Last updated 22 June 2022
Berkeley Group Holdings Plc
Berkeley Group was founded in 1976 and is one of the UK’s top 10 housebuilders by most measures. In 1985, the company’s founder, the late Tony Pidgley, floated Berkeley on the London Stock Exchange and the company is a member of blue chip FTSE 100 index. Berkeley turns over more than £2.3 billion annually and sells 2,700 homes a year.
Financials
In the year to April 2022, Berkeley’s turnover rose 4.6%% to £2,348.0 million (2021: £2,202.2 million) and operating profits edged up 1.1% to £507.9 million (2021: £502.3 million). At a pre-tax level, Berkeley’s profits rose 6.4% to £551.5 million (2021: £518.7 million).
To view the financials for Berkeley Group Plc, visit Companies House and use Company ID 05172585.
Operations
Berkeley is a large developer with a portfolio that spans the private residential, affordable key worker housing, student housing, hotel and leisure, commercial office, strategic land development and private rented sectors. Berkeley is based in Surrey and operates in areas across the country but is principally focused on its key areas of London and the South East.
Berkeley was housebuilder of the year from 2010 to 2012 and has a business strategy called Vision2020, which focuses on five key areas: customers, homes, places, operations and people.
The group is comprised of six autonomous companies: Berkeley, St Edward, St George, St James, St Joseph and St Williams. The group also works in joint ventures, notably with Prudential on the St Edward brand.
In regional terms, the group focused on London and the Homes Counties since selling its northern operation, Crosby Homes, to Lend Lease for around £240 million in 2005, but more recently has begun operating in Birmingham.
Major long-term developments that Berkeley is currently working on include Green Park Village in Reading (Project ID: 17079177) and the Grand Union scheme at Brent Cross in London (Project ID: 18325221). Proposals in the planning pipeline include Armourer’s Court in Greenwich, south London, which will provide more than 500 homes (Project ID: 20097704).
In the 2022 financial year, completions edged up to 3,760 units (2021: 2,825 units). These homes were sold at an average selling price (ASP) of £603,000).
The landbank, including plots held in joint ventures, rose to 66,163 (2021: 63,270 plots).
Glenigan Data
In the 2021 calendar year, Berkeley submitted 9 detailed planning applications of 10 or more units (2021: 19 applications). These schemes contained a total of 1,801 units (2020: 6,245 units) and in Glenigan’s annual top 50 ranking of the UK’s leading housebuilders on planning submissions for 2020 (2020: 9th).
Conclusion: Challenges ahead
The fall-out from the pandemic has seen growth slow at Berkeley. Having leapt nearly 15% in 2021, revenue growth slowed to under 5% and the rise in operating profit slowed by three quarters to 1.1%. Pre-tax profits did increase at a faster rate and the group increased its earnings’ guidance by 5% over the next three years as cash due on forward sales rose to 32.2 billion (2021: £1.7 billion) but the operating margin shrank to 21.6% (2021: 22.8%).
The group now has 26 out of 32 major regeneration sites in production and bought four new sites containing 6,000 homes. Seven sites – two inside London and five outside – moved into production in the latest year but Glenigan’s research suggests that the group is shortening its landbank.
In 2021, the number of new homes in detailed planning applications shrank by 71%. The focus is shifting emphatically towards building some form of house, which comprises 95% of the units proposed in 2021 and the balance apartments (2020: 49% housing/51% flats) but the number of units in planning submissions is shrinking. In 2021, the average development contained 200 units (2020: 328 units).
The cost of living crisis is bound to have some impact with rising interest rates affecting buyers, while labour rates and materials costs are also likely to increase, and a commitment to annual shareholder returns of £282 million up to 2025 will weigh on the group.
Net cash shrunk to £269 million (2021: £1,128 million) as the group spent £412.5 million to buy the remaining 50% share of St William that it did not already own from National Grid, which led to Berkeley gain full control of 24 sites with the potential to deliver over 20,000 homes.
Berkeley”s strategy has always reflected the cyclical nature of property development and the group is rare amongst volume housebuilders in succeeding in ‘calling the market’ ahead of previous downturns. Berkeley was the first housebuilder to turn to the City to raise cash during the last downturn and also the first to pledge to return spare cash to investors rather than dramatically step up completions.
A shift into modular housing has been more belated compared to some peers and the short-term outlook will surely be challenged, but the group’s decision to expand out of central London looks well-timed to support future growth.
Winning Work with Berkeley Group
The Berkeley Group operates through autonomous divisions and operating companies and each runs its own implementation programme. All divisions have a sustainability management system in place that follows the ISO14001 standard and a health & safety management system, which is aligned with OHSAS 18001. All of the group’s construction sites take part in the Considerate Constructors Scheme.
Berkeley has a Code of Practice to manage sustainability on its construction sites, which contractors must agree to work with, as part of a strong group-wide commitment to sustainability. The group has a policy, Vision 2020, aimed at continuing the development of the business in this area and further details can be found here. The group is also a member of the Supply Chain Sustainability School and details of Berkeley involvement can be found here.
In 2014, Berkeley was awarded the Queen”s Award for Enterprise for Sustainable Development for five years of continuous achievement. For eight years in a row, Berkeley has been top of the NextGeneration benchmark initiative ranking the UK”s 25 largest homebuilders according to their sustainability strategy and performance. The group’s supply chain charter can be viewed here.
Berkeley Group has agreed suppliers for most of its work. Companies that are interested in being added to its roster are recommended to contact the company via rosters@berkeleygroup.co.uk
Key Berkeley Group procurement contacts include:
Product & Buying manager – Steve Ridout, tel: 01932-868555