE DO:
OUR UNIQUE
APPROACH
PRIORITISING
SUSTAINABILITY
THE LONG-TERM SUSTAINABLE
VALUE WE CREATE
Berkeley has a unique operating
model that is responsive to the
cyclical nature of the housing
market and focused on large-scale
developments where our
unique expertise and financial
strength can unlock long-term
social and economic capital for
our stakeholders.
Our core activities
— Identifying and acquiring land
— Designing and planning new
homes, places and communities
— Building new homes, places
and communities
— Marketing and customer service
— Placekeeping and stewardship
Link to how we characterise
our culture in Governance
see pages 106 to 114.
We are now the
only UK developer
undertaking major
brownfield regeneration
at scale in London and
the South East.
Industry-leading talent
Employees with expertise to deliver
large-scale, complex regeneration
developments.
Recognised and trusted brands
With autonomous, talented and
experienced teams who embrace
Berkeley’s core values in
their approach.
Strong relationships with partners
and key stakeholders
These include public and private
joint venture partners, land owners,
local authorities, customers
and communities.
Strong financial position
A strong Balance Sheet, net cash
and forward sales, plus rigorous
land investment appraisal process.
Commitment to customers
Putting customers at the heart
of every decision and commitment
to delivering world-class service.
Addressing climate change
Commitment to reducing
carbon emissions and having
a positive impact on nature and
the environment.
26
Prioritise long-term
brownfield regeneration
focusing our resources
on returning underused
sites to connect
communities.
Meet our science-based
targets
through a focus on
reducing our impacts
and working with our
supply chain.
Deliver carbon neutral
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.
CUSTOMERS
Satisfied customers
GOVERNMENT, REGULATORS
AND INDUSTRY
Delivering on our promises and working responsibly to
deliver quality homebuilding and sustainable placemaking
77.9
98.3%
£2.5bn
net promoter score
compared to an industry
average of just 42
(HBF, March 2021)
of customers would
recommend us to a friend
compared to an industry
average of 91% (HBF, March 2021)
contribution to UK GDP during the year, with
£13.8 billion contributed in the last five years
Read more on pages 37 and 58.
Read more on pages 9, 39, 59 and 62.
COMMUNITIES
Creating thriving developments where
people aspire to live and work
INVESTORS
Strong, sustainable risk-adjusted returns
for shareholders
>£200m
of subsidies provided to deliver affordable housing
and committed to wider community and infrastructure
benefits in the year
£281m
shareholder return in the
year, committed through
to 2025
£6.9bn
future gross margin in
the land holdings at
30 Apr 2021
Read more on pages 9, 39, 59 and 62.
Read more on pages 6 to 8.
EMPLOYEES
Prioritising health, safety and wellbeing as well
as increased knowledge and skills through strong
retention, training and development
SUPPLY CHAIN
Ensuring relationships are underpinned
by trust and partnership
2,705
1.24
29 days
employees at 30 April 2021 AIIR compared to an
taken on average to pay suppliers
industry average of 2.63
(HBF, October 2020)
Read more on pages 46 and 60.
Read more on pages 49 and 61.
ENVIRONMENT
Taking action on climate and making a measurable contribution to the natural environment
Net zero
100%
96%
carbon business
by 2040
renewable electricity for
UK activities since May 2017
construction waste
reused or recycled
Read more on page 64.
27
Strategic ReportCorporate GovernanceFinancial StatementsBerkeley Group 2021 Annual ReportBerkeley Group 2021 Annual Report KEY PERFORMANCE INDICATORS
Our key performance indicators (KPIs) are
aligned to the business strategy and are used
to actively monitor business performance.
FINANCIAL KPIs
NON-FINANCIAL KPIs
Profit before tax
Pre-tax return on equity
Net cash
Net Promoter Score
2021
2020
2019
2018
2017
518.1
503.7
2021
2020
2019
2018
2017
775.2
792.5
977.0
16.5
16.6
27.9
2021
2020
2019
2018
2017
285.5
41.9
41.3
1,128.2
1,138.9
975.0
687.3
2021
2020
2019
2018
2017
Annual Injury Incidence Rate
per 1,000 people
Direct apprentices
and training
77.9
78.8
73.5
73.9
70.8
2021
2020
2019
2018
2017
1.24
1.17
1.14
1.42
1.83
2021
2020
2019
2018
2017
6.5
9.3
8.7
10.3
10.4
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.
This provides a measure of the
financial strength of the Group.
Link to remuneration: page 127.
Link to remuneration: page 127.
Definition
Profit earned by the Company during
the year, including any finance income
and costs and share of results of joint
ventures, but before any tax expense.
Definition
This is measured by calculating profit
before tax as a percentage of the
average of opening and closing
shareholders’ funds. See page 196.
Definition
Cash and cash equivalents, less
total borrowings.
Link to strategy
Link to strategy
Link to strategy
Net asset value per share
Cash due on forward sales
Future gross margin
in land holdings
2021
2020
2019
2018
2017
26.12
24.72
23.05
19.38
15.11
2021
2020
2019
2018
2017
1,712
1,858
1,831
2,193
2,743
2021
2020
2019
2018
2017
6,884
6,417
6,247
6,003
6,378
This Balance Sheet measure reflects
the value of shareholders’ interests in
the net assets of the business.
This measures cash due from
customers under unconditional
contracts and reflects the strength
and financial stability of the business
from secured future sales.
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.
Definition
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. See page 195.
Definition
This measures cash still due from
customers at the relevant Balance
Sheet date during the next three years
under unconditional contracts for sale.
It excludes forward sales of affordable
housing and commercial properties
and forward sales within the Group’s
joint ventures.
Definition
This represents management’s
risk-adjusted assessment of the
potential gross profit for each of
the Group’s sites, including the
proportionate share of its joint
ventures, taking account of a wide
range of factors, including: current
sales and input prices; the economic
and political backdrop; the planning
regime; and other market factors;
all of which could have a significant
effect on the eventual outcome.
Link to strategy
Link to strategy
Link to strategy
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 42
(HBF, 2021) 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 construction industry average
of 3.66 (HSE, 2020).
This measure shows the proportion of
our employees who are an apprentice,
graduate or sponsored student. 135
employees have undertaken an
apprenticeship during the course
of the year.
Definition
Following their purchase, customers
register a score between 0-10; 9-10
being classified as promoters, 7-8 being
passive, and 0-6 being detractors. The
NPS is the percentage of promoters
less the percentage of detractors.
Definition
This is calculated by taking the
number of reportable injuries and
dangerous occurrences on our sites
throughout the year, multiplied by
1,000, divided by the average number
of people working across our sites in
the year.
Definition
Calculated as the average monthly
percentage of our direct workforce
who are apprentices, graduates or
sponsored students, in line with the
definition provided by The 5% Club.
Link to strategy
Link to strategy
Link to strategy
Greenhouse gas
emissions intensity
Affordable housing
and wider contributions
2021
2020
2019
2018
2017
204
270
0.0030
0.0031
0.0027
0.0027
0.0034
2021
2020
2019
2018
2017
Key
Customers
Quality
Employee
Experience
Modernised
Production
525
420
Communities
Future skills
Climate Action
Supply Chain
500
Nature
Shared value
This measure relates our annual
location-based greenhouse gas
emissions resulting from our direct
activities (Scope 1 and 2) to the floor
area legally completed in the year.
The figure is disclosed on an
operational reporting boundary.
This measures our contribution to
affordable housing subsidies and
wider community and infrastructure
benefits delivered or committed to
during the year. The value in any one
year is influenced by the number and
mix of homes delivered.
Definition
This is calculated by dividing the level
of greenhouse gas emissions on our
sites under construction by the floor
area legally completed in the year.
Definition
This is the total value of affordable
housing and wider community and
infrastructure benefits delivered or
committed to during the year.
Link to strategy
Link to strategy
28
29
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements TRADING AND FINANCIAL REVIEW
Trading performance
Revenue of £2,202.2 million in the year (2020: £1,920.4 million)
arose primarily from the sale of new homes in London and
the South East. This included £2,200.3 million of residential
revenue (2020: £1,883.7 million) and £1.9 million of
commercial revenue (2020: £36.7 million).
2,825 new homes (2020: 2,723) were sold across London
and the South East at an average selling price of £770,000
(2020: £677,000) reflecting the mix of developments and
varying stages thereon, particularly in London.
There were no significant commercial sales during the year.
In the comparative year, revenue of £36.7 million included
the sale of units at One Blackfriars, Goodman’s Fields and
Vista amongst others.
The gross margin percentage has decreased to 28.8%
(2020: 33.2%), reflecting the mix of properties sold in
the year, the operating environment over the last twelve
months and the Group’s investment in the future to
achieve Our Vision 2030 commitments. Overheads
of £133.0 million (2020: £167.7 million) decreased by
£34.7 million in the year. This reflects reduced LTIP charges
as well as operational efficiencies. Consequently, the
Group’s operating margin has decreased to 22.8% from
24.5% last year.
Berkeley’s share of the results of joint ventures is a profit
of £22.4 million (2020: £33.3 million). St William’s profits
arose primarily from completions at Prince Of Wales Drive
in Battersea and Clarendon in Hornsey, whilst St Edward’s
profits arose predominately from out of London sites at
Green Park Village in Reading and the first completions
at Hartland Village in Fleet and Highcroft in Wallingford.
Taxation
The Group has an overall tax charge of £95.4 million
for the year (2020: £93.6 million) and an effective tax
rate of 18.4% (2020: 18.6%). 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 2021)
£216.4m
Corporation tax
SDLT
PAYE
Employees’ NI
Employer’s NI
£94.7m
£21.3m
£61.1m
£12.6m
£26.7m
For the year ended 30 April 2021, the total tax contribution to the
UK Treasury was £216m; split between taxes borne by Berkeley of
£143m (corporation tax, employer's NIC and SDLT) and taxes borne
by our employees of £73m (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 9.
Income Statement
for the Year Ended
Revenue
Gross profit
Operating expenses
Operating profit
Net finance (costs)/income
Share of joint venture results
Profit before tax
Tax
Profit after tax
Earnings Per Share — Basic
Pre-Tax Return on Equity
30 April
2021
£’million
2,202.2
635.3
(133.0)
502.3
(6.6)
22.4
518.1
(95.4)
422.7
339.4p
16.5%
28.8%
6.0%
22.8%
18.4%
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
16.6%
33.2%
8.7%
24.5%
18.6%
Change
£’million
+281.8
-2.1
+34.7
+32.6
-7.3
-10.9
+14.4
+1.8
+12.6
+14.5p
-0.1%
Change
%
+14.7%
-0.3%
+20.7%
+6.9%
+2.8%
+3.1%
+4.4%
Abridged Cash Flow
for the Year Ended
Profit before tax
Increase in inventory
Increase in customer deposits
Other working capital movements
Net increase in working capital
Net (investment in)/receipts from joint ventures
Tax paid
Other movements
Cash inflow before share buy-backs and dividends
Shareholder returns — share buy-backs
Shareholder returns — dividends
(Decrease)/increase in net cash
Opening net cash
Closing net cash
(97.6)
7.1
13.3
30 April
2021
£’million
518.1
(77.2)
(19.9)
(90.1)
(7.5)
323.4
(188.6)
(145.5)
(10.7)
1,138.9
1,128.2
(440.2)
97.4
267.7
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
The Group has remained cash positive on a net basis
throughout the year. Net finance costs totalled £6.6 million
for the year (2020: £0.7 million net finance income) due
to facility fees, interest on drawn borrowings and imputed
interest on land creditors, which outweighed interest
income on cash deposits.
Pre-tax return on equity for the year is 16.5%, compared
to 16.6% for the comparative year. Basic earnings per share
has increased by 4.4% from 324.9 pence to 339.4 pence,
which takes into account the buy-back of 4.4 million shares
at a cost of £188.6 million under the Shareholder Returns
Programme.
Financial Position
Net assets increased over the year by £73.8 million,
or 2.4%, to £3,175.4 million (2020: £3,101.6 million).
This is after payment of £145.5 million of dividends and
£188.6 million of share buy-backs. This equates to a net
asset value per share of 2,612 pence, up 5.7% from 2,472
pence at 30 April 2020, given the share buy-backs
undertaken in the year.
Inventories have increased by £97.6 million over the
year from £3,554.9 million to £3,652.5 million at
30 April 2021. Inventories include £331.4 million of land
not under development (30 April 2020: £519.7 million),
£3,215.7 million of work in progress (30 April 2020:
£2,895.7 million) and £105.4 million of completed stock
(30 April 2020: £139.5 million).
The reduction in land not under development reflects the
movement of five significant sites into production during
the year. This outweighed the impact of new sites acquired
unconditionally and previously conditional sites which
completed, represented by cash and new land creditors.
The sites that moved into production, coupled with further
investment in build on a number of forward sold London
developments, has led to the increase in work in progress
inventory in the year. Completed stock is spread across
a number of sites and has seen a reduction since the
previous year-end.
Trade and other payables, including lease liabilities,
are £1,948.7 million at 30 April 2021 (30 April 2020:
£1,934.3 million). These include £790.6 million of on
account contract receipts from customers (30 April
2020: £783.5 million) and land creditors of £388.2 million
(30 April 2020: £372.7 million). Of the total £388.2 million
land creditor balance, £57.3 million is short-term and
£330.9 million is spread over future financial years.
Provisions of £128.1 million (30 April 2020: £114.9 million)
include post-completion development obligations and
other provisions.
The Group ended the year with net cash of £1,128.2 million
(30 April 2020: £1,138.9 million) which consists of cash
holdings of £1,428.2 million, net of £300 million of term
debt drawn under the Group’s banking facilities. During the
year Berkeley repaid the £200 million of its £450 million
revolving credit facility, which was drawn in March 2020,
and the full amount of this facility is now available.
This is a decrease in net cash of £10.7 million during the
year (2020: net increase of £163.9 million) as a result
of £419.3 million of cash generated from operations
(2020: £470.5 million) and a net outflow of £77.2 million
in working capital (2020: £75.1 million), before tax and
other net cash outflows of £18.7 million (2020: net
inflows £48.8 million), share buy-backs of £188.6 million
(2020: £130.5 million) and dividends of £145.5 million
(2020: £149.8 million).
Banking
The Group has banking facilities which total £750 million,
currently comprising a drawn £300 million term loan,
and a £450 million undrawn revolving credit facility. The
Group has clarity of financing with the facilities in place
to November 2023. The Group’s cash holdings are placed
on deposit with its relationship banks.
30
31
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
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
30 April
2021
£’million
Change
£’million
281.7
106.5
388.2
3,652.5
83.3
(790.6)
(1,158.1)
(128.1)
2,047.2
1,128.2
3,175.4
2,612p
+19.9
-15.3
+4.6
+97.6
+9.9
-7.1
-7.3
-13.2
+84.5
-10.7
+73.8
+140p
30 April
2020
£’million
261.8
121.8
383.6
3,554.9
73.4
(783.5)
(1,150.8)
(114.9)
1,962.7
1,138.9
3,101.6
2,472p
Joint ventures
Investments accounted for using the equity method
have increased by £19.9 million from £261.8 million to
£281.7 million at 30 April 2021. Berkeley’s joint ventures
include St Edward, a joint venture with M&G, and St William,
a joint venture with National Grid plc. The increase in joint
venture investments during the year reflects Berkeley’s
share of undistributed joint venture profits of £22.4 million
and net receipts from joint ventures of £2.5 million.
In St Edward, 184 homes were completed in the year at an
average selling price of £696,000 (2020: 64 at £768,000).
The majority of completions occurred at Green Park Village,
Royal Warwick Square and Hartland Village.
In total, 5,139 plots (30 April 2020: 5,310 plots) in Berkeley’s
land holdings relate to six St Edward developments, three
in London (Westminster, Kensington and Brentford) and
three outside the Capital (Reading, Fleet, and Wallingford).
All of the sites are in production apart from Brentford which
is contracted on a subject to planning basis and is part of
the Group’s 29 long-term regeneration developments.
In St William, 245 homes were completed in the year at an
average selling price of £667,000 (2020: 371 at £716,000).
The majority of completions were at Prince Of Wales Drive,
Battersea and Clarendon, Hornsey. Three small
developments were completed during the year; Fairwood
Place, Borehamwood, Elmswater, Rickmansworth and
Cottonworks, Highbury.
St William has committed banking facilities of £360 million
through to March 2024, with one remaining option over an
additional year. Borrowings under the facility totalled
£160 million at 30 April 2021.
In total, 13,056 plots (30 April 2020: 10,945 plots) in
Berkeley’s land holdings relate to 19 ongoing St William
developments which are contracted in the joint venture.
11 of these sites are included in Berkeley’s conditional land
holdings, St William having contracted a further four new
sites in the year. Berkeley continues to work closely with
National Grid to identify further sites from across its
portfolio to bring through into the joint venture.
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%
32
30 April
2021
52,080
11,190
63,270
Change
+1,522
+3,335
+4,857
30 April
2020
50,558
7,855
58,413
£25.5bn
+£1.8bn
£23.7bn
£472k
£42k
10.5%
£6,884m
27.0%
-£1k
-£3k
-0.5%
£473k
£45k
11.0%
+£467m
£6,417m
-0.1%
27.1%
Land
Berkeley’s land holdings comprise 63,270 plots at 30 April
2021 (30 April 2020: 58,413 plots), including joint ventures.
Of these land holdings, 52,080 plots (30 April 2020: 50,558)
are on 80 sites that are owned and included on the balance
sheet of the Group or its joint ventures and 11,190 plots
(30 April 2020: 7,855) are on 16 contracted sites which
either do not yet have a planning consent or have another
conditional element such as vacant possession. The Group
expects a number of development opportunities to come
into the land holdings over the business plan period from
its near-term pipeline which represent a further 7,000
homes and also holds a pipeline of long-term options for
in excess of 5,000 plots.
The plots in the land holdings at 30 April 2021 have an
estimated future gross profit of £6.9 billion (30 April
2020: £6.4 billion), which includes the Group’s 50% share
of the anticipated profit on any joint venture development.
The increase in the period is due to a combination of ten
new sites added, new or revised planning consents and
market movements, which has more than offset the gross
profit taken through the Income Statement.
Of Berkeley’s 80 owned sites, 64 sites (plots: 45,277)
have an implementable planning consent and are in
construction. A further ten sites (plots: 3,615) 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 six sites (plots:
3,188) which it owns unconditionally that do not have
a planning consent and includes four sites acquired in the
year at Borough Triangle, Paddington Green, Sutton and
in Redhill.
Of the 16 contracted sites, two sites have a planning
consent and a further five have achieved a resolution
to grant consent but remain subject to section 106
agreements. Given the conditional 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
The Strategic Report on pages 4 to 95 was approved
by the Board and signed on its behalf by:
Rob Perrins
Chief Executive
23 June 2021
The Dumont, Albert Embankment
33
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements OUR VISION: CELEBRATING THE SUCCESS OF THE LAST DECADE
Berkeley has always been driven by a clear
purpose, with a unique culture and strong
values that shape the way we work.
Building on these foundations, in 2010
we created a long-term strategy to guide
our business and we called it Our Vision.
Over the decade it pushed us forward and helped us lead
the industry in important areas like customer satisfaction,
tackling biodiversity loss, taking climate action and
embracing advanced manufacturing.
As we introduce Our Vision 2030 – an ambitious new
strategy for our business – it is important to recognise
how much we achieved under the original Our Vision.
We have embedded
lessons learnt over the
last ten years and are
proud of the progress
we have made.
Here are some of the
key highlights:
Nature
In 2016 we became the
first homebuilder to
commit to measurably
increasing biodiversity
on every new site we
develop. By 2020, we had
committed to enhancing
nature at 35 sites across
an area larger than
London's Hyde Park.
Climate action
We were the first
homebuilder to become
carbon neutral in our
business operations from
May 2017 and also led the
way in creating resilient
homes that can operate
at low or zero carbon in
the future.
Building communities
We built more than
37,800 homes across
180 communities. We
developed and applied
our framework for
building strong
communities and
began to calculate
value to society.
Queen’s Award
We won the Queen’s
Award for Sustainable
Development in 2014
for the second time,
recognising our
continuous achievement
in sustainability. This is
the UK’s highest accolade
for business success.
Net Promoter Score
Our Net Promoter Score,
an indicator of our
customers’ satisfaction
with our product and the
home buying experience
overall, increased from 62
to more than 70 in 2020,
compared to an industry
average of just 39.
Skills and training
On average 300
apprentices worked on
our sites each month and
we increased the number
of directly employed
apprentices to 100.
We introduced
Apprentice Awards in
2016 to celebrate the
individuals, supply
chain partners and
our own champions.
Customer connectivity
We were the first
developer to commit to
Fibre Connectivity and
have worked with our
partners since 2018 to
ensure all new homes are
fibre enabled and ready
for the digital future.
Safety and wellbeing
Our industry-leading
Annual Injury Incidence
Rate (AIIR) decreased
significantly over the
decade to 1.17, which is
testament to the focus of
every construction site and
management team. Every
part of the business
developed a wellbeing
programme and we
trained 220 mental
health first aiders.
34
The Berkeley Foundation
We launched the
Berkeley Foundation,
an independent charity,
in 2011 to help people
overcome barriers,
improve their lives and
build a fairer society. With
Berkeley employees and
our partners we helped
reach over 26,000 people.
Innovation and advanced
manufacture
We delivered the
patented Urban House
type in 2017. We
championed the
modernisation of our
sector with the launch of
a new business – Berkeley
Modular – and developed
an advanced manufacturing
facility to create a new
generation of beautifully
designed and precisely
made homes.
Considerate construction
Our site teams won more
than 260 Considerate
Constructors Scheme
awards, including Most
Considerate Site in the UK
twice. We are a long-
standing Partner of the
Considerate Constructors
Scheme (CCS) and our
build teams work hard
to reduce impact on our
neighbours’ daily lives.
TRANSFORMING
TOMORROW:
INTRODUCING
OUR VISION 2O3O
Our Vision 2030 is our new ambitious
strategy for the business. It centres on
ten strategic priorities that we will focus
on for the coming decade, helping to
drive our continued success, whilst
setting us apart and maximising
the positive impact we make.
The Green Quarter, Ealing
Berkeley Group 2021 Annual Report
35
Berkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements OUR VISION 2030:
TRANSFORMING TOMORROW
The ten strategic priorities are shown in the
diagram below and on the pages that follow.
Each priority includes a long-term goal and
is supported by an underlying action plan
with short, medium and long-term targets
and a new set of core KPIs which we
will use to measure outcomes and impacts.
It is an integrated and holistic strategy,
so each priority supports the others and
makes a valuable contribution to achieving
our vision.
Our vision is to be
a world-class business,
trusted to transform the most
challenging sites into exceptional
places and to maximise our
positive impact on society,
the economy and the
natural world.
Places that stand the test of time
WHAT WE CREATE
Exceptional people and resources
HOW WE WORK
CUSTOMERS
Put our customers at the heart of
our decisions and provide an industry
leading home buying experience.
Read more on page 37.
QUALITY
Lead the industry in producing
high quality, safe homes for all.
Read more on page 38.
COMMUNITIES
Transform underused land into
unique, well connected and
welcoming places where
people and communities can
thrive for the long-term.
Read more on page 39.
CLIMATE ACTION
Play an active role in tackling
the global climate emergency by
creating low carbon, resilient homes.
Read more on page 40.
NATURE
Create a net biodiversity gain and make
a measurable contribution to the natural
environment on every development.
Read more on page 41.
36
A T E
E
R
C
E
W
T
A
1
PRIORITIES
H
W
H
O
W
W
E
W
O
RK
EMPLOYEE EXPERIENCE
Create a positive working environment
for our people; one that fosters respect,
support, wellbeing, safety and inclusivity.
Read more on page 46.
MODERNISED
PRODUCTION
Harness advanced manufacturing
and digital technology to build
more homes and to achieve higher
standards of quality, safety
and sustainability.
Read more on page 47.
FUTURE SKILLS
Equip our people with the
skills they need both now and
for the future, enhancing
social mobility and inspiring
new talent to join the industry.
Read more on page 48.
SUPPLY CHAIN
Build a responsible and constructive
supply chain; one that is productive,
practical and profitable, sustainable,
ethical and dependable.
Read more on page 49.
SHARED VALUE
Allocate capital to deliver sustainable returns
to our shareholders whilst creating value for
our other stakeholders including through
the work of the Berkeley Foundation.
Read more on page 50.
OUR VISION 2030: TEN STRATEGIC PRIORITIES
WHAT WE CREATE
CUSTOMERS:
Our goal is to put our customers at the
heart of our decisions and provide an
industry leading home buying experience.
Why is this a priority?
Maintaining the trust, loyalty and advocacy of our
customers is fundamental to our business model and
sets Berkeley apart from other homebuilding brands.
Our approach
We strive to understand and delight each customer with
a personalised service and a unique, high quality home
that will stand the test of time. We focus on:
— Gathering, analysing and responding to customer
feedback to drive improvement, including independent
customer surveys and external assessments.
— Using independently collected Net Promoter Score and
Recommend to a Friend scores to track performance
and improve our service.
— Enhancing communication by investing in integrated
customer channels including our website, our MyHome
Plus interactive digital portal and one-to-one viewing.
— Undertaking research to understand customers'
needs and preferences at every stage of the customer
journey and fine tuning our service, homes and
places accordingly.
— Evolving our digital offer to reflect new technologies,
media and customer behaviours, including personalised
virtual tours and video updates.
Short-term targets by 2023
— Maintain an industry leading Net Promoter Score of
70 or above.
— Exceed the requirements of the HBF 5 star rating every
year by at least 5%.
— 90% customers sign up to our digital platform,
MyHome Plus.
— Refine communication at each stage of the buying
process to align with identified customer needs.
Medium-term target
— By 2025 customers will be able to interact with us
digitally, 24-7.
Long-term target by 2030
— We will provide a home buying experience that is
industry-leading and which delights our customers.
Highlights from 2021
77.9 Net Promoter Score on a scale of -100
to +100, compared to an industry average of just 42
(HBF, March 2021)
98.3% Recommend to a Friend
score, compared to an industry average of 91%
(HBF, March 2021)
— Adapted customer communications in response to the
pandemic, ensuring sales progressed and customers
remained updated, maintaining a feedback score of
92/100 for keeping customers updated despite the
unprecedented challenges.
— Expanded our digital offer, including virtual tours
and appointments, to enable new customers to
make informed decisions and buy with confidence.
— Produced a digital roadmap setting out actions over
the next two years and beyond, to improve our digital
interaction with customers. This year we created digital
platforms to engage with customers and their
representatives, and an interactive portal to showcase
all developments.
— Completed research on customers' emotional journeys
through the buying process, helping us to understand
how best to respond to their needs at each stage.
This included a survey of more than 1,000 people.
— Enhanced customer information in relation to Our
Vision 2030 and our Group's social positive impacts.
— Awarded 'Outstanding Achievement Award' and
'Gold Award' for customer satisfaction for the sixth
consecutive year, following an independent
benchmarking assessment by In-house Research.
These awards reflect our exceptional Net Promoter
and Recommend to a Friend scores.
— Maintained our independently assessed Investor
in Customers Gold rating across the Group.
Link to stakeholders
— Customers
Link to KPIs
— Net Promoter Score
Link to risks
— COVID-19
— Economic outlook
— Land availability
— Planning process
— Securing sales
— Product quality
— Customers
Green Park, Reading
37
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
OUR VISION 2030: TEN STRATEGIC PRIORITIES CONTINUED
WHAT WE CREATE CONTINUED
Highlights from 2021
1 defect reported by customers on average per
home; 49% of our homes had no defects reported by
customers when they moved in, compared to just 6%
of homes across the industry (HBF, March 2021)
100% close out of audit non-conformances
within the required timeframe
— We support the strengthening of the building safety
regime for high risk residential buildings, have signed up
to the Building a Safer Future Charter and are adapting
our procedures to achieve compliance ahead of the
implementation of the Building Safety Bill.
— Implemented enhanced Build Quality Assurance
arrangements across the business, setting robust
Standards that apply to all operating companies.
— Rolled out e-learning and more detailed build quality
management training.
— More than 30 dedicated quality managers are
now in place across the business, ensuring local
implementation and compliance with Group Standards.
— Internal and external quality audits have occurred,
including a review of Group, divisional and site
arrangements, with improvement recommendations
being actioned.
— Trialled RoSPA’s Safer by Design framework within the
detailed design phase of a project, having partnered
with RoSPA to develop this best practice approach to
reducing serious accidents in new homes.
— Awarded the prestigious Diamond Award from RoSPA
for our “outstanding corporate contribution to raising
safety standards across the residential building sector”.
— Named Developer of the Year at the Premier Guarantee
Excellence Awards 2020 and received a Housing Design
Award for the Urban House at Kidbrooke Village.
Link to stakeholders
— Customers
— Government, Regulators and Industry
Link to KPIs
— Net Promoter Score
Link to risks
— COVID-19
— Retaining people
— Securing sales
— Build cost and programme
— Product quality
— Customers
QUALITY:
Our goal is to lead the industry in
producing high quality, safe homes for all.
Why is this a priority?
Creating unique homes and places of lasting quality
is fundamental to our brand, purpose, values and
working culture.
Our approach
We work with leading architects to design unique homes
and neighbourhoods which delight our customers and
communities. We do not use standardised housing designs.
Instead, we set exacting standards, which are applied with
great care, expertise and relentless attention to detail.
We focus on:
— Expertise and accountability by maintaining high build
and construction management competence at all levels
of the business, including Main Board members and
expert Build Quality Managers in each business.
— Build Quality Assurance with robust and digitally
integrated management systems which ensure work is
inspected and approved before programmes progress.
— Skills and training, with site and project
management teams undergoing specialist quality
management training.
— Setting standardised best practice processes to
ensure consistency through Group-wide Build Quality
Assurance Standards.
— Embedding the Royal Society for the Prevention of
Accidents (RoSPA) Safer by Design Framework in the
design of our homes.
— Pre-handover inspections; homes must pass rigorous
quality inspections prior to handover.
— Targeting zero defects; our culture, Standards and BQA
systems are geared towards achieving zero defects.
Short-term targets by 2023
— Outperform the industry average for defects reported
while targeting zero defects.
— Embed enhanced Build Quality Assurance and
training requirements.
— Further use of technology to improve quality
management processes.
— 100% close out of quality non-conformances prior to
customer handover.
— Share best practice and lessons learnt across the Group.
Medium-term target
— Deliver all homes to RoSPA’s Safer by Design
Gold Standard.
Long-term target by 2030
— Build 50,000 high quality homes.
Highlights from 2021
79% of projects under construction will
incorporate community facilities, including 26
community spaces, 9 schools and 16 sports facilities
88% of all completed homes were on
brownfield land
— Continued to focus on the transformation
of brownfield land, including our long-term
regeneration sites.
— Worked with external experts to develop and trial
an innovative Value to Society development tool on
10 projects ahead of a business-wide roll out. The tool
uses more than 30 social, economic and environmental
indicators to quantify and understand the social value
of different design and infrastructure choices, such as
community centres, sports facilities or green spaces.
It also considers impacts on existing local services
such as GPs and schools.
— As the founding partner of the Quality of Life
Foundation, we supported the development of their
new Framework, which is a tool to improve quality
of life through intelligent design.
— Continued to implement community plans on our
major sites, helping to connect local people and
establish sustainable models of local partnership.
Link to stakeholders
— Customers
— Communities & Local Government
Link to KPI
— Affordable Housing and Wider Contributions
Link to risks
— COVID-19
— Land availability
— Planning process
COMMUNITIES:
Our goal is to transform underused land
into unique, well connected and welcoming
places where people and communities can
thrive for the long-term.
Why is this a priority?
We believe that holistic placemaking can strengthen
communities and make a lasting positive difference to
people’s lives.
Our approach
We are highly collaborative, working hard to engage local
people and partners so we can co-design sustainable places
which reflect the local character and work beautifully at
a human level. We focus on large brownfield sites, stitching
them back into the local fabric and bringing them to life with
the right mix of homes, public amenities, parks and digital
connectivity. We focus on:
— Community engagement and proactively searching out
a diverse mix of people.
— Transforming complex brownfield sites which otherwise
fragment local communities and are beyond the scope
of conventional homebuilders.
— Quality placemaking and design by providing open,
walkable landscapes with a bespoke mix of physical and
social infrastructure.
— Maximising social value through our innovative Value to
Society development tool.
— Developing community plans which connect neighbours
and engage people in community life.
Short-term targets by 2023
— Progress the transformation of our regeneration sites.
— Embed a community development plan at each major
regeneration site.
— Calculate the social value of all new projects.
— Complete research on design and infrastructure.
Medium-term targets
— All developments to have an embedded community plan.
— Maximise the value to society that each project brings.
— Work with external experts to assess and enhance
people’s quality of life on our sites.
Long-term target by 2030
— Demonstrate the success of our developments and the
quality of life of our customers and communities over the
long-term.
38
39
Woodhurst Park, Warfield
Royal Arsenal Riverside,
Woolwich
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements OUR VISION 2030: TEN STRATEGIC PRIORITIES CONTINUED
WHAT WE CREATE CONTINUED
Highlights from 2021
40% reduction in absolute direct emissions
(Scope 1 and 2) since we launched our carbon neutral
commitment in 2016
1.5°C aligned with new
science-based targets for carbon emissions reduction
— Set ambitious 1.5°C aligned science-based targets
for reducing greenhouse gas emissions in the years
ahead, which were independently validated by
the Science Based Targets initiative (SBTi) in
December 2020.
— Signed up to the Business Ambition for 1.5°C Pledge
and the Race to Zero.
— The only UK homebuilder to be awarded a place on
CDP's 'A List' for Climate Action and Transparency,
putting us in the top 3% of companies worldwide.
— Commenced work to undertake embodied carbon
assessments on ten sites.
— Continued to deliver carbon neutral direct business
operations and to procure 100% renewable electricity
across all UK operations.
— Continued to partner with the UK Green Building
Council's Advancing Net Zero programme, which is
helping to lead and co-ordinate climate action across
the UK built environment sector.
Link to stakeholders
— Environment
— Government, Regulators and Industry
Link to KPI
— GHG emissions intensity
Link to risks
— Climate Change
— Sustainability
CLIMATE ACTION:
Our goal is to play an active role in
tackling the global climate emergency
by creating low carbon, resilient homes.
Why is this a priority?
We believe every business has a duty to tackle the global
climate emergency and we want to continue leading our
industry in taking decisive climate action.
Our approach
We have set independently verified science-based targets
for reducing our emissions, which require a step change
in how we operate. To achieve this we have developed
an ambitious approach to climate action, which includes
designing efficient and resilient places, alongside
transformational changes to our construction processes
and wider business operations. We focus on:
— Assessing the embodied carbon emissions from the
materials and services we procure and working with
our supply chain to reduce it.
— Creating low carbon homes, in line with the Future
Homes Standard, by focusing on building fabric and
incorporating appropriate low carbon technologies
such as heat pumps and photovoltaics.
— Operating low carbon construction sites through energy
efficient set up and operation, increasing biodiesel use
in place of gas oil and early adoption of electric and
hybrid machinery.
— Making homes and places resilient to climate change
by continuing to incorporate adaptation measures
to reduce the risk of overheating during design,
construction and occupation.
— Balancing our impacts by investing in projects and
partnerships that actively remove carbon from the
atmosphere, or that help to produce zero carbon energy.
Short-term targets by 2023
— Assess embodied carbon for ten sites and work with our
supply chain to reduce impact in key areas.
— Complete Climate Scenario Analysis to understand how
climate change could impact our business and begin to
manage key risks.
— Maintain carbon neutral business operations and
investigate innovative ways to offset our wider impacts.
Medium-term target
— Undertake detailed embodied carbon assessments and set
reduction targets on all new developments.
Long-term targets by 2030
— Meet our science-based targets to reduce total
emissions across our direct operations by 50% and the
emissions intensity of the homes we build by 40%.
— Be on the pathway to be a net zero carbon business
by 2040.
NATURE:
Our goal is to create a net biodiversity
gain and make a measurable contribution
to the natural environment on every
development.
Why is this a priority?
We want to play a lead role in nature’s recovery and to
create more beautiful, wild and open spaces in the heart
of cities, towns and our communities.
Our approach
We are proud to have led the industry on net biodiversity
gain and laid the path for it to become a national legal
requirement for all developments. We will now increase our
own commitment in this area and begin to tackle the next
challenge for the industry. We will focus on the following:
— Achieving a biodiversity net gain of at least 10% on every
development, regardless of its former use. We will be
working closely with our managing agents and
landscaping teams to ensure that they have the skills
to maintain the habitats that we create in the long-term.
— Broadening our established approach to biodiversity
net gain to environmental net gain, so that we deliver
an even more valuable and holistic contribution to the
environment on every site, including biodiversity, water
resources, flood resilience, soil quality and air quality.
Highlights from 2021
42 net biodiversity gain strategies underway since
May 2017
480 acres of new or improved natural
habitats being created since May 2017
— Continued to commit to creating a biodiversity
net gain on every new site, with seven additional
projects coming through planning during the year.
— Kidbrooke Village, our first net biodiversity gain site
to reach maturity, was awarded the 'Sir David
Attenborough Award for Enhancing Biodiversity'
and the 'Overall President's Award' at the Landscape
Institute Awards for Kidbrooke Village.
— Created the first piece of a 13 acre network of
biodiverse parks and wetlands at The Green Quarter
in Southall, designed in partnership with the London
Wildlife Trust.
— Opened a 70 acre country park in Hart, connected by
new trails to Hartland Village, where 1,000 trees are
also being planted to support biodiversity.
— Worked with the Wildfowl and Wetlands Trust (WWT)
to develop best practice guidance for our teams on
Sustainable Urban Drainage Systems (SuDS) to
manage surface water, reduce flooding and
support biodiversity.
— Began dialogue with Thames Water to explore water
neutrality and how it can be applied to our sites.
Short-term targets by 2023
— Create a net biodiversity gain of 10% on every new
development.
— Partner with a water company to undertake a water
neutrality trial.
— Upskill managing agents and landscaping companies to
ensure biodiversity gains are maintained for the long-term.
Link to stakeholders
— Environment
— Customers
— Communities & Local Government
Link to risks
— Sustainability
— Climate change
Medium-term target
— Develop an overall approach for environmental net gain
and trial it on at least one site by 2025.
Long-term target by 2030
— We will achieve an overall environmental net gain on
all developments.
The rooftop solar array
on the Berkeley Modular facility
40
Delivering a 250% net biodiversity gain at Kidbrooke Village
41
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements TRANSFORMING
TOMORROW
OUR JOURNEY
TO NET ZERO
Became the first UK homebuilder to
publish a Climate Change Policy
Kidbrooke Village, Greenwich
2007
2010
2014
2018
2018
2019
First carbon reduction targets and
programmes launched as part of our
business strategy, Our Vision
Launched our first climate change
adaptation programme to make our
homes and neighbourhoods more
resilient to extreme weather and rising
global temperatures
Procured 100% renewable electricity
for UK operations for the first time
Achieved carbon neutral business
operations for the first time, by taking
action to reduce our emissions and
offsetting remaining emissions via
verified offsetting projects from May 2017
Produced our first low carbon transition
plans, which model design, infrastructure
and technology solutions to enable our
homes to achieve net zero carbon by
2030
2020
Set science-based targets and became
a 1.5°C aligned company
Rated ‘A’ by CDP for
Climate Action and
Transparency, the highest
grade available and the
leading grade in our sector
OUR SCIENCE-
BASED TARGETS
We have set science-based targets, which have been
validated by the SBTi. These targets represent an
ambitious step forward in our approach to tackling
climate change and have been calculated to ensure
that we play our part in limiting global warming to
1.5°C above pre-industrial levels.
Achieve our science-based targets,
reducing our emissions to play our part
in keeping global temperature changes
within 1.5°C
-50% We will reduce absolute emissions from
our direct operations by 50% between
2019 and 2030
Be a net zero business, by eliminating
emissions across both direct and indirect
activities as much as possible and
offsetting any remaining emissions
using verified carbon sequestration
-40% We will reduce the carbon intensity
of the materials and services we use
by 40% between 2019 and 2030
-40% We will reduce the in-use carbon
intensity of the homes we build
by 40% between 2019 and 2030
2020
2030
2040
42
OUR CARBON
IMPACT
Through the development of our science-based targets,
we now have a greater understanding of our true carbon
impact. Our direct emissions from our construction sites,
offices and sales suites account for around 1% of our total
impact; the remainder falls within our indirect activities.
This includes the embodied carbon within the materials
and services we procure together with the energy that
each of our homes will use throughout its lifetime. It is
in these two areas that we will focus our efforts, whilst
continuing to make progress to reduce our direct impacts.
Our operations
Other (e.g. waste generation and business travel)
Customer energy use
Supply chain
Berkeley Group 2021 Annual Report
43
Strategic ReportCorporate GovernanceFinancial StatementsBerkeley Group 2021 Annual Report TRANSFORMING
TOMORROW
UNLOCKING THE POTENTIAL
OF ADVANCED MANUFACTURING
Berkeley Modular will represent
a transformation in housing delivery,
combining our homebuilding expertise
with the advanced manufacturing
technologies of the aerospace and
automotive sectors.
We have developed a unique and highly flexible modular
housing system, which is manufactured through a highly
automated, digitally integrated and safe production
process. Our approach aims to create unique, beautifully
designed and precision made homes, which can be
delivered at high speed and scale. This additional
delivery capacity will complement our industry leading
construction operations and is key to increasing our
overall housing completions in the coming years.
The fit out of our Berkeley Modular factory is underway
and we aim to make a phased and gradual start to
delivery following production testing in 2022.
Key benefits:
Deliver
individually
designed homes
of all tenures
Deliver
individually
designed buildings
that integrate with
local placemaking
approaches
Deliver
precise and
consistent quality
standards
Deliver a
complete golden
thread information
through digital
record capture
Increase
operational
safety
Reduce
greenhouse gas
emissions across
scopes 1, 2 and 3
Enhance
sustainability
performance
and reduce
environmental
impacts
Reduce material
waste and meet
circular economy
design principles
Speed up
housing delivery
Increase
housing delivery
capacity
Mitigate industry
skills shortages
and productivity
challenges
Reduce
community
disruption including
air pollution, traffic
and noise
20 YEARS OF LEARNING
2000
2016 2018 2020 2021 2022
Completed
factory
construction.
Began the
full Research
and
Development
programme
for Berkeley
Modular.
First projects
designed to
Berkeley
Modular
specification
followed by
prototyping.
Production
testing,
followed by
a phased and
gradual start
to delivery.
Over the last 20 years we have
delivered a range of modular and off-
site solutions, including townhouses,
apartment blocks, bridges and
commercial and community buildings.
A mix of high quality modular
products have been in common use
across our developments, including
manufactured bathroom pods, steel
frame balconies, staircases and risers,
fully serviced utility spaces and
unitised external wall systems.
Launched
the Urban
House, one
of the first
modular
housing
types
designed
in-house by
Berkeley.
44
Modular Factory, Northfleet
Berkeley Group 2021 Annual Report
45
Strategic ReportCorporate GovernanceFinancial StatementsBerkeley Group 2021 Annual Report OUR VISION 2030: TEN STRATEGIC PRIORITIES CONTINUED
HOW WE WORK
Highlights from 2021
>85% employees participated in the 2021
staff survey
1.24 AIIR compared to industry average of 2.63
(HBF, October 2020)
— Engaged with our employees in a variety of ways to
understand their views, including a staff survey in
which more than 85% participated. We received
strong feedback around people’s pride in their roles,
the high quality product we create and our values and
ambitions as a business.
— Using our voluntary staff survey we have been
building a more detailed picture of the diversity
of our employees and the experience of different
demographics, so we can set specific actions and
targets to develop a more inclusive workplace.
— During the year we signed up to the Mayor’s Fund
for London Diversity Pledge and became a Platinum
Member of Women into Construction. 36% of our
employees and 30% of our managers are women.
— Maintained focus on health and safety, with a key
focus on compliance with the Standard Operating
Procedures for COVID-19 alongside maintaining
strong leadership at director level for overall health
and safety.
— Awarded three Royal Society for the Prevention of
Accidents (RoSPA) awards, including the prestigious
Diamond Award for our “outstanding contribution to
raising safety standards across the residential building
sector.”
— Every operating company continues to run a wellbeing
programme, including employee assistance
programmes, virtual GP services and support sessions
for managing stress and personal finances.
Link to stakeholders
— Employees
— Supply chain
Link to KPI
— Annual Injury Incidence Rate per 1,000 people
Link to risks
— COVID-19
— Retaining people
— Health and safety
EMPLOYEE EXPERIENCE:
Our goal is to create a positive working
environment for our people; one that
fosters respect, support, wellbeing,
safety and inclusivity.
Why is this a priority?
Our highly skilled people are the drivers of our success
and we want to build an increasingly diverse, talented
and productive workforce where everyone can reach
their potential.
Our approach
We take a holistic approach to employee experience;
considering both physical and mental health as part
of creating a safe, supportive and positive working
environment. We are proud to have an industry-leading
safety record and are building an increasingly diverse and
engaged workforce, where there is an opportunity for
employees to share and shape their experience of the
workplace. We focus on:
— Communicating and engaging with employees to shape
the way we work.
— Improving diversity and inclusion and building
a workforce which is representative of the areas in
which we operate.
— Improving the wellbeing of our people by running
wellbeing programmes in every part of the business.
— Maintaining and enhancing our established, robust and
industry-leading health and safety systems and culture.
Short-term targets by 2023
— Continued focus on excellent health and safety standards
and targeting zero harm.
— Providing diversity and inclusion and unconscious bias
training to all staff.
Medium-term targets
— Demonstrate improved employee health and wellbeing
based on the programmes implemented.
— Continued improvement in staff engagement.
— One third of management positions held by women.
Long-term targets by 2030
— Have an engaged and diverse workforce that is
representative of the areas in which we operate.
— Have a positive health impact on our employees and
contractors working on our sites.
As at 30 April:
Board of Directors – Male
Board of Directors – Female
Senior management – Male
Senior management – Female
Total employees – Male
Total employees – Female
2020/21
No.
2019/20
No.
12
5
2
3
12
4
3
4
1,735
970
1,786
1,058
Highlights from 2021
165,000 sqft advanced
manufacturing facility fit out in Kent
85% of developments currently incorporating
some elements of modern methods of construction
— Continued to fit out our Berkeley Modular factory
and have begun prototyping and testing.
— Designed five projects to meet the requirements of
the Berkeley Modular system and to form the early
pipeline for production.
— Begun training and upskilling project teams and the
Berkeley supply chain in the application of the
Berkeley Modular system to support its future roll out.
— Progressed a new digital collaboration platform which
aims to capture a complete digital record of every
home from pre-construction to post-completion, the
‘golden thread’ of information.
— Increased the use of digital platforms, such as
Building Information Modelling, automated design
and collaboration tools.
— Continued to incorporate modern methods of
construction into existing projects, with a mix of high
quality modular products in common use across our
developments, including manufactured bathroom
pods, steel frame balconies, staircases and risers,
fully serviced utility spaces and unitised external
wall systems.
Link to stakeholder
— Government, regulators and industry
Link to risks
— Securing sales
— Climate change
— Sustainability
— Build cost and programme
— Product quality
— Customers
MODERNISED PRODUCTION:
Our goal is to harness advanced precision
manufacturing and digital technology
to build more homes, and to achieve
higher standards of quality, safety
and sustainability.
Why is this a priority?
We want to lead a step-change in industry performance
and harness the great potential and benefits of new
technologies.
Our approach
We are investing in ground-breaking new production
systems and technologies, including robotics, which can
make a lasting positive difference to our industry. We are
investing in innovative solutions that can increase
production capacity and enhance performance in terms
of build quality, climate action, sustainability and safety.
We focus on:
— Advanced manufacturing through our Berkeley Modular
business, see page 44.
— Using more detailed design models to drive efficiencies
and increase scope for using modern methods of
construction (MMC).
— Digital integration by increasing the use of digital
technology and record capture to provide the 'golden
thread' of safety and quality information throughout
every project.
— Applying manufacturing sector methodologies to
improve build efficiency and quality assurance.
Short-term targets by 2023
— Begin production at Berkeley Modular.
— Introduce a new digital platform to capture the
'golden thread' of information for every home.
— Design all apartments to maximise the use of modular
construction, with blocks over 11m reaching BIM level
2 status.
Medium-term targets
— Develop a methodology to assess the benefits
of digitally-enabled processes for each home built.
— Achieve full production capacity at Berkeley Modular and
showcase the benefits compared to traditional construction.
Long-term targets by 2030
— Design all new homes to maximise the use of modern
methods of construction.
— Establish a modernised approach to production, including
advanced manufacturing and digital technologies which
deliver high standards and additional capacity.
46
47
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements OUR VISION 2030: TEN STRATEGIC PRIORITIES CONTINUED
HOW WE WORK CONTINUED
FUTURE SKILLS:
Our goal is to equip our people with the
skills they need both now and for the
future, enhancing social mobility and
inspiring new talent to join the industry.
Why is this a priority?
We want to equip our people with the skills to embrace
innovative technologies and working practices, while
attracting a new generation of aspirational and talented
people to join our industry and drive our growth.
Our approach
We are working to ensure we have the people and skills for
the future, enabling us to increase production levels and
fully embrace modern methods of construction and digital
technology. We focus on:
— Mapping and enhancing employee competencies and
skills, taking into account the evolution of production
and modernisation of the business.
— Bringing in new talent through graduate, apprenticeship
and trainee programmes, with pathways for early years
careers and career changers.
— Enhancing our industry’s outdated image to attract
aspirational young people to choose a built environment
career, demonstrating there is a job for everyone in the
modern built environment sector.
Short-term targets by 2023
— Maintain membership of The 5% Club to reinforce our
commitment to apprentices, graduates and training.
— Work with our supply chain to encourage apprentices,
graduates and sponsored students.
— Implement a Group-wide competency framework
covering all disciplines, together with future needs.
— Actively engage with young people and inspire them
to join the industry.
Medium-term target
— Ensure all employees meet the competency framework.
Long-term targets by 2030
— Develop a skilled and competent workforce to support our
changing production needs.
— Engage with more than 5,000 young people to champion
careers in the built environment sector.
Highlights from 2021
6.5% of our direct employees are graduates,
apprentices or sponsored students and we joined
The 5% Club to reinforce our commitment in this area
240 apprentices worked across our operations
on average each month
— Commenced a review of our approach to skills and
training of existing employees, ahead of the
development of a detailed competency framework.
— Continued to deliver robust training matrices across
a number of disciplines, including health and safety
and Build Quality Assurance.
— Moved courses online to maintain training delivery
throughout the COVID-19 pandemic.
— Completed work on a new staff Academy which will
be a hub for face-to-face training.
— Signed up to The 5% Club charter which commits us
to maintaining 5% of our workforce as a graduate,
apprentice or sponsored student.
— Developed a Group Apprenticeship Framework to
provide a consistent and ambitious approach across
all operating companies and commenced work on
a new programme to train the next generation of
construction site supervisors from September 2021.
— 26 new graduates joined our graduate programme in
2021, and we remained rated among the Top
Companies For Graduates To Work For by JobCrowd.
— Ran a series of training academies to bring more
experienced people into the business, drawing on
transferable skills and experience from outside
the sector.
— Continued to engage with young people around our
sites, offering virtual work experience and other
opportunities during COVID-19.
Link to stakeholder
— Employees
Link to KPI
— Direct apprentices and training
Link to risks
— Retaining people
— Build cost and programme
SUPPLY CHAIN:
Our goal is to build a responsible and
constructive supply chain; one that is
productive, practical and profitable,
sustainable, ethical and dependable.
Why is this a priority?
We want to develop strong partnerships with our supply
chain, sharing goals, embracing modernisation and
collaborating to maximise positive impacts whilst achieving
production aims.
Our approach
We collaborate with our supply chain to share knowledge,
increase transparency and reach higher quality, safety and
sustainability standards. Together we are building
capability with the skills and resources to meet the
transforming needs of the modern construction industry.
We focus on:
— Implementing best practice procurement, by engaging
with our supply chain, seeking feedback and working
towards the Chartered Institute of Procurement and
Supply’s Excellence Standard.
— Simplifying the tender process to make it
straightforward to work for Berkeley and between
our operating companies.
— Enhancing our tender process to demonstrate
procurement on overall value, including sustainability,
quality, cost, and health and safety.
— Launching a materials strategy to ensure resilience of
supply for typical materials, without compromising the
bespoke nature of our projects.
— Aligning procurement with other strategic priorities such
as quality and sustainability.
Short-term targets by 2023
— Implement and embed a new materials strategy.
— 100% of projects to award contracts on best overall value.
— Implement 360 degree feedback across our supply chain.
— Align procurement activity with Build Quality Assurance,
Modernised Production and Climate Action targets.
Medium-term targets
— Achieve the Chartered Institute of Procurement and
Supply (CIPS) Procurement Excellence Award by 2025.
— Ensure that the 'golden thread' of building information
is captured throughout our supply chain.
Long-term targets by 2030
— Benchmark procurement and supply chain activity against
global best practice and provide resilience and expertise
to meet strategic goals.
— Develop new supply chain capability aligned to modern
production methods and digital technologies.
Highlights from 2021
>4,500 suppliers, contractors and
consultants support our activities each year
29 days average payment time for
contractors, in line with the Prompt Payment Code
— Worked closely with key suppliers to understand and
mitigate risks to labour and materials supply from
COVID-19 and Brexit.
— Maintained strong relationships to ensure continuity of
service in changing and challenging market conditions.
— Supported the industry’s response to COVID-19, for
example through membership of the Construction
Leadership Council and Build UK, sharing real time
information and shaping best practice supply
chain management.
— We have been active members of CIPS Construction
Senior Leaders Group, and are working with CIPS to
develop a bespoke Procurement Excellence
Programme aligned to our requirements.
— We are working with the Construction Products
Association (CPA), Marketing Integrity Group and
British Standards Institution (BIS) regarding common
product data, physical identification and batching
details to be at the forefront of capturing the golden
thread of information at product level.
— Reviewed our approach to procuring on overall value,
and reissued a standard approach to be applied on all
tenders from February 2021.
— Continued to increase our understanding of the risks
of modern slavery and child labour in our supply
chain, launching updated guidance to our production
teams, preparing new awareness training and revising
the assessment methodology for our supply chain.
— Continued to adhere to the Prompt Payment Code,
of which we are a founding signatory, paying our
contractors within 30 days.
— Entered into an industry-leading strategic partnership
agreement with Travis Perkins to facilitate the lean
procurement and logistics required to align with
Berkeley Modular’s manufacturing capability.
Link to stakeholder
— Supply chain
Link to risk
— COVID-19
— Economic outlook
— Political outlook
— Regulations
— Climate change
— Sustainability
— Health & safety
— Build cost and programme
— Product quality
— Customers
48
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REACH apprentices at South Quay Plaza
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements OUR VISION 2030: TEN STRATEGIC PRIORITIES CONTINUED
HOW WE WORK CONTINUED
BERKELEY FOUNDATION
SHARED VALUE:
Our goal is to allocate capital to deliver
sustainable returns to our shareholders
whilst creating value for our other
stakeholders including through the
work of the Berkeley Foundation.
Why is this a priority?
We want to make a lasting positive impact, using our
unique operating model and resources to fulfil our purpose
and deliver value for all.
Our approach
Our returns are sustainable and balanced with other
strategic priorities to ensure we remain a responsible and
purposeful business. We invest in opportunities with the
right risk-adjusted returns, maintaining our financial strength
and making returns to the shareholders who support us to
achieve our purpose. Our commercial performance creates
and sustains value for other stakeholders, including through
the work of the Berkeley Foundation. We focus on:
— Allocating capital to deliver sustainable returns to our
shareholders whilst creating value for other stakeholders.
— Quantifying our value to society as a result of our
activities, calculating the benefits and costs that we
bring across a range of topics, from employee training
to research and development, greenhouse gas emissions
and investment in health and safety.
— Working in partnership with the Berkeley Foundation
to build a society where every person can thrive.
Short-term targets by 2023
— All employees to be engaged with the work of the
Berkeley Foundation each year.
— Quantify and report on our value to society.
— Work with the Berkeley Foundation to agree targets
for achieving our shared goals.
Medium-term target
— Achieve 15% pre-tax return on equity across the cycle.
Long-term targets by 2030
— We will be a successful business delivering sustainable
returns whilst creating demonstrable value for our
other stakeholders.
— Demonstrate the impacts of our work with the
Berkeley Foundation.
Highlights from 2021
53% of employees did something for the
Berkeley Foundation in 2020/21
£2.5billon contribution to UK GDP
in 2020/21
— Continued to deliver sustainable returns to our
shareholders, whilst creating value to our other
stakeholders.
— Over the last five years we contributed £2.0 billion
to community facilities including affordable housing,
and £13.8 billion in total to the UK economy.
— Building upon the annual assessment of our economic
contribution which we have undertaken since 2014,
over the past year we have been working to expand our
approach across a broader range of indicators, both
positive and negative, in order to better understand our
impact on society. This includes the benefits of early
careers training, investment in site health and safety,
and innovative practices, together with negative
impacts, such as greenhouse gas emissions.
— This year, 53% of employees directly contributed to
the Berkeley Foundation, committing their time, along
with donations and fundraising, to help reach more
than 5,400 people.
— Despite COVID-19 restrictions, Berkeley colleagues
have continued to fundraise and work with the
Foundation to support the most vulnerable in society,
including a number of emergency COVID grants.
— Came top in the 'home construction' category of
Britain's Most Admired Companies Awards 2020, and
were named the sixth most admired business in the
country. This is based on a survey of corporate
reputation and business performance, ranked by
competitors and independent analysts.
Link to stakeholders
— All
Link to KPIs
— All
Link to risks
— Economic outlook
— Political outlook
— Regulations
— Liquidity
A DECADE OF
SOCIAL IMPACT
The Berkeley Foundation is at the heart of our
Group, helping us to fulfil our core purpose
and to maximise our lasting positive impacts
within the communities in which we work.
Now in its tenth year, the Foundation is an independent
grant-making charity focused on supporting
disadvantaged young people to overcome barriers,
improve their lives and build a fairer society. Its dedicated
team is supported through a company-wide network
of volunteers and champions, a structure which drives
engagement right through our business and ensures that
charity partners can draw on the full range of our skills
and resources.
The Foundation is funded by Berkeley Group and through
the incredible fundraising efforts of Berkeley staff. Over
50% of our people chose to actively contribute to the
charity over the past 12 months.
Last year the Foundation gave £2.5 million in grants
to a network of exceptional charity partners which
share its goals, and Berkeley staff raised an
additional £326,000.
The Foundation’s key priority was to support its charity
partners through the COVID-19 crisis as they faced the
triple threat of falling funding, rising community need, and
a more challenging operating environment. The priority
was to help charities respond to the needs of vulnerable
young people and communities – from distributing food to
families living in poverty, to putting mental health support
in place for young people isolated by lockdown.
Over the course of the year the Foundation provided
partners with £660,000 in emergency grants, including
unrestricted grants for core funding and support to adapt
services to meet young people’s needs. It also worked with
partners to increase the flexibility of existing grants so that
the money could be spent on immediate needs.
The Foundation also maintained its existing funding
commitments and activities throughout the period and
is delighted to have renewed its partnership with Imperial
College, which encourages young people to develop
STEM skills for the future, and expanded its funding to the
Change Foundation to support the award-winning Street
Elite programme, that helps disadvantaged young people
find pathways into employment, education or training
through sport.
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Berkeley Group 2021 Annual Report
Brothers Rilwan and Rafiu graduated from the Street Elite
youth engagement programme and started apprenticeships
with Berkeley’s supply chain partner P&O Painting
Berkeley Group 2021 Annual Report
51
Berkeley provides the core
funding for the Foundation,
pays all of its overheads and
match funds staff fundraising
efforts. This support means
that every penny raised for
the Foundation is spent on
charitable activities.
BERKELEY FOUNDATION CONTINUED
Berkeley Group staff taking part in Race to End
Homelessness, fundraising for Crisis
The Foundation 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.
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.
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.
These partnerships combine grant funding from the
Foundation with Berkeley's skills, resources and networks.
Last year saw staff come together in new ways to support
the Foundation, from hosting virtual courses for young
people in subjects like interior design and marketing, to
taking part in Crisis’ virtual Race to End Homelessness –
which involved 243 colleagues raising over £55,000.
TEN YEAR
HIGHLIGHTS
>33,000
Since 2011, the Foundation has supported work with
more than 33,000 people, helping them to move out
of homelessness, build their skills, move into work or
access new opportunities.
£23.3m
given and committed to the Berkeley Foundation's
charity partners through grants, staff fundraising and
Give As You Earn.
>50%
of Berkeley staff get involved in supporting the Berkeley
Foundation each year.
32%
of Berkeley staff are signed up to our Give As You Earn
(GAYE) scheme, earning Berkeley a Diamond Payroll
Giving Award – the highest level available.
>£6.6m
Berkeley staff have raised more than £6.6 million for the
Berkeley Foundation and its charity partners through
fundraising and GAYE to date.
VAUXHALL CITY FARM
Vauxhall City Farm is one of the oldest city farms in
London, serving an area in which many families live on low
incomes and have limited opportunities to connect with
nature. The Farm works to enable people of all ages and
backgrounds to experience nature and enhance their
health, wellbeing, and life chances. It has been the local
charity partner of St James/St William since 2015, and
has received over £200,000 in staff fundraising,
Give As You Earn donations, and funding from the
Berkeley Foundation.
Monica Tyler, CEO, shared the impact of the partnership
and the ways in which the Farm has been supporting its
local communities through the pandemic:
“Before the pandemic, St James and the Berkeley
Foundation helped to build the skills and capacity within
our small team by providing a grant to employ our first
fundraiser. Little did we know how much this would mean
to the charity during the pandemic! We lost 81% of our
income, but having a fundraiser meant we could recover
75% – £400,000 – through additional bid writing support
and appeals. This has enabled us to arise from the
pandemic stronger and ready to support communities and
visitors in their wellbeing, by offering a little oasis in this
very urban area that surrounds the farm.
"In 2020 we set up an after-school club to provide
engaging, out-of-school learning opportunities for
children from low-income backgrounds and at risk of
low educational achievement. Working with local schools,
the club supported 45 children with curriculum-based
tutoring and bespoke wellbeing support.
"The after-school club also supported local children and
families living in overcrowded housing and lacking access
to green space. COVID-19 exacerbated many pre-existing
inequalities, so it was crucial for us to continue the
programme despite the challenges of lockdown.
"At a time when the risk of lost learning was so high, most
children in the after-school club are on track to obtain an
average grade progression of 1.5 over the academic year,
150% higher than the national average. This success,
combined with demand and proven impact means we’re
now working to scale the club for the next academic year.”
“We couldn't recommend the programme
enough, it's been an utter life saver for us
during the lockdown and made us realise
how much it gives our daughter in terms
of how positive she feels about learning
and being confident to write.” Parent
52
53
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements TWELVETREES
PARK
NEWHAM
26 acre
3,800
45%
derelict brownfield site
mixed-tenure homes
public open space
170,000 sqft
commercial and community space
This project moved into production during
2020/21 and will see a derelict Parcelforce
depot transformed into a new part of
West Ham, including a mix of amenities,
commercial space and 12 acres of high
quality public open space.
A major infrastructure package is reconnecting this
isolated site with its surroundings, including two pedestrian
bridges over the Dockland Light Railway and a new entrance
to West Ham Station leading directly into a new 4.5 acre
public park. The first phase of the project will deliver a 58%
net biodiversity gain.
54
Computer Generated Image
55
Berkeley Group 2021 Annual ReportBerkeley Group 2021 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 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 110.
decisions in the long-term
the likely consequences of any
the impact of the Company’s
operations on the community
and environment
employees
the interests of the Company’s
the desirability of the Company
maintaining a reputation of high
standards of business conduct
business relationships with
suppliers, customers and others
the need to foster the Company’s
the need to act fairly between
members of the Company
Relevant factors under s172(1)
Directors’ consideration of factors in accordance with s.172(1)
Culture and values
The matters above are continuously considered by the Directors when discharging
their duties and are embedded into the culture and values of the business.
Business model and strategy:
Our Vision 2030
Risk management
Stakeholder engagement
Berkeley's new ten year business strategy, Our Vision 2030, is firmly grounded in the
Berkeley culture, building upon our established strengths, and challenges us to do
even more to achieve our core purpose.
For more details on our purpose, culture and values see page 109.
The Directors have collective responsibility for promoting the long-term success
of the Company in a safe and sustainable manner in order to create and enhance
shareholder value. The Directors provide leadership and set the Company’s strategic
long-term objectives which are set out in Our Vision 2030. Read more on pages 35
to 50.
Berkeley has a unique long-term operating model, as shown on pages 26 to 27.
The focus of the business is on large-scale regeneration opportunities that maximise
social and economic value for the community. Each development Berkeley creates
has a unique, locally inspired masterplan with a mix of public spaces, natural
landscapes and amenities that help create new and sustainable communities.
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 106 to 110.
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 114.
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 78 to 95.
The Directors engage directly with stakeholders in a number of different ways, and as
frequently as they can. The table below sets out our key stakeholders and introduces
our approach as to how the interests of each of our stakeholders is embedded in to
the long-term strategy of the business.
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.
Key to strategy
Customers
Communities
Nature
Quality
Climate Action
Employee
Experience
Modernised
Production
Supply Chain
Future skills
Shared value
Customers
Communities and
local government
Employees
Supply chain
Government,
regulators and
industry
Investors
Environment
Our approach
At Berkeley we put our customers at the heart of every
decision we make. From exceptional customer service to
the quality of our homes, we aim to delight them in every
last detail.
Senior management teams and the Board interact with
customers on a regular basis to ensure we provide the
high level of quality and service expected. Any issues are
resolved promptly and effectively.
The Company seeks to work with local people to create
places that strengthen the community, improve people's
quality of life and create a lasting social impact beyond
the site boundary.
Berkeley seeks to create and enhance communities,
and our economic contribution and value to society
is evidence of the focus in these areas.
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 to support this.
The physical and mental health, as well as creating a safe,
supportive and positive working environment, is important
to the Company. This is demonstrated through our
industry-leading safety record.
Berkeley’s approach is to collaborate with our supply
chain to share knowledge, increase transparency and
reach higher quality, safety and sustainability standards.
Together Berkeley aims to build capability across the
industry by enhancing skills and resources to meet the
transforming needs of the modern construction industry.
Collaboration is a key feature to creating successful
and sustainable developments. Berkeley looks to work
constructively with Government, regulators, local
authorities and industry bodies to shape developments.
We aim to understand planning, regeneration, housing,
environmental and economic policy objectives and work
collaboratively to deliver these.
The Company contributes to relevant policy consultations
and has regular and constructive dialogue with
Government departments and regulatory bodies.
Our long-term strategy is to invest in opportunities
with the right risk-adjusted returns, while ensuring
our financial strength reflects the prevailing macro
environment, and to make returns to the shareholders
who support us to achieve our purpose.
We have 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.
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. 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.
Link to
strategy
Read more
Read more on page 58.
Read more on page 59.
Read more on page 60.
Read more on page 61.
Read more on page 62.
Read more on pages 63.
Read more on pages 64.
56
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Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
STAKEHOLDER ENGAGEMENT
CUSTOMERS
Placing the customer at the heart of every decision
COMMUNITIES AND LOCAL GOVERNMENT
Making a positive contribution to the communities in which we work
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. This will be repeated in 2021.
— 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.
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.
58
— 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.
Read more online: berkeleygroup.co.uk/about-us/our-
vision/customers
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.
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. 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.
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.
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. We build
responsibly and with respect and care for our neighbours.
— We register every site with the CCS, which
independently assesses our conduct.
— We create site-specific Community Development Plans
to create social links and integration with the wider
community. In the last year we trialled a Social Value
Toolkit to quantify and maximise community benefits
over the long-term.
Read more online: berkeleygroup.co.uk/about-us/our-
vision/communities
Horlicks Quarter, Slough
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Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
STAKEHOLDER ENGAGEMENT CONTINUED
EMPLOYEES
Promoting health, wellbeing and inclusion
SUPPLY CHAIN
Ensuring responsible procurement and collaborative delivery
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, and diversity and inclusion.
— 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
each employee based on where they are working.
— We launched new training programmes for diversity
and inclusion and unconscious bias.
— We are trialling other initiatives such as agile working
at operating company level.
— We implemented a new People Engagement Forum.
— We launched an enhanced intranet system to provide
updates and key information to our teams at both
a Group and a divisional level.
Read more online: berkeleygroup.co.uk/about-us/our-
vision/employee-experience
Our people are the key to the successful
delivery of our business model and are one
of the key priorities of our business strategy,
Our Vision 2030.
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?
— We complete an annual engagement survey across all
parts of the Berkeley Group to understand and measure
engagement across a number of areas; 87% of
employees responded to the survey in March 2021.
— 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.
— 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:
Staff conferences – which bring together the workforce
and communicate key achievements and future plans;
and 'Sessions with the management' – this could include
time with the Managing Director or management team.
— We sought input into the development of our business
strategy, Our Vision 2030. Every member of staff was
given the opportunity to share their views on a survey.
— 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
Committee meets regularly to bring together people
from each of the operating companies 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.
— 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. During the year, this
forum met four times and focused on a number of topics
including diversity and inclusion and the consistency of
employee benefits across different parts of the Group.
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. COVID-19
restrictions, including lockdowns and remote working
combined with new global supply challenges, have meant
that active and positive interaction at all levels with our
supply chain is now more important than ever.
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
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.
— 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.
— To improve efficiency throughout the supply chain,
help address product availability issues and encourage
investment in manufacturing capacity, we need to maximise
the visibility of our forward product requirements.
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.
days and conferences.
— We hold meetings and events by trade at a Group level
— We are members of the Homes Leadership Group
to gather feedback and discuss any issues.
of the Supply Chain Sustainability School, assisting
in determining the direction and priority topics for
supply chain resources.
— We are members of the Chartered Institute of
Procurement and Supply Construction Leaders
Group, where we proactively share and develop
industry-wide best practice.
— We joined the BuildUK Procurement Group, which
through BuildUK and the Construction Leadership
Council was formed from member companies with
the remit to work together with our mutual supply
chains and explore how, between us, we can support
reopening projects, increase productivity for those
that have remained open, or where critical, and in
accordance with the guidelines from the Competition
and Markets Authority, ensure the supply and fair
distribution of scarce products and/or services
affected by the COVID-19 crisis.
— 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 work with our supply chain to understand the
implications of and mitigating actions around COVID-19
and any extended product availability times.
Read more online: berkeleygroup.co.uk/about-us/our-
vision/supply-chain
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Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
STAKEHOLDER ENGAGEMENT CONTINUED
GOVERNMENT, REGULATORS AND INDUSTRY
Working together in the spirit of partnership
INVESTORS
Delivering sustainable financial returns
Working collaboratively to drive innovation
and best practice within our industry and
increase the positive social, environmental
and economic impacts of new development.
How do we engage?
— We work constructively with Government, regulators,
local authorities and industry bodies to shape
a delivery environment which creates the conditions
for growth and supports high quality homebuilding
and 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, UK Green Building
Council, 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.
What do we learn?
— We understand and inform emerging trends, issues and
policy discussions 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.
What do we do?
We align our business strategy and delivery model with
long-term national and local policy objectives including:
— Regenerating left behind 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
— Delivering an industry leading climate action programme
(see page 72)
— Delivering industry leading nature recovery projects
— Pioneering precision manufactured modular housing
solutions 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, including our Net
Biodiversity Gain toolkit and Safer by Design framework,
delivering in partnership with RoSPA.
We contribute to the public debate around housing
delivery and meet with regulators and policy makers
at both a regional and national level 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.
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 land holdings to ensure sufficient pipeline
and value-added development opportunities for the
Group. The current gross margin in the land bank is
£6.9 billion across 96 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 £1.7 billion at 30 April 2021
(2020: £1.9 billion) under unconditional open market
contracts for sale; and
— Balance Sheet strength. The Group is holding net cash
of £1.1 billion at 30 April 2021 which will enable the Group
to withstand headwinds and continue to invest in sites
when the right opportunities arise.
The net asset value per share at 30 April 2021 was £26.12
(2020: £24.72), reflecting the value of shareholders’
interests in the net assets of the business.
This has enabled the Group to reaffirm its long-term
Shareholder Returns Programme during the year, whereby
it is returning £281 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.
Read more online: berkeleygroup.co.uk/about-us/investor-
information
Delivering sustainable returns for our
investors over the long-term is a fundamental
aspect of the Group’s strategy.
This is complemented by the business's 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.
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
these have been held remotely to ensure everyone’s
safety but also continue to provide investors with the
opportunity to receive updates on the operations
of the business.
— During the year there are opportunities to hold
one-to-one meetings and conference calls with
management, as appropriate and where permitted
under restrictions.
— When safe and permissible, site visits with the CEO
and CFO provide investors with the opportunity to
view the operations of the business.
— Throughout the year the Chairman, CEO and CFO,
as appropriate, met with shareholders and investors
on ad hoc basis. Such meetings are held on site,
where safe and permitted under restrictions, and
provide investors with the opportunity to view the
operations of the business. Other meetings have
been held virtually during the year.
— 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 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.
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63
Housing Minister Chris Pincher visiting the Berkeley Modular factory
9 Millbank, Westminster
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
STAKEHOLDER ENGAGEMENT CONTINUED
NON-FINANCIAL REPORTING STATEMENT
ENVIRONMENT
Reducing negative impacts and working towards environmental net gain
— We get an understanding of the action that our
supply chain is taking on environmental matters and
the companies that we can preferentially partner with.
— We understand the risks and opportunities relating
to environmental matters, from reputational impacts
surrounding creating more sustainable homes to an
understanding of how global environmental factors such
as climate change could impact supply chain resilience
and productivity at a site level.
What do we do?
— We incorporate environmental issues within our strategic
plan, Our Vision 2030; climate action and nature are two
of the 10 priorities we have identified.
— We have set stringent, science-based targets for carbon
emissions reduction and are committed to enhancing
biodiversity on every site. We aim to achieve an overall
environmental net gain on our developments by 2030.
— We include updates on Our Vision 2030 and
Sustainability within Main Board reporting and hold
bi-monthly Board-level meetings on the topic.
— We set high standards for our project teams, covering
all aspects of our operations and the homes and
developments we create, with additional focus areas
on environmental management and resource use
— We employ dedicated sustainability practitioners
within each part of our business to help drive action
on every development.
— We audit our activities directly, and are subject to
external audits and checks, to ensure we uphold high
standards of environmental management.
— We actively engage within our sector with organisations
and initiatives focused on reducing environmental impact.
— We monitor and report our impact publicly across a range
of environmental indicators, including carbon emissions,
water usage, waste generation, environmental incidents
and prosecutions.
Read more online: berkeleygroup.co.uk/about-us/
sustainability
We are always mindful that the nature of
our business means we utilise a significant
volume of natural resources, from the water
and energy we use daily across our activities
to the materials we use to build new homes.
We believe that all businesses have an obligation to reduce
their impacts and play their part in protecting and enhancing
the world’s precious habitats and resources. Through a real
focus on environmental management and a strategy to
create more sustainable homes, we aim to reduce the
negative impacts we have and work towards having an
overall positive impact on the environment by 2030.
How do we engage?
— Site-specific consultation and engagement strategies
seek out contributions from a representative mix
of local people and stakeholders on environmental
issues at both a local level and a global scale.
— Local planning authorities directly consult relevant
regulators such as the Environment Agency,
Natural England and local water authorities on
development proposals.
— We register every site with the Considerate
Constructors Scheme and are subject to regular
external audits which cover our approach to
environmental protection on behalf of our neighbours
and the communities in which we work.
— We engage with industry organisations and initiatives
focused on improving how companies in the built
environment sector impact the natural world. These
include being a partner member of the UK Green
Building Council and the Supply Chain Sustainability
School, together with being an active member
of the Construction Leadership Council’s Green
Construction Board.
— We support and contribute to consultations,
research and innovation, for example through the
UK Green Building Council’s Net Zero Programme
and Government consultation on changes to the
Building Regulations.
— We engage with materials suppliers and trade
contractors purchasing materials on our behalf
to understand the environmental credentials
of materials and their supply chains.
What do we learn?
— We learn that the construction and broader built
environment sector has impacts on the environment that
must be managed throughout the whole process, from
the design of a scheme to specification and sourcing
of materials, throughout the construction process to the
use of the buildings and their eventual decommissioning
at end of life.
— We get to know what is important to local residents,
councillors and MPs, community leaders, civic societies,
charities, businesses and a broad range of
grassroots organisations.
— We learn the areas where industry must take action
and help to drive positive change.
64
The following table summarises where our non-financial information can be found in our Annual Report.
Reporting requirement
Environmental matters
Employees
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
— Sustainable Places Policy
— Sustainable Business
Policy
— Climate Change Policy
— Sustainable Specification
and Procurement Policy
— Employee Policy
— Apprenticeships and Skills
Development Policy
— Equality and Diversity
Policy
— Health and Safety Policy
— Our Vision 2030: Climate Action and Nature,
pages 40 to 41.
— TCFD, pages 70 to 75.
— SASB, pages 68 to 69.
— Stakeholder Engagement: Environment, page 64
— Environmental, Social and Governance Performance,
pages 76 to 77.
— Our Vision 2030: Employee Experience, page 46
— Stakeholder Engagement: Employees, page 60.
— Environmental, Social and Governance Performance,
pages 76 to 77.
Respect for human rights
— Modern Slavery
Statement
— Corporate Governance Report, page 110.
— Stakeholder Engagement: Employees and Supply Chain,
— Human Rights, Modern
pages 60 to 61.
Social matters
Anti-bribery and
anti-corruption
How we manage risk
Business model
Non-financial KPIs
Slavery and Child
Labour Policy
— Equality and Diversity
Policy
— Whistleblowing Policy
— Sustainable Specification
and Procurement Policy
— Sustainable Places Policy
— Apprenticeships and Skills
— Our Vision 2030: Employee Experience, Supply Chain
and Climate Action, pages 60, 61 and 64.
— Our Vision 2030: Employee Experience, Supply Chain,
Nature and Climate Action, pages 40, 46 and 49.
Development Policy
— Sustainable Specification
and Procurement Policy
— Berkeley Foundation, pages 51 to 53.
— Economic Contribution, page 9.
— Stakeholder Engagement: Employees, Environment and
— Climate Change Policy
Supply Chain, pages 60, 61 and 64.
— Corporate governance; Bribery Act and Anti-Money
Laundering Regulations, page 120.
— Anti-Bribery and
Corruption Policy
— Business Ethics Policy
— Corporate Hospitality
and Promotional
Expenditure Policy
— Whistleblowing Policy
— Anti-Facilitation of Tax
Evasion Policy
— Our external and internal risks, including climate change,
sustainability, and health and safety can be found on
pages 78 to 95.
— Our business model and its links to our strategy and
stakeholders can be found on pages 26 to 27.
— Our non-financial KPIs can be found on page 29. 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 2030 business
strategy sections of this report on pages 35 to 50.
A copy of all our policies can be found on our website:
berkeleygroup.co.uk/about-us/sustainability/governance-
and-management/policies
Edenbrook Village, Fleet
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Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
HORLICKS
QUARTER
SLOUGH
Computer Generated Image
Computer Generated Image
66
12 acre
1,300
brownfield industrial site
mixed-tenure homes
2 acres
public open space
12,500 sqft
commercial and community space
The regeneration of this landmark
site began in 2020 and will see the
restoration of the iconic Horlicks Factory,
along with its clocktower and 47 metre
chimney, to form the historic centrepiece
of a new neighbourhood close to Slough
town centre.
Walking distance from the coming Crossrail Station,
this project will provide up to 1,300 mixed-tenure homes,
high quality public open spaces, a new community square,
nursery and café.
67
Berkeley Group 2021 Annual ReportBerkeley Group 2021 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 and accounting metrics
Activity metric*
Code
Category
Unit of
measure
Number of controlled lots
IF-HB-000.A
Quantitative Number
Number of homes delivered
IF-HB-000.B
Quantitative Number
Data
63,270
3,254
Number of active selling
communities
IF-HB-000.C
Quantitative Number
67
* All metrics include joint venture operations
Topic
Code
Accounting metric
Category
Unit of
measure
Data
IF-HB-160a.1
Land Use &
Ecological
Impacts
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
68
(2) 2,869 (88%) including joint ventures
London and large areas of the south of
England are identified as an area of High
Baseline Water Stress within the World
Resources Institute's (WR) Water Risk Atlas
Tool. We recognise the need to balance
providing new homes in these areas with
reducing their impact on existing resources
through the incorporation of water efficient
fittings and Sustainable Urban Drainage
Systems (SuDS).
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 2030,
sets requirements for the design process,
from nature to climate change adaptation
measures and in support of our Sustainability
Strategy we have a range of Standards
to guide our project teams through the
requirements for development sites, sales
and marketing suites and the work undertaken
by our contractors. We set requirements
during construction, including regular
sustainability site assessments and external
CCS audits, together with targets for water
and energy efficiency and waste recycling.
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
Topic
Code
Accounting metric
Category
Unit of
measure
Data
Quantitative
Rate
(1)(a) AIIR: 0.70 (1)(b) AIIR: 1.40
IF-HB-320a.1
Workforce
Health &
Safety
(1) Total recordable
incident rate (TRIR)
and (2) fatality
rate for (a) direct
employees and (b)
contract employees
IF-HB-410a.1
Design for
Resource
Efficiency
(1) Number of
homes that obtained
a certified HERS®
Index Score and
(2) average score
Quantitative
Number,
Index score
IF-HB-410a.2
IF-HB-410a.3
Quantitative
Percentage (%) Note that WaterSense specifications are
not applicable within the UK. The water
efficiency of our completed homes is
provided as an alternative.
Quantitative
Number
Target: 105 litres per person per day
Average: 104.5 litres per person per day.
Note that there are no equivalent multi-
attribute green building standards in the UK.
Note: Annual Injury Incidence Rate reported
in line with UK Health and Safety Executive
(HSE) methodology. Our combined rate
is 1.24 which outperforms the homebuilder
average of 2.63 (HBF, October 2020) and
construction sector average of 3.30
(HSE, October 2020).
(2)(a) 0 (2)(b) 0
Note that the HERS certification standard is
not applicable within the UK. Information on
mandatory Energy Performance Certificates
is provided as an alternative.
(1) 3,254
(2) 84 (B rating)
Note that ratings range from ‘A’ (very
efficient) to ‘G’ (inefficient). 94% completed
homes were rated B or above.
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 2030 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.
IF-HB-410b.1
Community
Impacts
of New
Developments
n/a
Discussion and
Analysis
Description
of how proximity
and access to
infrastructure, services
and economic centres
affect site selection
and development
decisions
IF-HB-410b.2
IF-HB-410b.3
IF-HB-420a.1
Climate
Change
Adaptation
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
Quantitative
Number
(1) 47,012 (74%) including joint ventures
(2) 2,140 (66%) including joint ventures
Quantitative
Number
(1) 2,465 (76%) including joint ventures
(2) This data is not currently analysed
Quantitative
Number
17,531
We undertake flood risk assessments on
every site as part of the planning process.
Integrating water into our developments
is about designing water efficient homes
and managing rainwater by storing it and
releasing it into well-designed natural
features to help manage surface water
and reduce the impacts of flooding.
69
Quantitative
Number
(1) 59,240 (94%) including joint ventures
(2) 2,852 (88%) including joint ventures
Quantitative
Number
(1) 58,012 (92%) including joint ventures
IF-HB-410a.4
Discussion and
Analysis
n/a
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements TASKFORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES
TCFD
We support the recommendations of the
Financial Stability Board's (FSB) Task Force
on Climate-related Financial Disclosures
(TCFD) and the forthcoming mandatory
requirements. We want to play our part in
addressing the global climate emergency
and have this year strengthened our
strategic approach in this area. Climate
action forms a key business priority within
Our Vision 2030.
We have science-based targets for emissions reduction
by 2030 to set us on the pathway to be a net zero carbon
business by 2040. These were validated by the Science-
Based Targets initiative (SBTi) in December 2020, putting
us in the first 350 companies globally to have approved
targets aligned to a 1.5°C scenario. The SBTs provide us
with a robust and scientific approach to reducing our
impact and monitoring progress against our targets
through defined metrics.
We recognise that the potential impacts of climate change
pose a risk to our business, from programme delays due to
extreme weather events to increasing policy and legislation
for the built environment sector. We also recognise that
it also offers opportunities from resource efficiency to
delivering more sustainable homes and places. We plan
to extend our work in this area over the coming year,
principally through Climate Scenario Analysis to support
our assessment of risks and opportunities.
We support the global effort on climate action outlined
within the United Nation’s Sustainable Development Goal
13 and have identified this goal as one of four that are most
relevant to our business activities and which we have the
most material ability to influence. We also participate in the
CDP annual climate survey, for which we have received
an A rating for corporate action on climate change and
transparency and are a signatory of the Business Ambition
for 1.5°C.
The following pages aim to give further insight in to how
Berkeley currently implements the recommendations of
the TCFD. We are committed to evolve our disclosure
within our 2022 Annual Report.
TCFD progress roadmap
We have made progress in improving how we manage climate-related risks and opportunities, but we recognise that
we can build on these further in the future as we complete further analysis.
Completed
GOVERNANCE The Board has oversight of climate-
related risks and opportunities and
we have disclosed information on the
roles and responsibilities of the Board
and management.
Planned
Ensure further review and input into climate-
related risks by the Board during 2022
following Climate Scenario Analysis.
STRATEGY
We have developed a new strategy for
climate action within Our Vision 2030,
including the development of science-
based targets under a 1.5 °C scenario and
five areas of focus.
Refine our strategy following undertaking
Climate Scenario Analysis in 2022, to ensure
it addresses the key risks and opportunities.
Enhance disclosure around the financial impact
to our business.
RISK
We have identified key risks (both
physical and transition), together
with opportunities.
METRICS
We have adopted targets for climate
action and disclosed metrics.
An updated and more detailed identification
and assessment of climate-related risks through
Climate Scenario Analysis. This will cover how
we respond to the risks.
Assess whether it would be appropriate
following Climate Scenario Analysis to disclose
a broader range of metrics, such as financial.
Hartland Village, Fleet
GOVERNANCE
To successfully assess and respond to the risks and
opportunities posed by climate change, there must be
effective governance and awareness in all levels of our
business. The Board undertakes a review of all business
risks and opportunities on an annual basis and this includes
both sustainability and climate change. In particular, in the
past year our Board has taken an active role in reviewing
the significance of climate change to the business and
incorporating Climate Action as a strategic priority within
our business strategy, Our Vision 2030.
The Board has ultimate responsibility for climate-related
risks and opportunities. The Chief Executive is accountable
for climate action, including the achievement of our
science-based targets. In addition, Karl Whiteman, an
Executive Director, has responsibility for sustainability and
oversees implementation of our actions.
Separate Our Vision and Sustainability Board meetings
take place bi-monthly consisting of the two Directors
named above, the Chief Financial Officer, the Head of
Responsible Business and the Head of Sustainability.
The Head of Responsible Business and Head of
Sustainability are responsible for updating the Group risk
register and providing updates on changes to the risk level
based on a range of factors from forthcoming legislation
to customer feedback and extreme weather events. This
information is provided to the Main Board and incorporated
within our business risk register and this Annual Report.
Divisional management teams have responsibility
for climate action and have nominated a management
sponsor within their business. Each company maintains
a risk register, including sustainability and climate change,
for their business and, at a project level, the Project
Sustainability Tracker identifies risks and monitors
action taken.
The following are also in place to support the Board and
management and ensure strong governance at every level
throughout the business:
— A Group Sustainability Team focused on implementing
our strategy, performance monitoring, risk management
and reporting.
— Dedicated sustainability practitioners within each
business to support local management and project
teams and help drive continual improvement in
performance.
— Cross-disciplinary working groups to take action in
specific areas, such as embodied carbon.
— A bi-monthly Sustainability Committee, chaired by the
Head of Sustainability and consisting of a representative
from each of our businesses.
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CONTINUED
STRATEGY
RISK MANAGEMENT
Climate action is a strategic priority for the business.
With the development of Our Vision 2030 during the
year we have strengthened the governance and strategic
commitments in this area, building upon our previous
actions on climate change.
In 2007 we became the first homebuilder to publish
a climate change policy and have set and monitored our
progress against both emissions reduction and sustainable
homes since 2010. A summary of key milestones is
provided on page 42.
This year, we have developed science-based targets (SBTs)
for carbon emissions reduction, validated by the Science-
Based Targets initiative (SBTi) in December 2020. These
targets represent an ambitious step forward in our
approach to tackling climate change and have been
calculated to ensure that we play our part in limiting
global warming to 1.5°C above pre-industrial levels.
Our strategy for Climate Action includes five focus areas
which will shape our transition to becoming a net zero
carbon business by 2040. Across the focus areas we have
identified key actions that Berkeley will be undertaking
over the short-, medium- and long-term. We will also work
to enhance disclosure around the financial impact to
our business.
Our strong approach to climate action is fundamental
to our long-term vision and maximising value for
our stakeholders.
Focus area
Action
Embodied
carbon
— Benchmark: assess embodied carbon assessments on 10 sites to identify high impact materials
and services.
— Supply Chain: work with our supply chain, including architects, to understand and reduce
carbon impacts.
— Measure and reduce: assess embodied carbon on all sites by 2025 and set reduction targets.
— Reduce demand: design homes to be more energy efficient.
— Understanding performance: set out a strategy to measure in-use energy performance.
— Deliver low carbon homes: ensure all homes are enabled to be low carbon by 2030.
Low carbon
homes
— Low carbon lifestyles: continue to prioritise clean energy tariffs and design well-connected,
walkable neighbourhoods with local amenities, sustainable transport links and infrastructure.
— Increase the use of biodiesel.
— Early adopter of hybrid and electric machinery.
— Set challenging benchmarks and standards for energy management.
Low carbon
construction
sites
— Scenario planning: for our business and developments, aligned with the TCFD requirements.
— Climate resilient homes; define a climate-resilient home to ensure that they are leading and
maximise customer benefits.
Climate
change resilience
— Nature based solutions: create biodiverse landscapes that are resilient to extreme weather
including flooding and drought.
— Design adaptation: implement site specific adaptations such as passive balcony shading,
ventilation systems and SuDS.
— Climate risk management: develop active climate risk management programmes for all
developments and business activities by 2025.
— Carbon neutral: we will continue to be carbon neutral within our operations (covering Scope 1
and Scope 2 emissions) through purchasing 100% renewable energy in the UK (backed by
Energy Guarantee of Origins) and then offset our remaining emissions through the support
of verified projects.
Balancing
our impacts
— Innovation: we will investigate the opportunity for innovation and partnerships that would help
us to deliver or support clean energy and to explore how carbon offsets can deliver nature-
based solutions and support nature’s recovery.
The risk management process for climate-related risks
is incorporated within broader risk management
arrangements for the Group. The Board takes overall
responsibility for risk management, and the assessment of
risk. 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.
Sustainability has been recognised as a risk to the Group
for over a decade and more recently climate change has
been identified as a separate risk which must be managed.
A climate change adaptation risk identification exercise
was initially 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 were around physical,
weather-related events for the homes and places we
develop and remain relevant, including flooding,
overheating and water shortage.
Further work is required to update this study over the
next year as we undertake Climate Scenario Analysis, with
a broader remit. In preparation, Berkeley has identified the
following risks and opportunities:
Risk/
opportunity type
Description
Our response
RISKS
Physical –
extreme
weather
— Disruption to construction programmes
e.g. through work interrupted due to high winds
or extreme temperatures.
— Disruption to global supply chain and supplies
of materials to site due to extreme weather
events across the globe.
— Working with our supply chain to better
understand the source of raw materials
and location of processing and
manufacturing activities.
— Increasing use of off-site construction and use
of Berkeley Modular to control production
activities within a factory environment.
Transition –
reputation
— Homes and developments could be adversely
— Risk assessment undertaken on each
affected through overheating, water shortages
and flooding.
— Failure to improve our strategy, performance
development and climate change adaptation
measures incorporated into the design, such
as shading and ventilation strategies.
and reporting in line with evolving regulations,
investor requests and societal expectations
would impact Berkeley's reputation.
— Validated science-based targets (SBTs) to
support our ambitious strategy in this area.
— Increasing disclosure on climate action within
corporate reporting, together with external
ratings such as CDP.
Transition –
policy and legal
— There are increasing standards for
— We actively participate in government
homebuilders through forthcoming changes
to the Building Regulations.
— Many local authorities have declared climate
consultations relating to policy in this area,
including the Part L, F and [X] consultation
in spring 2021.
emergencies and expect developers to achieve
high standards to help with the collective effort
to reduce impact.
— Government is to set in law more ambitious
climate change targets for the UK; the built
environment is a sector that will need
to contribute.
— We review forthcoming legislation and assess
the potential impact on our sites.
— We ensure our strategy in this area is ahead
of regulation, putting us in a strong position
to respond to future changes.
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CONTINUED
RISK MANAGEMENT CONTINUED
METRICS AND TARGETS
Risk/
opportunity type
Description
Our response
OPPORTUNITIES
Resource
efficiency
in our operations.
— There is an opportunity for energy efficiency
Products/
services
— Working with our supply chain we can focus
on material efficiency and reducing waste.
— Increasing use of off-site manufacture and
commencing production at the Berkeley
Modular facility is expected to increase material
efficiency and reduce waste.
— Customers are increasingly seeking more
sustainable homes.
— New homes are more efficient than the existing
housing stock as they have to meet stringent
Building Regulations; this may become
increasingly important.
— Producing more efficient homes can reduce
running costs for our customers.
— Targeted reduction of emissions across all
of our activities through science-based
targets (SBTs).
— Progressing with our strategy to modernise
production, including commencing production
at the new Berkeley Modular facility.
— A focus on creating low carbon homes through
building fabric and the incorporation of the
right types of low carbon technologies.
— Including details on how to operate a home
efficiently and live a sustainable lifestyle within
customer information.
Markets
— Demonstrating a strong strategy and
performance in this area could help to support
local planning authorities in addressing the
climate emergency within their area.
— Local communities and stakeholders are more
likely to partner with a developer which has
strong sustainability credentials.
— Climate action incorporated within Our Vision
2030, to highlight its strategic importance
within our business.
— Information contained within planning
applications.
— Information included within community
engagement activity.
We monitor a range of metrics to support our targets
in the area of climate action. Detailed GHG emissions
information is located in the Directors’ Report, including
disclosure across Scopes 1, 2 and 3 and the Environmental,
Social and Governance table on page 76 to 77.
Our key metrics for climate action are included within
our science-based targets and these will be used to reduce
emissions against. We also have broader targets with
associated metrics as part of our climate action roadmap:
Time period
Targets
Short-term
(by 2023)
Complete scenario analysis by 2023 to
understand how risks from climate change
could impact our business and begin to
implement measures to manage these risks.
Maintain carbon neutral operations across
Scope 1 and Scope 2 emissions using REGOs
and verified projects.
Implement measures to manage climate risks
for our developments and business.
Medium-term
(2023-2029)
Undertake embodied carbon assessments and
set reduction targets for each development.
Metrics
Qualitative assessment.
Net carbon emissions within UK operations
(Scope 1 and Scope 2) (tCO2e).
Developments under construction incorporating
climate change adaptation measures (%).
tCO2e/m2 completed floor area.
Long-term
(by 2030)
Reduce absolute scope 1 and 2 GHG emissions
50% by FY2030 from a FY2019 base year.
Carbon emissions from direct activities (tCO2e)
against FY19 baseline.
Reduce scope 3 purchased goods and services
and use of sold products GHG emissions 40% per
square foot of legally completed floor area by
FY2030 from a FY2019 base year.
We will be a net zero carbon business.
Carbon intensity of the homes we build over their
lifetime (tCO2e/m2 completed floor area) against
FY19 baseline.
Net carbon emissions across Scopes 1, 2 and 3
(tCO2e).
Hollyfields, Hawkenbury
Long-term
(by 2040)
Berkeley is committed to helping to achieve the United
Nations' (UN) Sustainable Development Goals (SDGs).
We recognise that although all the SDGs and the targets
that underpin these are important and interconnected,
it is imperative to focus our efforts on those that are most
material to our business, where we have the greatest ability
to deliver meaningful positive impact. The following four
SDGs, and their underlying targets, are those that we have
identified as most relevant to our business activities and
that we have the greatest opportunity to contribute to the
achievement of, particularly through the Our Vision 2030
business strategy.
Read more about our approach to sustainability:
www.berkeleygroup.co.uk/sustainability
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Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements ENVIRONMENTAL, SOCIAL AND GOVERNANCE PERFORMANCE
Indicator
Measure
Unit
2020/21 2019/20 2018/19
Notes
We monitor a range of Environmental, Social and Governance (ESG) indicators across
our business activities, and many of these align to the core KPIs of our business strategy,
Our Vision 2030.
Indicator
Measure
Unit
2020/21 2019/20 2018/19
Notes
Sustainable
homes
Completed homes with an
Energy Performance Certificate
(EPC) rating of at least a ‘B’
%
96
94
93
The average EPC score was 84
(B rating).
Completed homes to be
supplied with low carbon
or renewable energy
Average water efficiency
of completed homes
Homes constructed on
brownfield land
Completed homes with
internal recycling facilities
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
Environmental prosecutions
Greenhouse gas emissions –
Scope 1 and 2 market-based
Greenhouse gas emissions –
Scope 1 and 2 location-based
Sustainable
places
Environmentally
responsible
operations
%
%
#
%
%
%
%
#
%
70
70
72
lppd
104.5
102.7
102.6
88
96
7
84
91
89
100
10
–
94
7
76
85
94
98
The proportion of completed
homes with low carbon or
renewable technology.
The average internal water efficiency
of legally completed homes in litres
per person per day.
The proportion of homes built on
previously developed land.
The proportion of completed homes
provided with recycling facilities.
Each site is a new site submitted for
planning permission which has
committed to delivering a net
biodiversity gain.
Proportion of developments
under construction on previously
developed land.
Proportion of developments under
construction with water management
practices such as swales and
permeable paving.
100
100
100 71,604 cycle spaces were being
84
0
76
0
provided on sites under construction
in 2020/21.
74
7,440 points were being provided on
sites under construction in 2020/21.
0 The number of environmental
prosecutions in the year.
tCO2e
8,598
9,151
10,054
The location-based emissions resulting
from our office, sales and site activities
reported for our operational boundary.
tCO2e
2,547
3,375
3,980 The market-based emissions, once
Water consumption
m3
240,232
214,517 224,443
Construction waste generated
tonnes 154,409 177,560 142,648
Construction waste reused
or recycled
%
96
95
95
Hazardous waste generation
tonnes
2,602
13,689
84,927
procurement of renewable electricity
in the UK is taken into account.
The volume of water consumed across
our regional offices, development sites
and sales suites.
Construction waste produced by our
development sites. This excludes any
demolition and excavation waste.
Proportion of construction waste that
has been reused or recycled.
Hazardous waste generation is
dependent on project activities during
the year, including materials contained
within any buildings demolished and
any contaminated land encountered
during groundworks.
Total waste sent to landfill
tonnes
9,666 46,882
53,055 Waste sent to landfill typically relates
to hazardous waste arising from
demolition and excavation activities
that cannot be treated in another way.
During 2021 we had fewer sites of
this nature.
Considerate
construction
Supply chain
Average Considerate
Constructors Scheme
(CCS) score
Days taken to pay suppliers
on average
Employees
Total employees
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
Skills and
training
Direct apprentices
and training
Number of directly
employed apprentices
Health and
safety
Annual Injury Incidence Rate
per 1,000 people
Charity and
the Berkeley
Foundation
Customer
experience
Work-related employee and
contractor fatalities
Hours of training delivered
on health and safety matters
Employees involved with
Give As You Earn
Staff involved with the
Foundation
Net Promoter Score
Customers who would
recommend us to a friend
New homes
Completed homes
Contribution
to society and
community
Contribution to GDP
Tax
%
%
%
%
%
#
#
#
#
%
%
#
%
#
£
£
#/50
43
43
43
Based on independent audits by the
CCS. Within 2020/21 three visits (3%)
were scored beneath 40/50.
29
28
30 In line with the period outlined as part
of the Construction Supply Chain
Payment Charter.
2,705
2,844
2,664
The total number of employees at
30 April each year.
71%
29%
40%
60%
68%
75%
25%
43%
57%
79%
75%
25%
50%
50%
80%
32%
21%
20%
64%
36%
6.5
63%
37%
9.3
62%
38%
10.3
135
100
151
1.24
1.17
1.14
Calculated as the average monthly
percentage of our direct workforce
who are apprentices, graduates or
sponsored students.
Number of employees on an
apprenticeship throughout the year.
Apprentices work across many
disciplines in our business.
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.
24,843
34,126
30,792
In 2020/21, some the training was
adapted to be delivered virtually.
32
53
33
63
32 We maintain a Charities Aid Foundation
(CAF) Diamond Award for payroll giving.
65
Based on internal data collection.
77.9
78.8
73.5
98.3
98.5
97.1
3,254
3,158
3,959
Six-month rolling average to March
2021, compared with a sector average
of 42 (HBF, 2021).
Year to March 2021, compared with
an industry average of 91% (HBF,
March 2021).
The number of homes that legally
completed during the year including
our joint ventures.
2.5bn
2.6bn
3.0bn
Berkeley’s calculated overall
contribution to GDP.
595m 675m
816m This includes taxes paid directly by
Affordable housing and
wider contributions
£m
204
270
525
Benchmarks
and Indices
CDP Climate
Change rating
Rating
A
A-
A-
Berkeley and the taxes paid by its
customers and suppliers as a result
of Berkeley activities.
The contribution we make in affordable
housing subsidies and wider community
infrastructure benefits delivered or
committed to during the year.
An ‘A-’ leadership score was obtained
in 2019/20.
Company is
featured on the
FTSE4Good
Index Series
MSCI ESG
rating
Y/N
Y
Y
Y Berkeley has been featured on the
Index since 2003.
Rating
AAA
AAA
AAA We have achieved a AAA rating for
the past five years.
76
77
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements HOW WE MANAGE RISK
HOW WE MANAGE RISK
PRINCIPAL RISKS
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. Risk appetite relates to the amount
of risk the Company may seek or accept at any given time
when pursuing its strategic objectives, in the context of the
prevailing operating environment. 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.
This can be dependent on where the Board believes we
are within any particular cycle.
AUTONOMY AND VALUES
Berkeley has recognised brands and autonomous,
talented and experienced teams who embrace Berkeley’s
values in their approach. Berkeley creates bespoke and
innovative solutions for each site which requires
experienced, intensive management.
OPERATIONAL COMPLEXITY
The business model also recognises the complexity of
the planning and delivery of the sites Berkeley undertakes,
alongside their capital intensive nature. It 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 and experienced
teams in place.
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.
CULTURE AND PURPOSE
Berkeley’s unique culture is the sum of its shared values,
vision and overarching sense of purpose. Together, they
have a dynamic and energising effect on the way the
business operates, shaping our purpose, long-term
Our Vision business strategy, brand and day-to-day
behaviours. Our culture sets the standards by which we
judge our behaviours, products and internal processes.
EMERGING RISKS
Berkeley faces 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.
78
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. There are also areas of
our existing principal risks that are evolving over time. We
have been reporting Climate Change and Sustainability as
two of Berkeley’s key risks for a number of years, and these
risks continue to evolve as the global focus and regulation
over climate action increases. COVID-19 has continued to
impact all areas of our operations over the last year, from
the way in which we work to the way our customers and
communities live their lives and use their homes and the
places that we create. The Group’s risk appetite is reviewed
annually and approved by the Board. This review guides the
actions we take to implement our strategy.
The principal operating risks and our approach to mitigating
them are described in more detail on pages 82 to 95.
The escalation of the COVID-19 pandemic in early 2020 led
to a tightening of the Group’s risk appetite last year, given
the significant uncertainties created across all elements
of our business, the UK and wider global economy. This was
characterised by the deferral of the return of surplus capital
of £455 million, albeit this also was in recognition of the
potential opportunity to acquire incremental land
in uncertain markets. The last year has seen ongoing
uncertainty with the evolution of the COVID-19 pandemic,
the UK and other countries moving in and out of lockdowns
of differing length and severity, all having a continued
impact on both the UK and global economies. However,
Berkeley’s business and the wider market has proved
resilient, in spite of a lack of urgency in London.
The approval of a number of vaccines during the last year, the
ongoing successful vaccination rollout, particularly in the UK,
and the steady unlocking of the Covid restrictions in line with
the road map outlined by the Prime Minister in late February
2021, has led to optimism over a return to more normal
conditions in the coming months. There has therefore been
a gentle moderation of the Group’s risk appetite in the year,
albeit risks remain which will continue to evolve over time.
RISK MANAGEMENT FRAMEWORK
Our approach to risk management 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.
H
C
A
O
R
P
P
A
N
W
O
D
-
P
O
T
R
U
O
Board
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.
The top-down assessment of risk by the Board includes a review of the external environment in which
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.
Audit 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 119 to 120.
Executive Committee
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.
Operational management
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.
All employees
All employees are encouraged to be alert to risks associated with the activities they perform and to
report issues and suggest alternative approaches as appropriate.
O
U
R
B
O
T
T
O
M
-
U
P
A
P
P
R
O
A
C
H
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Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
HOW WE MANAGE RISK CONTINUED
FINANCIAL RISKS
EXPOSURE TO FINANCIAL RISKS –
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 interest rate risk
The risk that Group financing activities are affected
by fluctuations in market interest rates.
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.
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.
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 £1.71 billion at 30 April 2021. It also helps mitigate
market credit risk by virtue of customers’ deposits held
from the point of unconditional exchange of contracts
with customers.
Low gearing
The Group is currently financing its operations through
shareholder equity, supported by £1,128 million of net
cash on the Balance Sheet. This in turn has mitigated
its current exposure to interest rate risk.
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.
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.
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.
VIABILITY STATEMENT
In accordance with provision 31 of the 2018 UK Corporate
Governance Code, the Directors have assessed the longer
term viability of the Group.
of £750 million which are in place until November 2023.
In addition, the Group held cash due on forward sales
of £1,712 million.
The Directors have considered their assessment over
a three year period from 1 May 2021 to 30 April 2024.
Although the focus of the Group is on long-term
regeneration, and the Board’s strategic planning reviews
cover much longer term forecasts, the Group considers
there is sufficient detail within the individual site cash
flow forecasts over this period to enable a meaningful
assessment given the inherently cyclical nature of the
housing market, as well as other emerging risks.
The Director’s continue to review the timeframe of the
viability assessment on an annual basis, taking into account
the principal and emerging risks facing the Group, all of
which have been assessed in light of COVID-19 impacts.
The operational focus of the Group is on bringing forward
long-term, complex regeneration schemes. We operate
a sustainable business model which is unique in its focus
on large-scale developments and requires a solid financial
position. All schemes go through a rigorous appraisal
process before commencement, which includes detailed
financial forecasting and a robust risk management
assessment, taking into account risks and emerging issues.
A core risk management principal 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 2021, the Group had net cash
of £1,128 million and total liquidity of £1,878 million when
this net cash is combined with corporate banking facilities
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 ongoing 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.
How the Group mitigates risks is summarised within pages
78 to 95 of the Strategic Report. 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.
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 2021.
Read more on our Going Concern on page 157.
Highcroft, Wallingford
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Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements HOW WE MANAGE RISK CONTINUED
External risks
COVID-19
Risk description and impact
Approach to mitigating risk
COVID-19 has impacted all areas of our
operations, including our employees,
purchasers and supply chain.
The extent of the impact has been
influenced by factors including UK and
international lockdowns, government
interventions, the severity of economic
effects and the speed and nature of
the recovery.
The COVID-19 pandemic has been a focus for the Board
over the last year. The extensive experience and skill set
of the Main Board, senior management and teams,
coupled with that of our subcontractor base and the
resilience of our business model, has enabled us to
weather the impact since its onset.
The health and safety of our employees, contractors and
customers remains of paramount importance, following
Government and public health guidance at all our sites,
offices and sales suites.
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.
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.
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.
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.
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.
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.
Key to strategy
Customers
Communities
Nature
Quality
Climate Action
Employee
Experience
Modernised
Production
Supply Chain
Future skills
Shared value
Key
Increase risk
No change
Decrease risk
Link to
strategy
Residual
risk rating
Likelihood
change
Impact change
during year
Commentary and developments if any during the year
High
High
This time last year COVID-19 was still in its early stages and
the UK had recently entered its first lockdown. The last
year has seen the significant spread and evolution in the
pandemic with the UK and other countries moving in and
out of lockdowns of differing length and severity, having
a severe impact on people’s lives and the wider economy.
Berkeley’s sites have remained operational throughout in
line with advice and guidance from Government and Public
Health England, with approved COVID-19 Site Operational
Procedures implemented and regularly monitored to
ensure compliance with the requisite standards of safety
and compliance. Office based roles largely moved to home
working and maintained operational effectiveness utilising
existing remote working technology capabilities. All
Berkeley offices and sales suites have safe operating
procedures in place to ensure the safety of our staff and
the public and to facilitate hybrid working practices as
lockdowns have eased.
The pandemic has impacted the way in which people view
the value of their time being fragmented between work
and home. This impacts everyone in a unique way
depending on their personal circumstances. This evolving
dynamic will inevitably impact social trends, including how
people use their homes longer term.
Read more on pages 18 to 24.
The COVID-19 pandemic has had a significant and lasting
effect on both the UK and global economies over the last
year. The combination of Government spending, low
inflation and low interest rates has helped mitigate some
of the impact.
The UK economy is forecast to return to growth relatively
quickly as Covid related restrictions continue to be relaxed,
but the exact timing of this remains uncertain.
The UK economy has also seen the effects in the last year
of the UK leaving the EU. Despite reaching a trade deal in
December 2020, the long-term economic impact of this
remains uncertain. Inevitably, there are some short-term
dislocations in global supply chains which have also been
impacted by COVID-19.
Read more on pages 18 to 24.
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Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
HOW WE MANAGE RISK CONTINUED
External risks continued
Key to strategy
Customers
Communities
Nature
Quality
Climate Action
Employee
Experience
Modernised
Production
Supply Chain
Future skills
Shared value
Key
Increase risk
No change
Decrease risk
Risk description and impact
Approach to mitigating risk
Link to
strategy
Residual
risk rating
Likelihood
change
Impact change
during year
Commentary and developments if any during the year
Political
outlook
Significant political events, 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.
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.
Failure to comply with laws and
regulations could expose the Group
to penalties and reputational damage.
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.
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.
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.
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.
High
High
Medium
The political landscape remains dominated by COVID-19,
with the continued focus on the easing of restrictions and
revitalising the economy.
With the UK securing a trade deal with the EU at the end
of 2020, avoiding a major disruption to trade, one aspect
of uncertainty has been resolved. However, the long-term
impacts are yet to fully materialise.
Government policy on housing clearly impacts the
operating environment for Berkeley and the support
shown by Government to the industry in the last 12 months
has been welcomed.
Read more on pages 18 to 24.
The Government announced in February 2021 that it would
introduce a new Residential Property Developer Tax as part
of its Building Safety Package, and is currently consulting
on the design of that tax ahead of its inclusion in the
2021-22 Finance Bill.
The Government has continued to reaffirm its commitment
to fire safety and the widespread remediation of buildings
previously assessed as compliant with building regulations
at the time of their construction. This commitment has
included the passing of the Fire Safety Act, the introduction
of the Building Safety Bill and an increase in the resources
of the Building Safety Fund. While we welcome increased
clarity from the government, challenges and delays remain
due to the scarcity of fire engineers available to review
historical buildings. This means the second hand housing
market remains constrained.
Read more on pages 18 to 24.
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.
Berkeley has acquired ten new sites in the year, including
four in St William.
Read more on pages 32 to 33.
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Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements HOW WE MANAGE RISK CONTINUED
Key to strategy
Customers
Communities
Nature
Quality
Climate Action
Employee
Experience
Modernised
Production
Supply Chain
Future skills
Shared value
Key
Increase risk
No change
Decrease risk
Risk description and impact
Approach to mitigating risk
Link to
strategy
Residual
risk rating
Likelihood
change
Impact change
during year
Commentary and developments if any during the year
Internal risks
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.
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.
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.
In February 2021, we launched two new commitments
within Our Vision, Berkeley's long-term strategy, to help
recruit and retain a high calibre work force.
The first is ‘Employee Experience’ which places a specific
focus on areas including employee experience and
diversity and inclusion, and the second focuses on
‘Future Skills’ looking at how we can create tangible
long-term change within the industry.
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.
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 adapted its sales strategy to the COVID-19
pandemic, increasing the use of digital channels and
virtual tours.
High
Medium
Medium
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 continue to take 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.
Read more on pages 32 to 33.
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, wellbeing initiatives and flexibility on
working hours.
We have also focused on the safety of our offices and sites
as a result of COVID-19, ensuring we provide the right
working environment for the business and our people.
Read more on page 60.
Despite the impact of COVID-19, the UK sales market has
remained resilient, despite a lack of urgency in London.
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.
Berkeley's focus on community, nature, connectivity and
overall quality of place will resonate with customers as
the country continues to emerge from the pandemic.
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 page 58.
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HOW WE MANAGE RISK CONTINUED
Internal risks continued
Risk description and impact
Approach to mitigating risk
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.
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.
Cash flow management is central to the continued
success of Berkeley and has been particularly important
as a consequence of the COVID-19 crisis, remaining
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.
Key to strategy
Customers
Communities
Nature
Quality
Climate Action
Employee
Experience
Modernised
Production
Supply Chain
Future skills
Shared value
Key
Increase risk
No change
Decrease risk
Link to
strategy
Residual
risk rating
Likelihood
change
Impact change
during year
Commentary and developments if any during the year
Low
Medium
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 2021, this is £1.85 billion of liquidity.
In addition, the St William joint venture has bank facilities
of £360 million, maturing in March 2023, with options over
two additional years.
Berkeley has a strong working partnership with the six
banks that provide the facilities which is key to Berkeley’s
approach to mitigating liquidity risk.
Read more on pages 63.
An economic environment of continued low interest rates,
combined with resilient economic performance, has
supported mortgage availability, resulting in a steady
risk profile.
There has been an improvement in the number of
higher loan to value mortgage products available in
recent months.
Read more on pages 12 to 13 and page 37.
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Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements HOW WE MANAGE RISK CONTINUED
Internal risks continued
Key to strategy
Customers
Communities
Nature
Quality
Climate Action
Employee
Experience
Modernised
Production
Supply Chain
Future skills
Shared value
Key
Increase risk
No change
Decrease risk
Risk description and impact
Approach to mitigating risk
Link to
strategy
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 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.
Local authorities have declared climate
emergencies and set roadmaps to be
net zero carbon and customers are also
placing an increasing emphasis on
homes with reduced impact over their
lifetime; failure to improve the efficiency
and embodied impacts of the homes we
build could reduce the potential for us
to gain planning permission or sell the
homes we build.
Carbon pricing is affecting the supply
of materials. There has been an increase
in the international carbon price which
has led to some suppliers which are
high carbon producers, such as cement
companies, to reduce production as
the price for offsetting their impact
is too high.
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 action is a key theme within our business
strategy, Our Vision 2030, and we have set ambitious
science-based targets (SBTs) to mitigate our impact,
alongside continuing to incorporate adaptation measures
within our developments to make them more resilient
to the expected future impacts of climate change.
By taking action under our Scope 1 and 2 carbon
emissions reduction targets 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. Our Scope
3 SBT commits us to building more efficient homes and
working with our supply chain to reduce the embodied
carbon within the materials and services we procure.
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 continue to enhance our disclosure in this area by
publishing information on our impacts and increasing
information in response to the Financial Stability Board’s
TCFD recommendations, ahead of mandatory disclosure
from 2022.
We are in regular talks with our supply chain to
understand and monitor the changes with our key
materials. We are undertaking work to understand how
we can reduce demand of high carbon materials with
our buildings.
High
This year we have set ambitious science-based targets
(SBTs) for carbon emissions reduction across Scopes 1, 2
and 3, which have been validated by the Science Based
Targets Initiative (SBTi). These commit us to taking action
to reduce absolute emissions within our direct activities
and to reducing our indirect impact within the materials
and services used to create our homes and the emissions
from the homes we build over their lifetime.
We monitor the actions taken to reduce carbon emissions
across our activities and have improved our reporting of
greenhouse gas emissions to also cover the two material
areas of our indirect emissions under Scope 3.
Following our leading approach in 2017/18, we continue
to achieve carbon neutral operations on an annual basis,
offsetting more emissions than we produce within our
construction sites, offices and sales suites.
We also regularly review the features incorporated into
our homes and places to both mitigate and adapt to
climate change.
This year, a Government consultation was held on Future
Buildings, covering Part L, F and [X] of the Building
Regulations, building upon the previous Future Homes
Standard and Part L consultations. Berkeley responded
to the consultation and awaits future announcements
on regulatory changes. These may have implications in
terms of additional design time and costs as homes will
be required to meet tighter energy, carbon and fabric
standards than current legislation requires. In addition,
our outer London apartment buildings require more
dynamic thermal modelling to demonstrate compliance.
Berkeley continues to report qualitatively on the
governance, strategy and risk management components
of the TCFD recommendations within this report and via
our response to the CDP Climate Change Programme.
Read more on pages 40 to 42, 64 and 70 to 73.
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Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements HOW WE MANAGE RISK CONTINUED
Internal risks continued
Sustainability
Risk description and impact
Approach to mitigating risk
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,
with access to green spaces and nature.
The strategic direction for sustainability is set at a Group
level within a dedicated Sustainability Strategy and
three areas have been identified as being of strategic
importance and integrated within our business strategy,
Our Vision 2030; communities, climate action and
nature. 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.
Key to strategy
Customers
Communities
Nature
Quality
Climate Action
Employee
Experience
Modernised
Production
Supply Chain
Future skills
Shared value
Key
Increase risk
No change
Decrease risk
Link to
strategy
Residual
risk rating
Likelihood
change
Impact change
during year
Commentary and developments if any during the year
Medium
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.
Medium
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.
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93
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 we launched a new Sustainability Strategy
internally, supporting our strategic plan for the business
Our Vision 2030. Together, these set out five areas of focus
for sustainability: climate action; nature; communities and
sustainable living; environmental management; and waste
and circular economy. New Standards have been issued to
our teams to set out the minimum Berkeley requirements for
new developments and the operation of our construction
sites, supported by more detailed procedures and
monitoring within our Sustainability Management System.
We continue to await the Royal Ascent of the Environment
Bill, setting out requirements 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.
Over the last year there has been an increase emphasis
on the need for green open space and parks close to
where people live due to the COVID-19 pandemic. We
already have a strong track record for delivering parks
and nature-rich areas, particularly through our long-term
regeneration schemes which benefit our residents and
the communities that live close to our developments.
Read more on pages 26, 40 to 49, 61 to 62, 64 and 71.
High levels of production continued during the majority
of the year, despite the effects of COVID-19, with site based
headcount averaging over 10,000.
Health and safety remains an operational priority for Berkeley
and our AIIR was 1.24 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 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 46 to 48 and 60.
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements
HOW WE MANAGE RISK CONTINUED
Internal risks continued
Key to strategy
Customers
Communities
Nature
Quality
Climate Action
Employee
Experience
Modernised
Production
Supply Chain
Future skills
Shared value
Key
Increase risk
No change
Decrease risk
Risk description and impact
Approach to mitigating risk
Link to
strategy
Residual
risk rating
Likelihood
change
Impact change
during year
Commentary and developments if any during the year
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.
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.
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.
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 new strategy includes ongoing commitments to
training and support across both our employees and
our indirect workforce.
Berkeley’s systems and control procedures are designed
to ensure that confidentiality, availability and integrity
are not compromised.
Our Information Security Programme focuses primarily
on the detection and prevention of security incidents
and potential data breaches. Ongoing monitoring and
scanning is conducted to detect and respond to
vulnerabilities and security events.
We also work closely with recognised security
service providers to implement and improve 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 physical data centres
supported by cloud based services thereby reducing
centralised risk exposure. An IT disaster recovery plan
is regularly assessed.
The Group has cyber insurance in place to reduce the
any potential financial impact.
Medium
Medium
High
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.
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 37 and 58.
Build cost increases were relatively stable in 2020 at c. 2%
but have increased in during 2021 to c. 4%, reflecting
current pressures on materials and the supply chain.
Read more on page 61.
The threat from cyber attacks remains high, and the
COVID-19 pandemic creates additional opportunities
for attacks, particularly with many businesses now
operating remotely.
Enhanced controls have been implemented on user end
points which allow for better detection and automated
prevention of many attacks.
However methods of attack continue to evolve and are
becoming more sophisticated, requiring additional
technical controls and awareness training.
Email based attacks remain a significant risk. An industry
leading email security platform is in place and is constantly
reviewed and improved to address new threats.
The Cyber Security architecture has been reviewed and
new controls implemented in the previous year. This
includes greater visibility of threats to the environment and
implements automated response for well known attacks.
In the year the Group achieved the Government’s Cyber
Essentials Plus certification for the fifth consecutive year.
The Cyber Security team regularly send awareness
reminders when threats affecting the Group are detected.
Read more on page 107.
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Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportStrategic ReportCorporate GovernanceFinancial Statements POPLAR
RIVERSIDE
TOWER HAMLETS
Corporate Governance
98 Chairman’s Introduction to the
Corporate Governance Report
100 Board at a Glance
101 Board of Directors
106 Board Leadership and
Company Purpose
111 Division of Responsibilities
115 Nomination Committee Report
118 Audit Committee Report
122 Directors’ Remuneration Report
151 Directors’ Report
Computer Generated Image
96
20 acre
2,800
50%
90,000 sqft
derelict brownfield gas works
mixed-tenure homes
public open space
commercial and community space
Awarded planning permission in 2020/21,
the derelict Leven Road Gas Works is
set to be transformed into a low carbon
neighbourhood with a mix of public open
space and natural habitats, designed in
partnership with the London Wildlife Trust.
The project will reopen the banks of the River Lea to
the local community, including a 2.5 acre riverside park
and meadow.
Winning Planning Permission of the Year at the 2020
Planning Awards, the proposals include a new secondary
school, crèche, gym, café, pub, food store, flexible
workspace, community hub and electric
car charging infrastructure.
97
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportFinancial StatementsCorporate GovernanceStrategic Report CHAIRMAN’S INTRODUCTION TO
THE CORPORATE GOVERNANCE REPORT
Introduction
I am delighted to introduce the Corporate
Governance Report for the 2020/21
financial year.
The Board continues to embrace high standards of
corporate governance and continues to operate under
the principles and provisions of the UK Corporate
Governance Code 2018 (‘the Code’).
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:
Pages
Board Leadership and Company Purpose
106 to 110
Division of Responsibilities
Nomination Committee Report
Audit Committee Report
DIrectors’ Remuneration Report
111 to 114
115 to 117
118 to 121
122 to 150
A copy of the Code is available on the Financial
Reporting Council’s website www.frc.org.uk.
Stakeholders and Company purpose,
culture and values
As the UK’s leading placemaker, Berkeley's purpose is to
build quality homes, strengthen communities and improve
people’s lives, transforming underutilised places to return
sustainable, social, economic and environmental value.
As a business with a uniquely long-term operating model
and value-added approach to regeneration, Berkeley
recognises the importance of businesses like ours creating
enduring, sustainable value for all our stakeholders.
During the year, Berkeley launched Our Vision 2030, our
new, ambitious, ten year strategic agenda for the business.
The new Our Vision 2030 strategy builds upon the success
of the last ten years of our previously established strategy
and we are proud of the impact this has had across the
past decade. Further detail on Berkeley’s strategy and
approach to development can be found in Our Vision
2030 on pages 35 to 50 of the Strategic Report and
at www.berkeleygroup.co.uk/ourvision. Further detail
on our engagement with and impact on our stakeholders
is set out on pages 58 to 64 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 set by
the Board and permeates all of the autonomous businesses
and teams within the Group. Our values are set out on
page 109 of this Report, along with information on how
the Board assesses and monitors culture. These are truly
ingrained in our people whose energy, passion and
determination drive the business forward for the benefit
of all our stakeholders.
I would like to recognise the substantial contribution of
Tony Pidgley CBE, the co-founder and former Chairman
of Berkeley, who passed away suddenly last year. Tony's
passion and energy defined Berkeley and he instilled this
culture and values in Berkeley over the last 40 years.
Board activities
Good governance plays a significant role in a successful
business strategy and the Board has undertaken
a number of key governance activities during the year.
Core amongst these activities has been the Board’s focus
on succession planning and transitioning Board and
Committee composition.
In July 2020, following Tony's sad and untimely passing,
I was appointed as Non-Executive Chairman to lead the
Board as it undertakes the process of refreshing Berkeley’s
Board composition. In the years immediately prior to his
death, Tony had the wisdom to put in place a strong
Executive team, which is now helping to support the
seamless transition in Non-Executive Director Board
membership as the Board seeks to ensure the appropriate
long-term balance of skills, experience and ethnic and
gender diversity.
The first stage of the Board refreshment programme saw
the appointments, on 5 January 2021, of William Jackson
and The Ven. Elizabeth Adekunle, and, on 30 April 2021,
of Sarah Sands as new Non-Executive Directors. The Board
has additionally announced that Andy Kemp will join the
Board as a Non-Executive Director on 1 July 2021. These
new appointments add further strength and depth to
the Board across a broad and diverse range of skills,
contribution and experience including commercial,
property, urban regeneration, environmental, sustainability,
social and ethical issues, financial, audit, risk, and
regulatory matters.
During the year, key roles and responsibilities within the
Board have been updated and Committee composition has
been further strengthened. Diana Brightmore-Armour was
appointed as Senior Independent Director in July 2020.
Diana brings considerable leadership skills and experience
to her role as a sounding board for the Chairman and
trusted intermediary for other Directors and shareholders
as she oversees the process to identify and appoint a new
long-term Non-Executive Chairman in 2022. Diana, who
brings considerable financial experience, has additionally
been appointed to the Audit Committee.
Peter Vernon, who was already a member of the
Remuneration Committee, was appointed as Chairman
of the Remuneration Committee in July 2020.
Having previously served as a member, I was appointed as
Chairman of the Nomination Committee. The Nomination
Committee has been further strengthened by the addition
of: William Jackson, who brings considerable commercial,
property and listed company experience, including
previously as Senior Independent Director of British Land
plc; and Sir John Armitt, whose significant understanding
of the Berkeley Group, its culture and values represents
an important contribution at this key stage in the
Board’s development.
After nine years on the Berkeley Board, Baroness Fleet,
Veronica Wadley CBE stepped down as a Non-Executive
Director on 31 January 2021, and, as previously announced,
Adrian Li and Peter Vernon will step down as Non-Executive
Directors at the Company’s 2021 Annual General Meeting.
I would like to take this opportunity to extend my thanks
and gratitude to Veronica, Adrian and Peter for their
significant contribution and commitment to Berkeley
during the course of their tenure and in particular for
their support over the last year.
The Board continues to engage with a wide and diverse
range of business contacts and professional advisors in
developing a strong and diverse candidate base as it
continues the process of transition, which, when complete,
we anticipate will maintain full compliance with the Parker
Review target of at least one Director from an ethnically
diverse background, and will bring female representation
on the Board in line with the recommendations of the
Hampton-Alexander Review. Further details of the Board’s
programme to refresh the composition of the Board and
its Committees by June 2022 will be announced in
due course.
Details of Board and Committee roles and responsibilities
are set out on page 114 of this report and of each Director‘s
unique contribution to Berkeley is set out in Directors’
biographies on pages 103 to 105 of this report.
Other key governance matters that the Board has focused
on during the year include:
— Review of the Group’s business strategy including, as
outlined above and in the Strategic Report, the launch
of Our Vision 2030, which will focus operations over the
next decade to achieve key priorities for the Group and
will help Berkeley to be a world-class business, trusted
to transform the most challenging sites into exceptional
places and to enhance our positive impact on society,
the economy and the natural world.
— Transition to net zero, taking action on climate change
and sustainability, as part of Our Vision 2030, as a key
priority at the heart of both our business strategy and
the way we design and create new places. Within its
strategy, the Board has included and committed to
long-term science-based targets for climate change.
This aims to ensure that the Group continues to drive
positive actions that address climate change to ensure
that Berkeley plays its part in mitigating the global
impact by supporting the international effort and Paris
Climate Agreement to limit global warming to 1.5°C
above pre-industrial levels. The Group’s integrated
climate action programme puts Berkeley on course
to achieve its strategic goal of being a net zero carbon
business by 2040.
— Consideration of emerging issues facing the Company
and the ongoing response to challenges imposed by
COVID-19, including ensuring the health, safety and
wellbeing of our customers, employees, subcontractors
and suppliers, with the introduction of industry-leading
COVID-19 operating and safe working procedures in
collaboration with the Construction Leadership Council.
At this challenging time of economic uncertainty,
the Board has focused on how best it can support
subcontractors and suppliers, including through the
delivery of transparent work programmes and prompt
payment practices, whilst also safeguarding continuity
of production and resilient supply chains.
Whilst these are the key matters arising in the year, the
Board agenda covers a vast array of other areas impacting
the business. A number of these are set out on pages 106
to 108 of this report, including our progress on the
Berkeley Modular factory, employee engagement and our
approach to fire safety both in our buildings and leading
within the industry, amongst others.
Looking forward to 2021/22, the Board will continue its
programme to refresh Board composition, 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 and support during the year.
Glyn Barker
Chairman
98
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Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportFinancial StatementsCorporate GovernanceStrategic Report BOARD AT A GLANCE
BOARD OF DIRECTORS
Board attendance
Member
Glyn Barker1
Diana Brightmore-Armour2
Andy Myers
Peter Vernon3
Rob Perrins
Richard Stearn
Sean Ellis
Karl Whiteman
Justin Tibaldi
Paul Vallone
Sir John Armitt
Meetings attended
Member
Meetings attended
Non-Executive Chairman
4/4
Adrian Li
Rachel Downey
Non-Executive Director
Non-Executive Director
Senior Independent
Director
Non-Executive Director
Non-Executive Director
Executive Director
Executive Director
Executive Director
Executive Director
Executive Director
Executive Director
Non-Executive Director
4/4
4/4
4/4
4/4
4/4
4/4
4/4
4/4
4/4
4/4
4/4
The Ven. Elizabeth Adekunle4 Non-Executive Director
William Jackson4
Sarah Sands5
Non-Executive Director
Non-Executive Director
Tony Pidgley, CBE6
Executive chairman
Baroness Fleet,
Veronica Wadley CBE7
Non-Executive Director
1 Appointed as Chairman on 26 June 2020
2 Appointed as Senior Independent Director on 23 July 2020
3 Appointed as Chairman of the Remuneration Committee on
26 June 2020
4 Appointed as Non-Executive Director on 5 January 2021
5 Appointed as Non-Executive Director on 30 April 2021
6 Served as Executive Chairman until his death on 26 June 2020
7 Stood down as Non-Executive Director on 31 January 2021
4/4
4/4
1/1
1/1
0/0
1/1
3/3
Dame Alison Nimmo, DBE
Non-Executive Director
What we bring to the Board
This diagram sets out the number of
Non-Executive Directors with specific skills
and experience as a way of demonstrating
the different aspects the Directors bring to
the Board. All Directors appear in more than
one category.
4
Recent relevant
financial
experience
5
Other current
PLC board
experience
5
Construction
4
Development
6
Finance/
Banking
11
Commerce
1
Media/
Comms
6
Public sector/
Government/
Community
4
International
Board composition
Gender split
Non-Executive Director tenure
Chairman
Executive Director
Non-Executive Director
Female
Male
1
6
10
29%
71%
0–3 years
3–6 years
7–9 years
9+ years
3
2
4
2
Glyn Barker BSc (Hons)
FCA
Chairman of the Board and
of the Nomination Committee
Date of appointment
to the Board
Independent on appointment
as Non-Executive Chairman
and Chairman of the
Nomination Committee on
23 July 2020 and as Interim
Chairman on 26 June 2020.
Appointed to the Board on
3 January 2012 and previously
as Senior Independent
Director and Deputy
Chairman on 18 April 2018
Committee memberships
N R
Diana Brightmore-
Armour FCCA, FCT
Senior Independent Director
Date of appointment
to the Board
1 May 2014
Committee memberships
N A
Key to Committees
A Audit Committee
N Nomination Committee
R Remuneration Committee
Committee Chair
Skills, experience and contribution
Glyn is a Chartered Accountant and brings extensive experience to the Board
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.
He was previously Senior Independent Director of Aviva plc and Deputy Chairman
of English National Opera.
Other appointments
Independent Non-Executive Director, Cornerstone FS PLC
Independent Non-Executive Director, Various Eateries Plc
Independent Non-Executive Director, Transocean Ltd
Chairman, Irwin Mitchell Holdings Ltd
Chairman, Tappit Technologies (UK) Ltd
Senior Advisor, Novalpina Capital LLP
Skills, experience and contribution
Diana is a Fellow of the Association of Chartered Certified Accountants and
a Fellow of the Association of Corporate Treasurers. In June 2021, she was
appointed as CEO of C. Hoare & Co., the UK’s oldest privately owned bank.
Previously, 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 also 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, International Women's Forum, C200 and the
City Women’s Network.
Other appointments
CEO, C. Hoare & Co.
Independent Non-Executive Director and Audit Chair of Vocalink,
a Mastercard Company
Independent Non-Executive Director and Audit Chair of Mercer, UK, a Marsh &
McLennan Company
Andy Myers BEng (Hons)
ACA
Independent
Non-Executive Director
Chairman of the Audit
Committee
Date of appointment
to the Board
6 December 2013
Committee memberships
A R
Skills, experience and contribution
Andy qualified as a Chartered Accountant with KPMG in 1990 and brings extensive
commercial and recent relevant financial experience to the Board. He is Chief
Financial Officer and a Member of the Management Board at SUSE S.A., the
world’s largest independent open source software business, listed on the Frankfurt
Stock Exchange. Previously he was Chief Financial Officer at SHL Group and prior
to that 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 and Member of the Management Board, SUSE S. A.
Peter Vernon FRICS
Independent
Non-Executive Director
Chairman of the
Remuneration Committee
Date of appointment
to the Board
6 September 2017
Committee memberships
R
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 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. Peter will be stepping down from the Board at
the 2021 Annual General Meeting and will not be standing for re-election.
Other appointments
Group Executive Director, Grosvenor
Trustee of Peabody
100
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Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportFinancial StatementsCorporate GovernanceStrategic Report
BOARD OF DIRECTORS CONTINUED
Rob Perrins BSc (Hons)
FCA
Chief Executive
Date of appointment
to the Board
1 May 2001
Committee memberships
None
Richard Stearn BSc
(Hons) FCA
Chief Financial Officer
Date of appointment
to the Board
13 April 2015
Committee memberships
None
Sean Ellis BSc (Hons)
Executive Director
Date of appointment
to the Board
9 September 2010
Committee memberships
None
Skills, experience and contribution
Rob joined Berkeley in 1994. He has been a Main Board member since 2001 and
Chief Executive since 2009. Under his management, Berkeley has increasingly
focused on transforming large scale brownfield sites which are beyond the scope
of conventional homebuilders.
Rob oversees an industry leading sustainability strategy, including innovative
climate action, nature recovery and social value programmes. Rob has prioritised
investment in digital skills and technologies and modern methods of
construction; including the development of Berkeley Modular’s precision
manufactured housing solution.
Rob launched the Berkeley Foundation in 2011, an independent charity which works
in close partnership with the Berkeley Group to maximise its positive social impacts.
He contributes to the Bank of England’s Real Estate Forum and to the public
debate around housing delivery, brownfield regeneration, sustainability,
placemaking and community wellbeing.
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, Marlborough College (since 2021)
Skills, experience and contribution
Richard re-joined Berkeley on 13 April 2015 as Chief Financial Officer, 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 practised 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
Sean joined Berkeley in 2004 and was appointed to the Group Main 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 a portfolio
of 23 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 2,400 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
Key to Committees
A Audit Committee
N Nomination Committee
R Remuneration Committee
Committee Chair
Karl Whiteman BSc (Hons)
Executive Director
Date of appointment
to the Board
10 September 2009
Committee memberships
None
Justin Tibaldi
Executive Director
Date of appointment
to the Board
8 December 2017
Committee memberships
None
Paul Vallone
Executive Director
Date of appointment
to the Board
8 December 2017
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 Thames and Berkeley Modular.
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 advanced manufacturing
facility in Kent.
Karl oversees the delivery of Our Vision 2030, 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 M&G, 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, the Customer Service Committee 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 Gas Works and 9 Millbank, both in London,
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
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Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportFinancial StatementsCorporate GovernanceStrategic Report BOARD OF DIRECTORS CONTINUED
Sir John Armitt CBE
FREng FICE
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
N
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
Dame Alison Nimmo DBE
Independent
Non-Executive Director
Date of appointment
to the Board
5 September 2011
Committee memberships
A
Skills, experience and contribution
Dame Alison is a Non-Executive Director of St. Modwen Properties PLC and of MHCLG.
Alison is a Chartered Surveyor and Town Planner by training and is the former
Chief Executive of The Crown Estate. Alison brings extensive experience in urban
regeneration and property to the Board. 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
Royal Institution of Chartered Surveyors, 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
Independent Non-Executive Director, St. Modwen Properties PLC
Non-Executive Director, MHCLG
Member of Imperial College’s Property Committee
Commissioner, The Royal Commission for the Exhibition of 1851
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. Adrian is an active, valuable and effective
member of the Board who brings a global and diverse perspective to Board
discussions, provides valuable insight into the Far East property and finance
markets and, throughout his tenure, has demonstrated sustained commitment
and availability. Adrian will be stepping down from the Board at the 2021 Annual
General Meeting and will not be standing for re-election.
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
Skills, experience and contribution
Rachel brings extensive regeneration expertise to the Board. 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 Non-Executive Director
of Lancashire County Cricket Club and 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
Non-Executive Director, Lancashire County Cricket Club
Trustee of We Love Manchester Emergency Fund
Adrian Li MA (Cantab),
MBA, LPC
Independent
Non-Executive Director
Date of appointment
to the Board
2 September 2013
Committee memberships
None
Rachel Downey ACA
Independent
Non-Executive Director
Date of appointment
to the Board
8 December 2017
Committee memberships
A
Key to Committees
A Audit Committee
N Nomination Committee
R Remuneration Committee
Committee Chair
The Ven. Elizabeth
Adekunle
Independent
Non-Executive Director
Date of appointment
to the Board
5 January 2021
Committee memberships
None
William Jackson
Independent
Non-Executive Director
Date of appointment
to the Board
5 January 2021
Committee memberships
N
Skills, experience and contribution
Liz has been the Archdeacon of Hackney since 2016 and became a Chaplain
to Her Majesty the Queen in April 2017. Liz was awarded the Freedom of the
City of London in April 2019.
Liz is a Westminster Abbey Institute Fellow, an Associate at Ridley Hall Theological
College and an Honorary Fellow of St Augustine’s College of Theology. Liz is on
the Board of STRIDE, Metropolitan Police Board, a member of the National Police
Chief’s Council Op. Talla Independent Ethics Committee and a member of the
Metropolitan Police Strategic Faith Group.
Until recently, Liz was Chair of the Monuments and Plaques Committee at St Paul’s
Cathedral and has chaired several conversations on contentious and complex
issues such as Contested Histories. Liz has considerable experience of social,
political and ethical matters and brings a valuable perspective on the potential
of urban regeneration and good placemaking to improve the lives of those living
in the communities within which Berkeley operates.
Other appointments
Archdeacon of Hackney for the Diocese of London
Chaplain to Her Majesty the Queen
Board Member, STRIDE, Metropolitan Police Board
Member, National Police Chief’s Council Op. Talla Independent Ethics Committee
Member, Metropolitan Police Strategic Faith Group
Skills, experience and contribution
William is Managing Partner of Bridgepoint, one of Europe’s leading private equity
groups, which he has led since 2001. William has served on a wide range of UK
and international boards during his career and stood down as Senior Independent
Director of British Land plc in 2020 and as a Non-Executive Director in March 2021.
William is President of the Board of Dorna Sports S.L. and Non-Executive Director
of the Royal Marsden NHS Foundation Trust. William brings extensive property,
commercial, financial and PLC experience to the Board.
Other appointments
Managing Partner, Bridgepoint Advisers Group Ltd
President of the Board, Dorna Sports S.L.
Non-Executive Director, Royal Marsden NHS Foundation Trust
Chairman of Governors, Wellington College
Sarah Sands
Independent
Non-Executive Director
Date of appointment
to the Board
30 April 2021
Committee memberships
None
Skills, experience and contribution
Sarah is a journalist by profession and was Editor of the BBC Radio 4 Today
programme from 2017 to 2020. Prior to this, Sarah was Editor of The Evening
Standard and The Sunday Telegraph and has held Editor in Chief and Consultant
Editor roles at Reader’s Digest and the Daily Mail. Sarah is a Board Director of
Hawthorn Advisors and is Chair of the Gender Equality Advisory Council for G7 for
2021 and of the political think tank Bright Blue. She is a Board Member of London
First and Index on Censorship and is a Patron of the National Citizen Service. Sarah
brings to the Board a broad insight on economic, political and social matters and
a valuable perspective on issues such as the environment, sustainability,
community and inclusivity.
Other appointments
Board Director, Hawthorn Advisors
Chair, G7 Gender Equality Advisory Council
Chair, Bright Blue
Non-Executive Director, London First
Trustee, Index on Censorship
Patron, National Citizen Service
Advisory Board Member, The Queen’s Platinum Jubilee Pageant
Former Directors who served during the year
Tony Pidgley CBE
Executive Chairman until 26 June 2020. Co-founded Berkeley in 1976 and led the business as Group Managing Director
for 33 years. Served as Group Chairman from 9 September 2009 until his sudden and untimely passing on 26 June 2020.
Baroness Fleet, Veronica Wadley CBE
Independent Non-Executive Director from 3 January 2012 until 31 January 2021.
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Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportFinancial StatementsCorporate GovernanceStrategic Report
BOARD LEADERSHIP AND COMPANY PURPOSE
The Board
At the date of this report, the Board comprises 17 Directors:
the Non-Executive Chairman, six Executive Directors and
10 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 113 of this report.
Meetings
The Board met formally four times during the year ended
30 April 2021 and there were no absences. There was also
one Board call during the year and multiple email exchanges.
In addition to these formal meetings of the Board, the
Non-Executive Directors met with the Chairman three times
during the year. The Chief Executive and Chief Financial
Officer attended part of these meetings in order to provide an
update on the business activities of the Group. Thereafter, the
Non-Executive Directors met without the Executive Directors
being present. 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 announcements.
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.
Board activities during the year and
key focus areas
The governance structure on page 113 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 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.
The Board normally aims to hold some meetings at key
sites. Whilst this has not been possible over the last year,
it is a practice which will resume when circumstances
permit this safely. These site visits are accompanied by
a presentation from the local divisional management team
on the respective developments setting out the development
challenges they have overcome, engagement with the local
community and the overall financial performance of the
development. These presentations have been undertaken
remotely this year to ensure Non-Executive Directors
continue to have visibility of the operations of the business
and the local management teams.
Broadly, the focus of Board activities falls into three areas;
strategy, finance and governance.
STRATEGY
Monitoring and responding to COVID-19
The Board closely monitored the Group’s strategic
response to COVID-19 as the situation changed and
evolved during the year to ensure the safety and
wellbeing of our people, customers, suppliers and
local communities and continuity of production and
supply-chain resilience. For more details on the
response to COVID-19 during the year see page 17.
Shaping Our Vision 2030
The Board reviewed and shaped the Our Vision 2030
strategy as it was being developed, before approving its
structure, content and targets. The Board will continue
to monitor performance against the strategy's targets
and long-term goals.
Planning status of future developments
The Board received updates at each meeting on the
planning status of key sites, 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.
The fit out of the factory is now nearing completion with
the first prototype modules expected to go into
production soon.
Health and safety incidents
The Board reviewed the Company’s health and safety
approach. The Group currently has an industry leading
AIIR of 1.14, compared with the Health and Safety
Executive’s industry average of 2.63; see page 46
of the Strategic Report.
Fire safety
As a responsible developer, the safety of its customers
has always been, and continues to be, of paramount
importance to Berkeley. Regulatory developments in
this area are reported to the Board as well as updates
from the divisional management teams on the ongoing
reviews across the business and actions being taken.
During the year the Board approved the roll out of an
updated set of Build Quality Assurance Standards across
the business to reflect the latest Government regulation
and guidance and to reinforce best practice.
FINANCE
Progress against climate change
commitments and approach to sustainability
Dividends and shareholder returns
In line with the updated Group Strategy, Our Vision 2030,
the Board approved the new priorities for nature and
climate change, including short, medium and long-term
targets to meet ambitious goals in tackling these issues.
The Board also received regular updates on sites under
development to ensure that the current 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 76 to 77 of the
Strategic Report.
During the year the Board reaffirmed its commitment
to make £281 million of shareholder returns per annum,
either through dividends or share buy-backs, up to
September 2025.
In June 2020, the Board announced the deferral, by up
to two years, of the previously earmarked £455 million
surplus capital which was to be delivered in instalments
by March 2021.
In June 2021, Berkeley proposed to return the first half
(£228 million) via a shareholder payment by
30 September 2021.
Government COVID-19 support
The Board took the decision during the year not
to make use of the Government's financial support
schemes offered during the COVID-19 pandemic,
including the Government’s furlough scheme or its
COVID Corporate Financing Facility. This decision was
made due to the Group’s high liquidity and long-term
cash flow visibility.
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.
Cyber security and data protection
The Board continues to be cognisant of both Cyber
Security threats and Data Protection requirements. Whilst
the overall strategy to comply with the requirements in
relation to Data Protection and provide an appropriate
level of Cyber Security is consistent, this area continues
to be dynamic and emerging threats and responses
are reviewed regularly. A steering group with Board
representation meets monthly to monitor the Group’s
position in these areas and evaluate opportunities for
improvement. In the event that specific Cyber Security
threats to the Group are identified, then protocols are
in place to allow rapid responses.
Company Tax Policy
The Group’s tax strategy is ultimately overseen by
the Board of Directors. Berkeley seeks to meet all of
its statutory and regulatory tax obligations. The Board
undertakes an annual review of the Group Tax Policy, or
more frequently if there are material changes to the tax
environment. The aim is 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.
Modern Slavery Statement
The Board approved the Modern Slavery Statement
in compliance with the Modern Slavery Act 2015, which
also included commitments to further actions over the
forthcoming year to understand the risks of modern
slavery and child labour and to their eradication.
Read more at https://www.berkeleygroup.co.uk/
modernslavery.
106
107
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportFinancial StatementsCorporate GovernanceStrategic Report BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED
During his tenure, Adrian has been a valuable and
effective Independent Non-Executive Director, who
has consistently demonstrated sustained commitment
and availability. Adrian has maintained a perfect
attendance record and has contributed strongly
during ad hoc periods of increased activity, as has
been notably evident during recent times of
unprecedented and increased challenge during
COVID-19 and following the passing of the
Company’s Chairman and Co-founder.
— During the year, the Company has appointed three
new Non-Executive Directors, The Venerable Elizabeth
Adekunle, William Jackson and Sarah Sands, who
together bring to the Board a broad and extensive
range of experience on property, commercial,
environmental and social, and ethical governance.
Andy Kemp will be joining the Board as a Non-
Executive Director with effect from 1 July 2021,
following his retirement as a senior partner at PwC.
Most recently at PwC, Andy chaired their
Non-Executive Director programme and was
previously a member of the Audit and Risk
Assurance executive board.
— On 31 January 2021 Baroness Fleet, Veronica Wadley
CBE stepped down as a Non-Executive Director.
Additionally, following the year end, the Company
announced that Peter Vernon will be stepping down
as a Non-Executive Director at the Company's 2021
AGM and will not be standing for re-election in order
to take a long-planned sabbatical coinciding with his
retirement from Grosvenor.
Throughout the year ended 30 April 2021, 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
in respect of provisions 10, 19 and 38 as set out on this
page and on page 129 of this Report.
LTIP vesting performance conditions
During the year, the Remuneration Committee approved
a change to the performance conditions of the Long
Term Incentive Plan, to introduce additional vesting
criteria in assessing individual performance, targeted
to each individual Executive Director’s role and function
and to allow a differentiated vesting outcome aligned
to individual targets. Further details are set out in the
Remuneration Report on pages 122 to 150.
GOVERNANCE
Several matters were considered by the Board
during the year relating to the tenure and
independence of members of the Board,
pursuant to Provisions 9 and 19 of the Code, the
composition and succession planning for the Board
and the perceived over-boarding of Adrian Li.
— The Board recognises that the tenures of Sir John
Armitt and Dame Alison Nimmo DBE as Independent
Non-Executive Directors have exceeded nine years
which the Code refers to in the context of the
independence of Non-Executive Directors. The Board
has considered this matter and concluded that both
directors continue to be independent. Both Sir John
Armitt and Dame Alison Nimmo DBE continue to
maintain and contribute an independent view in all
Board deliberations, consistently providing robust
challenge and scrutiny. Furthermore, their extensive
construction and urban regeneration expertise and
experience continue to be of significant value to
the Board.
— Following the sudden death of Tony Pidgley in
June 2020, the Board decided that in these unexpected
circumstances, Glyn Barker should take on the role of
Chairman for a period of up to two years as he oversees
the transitional programme of refreshing the Board.
The appointment of Glyn Barker as Chairman for this
period will take his length of service on the Board
beyond nine years, which the Code refers to as the
suggested maximum period a Non-Executive can serve
as an independent member. However, in compliance
with the code, which states the Chairman should be
independent on appointment, the Board has concluded
that it is in the best interests of shareholders that the
Chairman should remain in post beyond the nine years
in order to facilitate effective succession and the
development of a diverse board.
— Following his appointment as Chairman, Glyn Barker
stepped down as Chairman of the Remuneration
Committee and as a member of the Audit Committee.
He remains as member of the Remuneration
Committee and has been appointed as Chairman of
the Nomination Committee. Diana Brightmore-Armour
became Senior Independent Director and a member of
the Audit Committee. Peter Vernon became Chairman
of the Remuneration Committee and Sir John Armitt
became a member of the Nomination Committee.
William Jackson was also appointed as a member
of the Nomination Committee.
— Following the 2019 AGM the Company noted that there
was concern over the re-election of Adrian Li due to
the number of directorships he holds. The Company
appreciates the support given by shareholders at its
AGM held on 4 September 2020, where 78.42% of
votes were cast in favour of the re-election of Adrian Li.
Nonetheless, as previously advised, Adrian Li will not
be standing for re-election as a Non-Executive Director
at the Company’s 2021 AGM. I would like to take
this opportunity to thank Adrian for the substantial
contribution he has made during nearly eight
years of service since joining the Board in 2013.
108
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 one another, our long-term strategies and our brand.
Our value
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 Purpose
is to build quality homes, strengthen communities
and improve people’s lives.
Our Vision
is to be a world-class business, trusted to transform the
most challenging sites into exceptional places and to
maximise our positive impact on society, the economy
and the natural world.
Read more on pages 35 to 50.
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
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 actively to 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 conferences. 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.
Our Vision 2030:
Transforming Tomorrow
Our new ten-year business strategy
is firmly grounded in the Berkeley
culture, building upon our established
strengths, and challenges us to do even
more to achieve our core purpose.
109
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportFinancial StatementsCorporate GovernanceStrategic Report BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED
DIVISION OF RESPONSIBILITIES
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 106 to 108 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 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 Chief
Financial Officer.
Individual areas of responsibility are explained on page 112.
The Board has a range of experience and has
strong knowledge in areas of property development,
construction, media and communications, public
sector, Government, communities, inclusivity and social
engagement, finance and banking, and commerce and
governance, 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 Chairman leads the Board and is responsible for its
overall effectiveness, for setting and shaping the culture in
the Boardroom and the Company, overseeing high
standards of corporate governance, ensuring effective
communications between the Board and shareholders and
ensuring the Board understands the views of the
Company’s key stakeholders.
The Chief Executive has day-to-day executive responsibility
for the running of the Group’s businesses. His role is to lead
the Group’s strategic direction and propose, develop and
deliver the overall strategy and business plans, to enable
the Group to meet its objectives, to oversee and maintain
relations with investors and other key stakeholders, to
ensure the appropriateness of the Group’s risk management
strategy, and to ensure effective policies and procedures
for the management, development and succession planning
of the management team and the Company’s staff.
The Senior Independent Director’s primary role is to work
closely with the Chairman, serving as a sounding board,
providing support in the delivery of objectives and serving
as an intermediary for other Directors and shareholders.
The Non-Executive Directors, led by the Senior
Independent Director Diana Brightmore-Armour, 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.
In addition to ensuring the safe operation of our sites for the
health and wellbeing of our employees and subcontractor
workforce, the Board engages with employees in a number
of different ways. Subject to COVID-19 restrictions, the
Chief Executive and Chief Financial Officer regularly
visit the operating companies and developments under
construction to engage with employees and oversee the
site activities. Members of the Board are present at staff
conferences to provide business updates and encourage
open group discussions. During the last year, a number
of these have still taken place using remote technology.
A People Engagement Forum was set up in 2020 with the
aim of ensuring there is a single platform for reviewing
employee matters, 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 60
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.
Annual General Meeting
The Company’s AGM will take place at 11 a.m. on
3 September 2021. 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.
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, as well as 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
56 to 57 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 agreed risk framework 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 78 to 95 of the Strategic Report.
Shareholder engagement
The Company undertakes active dialogue with its current
and prospective institutional shareholders through meetings
or calls. During 2020/21 discussions focused around the half
year and year-end and covered topics such as COVID-19
response and operations, performance, markets, business
strategy and capital allocation, interim and full year results
and governance matters. In addition to these meetings,
Executive Directors continue to engage with a number
of shareholders and proxy advisory agents in order to
discuss specific queries raised.
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 on the Investor Information section
of the website. The Board is also kept informed of the views
of the shareholders through periodic reports from the
Company’s broker, UBS.
The Chief Executive and Chief Financial Officer 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 Chairman and Senior Independent Director are
available to shareholders if they have concerns and 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. This has been especially important in light of
the COVID-19 pandemic which has presented challenges to
the business and focused priorities. The Board recognises
that talented and motivated employees are the Company’s
strongest resource. The 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 2030.
110
111
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportFinancial StatementsCorporate GovernanceStrategic Report DIVISION OF RESPONSIBILITIES CONTINUED
Board responsibilities
Non-Executive Chairman
Executive Directors
The Chairman is responsible for:
— leading the Board and ensuring its overall
effectiveness, setting the agenda and ensuring
accurate, timely and clear information is provided
to the Board as required;
— setting, shaping and sustaining the culture in the
Boardroom and the Group;
Collectively, the Executive Directors on the Board are
responsible for:
— operational aspects of implementing the Group’s
strategy, including land acquisitions, planning,
construction and sales of homes and commercial
properties;
— driving performance and innovation across
— overseeing the implementation of high standards
the business;
of corporate governance;
— encouraging constructive Board relations and open
debate and ensuring that each Director contributes
to effective decision making; and
— ensuring effective communication between the Board
and shareholders and ensuring the Board understands
the views of the Company’s key stakeholders.
— 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.
Chief Executive
Senior Independent Director
The Chief Executive is responsible for:
The Senior Independent Director is responsible for:
— day-to-day running of the Group’s businesses
— working closely with the Chairman, serving as
and operations;
— leading the Group’s strategic direction, proposing,
developing and delivering the overall strategy
and business plans to enable the Group to meet
its objectives, having regard to the needs of
key stakeholders;
— overseeing and maintaining relationships with
investors and other key stakeholders;
— ensuring the appropriateness of the Group’s risk
management strategy; and
a sounding board and providing support and advice
in the delivery of objectives;
— leading the Non-Executive Directors' evaluation of the
Chairman’s performance; and
— serving as an intermediary for other Directors and
shareholders, including meeting with Non-Executive
Directors annually, without the Chairman present,
and providing feedback to the Chairman and
Chief Executive; and
— being available to shareholders and other
— ensuring effective policies and procedures for the
management, development and succession planning
of the management team and the Company’s staff.
Non-Executive Directors to address any concerns
not otherwise dealt with through usual channels
of communication.
Chief Financial Officer
Non-Executive Directors
The Chief Financial Officer is responsible for:
— managing the financial affairs of the Group,
including tax, treasury, internal audit and investor
relations functions;
— managing the relationship with the external auditor;
— strategic risk management of the Group; and
— oversight of the IT and HR functions.
Collectively, the Non-Executive Directors on the Board
are responsible for:
— bringing an external perspective in providing
additional advice and expertise to support the
Board in setting, developing and monitoring the
implementation of the Group strategy;
— providing sound judgment, objectivity and an
appropriate level of constructive challenge and
scrutiny of 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.
The Board are supported by the Company Secretary in
relation to policies, processes and the timely provision
of information to the Board.
Governance structure
Executive Committee
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
Divisional and operating company boards
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
— Sustainability
— Estates Management
Board of Directors
Key responsibilities include:
— overall management of the Group, its strategy and long-term objectives including sustainability
— 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
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,
experience and diversity
on the Board
— leading the process for
identifying and nominating
candidates for Board
vacancies
Audit Committee
Remuneration Committee
Key responsibilities include:
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
— determining and agreeing with the Board the broad policy
for the remuneration of the Group Chairman and Executive
Directors and reviewing its ongoing appropriateness,
consulting with significant shareholders as appropriate.
This includes salary, bonuses, benefits in cash or in kind,
profit sharing and incentive remuneration arrangements,
share options, other share based incentives and pension
rights and arrangements
— determining targets for any performance-related incentive
schemes and approving total annual payments under
such schemes
— determining the design of all share incentive plans for
approval by the Board and shareholders, determining each
year whether awards will be made, the levels of participation
in such plans, the overall amount of such awards and
individual awards
— monitoring and assessing performance conditions applicable
to long-term incentive awards, ensuring these are aligned to
the Company’s purpose and values and clearly linked to the
successful delivery of the Company’s long-term strategy and
enhancement of shareholder value
— monitoring and mitigating
— considering the views of shareholders when determining plans
emerging and
principal risks
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
and Group
— reviewing staff remuneration and related policies and the
alignment of incentives and rewards with culture and
performance, including overseeing any major changes in
remuneration and employee benefit structures
112
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Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportFinancial StatementsCorporate GovernanceStrategic Report DIVISION OF RESPONSIBILITIES CONTINUED
NOMINATION COMMITTEE REPORT
Remuneration Committee
The Remuneration Committee is responsible for
determining the Company’s policy for Executive
remuneration and the precise terms of employment and
remuneration of the Non-Executive Chairman and the
Executive Directors.
During the year Glyn Barker stepped down as Chairman
of the Remuneration Committee, as required by the
Code, but remained as a member. Peter Vernon was
appointed Chairman of the Remuneration Committee,
having had over a year of experience on the Group’s
Remuneration Committee. Details of membership,
meetings and attendance can be found in the table on
page 122 of this Report.
No Director is involved in deciding his or her
remuneration. The Chairman and the Executive Directors
decide the remuneration of the Non-Executive Directors
and the Committee takes into consideration the
recommendations of the Chief Executive and Chief
Financial Officer regarding the remuneration of their
Executive colleagues.
The principles and details of Directors’ remuneration are
contained in the Directors’ Remuneration Report on
pages 122 to 150.
Introduction
The Board of Directors presents its
Nomination Committee Report for
the year ended 30 April 2021.
Details of the membership, meetings and attendance
of the Nomination Committee are reported in the
table below.
Audit Committee
Membership meetings and attendance
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.
During the year, Glyn Barker stepped down from and
Diana Brightmore-Armour was appointed to the Audit
Committee. The Audit Committee comprises four
independent Non-Executive Directors. A Myers, who
chairs the Audit Committee, is considered to have
recent and relevant experience as demonstrated by his
biography on page 101 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 118
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 118.
Committee member
Tony Pidgley CBE
(Chairman)*
Date of
appointment
to Committee
9 September
2009
Glyn Barker (Chairman)**
Diana Brightmore-Armour 15 October 2015
Baroness Fleet,
Veronica Wadley CBE†
13 June 2012
18 April 2018
Sir John Armitt
23 July 2020
Meeting
attendance
0/0
2/2
2/2
1/1
2/2
* Chairman of the Nomination Committee from 9 September
2009 until his passing on 26 June 2020
** Chairman of the Nomination Committee since 23 July 2020
† Member of the Nomination Committee until her retirement
as a Non-Executive Director of the Company on 31 January 2021
In addition to formal meetings of the Nomination
Committee, the Committee held a number of calls and
meetings with prospective Non-Executive Directors as
it oversaw the Board refresh programme.
G Barker
Chairman, Nomination Committee
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.
Executive Committee
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 S Ellis, R J Stearn, J Tibaldi, P M Vallone,
K Whiteman, P Clanford, H Lewis, E Russell and
A J Dowsett.
Nomination Committee
The Nomination Committee ensures that the
membership and composition of the Board, including
the balance of skills, experience and diversity, is
appropriate, as well as giving full consideration
to succession planning on a regular basis.
During the year Glyn Barker was appointed as Chairman
of the Nomination Committee on 23 July 2020, following
the passing of Tony Pidgley CBE. Baroness Fleet, Veronica
Wadley CBE left the Committee upon stepping down as
a Non-Executive Director and Sir John Armitt and William
Jackson were appointed as members of the Nomination
Committee to bring the Committee membership to four
independent Non-Executive Directors.
Full details of membership, meetings and attendance
can be found in the table on page 115 of this Report.
Key areas of responsibility of the Nomination
Committee can be found on page 115 of this Report.
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Meeting Items discussed
Meeting
Item discussed
November
2020
— Board and Committees composition
— Skills matrix for Non-Executive Directors
— Non-Executive Director succession planning,
including the appointment of new
Non-Executive Directors
— Gender and ethnic diversity
December
2020
— Board and Committees composition
— Non-Executive Director succession planning,
April 2021
including the appointment of new Non-
Executive Directors, having regard to skills,
experience, knowledge, diversity and inclusion
— Board and Committees composition
— Skills matrix for Non-Executive Directors
— Non-Executive Director succession planning,
including the further appointment of a new
Non-Executive Director
— Gender and ethnic diversity
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 Information 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 has increased in the past year to 29%, although
this is still just below the target set by the Hampton-
Alexander Review. This largely reflects the fact that the
Board includes six 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. Nonetheless, as the Board continues
its programme to refresh the composition of the Board,
it is anticipated that female representation on the Board
will have reached at least 33% by June 2022.
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
60% of the next tier of senior management. When taken
together with the five female Non-Executive Directors,
female representation in the most senior roles within the
Group stands at 36%.
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Berkeley Group 2021 Annual Report
115
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 are key considerations
during ongoing Board recruitment processes. 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, subject to evolving health and safety
guidance, 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 in which the Group
operates. Additionally, during the year, Directors received
training on the Market Abuse Regulations and changes
to town and country planning legislation, to create safe
places of work during the COVID-19 pandemic and the
Government’s advice and legislation on safer buildings.
Members of the Audit and Remuneration Committees
receive briefings from the Group's 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 2020/21
The Code requires that the Board undertakes an annual
evaluation of its own performance and that of its
committees and directors with an externally facilitated
evaluation conducted at least once every three years.
Although an external evaluation was conducted in
2019/2020, given the death of Tony Pidgley on 26 June
2020 and the challenges created by COVID-19, it was
decided to conduct a further external review in 2020/2021.
The Evaluation was conducted by Claire Howard
Consultancies through private one to one discussions
with each Director, the Group Solicitor and the Company
Secretary. Despite continuing COVID-19 challenges,
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 finalising its findings for submission to the Board
for a full Board discussion.
The Board set itself the following goals in 2020/21:
Following the 2019/2020 Board Evaluation, the Board set
itself the following goals:
1. To continue ensuring the Group’s culture is embedded
throughout the Company by establishing one-to one
meetings between the divisional directors and Tony
Pidgley to explore individual ideas and initiatives;
2. As the tenure of a number of Non-Executive Directors
is ending, to encourage a diverse range of candidates
to join the Board with not only traditional Board skills
but also a wider set of skills fit to meet the next
decade’s challenges;
3. Each divisional board to conduct an in-depth review
of the skill sets in its companies and also in anticipation
of the skills needed to take the Company through the
next decade.
Progress against these goals:
1. Within days of having approved the Board Evaluation for
2019/2020, Tony Pidgley died unexpectedly. The Board
stood resolutely behind Rob Perrins as CEO and Glyn
Barker as Chairman to ensure that, at a time that was
already difficult because of COVID-19, the Company
continued to operate seamlessly. Rob Perrins conducted
the interviews on culture that Tony Pidgley had expected
to undertake. These conversations also included
discussion on modernising the Company in anticipation
of the demands of the next decade but within the
framework of a company with entrepreneurial flare and
a strong balance sheet that was at the basis of Tony
Pidgley’s vision.
2. Having been appointed as Chairman on Tony Pidgley’s
death, Glyn Barker has led the identification of the new
Non-Executive Directors. Having identified the skills
needed to replace those Directors coming to the end
of their tenure, Glyn Barker also identified a number of
additional and complementary skills needed to take the
Company through the next ten years whilst at the same
time being mindful of ensuring a diverse Board. This
has resulted in the appointment of four new directors:
Liz Adekunle, William Jackson, Andy Kemp and
Sarah Sands.
3. The divisional heads have engaged in detailed talks with
Rob Perrins on the skills gaps in their companies, with
particular emphasis on what is needed to take the
Company forward through the next phase of its
development. These discussions have also informed the
Board’s work in developing Vision 2030 which is dealt
with in more detail in other parts of this Annual Report.
Goals for 2021/22:
The goals for 2020/21 are yet to be finalised but will include:
a) ensuring that the new Directors through meetings with
both Rob Perrins and the long-standing Directors
acquire a deep understanding of the Company’s culture
and values;
b) embedding Our Vision 2030 throughout the Company;
c) building on and consolidating the Company’s work on
staff engagement and diversity;
d)as soon as Government restrictions allow, to resume face
to face meetings and less formal engagement between
Board members.
All whilst preserving the entrepreneurial nature of the
business and retaining its strong Balance Sheet.
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 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, and utilising the services of an independent
recruitment specialist, when appropriate. There have been
three new appointments during the year ended 30 April
2021, with The Ven. Elizabeth Adekunle, William Jackson
and Sarah Sands joining the Board as Non-Executive
Directors before 30 April 2021 and a further appointment,
Andy Kemp due to take effect from 1 July 2021.
Baroness Fleet, Veronica Wadley CBE retired from the
Board in January 2021, following nine years of service.
Adrian Li and Peter Vernon will retire from the Board,
and will therefore not be standing for re-election, at the
2021 AGM.
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, with the
exception of Adrian Li and Peter Vernon as reported
above, will be offering themselves for re-election at the
AGM to be held on 3 September 2021.
Board and Employee diversity and inclusion
Berkeley strives to be an equal opportunity employer
and a Group-wide Equality and Diversity Policy, which
applies equally to the Board, is in place, in line with Group
strategy, making it clear that Berkeley 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.
G Barker
Chairman, Nomination Committee
23 June 2021
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Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportFinancial StatementsCorporate GovernanceStrategic Report AUDIT COMMITTEE REPORT
Introduction
The Board of Directors presents its
Audit Committee Report for the year
ended 30 April 2021 which has been
prepared and recommended by
the Audit Committee.
The report has been prepared in accordance with the
requirements of the Code, 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 101 to 105 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
Date of appointment
to Committee
Meeting
attendance
Andy Myers (Chairman)* 6 December 2013
5 September 2011
Glyn Barker**
Dame Alison Nimmo DBE 5 September 2012
18 April 2018
Rachel Downey
Diana Brightmore-Amour 23 July 2020
3/3
1/1
3/3
3/3
1/2
* Chairman of the Audit Committee since 1 September 2014
** Retired from the Audit Committee on 23 July 2020
Andy Myers
Chairman, Audit Committee
Meeting Items discussed
Meeting
Item discussed
June 2020 — Draft results for the year ended 30 April 2020
— 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 2020 Annual Report
— Draft interim results for the 6 months ended
31 October 2020
— KPMG’s Report on the Audit Plan and
Strategy for the year ending 30 April 2021
— KPMG’s Report on the interim review period
— Internal audit report
— Auditor independence and non-audit fees
and services
December
2020
March 2021
— Annual review of risk management and
Internal Control Framework
— Internal audit report
— Review of the Company’s approach to cyber
security and data protection
— Auditor independence and non-audit fees
and services
— Financial reporting update including new
mandatory reporting requirements
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 in 2020 together
with the policy on the independence of the external
auditor, 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 Chief Financial
Officer presented, and the Committee debated, the
financial results, business plan of the Group and any
significant financial reporting judgments 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 judgments
adopted therein.
The Committee’s review of the Annual Report
concentrated on whether, taken as a whole, it was
fair, balanced and understandable and provided the
information necessary for users of the Annual Report
to assess the Group’s business strategy and performance.
The views of the Group’s 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 2020/21 financial year included:
— Cost of sales recognition
The Group recognised costs of sales on each unit sold
by reference to the overall site margin, determined by the
forecast profit percentage for a site that may comprise
multiple phases and can be completed over a number
of years. The recognition of cost of sales is therefore
dependent on an estimate of future selling prices and
build costs, including an allowance for risk. Long-term
sites contain a higher degree of estimation uncertainty
and exposure to cyclical market movements. Management
undertook an assessment of these risks and assumptions,
and reported the conclusions of these assessments,
by exception, to the Committee in a financial overview
paper prior to the 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 judgment 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 historical 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
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.
During the year, the Financial Reporting Council's
Corporate Reporting Review Team ("CRR") reviewed
our Annual Report and Accounts for the year ended
30 April 2020. Following its review, the CRR entered into
correspondence with the Group, seeking clarification on
the principal areas below:
— Revenue recognition
— Significant estimates
— Alternative performance measures
All correspondence received and our responses were
discussed with the Company’s Audit Committee and
the Group’s external auditors. Following the conclusion
of the FRC’s review we have agreed to improve certain
disclosures in relation to the areas listed above in this
year’s financial statements. We note that the FRC letters
provide no assurance that our Annual Report and
Accounts are correct in all material respects; the FRC’s
role is not to verify the information provided but to
consider compliance with reporting requirements.
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 2021 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 78 to 95
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 pages 78 to 79 of the Strategic Report.
The key features of the system of internal control include:
COVID-19
COVID-19 has presented new challenges for the business
over the last year and a key focus for the Committee has
been ensuring the Group has continued to implement
essential processes and effective controls. The move
to remote working across a substantial portion of the
business has had a significant impact which, alongside
other restrictions such as social distancing on our on-site
operations, has presented new challenges in the ongoing
implementation of internal controls. Throughout this
period the Group has had to ensure that internal controls
and processes remain robust. The Group embraced the
challenge, with modified processes being swiftly rolled
out across the Group to ensure the internal control
environment remains resilient.
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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.
In addition, there is a formalised process whereby each
division produces quarterly risk and control reports that
identify risks, the potential impact of these and the actions
being taken to mitigate them. These risk reports are
reviewed and updated quarterly.
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, and the impact of steps taken to mitigate
these risks.
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 106 of the Corporate
Governance Report, and covered:
— the assessment of the principal and emerging risks
facing the Group, including COVID-19;
— 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 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 81 of this report.
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 include 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 provided to all employees. Training to staff is
given where necessary. Policies and procedures have been
refreshed and updated during the year to adapt to remote
working and updated operating procedures on site
implemented as a result of COVID-19 restrictions.
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 considered any internal control
recommendations raised by the Group’s auditor 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.
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:
— 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.
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 2021 AGM.
The Committee remains mindful of evolving best practice
under the Code and is subject to various legal and
regulatory requirements which it will consider when
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 Authority’s Audit Order for the financial year
under review.
A Myers
Chairman, Audit Committee
23 June 2021
External audit
KPMG was appointed as the Company’s auditor in the year
ended 30 April 2014 by way of a competitive tender. The
Company is due to re-tender for the external audit again
by 2024, in compliance with the Statutory Auditors and
Third Country Auditors Regulations 2016.
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 judgments 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 it 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 aggregate over the previous three
financial years. The ratio for the year ended 30 April 2021
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.
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
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Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportFinancial StatementsCorporate GovernanceStrategic Report DIRECTORS’ REMUNERATION REPORT
ANNUAL STATEMENT OF THE CHAIR OF THE REMUNERATION COMMITTEE
Key responsibilities of the Committee
— Determine and agree with the Board the broad policy
for the remuneration of the Group Chairman, 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). These were updated
in June 2021.
Who supports the Committee?
In determining the Executive Directors’ remuneration
for the year, the Committee consulted with the Chief
Executive, R C Perrins, and the Chief Financial Officer,
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.
Remuneration Committee membership
Committee member
Date of
appointment
to Committee
Meeting
attendance
Peter Vernon, Chairman*
18 April 2018
Glyn Barker*
Andy Myers
13 June 2012
1 May 2014
3/3
3/3
3/3
* Glyn Barker stepped down as Chairman of the Remuneration
Committee and Peter Vernon was appointed as Chairman on
23 July 2020.
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 2020/21 and how the Remuneration
Policy will operate in 2021/22
Additional context on Berkeley Executive
Directors’ pay
Employment at Berkeley
Annual Report on Remuneration
Peter Vernon
Chairman, Remuneration Committee
Page
124
131
132
134
137
138
144
Financial highlights of 2020/21
The company has had another strong year reflected in the following components of performance:
— Net cash of £1,128 million (2020: £1,139 million) after making shareholder return payments of £334.1 million
(2020: £280.3 million)
— Pre-tax return on shareholders’ equity of 16.5% (2020: 16.6%)
— Net asset value per share increased by 5.7% to £26.12 (2020: £24.72)
— Cash due on forward sales of £1.7 billion (2020: £1.9 billion)
— Future anticipated gross margin in the land bank up 7.3% to £6,884 million (2020: £6,417 million)
— Profit before tax of £518.1 million (2020: £503.7 million)
We did this without furloughing any employees or accessing Government funding support. In the course of an
exceptional year, we learned a good deal about how to keep our people engaged and safe, as well as how our ways
of working can quickly adapt to the circumstances. We will continue to evolve the support provided to our colleagues,
customers and local communities.
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:
Berkeley
Sector highest
Sector lowest
Sector average*
(excluding
Berkeley)
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
2017/18
Restated
2018/19 2019/20 2020/21
21.2%
21.2%
22.4%
22.4%
(0.4%)
3.4%
27.5%
27.5%
3.5%
35.1% 30.8%
35.1% 30.8%
12.2%
16.0%
41.1%
41.1%
15.7%
41.9%
41.9%
11.0%
27.9%
34.1%
15.9%
16.6%
32.3%
15.0%
16.5%
23.1%
5.7%
10 year
average
28.1%
28.1%
11.8%
4.8%
8.5%
11.4%
18.2% 22.3% 24.2% 23.3% 24.9% 23.8% 10.5%
17.2%
*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.
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 2020; following the return to shareholders of £280.2m in respect of 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 was kept apprised of the additional guidance notes issued by the proxy agencies and major shareholders
in respect of the impact of COVID-19 on businesses and how these were expected to be reflected in remuneration
decisions.
— Reviewed and updated the Committee’s Terms of Reference and assessed its effectiveness.
Decisions made during the year
The Committee determined the following during the year:
— Actions in relation to the impact of COVID-19 on Executive Director base salaries and Non-Executive Director fees
including reinstatement of salaries and fees following voluntary 20% reduction in 2019/20 and the first half of 2020/21.
— Vesting of the 2011 LTIP tranche in September 2020.
— The treatment of remuneration for the late A W Pidgley and in particular, impact under the 2011 LTIP.
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 160 to 166 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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Dear Shareholder,
I am pleased to introduce our Directors’ Remuneration Report for the year ended 30 April 2021.
2020/21 has been a busy year for the Remuneration Committee and I am very grateful for the support and dedication
of the fellow members of the Committee and the wider Berkeley team. The Committee has dealt with the continued
consequences of COVID-19 as well as the remuneration consequences of the tragic and untimely death of our founder,
the late A W Pidgley. In this letter I have set out further detail on the work of the Committee in these areas.
The COVID-19 pandemic has created a seismic shift in the way that all businesses must operate. At Berkeley we have
been committed to ensuring that our customers continue to be able to have access to the purchase of quality homes,
while also supporting our people and partners however we can.
We continued to operate our sites throughout the various lockdowns and quickly adapted our methods of working.
The pace and credibility of our response was made possible by the experience and expertise of our employees, and
in particular our construction teams, supported by our Health and Safety professionals, ensuring that disruption was
minimised and efficiency maintained.
Our teams continue to serve our communities and adapt to the ever-changing circumstances and the Board is extremely
proud of the work of every one of our employees and their ongoing efforts in relation to the pandemic. Further detail
is set out on page 17 and within the Company Chairman’s statement.
There were a number of actions taken by the Company in order to support our people during this difficult period.
Health, wellbeing and safety remains the top priority for our business and our wellbeing programme is available to all
people in providing information to support their mental, physical and social health.
Our colleagues, customers and communities continue to be faced with a set of unique circumstances as a result of
COVID-19 whilst the world we live in, the market we operate in, and our business continues to change. Our challenge
going forward is to ensure we continue to optimise our business and create a sustainable long-term model that benefits
all stakeholders post-crisis. Our remuneration principles, which cascade throughout the business, underpin our
Remuneration Policy (the “2019 Policy”) and can be found on page 131. The Remuneration Committee is committed
to ensuring that remuneration structure and outcomes reflect these principles.
The 2019 Policy is set out on pages 21 to 33 of the 2019 Notice of Annual General Meeting which can be found on the
Group's website at www.berkeleygroup.co.uk/about-us/investor-information/corporate-governance.
Impact of COVID-19 on Directors’ Remuneration in 2020/21
The following table sets out the Company’s remuneration history over this period and the impact of COVID-19.
The following factual background should be noted:
— No employees have been furloughed;
— The Company did not receive money under the Coronavirus Job Retention Scheme (CJRS);
— No Government loans were sought by the Company under the Government's Covid Corporate Funding
Facility (CCFF);
— The Company has delivered profits for this year and last, in line with guidance at the start of the two-year period;
— The Company sustained production throughout the pandemic, while protecting the health and wellbeing
of its people, to deliver on our commitments to our customers and communities;
— The Company maintained its industry leading customer satisfaction standing and NPS score;
— The Company maintained its programme of annual shareholder returns; and
— The Company did not raise any additional funding from shareholders.
Element of Remuneration
Committee Decision
Rationale
FY19/20 Salary rises
Executive Director salary rises were
approximately 2.8%.
The general rise for employees was 4.1% and was
implemented prior to the COVID-19 pandemic.
Payment of Deferred Bonus
from the legacy Bonus Plan
in FY 19/20
The Committee determined that the
bonus earned in years prior to
FY19/20 but deferred, and which was
payable in June 2019, should be paid
in accordance with the rules of the
legacy Bonus Plan.
The following are relevant:
— The last financial year in which a bonus
contribution was made to the Plan was FY18/19.
— Therefore 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.
Element of Remuneration
Committee Decision
Rationale
Payment of Salaries and
Fees in FY19/20 & FY20/21
FY19/20 Bonuses
FY20/21 Salary rises
Payment of Deferred Bonus
from the legacy Bonus Plan
in FY 20/21.
The Executive Directors and other
members of the Board took
a voluntary reduction in their salaries
or fees of 20% for the period of 1 April
to 30 September 2020.
The Executive Directors do not
participate in a Bonus Plan. However,
all other eligible people received
a bonus in line with the various
plan rules.
The Committee determined no
salary rises would be made to the
Executive Directors.
The Committee determined that the
bonus earned in years prior to
FY20/21 but deferred, and which was
payable in June 2020, should be paid
in accordance with the rules of the
legacy Bonus Plan.
30 September 2020 – 2011
LTIP Vesting
The Committee determined that the
vesting was in line with the corporate
performance of the Company over the
long-term and individual and wider
considerations did not result in any
requirement for adjustment.
FY20/21 Bonuses
The Executive Directors do not
participate in a Bonus Plan. However,
all other eligible people may receive
a bonus in line with the various
plan rules.
This decision was made to demonstrate
a general social responsibility given the crisis
experienced by the country.
The bonuses related to a financial year largely
unaffected by COVID-19 and the retention and
operation of the bonus plan for employees was
an important part of their incentivisation.
The general rise for employees was 0.2%.
The following are relevant:
— The last financial year in which a bonus
contribution was made to the Plan was FY18/19.
— Therefore 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 FY20/21 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.
The following are relevant:
— The performance period for this vesting
started in 2011 and therefore was only
marginally affected by COVID-19.
— The performance conditions were met in full
with a cumulative return of £1,115.6 million.
— The vesting reflected strong performance
over nine years, including the year ended
30 April 2020.
The retention and operation of the bonus plan
for employees is an important part of their
incentivisation and retention at a time when
the house building market is picking up.
Treatment of remuneration for A W Pidgley
It was with great sadness that we reported that the co-founder of the Company and our Executive Chairman A W Pidgley,
had died suddenly in June 2020. The Company’s Remuneration Policy provides for specific treatment where a participant
dies, compared to a normal departure. The Committee felt there was no need to depart from this default position given
Tony’s unmatched contribution to the Company over a very long period.
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Vesting of the fifth tranche of the 2011 LTIP (30 September 2020)
This tranche of the LTIP was the first to be subject to the enhanced performance conditions set out on page 112 and 113
of the 2020 Report and Accounts. The following table sets out the standard and enhanced performance conditions both
of which have to be met for this tranche of the 2011 LTIP to vest:
30 September 2020 LTIP Vesting
Performance Condition
Detail
Actual Performance
Standard Return Targets
No element of the 2011 LTIP can vest unless the cumulative returns target has been met
through the delivery of the targeted returns during the financial year.
Actual returns made in respect of the 12 months
to 30 September 2020: £280 million
Actual cumulative return since
2011: £1,115.6 million
Enhanced returns: £455 million
The Company held net cash significantly in
excess of £455 million at 30 September 2020,
in readiness for making the Enhanced Return
by the specified dates
This element of the award vested in full on
30 September 2020.
Target returns in respect of the twelve
months to 30 September
2020: £280 million (approximately)
Cumulative return target since
2011: £1,115.6 million
Enhanced return during financial year:
£455 million (approximately)
The Enhanced Return performance
condition will be satisfied provided
that one or more of the following
conditions are met at the September
2020 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.
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; and
4. The Company has a minimum
of £455 million (approximately)
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).
50% of the 2011 LTIP tranche will be
capable of vesting at the 2020 vesting
date and 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 will lapse.
Base Return
Enhanced Return
Vesting
126
Performance Condition
Detail
Actual Performance
Financial Targets
Cumulative ROE
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.
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)
Actual cumulative ROE 16.6%
Full vesting of the 30% of the tranche subject to
this performance condition.
Cumulative Profit before Tax 20% of the tranche is subject the
cumulative Profit before Tax; to
achieve the target in any one year
(1) the Company needs to deliver
Profit before Tax of at least
£500 million; or
(2) The Company must be on track to
deliver a cumulative Profit before Tax
of £3 billion in the six years ending
30 April 2025.
The Company delivered a Profit before Tax of
£504 million for the year ended 30 April 2020
Full vesting of the 20% of the tranche subject
to this performance condition.
Vesting of the 2011 LTIP tranche on
30 September 2020
100%
The fifth 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:
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
options(1)
vested)(2)
of Cap)(3)
Value
above
the Cap(4)
5,000,000
5,000,000
954,328
13.4%
1,000,000
2,250,000
450,000
450,000
33.33%
£1,115.6m of
shareholder
returns from
1 October 2016
to the 30
September
2020 – 100%
achieved
670,000 24,827,319 8,000,000
215,891
16,827,319
670,000 24,827,319 7,344,800
198,209
17,482,519
127,879 4,738,644 2,813,000
75,912
1,925,644
134,000 4,965,464 2,830,250
76,378
2,135,214
301,500 11,172,294 4,580,250
123,604 6,592,044
150,000 5,558,355
1,980,250
150,000 5,558,355
1,980,250
53,439
53,439
3,578,105
3,578,105
Executive Director
A W Pidgley(5)
R C Perrins
R J Stearn
K Whiteman
S Ellis
J Tibaldi(6)
P Vallone(6)
Notes
1. The value of gain on the options at vesting is calculated using the opening share price of £42.45 on 30 September 2020 (the date the
options vested and became exercisable) less the exercise price of £5.3943 per share.
2. The Total Remuneration Cap limits the value of the LTIP vesting in the year. The Total Remuneration Cap operated for the 2020/21
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 2020 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. A W Pidgley ceased to be a director on his death on 26 June 2020. As set out in the section 430(2B) Companies Act 2006 Statement
which was published on the Company's website, all payments in relation to fees and benefits ceased with effect from 26 June 2020.
Details in relation to the treatment of the 2011 LTIP were also disclosed in the section 430(2B) Companies Act 2006 Statement and full
details in relation to the treatment of remuneration for A W Pidgley are set out on page 147.
6. 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 are eligible to vest in two tranches in 2020 and 2021. Therefore in September 2020, 150,000 shares were capable of vesting
(33.33% 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.
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New Performance Assessment for vesting for 2021 tranche of the 2011 LTIP
Rationale
As part of its annual responsibilities the Committee reviewed the operation of the incentives for the Executive Directors.
The Company currently does not operate a Bonus Plan for the Executive Directors. Therefore the only incentive
arrangement is the 2011 LTIP. The Committee believes that, with the addition of the financial performance conditions
in 2020 which have to be satisfied for 50% of any future LTIP tranche to vest, the amended 2011 LTIP was appropriate
for the Company, its strategy and the current environment from an overall corporate performance perspective.
However, the Committee felt that in the current climate, once these corporate performance conditions have been met,
there should be a further qualitative review of individual Executive Director performance to determine whether the
outcome of the corporate performance conditions was appropriate at the level of individual Executive Director.
The Committee therefore asked the CEO of the Company to put in place a mechanism which:
Each Executive Director will be provided with a list of key criteria and the actions expected to deliver the desired result.
The Executive Director will have to deliver the criteria in a holistic manner as there are no weightings as opposed to
simply focusing on achieving the elements of a scorecard which have the highest weightings.
End of the Financial Year
At the end of the financial year the CEO will provide a report to the Remuneration Committee setting out the following
information for each of the Executive Directors:
— The criteria set at the beginning the year;
— A narrative against each of the criteria setting out the CEO’s view on whether the Executive Director has met the
criteria and the evidence relied upon by the CEO;
— An overarching recommendation from the CEO on whether any adjustment should be made to the formulaic outcome
of the 2011 LTIP Tranche vesting; and
1. Allowed the Committee, based on the input of the CEO, to incentivise the targeted behaviours and performance
— Scope of the adjustment: the CEO can recommend a reduction in the level of vesting resulting from the formulaic
of the Executive Directors;
outcome of the performance conditions of up to 50%.
2. Allowed the Committee to provide a differentiated outcome from vesting for relative performance, based on the
CEO’s evaluation of each Executive Directors performance; and
3. Gave the Committee, on recommendation by the CEO, a method by which the absolute values paid to the Executive
Directors may be reduced to deal with the future acceptability of the value of the tranches vesting under the 2011 LTIP
due to COVID-19.
The Chair of the Company would perform a similar role to that of the CEO when the Committee was evaluating the
CEO’s performance.
This change was felt important by the Board to reflect that without a Bonus Plan there was no ability to differentiate
between each individual Executive Director’s performance, as performance under the 2011 LTIP prior to this amendment
was based on the satisfaction of corporate performance conditions, which did not differentiate between each Executive
Director’s respective contributions.
Process
Start of the Financial Year
The CEO of the Company produces, and agrees with the Committee, a set of criteria for each Executive Director which
will be used to determine what if any adjustment will be made to the vesting of each Tranche of the 2011 LTIP resulting
from the formulaic application of the Group-based performance conditions. The following points are relevant:
The broad groupings of the criteria will be as follows:
— Contribution to Group Performance measured through:
– Impact on overall Group not just Divisional or Functional performance
— Performance of the Division or Function measured through:
– Delivery of budget
– No material failures of risk management
– No reputational damage
— Personal Objectives:
– Particular business or functional objectives or goals
The intention is not to provide a strict weighting and scorecard approach for the following reasons:
— Scorecards in general never result in 100% lapse or 100% vesting. It is very difficult to achieve the two extremes in
practice; and
— The intention is for the CEO to take a holistic view at the end of the financial year and determine whether based on
the criteria there is a reason to recommend that the Committee determine to reduce the level of vesting from the
formulaic outcome. There is, therefore, a rebuttable presumption that the tranche will vest. Where the Executive’s
performance does not justify the potential value paid under the formulaic outcome, an adjustment would be made
from the formulaic outturn.
Where the Committee accepts the CEO’s recommendation the shares representing the reduced level of vesting
will lapse.
It should be noted that, for the CEO’s assessment, the Chair of the Company will perform the CEO’s role in the process.
Compliance with the 2018 UK Corporate Governance Code
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 2011 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.
Post-cessation shareholding requirement.
Pension alignment.
Extended malus and clawback.
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.
We have a two year post-cessation shareholding
requirement.
We have lowered pension entitlement for new Executive
Directors to 6%, to be in line with eligibility for the majority
of the wider workforce. There will be full alignment with this
level of pension contribution for the incumbent Executive
Directors by 31 December 2022.
The current malus and clawback provisions already exceed
the best practice suggested in relation to the new Code.
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BERKELEY’S REMUNERATION PHILOSOPHY
Shareholder support
The results of the shareholder votes on the 2019 Remuneration Policy and 2020 Annual Report on Remuneration are set
out below.
Our remuneration philosophy
We have developed a clear set of principles which embed our strategy into how we deliver remuneration to our
Executive Directors.
2020 Annual Report on Remuneration
2019 Remuneration Policy
Remuneration principle
Details
Votes For
Votes Against
91.8%
8.2%
Votes For
Votes Against
57.0%
43.0%
Looking ahead – 2022 Remuneration Policy review
The Company is required to seek shareholder approval at the 2022 Annual General Meeting for a new Remuneration
Policy. The Committee is currently considering the appropriate Remuneration Policy to support the delivery of the
Company’s strategy over the next period of time. It is the intention of the Committee to consult extensively with
shareholders and their representative bodies on the design of the new Remuneration Policy.
In conclusion
We believe that in the wider context of the Company, its stakeholders and the successful implementation of the strategy
that the remuneration outcomes for FY20/21 are appropriate. We, therefore, look forward to shareholder support for
the resolution on the Annual Report on Remuneration. I will be attending the Annual General Meeting so shareholders
can ask questions in person. In accordance with prevailing guidance on Covid restrictions, shareholders are, however,
strongly encouraged not to attend the meeting in person. Any questions can therefore be submitted in advance of
the Annual General Meeting as set out on page 110. Alternatively, I can be contacted via the Company Secretary,
Ann Dibben.
Peter Vernon
Chairman of Remuneration Committee
Fixed pay should be aligned
to the market and the
individual’s experience.
Variable pay should be linked to
the long-term performance of
the company.
Executives should be rewarded for
long-term sustainable performance.
Executives should hold substantial
equity holdings.
Executive remuneration should not
be excessive.
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.
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.
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 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.
600
500
400
300
200
100
130
131
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Berkeley
FTSE 250 Index
FTSE All Share Index
FTSE 100 Index
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportFinancial StatementsCorporate GovernanceStrategic Report
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(1)
R C Perrins
R J Stearn
K Whiteman
S Ellis
J Tibaldi
P Vallone
Shareholding
requirement
Value of
beneficially
owned shares
400%
400%
200%
200%
200%
200%
200%
34,334%
8,263%
2,169%
3,908%
3,628%
837%
939%
1. A W Pidgley ceased to be a director on 26 June 2020 and his shareholding is shown as at that date.
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.
DIRECTORS’ REMUNERATION REPORT CONTINUED
REMUNERATION AT A GLANCE
What we paid Executive Directors in the year
Executive Director
£’000
Salary
2021
Pension
2021(1)
Annual
bonus
2021(2)
Total Remuneration
LTIP(3)
Cap(4)
Actual(5)
Benefits
2021(6)
A W Pidgley(7)
R C Perrins
R J Stearn
K Whiteman
S Ellis
J Tibaldi
P Vallone
Notes
32
513
348
335
335
335
335
–
87
52
50
50
50
50
–
–
–
–
–
–
–
–
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
–
7,945
3,213
3,215
4,965
2,365
2,365
1
26
23
24
19
14
14
Total
2021
33
7,971
3,236
3,239
4,984
2,379
2,379
Total
2020
8,285
8,030
3,265
3,268
5,013
2,407
2,411
1. S Ellis was a member of a defined contribution scheme for part of the year and received a contribution equal to 15% of salary. For the
remainder of the year he received payments in lieu of pension payments from the Company 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 2021, who instead received
payments in lieu of a pension contribution from the Company (2020/21: 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 145.
3. This represents the fifth tranche of the 2011 LTIP that vested on 30 September 2020 at a share price of £42.45 subject to the operation
of the Total Remuneration Cap (see table on page 146 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 2020/21 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.
7. A W Pidgley ceased to be a director on 26 June 2020. As set out in the section 430(2B) Companies Act 2006 Statement which was
published on the Company's website, all payments in relation to fees and benefits ceased with effect from 26 June 2020. Details in relation
to the treatment of the 2011 LTIP were also disclosed in the section 430(2B) Companies Act 2006 Statement and full details in relation to
the treatment of remuneration for A W Pidgley are set out on pages 147. No payments after 26 June 2020 are included in the single figure
in line with the Regulations.
The following table sets out the total fixed pay and total variable pay in 2020/21 and 2019/20:
£’000
A W Pidgley
R C Perrins
R J Stearn
K Whiteman
S Ellis
J Tibaldi
P Vallone
Total Fixed
Total Variable
2021
33
626
423
409
404
399
399
2020
285
685
452
438
433
427
431
2021
–
7,345
2,813
2,830
4,580
1,980
1,980
2020
8,000
7,345
2,813
2,830
4,580
1,980
1,980
Annual Bonus outcome
In line with the Remuneration Policy, the Company does not operate a bonus plan for the Executive Directors of the
Company. The accrued deferred balances in participant Bonus Plan accounts under the legacy Bonus Plan will continue
to pay-out as normal – see page 145 for details of the payments out of the bank this year. This is the last year of deferred
payments from the Bonus Plan and therefore there will be no balance carried forward.
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Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportFinancial StatementsCorporate GovernanceStrategic Report DIRECTORS’ REMUNERATION REPORT CONTINUED
HOW THE REMUNERATION POLICY WAS OPERATED IN 2020/21
AND HOW IT WILL BE OPERATED IN 2021/22
Element and key features of current
Remuneration Policy
How the Remuneration Policy was
implemented in 2020/21
How we plan to implement the
Remuneration Policy in 2021/22
Element and key features of current
Remuneration Policy
How the Remuneration Policy was
implemented in 2020/21
How we plan to implement the
Remuneration Policy in 2021/22
The salaries for 2020/21 are set
out below:
Base salary levels for 2021/22 will be
as follows:
R C Perrins
R J Stearn
K Whiteman
S Ellis
J Tibaldi
P Vallone
£000’s % Increase
£000’s % Increase
560
380
365
365
365
365
0%
0%
0%
0%
0%
0%
R C Perrins
R J Stearn
K Whiteman
S Ellis
J Tibaldi
P Vallone
579.50
393.25
377.75
377.75
377.75
377.75
3.5%
3.5%
3.5%
3.5%
3.5%
3.5%
In reviewing the salaries of the
Executive Directors for FY 2020/21,
the Committee also took account of
the employment conditions and salary
increases awarded to employees
throughout the Group, which were
on average 0.2%.
In reviewing the salaries of the
Executive Directors for FY 2021/22,
the Committee took account of the
employment conditions and salary
increases awarded to employees
throughout the Group, which were
on average 5.3%.
Normal company benefit provision.
Normal company benefit provision.
The pension contributions for 2020/21
were as follows:
The pension contribution levels for
2021/22 will be as follows.
% salary
% salary
R C Perrins
R J Stearn
K Whiteman
S Ellis
J Tibaldi
P Vallone
17%
15%
15%
15%
15%
15%
R C Perrins
R J Stearn
K Whiteman
S Ellis
J Tibaldi
P Vallone
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
the wider workforce level of 6% of
salary. The Committee will be aligning
the pension contributions of the
incumbent Executive Directors with the
wider workforce by 31 December 2022.
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. FY2020/21 is the sixth
plan year and therefore the final
balance under the Bonus Plan will
be paid.
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.
Benefits
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.
Bonus
Under the legacy Bonus Plan, awards
were earned annually over a six-year
plan period, subject to stretching
performance targets, which were set
at the beginning of the plan year. No
bonus contributions have been made
under the Bonus Plan since the year
ended 30 April 2019.
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.
The fifth vesting of options under
the 2011 LTIP occurred on
30 September 2020.
Same performance conditions
apply for any vesting to occur
on 30 September 2021.
Changes were made to the operation
of vesting under the 2011 LTIP and
these were effective for the
30 September 2020 vesting and in
particular the performance conditions
were strengthened. Full details of the
performance conditions are set out
on pages 112-114 of the 2020 Annual
Report. In summary:
1. Return performance conditions:
50% of the 2011 LTIP Tranche
capable of vesting at the 2020
vesting date will vest on the
satisfaction of the Base and
Enhanced Return performance
condition (Base return: £280m
approximately and Enhanced
return: £455m approximately
by 31 March 2023)
2. 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
3. 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)
4. 20% of the tranche is subject to
delivering an annual pre-tax profit
of £500m or 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.
These performance conditions were
met in full and therefore the maximum
level of options vested.
Further details on the operation
of the 2011 LTIP in the year 2020/21
are set out on page 126 in the
Committee Chairman’s letter.
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
2020/21 were as follows:
The Total Remuneration Caps
remain unchanged.
R C Perrins
R J Stearn
K Whiteman
S Ellis
J Tibaldi
P Vallone
Total cap
p.a.
£’000
8,000
3,250
3,250
5,000
2,400
2,400
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Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportFinancial StatementsCorporate GovernanceStrategic Report DIRECTORS’ REMUNERATION REPORT CONTINUED
HOW THE REMUNERATION POLICY WAS OPERATED IN 2020/21
AND HOW IT WILL BE OPERATED IN 2021/22 CONTINUED
DIRECTORS’ REMUNERATION REPORT CONTINUED
ADDITIONAL CONTEXT ON BERKELEY EXECUTIVE DIRECTORS’ PAY
Element and key features of current
Remuneration Policy
How the Remuneration Policy was
implemented in 2020/21
How we plan to implement the
Remuneration Policy in 2021/22
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.
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.
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.
A minimum shareholding requirement
applies for the Non-Executive
Directors equal to 100% of net fees.
In the case of the 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 requirements.
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.
Non-Executive Director fee levels for
2020/21 were as follows:
— Chairman: £350k (represents fees
for Glyn Baker);
— Deputy Chairman and SID fee:
£123.1k (representing the fees for
Glyn Barker prior to his appointment
as Chairman);
— SID fee: £83k (represents fees for
Diana Brightmore-Armour);
— Basic fee: £68k;
— Additional fee for chairmanship
of Committee: £13k.
There were no fee increases
in 2020/21.
The minimum shareholding
requirement remains unchanged.
The post-cessation shareholding
requirement remains unchanged.
Non-Executive Director fee levels for
2021/22 will be increased by 3.5% as
follows:
— Chairman: £362.25k;
— SID fee: £85.9k;
— Basic fee: £70.35k;
— Additional fee for chairmanship of
Committee: £13k.
The average employee rise in salaries
for 5.3%.
Key elements of Berkeley’s Remuneration Policy for 2021/22
Policy elements Purpose
21/22
22/23
23/24
24/25
25/26
Base salary
To recruit and retain Executive Directors
of the appropriate calibre 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
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 comprised:
— Persimmon
— Taylor Wimpey
— Barratt Developments
— Bellway
— Redrow
— Balfour Beatty
— Countryside Properties
— Vistry Group
— Crest Nicholson Holdings
— Galliford Try
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.
R Perrins
R Stearn
K Whiteman
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
1. The maximum opportunity under the 2011 LTIP is calculated as the Total Remuneration Cap less base salary and
pension, as this is the maximum value of options which can vest in a given year under the Policy (noting that the
value of benefits paid in the year do not count towards the Total Remuneration Cap).
2. The on-target opportunity under the 2011 LTIP is calculated as 50% of the maximum value of options which can
vest in a given year under the Policy calculated in accordance with 1. above.
The above charts show clearly the Remuneration Committee’s policy of providing comparatively modest salaries
in combination with a leveraged approach to incentivisation.
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EMPLOYMENT AT BERKELEY
The Remuneration Committee’s remit
Last year, the Committee 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
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 programmes and ensures individuals
receive the support and training that they need. In the section titled ‘How we work’, on pages 46 to 50, we set out how
we are working towards developing highly skilled teams that work together in a safe, healthy and supportive
environment and contribute to wider society.
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 oversight review of key remuneration elements, policies and processes by employee
group during the 2020/21 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
Medium-term incentives
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.
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 once again 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
— 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 median pay gap for the Group is 34.2%. This has fallen compared to prior years as it includes the effects
of temporary COVID-19 salary reductions implemented in April 2020, reducing the pay on a graduated basis with the
pay of senior management reduced by 20%. Berkeley’s pay gap, like much of our industry, is 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 Berkeley 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 February 2021 we launched two new priorities
within Our Vision 2030, Berkeley's long-term strategy, to help achieve this.
Employee experience and diversity and inclusion
The first focus area is ‘Employee Experience’ which will see us place a specific focus on several areas, including
employee experience and 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 creating an engaged and inclusive environment by developing guiding principles and seeking
to attract and retain a diverse workforce.
Following the implementation of enhanced maternity and paternity policies, we have also introduced a more agile
approach to working to attract and retain a more diverse pool of talent.
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 completed 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. 60% of all hires that come
through our internal recruitment team are female filling roles with a range of seniority across multiple disciplines.
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.
New diversity and unconscious bias training has been introduced to provide employees with a better understanding
of how biases affect recruitment and progression decisions and help to mitigate against them.
Recruiting females into the business is a key step to addressing the gap but to strengthen the output we have also
committed to increasing the level of women in management positions to 33% by 2026 to be more representative of
our overall workforce.
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EMPLOYMENT AT BERKELEY CONTINUED
Future skills and long-term change
Our second commitment focuses on ‘Future Skills’ looking at how we can create tangible long-term change within
the industry.
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 supply chain apprenticeship programmes have excelled in the recruitment of
women into the built environment and trade apprenticeships in the last four years.
We have a number of affiliations with companies that promote women to work in the built environment. Most recently,
we have enhanced a long standing relationship with Women into Construction by becoming a Platinum Member.
Pay comparisons
In 2019, the Committee chose to adopt early the CEO pay ratio disclosure requirements which would have otherwise
come into effect in last year’s Directors’ Remuneration Report.
Since then, the Committee determined that it would be appropriate to use Option B, which involves using the 2020/21
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
2020/21(1)
2019/20(1)
Method
Option B
Option B
25th
percentile
pay ratio
189.1
189:1
Median
pay ratio
119.1
125:1
75th
percentile
pay ratio
85:1
84:1
1. CEO pay ratio is determined by reference to representative employee data as at 30 April 2021
The median pay ratio for 2020/21 is 119.1. The Company considers that the median pay ratio for 2020/21 is consistent
with the pay, reward and progression policies for the Company's UK employees as a whole.
Under Option B of The Companies (Miscellaneous Reporting) Regulations 2018, the latest available gender pay gap data
(i.e. from April 2021) 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
relevant 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.
The Committee is satisfied that the individuals identified within each relevant percentile appropriately reflects the
employee pay profiles at those quartiles, and each was remunerated in line with Berkeley's remuneration policies.
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
40,000
42,176
Median
55,200
67,254
75th
percentile
73,250
93,490
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 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
140
Chief
Executive
pay ratio
2.5:1
2.5:1
1.6:1
3.4:1
3.4:1
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 potential 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.
— 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 – 15:1
– To employee at the 50th percentile – 9:1
– To employee at the 75th percentile – 7:1
External pay comparisons
On page 137 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.
)
d
e
s
a
b
e
r
(
n
r
u
t
e
R
r
e
d
o
h
e
r
a
h
S
l
l
a
t
o
T
700
600
500
400
300
200
100
0
30,000
25,000
20,000
15,000
10,000
5,000
0
'
)
0
0
0
£
(
n
o
i
t
a
r
e
n
u
m
e
R
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
2020/21
Chief Executive Single Figure
Berkeley
FTSE 250 Index
FTSE All Share Index
FTSE 100 Index
141
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportFinancial StatementsCorporate GovernanceStrategic Report
DIRECTORS’ REMUNERATION REPORT CONTINUED
EMPLOYMENT AT BERKELEY CONTINUED
Chief Executive pay in the last 10 years
The table below shows the remuneration of the Chief Executive for each of the financial years shown in the graph above.
Single total
figure of
remuneration
(£’000)(1)
R C Perrins
Chief Executive
Annual bonus pay-out
(as % maximum opportunity)(2)
Multi-year incentive vesting awards
(as % maximum opportunity)
7,971
8,030
7,809
7,806
27,963
10,993
12,357
2,271
2,198
1,692
–
–
100%
100%
100%
100%
100%
100%
100%
100%
100%/See Note 10
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
2020/21
2019/20
2018/19
2017/18
2016/17
2015/16
2014/15
2013/14
2012/13
2011/12
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.
Percentage change in Directors’ remuneration
The following table compares Directors’ pay (including salary, taxable benefits and annual bonus) between 2019/20 and
2020/21 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:
Director
Executive Directors(1)
A W Pidgley
R C Perrins
R J Stearn
K Whiteman
S Ellis
J Tibaldi
P Vallone
Non-Executive Directors(2)
J Armitt
A Nimmo
G Barker
V Wadley
A Li
A Myers
D Brightmore-Armour
P Vernon
R Downey
E Adekunle(8)
W Jackson(8)
S Sands(8)
Average percentage increase
for employees(9) (10)
2019/20 to 2020/21 year on year change (%)
Base salary/fees
Taxable benefits
Annual Bonus
0% (Note 3)
0%
0%
0%
0%
0%
0%
0%
0%
Note 4
0% (Note 5)
0%
0%
Note 6
Note 7
0%
n/a
n/a
n/a
0.2%
n/a
-37%
1%
-2%
-9%
0%
-23%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
4%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
7%
7. 2017/18 Multi-year vesting represents the 2011 LTIP second tranche that vested during the year and deferred awards that were released
Notes
during the year under the Bonus Plan.
1. Executive Director salaries were reduced by 20% between 1 April and 30 September 2020. This equated to a 7% year on year reduction in
8. 2018/19 Multi-year vesting represents the 2011 LTIP third tranche that vested during the year and deferred awards that were released
salary received.
during the year under the Bonus Plan.
2. Non-Executive Director fees were reduced by 20% between 1 April and 30 September 2020. This equated to a 7% year on year reduction
9. 2019/20 Multi-year vesting represents the 2011 LTIP fourth tranche that vested during the year and deferred awards that were released
in fees received.
during the year under the Bonus Plan.
10. 2020/21 Multi-year vesting represents the 2011 LTIP fifth tranche that vested during the year (see table on page 146 for details) and
deferred awards that were released during the year under the Bonus Plan (see table on page 145 for details).
3. A W Pidgley ceased to be a director on 26 June 2020 and the figure is based on FTE fees.
4. On appointment as Group Chairman G Barker’s salary increased from £123.1k to £350k per annum.
5. V Wadley retired from the Board on 31 January 2020 and figure is based on FTE fees.
6. On appointment as Senior Independent Director D Brightmore-Armour’s salary increased from £68k to £83k per annum.
7. On appointment as Chairman of the Remuneration Committee P Vernon also received an additional fee of £13k per annum.
8. Non-Executive Directors who were appointed during the year.
9. The listed parent company does not employ any staff. The data in respect of employees is therefore in relation to the whole Group
(excluding the Main Board).
10. Employee salaries were reduced between 1 April and 31 July 2020 on a sliding scale dependent on salary levels. This equated to a 1.3%
year on year reduction in salary received.
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.
142
143
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportFinancial StatementsCorporate GovernanceStrategic Report DIRECTORS’ REMUNERATION REPORT CONTINUED
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 2021. An advisory resolution to approve this report
(including the Chair’s Annual Statement) will be put to shareholders at the AGM in September 2021.
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
2020/21 financial year. The components of the single figure for 2020/21 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. Note that Executive
Director salaries were reduced by 20% between 1 April and 30 September 2020 and this is reflected in the tables below.
Executive Director
£’000
Salary
2021
Pension
2021
Annual
bonus
2021(1)
Total Remuneration
LTIP(2)
Cap(3) Actual(4)
2021(5)
Benefits
Total
fixed
2021
Total
variable
2021
A W Pidgley(6)
R C Perrins
R J Stearn
K Whiteman
S Ellis
J Tibaldi
P Vallone
Notes
32
513
348
335
335
335
335
–
87
52
50
50
50
50
–
–
–
–
–
–
–
–
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
–
7,945
3,213
3,215
4,965
2,365
2,365
1
26
23
24
19
14
14
33
626
423
409
404
399
399
–
7,345
2,813
2,830
4,580
1,980
1,980
Total
2021
33
7,971
3,236
3,239
4,984
2,379
2,379
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 145.
2. This represents the fifth tranche of the 2011 LTIP that vested on 30 September 2020 at a share price of £42.45 subject to the operation
of the Total Remuneration Cap (see table on page 146 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 2020/21 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.
6. A W Pidgley ceased to be a director on 26 June 2020. As set out in the section 430(2B) Companies Act 2006 Statement which was
published on the Company's website, all payments in relation to fees and benefits ceased with effect from 26 June 2020. Details in relation
to the treatment of the 2011 LTIP were also disclosed in the section 430(2B) Companies Act 2006 Statement and full details in relation to
the treatment of remuneration for A W Pidgley are set out on pages 147. No payments after 26 June 2020 are included in the single figure
in line with the Regulations.
Comparative figures for 2019/20, as disclosed in last year’s Directors’ Remuneration Report, are set out in the table below.
Executive Director
£’000
Salary
2020
Pension
2020
Annual
bonus
2020(1)
Total Remuneration
LTIP(2)
Cap(3) Actual(4)
2020(5)
Benefits
Total
fixed
2020
Total
variable
2020
A W Pidgley
R C Perrins
R J Stearn
K Whiteman
S Ellis
J Tibaldi
P Vallone
Notes
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
285
685
452
438
433
427
431
8,000
7,345
2,813
2,830
4,580
1,980
1,980
Total
2020
8,285
8,030
3,265
3,268
5,013
2,407
2,411
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.
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. 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.
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.
Note that Non-Executive Director fees were reduced by 20% between 1 April and 30 September 2020 and this is
reflected in the table below.
Non-Executive Director (£’000)
J Armitt(2)
A Nimmo
G Barker(4)
V Wadley(3)
A Li
A Myers
D Brightmore-Armour(4)
P Vernon(4)
R Downey
E Adekunle(5)
W Jackson(5)
S Sands(5)
Notes
Basic fees
Additional fees(1)
Total fees
2021
75.5
62.3
290.6
45.3
62.3
62.3
74.1
62.3
62.3
22.1
22.1
0.3
2020
81.0
66.9
121.0
66.9
66.9
66.9
66.9
66.9
66.9
–
–
–
2021
2020
–
–
–
–
–
12.0
–
10.2
–
–
–
–
–
–
–
–
–
12.8
–
–
–
–
–
–
2021
75.5
62.3
290.6
45.3
62.3
74.3
74.1
72.5
62.3
22.1
22.1
0.3
2020
81.0
66.9
121.0
66.9
66.9
79.7
66.9
66.9
66.9
–
–
–
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.
3. V Wadley retired from the Board on 31 January 2021.
4. Changes to fees reflect changes to roles during the year for these individuals. G Barker was appointed as Chairman; D Brightmore-Armour
as Senior Independent Director and P Vernon as Remuneration Committee Chair.
5. E Adekunle and W Jackson were appointed to the Board on 5 January 2021; S Sands was appointed to the Board on 30 April 2021.
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.
FY2020/21 is the sixth plan year and therefore the final balance under the Bonus Plan will be paid.
a. Plan
account
brought
forward
b. Plan
account
brought
forward(1)
c.
Contribution
into plan
accounting
for the
financial year
2020/21(2)
d. Plan
account
balance
following
contribution
for financial
year 2020/21
e. Amount
paid following
contribution
for financial
year 2020/21
(100% of
column d)
£’000
£’000
£’000
f. Plan
account
carried
forward
g. Plan
account
carried
forward
£’000
Shares
Shares
8,376
21,485
9,726
9,328
10,261
7,127
7,127
397
1,019
461
442
487
338
338
397
1,019
461
442
487
338
338
£’000
(397)
(1,019)
(461)
(442)
(487)
(338)
(338)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
73,430
3,482
3,482
(3,482)
Executive Director
A W Pidgley(3)
R C Perrins
R J Stearn
K Whiteman
S Ellis
J Tibaldi
P Vallone
Total
Notes
–
–
–
–
–
–
–
–
145
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.
2. No contributions made into the plan account for the year as disclosed in the single figure table for 2020/21.
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.
3. A W Pidgley ceased to be a director on 26 June 2020. As set out in the section 430(2B) Companies Act 2006 Statement which was
published on the website, A W Pidgley’s estate will be entitled to receive the deferred balance of shares of the Company in his legacy
Bonus Plan account in line with the rules of the Plan and the Directors’ Remuneration Policy.
4. All amounts are rounded to the nearest £’000.
144
1. Converted at a share price of £46.27 at 30 April 2021 plus £1.07 dividend paid on 11 September 2020 and £0.0913 dividend paid on
19 March 2021.
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportFinancial StatementsCorporate GovernanceStrategic Report DIRECTORS’ REMUNERATION REPORT CONTINUED
ANNUAL REPORT ON REMUNERATION CONTINUED
Long-term incentives (Audited)
The fifth vesting of options under the 2011 LTIP occurred on 30 September 2020. The maximum level of options capable
of vesting was 13.4% (33.3% for Tibaldi and Vallone) of the total grant provided that £1,115.6 million of shareholder returns
had been made from 1 October 2016 to 30 September 2020, 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)
Capped
value
(and value
Number
of options
vested
(after
application
vested)(2)
of Cap)(3)
Value
above
the
Cap(4)
Banked
options(5)
Cumulative
Banked
options(6)
A W Pidgley(7)
5,000,000
R C Perrins
R J Stearn
K Whiteman
S Ellis
J Tibaldi(8)
P Vallone(8)
Notes
5,000,000
954,328
13.4%
1,000,000
2,250,000
450,000
450,000
33.33%
£1,115.6m of
shareholder
returns from
1 October
2016 to
the 30
September
2020 –
100%
achieved
670,000 24,827,319 8,000,000
215,891
16,827,319
454,109
1,674,560
670,000 24,827,319
7,344,800
198,209
17,482,519
471,791
1,885,508
127,879 4,738,644
2,813,000
75,912
1,925,644
51,967
134,000 4,965,464
2,830,250
76,378
2,135,214
57,622
214,655
238,172
301,500 11,172,294
4,580,250
123,604 6,592,044
177,896
688,232
150,000 5,558,355
1,980,250
53,439
3,578,105
150,000 5,558,355
1,980,250
53,439
3,578,105
96,561
96,561
149,029
149,029
1. The value of gain on the options at vesting is calculated using the opening share price of £42.45 on 30 September 2020 (the date the
options vested and became exercisable) less the exercise price of £5.3943 per share.
2. The Total Remuneration Cap limits the value of the LTIP vesting in the year. The Total Remuneration Cap operated for the 2020/21
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 2020 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. A W Pidgley ceased to be a director on 26 June 2020. As set out in the section 430(2B) Companies Act 2006 Statement which was
published on the Company's website, all payments in relation to fees and benefits ceased with effect from 26 June 2020. Details in relation
to the treatment of the 2011 LTIP were also disclosed in the section 430(2B) Companies Act 2006 Statement and full details in relation to
the treatment of remuneration for A W Pidgley are set out on pages 147.
8. 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 are eligible to vest in two tranches in 2020 and 2021. Therefore in September 2020, 150,000 shares were capable of vesting
(33.33% of the total options granted). However, vesting will be restricted by the existing Total Remuneration Cap in both cases.
9. Each Executive Director exercised all the options that vested on 30 September 2020. 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.
Payments for loss of office (Audited)
The information in this section relates to A W Pidgley and summarises the treatment of his remuneration following his
sad and untimely passing. A W Pidgley ceased to be a director on 26 June 2020 and the information set out below
reflects the information disclosed in the section 430(2B) Companies Act 2006 Statement which was published on the
Company's website.
Fixed remuneration
A W Pidgley’s service contract came to an end on 26 June 2020 and all payments thereunder ceased with effect from
that date. His fees and benefits for the 2020/21 up to 26 June 2020 were £33,245.
Variable remuneration
The following arrangements were applied in respect of A W Pidgley’s remuneration under the Company’s legacy Bonus
Plan and the Company’s 2011 LTIP:
1. A W Pidgley was treated as a “Good Leaver” under the rules of the Company’s legacy Bonus Plan and the 2011
Long-term Incentive Plan (2011 LTIP).
2. A W Pidgley’s estate was entitled to receive the deferred balance of shares of the Company in his legacy Bonus Plan
account in line with the rules of the Plan and the Company’s Directors’ Remuneration Policy.
3. A W Pidgley’s estate was entitled to exercise his option over shares of the Company under the 2011 LTIP in line with
the rules of the 2011 LTIP and the Company’s Directors’ Remuneration Policy.
4. There were no other payments that were made to A W Pidgley’s estate.
5. There were no payments for loss of office.
The following table provides the maximum number of shares under (2) and (3) above:
Plan
Legacy Bonus Plan
2011 LTIP 30 September 2020 vested
2011 LTIP 30 September 2021 vesting estimate
2011 LTIP Award to A W Pidgley estimated to lapse (based on the above vestings)
Notes:
Number of shares
8,586(1)
215,891
215,891(2)
2,128,669
1. FY 2020/21 was the sixth plan year for the legacy Bonus Plan and therefore, the final balance under the Bonus Plan will be paid.
2. The number of option shares which will become exercisable will be calculated by dividing the Total Remuneration Cap (excluding fees)
set out in the Remuneration Policy of £8 million by the gain per option share (the share price on the date of vesting less the exercise price).
This table assumes that the number of option shares vesting at 30 September 2021 is the same as the number that vested on
30 September 2020. The actual number of option shares vesting will be dependent on the share price on 30 September 2021 and the
exercise price at that time. Therefore, this figure is purely illustrative.
A W Pidgley’s options became exercisable under the 2011 LTIP on 30 September 2020 and will become exercisable
30 September 2021 to the extent that the Total Remuneration Cap is not breached. A W Pidgley held a total of 1,890,451
banked and exercisable option shares on which the performance conditions had been met as at 30 September 2020.
The actual number of options that vest and become exercisable is determined with reference to the share price and
exercise price at the respective vesting dates with all remaining option shares lapsing in full.
146
147
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportFinancial StatementsCorporate GovernanceStrategic Report 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 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 £46.27 on 30 April 2021, compliance with these requirements was as follows:
Executive Director(1)
A W Pidgley(2)
R C Perrins
R J Stearn
K Whiteman
S Ellis
J Tibaldi
P Vallone
Non-Executive Director(3)
J Armitt
A Nimmo
G Barker
V Wadley(4)
A Li
A Myers
D Brightmore-Armour
P Vernon
R Downey
E Adekunle(5)
W Jackson(5)
S Sands(5)
Notes
Actual
Shareholding
as % base
salary at
30 April
2021
Achievement
at 30 April
2021
Obligation
(% base salary)
400%
400%
200%
200%
200%
200%
200%
34,334%
8,263%
2,169%
3,908%
3,628%
837%
939%
ü
ü
ü
ü
ü
ü
ü
(% NED net fees)
100%
% net fees
704%
% net fees
ü
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
257%
226%
224%
2,568%
323%
101%
216%
166%
–
128%
–
ü
ü
ü
ü
ü
ü
ü
ü
û
ü
û
1. To be achieved within five years of appointment.
2. A W Pidgley ceased to be a director on 26 June 2020 and his shareholding is shown as at that date.
3. To be achieved within three years of appointment.
4. V Wadley retired from the Board on 31 January 2021 and her shareholding is shown as at that date.
5. E Adekunle and W Jackson were appointed to the Board on 5 January 2021; S Sands was appointed to the Board on 30 April 2021.
Executive Director
A W Pidgley(4)
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(5)
A Li
A Myers
D Brightmore-Armour
P Vernon
R Downey
E Adekunle(6)
W Jackson(6)
S Sands(6)
Notes
Beneficially
owned
shares(1)
2011 LTIP
Option
interests
subject to
conditions(2)
Banked
LTIP
options(3)
Total
interests
held
1,672,800
1,000,000
178,159
308,247
286,160
65,994
74,088
670,000
670,000
127,883
134,000
301,500
150,000
150,000
1,674,560
1,885,508
214,655
238,172
688,232
149,029
149,029
4,017,360
3,555,508
520,697
680,419
1,275,892
365,023
373,117
6,891
2,000
9,411
2,000
20,000
3,000
1,000
2,000
1,290
–
1,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6,891
2,000
9,411
2,000
20,000
3,000
1,000
2,000
1,290
–
1,000
–
1. Beneficial interests include shares held directly or indirectly by connected persons.
2. The fifth tranche of the 2011 LTIP awards vested and were exercised during the year by the Executive Director participants (see page 148
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.
4. A W Pidgley ceased to be a Director on 26 June 2020 and his beneficially owned shares are shown as at that date.
5. V Wadley retired from the Board on 31 January 2021 and her share interests are shown as at that date.
6. E Adekunle and W Jackson were appointed to the Board on 5 January 2021; S Sands was appointed to the Board on 30 April 2021.
Summary table
The following table sets out where in the Remuneration Committee Report the following information can be found:
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
Yes
Yes
Yes
Page
134
134
–
147
148–149
134–136
148
149
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportFinancial StatementsCorporate GovernanceStrategic Report DIRECTORS’ REMUNERATION REPORT CONTINUED
ANNUAL REPORT ON REMUNERATION CONTINUED
DIRECTORS’ REPORT
Relative importance of spend on pay
The table below sets out the relative importance of spend on pay in the 2019/20 and 2020/21 financial years compared
with distributions to shareholders.
Remuneration of Group employees (including Directors)
Distributions to shareholders by way of dividends and share buy-backs
2020/21
(£m)
2019/20
(£m)
196
334
216
280
% change
(10%)
19%
Service contracts
Details of the service contracts or letters of appointment for the current Directors are as follows:
Executive Director
R C Perrins
R J Stearn
K Whiteman
S Ellis
J Tibaldi
P Vallone
Non-Executive Director
J Armitt
A Nimmo
G Barker
A Li
A Myers
Date of contract/
letter of appointment
Expiry date
15 July 2002
3 October 2014
15 January 1996
5 May 2004
30 June 1999
Rolling service contract with no fixed expiry date
Rolling service contract with no fixed expiry date
Rolling service contract with no fixed expiry date
Rolling service contract with no fixed expiry date
Rolling service contract with no fixed expiry date
25 September 1990
Rolling service contract with no fixed expiry date
1 October 2007
Renewal annually on 1 May
5 September 2011
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
E Adekunle
W Jackson
S Sands
6 September 2017
Renewal annually on 1 May
8 December 2017
Renewal annually on 1 May
5 January 2021
5 January 2021
30 April 2021
Renewal annually on 1 May
Renewal annually on 1 May
Renewal annually on 1 May
Notice period
by Company
or Director
12 months
12 months
12 months
12 months
12 months
12 months
n/a
n/a
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.
The Directors submit their report together with the audited
Consolidated and Company Financial Statements for the
year ended 30 April 2021.
For the purpose of Disclosure Guidance and Transparency
Rule (DTR) 4.1.8R, the Directors’ Report is also the
Management Report for the year ended 30 April 2021.
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 Listing Rule
(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
Section in
Annual Report
Capitalised interest
Directors’ Report
Unaudited financial
information
Long-term incentive
schemes
Waiver of Directors’
emoluments
Allotments of equity
securities
–
Remuneration
Report
Remuneration
Report
–
Contracts of significance Directors’ Report
Controlling shareholders
–
Pages
153
N/A
122 to 150
122 to 150
N/A
156
N/A
Dividend waivers
Directors’ Report
152 (i.e. EBT)
The Corporate Governance section on pages 98 to 150
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 98 and 108 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 18 to 24 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 78
to 95 of the Strategic Report and in note 2.23 of the
Consolidated Financial Statements, and is incorporated
into this report by reference.
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
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a
t
e
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o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
Dividends
An interim dividend of 107 pence per share was paid to
shareholders on 13 September 2020 and a further interim
dividend of 9.13 pence per share was paid to shareholders
on 18 March 2021. The Directors are not proposing to make
any dividend payments during the year to 30 April 2022.
Details of the proposed shareholder payment is set out in
the Chief Executive's Review on pages 18 to 24.
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 2030. Details of this
can be found in the Strategic Report on pages 44 and 47.
Share capital
The Company had 132,236,668 ordinary shares of 5 pence
each in issue at 30 April 2021 (2020: 136,648,882), which
are fully paid. During the year to 30 April 2021 and in
accordance with the authority provided by shareholders
at the 2019 and 2020 AGMs, the Company has purchased
through the market for cancellation 4,412,214 ordinary
shares with a nominal value of £220,610.70 which equated
to 3.51% of the called-up share capital of the Company
at the beginning of the year, excluding treasury shares.
The aggregate consideration paid for these shares was
£188.6 million. As at 30 April 2021 the Company held
10,615,895 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
2020 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.
150
Berkeley Group 2021 Annual Report
Berkeley Group 2021 Annual Report
151
DIRECTORS’ REPORT CONTINUED
At the Company’s 2020 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 £2,095,116.35 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 £314,267.45. These authorities will apply until the
conclusion of the 2021 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.
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.
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 122 to 150.
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.
Directors
The Directors of the Company, their profiles and details of
their roles and the Committees of which they are members
are detailed on pages 101 to 105 and are incorporated into
this report by reference. All of these Directors served
throughout the year under review, other than Tony Pidgley
CBE who died on 26 June 2020 and Baroness Fleet,
Veronica Wadley CBE who served until 31 January 2021.
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 AGM 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,
with the exception of Adrian Li who will not be standing for
re-election, will offer themselves for re-election at the
forthcoming AGM to be held on 3 September 2021.
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 116 to 117.
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 2021 each of
the Executive Directors was deemed to have a non-
beneficial interest in 55,247 (2020: 213,802) 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 2.25 to the Consolidated Financial Statements, the
contracts of employment of the Executive Directors, which
are terminable within one year, and the appointment terms
of the Non-Executive Directors, which are renewable
annually and terminable on one month’s notice.
Directors’ indemnities
The Company 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 for 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 2021 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 2021 are as follows:
BlackRock Inc
First Eagle Investment
Management LLC
JP Morgan Chase & Co.(ii)
Number of
ordinary
shares
held(i)
11,698,607
10,071,368
6,755,034
% of
voting
rights(i)
8.72
7.81
5.55
(i) The number of ordinary shares held and percentage of voting
rights is as stated by the shareholder at the time of notification.
(ii) On 10 June 2021, the Company was notified of a change in
substantial interest by JP Morgan Chase & Co., such that the total
number of ordinary shares held decreased to 5,373,855, being
5.24% of voting rights.
Other than as discussed above, between 30 April 2021
and 22 June 2021 the Company was not notified of any
changes to substantial interests pursuant to Rule 5 of
the DGTR.
Political donations
The Group made no political donations (2020: £nil) during
the year.
Capitalised interest
No interest has been capitalised by the Group (2020: £nil)
during the period under review.
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 46 to 48 and
page 60 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.
The Company’s s.172 Statement on pages 56 to 57 of the
Strategic Report sets out further details of how the
Directors have:
— 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 2030. 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 2030 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 Chief
Financial Officer, 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.
152
153
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportFinancial StatementsCorporate GovernanceStrategic Report DIRECTORS’ REPORT CONTINUED
Scope 1 and 2 greenhouse gas emissions and energy consumption
Emissions are reported in line with the operational boundary of the Group and include 100% of emissions resulting from
offices, sales and development site activities undertaken as a result of our joint ventures.
Scope 1 emissions
Scope 2 location-based emissions
Scope 2 market-based emissions
Scope 1 and scope 2 location-based
emissions
Scope 1 and scope 2 location-based
emissions intensity
Scope 1 and scope 2 market-based
emissions
Scope 1 and scope 2 market-based
emissions intensity
Energy consumption associated with
Scope 1 emissions
Energy consumption associated with
Scope 2 emissions
Energy consumption associated with
Scope 1 and Scope 2 emissions
2021
2020 (restated)
Unit
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e/
sq ft
tCO2e
tCO2e/
sq ft
MWh
Total
2,351 A
6,247 A
196 A
8,598 A
0.0030
Global
(excluding
UK)
–
117
117
117
UK
2,351
6,130
79
8,481
Total
3,215
5,936
160
9,151
UK
3,215
5,818
42
9,033
–
–
0.0031
–
2,547 A
2,430
117
3,375
3,257
0.0009
–
11,319 A
11,319
–
–
0.0012
–
13,741
13,741
MWh
26,617 A
26,415
202
23,050
22,854
MWh
37,936 A
37,734
202
36,792
36,596
Global
(excluding
UK)
–
118
118
118
–
118
–
–
196
196
A 2021 information has been separately subject to limited assurance by PricewaterhouseCoopers LLP. For further details of the assurance
provided in 2021 and prior years, see the independent assurance reports found at www.berkeleygroup.co.uk/sustainability/reports-and-
case-studies. The intensity metrics (tCO2e/sq ft) and restated information for 2020 have not been subject to assurance.
Greenhouse gas emissions and energy consumption from joint ventures
Emissions in the table above include 100% of emissions from our joint ventures (St Edward and St William). The total
emissions for our joint ventures are provided below.
Scope 1 emissions
Scope 2 location-based emissions
Scope 2 market-based emissions
Energy consumption associated with scope 1 emissions
Energy consumption associated with scope 2 emissions
Energy consumption associated with scope 1 and scope 2 emissions
Unit St Edward St William
tCO2e
tCO2e
tCO2e
MWh
MWh
MWh
188
610
2
965
2,620
3,585
53
497
–
260
2,133
2,393
Total
241
1,107
2
1,225
4,753
5,978
Progress against our science-based targets
Target
Reduce absolute Scope 1 and 2
GHG emissions 50% by FY2030
from a FY2019 base
Reduce Scope 3 purchased goods
and services and use of sold
products GHG emissions 40% per
square foot of legally completed
floor area by FY2030 from a
FY2019 base
Unit
2021
2020
2019
Market-based emissions
tCO2e
2,547
3,375
3,980
Change from baseline year
%
-36
-15
–
Scope 3 emissions
tCO2e
792,452
793,545
870,117
Emissions intensity
tCO2e/sq ft
0.28
0.27
0.24
Change from baseline year
%
17
15
–
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 Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 (as amended by
the Companies Act 2006 (Strategic Report and Directors’
Report) 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:
Scope 1 – direct emissions from natural gas consumed
for office, sales and development site activities; gas oil,
biodiesel, diesel, petrol and liquefied petroleum gas (LPG)
purchased directly for development site activities; and
travel (business and other travel where expensed) in
company owned and company leased 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 and company leased vehicles. The
Group has voluntarily purchased and retired Deep Green
Renewable Energy Guarantee of Origins (REGOs) for all
UK electricity consumption (accounted for within the
Scope 2 market-based emissions figures presented in
the above table).
Scope 3 – other indirect emissions within the two
categories deemed to be of material significance: Category
1: Goods and Services – impact within our supply chain,
from the procurement of services and labour, including
materials used to construct the homes and the use of gas
oil and other fuels procured by our contractors for use on
our construction sites; Category 11: Use of Sold Products –
impact of the homes that were legally completed during
the financial year over their lifetime.
Based on detailed calculations used to develop our
science-based targets in 2020 we estimate that these
two categories account for 95% of our Scope 3 impact
in 2020/21. The remaining 5% occurs within a range of
categories, including 13 – Downstream Leased Assets, 2 –
Capital Goods and 5 – Waste Generated in Operations.
Emission intensity – the emissions intensity ratios have
been calculated using the floor area of legally completed
homes and commercial space during the year (in square
feet), including our joint ventures. The intensity factor has
been amended from the number of Berkeley employees
and the number of contractors working on our sites used
in previous years. The change has been made to align the
metrics with the intensity metric used within our Scope 3
science-based target.
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 megawatt-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.
Data for 2020 has been restated based on the following:
— Updated data made available within the period; this
adjustment accounts for less than +1.5% of the total
Scope 1 and 2 location-based emissions reported
in 2020.
— Reporting data according to our operational boundary
rather than the financial boundary that has been
reported in previous years, including 50% of our joint
ventures. Reporting 100% of our joint ventures results
in a +9% change in reported emissions.
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-
andcase-studies.
Progress against our science-based targets
Our Scope 1 and 2 science-based target is based on
market-based emissions; this excludes our procurement
of 100% renewable electricity which was already in place
and continues for all UK consumption. Consequently,
approximately two thirds of emissions in this area occur
as a result of directly purchased gas oil for use on
construction sites which is heavily dependent on the
nature of construction activities occurring. Berkeley's
focus on brownfield regeneration can involve significant
demolition, remediation and infrastructure provision,
which typically utilises more gas oil within heavy plant
and machinery. During the year the reduction in emissions
reflects changes in the stage of development activities.
Our Scope 3 target is reported through a spend-based
method, meaning it is subject to market-based changes
to material and labour costs. Work has commenced on
detailed whole lifecycle carbon assessments on a range
of our developments and we plan to adopt a more
representative, hybrid form of reporting in future years, as
we gain more specific information from our supply chain.
Energy efficiency action
During 2020/21 our energy efficiency standards were
reviewed and updated for site office compounds, offices
and sales and marketing suites. We have implemented
a range of energy efficiency measures on our sites in the
last year, such as the retrofitting of welfare facilities at
Hartland Village with new LED lighting and the use of solar
hybrid generators to power the welfare cabins at the Green
Quarter. Within St Edward, we have trialled software to
raise awareness of machinery usage and help to reduce
machinery idling times. Recognising that taking action to
reduce non-renewable fuel consumption is a key challenge,
we are now trialling the use biodiesel within generators
in place of traditional gas oil; in the year, this was used
at three of our sites (Green Park Village, Trent Park and
Twelvetrees Park).
COVID-19 impact
The COVID-19 pandemic impacted our carbon
emissions and energy consumption in the early part of
the reporting year. Whilst Berkeley's construction sites
remained open, its sales suites were closed, business travel
was restricted and office-based staff largely transitioned
to home working.
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Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportFinancial StatementsCorporate GovernanceStrategic Report DIRECTORS’ REPORT CONTINUED
Significant 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.
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 3 September 2021. 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 Accounting Standards in conformity
with the requirements of the Companies Act 2006 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’. In addition, the Group financial
statements are required under the UK Disclosure Guidance
and Transparency Rules to be prepared in accordance with
International Financial Reporting Standards adopted
pursuant to Regulation (EC) No 1606/2002 as it applies
in the European Union.
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 judgments and estimates that are reasonable,
relevant, reliable and prudent;
— for the Group Financial Statements, state whether they
have been prepared in accordance with international
accounting standards in conformity with the
requirements of the Companies Act 2006 and
International Financial Reporting Standards adopted
pursuant to Regulation (EC) No 1606/2002 as it applies
in the European Union;
— 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.
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.
Directors’ responsibility statement
Each of the Directors confirms that, to the best of each
person’s knowledge:
— the Financial Statements, prepared in accordance with
the applicable set of accounting standards, give a true
and fair view of the assets, liabilities, financial position
and profit or loss of the company and the undertakings
included in the consolidation taken as a whole; and
— the Company financial statements,which have been
prepared in accordance with United Kingdom
Accounting Standards, comprising FRS 101, give a true
and fair view of the assets, liabilities, financial position
and results of the Company; and
— 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.
For an on behalf of the Board
R Perrins
Chief Executive
R J Stearn
Chief Financial Officer
23 June 2021
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.
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 30 to 33.
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 2021,
the Group has net cash of £1,128.2 million and total liquidity
of £1,878.2 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 £1,712 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 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
23 June 2021
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Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportFinancial StatementsCorporate GovernanceStrategic Report GREEN
QUARTER
EALING
88 acre
3,750
48%
disused brownfield gas works
mixed-tenure homes
public open space
500,000 sqft
commercial and community space
The first 319 homes went on sale at the
Green Quarter during 2020/21, following
on from the completion of the first 304
affordable homes.
The former Southall Gas Works is being transformed into
a nature-rich neighbourhood, designed in partnership with
the London Wildlife Trust to deliver a 93% net biodiversity
gain. Sustainably located close to the coming Ealing
Crossrail station, almost half of the site will be public open
space, including biodiverse parks, meadows, wetlands,
public squares, an amphitheatre, play spaces, canal-side
walks and 2,500 new trees.
The neighbourhood will bring new public amenities to
Southall, include a health centre, primary school, community
centre and a mix of shops, cafés and commercial spaces.
158
“We are going to create one of
the UK’s finest examples of urban
regeneration that puts biodiversity
and nature at its heart.”
David Mooney, London Wildlife Trust
Independent Auditor's Report
Financial Statements
160
167 Consolidated Income Statement
167 Consolidated Statement of
Comprehensive Income
168 Consolidated Statement of
Financial Position
169 Consolidated Statement of
Changes in Equity
170 Consolidated Cash Flow
Statement
171 Notes to the Consolidated
Financial Statements
203 Company Balance Sheet
204 Company Statement of Changes
in Equity
205 Notes to the Company
Financial Statements
210 Five Year Summary
211 Financial Diary
212 Registered Office and Advisors
Computer Generated Image
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Berkeley Group 2021 Annual ReportCorporate GovernanceFinancial StatementsStrategic ReportBerkeley Group 2021 Annual Report 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 Group”) for the year ended
30 April 2021 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 2021 and of the Group’s profit for the year
then ended;
— the Group financial statements have been properly
prepared in accordance with international accounting
standards in conformity with the requirements of the
Companies Act 2006;
— 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 to the extent applicable.
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 eight financial years ended 30 April
2021. 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
£25.0 million (2020: £21.0 million)
4.8% (2020: 4.2%) of Group profit
before tax
94% (2020: 90%) of Group profit
before tax
Key audit matters
Recurring risks Cost of sales recognition
vs 2020
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 judgment, 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.
The risk
Our response
Cost of sales
recognition
(£1,566.9 million;
2020: £1,283.0 million)
Refer to page 119
(Audit Committee
Report), and note 2.12
on page 186
(accounting policy)
and financial
disclosures).
Subjective estimate:
The Group recognises cost of sales by
allocating a portion of site wide costs to
each unit when it is legally completed.
Cost allocation is determined by the
overall forecast site wide profit
percentage for each site as a proxy for
cost per unit because specific costs per
unit are not readily identifiable. Each site
may comprise multiple phases and can
be completed over a number of years.
Cost of sales is subject to estimation
uncertainty as it is dependent on the
Group’s estimate of future sales prices
and land and build costs, including an
allowance for risk. Further estimation
uncertainty and exposure to market
cyclicality exists within longer term sites.
Forecasts are dependent on market
conditions, which can be difficult to
predict and can be influenced by
political and economic factors including,
but not limited to, the future market
uncertainties surrounding the longer-
term impacts of COVID-19.
The effect of this matter is that, as part
of our risk assessment, we determined
that cost of sales of £1,566.9 million 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.
Therefore, auditor judgment is required
to assess whether the directors’
estimates for forecast site wide margin
fall within an acceptable range.
The financial statements (note 2.12)
disclose the sensitivity estimated by the
Group in respect of the approach taken
for cost of sales and margin recognition.
Our procedures included:
— Methodology choice: We critically assessed
whether the cost allocation methodology used by
the Group to recognise cost of sales, including any
changes in methodology made in the year, is in
accordance with the Group’s accounting policies;
— Control operation: 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;
For a sample of sites that we considered at higher
risk of misstatement, due to either their size and/or
complexity, we inspected whole site forecasts and
challenged management’s inputs and assumptions
by performing the following procedures:
— Historical comparisons and benchmarking
assumptions: Compared forecast sales prices
against recent prices achieved in the local market,
historical sales prices, third party forecasts for the
housing market and considered economic factors,
including COVID-19, that may impact the
achievable price on forecast future sales;
— Test of detail: 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 invoices and/or payments;
— Benchmarking assumptions: Assessed, based
on the risks highlighted by the Group’s build cost
review meetings and industry costs indices, the
appropriateness of allowances made for cost
increases in longer-term developments as well
as contingencies held for specific sites;
— Our sector experience: Utilised the audit team’s
experience, supported as appropriate by our own
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, used to allocate costs, and
considered whether this indicated an alternative
basis of cost of sales 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 judgment, estimation uncertainty and
sensitivity to key assumptions involved in arriving
at the forecast site margins and resultant cost of
sales recognised.
Our results
We found the amount of cost of sales recognised in
the year to be acceptable (2020: acceptable).
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Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportCorporate GovernanceFinancial StatementsStrategic Report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF THE BERKELEY GROUP HOLDINGS PLC CONTINUED
The risk
Our response
Post completion
development
provisions
(£124.7 million;
2020: £109.8 million)
Refer to page 119
(Audit Committee
Report), and note 2.16
on page 188
(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
subsequent to the completion of certain
developments. The identification and
estimation of amounts to be recognised
in relation to post completion
development provisions is judgmental 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 of £124.7 million
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.
The financial statements (Note 2.16)
discloses the sensitivity estimated by
the Group.
Recoverability of the
parent Company’s
investment in and
amounts due from,
its subsidiaries
Investment carrying
value £1,433.9 million
(2020: £1,430.5
million), and amounts
due from subsidiaries
£593.8 million (2020:
£685.5 million)
Refer to note C2.4 on
page 207 (accounting
policy and financial
disclosures)
Low risk, high value:
The carrying amount of the parent
Company’s investments and amounts
due from its subsidiaries represents
70.2% and 29.1% (2020: 66.9% and
32.0%) of the Company’s total assets,
respectively. Their recoverability is not
a high risk of significant misstatement
or subject to significant judgment.
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.
We performed the tests below rather than seeking
to rely on any of the Group’s controls because the
nature of the balance is such that we would expect
to obtain audit evidence primarily through the
detailed procedures described.
Our procedures included:
— Personnel interviews: We enquired of Group and
divisional directors and inspected board minutes
to identify potential claims to be 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
and/or settled issues 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
in-house 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 judgment, estimation uncertainty, and
sensitivity to key assumptions involved in arriving
at the recorded post completion development
provisions.
Our results
We found the level of post completion development
provisions to be acceptable (2020: acceptable).
We performed the tests below rather than seeking
to rely on any of the Company’s controls because
the nature of the balance is such that we would
expect to obtain audit evidence primarily through
the detailed procedures described.
Our procedures included:
— Tests of detail: Comparing the carrying amount of
100% of investments with the relevant subsidiaries’
draft balance sheets 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 sheets, 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 Company’s conclusion that there is no
impairment of its investments in subsidiaries and
amounts due from its subsidiaries to be acceptable
(2020: acceptable).
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 £25.0 million (2020: £21.0 million), determined with
reference to a benchmark of group profit before tax of
£518.1 million, of which it represents 4.8% (2020: group profit
before tax of £503.7 million, of which it represents 4.2%).
Materiality for the parent Company financial statements
as a whole was set at £21.0 million (2020: £12.0 million),
determined with reference to a benchmark of Company
total assets of £2,041.2 million (2020: £2,139.6 million),
of which it represents 1.0% (2020: 0.6%).
In line with our audit methodology, our procedures
on individual account balances and disclosures were
performed to a lower threshold, performance materiality,
so as to reduce to an acceptable level the risk that
individually immaterial misstatements in individual account
balances add up to a material amount across the financial
statements as a whole.
Performance materiality was set at 75% (2020: 75%) of
materiality for the financial statements as a whole, which
equates to £18.75 million (2020: £15.75 million) for the
group and £15.75 million (2020: £9.0 million) for the parent
Company. We applied this percentage in our determination
of performance materiality because we did not identify any
factors indicating an elevated level of risk.
We agreed to report to the Audit Committee any corrected
or uncorrected identified misstatements exceeding
£1.25 million (2020: £1.05 million), in addition to other
identified misstatements that warranted reporting on
qualitative grounds.
Scoping and coverage:
Of the group's 17 (2020: 17) reporting components,
we subjected 8 (2020: 11) to full scope audits for group
purposes and 5 (2020: 6) to specified risk-focused audit
procedures, all performed by the group team. The latter
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. For 5 components, the specified audit
procedures were performed over cost of sales and post
completion development provisions. For the residual
components, we performed analysis at an aggregated
group level to re-examine our assessment that there were
no significant risks of material misstatement within these.
The components within the scope of our work accounted
for the percentages illustrated opposite.
The component materialities ranged from £0.2 million to
£13.5 million (2020: £0.2 million to £14.0 million), having
regard to the mix of size and risk profile of the Group
across the components.
Profit before taxation
£518.1 million
(2020: £503.7 million)
Group materiality
£25.0 million
(2020: £21.0 million)
£25.0 million
Whole financial
statements materiality
(2020: £21.0 million)
£18.75 million
Whole financial
statements
performance
materiality
(2020: £15.75 million)
£13.5 million
Range of materiality
at 8 components
(£0.2m to £13.5m)
(2020: £0.2 million
to £14.0 million)
£1.25 million
Misstatements reported
to the audit committee
(2020: £1.05 million)
Group profit before taxation
Group materiality
Group revenue
Group profit before tax
6
5
9
100%
(2020 100%)
94%
(2020 95%)
100
100
90
85
Group total assets
6
14
18
94%
(2020 95%)
82
80
Full scope for group audit
purposes 2021
Specified risk-focused
audit procedures 2021
Full scope for group audit
purposes 2020
Specified risk-focused
audit procedures 2020
Residual components
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Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportCorporate GovernanceFinancial StatementsStrategic Report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF THE BERKELEY GROUP HOLDINGS PLC CONTINUED
4. Going concern
The Directors have prepared the financial statements on
the going concern basis as they do not intend to liquidate
the Group or the parent Company or to cease their
operations, and as they have concluded that the Group’s
and the parent Company’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').
— we have nothing 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 the going concern
period, and we found the going concern disclosure
in note 1 and C1.2 to be acceptable; and
— the related statement under the Listing Rules set out
on page 123 is materially consistent with the financial
statements and our audit knowledge.
We used our knowledge of the Group, its industry, and
the general economic environment to identify the inherent
risks to its business model and analysed how those risks
might affect the Group’s and parent Company’s financial
resources or ability to continue operations over the going
concern period. The risk that we considered most likely
to adversely affect the Group’s and parent Company’s
available financial resources over this period was a possible
reduction in sales volumes as a consequence of changes
in the economic environment, including the impact of
COVID-19, leading to a sustained medium-term decline in
revenue and profits.
We also considered less predictable but realistic second
order impacts, such as cost inflation due to a reduction
in productivity, increases in post completion development
costs and disruption to the Group’s supply chain.
We considered whether these risks could plausibly affect
the liquidity or covenant compliance in the going concern
period by comparing severe, but plausible downside
scenarios that could arise from these risks individually and
collectively against the level of available financial resources
and covenants indicated by the Group’s financial forecasts.
Our procedures also included:
— critically assessing assumptions in the base case and
downside scenarios, particularly in relation to forecast
liquidity, by confirming the completeness and accuracy
of forward secured sales;
— assessing whether downside scenarios applied mutually
consistent and severe assumptions in aggregate, using
our assessment of the possible range of each key
assumption and our knowledge of the Group;
— inspecting confirmation from banks of the level of cash
and cash equivalents held at year end;
— considering whether the going concern disclosure
in notes 1 and C1.2 to the financial statements gives a full
and accurate description of the Directors’ assessment
of going concern, including the identified risks; and
— assessing the completeness of the going
concern disclosure.
Our conclusions based on this work:
— we consider that the Directors’ use of the going concern
basis of accounting in the preparation of the financial
statements is appropriate;
— we have not identified, and concur with the directors’
assessment that there is not, a material uncertainty
related to events or conditions that, individually or
collectively, may cast significant doubt on the Group’s
or Company's ability to continue as a going concern for
the going concern period;
However, as we cannot predict all future events or
conditions and as subsequent events may result in
outcomes that are inconsistent with judgments that
were reasonable at the time they were made, the above
conclusions are not a guarantee that the Group or the
Company will continue in operation.
5. Fraud and breaches of laws and regulations
– ability to detect
Identifying and responding to risks of material
misstatement due to fraud
To identify risks of material misstatement due to fraud
('fraud risks') we assessed events or conditions that could
indicate an incentive or pressure to commit fraud or
provide an opportunity to commit fraud. Our risk
assessment procedures included:
— enquiring of Directors, the audit committee, internal
audit, internal legal counsel and inspection of policy
documentation as to the Group’s high-level policies and
procedures to prevent and detect fraud, including the
internal audit function, and the Group’s channel for
'whistleblowing', as well as whether they have knowledge
of any actual, suspected or alleged fraud;
— reading Board and all relevant committee minutes;
— considering remuneration incentive schemes (primarily
the 2011 LTIP) and performance targets for management
and directors, including any revenue and trading margin
targets for management remuneration; and
— using analytical procedures to identify any unusual or
unexpected relationships.
We communicated identified fraud risks throughout the
audit team and remained alert to any indications of fraud
throughout the audit.
As required by auditing standards, and taking into account
our overall knowledge of the control environment, we
perform procedures to address the risk of management
override of controls, in particular the risk that Group and
component management may be in a position to make
inappropriate accounting entries and the risk of bias in
accounting estimates and judgments such as cost of sale
recognition and post completion development provisioning.
On this audit we do not believe there is a fraud risk related
to revenue recognition as the accounting for the Group’s
revenue is non-complex and only recognised on the legal
completion of the sale, being the point at which the balance
of the sale is paid for and title of the unit transfers to the
customer. There are therefore limited levels of judgment
with limited opportunities for manual intervention in the
sales process to fraudulently manipulate revenue.
We did not identify any additional fraud risks.
In determining the audit procedures we took into account
the results of our evaluation and testing of the operating
effectiveness of some of the Group-wide fraud risk
management controls.
We also performed procedures including:
— identifying journal entries and other adjustments to test
for all full scope components based on specific risk-
based criteria and comparing the identified entries to
supporting documentation. These included those posted
by senior finance management, those posted to unusual
accounts, and those with missing user identification;
— evaluating the business purpose of significant unusual
transactions; and
— assessing significant accounting estimates for bias.
Identifying and responding to risks of material misstatement
due to non-compliance with laws and regulations
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 from inspection of the Group’s regulatory
and legal correspondence and discussed with the Directors
and other management the policies and procedures
regarding compliance with laws and regulations.
As the Group is regulated, our assessment of risks involved
gaining an understanding of the control environment
including the entity’s procedures for complying with
regulatory requirements.
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
license to operate. We identified the following areas as
those most likely to have such an effect: UK planning
permission and building regulations, health and safety,
anti-bribery, anti-money laundering and sanctions
checking, employment laws, data protection laws and
environmental laws. 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. Therefore, if a breach of operational
regulations is not disclosed to us or evident from relevant
correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud
or breaches of law or regulation
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 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 fraud, as these may involve collusion,
forgery, intentional omissions, misrepresentations, or the
override of internal controls. Our audit procedures are
designed to detect material misstatement. We are not
responsible for preventing non-compliance or fraud and
cannot be expected to detect non-compliance with all laws
and regulations.
6. 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
We are required to perform procedures to identify whether
there is a material inconsistency between the Directors’
disclosures in respect of emerging and principal risks and
the viability statement, and the financial statements and
our audit knowledge.
Based on those procedures, we have nothing material to
add or draw attention to in relation to:
— the Directors’ confirmation within the Viability Statement
on page 81 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 Emerging and Principal Risks disclosures describing
these risks and how emerging risks are identified, and
explaining how they are being managed and mitigated;
and
164
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OF THE BERKELEY GROUP HOLDINGS PLC CONTINUED
CONSOLIDATED INCOME STATEMENT
— 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.
We are also required to review the Viability Statement,
set out on page 81 under the Listing Rules. Based on the
above procedures, we have concluded that the above
disclosures are materially consistent with the financial
statements and our audit knowledge.
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 judgments 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
parent Company’s longer-term viability.
Corporate governance disclosures
We are required to perform procedures to identify whether
there is a material inconsistency between the Directors’
corporate governance disclosures and the financial
statements and our audit knowledge.
Based on those procedures, we have concluded that each
of the following is materially consistent with the financial
statements and our audit knowledge:
— 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;
— the section of the annual report describing the work
of the Audit Committee, including the significant issues
that the audit committee considered in relation to the
financial statements, and how these issues were
addressed; and
— the section of the annual report that describes the
review of the effectiveness of the Group’s risk
management and internal control systems.
We are required to review the part of Corporate
Governance Statement relating to the Group’s compliance
with the provisions of the UK Corporate Governance Code
specified by the Listing Rules for our review. We have
nothing to report in this respect.
7. 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.
8. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on
page 156, 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 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 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.
9. 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
23 June 2021
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
2.1
2.3
2.3
2.11
2.6
2.7
2.7
2021
£m
2,202.2
(1,566.9)
635.3
(133.0)
502.3
3.0
(9.6)
22.4
518.1
(95.4)
422.7
2020
£m
1,920.4
(1,283.0)
637.4
(167.7)
469.7
12.4
(11.7)
33.3
503.7
(93.6)
410.1
339.4
332.5
324.9
313.4
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 April
Profit after taxation for the year
Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss:
Actuarial gain/(loss) recognised in the pension scheme
Total items that will not be reclassified to profit or loss
Other comprehensive income/(expense) for the year
Total comprehensive income for the year
Notes
2.5
2021
£m
422.7
2.7
2.7
2.7
2020
£m
410.1
(1.7)
(1.7)
(1.7)
425.4
408.4
S
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a
t
e
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s
166
Berkeley Group 2021 Annual Report
Berkeley Group 2021 Annual Report
167
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
As at 30 April
Assets
Non-current assets
Intangible assets
Property, plant and equipment
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 liabilities
Provisions for other liabilities and charges
Current liabilities
Borrowings
Trade and other payables
Lease liabilities
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
2021
£m
2020
£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
46.0
3.2
281.7
40.1
388.2
17.2
48.5
2.5
261.8
53.6
383.6
3,652.5
3,554.9
75.4
7.9
1,428.2
5,164.0
5,552.2
68.3
5.1
1,638.9
5,267.2
5,650.8
(300.0)
(330.8)
(1.7)
(62.3)
(694.8)
–
(1,614.7)
(1.5)
(65.8)
(1,682.0)
(2,376.8)
3,175.4
6.6
49.8
24.9
(961.3)
4,055.4
3,175.4
(300.0)
(263.7)
(1.3)
(60.0)
(625.0)
(200.0)
(1,668.1)
(1.2)
(54.9)
(1,924.2)
(2,549.2)
3,101.6
6.8
49.8
24.7
(961.3)
3,981.6
3,101.6
The financial statements on pages 167 to 202 were approved by the Board of Directors on 23 June 2021 and were signed
on its behalf by:
R J Stearn
Chief Financial Officer
Share
capital
£m
Share
premium
£m
Capital
redemption
reserve
£m
Other
reserve
£m
Retained
earnings
£m
Notes
6.8
49.8
24.7
(961.3)
3,981.6
At 1 May 2020
Profit after taxation for the year
Other comprehensive income
for the year
–
–
Purchase of own shares
2.18
(0.2)
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 2021
At 1 May 2019
IFRS 16 application adjustment
at 1 May 2019
Profit after taxation for the year
Other comprehensive expense
for the year
2.5
2.17
2.20
–
–
–
6.6
7.0
–
–
–
Purchase of own shares
2.18
(0.2)
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
2.5
2.17
2.20
–
–
–
–
–
–
–
–
–
–
–
0.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.2
–
–
–
–
–
–
–
–
–
–
Total
equity
£m
3,101.6
422.7
422.7
2.7
2.7
(188.6)
(188.6)
(11.9)
(11.9)
(5.6)
(5.6)
(145.5)
(145.5)
3,175.4
(0.2)
410.1
(0.2)
410.1
(1.7)
(130.5)
(1.7)
(130.5)
(3.9)
(3.9)
14.3
14.3
(149.8)
3,981.6
(149.8)
3,101.6
49.8
24.9
(961.3)
4,055.4
49.8
24.5
(961.3)
3,843.3
2,963.3
6.8
49.8
24.7
(961.3)
168
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Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportCorporate GovernanceFinancial StatementsStrategic Report
CONSOLIDATED CASH FLOW STATEMENT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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
Increase 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
(Decrease)/increase in borrowings
Dividends paid to Company’s shareholders
Net cash flow from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the start of the financial year
Cash and cash equivalents at the end of the financial year
Notes
2.22
2.9
2.11
2.11
2.19
2.23
2.20
2.22
2021
£m
419.4
3.0
(8.1)
(90.1)
324.2
(2.4)
0.8
7.5
(5.0)
0.9
(1.8)
0.1
(188.6)
(200.0)
(145.5)
(535.8)
(210.7)
1,638.9
1,428.2
2020
£m
395.4
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
1 Basis of preparation
1.1 Introduction
These Consolidated Financial Statements have been prepared in accordance with International Accounting Standards
(IAS) in conformity with the requirements of the Companies Act 2006 and Article 4 of the IAS Regulation, to the
extent applicable.
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 judgments and key sources of estimation uncertainty
The preparation of financial statements in conformity with International Financial Reporting Standards
(IFRS) requires the use of certain critical accounting estimates. It also requires management to exercise their
judgment in the process of applying the Group’s accounting policies.
Management have not made any individual critical accounting judgments that are material to the Group in
the year. The key areas involving estimation uncertainty, which are significant to the Consolidated Financial
Statements, are disclosed within the relevant notes on pages 171 to 202.
Group accounting policies
The significant Group accounting policies are included within the relevant notes to the Consolidated
Financial Statements on pages 171 to 202.
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 2021, the Group
had net cash of £1,128.2 million and total liquidity of £1,878.2 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 £1,712 million, a significant proportion of which covers delivery for the next 18 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 not less than 12 months from the date of approval of these Consolidated 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 2.26.
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.
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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 2020:
2.3 Net finance (costs)/income
— Amendments to References in the Conceptual Framework in IFRS Standards issued by the IASB, which contains
Finance income
amendments to a number of IAS and IFRIC standards.
— Amendments to the definition of a business in IFRS 3 ‘Business Combinations’ to clarify what is considered to be
a business, narrow the definitions of a business and provide guidance and illustrative examples.
— Amendments to the definition of ‘material’ in IAS 1 ‘Presentation of Financial Statements’ and IAS 8 ‘Accounting
policies, changes in accounting estimates and errors’ to clarify the definition and align the definition used in the
Conceptual Framework and the standards.
— Amendments to IFRS 9 ‘Financial Instruments’, IAS 39 ‘Financial Instruments’ and IFRS 7 ‘Financial Instruments:
Disclosures’ which clarify hedge accounting requirements as a result of interest rate benchmark reform.
None of the above amendments have had a significant impact on the reported results or position.
1.5 Impact of standards and interpretations in issue but not yet effective
The International Accounting Standards Board (IASB) has published a number of minor amendments to IFRSs which
will be applicable to the Group for the financial year beginning 1 May 2021. These amendments are not expected to have
a significant impact on the results of the Group.
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 in the United Kingdom.
Revenue represents the amounts receivable from the sale of properties, comprising private and affordable
residential homes and commercial properties, ground rent assets and other income directly associated with
property development.
Properties are treated as sold and profits and revenues are recognised when all performance obligations
under the contract have been satisfied, following which control of the unit is passed to the customer.
For all residential and commercial properties sold in the year this 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.
An analysis of the Group’s continuing revenue is as follows:
Residential revenue
Commercial revenue
2021
£m
2,200.3
1.9
2,202.2
2020
£m
1,883.7
36.7
1,920.4
Included within revenue is £279.6 million (2020: £322.8 million) of customer deposits for units that legally completed in
the year.
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 to private customers or affordable housing providers, 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.
2021
£m
3.0
(7.7)
(0.9)
(1.0)
(9.6)
(6.6)
2020
£m
12.4
(9.1)
(1.8)
(0.8)
(11.7)
0.7
Finance costs
Interest payable on bank loans and non-utilisation fees
Amortisation of facility fees
Other finance costs
Net finance (costs)/income
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.
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 judgments
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 auditor for the audit of the Group and parent
Company
Fees paid and payable to the Company’s auditor for other services:
— Audit of the Company’s subsidiaries and Joint Ventures
— Audit-related assurance services
2021
£m
227.1
4.1
1.8
–
0.7
0.1
0.1
2020
£m
276.3
2.9
1.8
0.2
0.6
0.1
0.1
The value of inventories expensed and included in the cost of sales is £1,482.2 million (2020: £1,184.3 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 (2020: £10,000).
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
2021
£m
195.6
21.4
(1.8)
3.7
8.2
2020
£m
216.4
36.8
10.0
4.5
8.6
227.1
276.3
The average monthly number of persons employed by the Group during the year was 2,627 (2020: 2,709).
172
173
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDBerkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportCorporate GovernanceFinancial StatementsStrategic Report 2.5 Directors and employees continued
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:
The key features of the plan are as follows:
2016
2017 – 2018
2019 – 2021
2022 – 2025
Directors’ remuneration
Amount (credited)/charged under long-term incentive schemes
Company contributions to the defined contribution pension schemes
2021
£m
2.4
(1.2)
0.1
1.3
2020
£m
2.8
12.2
0.1
15.1
£2 of return required each year by 30 September for
tranche of options to vest.
Tranche
– 33.0% option
Tranche
– 13.4% option
per annum
Tranche
– 13.4% option
per annum
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 (2020: £29.5 million) in aggregate.
The number of Directors accruing benefits under defined contribution pension schemes in the year was two (2020: two).
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 (2020: one) equity settled share based payment scheme. The credit 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 (‘2011 LTIP’) was £1.8 million (2020: charge of £10.0 million). The credit to the Income Statement
attributable to key management is £1.9 million (2020: charge of £10.3 million).
The charge to the reserves during the year in respect of employee share schemes was £11.9 million (2020: £3.9 million),
resulting from the non-cash IFRS 2 charge for the year.
There were nil exercisable share options at the end of the year (2020: nil). During the year 836,466 options vested under
the 2011 LTIP (2020: 926,265).
2011 Long-term Incentive Plan
The 2011 LTIP was approved by shareholders at the 2011 AGM. The 2011 LTIP is designed to incentivise management to
both deliver long-term shareholder returns and create value in the ongoing business. Under the plan eligible employees
are granted options which will only vest if certain performance conditions are satisfied. Participation in the plan is at the
discretion of the Board.
The current term of the plan runs for 14 years, with the final options due to vest in September 2025. The original scheme
was due to run until September 2021, but at the 2019 AGM the scheme was extended, for eligible employees, by four
years to September 2025.
The amount of options that will vest is dependent on the shareholder returns and, for the Executive members, the
remuneration caps in place. In total £2.3 billion must be returned to shareholders by September 2021 through either
dividend payments and/or share buybacks. This equates to a minimum of £2 per annum and must be paid by the
milestone date of 30 September each year.
Total remuneration caps are in place for Executive Directors. Each year options can vest up to the value of their
remuneration cap. Any options prevented from vesting due to the caps are banked, and will vest in equal tranches from
2022 to 2025. Additional returns of £2 per annum must be returned to shareholders from 2022 to 2025 in order for the
banked options to vest.
Options granted under the plan are for nil consideration and carry no dividend or voting rights. The original option price
was £16.34, which equated to the £2.3 billion of shareholder return that needed to be returned to shareholders over the
original term of the LTIP to 2021. The option price for each tranche is reduced by the value of dividend paid each year,
but fixed at 30 September 2021 for subsequent tranches expected to vest in 2022 to 2025.
Original option price £16.34, reduced by amount of £2
return provided in dividend each year. Option price
fixed at 30 September 2021.
£2 of return required each year for any of the shares
subject to tranches from 2022 – 2025 to vest.
Banked options carried forward.
Banked options vest in equal tranches to value of total
rem cap.
LTIP cap in
place
Total rem cap
in place
Vesting to total rem cap each year.
When exercised, each option is converted into one ordinary share on the vesting date. The exercise price of the option
is based on the opening price at which the Company’s shares are traded on the London Stock Exchange on the date
of vesting.
Sale restrictions are in place which provide a maximum of 10% of the cumulative balance of the shares earned to be sold
each year.
The table below summarises the movement in options under the 2011 LTIP during the year:
As at 1 May
Granted during the year
Exercised during the year
Lapsed during the year
As at 30 April
2021
2020
Option price
per share
£
Number of
options
No.
Option price
per share
£
Number of
options
No.
–
–
8,131,720
–
5.39
(836,466)
–
–
–
7,295,254
–
8,808,235
4.39
7.46
5.42
–
300,000
(926,265)
(50,250)
8,131,720
174
175
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDBerkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportCorporate GovernanceFinancial StatementsStrategic Report 2.5 Directors and employees continued
The historic options vested, options banked and the option price is shown in the table below:
Pensions
Vesting date
30 September 2016
30 September 2017
30 September 2018
30 September 2019
30 September 2020
Total
2021
Share
options
vested
No.
5,719,166
892,487
990,955
926,265
836,466
Banked
options
at 30 April
2021
No.
–
1,163,737
1,231,409
1,202,514
1,417,163
9,365,339
5,014,823
Option
price
£
10.00
8.63
7.73
7.46
5.39
Fair value of options granted
The assessed fair value of the original options granted, determined using the current market pricing model, was £3.17.
The inputs into the current market pricing model were:
Grant date
Final vesting date
Share price at date of grant (p)
Exercise price
Discount rate
Inputs
5 September 2011
30 September 2021
1,236
Nil
6.3%
Modifications to the 2011 LTIP, approved at the 2019 AGM, were considered to be non-beneficial due to the extended
service period and requirement for additional shareholder returns. Therefore there was no impact on the fair value of the
options or accounting treatment applied.
The discount rate was determined by calculating the Group’s expected cost of capital over the original vesting period at
the grant date.
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 145, no new awards have been made under the annual Bonus
Plan during the financial year. The plan was originally a five year plan, with the balance being paid out in the sixth year.
During the year the plan was paid out in full and no further amounts are due under the plan. The charge for the year
of £0.8 million (2020: £2.0 million) relates to prior year awards, all of which relate to key management.
The total carrying amount of liabilities for the Bonus Banking Plan at the end of the year was £3.3 million
(2020: £5.9 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 2021 was
£0.4 million (2020: £2.5 million).
The total carrying amount of liabilities for share appreciation rights at the end of the year was £9.6 million
(2020: £13.0 million), recorded in accruals and deferred income.
176
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 £7.0 million (2020: £7.4 million) were paid into the defined contribution schemes during
the year.
Defined benefit plan
As at 30 April 2021, 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
(2020: £0.6 million).
Following the High Court ruling on 26 October 2018, regarding the equalisation of Guaranteed Minimum Pension (‘GMP’)
benefit, the Plan was required to adjust benefits to remove the inequalities between the GMP benefits awarded to males
and females.
On 20 November 2020, the High Court issued a supplementary ruling in the respect of GMP equalisation with regard to
members that transferred out of the scheme prior to the ruling. As at 30 April 2021, the Group has estimated that the
additional obligation required to equalise benefits for transfers out of the scheme prior to the original ruling is
£0.7 million. The additional obligation is considered a past service cost and has been recognised through the Income
Statement in accordance with IAS 19.
On 25 November 2020, the Government and UK Statistics Authority’s joint consultation response on RPI reform was
published. This confirmed their intention to amend the RPI calculation methodology to be aligned to that already in
use for the calculation of the CPI with effect from 2030. The markets have adjusted since the announcement and it is
reasonable to conclude that the Bank of England curve for periods after 2030 reflects CPIH expectations, whilst for
earlier periods it reflects the current RPI methodology. There has been no change to the derivation of the RPI
assumption compared to last year.
For the purpose of IAS 19, the 2019 valuation was updated for 30 April 2021.
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.
The amounts recognised in the Statement of Financial Position are determined as follows:
Present value of defined benefit obligations
Fair value of plan assets
Net surplus recognised in the Statement of Financial Position
2021
£m
(23.2)
26.4
2020
£m
(22.4)
23.0
3.2
0.6
177
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDBerkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportCorporate GovernanceFinancial StatementsStrategic Report 2.5 Directors and employees continued
History of asset values
Defined benefit obligations
Fair value plan assets
Net defined benefit asset
2020
£m
22.5
–
0.6
–
–
–
(0.2)
0.6
(0.5)
23.0
Balance at 1 May
Included in Income Statement
Past service costs
Net interest
Included in Other
Comprehensive Income
Remeasurements:
Actuarial gain/(loss) arising from:
— Demographic assumptions
— Scheme experience
— Financial assumptions
Return on plan assets
Other
Contributions by the employer
Benefits paid out
2021
£m
(22.4)
(0.7)
(0.4)
–
0.3
(1.1)
–
–
1.1
2020
£m
(20.9)
–
(0.5)
0.1
(0.4)
(1.2)
–
–
0.5
2021
£m
23.0
–
0.4
–
–
–
3.5
0.6
(1.1)
Balance at 30 April
(23.2)
(22.4)
26.4
Cumulative actuarial gains and losses recognised in equity:
Cumulative amounts of losses recognised in the Statement of Comprehensive Income
at 1 May
Net actuarial gain/(loss) recognised in the year
Cumulative amounts of losses recognised in the Statement
of Comprehensive Income at 30 April
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)
Absolute return bonds
Corporate bonds
Cash
Fair value of plan assets
2021
£m
0.6
(0.7)
–
–
0.3
(1.1)
3.5
0.6
–
3.2
2021
£m
(7.5)
2.7
2020
£m
1.6
–
0.1
0.1
(0.4)
(1.2)
(0.2)
0.6
–
0.6
2020
£m
(5.8)
(1.7)
(4.8)
(7.5)
30 April 2021
Long-term
value
£m
30 April 2020
Long-term
value
£m
1.1
7.9
2.5
2.0
5.3
1.3
2.5
2.0
1.7
0.1
0.9
5.9
1.8
1.6
6.9
1.5
2.6
–
1.7
0.1
26.4
23.0
All equity securities and government bonds have quoted prices in active markets. All government bonds are issued by
European governments and are AAA- or AA- rated. All other plan assets are not quoted in an active market.
178
Fair value of plan assets
Present value of defined benefit obligations
Net surplus in the plan
30 April 2021
£m
30 April 2020
£m
30 April 2019
£m
30 April 2018
£m
30 April 2017
£m
26.4
(23.2)
3.2
23.0
(22.4)
22.5
(20.9)
21.5
(19.4)
21.0
(20.5)
0.6
1.6
2.1
0.5
Actuarial assumptions
The major assumptions used by the actuary for the 30 April 2021 valuation were:
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
2021
1.90%
3.50%
3.00%
3.75%
30 April
2020
1.70%
2.80%
2.30%
3.00%
The mortality assumptions are the standard S3PMA/S3PFA_M CMI_2020_X (1.25%) (2020: S3PMA/S3PFA_M
CMI_2019_X (1.25%)) 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 (2020: 21.9 and 23.6 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 (2020: aged 45, 23.2 and 25.1 years respectively).
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
£(0.9)m
£0.4m
£1.2m
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 2022, 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:
Current tax
UK corporation tax payable
Adjustments in respect of previous years
Deferred tax
Deferred tax movements
Adjustments in respect of previous years
2021
£m
(93.1)
1.9
(91.2)
(5.4)
1.2
(4.2)
2020
£m
(93.3)
2.8
(90.5)
(0.9)
(2.2)
(3.1)
(95.4)
(93.6)
179
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDBerkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportCorporate GovernanceFinancial StatementsStrategic Report 2.6 Taxation continued
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)
2021
£m
(5.6)
(3.7)
(9.3)
The tax charge assessed for the year differs from the standard rate of UK corporation tax of 19.0% (2020: 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
2021
£m
518.1
98.4
0.6
(0.1)
(3.1)
–
(0.4)
95.4
2020
£m
14.3
(3.4)
10.9
2020
£m
503.7
95.7
1.0
–
(0.6)
(2.1)
(0.4)
93.6
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 2020.
At the Spring Budget 2021, the Government announced that from 1 April 2023 the corporation tax rate will increase
from 19% to 25%. This change was not substantially enacted until May 2021 and as such has not been reflected in the
measurement of deferred tax assets at the balance sheet date. HM Treasury have also issued a consultation in
connection with the proposed Residential Property Developer Tax which will be introduced next year.
This announcement does not impact results for the year.
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)
2021
422.7
124.6
2020
410.1
126.2
339.4
324.9
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 2021 the Group had two (2020: two) categories of potentially dilutive ordinary shares: 2.3 million
(2020: 4.4 million) share options under the 2011 LTIP and 30,912 (2020: 30,788) 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.
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
2021
422.7
124.6
2.5
127.1
332.5
2020
410.1
126.2
4.6
130.8
313.4
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 2020 and 30 April 2021
Accumulated impairment:
At 1 May 2020 and 30 April 2021
Net book value:
At 1 May 2020 and 30 April 2021
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
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 8.88% (2020: 8.21%) 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.
180
181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDBerkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportCorporate GovernanceFinancial StatementsStrategic Report 2.9 Property, plant and equipment
2.10 Right-of-use assets and lease liabilities
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.
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 Consolidated
Statement of Financial Position and lease liabilities are shown separately on the Consolidated Statement of
Financial Position in current liabilities and non-current liabilities depending on the length of the lease term.
Cost:
At 1 May 2020
Additions
Disposals
At 30 April 2021
Accumulated depreciation:
At 1 May 2020
Charge for the year
Disposals
At 30 April 2021
Net book value:
At 1 May 2020
At 30 April 2021
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
182
Freehold
property
£m
Fixtures,
fittings &
equipment
£m
Motor
vehicles
£m
33.3
0.2
–
33.5
2.5
0.8
–
3.3
30.8
30.2
19.7
2.1
(0.7)
21.1
3.4
3.0
(0.1)
6.3
16.3
14.8
2.5
0.1
(0.5)
2.1
1.1
0.3
(0.3)
1.1
1.4
1.0
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
55.5
2.4
(1.2)
56.7
7.0
4.1
(0.4)
10.7
48.5
46.0
Total
£m
54.0
9.7
(8.2)
55.5
11.5
2.9
(7.4)
7.0
42.5
48.5
Cost:
At 1 May 2020
Additions
Disposals
At 30 April 2021
Accumulated depreciation:
At 1 May 2020
Charge for the year
Disposals
At 30 April 2021
Net book value:
At 1 May 2020
At 30 April 2021
Lease liabilities included in the Consolidated Statement of Financial Position:
Current
Non-current
Total
Amounts recognised in the Consolidated 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 2021 was £1.8 million (2020: £2.0 million)
Leasehold
property
£m
Motor
vehicles
£m
5.2
3.3
(2.3)
6.2
3.1
1.6
(1.4)
3.3
2.1
2.9
0.7
0.1
(0.1)
0.7
0.3
0.2
(0.1)
0.4
0.4
0.3
2021
£m
1.5
1.7
3.2
2021
£m
1.6
0.2
0.1
1.9
Total
£m
5.9
3.4
(2.4)
6.9
3.4
1.8
(1.5)
3.7
2.5
3.2
2020
£m
1.2
1.3
2.5
2020
£m
1.6
0.2
0.1
1.9
183
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDBerkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportCorporate GovernanceFinancial StatementsStrategic Report 2.11 Investments in joint ventures
Joint ventures are accounted for using the equity method (equity accounted investees) and are initially
recognised at cost. 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.
Loans
Share of post acquisition reserves
Elimination of profit on transfer of inventory to joint ventures
Details of the joint ventures are provided in notes 2.25 and 2.26.
At 1 May
Group’s share of profit after taxation for the year
Increase in loans to joint ventures
Dividends from joint ventures
2021
£m
182.2
99.5
–
281.7
2021
£m
261.8
22.4
5.0
(7.5)
2020
£m
177.2
84.7
(0.1)
261.8
2020
£m
374.7
33.3
31.5
(177.7)
At 30 April
281.7
261.8
The Group’s share of joint ventures’ net assets, income and expenses is comprised as follows:
2021
Cash and cash equivalents
Other current assets
Current assets
Current liabilities
Non–current financial liabilities*
Net assets/(liabilities) (at 100%)
Group share of net assets/(liabilities) (50%)
Loans to joint ventures
Total interest in joint ventures
Revenue
Costs
Operating profit
Net finance costs
Profit before taxation for the year
Tax charge
Profit after taxation and total comprehensive income (100%)
Group share of post tax profit of joint ventures (50%)
St Edward
£m
St William
£m
284.4
524.3
808.7
(401.1)
(172.2)
235.4
117.7
22.6
140.3
133.9
(94.3)
39.6
(0.5)
39.1
(0.4)
38.7
19.4
17.8
878.5
896.3
(240.9)
(691.8)
(36.4)
(18.2)
159.6
141.4
165.9
(147.8)
18.1
(12.0)
6.1
–
6.1
3.0
Total
£m
302.2
1,402.8
1,705.0
(642.0)
(864.0)
199.0
99.5
182.2
281.7
299.8
(242.1)
57.7
(12.5)
45.2
(0.4)
44.8
22.4
2020
Cash and cash equivalents
Other current assets
Current assets
Current liabilities
Non–current financial liabilities*
Net assets/(liabilities) (at 100%)
Group share of net assets/(liabilities) (50%)
Loans to joint ventures
Total interest in joint ventures
Revenue
Costs
Operating profit
Net finance income/(costs)
Profit before taxation for the year
Tax charge
Profit after taxation and total comprehensive income (100%)
Group share of post tax profit of joint ventures (50%)
* Non-current liabilities includes amounts owed to joint venture partners.
2.12 Inventories
St Edward
£m
St William
£m
314.0
388.8
702.8
(251.2)
(240.0)
211.6
105.8
22.6
128.4
61.2
(40.4)
20.8
5.2
26.0
(0.4)
25.6
12.8
9.4
744.8
754.2
(236.0)
(560.6)
(42.4)
(21.2)
154.6
133.4
265.4
(215.0)
50.4
(9.4)
41.0
–
41.0
20.5
Total
£m
323.4
1,133.6
1,457.0
(487.2)
(800.6)
169.2
84.6
177.2
261.8
326.6
(255.4)
71.2
(4.2)
67.0
(0.4)
66.6
33.3
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.
184
185
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDBerkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportCorporate GovernanceFinancial StatementsStrategic Report 2.12 Inventories continued
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.
A 1% increase or decrease to estimated costs recognised in the year would lead to a change in cost of sales and
inventory of £14.8 million in the current financial year. This sensitivity is based on a reasonably possible scenario
and is provided in the absence of a change to any other factor affecting future gross margins on the Group’s
developments, such as a change in future sales prices.
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 2021 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 6% (2020: 9%) of the future estimated revenue for the specific sites. As with all judgments
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
2.13 Trade and other receivables
2021
£m
331.4
1,134.7
1,466.1
2,081.0
105.4
2020
£m
519.7
907.9
1,427.6
1,987.8
139.5
3,652.5
3,554.9
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
2021
£m
44.1
23.9
7.4
75.4
2020
£m
26.2
27.4
14.7
68.3
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
2021
£m
1,428.2
2020
£m
1,638.9
New property deposits and on account contract receipts are held within current trade and other payables.
Deposits and on account contract receipts are non-refundable and are recorded as a liability on receipt.
They are released to the income statement, as revenue, upon legal completion.
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.
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
2021
£m
2020
£m
(509.2)
(790.6)
(28.6)
(286.3)
(1,614.7)
(586.0)
(783.5)
(40.6)
(258.0)
(1,668.1)
(330.8)
(263.7)
(1,945.5)
(1,931.8)
All amounts included above are unsecured. The total of £28.6 million (2020: £40.6 million) for other taxes and social
security includes £11.6 million (2020: £17.6 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.
186
187
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDBerkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportCorporate GovernanceFinancial StatementsStrategic Report 2.16 Provisions for liabilities and charges
2.17 Deferred tax
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.
Provisions include 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 Group continually reviews the identified risks that it is aware of for the Group’s portfolio of
developments to ensure that the amount of the provision remains appropriate. 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 ten (2020: five) years following completion.
If costs estimated in the post-completion development provision are overstated or understated by 10%,
this would lead to a change in cost of sales and provision of £12.8 million in the current financial year.
At 1 May 2020
Utilised
Released
Charged to the Income Statement
Post
completion
development
provisions
£m
(109.8)
25.7
4.4
(45.0)
Other
provisions
£m
(5.1)
0.6
1.4
(0.3)
Total
£m
(114.9)
26.3
5.8
(45.3)
At 30 April 2021
(124.7)
(3.4)
(128.1)
At 1 May 2019
Utilised
Released
Charged to the Income Statement
Post
completion
development
provisions
£m
(74.2)
15.6
12.9
(64.1)
Other
provisions
£m
(4.9)
–
1.8
(2.0)
Total
£m
(79.1)
15.6
14.7
(66.1)
At 30 April 2020
(109.8)
(5.1)
(114.9)
2021
£m
(62.3)
(65.8)
2020
£m
(60.0)
(54.9)
(128.1)
(114.9)
Non-current
Current
Total
188
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.
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 2020
Adjustments in respect of previous years
Charged to income statement in the year
Charged to equity at 19%
Realisation of deferred tax asset on vesting of employee
share scheme
Charged to equity in year (note 2.6)
At 30 April 2021
(2.1)
(1.0)
0.2
–
–
–
(2.9)
–
–
–
–
–
–
–
43.0
40.1
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)
–
–
–
–
–
–
–
–
–
Short-term timing differences primarily relates to deferred tax assets held in relation to long-term incentive schemes
and bonuses.
189
55.7
53.6
Total
£m
53.6
1.2
(5.4)
(5.6)
(3.7)
(9.3)
Total
£m
45.8
(2.2)
(3.0)
2.1
(0.9)
14.3
(3.4)
10.9
55.7
2.2
(5.6)
(5.6)
(3.7)
(9.3)
45.2
0.6
(3.0)
2.0
(1.0)
14.3
(3.4)
10.9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDBerkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportCorporate GovernanceFinancial StatementsStrategic Report 2.17 Deferred tax continued
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 (2020: 19%). There is no
unprovided deferred tax (2020: £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 2021 is £40.1 million (2020: £53.6 million).
Deferred tax assets of £29.7 million (2020: £41.5 million) are expected to be recovered after more than one year.
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
Cumulative deferred tax credited to equity at 30 April
2.18 Share capital and share premium
2021
£m
(9.3)
31.6
22.3
2020
£m
10.9
20.7
31.6
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
Issued
At start of year
Shares cancelled
2021
No ’000
2020
No ’000
136,649
(4,412)
140,157
(3,508)
At end of year
132,237
136,649
2021
£m
6.8
(0.2)
6.6
2020
£m
7.0
(0.2)
6.8
2021
£m
49.8
–
49.8
2020
£m
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 29 September 2020, 0.3 million ordinary shares (2020: 0.2 million) were allotted and issued to the Employee
Benefit Trust.
On 30 September 2020, 0.4 million ordinary shares (2020: 0.4 million) were transferred from the Employee Benefit Trust
to Executive Directors to satisfy the exercise of options under the 2011 LTIP.
At 30 April 2021 there were 0.1 million shares held in trust (2020: 0.2 million) by the Employee Benefit Trust. The market
value of these shares at 30 April 2021 was £2.6 million (2020: £8.9 million).
During the 2021 financial year, 4.4 million shares were repurchased (2020: 3.5 million) for a total consideration of
£188.6 million, excluding transaction costs (2020: £130.5 million). These shares were subsequently cancelled
(2020: 3.5 million).
At 30 April 2021 there were 10.6 million (2020: 10.9 million) treasury shares held by the Group. The market value of the
shares at 30 April 2021 was £491.2 million (2020: £457.7 million).
2.19 Reserves
The movement in reserves is set out in the Consolidated Statement of Changes in Equity on page 169.
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 4.4 million (2020: 3.5 million) shares were repurchased to the value of £188.6 million
(2020: £130.5 million). These shares were subsequently cancelled (2020: 3.5 million) 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 (2020: 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 29 September 2020 the Company issued and transferred to the Employee Benefit Trust 0.3 million ordinary shares
(2020: 0.2 million ordinary shares). On 30 September 2020 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 (2020: 0.4 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 2019
March 2020
September 2020
March 2021
Total dividends
2021
2020
Dividend per
share
pence
Dividend per
share
pence
£m
–
–
107.00
9.13
20.08
99.32
–
–
–
–
134.3
11.2
145.5
£m
25.2
124.6
–
–
149.8
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 £27.1 million which are guaranteed by third parties (2020: £22.6 million). The Group considers that the likelihood of an
outflow of cash under these agreements is low and that no provision is required.
190
191
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDBerkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportCorporate GovernanceFinancial StatementsStrategic Report 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 scheme
— Non-cash charge in respect of share awards
Changes in working capital:
Increase in inventories
Increase in trade and other receivables
Increase in trade and other payables
Net change in employee benefit obligations
Cash generated from operations
Reconciliation of net cash flow to net cash:
Net (decrease)/increase in cash and cash equivalents, including bank overdraft
Decrease/(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*
2021
£m
422.7
95.4
5.9
–
(3.0)
9.6
(22.4)
0.7
(12.3)
(97.6)
(5.1)
25.5
–
419.4
(210.7)
200.0
(10.7)
1,138.9
1,128.2
1,428.2
–
(300.0)
(300.0)
1,128.2
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
* IFRS 16 lease liabilities are detailed in note 2.10.
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 page 8, 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 2021 was £2,047.2 million (2020: £1,962.7 million). The increase in capital employed in
the year of £84.5 million reflects an increase in net assets during the year (2020: decrease of £25.6 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 its 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
2021
£m
2020
£m
44.1
1,428.2
26.2
1,638.9
1,472.3
1,665.1
Trade receivables are non-interest bearing. Of the current trade receivables balance of £44.1 million (2020: £26.2 million)
none of the balance was overdue by more than 30 days (2020: £nil).
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.
Financial instruments: financial liabilities
The Group’s financial liabilities can be summarised as follows:
Current
Trade payables
Deposits and on account contract receipts
Lease liabilities
Accruals and deferred income
Borrowings
Non-current
Trade payables
Lease liabilities
Borrowings
Total trade and other payables
All amounts included above are unsecured.
2021
£m
2020
£m
(509.2)
(790.6)
(1.5)
(286.3)
–
(1,587.6)
(330.8)
(1.7)
(300.0)
(632.5)
(586.0)
(783.5)
(1.2)
(258.0)
(200.0)
(1,828.7)
(263.7)
(1.3)
(300.0)
(565.0)
(2,220.1)
(2,393.7)
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
2021
£m
2020
£m
(55.3)
(511.5)
(65.7)
(26.6)
(445.4)
(93.0)
(632.5)
(565.0)
The carrying amounts of the Group’s financial assets and financial liabilities approximate their fair value.
192
193
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDBerkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportCorporate GovernanceFinancial StatementsStrategic Report 2.23 Capital management, financial instruments and financial risk management continued
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 Group’s credit risk, which is considered to be aligned to a nominal,
low-risk 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.
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
2021
£m
2020
£m
(797.2)
(55.5)
(512.5)
(66.1)
(1,045.4)
(26.8)
(446.4)
(93.5)
(1,431.3)
(1,612.1)
Deposits and on account contract receipts are not included in the table above as they represent deferred revenue and
therefore do not have a payment maturity date.
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
2021, profit after tax for the year would have been £4.8 million higher (2020: £4.3 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 2021.
Credit risk
The Group’s exposure to credit risk encompasses the financial assets being: trade receivables and cash and
cash equivalents. The Group has assessed expected credit losses and the loss allowance for trade and other receivables
as immaterial.
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 (2020: £nil), nor are there any material
provisions held against trade receivables (2020: £nil), and £nil trade receivables are past their due date (2020: £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.
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:
2021
2020
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)
–
Nov–23
–
450
Nov–23
300
450
(300)
–
Nov–23
(200)
250
Nov–23
750
(300)
450
750
(500)
250
The Group’s committed banking facilities currently total £750 million and expire in November 2023.
At 30 April 2021 the total drawn down balance of the facilities was £300.0 million (2020: £500.0 million) after the Group
repaid £200 million (2020: drew down £200 million) on the revolving credit facility during the year. In addition, at
30 April 2021 there were bank bonds in issue of £18.8 million (2020: £28.1 million), of which £9.4 million is due within one
year (2020: £9.3 million). This amount reflects deferred land payments and is therefore included within trade payables
on the Group’s Balance Sheet. The bank bonds are issued under the Group’s revolving credit facility.
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 Alternative performance measures
Berkeley uses a number of alternative performance measures (APMs) which are not defined by IFRS. The Directors
consider these measures useful to assess the underlying performance of the Group alongside the relevant IFRS financial
information. They are referred to as Financial KPIs throughout the year end results. The information below provides
a definition of APMs and reconciliation to the relevant IFRS information, where required:
Net cash
Net cash is defined as cash and cash equivalents, less total borrowings. This is reconciled in note 2.22.
Net assets per share attributable to shareholders (NAVPS)
This is defined as 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.
Net assets (£m)
Total shares in issue (million)
Less:
Treasury shares held (million)
Employee Benefit Trust shares held (million)
Net shares used to determine NAVPS (million)
2021
3,175.4
2020
3,101.6
132.2
136.6
(10.5)
(0.1)
121.6
(10.9)
(0.2)
125.5
Net asset per share attributable to shareholders (pence)
2,612.1
2,471.5
194
195
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDBerkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportCorporate GovernanceFinancial StatementsStrategic Report 2.24 Alternative performance measures continued
Return on capital employed (ROCE)
This measures the profitability and efficiency of capital 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.
Operating profit
Share of joint ventures using equity method
Profit used to determine ROCE
Opening capital employed:
Net assets
Net cash
Opening capital employed
Closing capital employed:
Net assets
Net cash
Closing capital employed
Average capital employed
Return on capital employed (%)
2021
£m
502.3
22.4
524.7
2020
£m
469.7
33.3
503.0
3,101.6
(1,138.9)
1,962.7
2,963.3
(975.0)
1,988.3
3,175.4
(1,128.2)
2,047.2
3,101.6
(1,138.9)
1,962.7
2,005.0
1,975.5
26.2%
25.5%
Return on equity (ROE) before tax
This measures the efficiency of returns generated from shareholder equity before taxation and is calculated as profit
before taxation attributable to shareholders as a percentage of the average of opening and closing shareholders’ funds.
Opening shareholders’ equity
Closing shareholders’ equity
Average shareholders’ equity
Profit before tax
Return on equity before tax (%)
2021
£m
3,101.6
3,175.4
3,138.5
518.1
16.5%
2020
£m
2,963.3
3,101.6
3,032.5
503.7
16.6%
Cash due on forward sales
This measures cash still due from customers, with a risk adjustment, at the relevant Balance Sheet date during the next
three years under unconditional contracts for sale. It excludes forward sales of affordable housing and commercial
properties and forward sales within the Group’s joint ventures.
Future gross margin in land holdings
This represents management’s risk-adjusted assessment of the potential gross profit for each of the Group’s sites,
including the proportionate share of its joint ventures, taking account of a wide range of factors, including: current sales
and input prices; the economic and political backdrop; the planning regime; and other market factors; all of which could
have a significant effect on the eventual outcome.
196
2.25 Related party transactions
The Group has entered into the following related party transactions:
Transactions with Directors
During the year, Mr A W Pidgley paid £23,072 (2020: £65,598), Mr R C Perrins paid £255,980 (2020: £120,601), Mr S Ellis
paid £26,978 (2020: £208,046) and Mr P Vallone paid £nil (2020: £811,191) 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 former Group’s Chairman, under which Langham Homes will be paid a fee for a land introduction on an arm’s length
basis. No fees have been paid under this agreement in the year (2020: £300,000), there were no outstanding balances
at the year end (2020: £nil) and there are no contingent fees outstanding. Langham Homes has not introduced any new
land to the Group in the year.
Transactions with joint ventures
During the financial year the joint ventures paid management fees and other recharges to the Group of £38.6 million
(2020: £39.8 million). Other transactions in the year include the movements in loans of £5 million (2020: £31.5 million)
and the receipt of dividends of £7.5 million (2020: £177.7 million).
The outstanding loan balances with joint ventures at 30 April 2021 total £182.2 million (30 April 2020: £177.2 million).
2.26 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 2021 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
Agents of
Berkeley Homes
(Central London)
Limited
Agents of
Berkeley Homes
(Hampshire)
Limited
Agents of
Berkeley
Homes plc
Ely Business Park 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
Berkeley Homes (South Western House No.1)
Limited
Berkeley (Canalside) Limited
Berkeley Build Limited
Berkeley Fifty-Five Limited
Berkeley Forty-Five Limited(i)
Berkeley Forty-Four plc
Berkeley Gateway Limited
Berkeley Homes (Barn Elms) Limited
Berkeley Homes (Capital) plc
Berkeley Homes (Central & West London) plc
Berkeley Homes (Central London) Limited
Berkeley Homes (Chiltern) Limited
Berkeley Homes (East Anglia) Limited
Berkeley Homes (East Kent) Limited
Berkeley Homes (East Thames) Limited
Berkeley Homes (Eastern Counties) Limited
Berkeley Homes (Eastern) Limited
Berkeley Homes (Festival Waterfront
Company) Limited
Berkeley Homes (Hampshire) Limited
Berkeley Homes (Home Counties) plc
Agents of
Berkeley Twenty
Limited
Berkeley Homes (North East London) Limited
Berkeley Homes (Oxford & Chiltern) Limited
Berkeley Homes (South East London) 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
Berkeley Homes (Western) Limited
Berkeley Homes (West London) Limited
Berkeley Homes (West Thames) Limited
Berkeley Modular Limited
Berkeley Ninety-One Limited
Berkeley Partnership Homes Limited
Berkeley Seven Limited
Berkeley STE Limited
Berkeley SW Management Limited
Berkeley Urban Renaissance Limited
Clare Homes Limited
Lisa Estates (St Albans) Limited
PEL Investments Limited
St John Homes Limited
St Joseph Homes Limited
Stanmore Relocations Limited
Tabard Square (Building C) Limited
Thirlstone Homes (Western) Limited
Thirlstone Homes Limited
197
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDBerkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportCorporate GovernanceFinancial StatementsStrategic Report 2.26 Subsidiaries and joint ventures continued
(a) Subsidiaries continued
Agents of
St George Central
London Limited
Castle Court Putney Wharf Limited
Imperial Wharf (Block C) Limited
Imperial Wharf (Block J) Limited
Imperial Wharf (Riverside Tower) Residential
Limited
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)
St George West London Limited(ii)
Battersea Reach Estate Company Limited
Kensington Westside No. 2 Limited
Putney Wharf Estate 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 Sixty-Six Limited
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
Berkeley Commercial Developments Limited
Berkeley Commercial Investments Limited
Berkeley Commercial Limited
Berkeley Community Villages Limited
Berkeley Construction Limited
Berkeley Developments Limited(i)
Berkeley Eighteen 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-Four Limited
Berkeley Fifty-Nine Limited
Berkeley Fifty-One Limited
Berkeley Fifty-Seven Limited
Berkeley Fifty-Three Limited
Agents of
St George plc
Agents of
St George South
London Limited
Agents of St John
Homes Limited
Non-Agency
Companies(v)
198
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 (City & East London) Limited
Berkeley Homes (City) Limited
Berkeley Homes (Dorset) Limited
Berkeley Homes (East London) Limited
Berkeley Homes (Essex) Limited
Berkeley Homes (Fleet) Limited(i)
Berkeley Homes (Greater London) Limited
Berkeley Homes Group Limited
Berkeley Homes (Hertfordshire &
Cambridgeshire) Limited
Berkeley Homes (Kent) Limited
Berkeley Homes (North Western) Limited(i)
Berkeley Homes (PCL) Limited
Berkeley Homes Public Limited Company(iii)
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
Non-Agency
Companies(v)
continued
Berkeley One Hundred and Fifty-Eight
Limited
Berkeley One Hundred and Seventy-Two
Limited
Berkeley One Hundred and Fifty-Five Limited
Berkeley One Hundred and Six Limited
Berkeley One Hundred and Fifty-Four Limited
Berkeley One Hundred and Sixteen Limited
Berkeley One Hundred and Fifty Limited
Berkeley One Hundred and Sixty-Five Limited
Berkeley One Hundred and Fifty-Nine Limited
Berkeley One Hundred and Sixty-Four Limited
Berkeley One Hundred and Fifty-One Limited
Berkeley One Hundred and Sixty-One Limited
Berkeley One Hundred and Fifty-Seven
Limited
Berkeley One Hundred and Fifty-Six Limited
Berkeley One Hundred and Fifty-Three
Limited
Berkeley One Hundred and Fifty-Two Limited
Berkeley One Hundred and Five 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 Ninety-Two
Limited
Berkeley One Hundred and One Limited
Berkeley One Hundred and Seven Limited
Berkeley One Hundred and Seventeen Limited
Berkeley One Hundred and Seventy-Eight
Limited
Berkeley One Hundred and Seventy-Five
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 Sixty-Six Limited
Berkeley One Hundred and Sixty-Three
Limited
Berkeley One Hundred and Thirteen Limited
Berkeley One Hundred and Thirty-Eight
Limited
Berkeley One Hundred and Thirty-Five
Limited
Berkeley One Hundred and Thirty-Four
Limited
Berkeley One Hundred and Thirty Limited
Berkeley One Hundred and Thirty-Nine
Limited
Berkeley One Hundred and Thirty-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 One Hundred and Twenty-Eight
Limited
Berkeley One Hundred and Twenty-Five
Limited
Berkeley One Hundred and Twenty-Four
Limited
Berkeley One Hundred and Twenty 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 Portsmouth Harbour Limited
Berkeley Portsmouth Waterfront Limited
Berkeley Properties Limited(i)
Berkeley Real Estate Consulting
(Beijing) Co., Ltd
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 Seventy-Seven Limited
Berkeley Seventy-Six Limited
Berkeley Seventy-Three Limited
199
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDBerkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportCorporate GovernanceFinancial StatementsStrategic Report 2.26 Subsidiaries and joint ventures continued
(a) Subsidiaries continued
Non-Agency
Companies(v)
continued
Berkeley Seventy-Two Limited
Berkeley Sixty Limited
Berkeley Sixty-Eight Limited
Berkeley Sixty-Five Limited
Berkeley Sixty-Four Limited
Berkeley Sixty-Nine Limited
Berkeley Sixty-One 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 Twenty-Eight Limited
Berkeley Twenty-Four Limited
Berkeley Twenty-Nine Limited
Berkeley Twenty-Seven Limited
Berkeley Twenty-Three Limited
Berkeley Twenty-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 Two Hundred and Thirteen 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
Bromyard House (Freehold) Limited
Bromyard House (North) Limited
Bromyard House Limited
BWW Management Limited
Charco 143 Limited(i)
Chelsea Bridge Wharf (Management
Company) Limited
Chelsea Bridge Wharf Car Park Limited
Community Housing Action Limited
Community Villages Limited
CPWGCO 1 Limited
Drummond Road (Number 1) Limited
Drummond Road (Number 2) Limited
Exchange Place No 2 Limited
Fishguard Bridge Limited
Fishguard Tunnel Limited
Great Woodcote Park Management Limited
Hertfordshire Homes Limited
Historic Homes Limited
Kentdean Limited
One Tower Bridge Limited
Oval Works 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
Royal Clarence Yard (Phase G) Management
Company Limited
Royal Clarence Yard (Phase H) Limited
Royal Clarence Yard (Phase I) Limited
Royal Clarence Yard (Phase K) Management
Company Limited
Royal Clarence Yard Estate Limited
Sandgates Developments Limited(i)
Sitesecure Limited
SJC (Highgate) Limited
South Quay Plaza Management Limited
(62.5%)(vi)†
St Edward Limited
St George (Crawford Street) Limited
St George (Queenstown Place) Limited
St George Blackfriars Limited
St George Commercial Limited
St George Ealing Limited
St. George Eastern Limited
St. George Inner Cities Limited
St. George Investments Limited
St. George London Limited
St George Northfields Limited
St. George Partnerships Limited
St George plc(iv)
St George Project Management Limited
St. George Properties Limited
St George Real Estate Limited
St George Regeneration Limited
St. George Southern Limited
St. George Western Limited
St George Wharf Hotel Limited
Non-Agency
Companies(v)
continued
St. George’s Hill Property Company Limited
St James Group Limited
St James Homes (Grosvenor Dock) Limited
St James Homes Limited
Tabard Square (Building A) Limited
Tabard Square (Building B) Limited
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(i)
Thirlstone (JLP) Limited
Thirlstone Commercial Limited
Thirlstone plc(ii)
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
The subsidiary companies listed below are incorporated outside of England and Wales. Their country of incorporation
and registered offices are listed below. Their principal activities continues to be that of 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.
Country of incorporation
Registered office
Aragon Investments Limited(ii)
Berkeley (Carnwath Road) Limited
Jersey
Isle of Man
Berkeley (Hong Kong) Limited
Hong Kong
Berkeley Homes Special Contracts
Public Limited(iii)
Scotland
Berkeley Investments (IOM) Limited
Isle of Man
28 Esplanade, Jersey, JE2 3QA
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
77 Robinson Road, #13-00 Robinson 77,
Singapore 068896
Berkeley Whitehart Investments Limited
Jersey
28 Esplanade, Jersey, JE2 3QA
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
Ocean Centre, Montagu Foreshore, East Bay
Street, Nassau, New Providence, The 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
200
201
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDBerkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportCorporate GovernanceFinancial StatementsStrategic Report COMPANY BALANCE SHEET
As at 30 April
Fixed assets
Investments
Current assets
Debtors
Cash at bank and in hand
Current liabilities
Creditors (amounts falling due within one year)
Net current liabilities
Total assets less current liabilities and net assets
Capital and reserves
Called-up share capital
Share premium account
Capital redemption reserve
Profit and loss account
Total shareholders’ funds
Notes
C2.4
C2.5
C2.6
C2.7
C2.7
2021
£m
2020
£m
1,433.9
1,433.9
606.4
0.9
607.3
(828.7)
(221.4)
1,212.5
6.6
49.8
24.9
1,131.2
1,212.5
1,430.5
1,430.5
708.2
0.9
709.1
(804.8)
(95.7)
1,334.8
6.8
49.8
24.7
1,253.5
1,334.8
As permitted by Section 408 of the Companies Act 2006, The Berkeley Group Holdings plc has not presented its own
Income Statement. The profit after taxation of the Company for the financial year was £223.2 million
(2020: £709.6 million).
The financial statements on pages 203 to 209 were approved by the Board of Directors on 23 June 2021 and were
signed on its behalf by:
R J Stearn
Chief Financial Officer
2.26 Subsidiaries and joint ventures continued
(b) Joint ventures
At 30 April 2021 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)
Berkeley Sutton Limited(ii)
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 Edward Homes Number Five Limited**
St Edward Homes Number Four Limited**
St Edward Homes Number One Limited**
St Edward Homes Number Three Limited**
St Edward Homes Number Two Limited**
St William Holdings Limited*
St William Homes LLP(i)*
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 William Ten Limited*
St William Thirteen Limited*
St William Three Limited*
St William Twelve Limited*
St William Twenty Limited*
St Edward Homes Partnership Freeholds Limited
St William Twenty-Eight Limited*
St Edward Strand Partnership Freeholds Limited
St George Little Britain (No 1) Limited(ii)
St George Little Britain (No 2) Limited(ii)
St Katharine Homes LLP(i)
STKM Limited
Strand Property Unit Trust (unregistered)†
St William Eight Limited*
St William Eighteen Limited*
St William Eleven Limited*
St William Fifteen Limited*
St William Five Limited*
St William Four Limited*
St William Fourteen Limited*
(i) Partnership with no share capital
(ii) A ordinary and B ordinary shares
St William Twenty-Five Limited*
St William Twenty-Four Limited*
St William Twenty-One Limited*
St William Twenty-Seven Limited*
St William Twenty-Six Limited*
St William Twenty-Three Limited*
St William Twenty-Two Limited*
St William Two Limited*
The St Edward Homes Partnership (unregistered
partnership)(i)
The St Edward (Strand) Partnership (unregistered
partnership)(i)
U B Developments Limited(iv)
(iii) A ordinary, B ordinary, C preference and D preference shares
(iv) B ordinary shares
* Accounting date of 31 March
** 100% owned by St Edward Homes Limited
† Principal place of business is 19 Portsmouth Road, Cobham, Surrey, KT11 1JG
202
203
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDBerkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportCorporate GovernanceFinancial StatementsStrategic Report
COMPANY STATEMENT OF CHANGES IN EQUITY
NOTES TO THE COMPANY FINANCIAL STATEMENTS
At 1 May 2020
Profit after taxation for the year
Purchase of ordinary shares
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 2021
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
6.8
–
(0.2)
–
–
–
6.6
7.0
–
(0.2)
–
–
–
Share
premium
account
£m
49.8
–
–
–
–
–
49.8
49.8
–
–
–
–
–
Capital
redemption
reserve
£m
Profit
and loss
account
£m
Total
shareholders’
funds
£m
24.7
–
0.2
–
–
–
24.9
24.5
–
0.2
–
–
–
1,253.5
223.2
(188.6)
(6.2)
(5.2)
(145.5)
1,131.2
813.0
709.6
(130.5)
2.2
9.0
(149.8)
1,253.5
1,334.8
223.2
(188.6)
(6.2)
(5.2)
(145.5)
1,212.5
894.3
709.6
(130.5)
2.2
9.0
(149.8)
1,334.8
At 30 April 2020
6.8
49.8
24.7
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 accounting standards in conformity with the requirements of the Companies Act 2006,
but makes amendments where necessary in order to comply with the Companies Act 2006 and, has 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 171 to 202.
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.
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 30 to 33.
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 £221.4 million (2020: £95.7 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
2021
£m
0.1
2020
£m
0.1
There were no non-audit services provided by the Company’s current auditor during the year (2020: £nil).
204
205
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportCorporate GovernanceFinancial StatementsStrategic Report C2.2 Directors and employees
C2.4 Investments
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 (credit)/costs
Share based payments – equity settled
Share based payments – cash settled
2021
£m
1.6
(3.9)
(5.1)
0.4
(7.0)
2020
£m
2.4
6.0
1.4
1.0
10.8
The average monthly number of persons employed by the Company during the year was 12, all of whom are Directors
(2020: 12).
Directors
Details of Directors’ emoluments are set out in the Remuneration Report on pages 122 to 150.
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 (2020: £nil) were paid into the defined contribution scheme during the year.
Share based payments
The credit 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 £5.1 million (2020: charge of £1.4 million).
The charge to the profit and loss account in respect of cash settled share based payments under the Bonus Banking
Plan was £0.4 million (2020: £1.0 million). The charge to the reserves during the year in respect of employee share
schemes was £6.2 million (2020: £2.2 million credit) which includes the corresponding entry to the cost of investment
of £3.4 million (2020: £8.8 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 122 to 150 as well as note 2.5 to the Consolidated Financial Statements.
C2.3 The Berkeley Group Holdings plc profit and loss account
The profit for the year in the Company is £223.2 million (2020: £709.6 million).
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
2021
£m
1,430.5
3.4
2020
£m
1,421.7
8.8
Investments in shares of subsidiary undertaking at 1 April
1,433.9
1,430.5
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 2.26 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
2021
£m
593.8
12.6
2020
£m
685.5
22.7
606.4
708.2
All amounts owed from subsidiary undertakings are unsecured, bear no interest and are payable on demand.
The Company has assessed expected credit losses as immaterial on amounts owed from subsidiary undertakings.
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
2021
£m
22.7
(7.5)
(2.6)
12.6
2020
£m
16.1
8.7
(2.1)
22.7
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 (2020: 19%). Accordingly, all
temporary differences have been calculated. There is no unprovided deferred tax (2020: £nil) at the Balance Sheet date.
The deferred tax asset of £12.6 million relates to short-term timing differences (2020: £22.7 million).
206
207
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUEDBerkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportCorporate GovernanceFinancial StatementsStrategic Report C2.6 Creditors: Amounts falling due within one year
C2.8 Dividends per share
Creditors are recognised initially at fair value. Subsequent to initial recognition they are measured at
amortised cost using the effective interest method.
Dividend distributions to shareholders are recognised as a liability in the period in which the dividends are
appropriately authorised and approved for pay out 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 2019
March 2020
September 2020
March 2021
Total dividends
2021
2020
Dividend per
share
pence
Dividend per
share
pence
£m
–
–
107.00
9.13
20.08
99.32
–
–
–
–
134.3
11.2
145.5
£m
25.2
124.6
–
–
149.8
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.
Current
Amounts owed to subsidiary undertakings
Other taxation and social security
Accruals and deferred income
2021
£m
2020
£m
(821.9)
(790.9)
(5.9)
(0.9)
(11.6)
(2.3)
(828.7)
(804.8)
All amounts included above are unsecured. The interest rate on £821.9 million (2020: £790.9 million) of the balance
owed to subsidiary undertakings is 4.0% (2020: 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
2021
No ’000
2020
No ’000
2021
No ’000
2020
No ’000
2021
No ’000
2020
No ’000
Issued
At start of year
Shares cancelled
136,649
(4,412)
140,157
(3,508)
At end of year
132,237
136,649
6.8
(0.2)
6.6
7.0
(0.2)
6.8
49.8
–
49.8
49.8
–
49.8
During the year 4.4 million (2020: 3.5 million) shares were repurchased to the value of £188.6 million
(2020: £130.5 million). These shares were subsequently cancelled (2020: 3.5 million). On cancellation of the share capital
the capital redemption reserve was credited with the nominal value of shares.
On 29 September 2020, 0.3 million ordinary shares (2020: 0.2 million) were allotted and issued to the Employee
Benefit Trust.
On 30 September 2020, 0.4 million ordinary shares (2020: 0.4 million) were transferred from the Employee Benefit Trust
to Executive Directors to satisfy the exercise of options under the 2011 LTIP.
At 30 April 2021 there were 0.1 million shares held in trust (2020: 0.2 million) by the Employee Benefit Trust. The market
value of these shares at 30 April 2021 was £2.6 million (2020: £8.9 million).
At 30 April 2021 there were 10.6 million (2020: 10.9 million) treasury shares held by the Group. The market value of the
shares at 30 April 2021 was £491.2 million (2020: £457.7 million).
The movements in the year are disclosed in note 2.18 and note 2.19 of the Consolidated Financial Statements.
208
209
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUEDBerkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportCorporate GovernanceFinancial StatementsStrategic Report FIVE YEAR SUMMARY
FINANCIAL DIARY
2021
£m
2020
£m
2019
£m
2018
(*Restated)
£m
2017
(*Restated)
£m
Annual General Meeting and Trading Update
Half year end
3 September 2021
31 October 2021
Interim Results Announcement for the six months ending 31 October 2021
December 2021
Trading Update
Year end
Announcement of Results for the year ending 30 April 2022
Publication of 2022 Annual Report
March 2022
30 April 2022
June 2022
August 2022
Income statement
Revenue from operations
Operating profit
Share of results of joint ventures
Net finance (costs)/income
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)
2,202.2
502.3
22.4
(6.6)
518.1
339.4p
2,047.2
1,128.2
3,175.4
1,920.4
469.7
33.3
0.7
503.7
324.9p
1,962.7
1,138.9
3,101.6
2,957.4
768.4
8.8
(2.0)
775.2
481.1p
2,840.9
2,626.8
817.0
162.7
(2.7)
977.0
587.4p
737.1
63.0
(7.6)
792.5
456.2p
1,988.3
975.0
2,963.3
1,903.9
687.3
2,591.2
1,789.2
285.5
2,074.7
2,612p
2,472p
2,305p
1,938p
1,511p
26.2%
13.5%
16.5%
2,825
£1,712
£6,884
25.5%
13.5%
16.6%
2,723
£1,858
£6,417
39.9%
22.6%
27.9%
3,698
£1,831
£6,247
53.1%
34.1%
41.9%
3,678
£2,193
£6,003
46.4%
32.8%
41.3%
3,802
£2,743
£6,378
* Figures amended to reflect the adoption of IFRS 15.
(1)
Net assets attributable to shareholders divided by the number of shares in issue excluding shares held in treasury and shares held by
the Employee Benefit Trust.
(2)
This measures the profitability and efficiency of capital 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.
210
211
Berkeley Group 2021 Annual ReportBerkeley Group 2021 Annual ReportCorporate GovernanceFinancial StatementsStrategic Report REGISTERED OFFICE AND ADVISORS
Registered office and
principal place of business
Berkeley House
19 Portsmouth Road
Cobham
Surrey KT11 1JG
Registered number: 5172586
Registrars
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds LS1 4DL
0871 664 0300 (from the UK)
+44 (0) 371 664 0300 (from overseas)
shareholderenquiries@linkgroup.co.uk
Solicitor
Herbert Smith Freehills LLP
Bankers
Barclays Bank plc
HSBC UK Bank plc
Lloyds Bank plc
Santander UK plc
Handelsbanken plc
National Westminster Bank plc
Corporate broker and
financial advisor
UBS Investment Bank
Auditors
KPMG LLP
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
This report is printed on Amadeus
Silk and UPM Fine Offset which are
made of FSC® certified and other
controlled material.
They also have the European EcoLabel.
Printed sustainably in the UK by
Pureprint, a Carbon Neutral® company
with FSC® Chain of custody and an
ISO 14001-certified environmental
management system recycling over
99 per cent of all dry waste.
Design and production
www.luminous.co.uk
212
Berkeley Group 2021 Annual Report Berkeley Group
Berkeley House
19 Portsmouth Road
Cobham
Surrey KT11 1JG
www.berkeleygroup.co.uk
Registered number: 5172586